Peter Singh Sangha v Amicus Finance Plc ((in Administration))
| Jurisdiction | England & Wales |
| Judge | Mr Justice Zacaroli |
| Judgment Date | 05 May 2020 |
| Neutral Citation | [2020] EWHC 1074 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: CH-2019-000311 |
| Date | 05 May 2020 |
[2020] EWHC 1074 (Ch)
Mr Justice Zacaroli
Case No: CH-2019-000311
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
APPEALS (ChD)
7 Rolls Building
Fetter Lane
London EC4 1NL
Marc Brown (instructed by UK Law) for the Appellant
Turlough Stone (instructed by Brecher LLP) for the Respondent
Hearing dates: 27 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.
This is an appeal against the order of Deputy District Judge Sharp dated 6 April 2018, in which she refused an application by the defendant, Mr Peter Singh Sangha (“Mr Sangha”), to set aside a possession order made on 27 January 2017 by Deputy District Judge Anthony in favour of the claimant, Amicus Finance plc (“Amicus”). The possession order related to a property at The Mount in Reservoir Road, Edgbaston, Birmingham (“The Mount”). I will refer to the proceedings in which the appeal is made as “the Mount Possession Action” in order to distinguish them from other related proceedings to which I shall refer below.
Background
On 30 July 2015, Amicus loaned approximately £550,000 to Mr Sangha, secured by a first legal charge over The Mount. The loan was repayable on 29 April 2016, but has not been repaid. Amicus issued possession proceedings on 21 October 2016. At the first hearing, on 7 December 2016, the matter was adjourned to enable Mr Sangha to obtain alternative finance.
At the adjourned hearing on 27 January 2017, Mr Sangha resisted a possession order being made on the basis it would inhibit his ability to obtain alternative finance. The judge, however, made an order requiring Mr Sangha to give up possession of The Mount by 1 March 2017.
Mr Sangha failed to give up possession, and Amicus applied for a warrant for possession. Mr Sangha applied to suspend the warrant for possession. That application came before District Judge Ingram on 27 September 2017, when the matter was adjourned to 4 December 2017. The stated purpose of the adjournment was, in part, to enable further evidence and submissions to be made in relation to the exercise of discretion under section 36(2) of the Administration of Justice Act 1970 and to consider whether the security was a fixed term mortgage or an all monies mortgage.
No further submissions or evidence were in fact provided by Mr Sangha. Instead, on 1 December 2017 he made an application to set aside the possession order under CPR Rule 3.1(7). That rule provides a power to vary or revoke any order made by the court.
Mr Sangha's evidence is that he had a conference with counsel on 30 November 2017, at which point he became aware that he had a potential defence to the possession proceedings, arising out of the matters I describe below. That defence was set out in a draft defence and counterclaim dated 1 December 2017.
At the hearing on 4 December 2017, District Judge Burns-Beech stayed Mr Sangha's application to suspend the warrant for possession (pending determination of the application to set aside the possession order) and stayed the possession order, in light of the last-minute application to set it aside.
The application to set aside the possession order came before Deputy District Judge Sharp on 6 April 2018, when it was dismissed.
The issues raised on this appeal have a close relationship with proceedings involving Amicus in relation to a different property, at 80 Broad Street, Birmingham (“80 Broad Street”). 80 Broad Street is owned by a company called Five Rivers 2 UK Ltd (“Five Rivers”) of which Mr Sangha is the sole director and shareholder. On 21 August 2015, Amicus loaned approximately £990,000 to Five Rivers, secured by way of a debenture over 80 Broad Street. This was a fixed term loan of nine months, repayable on 20 May 2016.
There are in fact two other sets of proceedings. The first is an action commenced in the High Court by Amicus against Five Rivers and another company of which Mr Sangha is sole shareholder and director, Zara's Broad Street Ltd (“Zara's”). Amicus sought a declaration that it was not bound by a lease purportedly granted by Five Rivers to Zara's in respect of 80 Broad Street. I will refer to this as the “High Court Action”. The second is an action commenced by Amicus against Fiver Rivers, seeking possession of 80 Broad Street. I will refer to this as the “Five Rivers Possession Action”.
