England and Wales High Court (Technology and Construction Court) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY & CONSTRUCTION COURT

		Royal Courts of Justice
		4 November 2005

JUDGE THORNTON:

SECOND PROCEDURAL RULING

1. This is the second procedural ruling that I have handed down in relation to procedural applications made by the five parties that I will refer to in shorthand as "Group 3". These parties are also the appellants in the substantive appeal from part of my judgment at the trial of all the related proceedings. My first procedural ruling was handed down on Monday 31 October 2005 and this ruling was originally delivered extempore on Friday 4 November 2005.
2. This procedural ruling should be read with my first procedural ruling. Both of them concern Group 3's application that I should adjourn a further hearing that I have directed should take place. That further hearing will be concerned with various applications relating to my substantive judgment and with receiving fresh evidence and making findings based on that evidence. This fresh evidence is very significant and it was not, and could not reasonably have been, available at the substantive trial. The fresh evidence is not only relevant to the various applications that I have referred to, it is also potentially highly relevant to Group 3's substantive appeals.
3. I had directed in early October 2005 a hearing date for the further hearing of these various applications and for the receipt of the fresh evidence in November 2005 so that the hearing would have been concluded and my findings would have been available in time for the findings and fresh evidence to be placed before the Court of Appeal at the hearing of Group 3's substantive appeal fixed for 8 and 9 December 2005. At the hearing of Group 3's first procedural application on 27 October 2005, they applied for the further hearing to be adjourned until after the substantive appeal on the grounds that they could not fairly be ready for that further hearing until late January 2006 at the earliest. However, Group 3 stressed that the substantive appeal should nonetheless proceed in the meantime, notwithstanding the proposed adjournment of the further hearing.
4. I ruled on 31 October 2005 that it was imperative, as I saw it, that the further hearing should take place and the fresh evidence should be received so that the results of that further hearing and the fresh evidence could be placed before the Court of Appeal. I therefore, in effect, dismissed Group 3's adjournment application.
5. On 4 November 2005, Group 3 presented me with further material which persuaded me that the injustice to them of the further hearing taking place in November 2005 would be so great that it outweighed the potential injustice of maintaining my proposed hearing order of: further hearing first, substantive appeal second. However, as a corollary of that decision, I also directed that the Court of Appeal should be made aware of my two procedural rulings and of my view that a potential serious injustice will arise if the substantive appeal takes place before the further hearing has taken place and the further evidence and Group 3's responsive evidence is available.
6. Group 3 wish to fully participate in the further hearing and to adduce substantial evidence in an attempt to challenge and rebut the fresh evidence which largely comes from Ramila. This is because that fresh evidence is said by Group 4 to support a series of allegations against the five Group 3 members who are the substantive appellants to the effect that those parties deliberately misled the court at the substantive trial; were parties to, or were aware of, fraudulent transactions that are the subject of the substantive appeal and which were undertaken for their benefit; and, finally, were parties to a serious abuse of process in which Ramila's name was used to pursue an action in her name which she knew nothing about and had neither authorised nor ratified. That action was one of the conjoined actions that are now the subject of the substantive appeal. However, as a result of funding difficulties, the complexity of the issues that have arisen and the need to obtain evidence from many witnesses including a handwriting expert and the difficulties in obtaining documents vital to their case, Group 3 insist that they cannot be ready for the further hearing until late January 2006. I was satisfied that the gravity of the allegations against them that the fresh evidence thrown up is such that Group 3's rights, including their article 6 rights and their rights enshrined in the overriding objective defined by the CPR, cannot be fully provided for if the hearing was rushed on in November 2005 and before late January 2006.
7. It is true that Ramila's fresh evidence is, on the face of it, being adduced in relation to her applications to have set aside a default judgment against her on the grounds that she was not, in reality, a party to the proceedings at all and should not, in consequence, be liable for any costs. However, that evidence, if it is accepted, will have a direct bearing on several other issues and on the credibility of Group 3's evidence given at the substantive trial and on the case that they are mounting at their forthcoming appeals as set out in their notices of appeal and in their skeleton arguments lodged in support of those appeals, both documents I was shown and have considered. Group 3 strenuously contest the veracity of Ramila's evidence, I was informed, but will not be able to serve their detailed evidence in opposition until after the currently scheduled hearing of the substantive appeals.

