British
and Irish Legal Information Institute
Freely Available British and Irish Public Legal Information
[
Home]
[
Databases]
[
World Law]
[
Multidatabase Search]
[
Help]
[
Feedback]
England and Wales High Court (King's Bench Division) Decisions
You are here:
BAILII >>
Databases >>
England and Wales High Court (King's Bench Division) Decisions >>
Al-Muslimani v Ghazarian [2024] EWHC 3601 (KB) (09 December 2024)
URL: http://www.bailii.org/ew/cases/EWHC/KB/2024/3601.html
Cite as:
[2024] EWHC 3601 (KB)
[
New search]
[
Printable PDF version]
[
Help]
|
|
Neutral Citation Number: [2024] EWHC 3601 (KB) |
|
|
Claim Number: KB-2022-004188 |
IN THE HIGH COURT OF JUSTICE
KING'S BENCH DIVISION
|
|
Royal Courts of Justice Strand London
|
|
|
Delivered Orally On 9th December 2024 |
B e f o r e :
MASTER DAGNALL
____________________
Between:
|
HASSAN ALI BIN ALI AL-MUSLIMANI
|
(Claimant)
|
|
- and -
|
|
|
HRACH GHAZARIAN
|
(Defendant)
|
____________________
Transcribed from the official recording by eScribers Ltd
Ludgate House, 107-111 Fleet Street, London EC4A 2AB
Tel: 0330 100 5223 | Email: uk.transcripts@escribers.net | uk.escribers.net
____________________
MR A DAVIES, appeared on behalf of the Claimant
MR J HAMILTON BARNS, appeared on behalf of the Defendant
____________________
HTML VERSION OF APPROVED JUDGMENT
____________________
Crown Copyright ©
MASTER DAGNALL:
- This is my judgment in relation to the claimant's application, made by application notice of 18 March 2024 under CPR 3.4, to be able to obtain judgment, or for summary judgment, under Civil Procedure Rule 24.3. This being in relation to the claimant's claim, as set out in the claim form and particulars of claim, for payment of a sum of £310,000 promised to be paid by the first defendant by a cheque dated 22 December 2017.PRIVATE
- The situation before me is to be seen as follows, being from the limited material which is contained in the bundle of documents which has been presented to me and the submissions made by the parties' advocates. It is common ground that the first defendant did provide the claimant with the cheque drawn on a National Westminster Bank account dated 22 December 2017 for £310,000. Further, that the claimant had brought bankruptcy proceedings against the first defendant's daughter, the second defendant, seeking to rely on a cheque allegedly given by her to the claimant dated 27 January 2017 for £289,000. Further, that the claimant presented the December 2017 cheque of the first defendant to the National Westminster Bank for payment, but at all material times, at least up to the time of that presentment, the relevant bank account had little, if any, money in it. The bank statement, which is before the court, recorded a maximum figure of £20. Further, the cheque was dishonoured and returned to the claimant marked "Refer to drawer."; although, the evidence presently before me is that the bank did not then inform the first defendant as to what had happened. Further, that by a document dated 20 September 2019, addressed by the first defendant to the claimant, the first defendant wrote, "Reference to our discussion herewith upon your request, I confirm that I take full responsibility for the amount borrowed and to redeem the full balance separately drafted and agreed provided my daughter [the second defendant] is released from all liabilities."
- There is also produced to me a document, which it is common ground emanates from about this time and which is signed by both the claimant the first defendant, which is addressed to the claimant and states, "Subject to proceedings against Nari" - that is to say the second defendant - "being brought, I am prepared to agree that I pay you the balance of £310,000 made up as to £165,000 in respect of the loan in the sum of £144,800 in respect of interest accrued under the loan. I can make payment of £50,000 as a first instalment by 11 October 2019 and I will pay the balance of further instalments as follows." There then follow separate amounts making up the balance in total, to be paid in five instalments between 31st January 2020 and 30 June 2021.
- On 17 October 2019, Deputy ICC Judge Agnello QC made an order in the insolvency proceedings brought by the claimant against the second defendant, which provided in its recital, "Upon the petitioning creditor" - that is to say the claimant - "and the debtor" - that is to say the second defendant -, "having agreed terms in full and final settlement of these proceedings on the basis that the petitioner herby releases the debtor from all and any liability whatsoever and howsoever arising." There are then references to the petition having been heard in early 2019. The order then provided that the petition be dismissed and that there be no order as to costs.
- It is further common ground that none of the amounts referred to in the instalment document, not even the first payment which was to be paid by 11 October 2019, were paid by the first defendant to the claimant.
