Khan (Mohammed Krim) v Khan (Iqbal Ali)

JurisdictionEngland & Wales
JudgeLORD JUSTICE STEPHENSON,LORD JUSTICE GRIFFITHS
Judgment Date21 December 1981
Judgment citation (vLex)[1981] EWCA Civ J1221-1
Docket Number81/0483
CourtCourt of Appeal (Civil Division)
Date21 December 1981

[1981] EWCA Civ J1221-1

IN THE SUPREME COURT OF JUDICATURE

COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

(MR. JUSTICE STUART SMITH)

(MR. JUSTICE WOOLF)

Royal Courts of Justice,

Before:

Lord Justice Stephenson

Lord Justice Griffiths

and

Lord Justice Kerr

(not present at delivery of judgment)

81/0483

1981 K No. 1360

Between:
Mohammed Krim Khan
Plaintiff (Respondent)
and
Iqbal Ali Khan
First Defendant (Appellant)

and

Watford Tradelink Limited
Second Defendant (Appellant)

and

Lloyds Bank Limited
Third Defendant

MR. RICHARD SLOWE (instructed by Messrs. Gasquet Metcalfe & Walton, Solicitors, London WC2R 3EB) appeared on behalf of the First and Second Defendants (Appellants).

MR. J.A. HIGHAM (instructed by Messrs. McKenna & Co., Solicitors, London WC2R OHF) appeared on behalf of the Plaintiff (Respondent).

LORD JUSTICE STEPHENSON
1

The First and Second Defendants, Mr. Iqbal Ali Khan and Watford Tradelink Ltd., apply for leave to appeal against, in effect, one of two injunctions granted ex parte by Mr. Justice Stuart Smith on 27th October at the suit of the plaintiff, Dr. Mohammed Krim Khan. On that date that judge granted what can be described as a tracing order and a Mareva injunction. The Mareva injunction is not now questioned before us. But Mr. Justice Woolf was asked to discharge or vary both parts of Mr. Justice Stuart Smith's order and it is his order of 3rd November refusing to discharge or vary the tracing order against which the applicants want leave to appeal. We have granted them leave, which Mr. Justice Woolf refused, and heard the application as an appeal. The tracing order was in these terms; I read from page 124 of our bundle: "IT IS ORDERED that the First Defendant personally and the Second Defendant by its directors make and serve upon the plaintiff's solicitors, Messrs. McKenna & Co."—and their address is given—"forthwith and in any event within 48 hours from service of the Order, affidavits setting out full details of all facts and matters within their knowledge and/or information concerning the whereabouts of and what has become of the sum of £40,000 paid on or about 14th August, 1981 to the second defendant from the bank account of the plaintiff with the branch of National Westminster Bank Limited at Stanhope Gate, 18A, Curzon Street, London W.1. and/or any monies or assets purchased or acquired, whether directly or indirectly, through the use of such sum or any part thereof and to exhibit thereto all documents within their custody, possession or power relating to the whereabouts of and/or application of such sum and/or such monies or assets", and then there was liberty to apply.

2

The appellants want us to vary that injunction by adding the words, reading from page 134 of the bundle: "…save and unless and solely to the extent that compliance herewith might incriminate the First and Second Defendants or either of them of offences other than any which may be charged under the Theft Act 1968 or 1978".

3

The injunction was obtained by the respondent plaintiff, Dr. Khan, to assist him in his action against both appellants and a third defendant, Lloyds Bank Ltd., who are not parties to this appeal, in recovering the sum of £40,000, which he claims to have paid to the First Defendant, Mr. Khan, in the following manner. Last August the plaintiff gave the First Defendant three cheques drawn and signed by the plaintiff in blank on his account with the National Westminster Bank. The first of them was to be used by the First Defendant to pay the balance of the purchase price of a leasehold property in Portsea Place, London, on which the plaintiff had already paid a deposit of £20,000. The other two cheques were to be used to pay surveyors' fees and for furnishing the property. The plaintiff wanted the property to live in on his frequent visits to this country from Saudi Arabia, where he practises as a doctor of medicine. He had given the First Defendant a general power of attorney and hoped to find the purchase of his property completed. But on his return to this country on 1st October last the First Defendant told him that that was not so as he had paid the monies standing to the credit of the plaintiff's account to the Second Defendant, Watford Tradelink Ltd.