RELEVANCE OF FRESH EVIDENCE

8. The close inter-relationship of all these matters and of the relevance of Ramila's evidence and any rebuttal evidence adduced by Group 3 can be demonstrated by considering various procedural matters relating to the substantive trial. The trial involved a consolidated hearing of various actions including Group 3's actions against Group 4 and SPC's action against Subhash. These actions were all directed to be heard together so that the evidence in each action would be considered as part of the evidence in all other actions. This is because, as the expert evidence showed, all transactions appeared to be linked or related. These transactions started with the will transactions and two further transactions that Group 3 (including Ramila) were concerned or ostensibly concerned with, they continued with a series of individual transactions that Ramila was ostensibly concerned with and they culminated with the portfolio sale transaction that Ramila was also ostensibly concerned with. My findings against Group 3 were based upon a consideration of all the evidence concerned with each and every one of these various transactions that took place over a 6-year period in the 1980s.
9. Based on that evidence, I made a number of findings including a number directly relevant to Group 3 and their claims. In particular, I found that there was little evidence of their having contributed to the family pot used to finance the will transactions that they based their claim for the proceeds of sale on. However, equally importantly, I used all that evidence to conclude that Group 3 had given Subhash general authority to use such contributions to the pot as each had actually made for whatever purpose or purposes Subhash thought appropriate including the use of the proceeds of sale of the will properties for further transactions. Thus, all transactions were linked and formed a series which any contributor to the pot had an interest in. I also found that Group 3, and certainly Mukesh, one of their number, knew of the use to which these funds were being put and authorised or ratified that use.
10. A further relevant matter is that the will transactions involved the misappropriations of properties within the estate of Neil's father that Neil was still in the process of administering. If any proceeds of sale from these properties can be traced, such proceeds should first be in equity considered as being available to the estate for distribution to those beneficiaries who have a surviving or continuing interest in part of the estate.
11. Overall, I concluded that Ramila played, or apparently played, a major role in all the transactions in question. She appeared to be involved in the initial series of transactions involving other Group 3 members since the transactions in her name, although not involving will properties, were very similar to and took place at the same time as the will transactions. She appeared to be the transferee of all subsequent one-off transactions and of the portfolio sale transaction. Several accounts were apparently opened in her name and substantial sums, representing proceeds of sale from some of these transactions, were transferred into them by Subhash. She then apparently joined the other Group 3 members in starting a linked set of proceedings seeking to enforce their respective entitlements to the proceeds of sale of the will and related transactions. Her involvement in those actions terminated when her action was discontinued due to her non-appearance at the substantive trial and her failure to comply with procedural directions. Given that significant and continuous apparent involvement in the subject-matter of the proceedings and in the actions brought by Group 3 and her non-involvement in the trial, allegedly because she was resident in Tanzania and unwilling to come to England and unable to fund representation, it was a huge surprise to all when she appeared unannounced at an enforcement hearing in May 2005. This was the first time that Group 4 had seen or had any contact with her. She appeared because her house had been charged with the costs judgment against her in Group 4's favour, she had just been notified of enforcement proceedings and she wanted that charge set aside and the judgment against her also set aside. The charge had been placed on her and her husband's modest family home located in East London by Group 4 who had no idea that it was her home, they had assumed that it was merely one of the properties transferred into her name as part of the series of property transactions carried out by Subhash which was therefore available for them to execute against.
12. Ramila has now placed before the court a significant body of evidence which, in summary, tells a remarkable story if it is accepted as truthful and accurate at the further hearing. In summary, Ramila states that she was never at any time a party to, or aware of, any of the property transactions that I have summarised and which the substantive action was concerned with. She never authorised the use of any of her funds to be placed in the family pot to be used for investment purposes. She has never consciously signed any conveyancing document relating to these transactions. She has never received any financial advantage from those transactions, nor any payment from accounts opened in her name by Subhash. Finally, she has never authorised, or been aware of, or financed or contributed to the finance of any proceedings brought in her name relating to any of the transactions in her name. Moreover, instead of being resident in Tanzania, as it was erroneously stated on various occasions she was by various members of Group 3, she was living in London and, on occasion, socialising at family gatherings attended by members of Group 3. The appellant members of Group 3 are her cousins and yet she was not informed about any of the proceedings or transactions brought in her name.
13. The significance of that evidence is, in summary, it is suggested by Group 4, that the transfer of all properties into her name was fraudulent or dishonest. Certainly there is a case to be answered as to the integrity of those transactions now. Thus, it is argued that the title to all properties which passed to Ramila and then on into a company called Glen and against which huge sums by way of borrowings had been charged, the borrowings having been made apparently by a company called Teso, can be set aside, or may well be capable of being set aside, and the properties would then be the subject of tracing remedies available to Suburban and Group 4. Other fresh evidence, already admitted into the substantive appeals by order of Thomas LJ is said to show that both Glen and Teso are owned by or controlled by Subhash and that Group 3 may also have interests in both of them. Moreover, the integrity and veracity of the evidence given by Group 3 at the trial, particularly as to their being unaware of the transactions carried out by Neil and Subhash, and as to their suggestion that there was only a limited retainer and authority provided to Subhash, and as to their suggestion that Neil acted dishonestly vis-à-vis Subhash in appropriating the will property, is now said to be seriously in question. Group 4 would wish to be able to consider applying to adduce all that fresh evidence and any rebuttal evidence when available, before the Court of Appeal on the hearing of the substantive appeal.
14. But, in addition to that, the evidence is highly material and will be needed in relation to Ramila's application to set aside the judgment against her, and if that is successful any cost applications that would arise against Group 3 and in relation to the tracing or potential tracing proceedings that the parties with a judgment in their favour would wish to bring. Subhash is now bankrupt and his trustee has initiated enforcement proceedings seeking to claim on behalf of the estate the properties which are charged to Teso and the evidence is highly material to these proceedings too.
15. Underlying the fresh evidence are essentially three issues: (1) did Ramila have knowledge of or subsequently authorise and ratify the property transactions in her name and, if not, was the use of her name dishonest and fraudulent; (2) did Ramila authorise and, if not, did she ratify the proceedings brought in her name; and (3) did Group 3 and Subhash individually or collectively involve themselves in any dishonesty arising from the transactions and the subsequent proceedings or have knowledge of that dishonesty, or subsequently participate in, ratify or authorise that dishonesty?

