The Accessory People Ltd v Laila Rouass

JurisdictionEngland & Wales
JudgeLady Justice Arden,Lord Justice Jackson,Lord Justice Sullivan
Judgment Date24 February 2010
Neutral Citation[2010] EWCA Civ 302
Date24 February 2010
CourtCourt of Appeal (Civil Division)
Docket NumberCase No: A2/2009/2010

[2010] EWCA Civ 302

IN THE COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM BIRMINGHAM DISTRICT REGISTRY

(HIS HONOUR JUDGE BROWN QC)

Royal Courts of Justice

Strand, London, WC2A 2LL

Before:

Lady Justice Arden

Lord Justice Jackson

and

Lord Justice Sullivan

Case No: A2/2009/2010

Between:
The Accessory People Limited
Appellant
and
Laila Rouass
Respondent

Mr Simon Clegg (instructed by JR Champkin LLB Solicitors) appeared on behalf of the Appellant.

Miss Dawn McCambley (instructed by Lewis Cutner and Co Solicitors) appeared on behalf of the Respondent.

Lady Justice Arden
1

This is an appeal by the Accessory People Limited ("Accessory") against the order dated 11 September 2009 of HHJ Brown QC sitting in the Birmingham District Registry of the Chancery Division of the High Court.

2

By his order the judge discharged an injunction which he had granted without notice earlier in July 2009 prohibiting the respondent, Miss Rouass, from advertising a winding-up petition which she had presented against Accessory. The winding-up petition was based on a debt of £162,260 comprising as to £145,000 the principal and interest due under the loan agreement together with further interest.

3

There is no dispute but that the parties entered into a loan agreement for this principal sum plus a certain amount of specified interest. It is unnecessary for me to go into the details of that loan agreement because the judge was satisfied that there was a debt of £145,000, and the company, Accessory, does not challenge that figure. It is sufficient for me to work on that basis and to record that there is a claim for further interest due but that the specified sum of £145,000 is accepted to be due. That means, of course, that the respondent, Miss Rouass, is a creditor for the purposes of the Insolvency Act 1986 in respect of that sum at least.

4

The moving light behind Accessory was a Mr Khan. He and Miss Rouass lived together until February 2008. There are now family proceedings between them in the Epsom County Court. It is relevant to note that in those proceedings Miss Rouass refers to the loan agreement, and she says that the respondent as guarantor owes her the amount due under the loan agreement, and she says that the sum is disputed by the respondent but that she does not accept this position. Thus, in this document Miss Rouass referred to the existence of a dispute but rejected it.

5

Miss Rouass also commenced proceedings in the Birmingham District Registry to recover some £60,000. The defendants were Accessory and Mr Khan, but neither of those defendants filed any defence. Miss Rouass discontinued the proceedings shortly after presenting the petition so that they are no longer relevant. Miss Rouass says that she considered that a claim defence that would have been put forward would not have been genuine or substantial.

6

In his judgment the judge recorded that Accessory raised a large number of cross-claims, which the judge went on to reject. We are concerned with only two of the cross-claims so that I need not deal with those which the judge rejected and which are no longer pursued on this appeal. Those two cross-claims are that Miss Rouass was responsible for the value of certain furniture at a property known as Linden House where she lived and that she was also responsible, pursuant to a borrowing agreement, to indemnify Accessory for the amount of rentals which it was obliged to pay for renting that furniture.

7

The evidence before the judge is contained in a number of witness statements. Certain passages in those witness statements are now relevant for the purposes of the present appeal. The first witness statement of Mr JR Champkin, solicitor for Accessory, dated 1 July 2009 states that Miss Rouass between June 2007 and June 2009 resided at Linden House, Woodland Way, Kingswood, Surrey, a property owned by Mr Khan. He further states that in that period Miss Rouass had the benefit of furniture rented by Accessory for her use. The value of that furniture, Mr Champkin was instructed, was £124,750. Accessory paid a rental deposit on that furniture in the sum of £25,000 and thereafter monthly rental payments in the sum of £30,000. Mr Champkin states that Accessory continues to be responsible for the rental payments and for the safeguarding of the furniture. He records that Miss Rouass paid the rental payments up till July 2008. Accessory's claim on account of rental is £36,000. It does not of course claim for the rental and the deposit, and that is the sum on which it relies in answer to this petition together with the value of the furniture as shown, by an invoice of 3 September 2007 on delivery of the furniture to Linden House.

8

Mr Champkin states in his witness statement that Miss Rouass made an oral agreement with officers of Accessory that she would indemnify the rental payments, which, as I said, she did until July 2008 according to the witness statement. Therefore Accessory claims the cross-claim of £36,000 and there are continuing rentals. He also says that Miss Rouass is also responsible for the value of the furniture which she had taken and Mr Champkin asserted that the combined value at the date of his witness statement was £185,750.

9

Miss Rouass made a witness statement, also in August 2009. She rejected the contention that she had had the benefit of furniture rented by Accessory or that the company paid a rental deposit of £25,000 or the monthly payments of £3,000. She pointed out that there is no documentary evidence to support the existence of any rental agreement to which Accessory was party. She also denies that there was any oral agreement between herself and Accessory for indemnifying Accessory against the rental payments. She also denies that she took furniture from Linden House when she left there in July 2008.

10

On 8 September 2009 Mr Champkin produced a further witness statement. He exhibited a bundle of invoices provided to him by Accessory and by Mr Khan. Among those documents are invoices to Accessory from Lakhani Group, which Mr Champkin says evidenced first the value of the furniture which was installed in Linden House and then the monthly invoices in respect of rental and an invoice for the deposit. There is no separate invoice for the deposit, but, as I have explained, we are not concerned with that sum. The value of the furniture was said in the invoice to be £124,750, the figure I have already given. Mr Champkin also produces a licence agreement between Lakhani as licensor and Accessory as licensee, providing for Accessory to pay a monthly rental of £3,000 and to return the goods at the end of the period of rental in the same condition. Accessory agreed to indemnify the licensor for any damage to the property. I shall have to refer to that agreement further below.

11

The judge dealt with these matters in paragraph 10 of his judgment. He said that there was some evidence, first, that the evidence was supplied to Linden House and that the furniture actually went there and, second, as to what happened to the furniture, although that was in dispute. There was evidence from Mr Khan, for instance, that he had seen furniture being removed by the respondent in June or July 2008, but no claim had been made or litigation commenced for the value of the furniture. The judgement does not actually say "or litigation" but it does record that no claim had been made for the value of the furniture. The judge held that what had become of the furniture was a matter for Accessory. There was no claim, and so there could be no cross-claim. He held that there was a debt of at least £145,000 owed by Accessory to Miss Rouass. He held that the fact of that claim was a material matter in deciding whether the petition should be advertised.

12

As I read the judgment, the judge did not deal with the alleged oral promise to indemnify Accessory for the rental. He did deal with the cross-claim for the value of the furniture and held that there was no cross-claim because no claim had been made. That is the point that I have already dealt with.

13

I now turn to the appellant's submissions, and the appellant appears by Mr Simon Clegg. The appellant submits that the judge was wrong to hold that there was no genuine cross-claim and that there was no bona fide dispute on substantial grounds. The judge was also wrong to say that because a cross-claim had been commenced there was no basis on which it could be said there was a dispute for the purposes of the application. For that purpose Mr Clegg relies among other authorities on Re Bayoil SA [1998] BCC 988 and the more recent authority, Bolsover District Council v Dennis Rye Limited [2009] 4 All ER 1140.

14

Mr Clegg submits that, insofar as the judge did so, he was wrong to say that...

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