Mansouri v Singh
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE MAY,LORD JUSTICE NEILL,LORD JUSTICE SLADE |
| Judgment Date | 12 February 1986 |
| Judgment citation (vLex) | [1986] EWCA Civ J0212-3 |
| Docket Number | 86/0135 |
| Court | Court of Appeal (Civil Division) |
| Date | 12 February 1986 |
[1986] EWCA Civ J0212-3
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 BELDAM
Royal Courts of Justice,
Lord Justice May
Lord Justice Slade
and
Lord Justice Neill
86/0135
No. 168/84
MR. A. ULLSTEIN (instructed by Messrs. Clintons, London, WC2) appeared for the Defendant (Appellant).
MR. R. MEUTHEN (instructed by Messrs. Paul Gromett & Co., London, W1) appeared for the Plaintiff (Respondent)
I will ask Lord Justice Neill to deliver the first judgment in this matter.
This is an appeal by the plaintiff, Mr. Ahmed Mansouri, against the decision of Beldam J. rejecting Mr. Mansouri's claim to recover the sum of £33,334 on a cheque drawn by the defendant, Mr. P.R. Singh, on a branch of the Midland Bank in Harrow. The cheque was a post-dated cheque dated 1st July 1980. The Midland Bank received instructions to stop payment on 30th June 1980.
On 3rd December 1980 the plaintiff issued a writ claiming £33,334 together with interest. On 19th December 1980, the defendant served a defence asserting ( inter alia) that no consideration had been give for the cheque or, in the alternative, that the consideration had wholly failed. On 7th May 1982, this Defence was amended to raise some new contentions with which it is not necessary for me to deal; in addition a counterclaim was added.
On 9th June 1982, however, a routine application in the action came before Hirst J. The judge drew the attention of counsel to the possible relevance of the Bretton Woods agreement and after a short hearing, he made an order in the following terms: "…. That the solicitors for the parties do make enquiries in writing of the Treasury as to whether Iran were in 1979 and/or 1980 members of the International Monetary Fund or parties to the Bretton Woods Agreement or whether Iranian exchange control regulations prohibited the export of funds from that country." As a result of this order, enquiries were made and on 1st March 1983, the defendant served a re-amended defence.
I shall have to refer to certain parts of the re-amended pleading a little later, but first I should outline as briefly as possible the circustances in which the cheque sued on was issued.
The plaintiff is an Iranian national. Before the overthrow of the Shah he was a man of position and wealth in Iran. Following the revolution, however, he and his wife decided to leave Iran and come to this country, to which Mrs. Mansouri had been a frequent visitor for extended periods since about 1955.
Mrs. Mansouri preceded her husband to England, arriving at about the end of 1978. Mr. Mansouri reached England about a year later on 18th December 1979.
It seems that from the outset, Mr. Mansouri experienced difficulty in transferring funds from Iran to England. After Mrs. Mansouri had been in England for a time, however, she was introduced through friends to the defendant, Mr. Singh.
It will be convenient if I quote from the judgment of Beldam J. to describe the arrangement which Mrs. Mansouri reached with Mr. Singh: "(Mr. Singh) is a travel agent with extensive interests in the Middle and Near East. In the course of his business as a travel agent he had a use for air tickets. One way in which money could be got out of Iran was by buying air tickets in Iran for they could be exchanged for cash anywhere in the world under the international air travel arrangements by claiming a refund. Mr. Singh….had assisted other refugees from Iran in a similar way. Accordingly, Mrs. Mansouri arranged with Mr. Singh that if her husband in Teheran deposited a sum in rials with a travel agent in Teheran nominated by Mr. Singh, he would give her the sterling equivalent of the sum in rials so deposited at an exchange rate considerably in excess of that officially recognised in Teheran. In general terms the rate of exchange Mr. Singh was allowed was approximately double the official rate of exchange.
"Having made this agreement in England, Mrs. Mansouri would then telephone her husband in Teheran. He would deposit the appropriate sum in rials with Mr. Singh's agent in Teheran. The agent in Iran would notify Mr. Singh in London that the sum had been deposited and would arrange for air tickets of equivalent value to be forwarded to Mr. Singh in London. On receipt of the air tickets,Mr. Singh would pay the agreed rate of exchange in sterling to Mrs. Mansouri."
