Kastner v Jason and Others
| Jurisdiction | England & Wales |
| Judge | Mr Justice Lightman |
| Judgment Date | 23 March 2004 |
| Neutral Citation | [2004] EWHC 592 (Ch) |
| Docket Number | Case Nos: HC 03 C 02871 & HC 03 02524 |
| Court | Chancery Division |
| Date | 23 March 2004 |
[2004] EWHC 592 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
He Honourable Mr Justice Lightman
Case Nos: HC 03 C 02871 & HC 03 02524
Mr Jonathan Seitler QC (instructed by Dechert LLP, 2 Serjeants' Inn, London EC4V 1LT) for Mr Kastner
Mr David Lonsdale instructed by Mills & Reeve, 1 St James Court, Whitefriars, Norwich, NR3 1RU) for Mr and Mrs Sherman
Hearing dates: 29th January 2004 and the 15 th March 2004
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.
Mr Justice Lightman:
INTRODUCTION
At the trial of the two actions before me I had to consider the effect in English law of a decision and of an award made by a Beth Din (a Jewish Court) appointed as arbitrator to determine according to Jewish substantive and procedural law all disputes and differences between the Claimant in the arbitration, Mr Kastner, and the Defendant in the arbitration, Mr Jason. The allegation in the arbitration by Mr Kastner was that Mr Jason had defrauded him. The decision was the interlocutory grant to Mr Kastner of a "freezing" direction prohibiting Mr Jason from dealing with or disposing of his home without the permission of the Beth Din pending the making and satisfaction of the final award in the arbitration. The award was the final award by the Beth Din of £237,224.50 as damages for fraud to Mr Kastner against Mr Jason. Notwithstanding the direction prior to the award Mr Jason sold the property to Mr and Mrs Sherman. The issue before me is whether the direction (protected by registration of a caution against the title to the home) or the award created in favour of Mr Kastner a lien or charge on Mr Jason's home securing the award of damages and (if either did so) whether that lien or charge bound Mr and Mrs Sherman.
The parties to the two actions are in the first action ("the Kastner action") Mr Kastner as claimant and Mr Jason and Mr and Mrs Sherman as defendants, and in the second action ("the Sherman action") Mr and Mrs Sherman as the claimants and Mr Kastner as the defendant. Mr Kastner was represented by Mr Seitler and Mr and Mrs Sherman by Mr Lonsdale. Both Counsel gave me every assistance. Mr Jason was not represented and did not take any part in the proceedings.
Mr Kastner in the arbitration before the Beth Din (the court) of the Federation of Synagogues ("the Beth Din"), obtained an interlocutory direction ("the Direction") that Mr Jason should not deal with or dispose of his home, 10 Holmdale Gardens Hendon ("the Property"), without the written permission of the Beth Din. Mr Kastner with the permission of the Beth Din protected the Direction by registration of a caution at HM Land Registry against Mr Jason's title to the Property ("the Caution") and Mr Jason also orally agreed to comply with the Direction ("the Agreement").
In flagrant breach of the Direction and Agreement, Mr Jason entered into a contract for sale and (save for registration) completed a sale of the Property to Mr and Mrs Sherman. Subsequently, after the Beth Din had made an award of damages in his favour, Mr Kastner obtained an interim charging order against the Property to secure the sum awarded to him. In the Kastner action Mr Kastner seeks an order making the charging order absolute. In the Sherman action Mr and Mrs Sharman seek an order vacating the Caution and declaring that the registration of themselves as proprietors of the Property should proceed. At issue is whether the right of Mr and Mrs Sharman as purchasers of the Property to complete their purchase by registration as proprietors is subject to a charge or lien in favour of Mr Kastner securing payment of the award of damages by reason of the facts that: (1) they entered into the contract of purchase and paid the full purchase price notwithstanding the fact that they had constructive notice of the Direction and notwithstanding the existence of the Agreement; and (2) the claim in fraud by Mr Kastner against Mr Jason was upheld by the Beth Din which awarded damages for that fraud.
FACTS
Mr Jason fraudulently induced Mr Kastner to invest in Mr Jason's company. Mr Kastner discovered the fraud and decided to take action to recover his loss. Since both Mr Jason and Mr Kastner were strictly orthodox Jews and it was their duty under Jewish law to have their disputes resolved by a Beth Din and not to have recourse to the secular courts of this country, on the 13 th November 2001 they entered into a written arbitration agreement ("the Arbitration Agreement") under which they agreed to refer to the arbitration and final decisions of the Beth Din all disputes and differences between them and all claims which either party alleged that he had against the other party?
"for determination by way of Din Torah [the Five Books of Moses and the oral law which accompanies them] according to the rules of procedure customarily employed in arbitrations before the Beth Din, and according to principles of halachah [the Code of Jewish Law derived from the foregoing] and/or general principles of equity customarily employed in arbitrations before the Beth Din."
The parties went on to agree "to accept and perform the Award … of the Beth Din touching all disputes, differences and claims between the parties".
