England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE QUEEN'S BENCH DIVISION
(Mr Justice Wright)

		Royal Courts of Justice Strand London WC2 Tuesday, 3rd September 2002

Tuesday, 3rd September 2002

1. LORD JUSTICE PETER GIBSON: I will ask Tuckey LJ to give the first judgment.
2. LORD JUSTICE TUCKEY: This is a renewed application for permission to appeal by the first and second defendants in these proceedings, Mr and Mrs Khan, against an order made by Wright J on 6th March 2002 in which he refused an adjournment and entered judgment against them for £590,000 plus interest. Peter Gibson LJ refused permission to appeal on paper earlier this year.
3. The judgment was entered to enforce the terms of a Tomlin order made by Astill J on 19th June 2001 to compromise the dispute between the claimant company, which was a family property company, and the two defendants, who are husband and wife. The company had been involved in property dealing and the dispute arose when the family fell out.
4. In the course of the proceedings the claimant had obtained freezing orders against the defendants and registered inhibitions against a number of properties which they owned. The first two of the terms scheduled to the Tomlin order were:

"1.The First and Second Defendants shall pay £590,000 to the Claimant on or before 14 December 2001.

2.If such sum is not paid in full by 14 December 2001, the First and Second Defendants will be liable to pay interest on the said sum ... at the rate of 8%..."

5. The requirement to pay the agreed amount and interest in default of payment was entirely unqualified by any of the other terms of the agreement.
6. At the date of Wright J's order, that is to say nearly three months after the agreed date for payment, nothing had been paid by the defendants. In the months following the making of the Tomlin order there was a considerable amount of acrimonious correspondence between the solicitors for the parties in which the applicant's solicitors alleged and the claimant denied that it had been in breach of two further terms of the Tomlin order. First, paragraph 13, which said:

"Security for the Claimant pending final payment of the sums in paragraph 1 and 2 above be provided by the undertaking of the [Defendants] above and the First, Second and Third Defendants consenting to the present inhibitions on the properties at Schedule A hereto, remaining registered at the Land Registry subject to the same being replaced where possible by a registered notice, which shall ensure that there shall be no registered dealing in respect of any of those properties without the prior written consent of the Claimant, which the Claimant shall not unreasonably refuse if the purpose of such registered dealing is to enable the sale [or] mortgaging of that property in order that the proceeds may be applied in discharge of the liabilities under paragraph 1 and 2 above."

7. The schedule identified six properties, and it was alleged in correspondence that the claimant had been slow to replace the inhibitions which had made the sale of the properties difficult.
8. Paragraph 24 of the order said:

"It is agreed by the parties that the terms of this agreement are confidential to the respective parties and their professional advisers and they will not disclose the same to any person body or organisation unless legally obliged to do so... . Messrs Raja & Partners [who were the claimant's solicitors] shall within 14 days from the date hereof by way of a letter write to all those institutions, pensions or organisations to whom they originally wrote concerning the freezing Order informing them that the freezing Order has been discharged as a result of the settlement of the Claimant's claims against the First and Second Defendants and will provide such copies to Shaidy & Company [who were then the defendant's solicitors]."

9. Here it was alleged that Raja & Partners had not written to all the parties notified of the freezing order within 14 days (and some had not been written to at all), and those who had been notified had been sent a copy of the order contrary to the confidentiality provision. This, it is said, had caused difficulties with potential lenders.
10. The applicants contended that these breaches of the order explained why payment of the agreed sum could not and had not been made.
11. As the day fixed for the hearing before Wright J approached, the applicants' solicitors asked the claimant's solicitors to agree to an adjournment. They refused to do so. Although the applicants' solicitors had said that they would send counsel to apply for an adjournment, no counsel appeared. Instead the applicants appeared in person and asked for an adjournment, because they said they wanted counsel who had appeared for them before Astill J to appear for them that day and he was not available. We do not have a transcript of what happened, but the judge refused an adjournment. Later in his judgment he said that he would ordinarily have been fairly sympathetic to such an application if it was likely to make any difference to the outcome of the proceedings. It is clear that he thought that it would not. He was also not happy with the explanation which the applicants had given for not having counsel, because other counsel could easily have been instructed to apply for an adjournment and, as I have said, that is what the solicitors had said they would do.
12. The first of the proposed grounds of appeal is that the judge should have adjourned the hearing. The applicants had some time earlier applied for the Tomlin order to be varied and filed evidence relying on the claimant's breaches of the Tomlin order to which I have referred. That application and the claimant's application for judgment should have been heard together, so it is said. But no steps had in fact been taken to ensure that this application was heard with the claimant's application for judgment and I can see no good reason why the judge should have adjourned the claimant's application. There was simply no answer to it. The obligation to pay on the agreed date was unconditional and the claimant was entitled to enforce the agreement by obtaining judgment.
13. Next it is said that because of the breaches of the Tomlin order the judge should not have given judgment as a matter of equity, or at least he should not have awarded interest because the applicant's ability to pay was caused by the claimant's breaches. I do not agree. The correspondence before the judge was inconclusive. It certainly did not establish any breach of paragraph 13 of the order, which only required the inhibitions to be replaced by registered notices where possible.
14. Before us today Mr Harris, counsel for the applicant, has put in a further bundle of correspondence which has taken place since the hearing before Wright J. That correspondence, he says, shows clearly that no steps had been taken at all by Raja & Partners to remove the inhibitions on the six schedule properties until shortly before some of those properties were sold in April and July of this year. These letters suggest that in April and July Raja & Partners did write to the relevant land registries to withdraw the inhibitions which had been placed on the properties, but it does not follow, in my view, that they had not complied with the order earlier, which was, as I have said, simply to replace, where possible, the inhibition notice by a registered notice. At the time they came to write the more recent letters they were simply concerned with withdrawing the inhibition notice because of an imminent sale. Certainly there was no evidence before the judge that there was a clear breach of this term of the Tomlin order.
15. The position about paragraph 24 of the Order is less clear, but, like Peter Gibson LJ when he dealt with the matter on paper, I do not think that the correspondence and the material relied on by Mr Harris this morning shows that there was any substantial breach of that obligation. The obligation was simply to write to those organisations who had been notified by Raja & Partners of the freezing order. Nowhere in the correspondence has any attempt been made to identify who those people were so as to determine whether in fact they were written to after the event. The correspondence contains assertion and counter assertion on this subject but, as I say, is inconclusive. Mr Harris invited us to draw the inference that Raja & Partners had not complied with this obligation from a number of quite short and general letters from a number of institutions saying that they had received no notification that the freezing order had been lifted. But, without knowing whether those institutions were institutions which had been notified by Raja & Partners of the original order, one does not know whether there was or was not a breach. Nor, it seems to me, can one draw the inference that Raja & Partners breached this obligation from other alleged failures on their part. Again, so far as the judge was concerned, there was nothing to show that there was a breach of the order. Moreover, on the material before the judge at least (and I would add on the material before us today) I can see nothing which shows clearly that any breach which may or may not have occurred caused the applicant's inability pay the agreed sum. The claimant's case in correspondence was that the applicant's complaints were a pretext designed to pre-empt the complaint about non-payment. One is not able to judge whether this allegation was justified or not, but it simply underlines the uncertainty which one is left with having read all of this correspondence.
16. At all events, at the end of the day I am satisfied that none of the points raised by Mr Harris give the applicants any real prospect of success on appeal, and so I would refuse this renewed application.
17. LORD JUSTICE PETER GIBSON: I agree.
Order: Application refused.