Following the making of this arrangement, Mr. Mansouri made the first deposit of 5,000,000 rials with a travel firm in Teheran on 10th October 1979. A few weeks later, after the air tickets had arrived, Mr. Singh gave Mrs. Mansouri a sterling cheque for £25,000 drawn on one of his travel companies, the cheque being calculated at the agreed exchange rate of 200 rials to the pound.
There then followed some further transactions of a similar nature to which it is not necessary for me to make any detailed reference. I need only observe that the agreed exchange rate for the later transactions in 1979 varied between 257.5 rials to the pound and 259 rials to the pound.
In February 1980, however, payments amounting to 17.5 million rials were made in Teheran to Mr. Cassidy, an employee of Mr. Singh who had been sent out to Iran to make some investigations on Mr. Singh's behalf.
By this date Mr. Mansouri had already arrived in England so the payments to Mr. Cassidy were made by the relatives of Mr. Mansouri who were still living in Teheran.
In the present case, we are concerned with two of these payments amounting to 10 million rials. It was in exchange for these payments that Mr. Singh gave Mr. Mansouri the post-dated cheque for £33,334 which is the basis of Mr. Mansouri's claim. For this transaction, the agreed exchange rate was 300 rials to the pound. Payment of the cheque was stopped on 30th June. Mr.Mansouri presented the cheque on 30th September 1980 when it was dishonoured and notice of dishonour was given by Mr. Mansouri's solicitor a few days later.
It will be remembered that in his original defence Mr. Singh raised the defence that Mr. Mansouri had no consideration for the cheque. The suggested basis for this defence was that on various dates before 1st July 1980 Mr. Singh had made a series of payments equivalent to the sum of £33,334 represented by the cheque. Beldam J. decided, however, that these payments were in respect of interest and not of capital and accordingly the defence failed.
I must turn therefore to the second defence raised by Mr. Singh which was introduced by way of the re-amended pleading served on 1st March 1983 and which succeeded before Beldam J.
The relevant parts of the re-amended defence were in these terms: "(i) At all material times Iran was a member of the International Monetary Fund and a party to the Bretton Woods Agreement. (ii) At all material times the exchange control regulations of Iran prohibited the export of currency from Iran and prohibited any person in Iran or a resident of Iran from making any payment to or for the credit of any person as consideration for or in association with the receipt by any person of a payment outside Iran. (iii) At all material times the plaintiff was in Iran and/or a resident of Iran. (iv) The purpose of the agreement pleaded….. was to realise in England assets held by or on behalf of the plaintiff in Iran. (v) The means….. devised and agreed between the parties to achieve the said purpose were designed to circumvent the said exchange control regulations and were contrary to the said regulations. (vi) By reason of the matters aforesaid and by virtue of Article VIII Section 2(B) of the Bretton Woods Agreement the agreement between the parties and the series of transactions and dealings thereunder (of which the issue of the cheque the subject matter of this action was part) are unenforceable and the defendant contends that payment under the cheque is unenforceable.
In his amended reply, Mr. Mansouri contended that the export of airline tickets from Iran was neither illegal nor contrary to the law of Iran; that the agreement was not contrary to the exchange control regulations of Iran and that in the alternative it was not in contravention of the Bretton Woods Agreement. In addition, Mr. Mansouri relied on the fact that at the material time both Mr. Mansouri and the defendant were ordinarily resident in England and that the payment of the cheque was to take place in England. In the further alternative, Mr. Mansouri claimed that the provisions of the Bretton Woods Agreement had no application to an agreement entered into by a political refugee who was unable to obtain permission to remove money or assets from the country from which he had been compelled to flee.
At the trial, Beldam J. identified the issues raised by what I may call the Bretton Woods defence as follows: (1) Was the agreement between the plaintiff and the defendant an exchange contract? (2) If so, was it contrary to the exchange control regulations of Iran? (3) Were such regulations maintained or imposed consistently with the Bretton Woods Agreement? (4) If the court allows the plaintiff to recover on the cheque, will the court be enforcing the agreement between the parties?
These issues were formulated in the light of the relevant provisions of the Bretton Woods Agreement. These provisions, which have been incorporated into English law by the Bretton Woods Agreements Act 1949 and the Bretton Woods Agreements Order in Council made under the Act are as follows: "Exchange contracts...
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