- The claimant then issued the claim form in these proceedings on 31 October 2022 against both the first defendant and the second defendant, seeking the amounts against them which were provided for by the two 2017 cheques, and referring to both cheques having been dishonoured on presentation. Paragraph 2 of the particulars of claim stated that the December 2017 cheque had been presented within a reasonable time, dishonoured and returned to the first defendant. That was said to amount to sufficient notice of the dishonour for the purposes of section 49(6) of the Bills and Exchange Act 1882, which I will call "the 1882 Act", for the claimant to be entitled to bring a claim on the cheque against the first defendant.
- The particulars of claim also sought the amount of the 2017 cheque against the second defendant. The first defendant acknowledged service in an acknowledgement of service signed by a solicitor, Mr Julian Hamilton Barns, who appears before me today representing the first defendant on instructions, but who tells me that he never intended in any way to be on the court record for the first defendant.
- The first defendant filed and served a defence, sending it to the court in person and not through Mr Hamilton Barns, in which he asserted, firstly, that the September 2019 documents constituted an agreement which had the effect of superseding the obligations of the first defendant under the December 2017 cheque. Secondly, that the first defendant had not been given sufficient notice of dishonour. He asserted that the first defendant had only learned about the presentation of the cheque to and dishonouring of the cheque by the bank some four years after the event. Reference was also made to the second defendant's defence, and it was denied that any liability of the second defendant existed.
- The second defendant filed and served a separate defence, asserting that there had been agreements that she was to be released from any claim against her, and in paragraph 6 asserting that, on that basis, the bankruptcy petition had been dismissed with no order as to costs.
- The claimant has since discontinued his proceedings against the second defendant; although there appears to be some dispute between the parties as to whether, or not, the claimant is still continuing to maintain claims against the second defendant.
- In order to ascertain the position as to what communications with regard to dishonouring of the December cheque took place between the bank and the first defendant, the claimant made an application for the bank to provide disclosure under the Bankers Book Evidence Act 1879. That was somewhat delayed, owing to jurisdictional queries raised by the court, but an order was eventually made which resulted in the bank disclosing both that it did not have material demonstrating a communication of notice of dishonour of the presented cheque to the first defendant, and that the relevant account had had very little money in it over the period of the supply of the cheque to the claimant and the claimant presenting it to the bank.
- The claimant then filed and served a reply dated 15 March 2024, which asserted at paragraph 3 that the September 2019 agreement did not release the first defendant from liability on the cheque, and that none of the various instalments having been paid had the consequences that the consideration for any promise on the part of the claimant had wholly failed and the 2019 agreement was no defence to the claim. It was further asserted that, in light of the limited amount in the bank account at the relevant time, the situation was that the first defendant had supplied the December 2017 cheque at a time when there were insufficient funds in his bank account to meet the cheque, and so that no notice of dishonour was required at all in order for the first defendant to be liable on the cheque.
- The claimant issued the application notice which is before me on 18 March 2024, asserting that the defences which had been advanced to the first defendant lacked any real prospect of success, and essentially relying on what is set out in the reply.
- The matter was eventually listed to be heard before me today. Mr Hamilton Barns appeared on behalf of the first defendant, and Mr Davies of counsel on behalf of the claimant. I have considered everything they have put before me, including Mr Davies' skeleton argument and each of their sets of oral submissions.
- Mr Hamilton Barns at the beginning of the hearing, without objection from Mr Davies, adduced to me a witness statement of the first defendant. Mr Hamilton Barns says to me that the first defendant is in the position of being a full-time career for his wife, who suffers from a substantial degenerative disease and is as a result vulnerable, and that obtaining instructions from the defendant is difficult, and that the first defendant is further vulnerable in that his first language is not English. Further, that a standard nature of dealings in the first defendant's, and also the claimant's, particular cultural ethnic circumstances is that their dealings may well not be fully documented.
- Mr Hamilton Barns says that, although the court's record is that notice of a hearing before today was sent to Mr Hamilton Barns' email address on 13 September 2024, Mr Hamilton Barns was not formally acting for the first defendant and does not recall receiving that hearing notice, with the result that the first defendant's side only heard about this hearing distinctly recently, and that the witness statement could only be prepared as a matter of urgency last night.
