ICICI Bank UK Plc v Mihir Mehta and Others
| Jurisdiction | England & Wales |
| Judgment Date | 18 April 2017 |
| Neutral Citation | [2017] EWHC 1030 (Comm) |
| Docket Number | Claim CL-2017-0001666 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 18 April 2017 |
[2017] EWHC 1030 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Claim CL-2017-0001666
Michael Brindle QC and Simon Goldstone (instructed by Zaiwalla & Co., Solicitors) for the Claimant
Karishma Vora and Max Shephard (instructed directly) for the First Defendant
David Caplan (instructed by Mishcon de Reya LLP, Solcitors) for the Third Defendant
Approved Judgment
I direct that pursuant to CPR PD 39A 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.
Hearing dates: 13 and 18 April 2017
INTRODUCTION
This is the adjourned return date of the application by the Claimant bank, ICICI Bank UK Plc (the Bank), for worldwide freezing orders against the Defendants. I granted the freezing orders on 9 March 2017 following a without notice hearing. On that occasion Mr Brindle QC appeared (as he does today) leading Mr Goldstone who also appears today.
The original return date for the applications was 24 March, when Mr Goldstone appeared before me for the Bank. Also present were Ms Vora for the First Defendant, Mr Caplan for the Third Defendant and a legal representative of the Fourth Defendant. They are all siblings and are content to be referred to as Mihir, Mona and Manisha respectively. Ms Vora and Mr Caplan appear before me today also.
I adjourned the hearing on 24 March in order to allow the parties time to file further evidence, mainly expert evidence on foreign law, which was duly served. This raises a number of issues which are dealt with in context below.
The Second Defendant (Purnima), the mother of Mihir, Mona and Manisha, has not indicated any objection to the continuance of the freezing order as against her. I therefore see no reason not to continue it against her. Manisha has agreed to the continuation of the injunction against her by a Consent Order made with the Bank. Neither the Fifth nor the Sixth Defendants, which are companies, have engaged in any way with the claim or injunction and they are not relevant for today's purposes. Accordingly the contest over the continuation or otherwise of the injunction is between the Bank, Mihir and Mona.
BACKGROUND
The relevant background is as follows. Jayam NV (Jayam) was a Belgian diamond dealing company which was part of the family diamond business started originally by Mihir and Mona's grandfather and then continued by their father, Mahendra Mehta (Mr Mehta). It had previously been very successful.
By a facility agreement dated 30 August 2005 the Bank's London branch provided a US$10m loan facility to Jayam. The loan account was later moved to the Bank's Antwerp branch in 2006 and a new facility agreement entered into on 7 September 2006.
The loan was secured by two guarantees of relevance to this application:
(1) a personal guarantee given by Mihir and Mr Mehta together, dated 7 September 2006; and
(2) a corporate 'all monies' guarantee dated 30 August 2005 provided by Jayam's holding company, the Fifth Defendant (now called Jayam Diamonds International PTE Ltd (JDIP)).
Mr Mehta died in 2009, survived by Mihir, Mona and Manisha and his widow, Purnima. He died unexpectedly during an operation and was intestate. His estate is subject to Belgian inheritance law. The death appears to have resulted in a family dispute and Manisha started proceedings in India against her siblings and cousins regarding what she considers to be her rights in a valuable Mehta family property known as Malabar House in the desirable Malabar Hill area of Mumbai – this is relevant for reasons I will come to.
In early 2014, Jayam started to experience financial difficulties and in June 2016 it went into voluntary liquidation. The Bank subsequently served a series of demands between June and August 2016 on Jayam and on Mihir and JDIP as guarantors.
The Bank also served demands on:
(1) Purnima, on the basis that under Belgian law, she had acquired a usufruct over Mr Mehta's estate upon his death pursuant to which she became liable for interest owing and accruing under Mr Mehta's debts as guarantor.
(2) Mona and Manisha, on the basis that under Belgian law Mr Mehta's guarantee liabilities had passed to them and Mihir as Mr Mehta's heirs. The first demand served on Mona is dated 26 July 2016 and it required payment of US$7,619,750.09 within two days.
No payment has been made. Jayam is said to owe the bank approximately US$8m.
THE PRESENT CLAIM
The Bank issued a Claim Form in August 2016 but held off on serving it whilst settlement discussions between the parties were ongoing and whilst it pursued other securities, including commencing a claim for a freezing order in the High Court of Mumbai against Mihir, Purnima, Mona and Manisha in relation to Malabar House. That injunction was granted ex parte and seemingly in support of the issued claim in England. The return date was set for 7 and 8 March 2017 in Mumbai.
