All posts by Arfan Khan

Court of appeal grants permission to appeal in second appeal

Bankruptcy, Commercial and Chancery, Commercial and Chancery litigation, Insolvency, , , ,

Insolvency – Bankruptcy- defrayment of judgment debt – nature of legal test – second appeal – stay of execution

Arfan Khan successfully represented the appellant after taking over the case on appeal in the Court of Appeal.

The appellant applied to vary a judgment debt to pay by way of affordable instalments. That application was heard in the County Court at Central London under CPR r 40.9A. The District Judge allowed the application, ordering the debt to be defrayed at an affordable rate, on the basis that it was reasonable and proportionate to do so.

The respondent appealed to the Circuit Judge, contending, amongst other points, that the District judge applied the wrong test, and the test was whether exceptional circumstances were present. The respondent relied on the case of Ameslam [2008] EWHC 3226 (TCC), contending that the creditors right to present a bankruptcy petition was prejudiced as a result of the decision to defray. The Circuit Judge allowed the appeal.

The appellant appealed to the Court of Appeal and sought a stay of execution pending the outcome of appeal. Prior to the receipt of the appellant’s skeleton argument, the respondent, through written submissions from Counsel, objected to the grant of permission to appeal on the ground that the second appeal test was not met.

The appellant’s skeleton argument argued that the test for the grant of a second appeal was met. There was a point of general public importance arising on this appeal: what is the applicable test to determine a debtor’s application to vary payment of a judgment debt under CPR r 40.9A? Alternatively, for a number of reasons, there was some other compelling reason why the appeal ought to be heard.

It was argued that the case of Ameslam, relied upon by the respondent, was not on point. It concerned CPR r 40.11 and not CPR r 40.9A. Amaslem was in any event distinguishable. The appellant contended that CPR r 40.9A contains a broad discretion. That discretion was aimed at avoiding bankruptcy in appropriate cases where the judgement debt can be paid by way of instalments.

It was argued in the appellant’s skeleton that this was consistent with the policy rationale behind bankruptcy legislation, which is to release individuals from debt, so as to permit a fresh start by increasing the circumstances in which any remaining debt (actual or contingent) is provable in the bankruptcy. The appellant relied on the decision of Richards J (as his Lordship then was) in Re T & N [2006] 1 WLR 1728.

The appellant contended that this analysis was consistent with the provenance of Rule 40.9A, which confirmed the correctness of the District Judge’s judgment. The right to present a bankruptcy petition was not prejudiced because the respondent could apply to vary the District Judge’s order at any time under CPR r 40.9A (15). In any event, that right was not absolute because a bankruptcy order itself could be rescinded or varied.

In the alternative, it was argued in the appellant’s skeleton that, even if the test was of exceptional circumstances, that test was met on the facts. The Circuit Judge erred in holding otherwise.

Lady Justice Arden granted permission to appeal on the papers on the basis that “Compliance with conditions for second appeal and requirement for arguability” was “shown by the appellant’s skeleton argument”. Her Ladyship also granted a stay of execution.

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Arfan Khan leads appeal in the Court of Appeal

Commercial and Chancery litigation,

Arfan Khan leads appeal of general public importance in the Court of Appeal

Statutory limitation periods – principle and practice

Arfan Khan is instructed as lead Counsel in the Court of Appeal following the grant of permission to appeal by the Court of Appeal on the papers. The appeal concerns the correct approach to the computation of a limitation period under statute. Lady Justice Arden held that sufficient prospects of success were shown by the Appellant’s skeleton, and that the calculation of time for the purposes of an enactment was “clearly an important point of principle and practice”.

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Bank’s High Court claim for £9.5 million settles out of Court

Banking and Finance, Chancery Litigation, Commercial and Chancery litigation

Bank’s High Court claim for £9.5 plus interest settles out of Court

Contract of guarantee – limitation periods – demands

Arfan Khan successfully defended complex claims in the High Court Chancery Division. The claims were pursued by a bank against the Defendants for £9.5 million plus interest, including possession of land. A legal charge was procured by the bank to secure the alleged indebtedness.

The bank issued a demand for the monies in 2003. In 2014, the bank issued claims for both a money judgment and possession orders in relation to three separate plots of land. By 2015, the alleged debt was claimed to stand at £9.5 million plus interest.

