George Maloney and Others v Filtons Ltd and Another
| Jurisdiction | England & Wales |
| Judge | MR JUSTICE PETER SMITH,Mr Justice Peter Smith |
| Judgment Date | 24 May 2012 |
| Neutral Citation | [2012] EWHC 1395 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: HC12C00956 |
| Date | 24 May 2012 |
[2012] EWHC 1395 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Justice Peter Smith
Case No: HC12C00956
Mr Anthony Trace QC and Ms Rosanna Foskett (instructed by SNR Denton) for the Claimants
Mr Moshin Kothia in person for the Defendants
Hearing dates: 23, 24, 25 & 26 April 2012
THE HONOURABLE MR JUSTICE PETER SMITH
The Honourable
INTRODUCTION
This judgment arises out of a trial of this action. The trial took place as a result of an order made by His Honour Judge Mackie QC (sitting as a Judge of the High Court) on 21 st March 2012 directing (inter alia) an expedited trial to commence at the end of April 2012.
The Claimants are the Receivers ("the Receivers") of Thomas Bernard McFeely and Conal Derek McFeely. In this judgment I shall call them "the McFeely Brothers".
The Receivers are represented by Mr Anthony Trace QC and Ms Rosanna Foskett.
Until shortly before the trial the Defendants were represented by solicitors and had Leading Counsel (Mr Steven Gee QC) at the hearing on 14 th March 2012 before Mr Justice Warren and Mr David Berkley QC on the above mentioned hearing before His Honour Judge Mackie QC. In addition, Mr Berkley QC settled a Defence and Counterclaim.
Throughout the hearing the Defendants were represented by one of its Directors, a Mr Moshin Kothia. Mr Kothia presented his case extremely lucidly and tenaciously and I pay tribute to his efforts in that regard. However, Mr Kothia, of course, is not a lawyer and it follows that things were missed of a legal nature which would never have occurred to him as a non lawyer.
I should also say that Mr Trace QC following the well established and proper traditions of the Bar without derogating from his duty to his clients provided Mr Kothia with considerable help in the production of documents and references to authorities and assistance to me as his duty to the court as an advocate when one party is unrepresented.
This case as this judgment will show demonstrates the difficulties a court faces at a trial when one party is unrepresented. There is of course the general difficulty of a litigant in person not understanding how trials run. That can be covered by assistance from the bench. There is the difficult aspect of cross examination and the need to put matters. There is always the difficulty of when the litigant in person gives evidence, is cross examined and there is no one who can effectively re-examine him. That is a role which effectively falls on the Judge to address matters of clarification that might have been raised in re-examination by an advocate if there were such an advocate.
As this judgment shows there is a further significant difficulty in my view arising out of matters which were not pleaded in the Defence and Counterclaim which was settled by Leading Counsel and served as long ago as 26 th March 2012. Mr Kothia in the closing stages of his submissions applied to amend the Defence and Counterclaim. I heard submissions on that. Mr Trace QC objected to that late amendment. The further difficulty about the amendment is that Mr Kothia has no idea how to plead the amendment which it is fair to say was raised by me in argument with Mr Trace QC and during the course of the trial.
It is always difficult to assist the litigant in person without giving the represented parties the impression that they are being punished for having representation.
BACKGROUND
The dispute relates to a block of residential apartments ("the Property") known as Athena Court which is on a site 160–188 High Street Stratford East London. It is very close to the Olympic Park. It has a registered title with HM Land Registry EGL74535.
The registered proprietors of the Property are (and have been since January 2007) are the McFeely Brothers. The McFeely Brothers hold the Property upon trust for Ashwood Enterprises Ltd ("Ashwood") an Isle of Man company. Thomas McFeely was declared bankrupt in the High Court on 13 th January 2012.
That bankruptcy does not affect the Receivership because the Property has been held on trust by him rather than beneficially so it and any causes of action associated with it do not form part of the bankruptcy estate ( section 284 (3) IA 1986). Further the Trustee in Bankruptcy has been notified of the proceedings and has not sought to participate in them.
