Pharmagona Ltd v Sayed Mostafa Taheri
| Jurisdiction | England & Wales |
| Judge | Halliwell |
| Judgment Date | 17 January 2020 |
| Neutral Citation | [2020] EWHC 66 (Ch) |
| Date | 17 January 2020 |
| Docket Number | Case No: E30MA106 |
| Court | Chancery Division |
[2020] EWHC 66 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS IN MANCHESTER
BUSINESS LIST (ChD)
His Honour Judge Halliwell sitting as a Judge of the High Court
Case No: E30MA106
Mr Nicholas George (instructed by direct access) for the Claimant
The First Defendant appeared in person.
Hearing dates: 10th and 17th January 2020
APPROVED JUDGMENT
(1) Introduction
On 11th December 2019, I made an order (“the Unless Order”) requiring the Defendants to deliver to the Claimant a signed letter of authority. The Unless Order provided that, in default of compliance, the Defendants would be debarred from defending the claim and the Claimant would be at liberty to enter judgment for the amount claimed. The Claimant contends that the Defendants have failed to comply with the Unless Order and thus seeks judgment. The Defendants deny non-compliance. The First Defendant has also submitted an application for a “stay of execution and reconsideration (rehearing)…” of the Unless Order.
Before me, Mr Nicholas George, of counsel, appeared on behalf of the Claimant and the First Defendant appeared in person. The Second Defendant did not appear. Although she is married to the First Defendant, I have not seen written authority providing for the First Defendant to make submissions on her behalf. However, the First Defendant maintains he has authority to make submissions on their joint behalf and he has filed a witness statement from the Second Defendant inviting the Court to reject the Claimant's request for judgment whilst stating that, owing to illness and the need “to look after my 1.5 years old child at all times, [she has] not been able to attend Court in (sic) previous occasions”. Regardless of whether the Second Defendant has authorised the First Defendant to make submissions on her behalf, notice of the hearing has been sent to the Second Defendant and I am content to proceed in her absence.
(2) The Defendants as unrepresented parties
At various stages in this litigation, the Defendants have been represented by solicitors or counsel. However, they had ceased to have the benefit of legal representation by the time that I made the Unless Order.
In Barton v Wright Hassall [2018] UKSC 12, Lord Sumption observed, at Paragraph 18, that where litigants are unrepresented “their lack of representation will often justify making allowances in making case management decisions and in conducting hearings. But it will not usually justify applying to litigants in person a lower standard of compliance with rules or orders of the court. The overriding objective requires the courts so far as practicable to enforce compliance with the rules: CPR rule 1.1(1)(f). The rules do not in any relevant respect distinguish between represented and unrepresented parties”.
The Unless Order was in simple and straightforward terms. It required the Defendants to deliver to the Claimant an original signed Letter of Authority in a form specifically appended to the Unless Order itself. The First Defendant is an intelligent and determined litigant with a good command of the English language. He could reasonably be expected to understand the Unless Order itself and the consequences of non-compliance. Indeed, he confirmed that he had understood these matters at the hearing before me. In the Second Defendant's absence, I have not had the opportunity to observe her or evaluate her linguistic skills but, in these proceedings, she has made a series of witness statements demonstrating a sophisticated understanding of the English language and, if she was ever in any doubt, the First Defendant could reasonably be expected to have provided her with a full explanation of the Unless Order and its consequences. Consistently with Lord Sumption's guidance, there is no reason for me to apply to the Defendants a lower standard of compliance with rules or orders of the court than other litigants.
(3) Factual and Procedural Background
The substantive proceedings are founded on allegations of fraud and dishonesty. The Claimant is a supplier and distributor of pharmaceutical products. The Defendants were employees of the Claimant. The Claimant contends that the Defendants colluded in fraudulent activities under which they purported to enter into transactions with fictitious businesses and used them as a device to misappropriate the Claimant's funds. The Defendants contend that the transactions were initiated and authorised by the Claimant's director, Dr Ghasemi Firoozibadi, in connection with the illegal export of goods to the Islamic Republic of Iran.
By its amended claim, the Claimant seeks £452,912.58 in respect of misappropriated funds and £1,200 as damages for the conversion of some computer equipment.
