Paul Atkinson & Glyn Mummery (as joint liquidators of Grosvenor Property Developers Ltd) v Sanjiv Varma
| Jurisdiction | England & Wales |
| Judge | Johns |
| Judgment Date | 13 July 2020 |
| Neutral Citation | [2020] EWHC 1868 (Ch) |
| Date | 13 July 2020 |
| Court | Chancery Division |
| Docket Number | Case No: CR 2018 006183 |
[2020] EWHC 1868 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
INSOLVENCY AND COMPANIES LIST (ChD)
Royal Courts of Justice
7 The Rolls Building
Fetter Lane
London
EC4A 1NL
HHJ Johns QC
Sitting as a Judge of the High Court
Case No: CR 2018 006183
Mr Rory Brown and Mr Andrew Shipley (instructed by Gunnercooke LLP) for the Applicants
Mr James Leonard (instructed by Janes Solicitors) for the First Respondent
Hearing dates: 9–12 June 2020
HHJ Johns QC:
This is my judgment following the substantive hearing of an application to commit Mr Sanjiv Varma to prison for contempt of court. The alleged acts of contempt are extensive, being set out over 20 pages attached to an application notice of 9 September 2019. They arise out of insolvency proceedings concerning Grosvenor Property Developers Limited (“the Company”). The applicants are the Company and its liquidators Paul Atkinson and Glyn Mummery. They complain that, among other things, Mr Varma has breached an order for disclosure of assets made as part of a freezing order. And that he has made false written statements about what was done with the Company's money.
Background
I start with some background.
The apparent purpose of the Company was the acquisition of the Grosvenor Hotel in Bristol, its redevelopment to form studio flats to be used as student accommodation, and the sale of those units. Around £7m was paid to the Company by investors. But the hotel was never acquired by the Company, no planning permission was obtained or even applied for, and little or no work was done to the hotel.
The Company went into compulsory liquidation by order made on 14 November 2018 and the liquidators were appointed on 6 December 2018.
There was an interview with Mr Varma on 27 February 2019 by Mr Russell Herbert for the liquidators. Mr Varma told Mr Herbert that while the registered shareholder of the Company had been Jonathan England, the true owner was a Mr Maneet Singh. Mr Varma said his own role was that of consultant to the Company and he would produce the consultancy agreement. On the topic of payment by the Company of around £3m to a Dubai registered company, Grosvenor Consultants FZE (“GCFZE”), he said that this related to investment by the Company in diamonds and jewellery.
There was then an application by the liquidators dated 27 March 2019 (“the Main Application”) for a private examination under s.236 of the Insolvency Act 1986 and for delivery up of company property under s.234. An order was made on the Main Application by ICC Judge Jones on 2 April 2019. That order required the attendance of Mr Varma at a private examination at 2pm on 16 April 2019. It also required the delivery up by Mr Varma by 4pm on 12 April 2019 of all documents belonging to the Company and all documents giving information concerning his dealings with the Company or its property during the period from 16 December 2016 to 14 November 2018. Further, directions were given for points of claim, points of defence and points of reply. The time for delivery up of documents was later extended to 4pm on 15 April 2019.
Mr Varma failed to attend the examination on 16 April. The circumstances of that failure I will need to examine later. As to documents, he delivered up only a few, his then solicitors Edwin Coe LLP sending to the liquidators by email on 6 May 2019 5 documents comprising a total of 9 pages. The documents included a “business consultancy agreement” dated 19 December 2016 made between Mr Varma and the Company, an invoice dated 27 June 2017 from GCFZE to the Company in the sum of £4.95m for 9 listed items of jewellery, and a written agreement dated 11 June 2018 between the Company and GCFZE entitled “Settlement, Receipt, Release and Discharge” (“the Settlement Agreement”). The Settlement Agreement includes recitals that the Company has asserted claims against GCFZE, that the parties wish to settle the claims, and that the Company accepts receipt of assets listed in a schedule in settlement. The assets listed in the schedule are the items of jewellery referred to in the earlier invoice.
In the meantime, on 1 May 2019 Birss J had made a worldwide freezing order against Mr Varma. GCFZE was also a party to the order. It was made on the liquidators' application without notice. It restrained the removal or disposal of or dealing with assets up to the value of £3.25m. In addition to the familiar provisions of a freezing order, including requiring information to be given as to assets, there was an order for delivery up by Mr Varma of his passport.
