Moqsud Ahmed Khan v Abdul Malik
| Jurisdiction | England & Wales |
| Judge | Mr Justice Richard Smith |
| Judgment Date | 12 October 2023 |
| Neutral Citation | [2023] EWHC 2529 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: CH-2022-000222 |
[2023] EWHC 2529 (Ch)
THE HONOURABLE Mr Justice Richard Smith
Case No: CH-2022-000222
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
APPEALS (ChD)
ON APPEAL FROM THE COUNTY COURT AT MAYORS & CITY OF LONDON
ORDER OF HHJ BACKHOUSE 15 NOVEMBER 2022 IN CLAIM G36YJ795
7 Rolls Building
Fetter Lane,
London, EC4A 1NL
Kerry Bretherton KC of Counsel (instructed by Taylor Fordyce Solicitors) appeared for the Appellant
Aaron Walder of Counsel (instructed by Mills Chody LLP) appeared for the Respondents
Hearing date: 10 July 2023
APPROVED JUDGMENT
This judgment was handed down remotely at 10.30am on 12 October 2023 by circulation to the parties or their representatives by e-mail and by release to the National Archives.
A. Background
This judgment concerns an application by the Appellant/Defendant ( Defendant) for permission to appeal against the order of HHJ Backhouse dated 15 November 2022 which gave effect to her judgment allowing claims by the Respondents/Claimants ( Claimants) against the Defendant and ordering payment of costs and interest.
The Claimants, Mr Abdul Malik and Mr Adnan Malik, are, respectively, father and son. They claimed £92,071.22 from the Defendant, Mr Moqsud Khan, pursuant to an alleged oral agreement dated 8 August 2016. Although originally formulated more broadly, their claims in deceit, misrepresentation and unjust enrichment were not pursued at trial.
The Defendant and his wife own the freehold to 2 and 4 High Street, Sunninghill, near Ascot ( Property). From 1986, the Defendant ran a restaurant called Rajvoog at the Property in his own name or through different companies. In September 2014, he sold the restaurant business for £67,000 to a company incorporated for that purpose, Moitree Limited ( Moitree).
Mr Saifur Rahman, long term waiter at the restaurant, is the husband of the First Claimant's sister, Ms Jasmine Rahman. He was director of Moitree and owned 34% of its shares, with two other waiters, Mr A.Z.M. Shamsur Rakib and Mr Sarwar Hossain, each owning 33%. In 2016, Mr Hossain sold his shares to Mr Yann Mohammed Salimur Rahman.
As part of the restaurant sale, the Defendant intended to grant a lease of the Property. Solicitors were instructed and a draft lease prepared for a term of 20 years at an annual rent of £25,000, with clauses commonly found in commercial leases and to be excluded from the protections of the Landlord and Tenant Act 1954 ( 1954 Act). The lease was to be granted to Moitree, with its three shareholders as personal guarantors.
The correspondence suggests that signed counterpart leases were exchanged in December 2014, albeit that the shareholders were reluctant to sign their personal guarantees and the formalities were not completed. Nor was the lease registered. Mr Rahman and his colleagues ran the restaurant from late 2014 and paid rent to the Defendant.
The Claimants contended that, in around June 2016, Saifur and Jasmine Rahman came to them and said that the restaurant was failing and asked for help from the Malik family, Mr Malik (Snr) having run a number of restaurants, Mr Malik (Jnr) being an architect. The Claimants decided to invest in the restaurant by buying out the other shareholders, apart from Saifur Rahman, and refurbishing the Property.
The Claimants further contended that there was a meeting at the Property on 8 August 2016 attended by them, Mrs Fahmida Malik (the First Claimant's wife), their youngest son, Nabhan Malik, Saifur Rahman, Mr Rakib and Salimur Rahman, at which the following was expressly agreed (as pleaded at paragraph 14 of the Particulars of Claim) ( agreement):-
(i) The First Claimant would purchase two-thirds of the shares in Moitree for £10,000, in effect buying out Mr Rakib and Salimur Rahman. Saifur Rahman would retain his shares. Moitree would then be wound up and a new trading entity established;
(ii) The restaurant would be refurbished by the Second Claimant in his personal capacity, using his skills and qualifications;
(iii) A new 20 year lease would be granted to the new entity, which would be controlled by Fahmida Malik; and
(iv) Should the new lease not be granted for any reason, the Second Claimant would be paid for undertaking the works by the Defendant since he would benefit from the refurbished Property.
