Deepak Abbhi v Richard John Slade (trading as Richard Slade and Company)
| Jurisdiction | England & Wales |
| Judge | Lady Justice King,Lord Justice Flaux,Lord Justice David Richards |
| Judgment Date | 06 December 2019 |
| Neutral Citation | [2019] EWCA Civ 2175 |
| Date | 06 December 2019 |
| Docket Number | Case No: A4/2019/0512 |
| Court | Court of Appeal (Civil Division) |
[2019] EWCA Civ 2175
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS
LONDON CIRCUIT COMMERCIAL COURT (QBD)
HHJ RUSSEN QC (Sitting as a Deputy High Court Judge)
LM-2017-000132
Royal Courts of Justice
Strand, London, WC2A 2LL
Lady Justice King
Lord Justice David Richards
and
Lord Justice Flaux
Case No: A4/2019/0512
Stephen Robins (instructed by Birketts Llp) for the Appellant
Brian Doctor QC and Sebastian Kokelaar (instructed by Richard Slade and Company Limited) for the Respondent
Hearing date: 20 November 2019
Approved Judgment
Introduction
The appellant (to whom I will refer as “Mr Abbhi”) appeals against the Order dated 1 March 2019 of HH Judge Russen QC in the London Circuit Commercial Court giving judgment for the respondent (to whom I will refer as “Mr Slade”) with damages to be assessed. The Order was made following a three day trial in July 2018 in respect of which the judge gave a judgment dated 24 September 2018 finding, so far as relevant to this appeal, that Mr Slade had established the oral agreement with Mr Abbhi for which he contended and that that oral agreement was not a guarantee to which section 4 of the Statute of Frauds 1677 applied. There was a further hearing on February 2019, following which the judge gave a second judgment dated 1 March 2019 rejecting Mr Abbhi's argument that the claim had been issued in contravention of section 69 of the Solicitors Act 1974.
On 12 June 2019, Longmore LJ granted permission to appeal on one ground: namely, the question of whether the oral agreement comes within Section 4 of the Statute of Frauds 1677. He also stayed the assessment of damages and payments on account. He refused permission to appeal on a second ground concerning the judge's decision on section 69 of the Solicitors Act 1974.
Factual background
In 2012 and 2013, Mr Abbhi's father-in-law Mr Balmohinder Singh (to whom I will refer as “Mr Singh”) was engaged in extensive litigation in the Chancery Division against his son Jasminder Singh, in which he contended that certain property was subject to a common intention constructive trust under the Hindu custom of mitakshara, by which Mr Singh as the patriarch of the family was entitled to partition the property. The property in question consisted of Tetworth Hall, a substantial house on the edge of Ascot racecourse, and shares in a very successful hotel group, Edwardian Group Limited. Mr Abbhi is married to Mr Singh's daughter Suninder, known as “Seema”. They are resident in the United States.
The proceedings were brought with funding provided by Mr Abbhi, as Mr Singh was unable to fund it himself. The funding was initially on an informal basis, but on 16 June 2012 Mr Singh and Mr Abbhi entered a Loan Agreement in writing, the terms of which applied to loans already made (about US$530,000 at that date) and any future advances, which were to be entirely at the discretion of Mr Abbhi.
Although Mr Abbhi denied at trial that he and Seema had any personal interest at stake in the litigation, the judge found that Seema had an expectation of deriving some personal financial benefit in the form of a legacy from her father out of his share of the family property if his claim were successful.
Mr Singh was initially represented by a firm of solicitors called Pillai & Jones, but only a few months before the trial, the principal solicitor there was taken ill. Mr Singh's leading counsel, Mr John McDonnell QC, recommended that Mr Slade, who is a solicitor and the principal of Richard Slade & Co, be instructed.
A meeting was arranged between Mr Slade and Mr Abbhi and Seema at the Capital Hotel in Knightsbridge on 11 July 2013, before they went to the airport to return to the United States. Mr Slade did not meet Mr Singh at that time. The meeting, and what was agreed at it, was predicated upon Mr Singh not being able to pay Mr Slade's bills if he agreed to take on the case and the liability for disbursements such as counsel's and experts' fees it would entail. Mr Slade's pleaded case in [7] of the Particulars of Claim was that an oral agreement was made at the meeting in these terms:
“On or around 11 July 2013 the Defendant:
(a) Informed the Claimant that Mr Singh himself would be unable to pay the Claimant's fees and disbursements to be incurred in connection with the Action”;
(b) Agreed with the Claimant, in consideration of the Claimant agreeing to act for Mr Singh in the Action, that he would pay such fees and disbursements on Mr Singh's behalf, alternatively, lend Mr Singh sufficient funds to pay such fees and disbursements and ensure that those funds would be applied for that purpose, pursuant to the 2012 Loan Agreement (a copy of which was provided by the Defendant to the Claimant by email on 16 July 2013)”
Mr Abbhi's first line of defence was that no such oral agreement was made at all. Both he and Mr Slade gave evidence at trial and the judge preferred the evidence of Mr Slade. At [92] of the first judgment the judge recorded Mr Slade's evidence in cross-examination about the oral agreement:
“The agreement that was made was this: Mr Singh, Mr Abbhi and Seema wanted me to act as Mr Singh's solicitor for the purposes of the forthcoming trial. I am reducing this to a series of propositions if you like. That is proposition number one. Number two: Mr Singh couldn't pay. Number three: Mr Abbhi said he would pay. Number four: Mr Abbhi said that there was a slight complication in that he did not want to pay me directly because he considered, on the basis of previous advice, that that might expose him more than necessarily [sic] to an application under section 51 [of the Senior Courts Act 1981] by Jasminder, and so the precise way in which he would pay me would be by providing his funds so that Mr Singh could write a cheque and deliver it to me.”