In his draft defence and counterclaim, Mr Sangha contends as follows:-
i) He caused Five Rivers to purchase 80 Broad Street with the intention of Zara's operating a bar and nightclub from it. In order to complete refurbishment works at the property, Mr Sangha arranged bridging finance with Amicus.
ii) At a meeting on 17 July 2015 at Amicus's offices, Mr Sangha told “Iain” of Amicus that Zara's was to occupy 80 Broad Street and that Five Rivers had already granted Zara's a lease for that purpose. He also explained that it was intended that, when Zara's had commenced trading, either it or Five Rivers would obtain a term loan in order to repay any bridging loan from Amicus.
iii) Iain, on behalf of Amicus, indicated that it had no objection to these arrangements. Alternatively, in offering to lend money to Five Rivers secured on 80 Broad Street, Amicus impliedly represented that it had no objection to the lease to Zara's.
iv) Iain also said that Amicus would only lend about £1 million on the security of 80 Broad Street, and asked whether Mr Sangha could offer any other property by way of security.
v) Mr Sangha offered The Mount, which he said was valued at about £800,000. As a result, Amicus lent just under £1 million to Five Rivers, secured on 80 Broad Street, and just over £500,000 to Mr Sangha, secured on The Mount.
vi) Mr Sangha was induced to obtain finance from Amicus by the representations made in relation to the lease to Zara's. Had those representations not been made, neither Mr Sangha nor Five Rivers would have entered into loans with Amicus or put up the two properties (The Mount and 80 Broad Street) as security.
vii) The representation was untrue, as evidenced by the stance taken by Amicus in the High Court Action, in which it pleaded that the lease between Five Rivers and Zara's is a sham and that any right Zara's has to occupy 80 Broad Street is not binding on Amicus.
viii) The representation was made fraudulently alternatively carelessly.
ix) Mr Sangha was entitled to, and did, rescind the loan agreement and the charge over The Mount.
The High Court Action came on for trial in October 2018. In a reserved judgement handed down on 30 November 2018, HHJ Pearce concluded that the lease of 80 Broad Street from Five Rivers to Zara's was genuine and had been entered into prior to the execution of the debenture in favour of Amicus. The judge also dealt with the question whether the lease had been mentioned at all in the meeting of 17 July 2015, and concluded that it had not been. If that finding of fact is correct, then the case of misrepresentation advanced in Mr Sangha's draft defence and counterclaim would be bound to fail.
In the Five Rivers Possession Action, Amicus seeks possession of 80 Broad Street on the grounds that the loan made from Amicus to Five Rivers fell due for payment in full in May 2016, but remains unpaid. Five Rivers' defence and counterclaim raises materially the same points as are raised in Mr Sangha's draft defence and counterclaim in the Mount Possession Action. The action was commenced in the County Court at Birmingham, but transferred to the High Court on 16 July 2018. It was then stayed (by order of Deputy Master Henderson dated 3 September 2018) pending resolution of the High Court Action. The stay was lifted by order of Deputy Master Bartlett on 26 September 2019. By order of Fancourt J dated 20 December 2019, the case management conference in the Five Rivers Possession Action was ordered to be heard at the same time as Mr Sangha's appeal in the Mount Possession Action.
Amicus has indicated an intention to apply to strike out the parallel misrepresentation defence in the Five Rivers Possession Action on the basis of the finding of fact of HHJ Pearce that the lease to Zara's was not mentioned at the meeting on 17 July 2015. It is accepted on this appeal, however, that I cannot form a view on the outcome of that application and must proceed on the basis that Five Rivers has at least some prospect of success in its misrepresentation defence and, accordingly, so would Mr Sangha if he was permitted to defend the Mount Possession Action.
The judgment of DDJ Sharp
The deputy District Judge first noted that the ability to revoke, vary or set aside an order under CPR 3.1(7) is very different in nature from an appeal process, and the court must be careful to consider whether the application is an appeal by another route.
Next, she held that the possession order was a final order, noting that it makes no difference whether the final order was made without an adjudication by the judge of the merits.
She referred to the test to be applied under Rule 3.1(7) in cases concerned with an interim order, by reference to the decision of the Court of Appeal in Roult v North West Strategic Health Authority [2010] 1 WLR 487: namely, whether erroneous information was provided to the court at the time it made its order, or whether a subsequent event had destroyed the basis on which it was made. She also cited Tibbles v SIG PLC [2012] EWCA Civ 518 for the proposition that an order may be set aside where there had been a material change in circumstances or a manifest mistake on the part of the judge in the formulation of the order.
She...
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