Locabail (Uk) Ltd (Plaintiff) Bayfield Properties Ltd and Another (Defendants) Barbara Hagan Emmanuel (Plaintiff by Counterclaim) Locabail (Uk) Ltd and Another (Defendants by Counterclaim)
| Jurisdiction | England & Wales |
| Judgment Date | 09 March 1999 |
| Judgment citation (vLex) | [1999] EWHC J0309-3 |
| Docket Number | CH 1997 L No. 4909 |
| Court | Queen's Bench Division (Administrative Court) |
| Date | 09 March 1999 |
[1999] EWHC J0309-3
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Sitting as a Deputy Judge
CH 1997 L No. 4909
Mr Anthony Mann QC and Mr James Barker (instructed by Messrs More Fisher Brown) for the Plaintiff and Defendants by Counterclaim
Miss Hazel Williamson QC and Mr Richard Morgan (instructed by Messrs Stephenson Harwood) for the Second Defendant and Plaintiff by Counterclaim
I direct pursuant to RSC Order 68 rule 1 that no official shorthand note shall be taken of this judgment and that copies of this version as handed down may be treated as authentic.
Signed:
I Introduction
Ares Emmanuel ("Mr Emmanuel") and Barbara Emmanuel, the second defendant ("Mrs Emmanuel") , were married in 1984. For each of them it was a second marriage. Mrs Emmanuel is American. She obtained a decree in political science in the United States. Her family (at any rate at that time) was well off, and her father owned a business making truck brake parts. Whilst still a student she married Peter Tavoulareas ("Mr Tavoulareas") , whom she had known since childhood. Mr Tavoulareas' father was a senior executive with Mobil Oil, and, apparently, he suggested to his son that he (Mr Tavoulareas) should establish a company to manage Mobil's offshore fleet. In the early 1980s Mr Tavoulareas moved to London with his wife, and set up Atlas Shipping & Trading Co. SA ("Atlas") as his shipping vehicle. They had two children, and lived in a large house in Hampstead.
Atlas came to be owned as to two thirds by Mr Tavoulareas, and the other one third was owned by his associate Mr Emmanuel. Mr Tavoulareas had two other associates: Elias Lemos (whose family was involved in shipping) was a consultant (and appears also at some time to have held shares in Atlas) ; John Arapis was the finance director. Mr Lemos and Mr Arapis also owned Lear Investment Corporation ("Lear") .
In the course of 1983 there was a split between Mr Tavoulareas and Mr Emmanuel, because Mr Emmanuel was having an affair with Mr Tavoulareas' wife Barbara (later Mrs Emmanuel) . Mr Emmanuel left Atlas and set up, with the assistance of Mr Arapis, Transocean Shipping and Trading Ltd ("Transocean") as the vehicle for his shipping activities. Subsequently Mr Arapis left Transocean to concentrate on his activities at Lear with Mr Lemos, who had by that time left Atlas.
In 1984 Mr Tavoulareas and his wife were divorced. There was a financial settlement in June 1984 under which she was to receive �300,000 in six instalments over three years from June 1984, and �13,000 annually for their children (plus school bills) . But there followed a long, acrimonious and expensive dispute about the custody of their children (a daughter then aged 8 and a son aged 4) .
In November 1984 Mr Emmanuel and Mrs Emmanuel were married. Mr Emmanuel 's first wife was also called Barbara, and they also had had two children. Mr Emmanuel had three substantial properties when he married the second Mrs Emmanuel . His main residence (which became the principal matrimonial home) was Hans House in Knightsbridge. It was owned through Waldorf Investment Corporation ("Waldorf") , a Liberian company. He also owned a small country estate in Chobham, Surrey ("Hawks Hill") , which consists of a large house built in the 1930s, a lodge house, bungalow and extensive grounds. It is now worth about �900,000. Hawks Hill was owned through Aurora Enterprises SA ("Aurora") , a Panamanian company, and he also owned a villa in Switzerland through La Villa des Fontaines SA, a Swiss company.
Mr Emmanuel gave the impression of being a wealthy businessman, and at some time after the marriage it was agreed between Mr Emmanuel and Mrs Emmanuel's father, John Hagan, that Mr Emmanuel would arrange for 900,000 of Mr Hagan's money to be safeguarded in a Swiss bank account by Mr Emmanuel. It would appear that Mr Emmanuel spent the money for his own purposes and did not repay it to Mr Hagan.
