Dr Faramarz Shayan Arani v Cordic Group Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Andrew Hochhauser |
| Judgment Date | 07 April 2021 |
| Neutral Citation | [2021] EWHC 829 (Comm) |
| Court | Queen's Bench Division (Commercial Court) |
| Docket Number | Case No: LM-2020-000063 |
| Date | 07 April 2021 |
[2021] EWHC 829 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
LONDON CIRCUIT COMMERCIAL COURT
Royal Courts of Justice,
Rolls Building, Fetter Lane,
London, EC4A 1NL
Mr Andrew Hochhauser QC
SITTING AS A DEPUTY JUDGE OF THE HIGH COURT
Case No: LM-2020-000063
Adam Solomon QC instructed by Penningtons Manches Cooper for the Claimants
Paul Sinclair QC and Thomas Lazur (instructed by A&L Goodbody) for the Defendant
Hearing dates: 4, 5 November and 3 December 2020
APPROVED JUDGMENT
I direct that pursuant to CPR PD 29A para. 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic
Table of Contents
| Introduction | 3 |
| Representation | 6 |
| The background | 7 |
| The evidence | 20 |
| The law in relation to summary judgment | 21 |
| The law in relation to the strike-out application | 24 |
| The applicable principles when considering whether to grant permission to amend a statement of case | 24 |
| The Parties' Submissions | 25 |
| The Claimants' submissions in support of the Claimants' Application on the basis of the original Defence and Counterclaim | 25 |
| No right to withhold from the Claimants the money in the Retention Account | 27 |
| Clause 6.4.3 of the SPA | 29 |
| No right to set off | 30 |
| The Defendant's claims for breach of warranty claim, misrepresentation and negligent misstatement | 32 |
| The Counterclaim for rescission | 35 |
| The Defendant's allegation of risk of dissipation | 35 |
| The Defendant's submissions in support of the Amendment Application and in opposition to the Claimants' Application | 37 |
| A summary of the Defendant's case | 37 |
| The amendments to the Defence | 38 |
| The draft amended Defence based on Misrepresentation and Negligent Misstatement | 40 |
| The five authorities | 41 |
| The way in which the Defendant now advances its case on misrepresentation and negligent misstatement | 47 |
| The right to withhold or to set off against the Retained Amount | 51 |
| Risk of dissipation | 53 |
| The Claimants' submissions in relation to the draft amended Defence and Counterclaim | 53 |
| The five authorities referred to by the Defendant | 55 |
| Should the Court entertain the Defendant's further submissions on the “clean hands” argument, submitted after the conclusion of the First Hearing? | 60 |
| The Court should consider the “clean hands” argument | 62 |
| The Defendant's submissions on “clean hands” | 63 |
| The Claimants' submissions on “clean hands” | 65 |
| Discussion and conclusions | 67 |
| Is there a right of set off in relation to the draft amended Counterclaim? | 71 |
| The alleged risk of dissipation | 71 |
| Given the summary judgment granted in favour of the Claimants, should the draft Counterclaim be permitted to proceed? | 73 |
| Is the draft amended Counterclaim one which stands a real prospect of success? | 74 |
| The reformulated fraudulent breach of warranty claim | 75 |
| The reformulated misrepresentation claim | 75 |
| The claim for rescission | 77 |
| The “clean hands” argument | 77 |
| Summary of conclusions | 78 |
| Next steps | 79 |
Mr Andrew Hochhauser QC:
Introduction
There are two applications before me. They both relate to a claim and counterclaim arising from a Share Purchase Agreement dated 1 November 2018 (the “ SPA”), whereby the Defendant, Cordic Group Ltd (then Bonumcorpus (No 14) Limited) agreed to purchase from the Claimants the shares in Cordic Ltd (the “ Company”).
The first is an application by the Claimants by an Application Notice dated 25 June 2020 (the “Claimants' Application”) for summary judgment under CPR r.24.2(a)(ii) on the Claimants' Claim and on the Counterclaim on the basis that the Defendant has no real prospect of successfully defending the claim and no real prospect of succeeding on its Counterclaim, and there is no other compelling reason why the case should be disposed of at trial, alternatively that the Defence and Counterclaim be struck out under CPR r.3.4(2)(a) on the basis that there are no reasonable grounds for defending the claim or bringing the counterclaim.