- The witness statement refers to the following contentions on the part of the first defendant. Firstly, that when the December cheque was given by the first defendant to the claimant it was on the basis of a specific request for the cheque not to be presented until the first defendant had confirmed that there would be sufficient funds in the account. Secondly, that the claimant had continually brought proceedings against the second defendant in attempts to force the first defendant to accede to his demands, notwithstanding his agreement to release her. Thirdly, that the September 2019 arrangement had been made in the form of the documents which I have referred to earlier, and which superseded any liability which the first defendant had in relation to the cheque. Fourthly, that the first defendant had continually made that clear. Fifthly, reference was made to a previous witness statement of the claimant's solicitor, dated 31 January 2023, in which at one point she had said, "If, however, what the first defendant says is true" - this possibly being a reference to the first defendant's construction of the 2019 agreement -, "the claimant will apply to the court on notice to the first defendant for permission to amend the claim form to plead in the alternative for an agreed sum due under or for breach of the agreement dated 20 September 2019 exhibited in the first defendant's defence." The first defendant went on to say that if those arguments based on the 2019 agreement were to be relied on, there would have to be amendment to the claimant's particulars of claim.
- Nothing, however, was said as to why in those circumstances, if there was such an amendment, the first defendant would have any defence to such a claim. I raised this during the hearing, and Mr Hamilton Barns eventually said to me, firstly, that the first defendant would contend that the 2019 instalments agreement had been breached by the claimant, being by way of the claimant continuing to pursue the second defendant, first by these proceedings, but also by other means. Then, secondly, that the first defendant wished to raise another set of arguments based on the dealings between the parties before the cheque was actually supplied by the first defendant.
- Mr Davies seeks to make the application under the two different sets of the civil procedure rules. Firstly, under CPR 3.4(2)(a) and (b), which read as follows:
""3.4…
(2) The court may strike out a statement of case if it appears to the court –
(a) that the statement of case discloses no reasonable grounds for bringing or defending the claim;
(b) that the statement of case is an abuse of the court's process or is otherwise likely to obstruct the just disposal of the proceedings…"
- I note that sub rule (a) involves in general a consideration of whether the relevant statement of case, here the defence, discloses reasonable grounds for defending the claim. That consideration usually being on the basis that what is set out in the defence as a matter of fact is assumed to be correct. The court then tests as a matter of law as to whether, or not, it would give rise to a defence. As far as CPR 3.4(2)(b) is concerned, such applications are generally brought on the basis that there is some particular form of abuse of the court process. Although, I do bear in mind that some authority may suggest that putting forward a defence that is bound to fail would itself be an abuse.
- Thirdly though, Mr Davies seeks to rely upon CPR 24.2:
"24.2 The court may give summary judgment against a claimant or defendant on the whole of a claim or on a particular issue if –
(a) it considers that –
(i) that claimant has no real prospect of succeeding on the claim or issue; or
(ii) that defendant has no real prospect of successfully defending the claim or issue; and
(b) there is no other compelling reason why the case or issue should be disposed of at a trial."
- I bear in mind that in order to obtain summary judgment the claimant has to show both that the defendant has no real prospect of success on the defence, and that there is no other compelling reason why there should be a trial.
- As far as the question of no real prospect of success is concerned, the principles are well-known and essentially set out in CPR 24.3.2:
[Diagram or picture not reproduced in HTML version - see original .rtf file to view diagram or picture]/
- I bear in mind that I am not to conduct any mini trial. That does not prevent me deciding a point of construction, or of law, if I regard it as appropriate to do that. I also bear in mind that I can take into account the possibility of the material evidence which might affect the ultimate outcome only appearing within the case management process potentially as a trial itself, but I should only proceed on that basis where there is some real foundation for such an expectation.
- In relation to case management issues, I have borne in mind the court's overriding objective in CPR1.1;, and also that, in particular in relation to parties being able to participate fully in the litigation process, CPR 1.6 and Practice Direction 1A make provision for how the court should give effect to the overriding objective in relation to vulnerable parties.
- In considering Mr Davies' arguments he submits, firstly, that in the light of there being no moneys, or any substance, in the relevant bank account, resulting in the dishonour of the December 2017 cheque when it was presented, it was not necessary for notice of dishonour to be given to the first defendant in order for an action to be brought on the cheque. He further contends that although that was not the basis of the claimant's assertion as to why a claim could be brought on the cheque as set out in the particulars of claim, that it was legitimate to raise this matter by way of reply, and that if it was not the court should, effectively, deem the particulars of claim to be amended on the basis that the claimant's claim has been clear since the service of the reply, and that to require a full amendment process would simply be a waste of time, cost and court resources, contrary to the overriding objective.
