Mammen P. Jacob v Heino Vockrodt
| Jurisdiction | England & Wales |
| Judge | HIS HONOUR JUDGE PETER COULSON QC |
| Judgment Date | 12 October 2007 |
| Neutral Citation | [2007] EWHC 2403 (QB) |
| Court | Queen's Bench Division |
| Docket Number | Case No: HQ05X03381 |
| Date | 12 October 2007 |
[2007] EWHC 2403 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN's BENCH DIVISION
St. Dunstan's House
133–137 Fetter Lane
London, EC4A 1HD
His Honour Judge Peter Coulson QC
(Sitting as a Judge of the High Court)
Case No: HQ05X03381
Mr. Edmund Cullen (instructed by Alen-Buckley & Co.) for the Claimant
Mr. Adrian Davies (instructed by Sempik & Co) for the Defendant
Hearing Dates: 10 th, 11 th, and 12 th October 2007
A. Introduction
Pursuant to a written loan agreement dated 15 th September 2003 Mr. Jacob, the claimant, lent Mr. Vockrodt, the defendant, the sum of US$100,000. This sum remains to be repaid. As part of the claimant's attempts to recover the US$100,000 he presented a bankruptcy petition against the defendant, which petition was subsequently terminated in favour of the defendant. The defendant now raises a counterclaim based on the malicious presentation of that bankruptcy petition.
Accordingly, save for this counterclaim, it is accepted that the claimant is entitled to the US$100,000 plus interest. The sole issue for me is whether or not the bankruptcy petition was maliciously presented. If I find that it was not, the counterclaim must be dismissed and the claimant is entitled to judgment. If, on the other hand, I find that it was, the assessment of any damages caused thereby will have to be the subject of a subsequent hearing.
I propose to set out the background to, and terms of, the loan agreement ( section B below) and then an outline chronology of the relevant events ( section C). At section D I identify the relevant legal principles. Thereafter at sections E and F I analyse the detail of the defendant's counterclaim by reference to those principles. I should acknowledge at the outset the considerable assistance that I have received from both counsel in arriving at my conclusions, which are summarised shortly at section G below.
B. The Loan Agreement
B1 Background
The claimant and the defendant had both worked for Credit Suisse and knew each other. The claimant was a director; the defendant was a trader. It seems that some time in the late 1990's the defendant ceased to work for Credit Suisse. In the summer of 2003 they agreed that the defendant would invest money on behalf of the claimant and they would share the profits. The claimant agreed to loan a sum of money to the defendant to allow him to trade on that basis.
The defendant's then solicitors sent a draft loan agreement to the claimant on 9 th September 2003. The draft was dated 15 th September 2003. The claimant was surprised that the sum identified was US$100,000 as he had previously agreed to loan US$50,000 for trading purposes. However, he was still willing to sign, saying in an e-mail of 11 th September 2003 that: “This is all based on trust”. When, on 12 th September, the defendant provided details of the bank into which the US$100,000 was to be paid, he added:
“Remember you'll always have access to the funds, no restrictions. You just let me know and I'll transfer back however much you need.”
B2 The Terms of the Agreement
The loan agreement that was signed was in precisely the same terms as that sent out on 9 th September. The relevant provisions were as follows:
“1. In consideration of the sum of US$100,000 (hereinafter called 'the principal sum') now paid by the Lender to the Borrower, the receipt of which is hereby acknowledged, Borrower hereby covenants with the Lender to pay the Lender the principal sum with interest thereon from the date hereof at the rate set out and on the terms contained and described in Schedule 1 hereto.
2. If the Borrower shall pay the Lender the principal sum with interest thereon in accordance with the covenant hereinbefore contained, the Lender will, at the request and cost of the Borrower, duly discharge this loan.
3. The Borrower will on demand repay to the Lender all money properly paid and all costs, charges and expenses properly incurred by the Lender together with interest thereon from the time of paying or incurring the same until repayment at the rate aforesaid and, until so paid, such costs, charges and expenses shall be added to the principal sum hereby secured and interest thereon and shall be payable on the respective dates hereinafter appointed for the payment of interest on the principal sum ….
