Prompt Motor Ltd v HSBC Bank Plc
| Jurisdiction | England & Wales |
| Judge | HHJ Paul Matthews |
| Judgment Date | 20 June 2017 |
| Neutral Citation | [2017] EWHC 1487 (Ch) |
| Docket Number | Case No: CH/2011/0309 |
| Court | Chancery Division |
| Date | 20 June 2017 |
[2017] EWHC 1487 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Rolls Building, Fetter Lane,
London, EC4A 1NL
HHJ Paul Matthews
(sitting as a Judge of the High Court)
Case No: CH/2011/0309
Mr Thirrupathy Kandasamy, director, for the Claimant
Mr James Barnard (instructed by HSBC Legal Department) for the Defendant
Hearing dates: 19, 20 June 2017
Introduction
This is my judgment on two applications. First, there is an application made by the claimant company by notice dated 6 March 2017, for an order setting aside an order of Mr Justice Peter Smith dated as long ago as 27 October 2011, whereby the judge refused permission to appeal to the claimant against the order of Master Price of 24 May 2011, granting summary judgment to the defendant, both on the claimant's claim and on the defendant's counterclaim. The second application is that of the defendant, by notice dated 5 May 2017, for an order, in the event that the claimant's application is dismissed, that the two directors of the claimant, Mr Thirrupathy Kandasamy and Mr Kugananthan Kandasamy, be joined as parties to the claim and that an extended civil restraint order be made against all three of the company, Mr Thirrupathy Kandasamy, and Mr Kugananthan Kandasamy. At the hearing before me on 19 and 20 June 2017, Mr Thirrupathy Kandasamy (accompanied by Mr Kugananthan Kandasamy) appeared for the claimant company, and Mr James Barnard of counsel appeared for the defendant bank.
Facts
The sequence of events that has led the parties to this present hearing is long and involved. It begins in June 2001, when the claimant company, which was intended to carry on the business of operating a road vehicle fuel filling station in west London, obtained a term loan for £1,000,000 from the defendant bank. The purpose was to assist with the redevelopment of the claimant's premises and provide it with working capital. The offer letter is dated 13 June 2001. The defendant required security for the loan, in the form of a first legal charge over the premises, and a debenture over its assets. Clause 5 of the standard terms and conditions provided that the defendant was entitled to demand repayment of all sums owed even before the term date, on any failure by the claimant to repay or discharge in full any liability owed to the defendant for monies borrowed when they became due.
On 4 July 2001, the claimant granted an all monies legal charge over its premises and also a debenture by way of fixed and floating charge over all its assets. The debenture was a security for the payment of any liabilities to the defendant ("the Debt"), including the term loan and any overdraft. It was enforceable if the Debt was not paid when due, or if the defendant reasonably considered that any claim might be made against the claimant under any agreement or contingent liability by a third party. Once enforceable, the defendant might appoint an administrator or receiver, who would be the agent of the claimant company, so that the claimant would be responsible for such agent's acts, defaults and remuneration.
The premises were closed for redevelopment between July 2001 and April 2002. This closure appears to have had an adverse effect on the claimant's business. In 2003 the bank, concerned about the claimant's financial state, obtained a further valuation of the premises, and sought greater security from the company. In November 2003 Mr Thirrupathy Kandasamy gave a personal guarantee of the company's liability, limited to £50,000. On 26 May 2004, the defendant made formal demand by letter of the claimant for sums outstanding on its overdrawn bank account. On 27 May 2004, the claimant not having repaid the overdraft as demanded, the defendant appointed partners in Moore Stephens to be joint administrative receivers of the claimant company under the debenture.
After a period of administrative receivership, on 19 September 2006 the claimant company was struck off and dissolved, for the first time. In March 2007 Mr Thirrupathy Kandasamy and Mr Kugananthan Kandasamy were both disqualified for being directors, for five and four years respectively. Three years later, in February 2010, Mr Thirrupathy Kandasamy (but not Mr Kugananthan Kandasamy) was adjudicated bankrupt.