- In support of his submission that, in the particular circumstances, notice of dishonour is not required, Mr Davies has relied particularly on section 50(2)(c)(iv) of the 1882 Act:
"50 Excuses for non-notice and delay.
(1) Delay in giving notice of dishonour is excused where the delay is caused by circumstances beyond the control of the party giving notice, and not imputable to his default, misconduct, or negligence. When the cause of delay ceases to operate the notice must be given with reasonable diligence.
(2) Notice of dishonour is dispensed with—
(a) When, after the exercise of reasonable diligence, notice as required by this Act cannot be given to or does not reach the drawer or indorser sought to be charged:
(b) By waiver express or implied. Notice of dishonour may be waived before the time of giving notice has arrived, or after the omission to give due notice:
(c) As regards the drawer in the following cases, namely, (i) where drawer and drawee are the same person, (ii) where the drawee is a fictitious person or a person not having capacity to contract, (iii) where the drawer is the person to whom the bill is presented for payment, (iv) where the drawee or acceptor is as between himself and the drawer under no obligation to accept or pay the bill, (v) where the drawer has countermanded payment:
(d) As regards the indorser in the following cases, namely, (i) where the drawee is a fictitious person or a person not having capacity to contract, and the indorser was aware of the fact at the time he indorsed the bill, (ii) where the indorser is the person to whom the bill is presented for payment, (iii) where the bill was accepted or made for his accommodation."
- Mr Davies submits that where there was nothing in the bank account of any substance at the time the cheque was supplied, and at the time when it was presented, the drawee, that is to say the bank, was between itself and the drawer, that is to say the first defendant, under no obligation to pay the bill, that is to say the cheque. In those circumstances notice of dishonour, Mr Davies submits, is dispensed with.
- In support of those submissions he relies firstly on the previous common-law position as set out in particular in Bickerdike v Bollman 1 Term Rep 404. The opening five paragraphs are the judgments of Mr Justices Ashurst and Buller read as follows:
"Ashhurst, J. As to the general rule; it has never been disputed, that the want of notice to the drawer after the dishonour of a bill is tantamount to payment by him; but that rule is not without exceptions, and particularly in the case mentioned by the plaintiff's counsel, that notice is not necessary to be given where the drawer has no effects in the hands of the drawee; for it is a fraud in itself, and if that can be proved, the notice may be dispensed with. In this case it appears that at the time of drawing the bill, the drawer, so far from having any effects in the hands of the drawee, was actually indebted to him to a large amount.
But even admitting this to be a general rule without any exception; it was certainly introduced for the benefit of the drawer. Now every rule may be waived by the person for whose benefit it is introduced. Under the circumstances of the present case the drawer must be considered as having waived this benefit, because the commission is founded on that creditor's debt, between whom and the drawer this transaction has happened; and his submitting to it is a waiver of the want of notice, and an admission of the debt; which admission the assignees have subsequently confirmed by bringing this action. Therefore I think that as the bankrupt himself has not chosen to take advantage of it by moving to supersede the commission, it does not now lie in the mouth of a third person to do so.
Buller, J. The last point may be laid entirely out of the case, because, unless the objection be well founded in the case of the bankrupt himself, it is immaterial to consider how far it was competent for a third person to take advantage of it. The case of Quantock and England does not apply. There the question was, whether a third person should be permitted to avail himself of the Statute of Limitations. There might be good reasons for disallowing it in that case, because the debt still remained in conscience. But here the question is, whether there was a sufficient debt to support the commission at the time when it issued.
The first point to be considered is, whether under these circumstances it was necessary to give notice within as short a time as could conveniently be done, that the bill was neither accepted nor paid. I am of opinion that no such notice was necessary. On the second trial of the cause of Tindal and Brown before me at Guildhall, the jury told me they found their verdict for the plaintiff on the ground that it had not appeared from the evidence that any injury had arisen to the party from want of notice. In consequence of which, upon the subsequent trial, I told the jury that where a bill was accepted, it was primâ facie evidence that there were effects of the drawer in the hands of the acceptor. The mistake of the jury on the former occasion had arisen from their taking it for granted that the drawer had not been injured by the want of notice, because he had not proved it, whereas that proof lay on the plaintiff to produce. And upon my mentioning this matter to the Court, they thought that if there were no effects in the hands of the acceptor, that would vary the question very much, as the drawer could not be hurt.
