Shah v Shah
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE PILL,LORD JUSTICE TUCKEY,PILL LJ,TUCKEY LJ,SIR CHRISTOPHER SLADE |
| Judgment Date | 10 April 2001 |
| Neutral Citation | [2001] EWCA Civ 493,[2001] EWCA Civ 527 |
| Docket Number | A2/2000/3217,Case No: A2/20003217 |
| Court | Court of Appeal (Civil Division) |
| Date | 10 April 2001 |
[2001] EWCA Civ 493
IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE QUEEN'S BENCH DIVISION
(His Honour Judge Crawford QC)
Royal Courts of Justice
Strand
London WC2
Lord Justice Pill
Lord Justice Tuckey
Sir Christopher Slade
A2/2000/3217
MR J BONNEY QC (Instructed by Gandecha & Pau, 1st Floor, 508 Kingsbury Road, London, NW9 9HE) appeared on behalf of the Appellant.
MR J RAYNER-JAMES QC (Instructed by Courtney Van Ben Borgh Shah, 51 Charles Street, Berkeley Street, London W1X 8LB) appeared on behalf of the Respondent.
Wednesday, 7th March 2001
This is a renewed application for permission to appeal against a judgment of His Honour Judge Crawford QC given on 20th July 2000. The judge ordered that there be judgment against the third and fourth defendants, jointly and severally, in the sum of £1.5 million together with interest of £170,302.86. The third and fourth defendants sought permission to appeal on the papers from Sedley LJ. He refused that application in December 2000 in these terms:
"Permission to appeal refused save as to the validity of the deed, which is adjourned to the full court to be heard on notice to the claimant."
The stay was continued. Under the heading: "Reasons", Sedley LJ stated:
"The only potentially arguable point seems to me to be the validity of the deed, low though it may be in merit. I am not persuaded that it has a realistic prospect of success but the full court may be."
The renewed application has been made on three grounds. The question of the validity of the deed, to which Sedley LJ referred, incorporates two points: first, whether in fact what can, in the circumstances, be described as an estoppel existed; and, second, if it did, whether the validity of the deed, which does not comply with the appropriate statutory provision in Section 1 of the Law of Property (Miscellaneous Provisions) Act 1989, is saved by reason of the estoppel. The second ground is that in signing the deed which is the subject of the litigation the third and fourth defendants submit that there was no intention to create legal relations. The third ground is that the document was signed under duress or undue influence, which it is submitted for present purposes have the same meaning.
I indicate immediately what course the court proposes to take and will quite briefly give reasons for that.
The application has been made orally over two full days. It was ordered that, if permission was given, the hearing of the appeal would follow; and counsel accepted at the outset that the submissions which they made upon the permission application should be treated as the submissions in the appeal if permission is granted.
What we propose to do is to grant leave on the deed issue (both aspects of it to which I have referred) and to refuse permission on the other two issues. We propose to reserve judgment on the deed issue and take time for consideration of it. The reasons which I now give are therefore those for refusing permission upon the other two grounds.
The third and fourth defendants accept that in February 1999, in Kenya, they each signed a document described as a deed, the first operative paragraph of which states:
"Messrs Shah" [which by definition within the deed are the third and fourth defendants] "hereby jointly and severally agree to pay to NZ" [by definition the claimant] "the said sum of £1.5 million."
Evidence was called at the trial, which proceeded over several days, as to the circumstances in which the document was signed by the third and fourth defendants. Evidence was given by them and also by Mr Anup Shah, who is the claimant's solicitor and who went to Nairobi, Kenya, to negotiate with the third and fourth defendants. The circumstances will be more fully considered in the written reserved judgment; but it is necessary to say at this stage that both the third and fourth defendants are directors of Reliance, a Kenyan bank, the third defendant being the Chairman and the fourth defendant, his son, being a director.
The claimant sought to invest the sum of £1.5 million in the Reliance Bank, and he paid the money into a sub-account in his name within Reliance's account at the Habib Bank in Morgate on 20th August. A sum of interest had been agreed, repayment of the sum, plus interest, to be given on 19th April 1999. When enquiries were made of the bank in Kenya, that money had not been paid in. That has not been in dispute. On 7th September 1998 Reliance was placed under statutory management by the Kenyan authorities and it was, in any event, unable to repay to the claimant any part of his investment.