Mr Thirrupathy Kandasamy and Mr Kugananthan Kandasamy were evidently concerned that the claimant company, now dissolved, had or might have a claim against HSBC, but that that claim might be reaching the end of the six year limitation period. They therefore sought permission to issue the claim form against the defendant within the limitation period, even before they had obtained an order for the restoration of the claimant company to the register. On 26 May 2010 Mr Justice Vos gave permission to Mr Kugananthan Kandasamy to issue the claim form. In September 2010 Registrar Derrett made an order restoring the claimant to the register solely for the purposes of the claim. In October 2010 the defendant filed a defence and counterclaim to the claim. The counterclaim was in the sum of £626,534 plus interest.
In February 2011 the defendant applied for summary judgment on the claim and counterclaim. On 24 May 2011 Master Price in a reserved judgment granted summary judgment to the defendant as sought. He also ordered that the claimant pay the defendants costs, and ordered a payment on account of £15,000. He also refused the claimant permission to appeal. On 13 June 2011 the claimant filed an appellant's notice against the decision of Master Price, seeking permission to appeal from the appellate court. On 17 August 2011, Mr Justice Peter Smith refused permission to appeal on the papers. In his reasons, he said that Master Price had been right, for the reasons he gave. The claimant renewed its application for permission. On 27 October 2011, Mr Justice Peter Smith heard the renewed (oral) application and refused it again.
In a transcript of the ex tempore judgment given by the judge on that occasion, he said this in part:
"15. For my part, even if I was in a position to reconsider the decision of Master Price in its entirety, and start the case again, I would have come to entirely the same conclusion. I do not believe there is any basis for criticising his careful judgment and it is quite clear in this case that the bank was perfectly entitled to serve the demand and, with the failure of the company to make the payment, that had the result of being the default entitled them to appoint the receivers. It also was that failure to make that payment on the amount that rendered the company in breach of the long term loan agreement which also became immediately due as a result of that. It also meant that the company was justifiably wound up. It also meant that the bank, if there was a shortfall in the realisable assets, was entitled to present a statutory demand against the directors on their guarantees and make them bankrupt. This all flows from that fundamental proposition. Was the demand valid? If it was, that is the end of the case, unless the appellant can show it has an argument which is more than fanciful, and has a real prospect of success.
16. In my view the company has not identified any argument which has a prospect of success.
17. Therefore, for those reasons I will aver my written decision and refuse the company permission to appeal…"
No doubt as a result of the failure of the litigation (or so the defendant thought), the claimant company was struck off the register and dissolved (for a second time) on 20 November 2012. However, in 2015 Mr Thirrupathy Kandasamy made a further application to Mr Justice Peter Smith for an order setting aside the order of 27 th of October 2011. On 25 February 2015 the judge, after hearing Mr Thirrupathy Kandasamy (the defendant apparently not being present or represented), ordered that Mr Thirrupathy Kandasamy should apply to restore the company for the purpose of making the application, which should then be issued and served on the defendant, and set down for hearing, before the judge if possible, and that Mr Thirrupathy Kandasamy had permission to obtain a transcript of the hearing. Unfortunately, no transcript of that hearing has ever been obtained, and certainly none was provided to me. Mr Thirrupathy Kandasamy said that they did not have enough money. What this means is that I have no statement of the reasons why the judge came to the conclusion that he did, even though on one view it might be thought to be inconsistent with the view that he had expressed in 2011. It may be that he was shown further documents or other material which had not been shown to him in 2011, or it may be that he simply changed his mind. I do not know.
At all events, on 20 May 2015 Mr Thirrupathy Kandasamy applied to restore the claimant company to the register. He made a similar application at the same time in relation to another company. The application to restore the other company was dismissed by District Judge Hart on 6 June 2016. But on 1 July 2016 an order was made by consent restoring the claimant to the register for the purpose of making this application. It is, therefore, now in its third life. The late author Ian Fleming was wrong.
The claimant's complaints
During the course of the hearing I endeavoured to understand from Mr Thirrupathy Kandasamy exactly what the complaints of the claimant company were which justified setting aside the order of October 2011. This was made difficult by a number of matters. First of all there was the absence of the transcript of the hearing before Mr Justice Peter Smith in 2015. Second, the bundle prepared by Mr Thirrupathy Kandasamy and Mr Kugananthan Kandasamy on behalf of the claimant company lacked a number of critical documents, such as...
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