As to information on assets, by emails of 5 May 2019 from Mr Varma and his solicitors, the liquidators were told that GCFZE had bank accounts the exact balance of which could not be stated but which was thought to be £2500 – £3500, and that the sole asset of Mr Varma that may qualify for disclosure was his shareholding in My Casa PBSA Ltd. The value of this was said to depend on netting off liabilities in that company and may amount to £14,000. The information as to Mr Varma's assets was later confirmed by his affidavit of 7 May 2019. That affidavit also recorded that he was the sole owner of GCFZE (“I am the beneficial owner of it”) but that such asset was believed to be of notional value only.
The passport was delivered up on 7 May 2019 in a sealed envelope. It remains in the envelope. A video clip taken by Mr Varma's then solicitors of them inserting the passport into the envelope reveals that some pages of the passport are not whole, having had a portion torn off them.
The freezing order was continued by Falk J on the return date of 15 May 209. It is plain from the recitals to the order that she considered Mr Varma and GCFZE in breach of the 1 May 2019 order. She ordered that Mr Varma file and serve a further affidavit by 4pm on 16 May 2019 giving true, full, and accurate answers to a list of questions scheduled to an affidavit of Mr Atkinson.
Mr Varma did file and serve an affidavit on 16 May 2019. There is a dispute as to whether the answers it gives are true, full and accurate.
Directions on the Main Application were given by Chief ICC Judge Briggs on 4 June 2019. Permission to amend was given to make additional claims against Mr Varma and there was an order for joinder of further respondents including GCFZE and Mr Varma's son, Siddhant Varma. The other respondents were to file points of defence by 2 July 2019.
Given the claims now being made, the private examination was adjourned generally by order of 13 June 2019. ICC Judge Mullen also made an order for costs against Mr Varma on that occasion on the basis that he did not have a genuine reason for failing to attend the private examination on 16 April 2019.
In the meantime, the liquidators had obtained information from Kennedys (former solicitors for the Company) as to payment of Company money including to an account in Mr Varma's name at Emirates NBD Bank.
There was then an application by the liquidators for Mr Varma to attend for cross examination. Following a 2-day hearing, Mr Adam Johnson QC, sitting as a Deputy High Court Judge, made such an order on 3 July 2019 in aid of the freezing order. It is apparent from the transcript of his judgment and the recitals to his order, that he did so on the basis that Mr Varma had failed to comply with the 1 May 2019 and 15 May 2019 orders. He further ordered that Mr Varma must by 4pm on 11 July 2019 send by email and special delivery a signed letter of instruction to Emirates NBD Bank (where GCFZE holds an account) instructing it to disclose GCFZE's bank statements to the liquidators. Mr Varma had previously refused consent for the liquidators to contact the bank to obtain information on GCFZE's account.
On 12 July 2019, an unless order was made on the Main Application. Mr Varma would be debarred from defending the Main Application if he failed to serve points of defence by 2 August 2019.
The cross examination ordered by Mr Adam Johnson QC took place before Mr Hochhauser QC, sitting as a Deputy High Court Judge, on 26 July 2019. And it was on the occasion of that cross examination that Mr Varma handed over the signed letter of instruction ordered by Mr Adam Johnson QC. By then, an application by Mr Varma to the Court of Appeal for permission to appeal the 3 July 2019 order and for a stay had been dismissed.
In light of the answers given by Mr Varma during cross examination, Mr Hochhauser QC made on 26 July 2019 an order that Mr Varma provide by 4pm on 30 July 2019 copies of the documents listed in schedule A to his order. Among the liquidators' complaints on this application for committal, is an alleged failure by Mr Varma to provide the documents listed at paragraph 8 of schedule A following that order, being documentary evidence showing what happened to the proceeds of the sale of Flat 54, 49 Hallam Street, Marylebone, London W1W 6JW in about June 2019 (“Hallam Street”).
Significantly for Mr Varma's defence of this committal application, there was also a Schedule B to Mr Hochhauser QC's order, being a list of documents which Mr Varma undertook to provide copies of within 72 hours of his entry into the United Arab Emirates. Mr Varma says these documents are held in a fingerprint lock safe in Dubai. They include...
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