Paul Atkinson v Sanjiv Varma also know as Sanjeev Varma
| Jurisdiction | England & Wales |
| Judge | Agnello |
| Judgment Date | 13 May 2020 |
| Neutral Citation | [2020] EWHC 1114 (Ch) |
| Court | Chancery Division |
| Docket Number | Case Number 006183 of 2018 |
| Date | 13 May 2020 |
[2020] EWHC 1114 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
INSOLVENCY AND COMPANIES LIST (Ch D)
IN THE MATTER OF GROSVENOR PROPERTY DEVELOPERS LIMITED (IN LIQUIDATION)
AND IN THE MATTER OF THE INSOLVENCY ACT 1986
Royal Courts of Justic
7 The Rolls Buildin
Fetter Lan
Londo
EC4A 1NL
DEPUTY INSOLVENCY AND COMPANIES COURT JUDGE Agnello QC
Case Number 006183 of 2018
Mr Rory Brown (instructed by gunnercooke) for the Applicants
The First Respondent in person
Hearing date: 19 November 2019, 20 January 2020, 2 April 2020
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.
Deputy Insolvency and Companies Court Judge Agnello QC
Introduction
This is the hearing of the applications dated 17 June 2019 and 23 September 2019 issued by the Joint Liquidators (‘the JLs’) of Grosvenor Developers Limited (‘the Company’). The First Respondent (‘Mr Varma’) appears before me acting in person. There was no attendance and/or representation from the other respondents to the current applications being the Second and Third Respondents (‘Mr Khadka’ and ‘GCFZE’ respectively), save that Mr Varma sought to be able to make submissions on behalf of GCFZE. I am satisfied that all three respondents against whom the applications were issued were served with the applications and evidence in support thereof.
The hearing days
This matter was listed before me for a half day. That was clearly on any view extremely optimistic. The matter was then adjourned for a further day and thereafter for a further half day. The fact that the matter was listed with such a hopeless time estimate is a matter which will in my judgment have a bearing on the costs which are sought in the event that the JLs succeed in part or the whole of their various claims. The reading time estimate was also extremely optimistic. No real excuse as to why the matter was listed with such an inadequate time estimate was given, beyond the JLs being keen to have the matter dealt with quickly. Instead, the case has dragged on over three days, from November 2019 until April 2020. Additionally, after the first hearing date, further evidence was sought to be filed and served by the JLs. It was clear to me that after the first hearing, the JLs considered that their evidence was somewhat lacking and sought to improve the position. However this somewhat chaotic way to prepare and present a case has added to the time it has taken to deal with both in time of Court time and preparation.
The Applications
Mr Varma
The application in relation to Mr Varma seeks that judgment be entered against him by reason of his non-compliance with paragraph 2 of the order of ICC Judge Burton dated 12 July 2019. The order of ICC Judge Burton of 12 July 2019 was an ‘unless order’ stipulating that unless Mr Varma filed and served his Points of Defence by 4 pm on 2 August 2019, he would be debarred from defending the claims against him in these proceedings and the JLs would have permission to apply for judgment to be entered against him. Mr Varma did not file his defence by the stipulated date.
The application notice seeks a declaration that Mr Varma is liable as an express or constructive trustee for the ‘Second Applicant’ (I understand this to be the Company rather than one of the two liquidators) in the sum of £4,703,893, being the £3,122,841 paid to GCFZE, the £925,000 paid to him directly from the Kennedys account and the £656,052 paid to Mr Varma from the Casa Account. Mr Brown, acting on behalf of the JLs has indicated that, additionally, certain revised sums are being sought which have been entitled below as ‘luxurious spending’ being sums withdrawn from the Casa Account and used, according to the JLs by Mr Varma on items of a personal nature and therefore were taken by Mr Varma in breach of the duties he owed as a shadow/de facto director. These sums total £1,466,343.