At [93] of the first judgment, the judge said: “I accept Mr Slade's evidence and that his four propositions neatly encapsulate the nature of the agreement reached between Mr Slade and Mr Abbhi.” At [115] he went on to conclude that Mr Slade had established the oral agreement alleged at [7] of the Particulars of Claim.
On the strength of the oral agreement, Mr Slade agreed to act for Mr Singh in the forthcoming litigation. Mr Singh subsequently signed Mr Slade's retainer letter on 1 October 2013. The trial took place before Sir William Blackburne over 16 days in November and December 2013. He handed down judgment dismissing the claim on 8 April 2014 ( Singh v Singh [2014] EWHC 1060 (Ch)). Permission to appeal was refused by the Court of Appeal.
All Mr Slade's bills were delivered to Mr Singh as the “party chargeable with the bill” within the meaning of section 70 of the Solicitors Act 1974. However, Mr Slade did not expect Mr Singh personally to pay the bills. Rather, prior to Sir William Blackburne's judgment, Mr Abbhi paid Mr Slade via Mr Singh some £185,000, pursuant to the oral agreement. The payments were made by putting Mr Singh in funds which he then paid on to Mr Slade by cheque because, as identified in Mr Slade's fourth proposition accepted by the judge, Mr Abbhi was concerned that, if he paid Mr Slade direct, Jasminder Singh would make an application against him under section 51 of the Senior Courts Act 1981 on the basis that he had funded the litigation. Hence payments being routed through Mr Singh.
However, after judgment was handed down by Sir William Blackburne, Mr Abbhi did not make any further payments, although in April 2014, Mr Slade received £250,000 being Mr Singh's share of monies held in an offshore bank account first disclosed in February 2014 and £138,492.25 being the balance of the proceeds of the sale of Mr Singh's minority shareholding in Edwardian Group to Seema (after repayment of the monies due from Mr Singh to Mr Abbhi under the Loan Agreement). This left an outstanding balance of £317,823.63, of which £251,743 represents unpaid counsel's fees, £5,700 other disbursements and £69,226 Mr Slade's own unpaid fees.
Mr Singh died on 9 February 2015 and his estate is insolvent. Section 4 of the Statute of Frauds 1677
Section 4 of the Statute of Frauds provides:
“ No Action against Executors, upon a special Promise, or upon any Agreement, or Contract for Sale of Lands, unless Agreement, be in Writing and signed.
No Action shall be brought… whereby to charge the Defendant upon any special promise to answer for the debt default or miscarriages of another person… unless the Agreement upon which such Action shall be brought or some Memorandum or Note thereof shall be in writing and signed by the party to be charged therewith or some other person thereunto by him lawfully authorised.”
As Lord Diplock said in Moschi v Lep Air Services [1973] AC 331 at 347H–348A:
“Translated into modern legal terminology “to answer for” is “to accept liability for” and “debt, default or miscarriage” is descriptive of failure to perform legal obligations, existing and future, arising from any source, not only from contractual promises but in any other factual situations capable of giving rise to legal obligations such as those resulting from bailment, tort, or unsatisfied judgments.”
The ground of appeal
The single ground of appeal for which permission to appeal was given is that the judge erred in law in holding that the oral agreement fell outside section 4 of the Statute of Frauds 1677 and was enforceable notwithstanding the lack of writing. He should have held that the oral agreement fell within section 4 because the liability of Mr Abbhi to Mr Slade under it was defined by reference to the liability of Mr Singh to Mr Slade under the Retainer Letter. Accordingly...
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...apply to a promise to answer for the “debt, default or miscarriages of another person.” In Abbhi v Slade (t/a Richard Slade and Co) [2019] EWCA Civ 2175, the Court of Appeal made clear that the requirements of the Statute of Frauds only apply to promises that are conditional on another par......