FURTHER NECESSARY PROCEDURAL STEPS

16. Group 3 rightly and understandably, now being fully aware of the significance of the issues raised by Ramila's evidence, wish to contest the evidence and have identified up to 14 witnesses, including the five Group 3 members. This evidence is not reasonably going to be available for another six weeks although Group 3 have already had many weeks already in which to prepare it, and I am clear that the wish to have that amount of additional time to prepare evidence in response to issues and allegations of such gravity is not unreasonable.
17. Group 3 also contend that there should be a definition of the issues and allegations against them that Ramila's evidence is said to give rise to so as to enable them to finalise the evidence that they should fairly be able to present, and that there should, furthermore, be a clear definition of the applications and issues to which those factual issues will be relevant. In other words, there should be set out a clear set of applications for which the evidence is sought to be used. There should then be identified in a pleading the factual issues relevant to those applications that Ramila's evidence gives rise to and the findings and inferences that those who seek to rely on Ramila's evidence contend arise from that evidence. There should then be the opportunity for them to finalise their evidence and serve a pleading in response, to instruct handwriting expert evidence because there are a number of signatures which Ramila contends are not hers on material documents, which it is said should be considered by a handwriting expert, and handwriting evidence takes a certain amount of time to prepare and that evidence cannot be available for several weeks yet, and there should be time for disclosure to be complete. There are questions of legal privilege and retainer in relation to documents in the possession of solicitors who apparently were acting for Ramila. There are possibly questions of the extent to which any legal privilege may be claimed by Group 3 and that the five Group 3 parties have in relation to documents that their then solicitors had, attendance notes and the like, relating to those proceedings since they were the same proceedings in which Ramila was also a party, and therefore questions of waiver of privilege or disclosure notwithstanding privilege may then arise, and those may need to be resolved before the further hearing can fairly take place. And there is then in prospect what is said to be a hearing of at least five days given the extent to which cross-examination may be relevant. Group 3 informed me that very serious cross-allegations will or may be made by them against Ramila.