The second application is an application by the Defendant to amend the Defence and Counterclaim pursuant to CPR r17.1(2)(b), which was made by an Application Notice dated 4 November 2020 (the “ Defendant's Amendment Application”). It was made on the basis that the Defendant was no longer pursuing its application, made orally to file and serve a Rejoinder and Reply to Defence to Counterclaim.
The procedural history of the Defendant's Amendment Application is somewhat complicated. The Defendant's Amendment Application, with a draft amended Defence and Counterclaim, was served after the end of the first day's hearing. It was presented at the beginning of the second day of the hearing. Mr Solomon objected to it being considered then, because he had been given little time to consider it. Furthermore, during the course of oral argument, it became apparent that further consideration needed to be given to formulation of some of the proposed draft amendments to it. On 5 November 2020, I therefore made the following Order (the “ 5 November Order”):
“ 1. The Defendant shall file and serve a final draft Amended Defence and Counterclaim by 10am, 9 November 2020 to replace the draft Amended Defence and Counterclaim provided with the Defendant's Application Notice dated 4 November 2020 to amend the Defence and Counterclaim. There is no need for any amendment to the Application Notice.
2. The evidence relied on in support of the Defendant's application to amend shall be the evidence served in response to the Claimants' application for Summary Judgment and strike out filed and served on 26 October 2020 (the witness statements of Bernardus Van Schriek and Stuart Nevin and their exhibits).
3. Any evidence in response to the Defendant's application shall be filed and served by the Claimants on or before 4pm, 16 November 2020.
4. Any evidence in reply to the Claimants' evidence shall be filed and served by the Defendant on or before 4pm, 20 November 2020.
5. A hearing to consider the Defendant's application to amend and consequential considerations arising out of the Court's Judgment on the Claimants' application for Summary Judgment and Strike Out Applications and shall be listed together when the Judgment is handed down. The time estimate for both matters is 1 day.
6. Costs reserved.”
A revised draft Amended Defence to Counterclaim was duly served on 9 November 2020. Evidence to which I will later refer was served pursuant to the timetable set out in the 5 November Order.
Thereafter, unexpectedly on 18 November 2020, I received from Mr Lazur, a further supplementary skeleton argument. It stated, amongst other things:
“I apologise for the unusually late nature of this submission and the disruption it may cause. However, given the discovery of documents in support of the Defendant's case on fraud following the hearing it is submitted that it is appropriate to add this issue at this late stage.
The point is a simple one: the Claimants should not be entitled to the release of the retained sum by way of specific performance because they have come before the Court with “unclean hands”.
The Claimants objected to this late submission and after receiving further written representations from the parties, I made the following Order on 23 November 2020:
“UPON THE submission of a supplementary skeleton argument (“the Supplementary Skeleton”) from the Defendant under cover of an email of 18 November 2020
AND UPON the Court considering the communications from both parties between 18 and 20 November 2020 and noting the Claimants' objection to the Defendant's ability to advance the points raised in its Supplementary Skeleton
AND UPON the Defendant's Counsel indicating that the Defendant does not seek to and will not re-argue points raised previously at the summary judgement hearing
IT IS HEREBY ORDERED:
1. There be a further hearing (“the Further Hearing”), to be set down on the first available date for the convenience of the Court and parties' counsel, to consider:
(1) the issues raised by the Supplementary Skeleton and the Claimants' objections thereto; and
(2) the Defendant's application to amend its Defence and Counterclaim.
2. Time estimate for the Further Hearing shall be 1 day. The parties' submissions at the Further Hearing be limited to 2 hours each, with the ability to the Defendant to reply for a further 15 minutes.
3. Counsels' clerks to liaise with the clerk to the Judge to arrange a date for the Further Hearing.
4. The Further Hearing shall be conducted remotely.
5. The Claimants shall file and serve any skeleton argument on which they intend to rely, in response to the Supplementary Skeleton and the Defendant's application to amend, by no later than 4pm 2 clear days before the hearing.
6. The Defendant shall file and serve any skeleton argument on which it intends to rely by no later than 4pm 2 clear days before the hearing.
7. Save as aforesaid, there be no further submissions or evidence in respect of the Further Hearing.
8. The costs of and occasioned by the Further Hearing be reserved.”
The further hearing took place on 3 December 2020 (the “ December Hearing”).
Representation
The Claimants have been represented throughout by Adam Solomon QC. At the first hearing (the “ First Hearing”) the Defendant was represented by Thomas...
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