Habib Bank Ltd and Liverpool Freeport (Electronics) Ltd and Others
| Jurisdiction | England & Wales |
| Judgment Date | 29 July 2004 |
| Neutral Citation | [2004] EWCA Civ 1062 |
| Date | 29 July 2004 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: A3/2003/2116 |
[2004] EWCA Civ 1062
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE QUEEN'S BENCH DIVISION
(MANCHESTER DISTRICT REGISTRY), (MERCANTILE LIST)
(His Honour Judge Kershaw QC)
Royal Courts of Justice
Strand,
London, WC2A 2LL
Lord Phillips of Worth Matravers, Mr
Lord Justice Laws and
Lord Justice Thomas
Case No: A3/2003/2116
Mr P Downes & Ms L Powell (instructed by Messrs Berrymans) for the Appellant
Mark Cawson QC & Andrew Tabachnik (instructed by Messrs Boote Edgar Esterkin) for Mrs IqbalMrs Iqbal representing herself (after the June hearing)
Mr H Malek QC & Mr J Strachan (instructed by Messrs Kuit Steinart Levy) for Mr Iqbal
Lord Phillips, MR: This is the judgment of the Court
This is an appeal, brought with permission granted by Longmore LJ, by Habib Bank Ltd ("the Bank") against decisions in a single judgment relating to two actions which were heard together by His Honour Judge Kershaw QC in the Mercantile List of the Manchester District Registry. The gestation of the judgment was lengthy and unusual, as we shall explain. It was delivered in its final form on 11 September 2003.
The parties
On 21 August 1984 Streed Ltd ('Streed') was incorporated. On 21 January 1986 Streed (UK) Ltd ('Streed UK') was incorporated. The Defendant in the first action, Mr Mohammed Iqbal, and the Third Claimant in the second action, Mrs Shirin Iqbal, each owned one share of each of these companies. There were no other shareholders.
On 30 October 1984 a current account was opened in the name of Streed at the Bank's Manchester Branch ('the Streed current account') . On 24 March 1987 a US dollar deposit account was opened in the name of Streed at the Bank's Manchester Branch ('the Streed dollar account') . On 26 June 1989 a trust loan account was opened in the name of Streed UK at the Bank's Manchester Branch ('the Streed UK loan account') .
The principal roles in the events which have given rise to the two actions were played by Mr Sohail Butt, the Manager of the Bank's Manchester Branch and Mr Iqbal. While he was Manager, Mr Butt was guilty of dishonest breaches of duty to the Bank of a nature that we shall explain in due course. No party called him to give evidence. Mr Iqbal was present at the trial of the actions before Judge Kershaw, but did not give evidence.
After the events with which this appeal is concerned Streed changed its name to Liverpool Freeport Electronics Ltd. The company was subsequently placed in receivership and then in liquidation. The liquidators of Streed have assigned to Mrs Iqbal such claims, if any, as they had against the Bank. Streed UK Ltd has also assigned to Mrs Iqbal such claims, if any, as it has against the Bank. The validity of those assignments were, but are no longer, in issue.
The rival claims
It was the Bank's case that, as at 28 February 1991, the Streed current account was substantially overdrawn, dwarfing a modest credit on the Streed dollar account, and that the two accounts produced a net indebtedness to the Bank of £681,580. It was the Bank's case that, as at 28 February 1991, the Streed UK loan account was overdrawn to the extent of £150,727. While by the end of the hearing of the action the Bank was prepared to concede that the overall indebtedness was less than this, it has always been the Bank's case that Streed and/or Streed UK owed substantial sums to the Bank.
In one of the actions the Bank claims against Mr Iqbal on a guarantee and a mortgage executed by Mr Iqbal, which the Bank alleges secures this indebtedness. Mr Iqbal denies that either the guarantee or the mortgage secured or secures the alleged or any indebtedness. He counterclaims damages for the wrongful registration of the mortgage and the return of the mortgage.