The law requires notice to be given for this reason, because it is presumed that the bill is drawn on account of the drawee's having effects of the drawer in his hands; and if the latter has notice that the bill is not accepted, or not paid, he may withdraw them immediately. But if he has no effects in the other's hands, then he cannot be injured for want of notice. Soon after I sat on this Bench I tried a cause at Guildhall, on a bill of exchange which was either drawn or accepted by a person residing in Holland, and a full special jury, under my direction, found a verdict for the plaintiff, notwithstanding no notice had been given to the drawer of the bill's having been dishonoured, because he had no effects in the hands of the person on whom the bill was drawn. That verdict never was objected to: and if it be proved on the part of the plaintiff that from the time the bill was drawn, till the time it became due, the drawer never had any effects of the drawee in his hands, I think notice to the drawer is not necessary; for he must know whether he had effects in the hands of the drawee or not; and if he had none, he had no right to draw upon him, and to expect payment from him; nor can he be injured by the non-payment of the bill, or the want of notice that it has been dishonoured. On these grounds I think the petitioning creditor's debt was sufficient to support the commission."
- Mr Davies contends that the above is authority for the proposition that for a cheque to be supplied in such circumstances is effectively a fraud on the holder of the cheque, that is to say the claimant, and so that notice of dishonour does not require the common law. He further relies on the decision of Karoon v Duckworth 4 Exchequer Reports 313, and the judgments of Barons Bramwell, Channell and Cleasby to the effect that notice of dishonour is not required where the drawer had no reasonable expectation of the bill being paid upon presentation to the drawee, that is to say the bank, which would be the case if there were no funds within the account.
- Mr Davies further calls my attention to section 15-042&15-043 of Byles on Bills and Exchange of Cheques, 30th Edition:
"Insufficient funds in drawee's hands
The most common instance of this arises in relation to cheques, where the bank, on whom the cheque is drawn, is under no obligation, as regards the drawer, to pay the cheque, as a result of there being insufficient funds in the drawer's account. Equally in relation to a stale cheque, a bank is not under an obligation to pay such a cheque and hence notice of dishonour is dispensed with. If the drawer has insufficient funds at any time during the currency of the bills in the hands of the drawee, the latter will be under no obligation to accept or, if he has accepted, to pay (vis-a-vis the drawer), and the drawer will have no remedy against the acceptor or any other person if he is obliged to pay the bill; not being therefore prejudiced by want of notice, the drawer cannot set that up as a defence. However this case was distinguished in a later decision, where it was held that notice of dishonour for the accommodation of an indorsee must be given to the drawer, though he had no effects in the hands of the acceptor, as, on receiptof notice, the drawer would be entitled to call on the indorsee for the money, whereas in the former case there was no person from whom the drawer would have been entitled to recover.
Further, at common law, in order to be liable without notice, the drawer must have had no remedy against the acceptor or any other person. Hence if a bill was drawn for the accommodation, not of the drawer, but of the acceptor, as the drawer might sue the acceptor, he was entitled to notice and if the drawer in such a case chose to pay without notice, he could not sue the acceptor for money paid to his use, although he might sue on the bill. So, it was no excuse for neglect to give notice to an indorser, that the drawer had no effects in the acceptor's hands. Nor would the absence of effects in the hands of the maker of a promissory note be any excuse for want of notice to the indorser, at all events unless the indorser was the person who was to pay, and who had no remedy over
against anyone; nor would it suffice to allege that he had not been damnified by the absence of notice.
An intimation from the drawee that he could not meet the bill, but that the drawer must take it up, does not relieve the holder from the necessity of giving the drawer notice. Where the acceptor remitted to the drawer a sum of money in part payment of his acceptance, it was held that such amount could be recovered by the holder as money paid to his use, but that he could not recover on the bill itself, since the drawer had received no notice.
The above cases do not appear to be affected by the 1882 Act s.50(2)(c) and (d).
At common law, though the drawer had no effects in the hands of the drawee, yet if he had any reasonable expectation that the bill would be honoured, he was held to be entitled to notice of dishonour, as if he had consigned goods to the drawee, though, in fact, they never came to hand, or had accepted bills for him, or where there was a fluctuating balance as between drawer and drawee.
The 1882 Act now, however, definitely provides that the question always is,whether the acceptor is obliged to pay and not whether the drawer expects that he will…"
- Mr Davies has further directed me to section 6-133 of Chalmers and Guest on Bills of Exchange and Cheques, 19th Edition to similar effect.
- Mr Hamilton Barns, in my view rightly, did not seriously seek to contest these aspects of Mr Davies' submissions.