On 9 November 2016, a company called Sunninghill Limited ( Sunninghill) was incorporated. The Claimants says this was done through Saifur Rahman, who made himself sole director, with himself and Fahmida Malik each owning half the shares. That new company paid rent between December 2016 and March 2018, with Moitree being struck off the Register on 7 March 2017.
In January 2017, correspondence commenced between Saifur Rahman's solicitors and the Defendant's solicitors. At one stage, this indicated that the lease was to be granted to Sunninghill but later that the lease was to be granted in the sole name of Saifur Rahman, with the Defendant apparently being adamant about this.
In February 2018, Saifur Rahman incorporated a new company called Hill Station Limited, with Jasmine Rahman the sole director and shareholder, that new company then paying rent to the Defendant. Throughout this period, Saifur Rahman continued to run the restaurant, with the Malik family very much the ‘sleeping partners’.
By April 2018, further inter-solicitor correspondence indicated that the lease would be granted to Jasmine Rahman, with the First Claimant indicating that he would agree to this but wanted to see the lease first. The First Claimant reiterated that agreement in June 2018, albeit with the requirement that Jasmine Rahman grant a declaration of trust as to Fahmida Malik's interest. Jasmine Rahman refused to do so.
On 7 November 2018, the Defendant granted a 20 year lease in favour of Jasmine Rahman from 29 November 2014.
Saifur Rahman dissolved Sunninghill in July 2018, apparently without Fahmida Malik's agreement. Despite the latter filing objection with Companies House, the company was struck off the Register in January 2019.
Finally, Saifur Rahman was declared bankrupt in January 2019, with the Malik family then instructing solicitors to write a letter before action to the Defendant. This claim was issued in March 2020.
B. The Judge's decision
The Judge heard oral evidence from the Claimants, Fahmida Malik, Nabhan Malik, Mr Rakib, the Defendant and Saifur Rahman. From the Judge's analysis of the evidence, it is fair to say that the content and course of the evidence (written, oral and documentary) were problematical in a number of respects (and on both sides). Nevertheless, after careful analysis of the evidence, including the honesty and credibility issues arising, the Judge rejected the Defendant's case that he was at the August 2016 meeting only briefly, he did not make any agreement with the Malik family and the discussion had nothing to do with him, finding that the Claimants' “ fundamental case as to the agreement reached is correct”.
At trial, the Defendant took two points as to the suggested uncertainty of the agreement, namely (a) the so-called “agreement for lease” issue and (b) the identity of the grantee of the lease (as to which it is fair to say the evidence on behalf of the Claimants was not consistent). As to the former, the Judge considered important the context of the parties' dealings, namely the existence of the (Moitree) draft lease on known terms (including as to term and rent), with the Claimants' evidence (which she considered entirely likely) that the new lease was to be either the existing lease with different names or a new lease on similar terms.
The Defendant relied on Harvey v Pratt [1965] 1 WLR 1025 in which the Court of Appeal held that it was settled law that, in order for there to be a valid agreement for lease, agreement as to the parties, property, lease term, rent and lease commencement date was essential. The court in that case rejected the argument that the law will imply that a lease is to commence within a reasonable period of time of the agreement.
In this case, however, the Judge accepted the Claimants' argument that this was not an agreement for lease rather than an agreement by the grantor and others to grant a lease in favour of a third party and, as such, more in the nature of an agreement to offer a lease or a right of first refusal. But even if that distinction lacked merit, the Judge considered that the date for commencement of the lease could be ascertained by ‘reasonable inference from the language used’ and that such an inference here was that the lease was to commence when the new company was set up. The Judge was therefore not persuaded that the lease was void for uncertainty in that respect.
As to the suggested uncertainty as to the identity of the grantee of the lease, the Judge relied on general principles that the court's job was to give effect to what can be discerned from the parties' intentions and not to strike down contracts save where it is legally or practically impossible to do so. In this case, at its heart, the agreement the Judge found was for the Defendant to give some proprietary interest in the Property to Fahmida Malik. Although this could be achieved by a lease to Moitree, with Saifur Rahman and Fahmida Malik as shareholders, or to a new company they owned, what the parties had agreed was sufficiently certain for this agreement to be effective.
Given these findings, the Judge went on to find that the Defendant was in breach of the agreement since he did not offer a lease to Sunninghill or Fahmida Malik in any guise but only initially to Saifur Rahman and then to Jasmine Rahman. The Judge also rejected arguments that there had been...
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