The Bank of Ireland ("the Bank") entered into loan facilities for up to £49m with Inis Developments Ltd ("Inis"). Inis is a Northern Ireland construction company in which the McFeely Brothers have an interest. Inis' liabilities to the Bank were (inter alia) secured over the Property by way of a first legal mortgage dated 26 th June 2007. That charge ("the Legal Charge") was between (1) the Bank (2) the McFeely Brothers and (3) Ashwood. It was registered at HM Land Registry on 2 nd July 2007.
As such the Charge pre-dates any proprietary interests the Defendants might assert. There is nothing to suggest that the Defendants' rights bind the Bank.
The Legal Charge is a third party charge whereby the McFeely Brothers charge the Property as security for Inis' liabilities to the Bank.
It should be observed that by clause 10 of the Legal Charge the McFeely Brothers are prohibited without the Bank's consent from creating or permitting to arise any mortgage charge or lien on the Property. They are also prohibited from granting or accepting a surrender of any lease or license of the Property and are prohibited from disposing of or parting with or sharing possession or occupation of the Property unless permitted. There is no suggestion that the Bank has permitted any of the transactions that are the subject matter of the present dispute.
Under clause 11 of the Legal Charge the Bank is given power to appoint a Receiver or Receivers who are deemed to be the agent of the McFeely Brothers and jointly and severally responsible. Finally clause 14 has a statement that a certificate by an official or manager of the Bank as to the amount of Inis' obligations or the amount due from the McFeely Brothers under the Legal Charge should be conclusive evidence save in the case of manifest error or any question of law. The legal effect of that clause is binding as to its terms: see Bache & Co (London) Ltd v Banque Vernes et Commerciale de Paris SA [1973] 2 Lloyds Reports 437 CA.
On 4 th November 2011 the Bank made a demand on Inis under the loan facility for repayment of sums in excess of £49m. Shortly thereafter it made demands on the McFeely Brothers under the Legal Charge. Neither Inis nor the McFeely Brothers managed to meet those demands. As a result of the failure to repay the whole or any part of the sums demanded receivers were appointed. The relevant demand seems to me to be a certificate in accordance with clause 14 above mentioned. In any event there is nothing to suggest in these proceedings that the amounts due are in any way challenged.
Following failure to repay initially 4 partners at BDO LLP ("the Original Receivers") were appointed on 4 th November 2011 by the Bank pursuant to its powers under the Legal Charge. In addition on 10 th January 2012 George Maloney a partner in the Irish associated firm Baker Tilly Ryan Glennon was appointed out of court in Northern Ireland as administrator of Inis pursuant to the demand. On that same day (10 th January 2012) the Claimants were appointed as Receivers under the Legal Charge in place of the Original Receivers who resigned.
INVESTIGATION BY ORIGINAL RECEIVERS AND THE RECEIVERS
According to the evidence which was not challenged by the Defendants the Original Receivers in November 2011 had difficulties obtaining access to the Property. They were blocked by Noel McFeely another McFeely brother. The Original Receivers then discovered that the Second Defendant had been instructed to find tenants for the Property. They contacted the Second Defendant and were told that the Second Defendant had a lease over the whole of the Property and that it had been granting sub tenancies of residential units in Athena Court. Those tenancies are let out on Assured Shorthold Tenancies ("ASTs"). The Original Receivers were then provided with a document by which the Defendants purported to claim a lease over the Property. That document is central to the issues before me ("the Lease").
TERMS OF LEASE
The Lease is dated 31 st October 2010. It is stated to be a lease between Ashwood Enterprises (note not the full name of Ashwood). Its address is stated to be c/o Merriman White Solicitors. The tenant is described as Filtons Leasing (London) Ltd and the Property is described as Athena Court. The term created is a term of 24 months commencing on 1 st November 2010 and expiring on 31 st October 2012. The rent payable is £32,000 per week payable in advance on the Friday of each week. Thus under the Lease a total of £3,328,000 is payable by the Second Defendant to Ashwood as rent for the 2 year term. On the same day (31 st October 2010) the Directors of the Second Defendant signed a document whereby it was agreed all security deposits obtained by the Second Defendant would be passed over to Thomas McFeely on behalf of Ashwood Enterprises. The document in question is also signed by Thomas McFeely on behalf of...
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