Infinity Distribution Ltd ((in Administration)) v The Khan Partnership LLP
| Jurisdiction | England & Wales |
| Judge | Stuart Isaacs |
| Judgment Date | 26 June 2020 |
| Neutral Citation | [2020] EWHC 1657 (Ch) |
| Court | Chancery Division |
| Docket Number | Claim No: CH-2019-000183 |
| Date | 26 June 2020 |
[2020] EWHC 1657 (Ch)
Stuart Isaacs QC (sitting as a Deputy Judge of the High Court)
Claim No: CH-2019-000183
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
BUSINESS LIST (ChD)
Royal Courts of Justice, Rolls Building
Fetter Lane, London, EC4A 1NL
Mr Dan Stacey (instructed by The Khan Partnership LLP) appeared on behalf of the Appellant.
Mr Albert Sampson (instructed by Candey Limited) appeared on behalf of the Respondent.
Hearing date: 24 June 2020
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.
Stuart Isaacs QC:
This is an appeal by the defendant, The Khan Partnership LLP (“TKP”), against the order dated 22 May 2019 of deputy master Arkush (“the master”) by which he ordered that a proposed deed of indemnity offered as security for TKP's costs in proceedings begun against TKP by the claimant (“IDL”) was adequate and acceptable security.
TKP is a firm of solicitors which is the successor practice to Hassan Khan & Co, which formerly acted for IDL in connection with an HMRC investigation into potential VAT fraud by mobile telephone traders. At all material times, IDL (which is now in administration and insolvent) was a wholesale supplier of mobile telephones. TKP was successful in obtaining for IDL a repayment from HMRC of input VAT which was paid into TKP's client account.
In the proceedings, IDL alleges that TKP acted in breach of fiduciary duty in connection with the fee arrangements between them in allegedly making unauthorised deductions from the monies held for IDL in its client account. IDL claims the principal sum of £337,525. TKP disputes the claim and seeks to set off further sums which it claims are due to it from IDL. The trial of the action is presently due to take place later this year although I was told by counsel at the hearing that it may be postponed until next year.
By an application notice dated 3 October 2018, TKP applied pursuant to CPR Part 25.12 for security for its costs of the proceedings in the sum of £500,000 or such other sum to the court's satisfaction by payment into court or in such other manner as the court may direct. The application was supported by witness statements dated 3 October 2018 and 5 December 2018 of Rao Hassan Khan, a partner in TKP, and opposed by a witness statement dated 12 November 2018 of Jonathan William Allan Child, a solicitor employed at Candey Limited (“Candey”), the law firm which represents IDL in these proceedings. In its evidence, TKP indicated that a deed of indemnity would be an acceptable form of security.
On 11 December 2018, Chief Master Marsh ordered inter alia that IDL should provide security in the sum of £350,000 by the provision of a proposed deed of indemnity to TKP by 19 December 2018; that, if no proposed deed of indemnity was provided by that date, IDL should provide security by payment of that sum into court by 31 December 2018, failing which all further proceedings would be stayed; and that if a proposed deed of indemnity was provided but was not acceptable to TKP, all further proceedings would be stayed pending further order following a further hearing. The deadline of 19 December 2018 was subsequently extended by a further order of the court to 24 December 2018. Although not spelled out in Chief Master Marsh's order, it is common ground between the parties that the reference to the acceptability of the proposed deed of indemnity must mean its reasonable acceptability. There was no appeal against Chief Master Marsh's order.
On 24 December 2018, Candey sent TKP a copy of the proposed deed of indemnity. There then followed, over the course of the next several months, extensive correspondence between the parties and with the court on the precise terms of the proposed deed of indemnity, which was eventually agreed, and other matters. However, on 15 February 2019, IDL informed TKP that it would be seeking from TKP the costs of the premium for the deed of indemnity. Also, on 18 March 2019, IDL informed TKP that the increased costs of its ATE policy, which had first been notified to TKP on 24 November 2014 and would be topped up from £180,000 to £350,000, would also be sought to be recovered from TKP. The total costs in question amount to £315,000, comprising the original £120,000 premium for the original cover of £180,000, plus an additional £195,000 for the topped up ATE policy and associated deed of indemnity. As Candey explained in a letter dated 1 April 2019 to TKP, “ the Deed of Indemnity cannot be provided without a commensurate increase to the ATE Policy because the Insurer cannot provide a Deed of Indemnity for an amount higher than the insured amount”.
TKP took the view that the deed of indemnity was unacceptable. This was not, as is often the case, because of the terms of the proposed security but because of the TKP's potential liability for the costs of the premium for it if it was unsuccessful at trial. The matter came before the master at a case management conference on 22 May 2019 at which he ordered that the deed of indemnity was adequate and acceptable security. TKP now appeals against that order and seeks instead an order that the security be provided by means of a payment into court. By a respondent's notice, IDL seeks to uphold the master's...
To continue reading
Request your trial
-
Infinity Distribution Ltd ((in Administration)) v The Khan Partnership LLP
...BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES BUSINESS LIST (ChD) Mr Stuart Isaacs QC sitting as a Deputy Judge of the High Court [2020] EWHC 1657 (Ch) Royal Courts of Justice Strand, London, WC2A 2LL Lord Justice Moylan Lord Justice Nugee and Lord Justice Birss Case No: A3/2020/1300 Be......