In 1985 Mr Emmanuel (as part of his complex business arrangements, to which I shall return) procured Aurora to grant a first charge over Hawks Hill to Locabail (UK) Ltd., the plaintiff ("LUK") . LUK is a member of a French finance group, part of whose business at the relevant time was to provide ship finance through a Bermudan company, Locabail International Finance Ltd. ("LIF") . The loan which it secured soon fell into arrears, and after several years of litigation between LUK/LIF and Mr Emmanuel and his companies, it was agreed between them in 1995 that Hawks Hill would be transferred to the first defendant, Bayfield Properties Ltd, an Isle of Man company ("Bayfield") , and the LUK charge would be replaced by a charge in favour of Allied Trust Bank Ltd ("Allied Trust") , which would advance funds to Bayfield for the purchase of Hawks Hill from Aurora. The Allied Trust loan went into default at once.
Mrs Emmanuel is in occupation of Hawks Hill. Mrs Emmanuel seeks to set aside a possession order obtained by Allied Trust, whose rights have since been assigned to LUK, and to have the register rectified so as to show her as the proprietor. The basis of her claim is that Mr Emmanuel, who controlled Aurora and Bayfield, made oral representations prior to their marriage, and in the years after their marriage, which led her to believe that Hawks Hill was her property, and that in reliance on the representations and on the belief that the property was hers, she spent some �245,000 on the property (including about �35,000 for the payment of mortgage interest due from Aurora to LUK) . She claims that by the time Allied Trust took a charge on Hawks Hill, she had acquired an interest under the doctrine of proprietary estoppel, which she claims is an overriding interest in priority to the rights of LUK as assignee of Allied Trust.
LUK does not admit that the representations were made, or that the payments were made, but if the payments were made it denies that they were made in reliance on the alleged representations. LUK also claims that any money was expended by Mrs Emmanuel in the knowledge that any rights she had were postponed to the charge granted to LUK by Aurora, to which (they say) she had consented; or that they are subrogated to the rights under that charge. Mrs Emmanuel replies that if she consented she did so under the undue influence of Mr Emmanuel, and that LUK had notice of it.
The proceedings
Allied Trust called in the loan and commenced possession proceedings in the Guildford County Court in February 1996. A possession order was made in favour of Allied Trust on 18th June 1996, and judgment was entered in the amount of �458,114 representing principal and interest. A few days later LUK took an assignment of the Allied Trust charge and LUK was substituted as plaintiff in July or August 1996. At the end of August 1996 Mr Emmanuel applied to be joined in order to make an application to set aside the order on the basis that he had a tenancy (granted by Bayfield) of Hawks Hill. His application was dismissed in October 1996. In the course of October 1996 Mr Emmanuel made (with the assistance of his associate Mr Phillip Makris) an attempt to refinance the amount oustanding by borrowing from Allied Dunbar, but this appears to have come to nothing.
In January 1997 Mrs Emmanuel was joined as a defendant on her application. The warrant for possession, which was due to be executed on 21st January 1997, was suspended. In April 1997 it was ordered that the action be transferred to the Chancery Division.
12.In April 1998 LUK and LIF commenced proceedings in the Chancery Division against Waldorf and Mr and Mrs Emmanuel for possession of Hans House. Judgment was given under RSC Order 14 in favour of LUK by Deputy Master Farrington in August 1998. Waldorf and Mr Emmanuel had consented to the order. In those proceedings ("the Hans House action") Mrs Emmanuel claims that Mr Emmanuel had assured her that she had a half-share in Hans House, and she claims that she expended some �270,000 on the property in reliance on those assurances. LUK relied for the Order 14 summons on a letter of consent to the charge which had been signed by Mrs Emmanuel and a certificate given by her solicitor, Mr Jeffrey Freeman (then of Messrs Janners) that he had advised her separately and that she appeared to have consented voluntarily to it. Mrs Emmanuel did not at that stage seek to assert that the consent had been obtained through the undue influence of Mr Emmanuel. Subsequently Mrs Emmanuel instructed new solicitors, gave notice of appeal, and filed further evidence to the effect that the consent had been executed under the undue influence of Mr Emmanuel and that Mr Freeman (to the knowledge of LUK) did not know the relevant factual background when he signed his certificate.
The trial in the present proceedings was set down with a hearing date to commence on 19th October 1998 with a five day estimate. In August 1998 Mrs Emmanuel instructed new solicitors and counsel. On 5th October 1998 they applied to Sir Richard Scott V-C for an adjournment of the trial in this action fixed for 19th October 1998, primarily on the grounds that (a) significant further work was necessary for them to be ready for trial, and (b) the action should be heard at the same time as the Hans House action if the appeal from summary judgment in the Hans House action were successful.
The Vice-Chancellor refused the application for an adjournment for reasons which are not now relevant. Two days later Mrs Emmanuel applied for leave to serve an amended defence and counterclaim and a rejoinder and reply...
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