Habib Bank Ltd v Mohammed Ali Dawood
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE PETER GIBSON,LORD JUSTICE LONGMORE,MR JUSTICE LINDSAY |
| Judgment Date | 07 October 2004 |
| Neutral Citation | [2004] EWCA Civ 1346 |
| Docket Number | A3/2004/0083; A3/2004/0085 |
| Court | Court of Appeal (Civil Division) |
| Date | 07 October 2004 |
[2004] EWCA Civ 1346
IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
MANCHESTER DISTRICT REGISTRY
MERCANTILE LIST
(HIS HONOUR JUDGE HEGARTY
(Sitting as a Deputy High Court judge))
Royal Courts of Justice
Strand
London, WC2
Lord Justice Peter Gibson
Lord Justice Longmore
Mr Justice Lindsay
A3/2004/0083; A3/2004/0085
MR J MARKS QC (instructed by Messrs Berrymans Lace Mawer, London EC2M 5QN) appeared on behalf of the Appellant
The Respondent did not appear and was not represented
I will ask Lord Justice Longmore to give the first judgment.
By an undated document but signed by the respondent defendant, Mr Dawood, on or about 25th April 1989, Mr Dawood guaranteed repayment of all monies due from one Barry McColgan, with a limit of £300,000 exclusive of interest and charges.
On 25th August 1992 Habib Bank (the claimant in the proceedings and the appellant before us) made a formal demand on Mr McColgan for £495,367.56, made up partly of principal and partly of interest. Mr McColgan failed to pay and on 18th February 1993 the bank made a formal demand on Mr Dawood for the maximum sum under the guarantee of £300,000 by way of principal and £1,703,202.75 for interest and costs up to 5th February 1993, making £473,202.75 altogether.
Mr Dawood made no payment pursuant to that demand. On 22nd December the bank issued a writ (so long ago is it) with an endorsed statement of claim claiming: (1) the figure of £473,202.75; (2) interest thereon to the date of the writ pursuant to section 35A of the Supreme Court Act 1981, which was quantified in the sum of £69,800.65; and (3) continuing interest from the date of that writ, also pursuant to the Supreme Court Act.
On 10th March 1997 the bank applied for summary judgment. That application became ineffective after evidence had been filed from Mr Dawood. A trial date was in due course fixed for 14th December 1998.
The bank failed to serve its list of documents until 27th May 1998 and that trial date had to be vacated. No new trial date was fixed. Mr Dawood applied to strike out the claim for want of prosecution. That application failed.
In due course the matter came for trial before His Honour Judge Hegarty QC in the Mercantile List at Manchester and he gave judgment on 30th January 2002 on liability. Since there was no doubt that at least £300,000 was owing, he also gave judgment for that sum. He reserved questions of any final sum and interest and costs.
Later that year there was oral argument on interest and costs. In the course of that oral argument it became clear that the bank wished to argue that the contractual rate of interest was something to which they were entitled, both as against Mr McColgan and against Mr Dawood, and that they would prefer to make a claim for contractual interest rather than the statutory interest as pleaded. An application was made to amend in the course of argument, but no formal document proposing any such draft amendment was at that stage produced.
On 20th November His Honour Judge Hegarty gave a second judgment dealing with interest and costs, among other things. He decided, first, that the statement of claim did not on its face include a claim for compound interest calculated at the contractual rate agreed in the loan to Mr McColgan. Secondly, that the bank should not have permission to amend to claim compound interest at what was, on any view, a very late stage of the proceedings. Thirdly, that as far as statutory interest was concerned, the bank should be entitled to interest for seven rather than the nine full years that had elapsed since the cause of action accrued.
On 18th February new proceedings were issued by the bank asserting a right to compound interest from 1st September 1995 to 31st January 2003. On 29th April 2003 judgment in an agreed sum, on the basis that the second judgment was correct, was entered for £346,000 and costs.
In due course His Honour Judge Hegarty heard applications in relation to the new proceedings. On 20th December 2003 he decided inter alia that the claim for compound interest in the second action could and should have been brought, if at all, in the first action and should therefore be struck out.
The bank now appeals to this court, originally asserting that the writ in the first action contained on its true construction a claim for compound interest. That has been abandoned by Mr Jonathan Marks QC, now appearing for the bank. (He did not appear in the courts below.) Secondly —and this is supported by Mr Marks —the bank asserts that the judge was wrong to refuse the bank permission to amend; and thirdly, the bank submits that if permission was rightly refused, the claim in the second action should not have been dismissed.
Since the date of the third judgment but after the date fixed for the hearing of this appeal, Mr Dawood's solicitors have informed the court that they have no instructions. They have, however, informed Mr Dawood of the date so fixed, but he has decided not to appear on the appeal. He has taken no steps to satisfy the judgment given in April 2003, and Mr Marks has told us that Mr Dawood is currently in Canada.
The burden of Mr Marks' submissions is that the judge was wrong to have refused the bank permission to amend. His primary submission was that the judge approached the application on the basis that the bank could only add accruing contractual interest to its claim if it availed itself of the option granted to it in clause 1 of the guarantee document to hold the guarantor primarily responsible as a principal debtor, rather than as a surety only. This was because a claim for post-writ contractual interest was a claim which inevitably accrued after the issue of the writ, and it was only as against a principal contracting party that it was a permissible practice for such interest to be claimed up to the date of judgment.
The way the judge put the matter was this:
'79. … the proposition is that proceedings can be commenced only in respect of an existing cause of action and that judgment cannot, therefore, be given in respect of monies which have only fallen due subsequent to the commencement of proceedings.
80. In the case of a cause of action for damages, it seems to me that the proposition is plainly wrong. Provided that the cause of action conferring the right to damages is complete at the time when the action is commenced, damages will be assessed as at the date of...
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