GROUP 4's ALTERNATIVE PROCEDURAL PROPOSAL

18. The response of Group 4 to this is that, in the unfortunate procedural circumstances that have arisen, I can and should still retain those two hearing dates in the week after next to try two very limited questions, namely: (a) why did Group 3 and Group 1 (that is Subhash and his brothers and sisters that formed the appellant members of Group 3) wrongly maintain at all times until the 18 May 2005 that Ramila was resident in Tanzania and was difficult to contact, and (b) wrongly maintain that Vijaya (that is Ramila's sister) was resident in Mozambique and was also difficult to contact. Vijaya was another Group 3 claimant. The action was also discontinued and struck out against Vijaya for non-compliance with procedural directions. The significance of these issues is said to be that Ramila has been, evidently since about 1990, resident in this country having moved here following her marriage, and has been resident in this country, she says, to the knowledge of the Group 3 and Group 1 parties, yet, despite that, they have made erroneous statements, material to the proceedings brought in her name, that she was resident in Tanzania and difficult to contact.
19. I can see that the answer to those two questions may well be highly material in relation to the wider issues that I have identified that are thrown up by Ramila's evidence. However, given the gravity of the allegations that are now made it does not seem to me to be fair or appropriate to try these particular questions in isolation, and, moreover, the answers to them will not necessarily resolve whether, and if so to what extent, the integrity of the claims that were made and the original proceedings and the property transactions on which tracing and enforcement actions are now to be made, can be challenged. There are many other questions that are thrown up by Ramila's evidence which might well have more significance than these two questions, and so, without in any way wishing to undermine the significance of those particular questions, I do not see that it is appropriate to truncate the resolution of all the issues in that way.