The same day the parties made submissions to the Beth Din which was a panel of three judges, one of whom was Dayan Lichtenstein. There was then a break until a resumed hearing on the 26 th November 2001 when both parties called witnesses. On the 27 th December 2001 the Beth Din made an award in favour of Mr Jason holding that on the evidence adduced no fraud on his part was established.
On the 25 th February 2002 Mr Kastner applied to the Beth Din to reopen the award in the light of the fact that fresh evidence of fraud on the part of Mr Jason had come to hand. It is common ground that this course was open to the Beth Din under Jewish Law. On the 27 th February 2002 the Beth Din acceded to this application.
The only known asset of Mr Jason was the Property which he was in the process of trying to sell. This fact combined with the fact that Mr Jason stated that he intended to emigrate to the USA reasonably led Mr Kastner to fear that, unless urgent action was taken, Mr Jason would so arrange his affairs that he would have no assets (and certainly no assets within the UK) to satisfy any award by the Beth Din and accordingly he applied in writing to the Beth Din for a direction restraining Mr Jason from selling or disposing of the Property without the written consent of the Beth Din. The Beth Din gave the Direction by letter dated the 25 th February 2001 and gave permission to Mr Kastner to register the Caution. On the 27 th February 2002, at the same time as it reopened the earlier award, the Beth Din repeated the Direction.
On the 1 st March 2002 Mr Kastner made an application to HM Land Registry to register the Caution against dealings with the Property in which he stated that the interest which he was applying to protect by the registration was that arising under the Direction. The Caution was duly registered on the 5 th March 2002.
Meanwhile on the 4 th March 2002 Mr Jason entered into the Agreement.
Further hearings proceeded before the Beth Din on the 4 th and 14 th March 2002 and the 25 th May 2002. The lengthy delay in concluding the hearings between the 14 th March and the 25 th May 2002 was the occasion for further dishonesty by Mr Jason.
On the 11 th April 2002 in flagrant breach of the Direction and Agreement Mr Jason entered into a contract with Mr and Mrs Sherman for the sale to them of the Property. Mr and Mrs Sherman's solicitor, Mr Brian Gordon ("Mr Gordon") of Farmer Millar Rabin Gordon, appears to have taken the whole conveyancing transaction and the proof of title by Mr Jason extremely lightly. This inference is to be drawn from his correspondence and the otherwise inexplicable fact that, when he carried out his Land Registry search, he did not read or take notice of the entry of the Caution. Accordingly in total ignorance of the Caution (but with constructive notice of it arising from registration of the Caution) Mr and Mrs Sherman proceeded to complete the purchase on the 20 th May 2002. Mr and Mrs Sherman paid the full purchase price and Mr Jason executed the transfer to them of the Property. Part of the purchase price was provided by HSBC on the security of a mortgage executed by Mr and Mrs Sherman. Part of the net purchase price was applied in discharging two existing mortgages on the Property and the balance was paid over to Mr Jason. There followed a five month unexplained and inexplicable delay on the part of Mr Gordon in applying for registration of the transfer and mortgage. The priority period in favour of Mr and Mrs Sherman and HSBC expired on the 27 th June 2002. The application for registration of Mr and Mrs Sherman as proprietors and HSBC as mortgagee was lodged on the 23 rd October 2002.
Mr Jason only informed the Beth Din of the sale by a letter dated the 22 nd May 2002 but in fact sent on the 5 th June 2002. Mr Kastner for the first time learnt of the sale on the 28 th October 2002, by which time the net proceeds had been paid to Mr Jason and he had emigrated to the USA.
There was a very lengthy delay between the conclusion of the hearings on the 25 th May 2002 and the first judgment of the Beth Din on the issue of liability. On the 12 th November 2002 the Beth Din made a Supplementary Award which found that Mr...
To continue reading
Request your trial
-
Kastner v Jason and Others
...EWCA Civ 1599 [2004] EWHC 592 (Ch)" class="content__heading content__heading--depth1"> [2004] EWCA Civ 1599 [2004] EWHC 592 (Ch) IN THE SUPREME COURT OF JUDICATURE COURT OF APPEAL (CIVIL DIVISION) ON APPEAL FROM the Queen's Bench Division (Commercial Court) Mr Justice Lightman Royal Courts ......
-
The French State v The London Steam-Ship Owners' Mutual Insurance Association Ltd
...reference to the discussion in Merkin's Arbitration Law (2023 ed), para. 18.55, was that the decision of Lightman J at first instance in Kastner v Jason [2004] EWHC 592 (Ch) is an illustration of the fact that restrictions on the court's powers will limit the powers conferred on an arbitra......
-
Mr David Sterling v Mrs Miriam Rand
...accept the route by which the Claimant reached that conclusion. 53 The Claimant relied on the decision of Lightman J in Kastner v Jason [2004] EWHC 592 regarding whether a Beth Din had power to grant a freezing order. Powers of arbitrators to grant such relief are subject to section 39 of t......
- Oliver Tim Axmann v Celcom (Malaysia) Berhad