In the other action Mrs Iqbal claims that the Bank had wrongfully debited the three accounts. Pursuant to an order of this Court she prepared, for the purpose of this appeal, a statement of her case on the accounts on the basis of the findings made by Judge Kershaw. This took the form of a substantial file. As we understand the contents of this, it shows that as at 9 March 1990 the Streed current account should have been £332,343 in credit and that a capital sum of 160,000 should have stood, at all times, to the credit of the Streed dollar account. So far as the Streed UK loan account is concerned, this was depleted by letters of credit issued and honoured by the Bank until it was overdrawn to the extent of some 56,748, well within the overdraft facility permitted by the Bank. This is important, for Mrs Iqbal also advances a substantial claim for damages. This is on the basis that the Bank wrongly exercised a lien over goods purchased under letter of credit MAN 2470 and thereby caused the company a substantial loss of profit on a resale contract.
In accordance with the order of this Court, Mrs Iqbal also gave particulars of the damages that she claimed. These amount, as we understand it, to £302,884.57. Mrs Iqbal provided a grand total of all her claims, including interest up to 1 March 2004, in the sum of £2,987,720.90.
The gestation of the judgment
There had been an order that the validity and enforceability of the guarantee should be tried as a preliminary issue. Judge Kershaw sat to determine that issue on 30 May 2001, but directed instead that all issues in relation to liability and quantum should be tried together on and after 19 November 2001. The Legal Services Commission withdrew funding from Mrs Iqbal shortly before that date and she was granted a short adjournment in order to prepare to present her own case. Mrs Iqbal gave evidence in support of her claim over a period of 5 days. Mr Naqvi, a former member of the Bank's audit team, gave evidence for the Bank. No witness was called who had been involved on the part of the Bank in any of the transactions in issue. The Bank provided voluminous documentation in relation to these transactions. Mr and Mrs Iqbal provided no banking documents. We were told that these had been passed to the liquidators of Streed and had not been recovered. The statutory accounts of Streed and Streed UK were put in evidence.
Evidence was completed by 17 December 2001. Closing submissions occupied 11 days within the period 25 January to 18 March 2002. Further submissions in writing were invited and served by 4 April 2002. Beginning in July 2002 Berrymans, the solicitors acting for the Bank, pressed with increasing urgency for delivery of a judgment. On 21 November 2002 the parties received by fax a draft of the first part of the judgment which was 65 pages in length. This dealt with the validity and effect of the guarantee and the mortgage. The Bank was held to have no claim under either. The part judgment did not deal with Mrs Iqbal's claims. These were dealt with in a draft of the second part of the judgment, which the parties received on 11 January 2003.
3 March 2003 was fixed as the date for formal hand-down of the judgment. Before then a number of inconsistencies and omissions in the draft judgment were drawn to the attention of the judge. At the hearing on 3 March some of the respects in which the judge indicated that he was minded to deal with these were at odds with the findings that he made in his final judgment. As to this, the judge said that he would deliver it within a short time. In the event, final judgment was not delivered to the parties until 11 September 2003. This differed in some respects from the draft.
So far as the Bank's claims were concerned, the judge held that Mr Iqbal was under no personal liability under the guarantee or the mortgage. He further held that he was unable to find, on balance of probabilities that any particular sum was owed by either Streed or Streed UK to the Bank. He held that he would give directions which were likely to include a separate direction on whether Mr Iqbal, who was an undischarged bankrupt, had any standing to advance a claim for damages and, subject to this, direct an enquiry as to damages.
So far as Mrs Iqbal's claims were concerned, the judge held that she had made out her entitlement to damages for the wrongful exercise by the Bank of a lien over the goods purchased under the letter of credit. So far as her claim for the balances alleged to be payable on the Streed current and the Streed dollar accounts were concerned, the judge referred to a Scott schedule with a column containing his findings. He said "a draft judgment with a schedule was supplied to the parties in advance. Some points were raised by counsel, including counsel for Mrs Iqbal. She has instructed new solicitors and there is not now any obstacle to their taking active steps on her behalf". Later, when dealing with the terms of his order he said "In Mrs Iqbal's action against the bank I will give directions for the trial of the issue of the re-writing of the accounts".
No order was ever drawn up. The Bank has sought a stay of further proceedings before Judge Kershaw. Mr Paul Downes on the Bank's behalf has attacked the judge's findings in the Scott Schedule. His submission has been that Mrs Iqbal's claim should be dismissed. Alternatively, if her claim has to be considered further, he submits that this should be before a judge other than Judge Kershaw.
Delay
In support of his appeal Mr Downes relied upon the delay that occurred between the end of the trial and the delivery of judgment. His submission in essence was that this delay, coupled with the omissions and inconsistencies in the draft judgment and the variations between the draft and final...
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