With time running out for service of the August 2016 Claim Form, the Bank then decided to issue the present application on 9 March 2017. Originally it was going to seek an extension of time for service of that Claim Form but in the event it decided to issue a new Claim Form a day later on 10 March 2017. This new Claim Form attaches brief details of the claim, which can be summarised as follows:
(1) Against Mihir for payment of all sums owed as a party to the personal guarantee and as an heir of Mr Mehta.
(2) Against Mona and Manisha for payment of all sums owed under the guarantee as Mr Mehta's heirs.
(3) The Bank's case is that Mihir, Mona and Manisha each answer for 1/3 of the total guarantee liability which had been Mr Mehta's. But Mihir would owe the total sum by reason of his separate guarantee liability.
(4) Against Purnima for payment of the interest on the personal guarantee, she having acquired a usufruct in Belgium over Mr Mehta's estate.
(5) Against JDIP for payment of all sums owed as a party to the all monies guarantee.
(6) The Bank also claims against JDIP and the Sixth Defendant (Diamond Capital Investments PTE Ltd (Diamond)) for suitable orders under s.423 Insolvency Act 1986. The Bank contends that starting in September 2014, JDIP transferred assets worth several millions of USD to Diamond which had only been incorporated in June 2014 and from December 2015 at the latest was owned by Mihir's wife. The suggestion from the Bank is that this was an attempt by Mihir to make JDIP judgment proof and that the relevant transfers of assets were transfers at an undervalue. This aspect of the claim is not directly relevant to the issues before me now.
THE PRESENT POSITION
A transcript was taken of the hearing on 9 March and is available at volume A1 tab 4 of the application bundle. Applying the well-known test for a freezing order, I was satisfied that the Bank had a good arguable case in relation to all the Defendants and that there was solid evidence of a risk of dissipation. There were some issues that initially troubled me on jurisdiction and on delay. However, I was nonetheless satisfied on hearing from Mr Brindle that it was appropriate to grant the worldwide freezing orders sought, and I did so with the usual undertakings. Having obtained the freezing orders in England, the Bank withdrew the Indian proceedings relating to Malabar House, as noted above.
Since then, the Bank has complied with its undertakings and notified each of the Defendants of the freezing orders. It has also served further pleadings and evidence, including reports on Indian and Belgian law.
In response, Mihir, Purnima, Mona and Manisha have disclosed assets and served affidavits pursuant to the terms of the orders. The Bank has some concerns that the disclosure made has been inadequate.
The Bank maintains that it is appropriate for all of the freezing orders to stay in place. As noted above the Defendants who are actively opposed to this are Mihir and Mona.
I heard submissions from Mr Brindle, Mr Caplan and Ms Vora at the hearing.
The issues that fall to be decided as against Mihir and Mona are, therefore:
(1) Is there a good arguable case against him/her?
(2) Is there a sufficient risk of dissipation?
(3) Are there any other reasons to discharge or not to continue the freezing order?
It is convenient to deal with the position of Mona first.
MONA
Good arguable case
In summary, Mr Caplan's submission is that the Bank's entire case against Mona is founded on an incorrect proposition that Mona is liable for a share of Mr Mehta's debts as a result of the operation of Belgian inheritance law.
Both parties have served evidence on this issue. The Bank relies on the evidence of Mr Marco Wirtz, a partner at Peeters Euregio Law in Belgium. Mona relies on evidence from Prof Renate Barbaix of the University of Antwerp. There appears, now, to be a substantial amount of common ground:
(1) Potential heirs in Belgium can either (a) unconditionally accept an estate, in which case they succeed to their share of its rights but also its obligations, (b) accept the estate under the benefit of an inventory (not relevant here) or (c) reject the estate, in which case they do not succeed to any of its rights or liabilities.
(2) An heir can accept an estate expressly or tacitly, the latter when, according to Mr Wirtz, "the heir performs an act which necessarily subsumes his intention to accept".
(a) Because Belgian inheritance law is not concerned with foreign immoveable property, which falls outside of a deceased's Belgian estate and devolves in accordance with the lex situ, nothing done in relation...
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Table of Cases
...LR 283 (CA) ICBC v Dragon Driving School Canada, 2004 BCSC 1580 52 153 5,38,39, 56, 57, 69,71,75.171 86 ICICI Bank UK Pic v Mehta, [2017] EWHC 1030 (Comm) 77 Igloo Specialties v Royal Oak Mines, 1998 CanLII 6972 (NWTSC) 39, 80 Imperial Oil v Gibson (1992), 72 BCLR (2d) 195,15 BCAC 297, ICBC......
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Procedure
...is a genuine risk of dissipation. But delay may undermine the applicant’s claim that this risk exists. ICICI Bank UK Pic v Mehta, [2017] EWHC1030 (Comm) at paras D. NOTICE The application for a Mareva order is almost always made exparte by neces sity. To do otherwise would defeat the very p......