Schedule 1
1. The Borrower will pay to the Lender interest of 6% per annum on the principal sum.
2. The Borrower will further pay a non-guaranteed premium calculated as being the difference of 6% and the Borrower's business rate of return as calculated by the Borrower.
3. The interest and the premium (hereinafter called 'the premium') is to be paid bi-annually on each 15 th March and 15 th September commencing on 15 th March 2004.
…..
5. The minimum period for the loan is two years from the date hereof.
6. The Lender may demand repayment from the Borrower of the loan between 16 th September 2004 and 1 October 2004 should the combined interest and premium payments up to and including 15 th September 2004 be below 15% per annum …..”
The claimant told me that he did not read the agreement before signing it. Had he done so, he would have seen that clause 3, which talked about repayment on demand, was contradicted by Schedule 1 paragraph 5, which said that the loan agreement would last for a minimum of two years. The claimant would also have realised that the defendant's assurance, identified in paragraph 5 above (which had been proffered after the draft had been sent), was nowhere referred to in the document that he signed. Herein lies the start of this unhappy story, of which this judgment is, I hope, the last chapter.
C. Outline Chronology
On 27 th January 2004 the claimant sought repayment of the US$100,000. His request made to the defendant by way of e-mail was in the following terms:
“Dear Heino and Lanka,
I'm sorry to inform you that Shireen and myself will be separating pending maybe a divorce. We both look at life in different ways and we do not see any chance as of now to reconcile. Hence we came to this conclusion to go our separate ways. Heino, under these circumstances, I cannot continue the investment with you. The performance is great but please close out all the open positions and transfer the funds …..”
In cross-examination, the claimant accepted that it had been untrue to say that he was separating from his wife, and that in reality he wanted the money back because he was concerned that the defendant was not keeping proper records of his transactions and did not provide any detailed information to the claimant. It was not at all clear why the claimant did not simply demand the return of the money, and set out those reasons for his decision. It is unfortunate that the whole repayment process started with this lie, although it does not appear that anything significant turns on it.
When this elicited no response, the claimant e-mailed the defendant and his wife again on 9 th February. The e-mail said:
“Did you both think you can get away with it? You both are young and if you want to spoil your life and your children's its your choice. I'll give you till Wednesday 11/01/04 to settle the money you took under false pretence. I'll use every legal procedure in [Switzerland] and UK to see that I get my money back. You bet you took the wrong man to cheat. You will learn your lesson.”
I am in no doubt that this e-mail was couched in intemperate terms and the claimant can be criticised for its vaguely threatening tone. However, I also find that, as the e-mail made clear, the claimant was solely interested in recovering the US$100,000 and that his stated methods of achieving that would be the use of “every legal procedure” in Switzerland and the UK. I reject the suggestion that this e-mail comprised or contained threats of a more sinister nature or that it was taken by the defendant and his wife as conveying such threats. I therefore do not accept Mr. Davies' colourful description of the e-mail as 'scandalous and appalling'.
The defendant's response of 13 th February 2004 did not give any indication that he felt in any way threatened by the e-mail. He makes plain that he had not shown it to his wife. More importantly, I think, the letter promised to repay the loan by 15 th March 2004, the date on which the first interest payment fell due in any event. The relevant parts of the letter say as follows:
“Subsequently I will adhere to the loan agreement (which I stipulated as a safeguard for both of us) and will return interest and principal on the next payment date, 15 th March 2004. For the purpose of keeping a clean record of both receipt and payment I will transfer the money in US$ denominations to my account in Zurich (where it came from), and then onwards to your account (also where it came from).
In this context I want to point out that contractually I am not obliged to return the loan at this date. You would agree with me that in today's business climate any other counterparty would hold you to the contractual terms. However, I want to draw a line under recent events and to do it by the book.
Your rather distressed e-mail, which I have refused to show to Lanka, was not exactly an exercise in trust building but did not have any influence on this decision. The decision is final and instructions have already been issued to the respective banks for value 15 th March 2004.”
Despite this clear promise, neither the principal nor the interest was paid by 15 th March 2004. The failure to pay the interest was on any view a breach...
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