- It does seem to me to be clear in those authorities, firstly, that at common-law notice of dishonour was dispensed with if the drawer, here the first defendant, did not at the time of supplying of the cheque have the reasonable expectation that the cheque would be met on presentation, and that the absence of sufficient funds in the bank account would ordinarily mean that no such reasonable expectation existed.
- Secondly, that the position had been made even more firm against the drawer by section 50 of the 1882 Act, which provides that notice of dishonour is not required if there is no obligation of the drawee, that is to say the bank, to pay the cheque; and which will generally be the case where insufficient funds were in the account.
- Further, it seems to me that there is no material before me, having considered the bank statements and the witness statements before me, to suggest that any such reasonable expectation existed. Therefore, in principle, it seems to me Mr Davies is right as to this element of his case.
- However, Mr Hamilton Barns seeks to meet this argument by relying on Mr Ghazarian's fairly recent witness statement, and contends that the circumstances in which the cheque was supplied to the claimant meant that the claimant could not actually present the cheque at an early point as he claimed that he did, he having been told by Mr Ghazarian that there were insufficient funds in the account and that the defendant would have to wait.
- It seems to me, on the clear evidence before me, that I would not be inclined to accept that this witness evidence raises a real prospect of success in the defence. This is, having considered all the material before me, primarily for the following reasons. Firstly, even the first defendant's evidence does not say that the claimant agreed that he would not present the cheque. All that is said by the first defendant is that the first defendant told the claimant that there were insufficient funds in the account, and that he would tell the claimant once there were. That does not seem to me, of itself, an assertion that the claimant agreed that he would not present the cheque in those circumstances. Secondly, the assertion that even that was said does not appear in the first defendant's defence, which renders the first defendant's statement in the very recent witness statement, at first sight, plainly unreliable, especially as no explanation was given for the earlier omission.
- Thirdly, the assertion by the first defendant that it seems at first sight extremely unlikely, commercially. Effectively, the first defendant seems to have been saying, on his own case, to the claimant that he was giving the claimant a cheque in relation to an existing liability, but that he, the first defendant, would be able to control when presentation of the cheque would take place, and that would be on the basis of his eventual confirmation that he had funds in his account, but which confirmation might have never been provided, or only provided after a distinctly substantial lapse of time.
- Mr Hamilton Barns says to me that this is a common situation where debtors often give their creditors cheques, stating that this is something which will afford the creditor some comfort, even though it may be well in the future, if ever, that funds will exist in relation to which the cheque can be presented. It may be that debtors seek to persuade their creditors from time to time to accept such a situation, but at first sight it seems to me clearly commercially unlikely (and inequitable) that the creditor would be prepared to accept that as being the case.
- In all the circumstances, on the material before me at present, it seems to me that any such assertion on the first defendant's position of something having been said which was sufficient to mean that the claimant could not present and rely on the cheque, falls within the realms of fanciful, such that the first defendant would have no real prospect of success.
- It further seems to me in relation to the question of amendment that, technically speaking, Mr Davies and the claimant have acted sufficiently by pleading the absence of moneys in the bank account within the reply. Although the claim itself refers to notice of dishonour, it is a claim based on the cheque. The first defendant has asserted that notice of dishonour was not given within a reasonable time, and the claimant has responded to say it was actually not required. That it seems to me is a proper course of claim, defence and reply and amendment of the particulars of claim is not there required.
- However, the first defendant's second defence is to rely on the September 2019 agreement. Mr Davies submits in relation to this that, where none of the instalments were actually paid, the document simply does not prevent the cheque being relied upon. He contended that the document can simply be construed on its own turns, on construction principles, and that when seen on its own terms the reasonable reader would conclude that, as it says nothing about the cheque, the September 2019 agreement is irrelevant to and does not prevent enforcement of the obligations arising from the 2017 cheque. Mr Davies would say it would seem odd that a creditor should be agreeing to no longer relying on a cheque on the basis of an instalment agreement if no instalments were paid.
- I think that Mr Davies accepted, although I did not find his submissions entirely clear, that if any moneys had been paid under the instalment agreement he might be in some difficulty, because the full amount of the cheque would no longer remain due. However, he submitted that, although he might be able to contend in those circumstances that an action on the cheque would have to give credit for what had been paid, this was not the situation before me (i.e. where not even one instalment had been paid).
- Mr Hamilton Barns submitted to me that the matter was much wider than simply the written document, it falling within a situation of other matters being agreed between the parties, and that any construction would have to be int eh context of and take account of all the relevant circumstances. He further submitted to me that on a proper construction of the 2019 Agreement alone, but in the light of the factual matrix which appears before me, a reasonable reader would treat the cheque as having been superseded by the 2019 agreement, so that any action would have to be brought on the 2019 agreement and where no such action has presently been brought.
