Nicholas James Care Homes Ltd v Liberty Homes (Kent) Ltd
| Jurisdiction | England & Wales |
| Judge | Mrs Justice O'Farrell,Mrs Justice O'Farrell DBE |
| Judgment Date | 19 May 2022 |
| Neutral Citation | [2022] EWHC 1203 (TCC) |
| Docket Number | Case No: HT-2022-000104 |
| Court | Queen's Bench Division (Technology and Construction Court) |
[2022] EWHC 1203 (TCC)
Mrs. Justice O'Farrell
Case No: HT-2022-000104
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF
ENGLAND AND WALES
TECHNOLOGY AND CONSTRUCTION COURT (QBD)
The Rolls Building
7 Rolls Buildings
Fetter Lane
London EC4A 1NL
Mr Laurence Page (instructed by Thomson Snell & Passmore LLP) appeared for the Claimant/Applicant
Mr Michael Levenstein (instructed by Furley Page LLP) appeared for the Defendant/Respondent
Hearing date: 9th May 2022
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
“ This judgment was handed down by the judge remotely by circulation to the parties' representatives by email and release to The National Archives. The date and time for hand-down is deemed to be Thursday 19 th May 2022 at 10:30am”
On 21 April 2022, on an application without notice brought by the applicant, Nicholas James Care Homes Limited (“NJCH”), the court ordered an interim freezing injunction against the respondent, Liberty Homes (Kent) Limited (“Liberty Homes”).
This is the return date, where both parties are represented, at which NJCH applies to continue the interim freezing injunction pending determination of the adjudication enforcement hearing listed on 15 June 2022. NJCH's position is that it has a good arguable case that it is entitled to enforce an adjudication award in its favour, Liberty Homes has assets within the jurisdiction, there is evidence that it has dissipated assets and there is a real risk that Liberty Homes has a continuing intention to dissipate assets which would render its relief nugatory.
NJCH relies on: (i) the affidavit of Kanagaratnam Rajakanthan, the managing director of NJCH, sworn on 20th April 2022; (ii) the witness statements of Christopher Kirby-Turner, of Thomson, Snell & Passmore LLP, solicitors for NJCH, dated 29 March 2022 and 29 April 2022 respectively; and (iii) the witness statement of Douglas Skilton, of Thomson, Snell & Passmore LLP, dated 5 May 2022.
The application is opposed by Liberty Homes. It seeks the discharge of the interim order on the basis that it should not have been made in the first place because there was inordinate delay in applying for the order, the criteria for a freezing injunction were not satisfied and the application amounted to misuse of an equitable remedy. Further, the freezing order should not continue because it is oppressive and the undertaking in damages offered by NJCH is inadequate.
Liberty Homes relies on (i) the affidavit of David Caulfield, managing director of Liberty Homes, sworn on 3 May 2022; (ii) the witness statement of Cameron Sunter, of Laytons LLP, solicitors advising on the restructuring of the Liberty Group, dated 3 May 2022; and (iii) the witness statement of Kevin Foster, Chartered Accountant of RPG Crouch Chapman, dated 3 May 2022.
Background
The parties have a long commercial relationship and friendship dating back to 2002. The applicant, NJCH, is beneficially owned by Mr Rajakanthan and acted as a developer in respect of a number of care homes. The respondent, Liberty Homes, is ultimately beneficially owned by Mr and Mrs Caulfield and was a contractor in respect of those projects.
Between 2002 and 2020 the parties worked together on a number of projects, including the development of a care home, Beacon Hill Lodge, at Beacon Hill, Herne Bay, on which work started in about 2018.
On 19 March 2020 Mr Rajakanthan sent Mr Caulfield a spreadsheet, setting out his understanding of the interim on account payments made in respect of Beacon Hill Lodge, indicating an overpayment of £1.13 million approximately:
“Please see attached a spread sheet produced by my head office staff as the payments made to Liberty Homes reference to Beacon Hill Lodge project. I did tell you on our last meeting that our account is showing as paid money in advance. I am not 100% sure all these payments are correctly recorded. Please check and confirm that you received these payments and also if any of the amount paid shouldn't have been allocated to Beacon hill Lodge project.
I am aware that we haven't completed the previous work payments fully and I want to sort it out within a week or two of receiving some information from you. I know that your account keeping is better than ours and we are struggling to confirm the payment details correctly. Lingam has left the company and we can't ask him to come back to office to explain. Soori is trying to put together the payment details piece by piece and it is taking long time to complete the puzzle. Please do me a very big favour and forward me our payment receipts to you. Once you provide me this information I will be able to settle your accounts in full within two weeks. The trouble is we paid to you from 29 care homes, three of my personal accounts and Dover Marina Hotel accounts. Your help in this matter will be much appreciated.
