Sethia London Ltd v Mr Ajay Sethi
| Jurisdiction | England & Wales |
| Judge | Mr Andrew Hochhauser |
| Judgment Date | 22 February 2021 |
| Neutral Citation | [2021] EWHC 367 (Comm) |
| Docket Number | Case No: LM-2019-000213 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 22 February 2021 |
[2021] EWHC 367 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
LONDON CIRCUIT COMMERCIAL COURT
Royal Courts of Justice,
Rolls Building
Fetter Lane,
London, EC4A 1NL
Mr Andrew Hochhauser QC
SITTING AS A DEPUTY JUDGE OF THE HIGH COURT
Case No: LM-2019-000213
William Edwards (instructed by CND Parker) for the Claimant
Duncan Macpherson (instructed by Zaiwalla & Co) for the Defendants
Hearing dates: 29, 30 September and 1 October 2020
Approved Judgment
| Introduction | 3 |
| Representation | 3 |
| The evidence | 3 |
| Parties | 4 |
| Background | 4 |
| The criminal proceedings in Dubai | 14 |
| The civil proceedings in Dubai | 14 |
| The English proceedings | 15 |
| The law in relation to summary judgment | 20 |
| The applicable principles when considering whether to grant permission to amend a statement of case | 22 |
| The Contractual and Double Recovery Defences – Mr Sethi's submissions | 23 |
| SLL's submissions on the Contractual and Double Recovery Defences | 27 |
| Discussion and conclusion on the Contractual and Double Recovery Defences | 34 |
| The res judicata defence – Mr Sethi's submissions on the application of Section 34 of the Civil Judgments and Jurisdiction Act (the “CJJA”) | 35 |
| SLL's submissions on the application of Section 34 of the CJJA | 38 |
| Discussion and conclusion on Section 34 of the CJJA | 38 |
| Mr Sethi's submissions on the breach of the principle in Henderson v Henderson | 38 |
| SLL's Submissions on the principle in Henderson v Henderson | 40 |
| Discussion and conclusion on the principle in Henderson v Henderson | 40 |
| Conclusion on the draft amendments | 41 |
| Is SLL entitled to default interest? | 41 |
| Conclusion on default interest | 42 |
| Is there some other compelling reason why the matter should go to trial? | 42 |
| Conclusion and disposal | 43 |
Mr Andrew Hochhauser QC:
Introduction
There are two applications before me. The first is an application dated 5 March 2020 by the Claimant for summary judgment pursuant to CPR 24.2, in respect of a claim, issued on 13 November 2019, for £1,720,200.20, together with interest, in respect of the unpaid balance of a loan of US$4m (“ the Loan”) made by the Claimant, Sethia London Limited (“ SLL”) to the First Defendant (“ Mr Sethi”), which was guaranteed by the Second Defendant (“ Mrs Sethi”) (the “ Summary Judgment Application”). That first came before the Court on 27 July 2020, and upon an application by Mr and Mrs Sethi (collectively the “ Defendants”) on 25 July 2020 to stay the proceedings until the outcome of ongoing proceedings in the United Arab Emirates (the “ UAE”), alternatively to adjourn the Summary Judgment application, I adjourned the hearing until the present hearing, on the basis that the Defendants paid the costs thrown away. The second application is an application by the First Defendant made by an Application Notice dated 23 September 2020 for permission to amend his Defence and Counterclaim (the “ Amendment Application”). The Amendment Application Notice attached a draft amended Defence, which was further revised from an earlier draft dated 18 September 2020. It is to the later draft to which I will refer. Both applications are vigorously opposed.
Representation
At both hearings SLL were represented by William Edwards. Mr and Mrs Sethi were represented by Duncan Macpherson. I am grateful to them for their helpful written and oral submissions.
The evidence
The evidence before me consisted of the following:
(1) The second witness statement of Abhijit Kandeparkar, a solicitor and director in CND Parker, SLL's solicitors representing SLL, dated 3 March 2020 (“ Kandepakar 2”) and exhibit AK-2, in support of SLL's summary judgment application;
(2) The first witness statement of Leigh David Crestohl, a partner in Zaiwalla & Co, the Defendants' solicitors, dated 25 July 2020 (“ Crestohl 1”) and exhibit LC-1, in support of an adjournment, alternatively a stay of SLL's application;
(3) The first witness statement of Ajay Sethi Shakti Chand Sethi dated 25 July 2020 (“ Sethi 1”) and exhibit AS-1, in support of an adjournment, alternatively a stay of SLL's application;
(4) The second witness statement of Leigh David Crestohl dated 18 September 2020 (“ Crestohl 2”) and exhibit LC-2, in opposition to SLL's summary judgment application;
(5) The second witness statement of Ajay Sethi Shakti Chand Sethi dated 18 September 2020 (“ Sethi 2”) and exhibit AS-2, in opposition to SLL's summary judgment application
I have also had sight of the pleadings and judgments in the Dubai Proceedings, as defined below.