At an early stage, the Claimant obtained a freezing order against the Defendants prohibiting them from removing their assets in England and Wales up to a value of £500,000. There has been a series of orders and directions, including repeated orders for disclosure and inspection. On 18th December 2019, I made a freezing order in respect of the First Defendant's shares in an Iranian company, Padideco, in the light of evidence recently obtained by the Claimant.
The case was initially listed for trial commencing on 8th July 2019. The parties attended for trial but it was adjourned and re-listed for hearing in October 2019. Although it was adjourned to release funds for the Defendants to obtain legal representation, the Defendants were not culpable for the adjournment.
The Defendants then instructed counsel, Mr Joseph Giret QC, to attend on their behalf. However, at the adjourned hearing, counsel for both sets of parties advised the Court that the case was not ready for trial albeit the First Defendant apparently interceded at the hearing to disagree with his counsel on this issue. The Judge reluctantly decided to adjourn the case again and, on 9th October 2019, he made an order providing for the trial to be re-listed for hearing from 12th February to 28th February 2020.
In the exercise of his case management powers, the Judge also made an order (“the 9th October 2019 Disclosure Order”) providing that “by 4pm on 5 November 2019 the Defendants must disclose, by taking all reasonable steps to obtain, in so far same are within the possession or control of the 1st and/or (sic) Defendant and provide to the Claimant” a series of bank of statements defined with reference to dates and bank account numbers. In the case of some bank statements, but not others, the Bank was identified by name. No point has been taken about the omission of the Second Defendant in the reference to “the 1st and/or Defendant”. This was plainly intended to include the Second Defendant and, in my judgment, it can be construed as such without the need for amendment under the slip rule.
In his submissions before me, the First Defendant submitted that the 9th October 2019 Disclosure Order was not made pursuant to a specific application. He also submitted that it was made without detailed argument. I am content to accept that these submissions are correct. However, there was a compelling logic to the order. In determining the substantive merits, it will be important for the judge to make findings about the ultimate destination of the proceeds of the alleged fraud. If and to the extent that the Defendant has any interest or connection with the bank accounts, entries on the statements are capable of throwing light on this aspect of the case. When he made the 9th October 2019 Disclosure Order, it can reasonably be inferred the Judge was mindful of these considerations and considered that there was reason to believe the Defendants might have an interest or connection with the bank accounts. In view of the fact that the relevant bank statements had not been disclosed, he thus made an order for their disclosure.
However, in view of the fact there was an issue as to the extent to which such statements were in the possession and control of the Defendants, the order was limited so as to require the Defendants to disclose such documents “by taking all reasonable steps to obtain” them “in so far as [the] same are within the possession or control” of the Defendants.
Following the 9th October 2019 Disclosure Order, the Defendants disclosed a limited amount of documentation including screen shots of obscure documents, in Farsi, apparently showing random information such as the balance on an unidentified account and an identification number for the First Defendant, together with an account number in the name of one Jazayeri, a letter from Sepah Bank referring to accounts in the name of one Zahra Amini and a joint account apparently in the names of the First Defendant and Zahra Amini and documents relating to some form of on-line facility. In the absence of an explanation as to the steps taken by the Defendants to obtain the documentation identified in the 9th October 2019 Disclosure Order, the Claimant maintains that there is an overwhelmingly strong inference that the Defendants failed to take all reasonable steps to do so by 4pm on 5 November 2019, as required, and indeed, they failed to do so afterwards.
(4) The Unless Order
On 11th December 2019, I made the Unless Order at a subsequent case management hearing. At that stage, I was satisfied the Defendants had failed to comply with 9th October 2019 Disclosure Order and I was mindful the trial was listed to commence no more than two months later, a period itself truncated by the Christmas vacation.
The Unless Order provided, in terms, that “the First and Second Defendants having failed to comply with [the 9th October 2019 Disclosure Order], each Defendant must by 4pm on 19th December 2019 deliver...
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Pharmagona Ltd v Sayed Mostafa Taheri
...the 1 st Defendant and from Ms Hanaee. He reserved judgment. 9 On 17 th January 2020 Judge Halliwell handed down a reserved judgment [2020] EWHC 66 (Ch). He subsequently made consequential orders on 23 rd January 2020. By those orders Judge Halliwell i) Found the defendants to be in breach......