I am aware that the build cost of £3.969,145.00 will be increasing when we add the vat and additional work cost we previously requested, such as change to the front image…”
On 18 June 2020 a further spreadsheet was given by Mr Rajakanthan to Mr Caulfield, indicating an estimated overpayment of £1.49 million approximately across a number of projects, including Beacon Hill Lodge. Mr Caulfield disputed the alleged overpayments and this resulted in a breakdown of trust between the parties. The First Adjudicator found that Liberty Homes ceased to work on or around 10 July 2010 at Beacon Hill Lodge.
On 28 July 2020 Mr Rajakanthan sent a further email to Mr Caulfield, stating:
“Please see attached statement with details of all our payments and invoices towards the work carried out by Liberty homes limited. Please check the amount in your bank statement and confirm that our payment records are correct. Currently according to our work out, we have over paid £1,399,968.64 into Liberty Homes Limited account. We were expecting that you would have completed the building work by now. You now need you to agree or disagree the figures and hand over the necessary documents amicably and move on still as friends.
If you disagree with any amount then we need to know for what reason. I am not sure if someone who has access to your bank account has taken any money from his account. Sometimes you may be focusing on the wrong person and may totally trust someone else who could turn out to be a crook. If you have lost money then I am hoping we got nothing to do with it. We met more than two weeks ago to discuss this matter and you said that you will check the paperwork and reply to me within two weeks. You have been accusing me for a long time saying we are behind in payment but in fact we were so much in upfront. If my statement is not true then please let me know where did I make a mistake?
Please let me know if I have missed any invoices towards the payment. We have been paying for most of the additional work including architect and KCC, electricity and may be water bills as well. You may have allocated some of the expenditures within your valuation report. Please check and adjust the valuation reports.
Once you are satisfied that our statement is true then, please forward the refund asap.”
On 30 July 2020 Liberty QS, a firm of quantity surveyors appointed by Liberty Homes sent to NJCH a schedule, setting out valuations and payments in respect of a number of projects, including Beacon Hill Lodge, indicating an outstanding sum due to Liberty Homes of £617,201.
By letter dated 29 September 2020 Furley Page LLP, acting for Liberty Homes, set out its case that Liberty Homes was entitled to interim applications for payment numbers 23 and 24 in respect of Beacon Hill Lodge in the sum of £274,698.04 plus interest.
On 2 November 2020, Liberty Homes issued an adjudication notice in respect of unpaid sums due pursuant to interim applications for payment for work at Beacon Hill Lodge: (i) interim application number 23 dated 1 July 2020 in the sum of £97,503.11; and (ii) interim application number 24 dated 3 August 2020 in the sum of £177,197.93. The basis for the claim in the adjudication was that NJCH had failed to issue either a payment notice or pay less notice in respect of those interim applications.
On 2 December 2020 the adjudicator, Robert Stevenson, issued his decision, directing NJCH to pay Liberty Homes the sum of £274,698.04, together with interest and the adjudicator's fees.
The adjudication award was not paid by NJCH and on 4 January 2021 Liberty Homes commenced proceedings to enforce the adjudication award. On 28 January 2021, those proceedings were settled, pursuant to which NJCH paid Liberty Homes the sum of £290,567.28.
By a pre-action letter of claim dated 14 July 2021, Liberty Homes set out its case against NJCH and other proposed defendants, including Mr Rajakanthan, that outstanding sums in the total of £1,151,082 were due and owing to Liberty Homes in respect of a number of projects, including Beacon Hill Lodge.
By letter dated 20 August 2021, NJCH responded to the claim, asserting an entitlement to recover overpayments, including overpayments in respect of Beacon Hill Lodge, in the sum of £2,642,587.85.
On 21 October 2021, NJCH issued a ‘true value’ adjudication in respect of the value of work carried out at Beacon Hill Lodge as at the date of interim application 24, seeking repayment of £2,387,005 together with interest. Dr Cyril Chern was appointed as the adjudicator.
On 18 February 2022, Dr Chern issued his decision in which he found that the true value of the application for interim payment number 24 was...
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Liberty Homes (Kent) Ltd v Kanagaratnam Rajakanthan
...claimant and the defendants is set out in the judgment of O'Farrell J in Nicholas James Care Homes Ltd. v Liberty Homes (Kent) Ltd. [2022] EWHC 1203 (TCC) and is not repeated here. This formed the background to an adjudication commenced by Liberty Homes against 7 The claimant's case, which......