- Mr Davies responded to say that his primary position was not to accept that his client should have to sue on the 2019 Agreement (if at all); but his secondary position was that, if such was to be the case, the court should treat there as being an amendment of the claimant's case to such effect, and make some form of conditional order providing for at least the £165,000, expressed to be the quantum of the original loan to be paid at this point, together with other directions.
- Mr Hamilton Barns disputed this, and further submitted that, if the 2019 agreement was to be relied on the claimant would wish to raise various other arguments relating to the parties' dealings, including dealings which had take place prior to the issue of the 2017 cheque. Mr Davies responded that there was no evidence or statements to what any of those matters were. They did not appear in the existing defence, and that for them to be raised would require specific permissions to be given by the court once they had been formulated, since they would not be consequential on any actual, or notional, amendment to the particulars of claim.
- I have considered these matters somewhat anxiously, since I bear in mind that Mr Davies is right, as I have already said, that the court can on a summary judgment application resolve contested questions of construction of written, or indeed oral agreements.
- In terms of construction, I have borne in mind the usual rules for construction of agreements which are contained in such cases as Arnold v Britton, and more recent cases such as BNY v Cine-UK [2-22] EWCA Civ 1021, to the effect that the court asks itself what the reasonable reader, or person construing the terms of the agreement, would consider was their relevant meaning. In doing so the court construes the entire word and context of the agreement looking at the words used, looking at the factual matrix of matters known to the parties to the agreement and considering its commercial purpose; and giving proper prominence to the words used in the circumstances, and the nature of the particular agreement, including as to whether, or not, it is professionally drawn. The court does not consider the actual subjective intentions of the parties or their negotiations, except in so far as they might form part of the factual matrix. The court engages in an iterative process of holistic construction, considering each of the various possible constructions together, rather than taking an approach of rejecting particular constructions and coming to fall back on some final default construction.
- Here, it seems to me, me my analysis is as follows. Firstly, a primary question which exists is as to whether the court has all of the terms of the relevant agreement. That involves the court asking itself as to whether the written document contains all the terms which have been agreed between the parties. Here, I have a substantial concern as to whether I have all that material, bearing in mind in particular what happened with regard to the bankruptcy proceedings.
- The second written document opens with the words, "Subject to the proceedings against Nari" that is to say the second defendant, "being withdrawn." The consent order made by the ICC judge, provided not merely that the petition should be dismissed, but also that there should be no order as to costs. The second defendant's defence, itself referred to in the first defendant's defence, seems to have been treated this costs provision, possibly, as being a term of the agreements which had been made, and, indeed, potentially as consideration for the agreement on the basis that the second defendant gave up what she might have contended to have been a right to seek costs in relation to what she may have contended to be a misconceived bankruptcy petition (such that at a contested hearing it should be dismissed with an order for costs).
- It, therefore, seems to me from all that, that there is some real potential for the discussions between the parties, and the agreement between the parties, to have been somewhat more complex and wider than simply what was written down within the September 2019 document. That may well suggest that it is not clear whether the document was itself an agreement that simply contained a condition which was then satisfied by a separate legal agreement between the claimant and the second defendant relating to the bankruptcy petition, or was itself simply part of a wider agreement. That concern is somewhat reinforced in my mind by Mr Hamilton Barns' submissions, albeit not made with any supporting evidence, that the dealings between these parties of this particular culture, and in their particular circumstances, may have resulted in a part written, and a part oral, agreement.
- Secondly, whether or not that is correct, I am concerned as to whether I have the entire factual matrix before me of matters which would have been known to both parties, and which factual matrix would potentially impinge upon the construction of the 2019 document. Whatever had happened by the time of the 2019 document in the bankruptcy petition does seem to have involved matters which were known to both of the parties to the 2019 document, and in some possible circumstances it seems to me that they might well affect the construction of the agreement, particularly in terms of whatever had been said or contended, if anything, by the second defendant in relation to cost claims against the claimant. Likewise, there is some suggestion that the first defendant was raising arguments that interest being sought by the claimant was not recoverable under some form of consumer, or similar, law. That is a matter which, if it was the case, may not have been admissible as to construction as being part of negotiations, but might have been admissible as being part of the factual matrix. Without evidence, as to which neither party has sought to focus on in any way, it seems to me that I have a potential difficulties in coming to a clear conclusion of construction.