The application seeks the following further orders
(1) Judgment be entered for the Claimants (‘the JLs’) acting as the Joint Liquidators of the Company on their claims against Mr Varma
(2) Delivery up by Mr Varma to the JLs of Company property, as defined in paragraph 3 of the Points of claim that he has in his possession or control
(3) That Mr Varma do pay by 3 December 2019 to the JLs
— The Company's money or alternatively equitable compensation for the Company's money received in that sum (or higher if so received by Mr Varma)
— Interest on the sum referred to above at 8% per annum or interest on such sum at the highest available exemplary rate or such other rate as the Court thinks fit for such period as the Court shall determine pursuant to s 35A Senior Courts Act 1981 and/or the equitable jurisdiction of the Court
— All accounts and inquiries into the application of the Company's money by Mr Varma shall be taken as are necessary to trace and recover from Mr Varma in so far as he or persons connected with him remain in possession of the Company's money or assets acquired directly or indirectly with the Company's money
— Costs
GCFZE
By order dated 1 May 2019, Mr Justice Birss granted a worldwide freezing order. As part of that order, paragraphs 9 and 10 required GCFZE to inform the Applicants' solicitors of GCFZE's assets located worldwide and also within 7 working days swear and serve an affidavit setting out the information relating to the assets. According to the JLs these paragraphs of the order of 1 May 2019 were not complied with. By order dated 15 May 2019, Mrs Justice Falk directed that if GCFZE did not comply with paragraphs 9 and 10 of the 1 May 2019 order, it would be debarred from defending the claims set out in the Points of Claim and the Applicants would be at liberty to apply to the Court for judgment to be entered against it. Accordingly, this application is made against GCFZE with GCFZE being debarred from defending the claim in accordance with the order of 15 May 2019.
In that application, the JLs seek the following:-
(1) Judgment be entered for the JLs on their claims against GCFZE;
(2) GCFZE shall pay the sum of £3,122,841 by way of equitable compensation for the Company's money received in that sum (or higher if received by GCFZE);
(3) Interest thereupon at 8% or interest on such sum at the highest exemplary rate as the Court thinks fit for such period as the Court shall determine pursuant to section 35A of the Senior Courts Act 1981 or equitable jurisdiction of the Court
(4) Accounts and inquiries into the application of the Company's money by GCFZE to be taken as necessary to trace and recover from GCFZE in so far as it or persons connected with it remain in possession of the Company's money or assets acquired directly or indirectly with the Company's money
(5) Costs
Arjun Khadka
Unlike in the case of Mr Varma and GCFZE, there is no debarring order as against Mr Khadka. He is according to the JLs, in breach of certain orders, namely by failing to deliver up the diamonds and jewellery which according to Mr Varma, was handed to Mr Khadka by Mr Varma. (1 May 2019 order for delivery up). By order dated 15 May 2019, Mrs Justice Falk ordered that Mr Khadka provide information in relation to the whereabouts of all of his passports and any document or travel warrant that might facilitate travel to and from the jurisdiction and deliver these documents to the JLs' solicitors. By reason of the breaches of these orders, by order dated 9 July 2019, Mr Adam Johnson QC (sitting as a Deputy High Court Judge) issued a bench warrant in respect of Mr Khadka. On 4 June 2019, Chief ICC Judge Briggs ordered that Mr Khadka do serve and file Points of Defence on or before 2 July 2019. In breach of that order, no Points of Defence have been served by Mr Khadka.
The application against Mr Khadka seeks that judgment be entered against him for delivery up. Further or alternatively, in reliance upon Mr Khadka being a director of the company appointed on 6 June 2018, in breach of the duties owed to the company, the JLs seek by way of equitable compensation such sum to be paid to the JLs as represents the value of the diamonds and jewellery. I have summarised to a large extent what is set out in the application against Mr Khadka above.
The basis of the applications – establishing the case against the respondents
Early on in the hearing before me, I sought clarification from Mr Brown as to the applications being made. Mr Brown clarified and confirmed that the JLs were seeking to prove their cases as against the various respondents. The application notices are perhaps somewhat unclear in this respect but Mr Brown confirmed that this was effectively the trial of the action in relation to Mr Varma and GCFZE. He accepted that as regards Mr Khadka, he was also seeking to make this the trial of the action as against him.
This meant as Mr Brown readily agreed, that the JLs had to prove their case in order to satisfy me that judgment should be entered. It is important to distinguish this trial of the action as against the three respondents from any application seeking summary judgment, judgment in default or judgment based upon admissions. The Points of Claim are dated 10 May 2018 and Points of Defence were filed by two of the respondents, being the Fourth Respondent (‘Siddhant Varma’) dated 2 July 2018 and the Fifth Respondent (‘Mr England’) dated 17 July 2018. As is set out below, there are no Points of Defence from Mr Varma and GCFZE. Both are...
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