4

It is common ground that the First Defendant had completed one of the plaintiff's cheques by making it payable to the Second Defendant in the sum of £40,000; that the First Defendant was a director and controlling shareholder of the Second Defendant; that the proceeds of the cheque were credited to the Second Defendant's account with the Third Defendant, Lloyds Bank Ltd. on 14th August, from which account these proceeds or part of them have been removed; that neither the cheque nor its proceeds were used for the purchase of the property or the other purposes connected with the purchase; and that the First and Second Defendants have failed to account to the plaintiff for the proceeds, or any part of the proceeds, of the cheque. So the plaintiff has had to complete the purchase of the property with other monies.

5

No defence to the plaintiff's claim for declarations, replacement of the sum of £40,000, damages, an account and disclosure of the whereabouts and application of the £40,000 has yet been served. But on 22nd October solicitors for the First Defendant wrote to the plaintiff's solicitors as follows; I read the letter at page 100 of our bundle:

"Dear Sir,

We refer to our telephone conversation of the 19th October when we informed you that we act for Mr. Iqbal Ali Khan and enquired from you whether you had received instructions to issue any proceedings against our Client in connection with a loan of approximately £39,000 made by your Client to our Client.

"We informed you over the telephone that our instructions were that your Client of his own volition allowed our Client to borrow this money and had agreed that it should be paid back at the rate of £217 per month over a period of 15 years.

"Would you kindly note that we now act for Mr. Iqbal Khan and kindly advise us immediately any proceedings are contemplated".

6

If the £40,000 was indeed lent to the First Defendant by the plaintiff and not entrusted to him to purchase the property, there would be no objection to the First Defendant or the Second Defendant acting as they did with the cheque and no liability to account to the plaintiff for the proceeds of the cheque.

7

The Second Defendant's account with the Third Defendant shows a receipt of £40,000 on 14th August, two payments of £15,000 by cheques cashed by the First Defendant on 21st August and 6th October and a payment by standing order of £217 on 15th October for the credit of the plaintiff's account with the National Westminster Bank.

8

The law gives a party all permissible help in tracing property which is the subject of dispute by compelling disclosure, but it has also fixed its canon against self-incrimination. A party is not compelled to give discovery which will tend to criminate him or expose him to proceedings for a penalty: see the note 24/5/10 at page 415 of the Supreme Court Practice 1981. He has a right in any legal proceedings other than criminal proceedings to refuse to answer any question or produce any document or thing if to do so would tend to expose him to proceedings for an offence or for the recovery of a penalty: see section 14(1) of the Civil Evidence Act 1968.

9

But Parliament has also recognised, in section 31 of the Theft Act 1968, the importance and difficulty of tracing stolen property and protecting the owners of property, including (since this year's decision of the House of Lords in Rank Film Distributors v. Video Information Centre (1981) 2 Weekly Law Reports, 668) intellectual property as defined in section 72 of the Supreme Court Act 1981. Section 31 of the Act of 1968 provides, by subsection (1):

"A person shall not be excused, by reason that to do so may incriminate that person or the wife or husband of that person of an offence under this Act—

(a) from answering any question put to that person in proceedings for the recovery or administration of any property, for the execution of any trust or for an account of any property or dealings with property; or

(b) from complying with any order made in any such proceedings; but no statement or admission made by a person answering a question put or complying with an order made as aforesaid shall, in proceedings for an offence under this Act, be admissible in evidence against that person or (unless they married after the making of the statement or admission) against the wife or husband of that person".

10

The statute removes the excuse of tendency to incriminate but...

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