- Thirdly, it does not seem to me that, even if there is no other relevant material, the question of construction is at all clear in the claimant's favour. There is no provision for acceleration of instalment payments in the event of non-payment, as is common in compromise agreements of this nature. Mr Davies submits to me that the reasonable reader would simply think that, if no instalments were paid, the underlying obligations arising from the 2017 cheque would just regain their full and immediate force and effect, or, to put it another way, were merely suspended pending the question as to whether the instalments would be swiftly paid at the times provided by the 2019 Agreement. That, however, does not seem to me to be at all obvious. It seems to me that the reasonable reader might well see the document as simply setting aside whatever had previously been the position, and creating a new regime as between the parties capable, and only capable, of being simply sued upon on its own terms.
- There is a further difficulty that Mr Davies himself has identified, that the reasonable reader might very well consider that if any one instalment had been paid, or indeed part paid, that would simply be inconsistent with a claim being brought under the previous cheque and agreement and regime. However, if that is right, that itself is support in the reasonable reader's mind for a conclusion that the 2019 agreement superseded what had gone on before.
- I further think that those considerations would be further reinforced by an impression, and which would, I think exist in the mind of the reasonable reader, that both some dispute about interest and disputes about both the bringing of the bankruptcy proceedings against the second defendant and their costs were being compromised. It, therefore, does not seem to me to be at all obvious that the construction issue results in favour of the claimant.
- In such circumstances, where I also have my concerns about whether I do have all the terms of the arrangement and all of the factual matrix, it seems to me that it would not be appropriate for me to come to a conclusion as to whether, if there was nothing else material to take into account, I would decide the construction issue in the claimant's favour. In my judgment, the first defendant has a real prospect of success in establishing that 2019 agreement simply replaced what had gone on before i.e. the 2017 cheque and any associated obligations.
- I do then come onto Mr Davies' other fallback points; being that I should effectively treat the claim as including a claim based upon the 2019 agreement, and effectively grant the first defendant only conditional permission to defend.
- It does seem to me in the circumstances that I ought to make some sort of order allowing Mr Davies to rely on the 2019 agreement; but it also seems to me to be contrary to the overriding objective to allow him to, effectively, rely on it as part of this hearing today. The claimant has already had a substantial period of time and opportunity to consider, in the light of the filed defences, whether to amend to plead the 2019 agreement as an alternative secondary way of putting the claimant's case. It also seems to me that this is the sort of matter which simply ought to be pleaded and stated in order for the claimant's case to comply with the rules, and in particular CPR 16.4, of setting out the facts which are relied on. Further, it seems to me that for such amendments not to have taken place yet has potentially prejudiced the first defendant today i.e. in circumstances where he has not yet had framed against him properly this alternative case and so that he has not yet had a proper opportunity to respond to it.
- It does seem to me that, for the claimant to advance that sort of case in these particular circumstances, the claimant should properly plead it out and give the first defendant a proper opportunity to respond to it, rather than the situation which is before me, where Mr Hamilton Barns is saying that the first defendant simply has not had such a proper opportunity.
- However, it does seem to me that any amendment application from either side has to be treated on its own merits, and thus in the order which I intend to make I do not give permission for the first defendant to amend other that by way of consequential amendments to those made by the claimant. If the first defendant wishes to seek to raise other matters, then he will have to seek a further permission.
- For all those reasons, what I am going to do is as follows. I am going to give the claimant permission to amend to include a claim based on the 2019 agreement. I am going to give the first defendant permission to amend consequential upon the claimant's amendments, but if the first defendant wishes to go further than that the first defendant will have to make an application within a set period of time.
- In the particular circumstances of this case, rather than dismiss the claimant's application as such, I am going to adjourn the claimant's application. The claimant will then have to say within a set period of time as to whether, or not, the claimant wishes, (a) to restore it, and/or (b), to object to any amendments which the first defendant makes. In the light of whatever occurs in that process, it should then be possible to decide what is best to then case manage the matter. That, it seems to me, is the appropriate way to deal with the matter, bearing in mind there will judicial continuity since I remain the assigned Master for the case.
- I say all this in circumstances where, whatever my views about Mr Davies' argument as to construction of the 2019 agreement, at first sight I have difficulty in understanding what could be the first defendant's defence to the claimant's alternative case. Accordingly, I am adopting this somewhat unusual course, which it seems to me is perfectly in accordance with the overriding objective in CPR1.1.
---------------
Approved 25.4.2025