FUTURE CONDUCT OF FURTHER HEARING AND SUBSTANTIVE APPEAL

20. Therefore, in the light of this further and mature consideration in the light of the further material placed before me today, I feel that I have no alternative but to direct a variation of my original procedural direction, namely to the effect that the trial of these issues should not take place until an appropriate opportunity to prepare for them has been undertaken, until the underlying applications to which the issues will be directed have been identified, and there have been pleadings that define what the factual issues are that arise out of Ramila's evidence, and then a response and the finalisation of the evidence, any disclosure by all parties has been complete, handwriting evidence has been obtained, and that Group 2 and the trustee in bankruptcy of Group 1 have been given the opportunity of considering whether to participate in the hearing.
21. The factual issues that I have identified can then be resolved at the further hearing. Then, and only then, is it appropriate to consider whether the judgment against Ramila should be set aside, what costs orders should apply, what tracing and enforcement remedies are available, whether Group 3 had knowledge of Ramila's involvement, or lack of involvement, in the transactions and the proceedings, and whether the new evidence shows that Group 3 knew of, or ratified, how Subhash was using the proceeds of sale of the will properties. In the light of the findings on those issues, consideration can be given as to what relief is appropriate to Ramila, to Group 4 in relation to costs, to Group 2 in relation to tracing, to the trustee in bankruptcy in relation to enforcement, and asset collection exercises, and to the beneficiaries of the will of William.
22. As to the impact of the findings arising from this hearing on the substantive appeal, it is of course not for me to express any view, nor as to whether the appeal should proceed or not at the time stated in the light of my determination that the lengthy trial that is in prospect should not take place until, at the earliest, January 2006. It is for the Court of Appeal, once the parties have appraised them of the contents of my two procedural rulings and the orders I have made, and of the procedural considerations, to determine what they should do. But I would like to stress that I have had in mind throughout the hearings that I have held that it is for this court to provide whatever assistance it can for the Court of Appeal, and it is for the Court of Appeal of regulate its own procedure, and that this court will seek to comply with any directions from the Court of Appeal, particularly with regard to the gathering of any further evidence.
23. I am clear, however, that the nature, extent and gravity of the fresh evidence and allegations is such that they cannot fairly be considered and ruled upon without a lengthy hearing and the cross-examination of a number of witnesses, currently estimated to be about five days in length, and that that hearing cannot fairly take place until the other procedural steps I have outlined have been undertaken.
24. In summary, therefore, I direct that a timetable be now devised in which: (1) the relevant applications are identified in a single document which it is contended the Ramila evidence is relevant to; (2) each party to the action has the opportunity of defining what issues they contend arise out of Ramila's evidence; (3) that the Group 3 parties respond to those pleadings; (4) that they serve their evidence; (5) that all relevant discovery is dealt with; (6) the handwriting expert evidence is obtained; (7) any further responsive evidence is served; and (8) a hearing currently estimated as being no longer than five working days, no earlier than the beginning of January 2006 term, is arranged, but that there be a further pre-trial conference at which all parties, Groups 2, 3 and 4, the trustee and if they wish those responsible for administering William's estate, and Glen and Teso, are present, at which I will give final directions as to who may be represented and the procedure to be followed, the order of cross-examination, the length of cross-examination, and the like.
25. I should conclude by stressing these further matters. The first is that, although I have already made this clear in my first judgment, I would stress again that Ramila's application to set aside the judgment and the charging order against her was made to the court by Ramila and was not raised by the court of its own motion. It is true that the application has not been set out in a formal application in writing, but that was as a result of the direction that I gave previously that that formality was to be dispensed with given that Ramila was a litigant in person, unable to afford legal representation, unable to obtain legal aid, so I was informed by her, with a limited command of English, with limited resources, and was conducting her case with the assistance of her brother as a McKenzie friend, who was also providing translation from her native Gujarati, given her very limited command of English.
26. It is appropriate that there should be set out a clear statement of the applications she is making. They are, in reality, three: she is applying to set aside the judgment and the charging order; she is, in the alternative, applying for a declaration that the proceedings started in her name are a nullity; and, thirdly, she is applying to have the action in her name restored not for the purpose of ratification but for the purpose of enabling her to apply for appropriate financial relief from any relevant party. I direct that all her relevant applications are identified and that an application is formally issued although I propose to use my inherent power to direct that the payment of an application fee be dispensed with in view of the limited resources that I am informed that Ramila has.
27. Furthermore, the proceedings started by the trustee in the Chancery Division should also be made available at the next hearing and the trustee is invited to identify to the court whether those issues or relevant issues in that action should be considered along with the other applications at the further hearing, and as to whether the trustee wishes to participate in or at any rate be a party to the further hearing.
28. I should also make clear that, as I see it, the agenda for the original trial that all parties including Group 3 were a party to, was defined not only by the pleadings but by the subsequent directions of the court and the issues that the parties placed before the court as being the issues on which I should make findings, and which are now incorporated into the substantive judgment, and by the rulings that gave rise to the admission of the expert evidence and by the CPR 35.12 statement. All of these documents, as I see it, are the materials from which the somewhat complex and detailed agenda for the substantive trial at first instance arose, and, as I see it, it would be an incomplete picture if only the pleadings were referred to in that context.
29. I should also say that it is my view that Groups 3 and 4 should jointly, at the earliest possible opportunity, approach and liaise with the Court of Appeal in order to enable, both in terms of procedural consideration, and if necessary the hearing of the appeals from this procedural ruling and from my ruling of the 31 October, to take place at the earliest possible opportunity, so that the Court of Appeal can be appraised of the developments that I have sought to summarise in this ruling and in my earlier ruling.