Vidya Bhushan Goyal v Florence Care Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Morgan |
| Judgment Date | 19 March 2020 |
| Neutral Citation | [2020] EWHC 659 (Ch) |
| Docket Number | Case No: CH 2019 000206 |
| Date | 19 March 2020 |
| Court | Chancery Division |
[2020] EWHC 659 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Justice Morgan
Case No: CH 2019 000206
Andrew Butler QC (instructed by Child & Child) for the Appellant
There was no appearance on behalf of the First and Second Respondents
Nigel Burroughs (instructed by Beale & Company Solicitors LLP) for the Third Respondent
Hearing dates: 20 & 21 February 2020
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Introduction
This is an appeal against parts of an order made on 4 July 2019 by His Honour John Hand QC, sitting as a Deputy Circuit Judge in the County Court at Central London, following a reserved judgment which he handed down on 14 June 2019, which itself followed a trial which took place over four days in September 2018.
The Appellant, Mr Goyal, is the Claimant in these proceedings. His claim was originally against seven Defendants but only three of those Defendants participated in the trial and it is not necessary to make further reference to the others. The three Defendants who participated in the trial are now the three Respondents to this appeal.
The judge gave the Appellant permission to appeal on one proposed ground of appeal but not on other proposed grounds. On 4 October 2019, I gave the Appellant permission to appeal on all of the grounds in his Appellant's Notice, save to the extent that he already had such permission from the judge.
At the hearing of the appeal:
i) the Appellant was represented by Mr Butler QC who also appeared for the Claimant in the County Court;
ii) the First and Second Respondents did not appear and were not represented; they had been represented by counsel in the County Court;
iii) the Third Respondent was represented by Mr Burroughs who also appeared for that party in the County Court.
The First Respondent
When the appeal was called on before me, Mr Butler for the Appellant told me that the First Respondent had been dissolved in October 2019. He invited me to adjourn or stay the appeal in relation to the First Respondent. In the circumstances, I will stay the appeal in relation to that Respondent.
The Second Respondent
The Second Respondent is Mr Shanthi Edwards. On 11 April 2019, a bankruptcy order was made in relation to Mr Edwards. That order was made between the end of the trial and the hand down of judgment in the County Court. The judge did not know of the bankruptcy order when he handed down his judgment and therefore his judgment does not refer to the fact that Mr Edwards had become bankrupt. The judge did refer to the fact of bankruptcy when he gave his reasons for refusing the Appellant permission to appeal in relation to one part of the order which he made following judgment.
By the date of the Appellant's Notice, trustees in bankruptcy had been appointed in relation to Mr Edwards. The appeal in relation to Mr Edwards has been pursued notwithstanding his bankruptcy. At the outset of the hearing before me, Mr Butler for the Appellant addressed me as to the possible relevance of section 285 of the Insolvency Act 1986.
Under section 285(1), the court has power to order a stay of this appeal against the Second Respondent. However, I have not been asked by anyone to order such a stay and, in those circumstances, I see no reason to order such a stay of my own initiative.
Section 285(3)(a) provides that after the making of a bankruptcy order no person who is a creditor of the bankrupt in respect of a debt provable in the bankruptcy shall have any remedy against the property or person of the bankruptcy in respect of that debt. I will assume that the Appellant is a creditor in respect of a debt which is within section 285(3) as I did not hear any argument as to that matter. Mr Butler submitted that the continuation of this appeal against Mr Edwards did not involve the Appellant having a remedy against the property or person of Mr Edwards in respect of that debt. He cited Heating Electrical Lighting and Piping Ltd v Ross [2012] EWHC 3764 (Ch), [2012] BPIR 1122 in support of that submission. That case is authority for the proposition that bringing and pursuing proceedings up to the point of judgment is not contrary to section 285(3)(a). That decision was followed by Registrar Barber in Hellard v Chadwick [2014] BPIR 163. In that case she granted a stay of the proceedings under section 285(1) and the grant of the stay was upheld on appeal: see [2014] EWHC 2158 (Ch), [2014] BPIR 1234. I will follow these authorities as to the scope of section 285(3)(a) and hold that that paragraph does not prevent the Appellant continuing with his appeal in relation to the Second Respondent.