It was against that background that Mr Anup Shah spoke to the defendants in Nairobi. As I have said, they accept that they signed the document to which I have referred and which is dated the 18th February 1999. They submit that in doing so they did not intend to create legal relations. The document, it is submitted, was intended only as a palliative to improve the claimant's recovery from the depression into which he had fallen following the loss of his money. Reliance is placed upon the fact that in his fax to the defendants of 16th February 1999, which accompanied a draft deed which Mr Anup Shah sent to them, a request was made for an early signature so that Mr Anup Shah could take the document back to London. He added in the fax that
"it would help for Mukesh's" [the claimant's] "peace of mind if you could also fax the guarantee to me at Norfolk Hotel. I will then send it by fax to Mukesh."
The allegation of duress is based on the suggestion that Mr Anup Shah threatened to report the defendants to the police (the Kenyan police or Scotland Yard) if they did not sign. On both issues Mr Anup Shah gave evidence; and the judge made clear in his judgment that he accepted the evidence of Mr Anup Shah. On his account of the circumstances in which the deed was made, a legally binding obligation was plainly contemplated. Moreover, he denied that he had made any threat in relation to the police, such as that alleged.
Mr Bonney QC submits that the judge's adverse finding upon the credibility of the third and fourth defendants is not sustainable and that there should be a new trial. Fundamental to the findings of fact, it is submitted, was the finding, which, in effect, the judge made but was not entitled to make, that the sum of £1.5 million had been diverted by the defendants to their advantage. Mr Bonney submits that not only was that allegation not pleaded on the claimant's behalf or pursued on his behalf in the course of the trial, but it was not justified on the basis of the evidence which was before the judge.
Counsel has referred us in some detail to the banking documents which were before the court. Adverse findings of credibility upon intent to create legal relations and upon duress cannot be upheld, it is submitted, when the judge's approach to the defendants' evidence on these subjects was tainted by his untenable approach to what had happened to the money. Irrelevant consideration must have influenced the judge, Mr Bonney submits, upon his findings as to why the deed was signed by the third and fourth defendants and his rejection of their evidence that the threat was not made to them. The court cannot be satisfied, submits Mr Bonney, that had the judge not made the general findings of fraudulent conduct by the defendants he would have come to the same conclusion on discrete points of credibility. His finding, it is submitted, was coloured and dictated by the finding of fraud which he made. An injustice has resulted, and this can only be remedied if the matter is remitted for a fresh trial.
Mr Bonney relies upon the statement of Lord Simon in Watt or Thomas v Thomas [1947] AC 484 at 486, cited by Bingham LJ in Eckersley & others v Binnie & others CA 18th February 1988. Lord Simon stated:
"It not infrequently happens that a preference for A's evidence over the contrasted evidence of B is due to inferences from other conclusions reached in the judge's mind rather than from an unfavourable view of B's veracity as such. In such cases it is legitimate for an appellate tribunal to examine the grounds of these other conclusions and the inferences drawn from them, if the materials admit of this; and if the appellate tribunal is convinced that these inferences are erroneous and that the rejection of B's evidence was due to error, it will be justified in taking a different view of the value of B's evidence.
I would only add that the decision of an appellate court whether or not to reverse a conclusion of fact reached by the judge at the trial must naturally be affected by the nature of the circumstances of the case under consideration."
What Mr Bonney relies upon in support of his submission is that from comments in his judgment, and in particular from a statement made in a subsequent judgment in which he had been asked to elaborate his reasons for finding against the first and second defendants, the judge made the finding of fraud. In the second judgment, which was delivered on 26th September 2000, he said this at page 5 G of the transcript:
"The fact that the £1.5 million was abstracted after it had reached the bank by, as I have found, the activities of the third and fourth defendants, seems to me to be irrelevant. Even if it had not been so abstracted, the claimant would still have been unsatisfied."
As to the judge's finding in relation to what happened to the money, reliance is placed upon his statement, beginning at page 28 H, where he considered what had actually...
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