Parties
SLL is an English company directed by Mr Sethia, an English national, who is resident in Dubai. SLL is a subsidiary of N Sethia Group Ltd and Companies House records that only the “Sethia 1999 Family Settlement” has significant control. Mr Sethia is also the director and controller of NS Investments Limited (“ NSIL”), a company based in the UAE.
Mr Sethi is a Dubai businessman. Mrs Sethi is his wife. Mr Sethi owns Villa W43, Emirates Hills, Dubai (“ the Villa”). The Villa is a luxury property, consisting of 22,000 square feet, where Mr Sethia has been a tenant since 2016.
Background
The background facts are not controversial. SLL and Mr Sethi entered into a Loan Agreement on 31 August 2017 (the “Loan Agreement”) “for general commercial purposes”, whereby SLL agreed to lend Mr Sethi US$4,000,000.00 (the “ Loan”), at an interest rate of 15% per annum, repayable six months after the first drawdown date of the loan. It is governed by English law. The structure of the Loan Agreement is as follows:
(1) Clause 1 contains the following definitions:
“Default Interest Period: each period of days the Lender selects under clause 7.2 to calculate interest on Unpaid Amounts under clause 7.
Event of Default: any event or circumstance listed in Schedule 7
Repayment Date: 06 months from the first Drawdown Date specified in paragraph 1 of Schedule 3 for repaying the Loan
Clause 1.21: Clause, schedule and paragraph headings shall not affect the interpretation of this agreement.”
(2) Clause 6 provides for the payment of interest, as follows:
“6.1 The interest rate on the Advance for each Interest Period is 15% (fifteen percent) per annum (360 days).
6.2 The Borrower shall pay interest on the Advance in arrears on the Interest Payment Date for the Interest Period applicable.
6.3 The length of the Interest Period shall be one month.
6.4 The initial Interest Period for the Advance shall start on the Drawdown Date of the Advance.
6.5 If an Interest Period would otherwise end on a day which is not a Business Day, that Interest Period shall, instead, end on:
(a) the next Business Day in that calendar month, if there is one; or
(b) the preceding Business Day, if there is not.”
(3) Clause 7 is entitled Default Interest and provides as follows:
“7.1 If the Borrower does not pay any sum it is obliged to pay under the Finance Documents when it is due, the Borrower shall pay interest under this clause 7 on that Unpaid Amount from time to time outstanding for the period beginning on its due date and ending on the date the Lender receives it, both before and after judgment.
7.2 Interest under this clause 7 shall be calculated by reference to successive Default Interest Periods. The duration of a Default Interest Period shall be seven days or less, as selected by the Lender on or before the beginning of each Default Interest Period.
7.3 The first Default Interest Period shall begin on the due date for payment of the relevant Unpaid Amount and each succeeding Default Interest Period shall begin on the last day of the previous Default Interest Period.
7.4 The rate of interest applicable to any Default Interest Period shall be the rate per annum which is 5% higher than the rate of interest which would have applied under clause 6.1, had the Default Interest Period been an Interest Period.
7.5 The Lender shall promptly notify the Borrower of the amount of interest payable and the Interest Payment Date for that Default Interest Period.
7.6 Interest accrued under this clause 7 shall be due on demand by the Lender, but:
(a) if not previously demanded, shall be paid on the last day of each Default Interest Period; and
(b) if the Borrower does not pay that interest when due, it shall be added to the Unpaid Amount and compounded at the end of each Default Interest Period.”
(4) Clause 8 is entitled “Repayment, Prepayment and Cancellation” and states:
“Schedule 3 shall apply to repayment, prepayments and cancellation of the Facility.”
(5) Schedule 3 paragraph 2 provides that:
“2.1 The Borrower may prepay part or all of an Advance, without any premium or penalty, by notifying the Lender 5 Business Days in advance. The Borrower may only do this if:
(a) the notice specifies the amount of the prepayment.
(b) the date of the prepayment is at least 5 Business Days from the date of the notice….”
(6) Clause 9.1 and 9.2 form part of the payment obligations:
“9. PAYMENTS
9.1 Subject to satisfaction of all the applicable conditions in clause 4, the Lender shall pay each Advance to the Borrower in immediately available cleared funds on the relevant Drawdown Date to, or for the account of, the Borrower as specified in that Drawdown Request.
9.2 Subject to clause 9.6, the currency of account shall be US Dollar and all payments that the Borrower makes under this agreement shall be made:
(a) in full, without any deduction, set-off or counterclaim; and
(b) in immediately...
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