Section 285(3)(b) provides that a creditor who is within section 285(3) shall not commence any action or other legal proceedings against the bankrupt (before his discharge) except with the leave of the court. The claim against the bankrupt in this case was commenced long before the bankruptcy order. Although I did not hear any submissions as to section 285(3)(b), I consider that the bringing of an appeal in existing proceedings does not involve the commencement of an action or other legal proceedings within section 285(3)(b).
It follows that the Appellant is entitled to continue with his appeal in relation to Mr Edwards.
The judgment in relation to the claim against the Second Respondent
The judgment is lengthy and detailed and contains a review of a number of authorities in relation to various legal points that were argued in the County Court. At this stage, I will summarise only the points which are material to the appeal in relation to the claim against the Second Respondent, Mr Edwards. From this stage onwards, it is convenient to refer to the Appellant and the Second Respondent by name.
The judge summarised the arrangements made between Mr Goyal and Mr Edwards and others as to a proposed joint venture involving the purchase of care homes. The joint venture involved the creation of a company to become the holder of the legal title to the care homes. The First Respondent, Florence Care Ltd, was the company which was formed for this reason.
The joint venture involved Mr Goyal investing his own money in the venture. In February 2012, Mr Goyal transferred £160,000 to the client account of DKLM LLP, which is the Third Respondent. I will refer to them as “the Solicitors”. They regarded Mr Edwards as their client for this purpose. In August 2012, Mr Goyal transferred £590,000 to the Solicitors' client account. When I consider the appeal in relation to the Solicitors, I will need to set out the communications between Mr Goyal and the Solicitors in much greater detail.
By the end of August 2012, the sums of £160,000 and £590,000, paid into the Solicitors' client account by Mr Goyal, remained in that account. This is subject to a possible qualification that a cheque (number 24096) for £10,000 had been drawn on that account prior to the end of August 2012 but that cheque was later cancelled on 21 February 2013. The judge, I think correctly, regarded this possible qualification as irrelevant in view of the fact that the £10,000 had never in fact been paid out of the account.
On 6 September 2012, the Solicitors transferred the sum of £377,982.70 from the client account in relation to Mr Edwards to another client account associated with Mr Edwards. Although, at the Pre-Trial Review, Mr Goyal had applied for disclosure in relation to this account, that application failed. Accordingly, by the time of the trial, Mr Goyal had not been told where that sum of money had gone. However, at the trial, it emerged that the Solicitors, acting on the instructions of Mr Edwards, had transferred that money so that it could be used for the purchase of the Plas Eleri care home by Atlantis Medicare (Plas Eleri) Ltd.
In September and October 2012, there were further transfers from the client account for Mr Edwards. For example, £40,000 was paid for stamp duty on 14 September 2012 and approximately £24,000 was paid as “completion monies” on 24 September 2012. It is possible that some of the further transfers at this time were in connection with the purchase of the Plas Eleri care home.
On 6 December 2012, Florence Care Ltd contracted to purchase a property described as the Cawston care home for a price of £1.7 million and paid a deposit of £170,000. The money for the deposit came from the Solicitors' client account for Mr Edwards. At this point, the balance in that account stood at approximately £85,000.
In 2013, on a number of occasions, Mr Goyal asked for the return of the £750,000 he had paid into the Solicitors' client account.
The low point for the balance in the Solicitors' client account in relation to Mr Edwards was reached on 26 June 2013 when the balance stood at approximately £30,000.
In August 2013, Mr Edwards made eight payments into the Solicitors' client account bringing the balance to a little over £1.56 million. The payments were described as “completion monies” and the sum of £1.56 million was paid out of the account on 13 August 2013 to enable Florence Care Ltd to complete the purchase of the Cawston care home.
By the time of the trial, Mr Goyal accepted that he would not claim that he had acquired rights in relation to the Cawston care home as a result of the earlier arrangements for a joint venture.
As to the relationship between Mr Goyal and Mr Edwards, the judge held:
i) The arrangements in relation to the proposed joint venture and the payment of monies by Mr Goyal...
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Pravin Patel v Barlows Solicitors (A Firm)
...of the trust. Absent such proof, the trust will not, or not be presumed, to exist: see, for example, Goyal v Florence Care Ltd [2020] EWHC 659 (Ch), [2020] All ER (D) 10 (Apr). The stated purpose must be clear so that a court can determine whether the property was applied for the purpose. ......