The bank through Counsel, and its legal team, contended that, whilst the claim had been issued in 2014, time started to run from the date of the demand in 2003 because the relevant documents expressed the liability to be repayable on demand. The bank contended that a limitation period of 12 years applied and, therefore, the bank’s claim for the money judgment and possession were in time.

The guarantees and the charge, however, contained a primary debtor clause, which guaranteed the alleged indebtedness as a primary debtor, rather than as a surety only. The Defendants contended that there was a distinction between an ordinary contract of surety in relation to which a demand was necessary before the indebtedness could be claimed, and a contract containing a primary debtor clause. The Defendants contended that, where there is a primary debtor clause in a guarantee, rendering the surety also a primary debtor, there is no need for a demand, even where the indebtedness is expressed to be repayable on demand: MS Fashions Ltd v Bank of Credit and Commerce International SA [1993] Ch 425; TS & S Global Ltd v John Fithian Franks [2007] EWHC 1401.

The reasoning behind this appears to be that the character of the agreement to pay is no longer a collateral one, but an agreement to pay a present debt for which a demand is not a condition precedent: TS & S Global Ltd v John Fithian Franks [2007] EWHC 1401 at para [18].

Accordingly, the Defendants argued that a demand was not necessary. It was argued, therefore, that time started to run from the date of the breach in 2001 rather than from the date of the demand in 2003. That being so, the Defendants contended that the 2014 claims for a money judgment and possession of land were time barred.

In any event, the Defendants contended that the bank’s claim for continuously accruing interest in excess of £5 million attracted a six-year limitation period and was time barred. The bank could only claim continuous interest limited to the last years rather than from the date of the demand.

In respect of the possession claim, it was contended that the limitation period of 12 years started to run from the date of the breach in 2001. This was so irrespective of whether or not the bank unequivocally demanded possession at that date or forbore from doing so. The Defendants relied on Ash v National Westminster Bank [2007] 2 P & C.R. 27.

The Defendants also argued that the bank could not, in any event, seek possession of the land because there were agricultural tenancies in place within the meaning of s.1 and 2 of the Agricultural Holdings Act 1986.

The Defendants issued applications for strike out and summary judgment which were listed to be heard on the morning of a four-day trial.

The bank subsequently abandoned its interest claim falling outside the six-year limitation period, and on the morning of the trial, after the exchange of skeleton arguments, settled.

 

Court of Appeal grants permission to appeal in default judgment case

Commercial and Chancery, Default Judgment - Practice & Procedure, Practice and Procedure, , ,

Default judgment –  Practice and Procedure

The Court of Appeal grants permission to appeal in a case of general public importance involving the practice and procedure surrounding default judgments.

The Claimant issued a claim against the Defendant for unpaid monies following the completion of construction works. The Defendant filed an Amended Defence and Counterclaim alleging that the works were defective and counterclaimed for damages. The Claimant served witness statement evidence denying the damages claimed, but not a formally pleaded defence to the counterclaim.

At trial in the Central London County Court, where the Appellant was represented by alternative Counsel, the Defendant contended that the Claimant had not filed a defence, and that the Defendant was entitled to default judgment. The Circuit Judge proceeded to grant default judgment on the basis that the Claimant had failed to file a formally pleaded defence.

The Appellant appealed to the Court of Appeal. The Appellant argued that there was a point of general public importance arising on the appeal, namely whether, in the absence of a formally pleaded defence, a witness statement denying damages claimed in the counterclaim constitutes “a defence” for the purposes of default judgment under CPR r 12. 3 2 (b). This was argued in conjunction with para 1.1 of Practice Direction 12 which states that a defence includes “any document purporting to be a defence”.

Lord Justice Christopher Clarke was persuaded to grant permission to appeal on the basis that the point was of general public importance, raising a point of practice or procedure, in respect to which the Appellant had real prospects of success. His Lordship allowed the appeal to proceed on the condition that the Appellant pay the outstanding interim costs order which the Appellant agreed to do.

Arfan Khan was instructed as lead Counsel on appeal and did not appear in the proceedings below.

The transcript of judgment will be available soon.

Chancery litigation in Construction Dispute

Chancery Litigation, , , , , , ,

Peak Construction (London) Ltd v Savva & Anor  [2016] EWHC 1295 (Ch)

Mrs Justice Asplin, sitting in the Chancery Division, delivered judgment in the above litigation. The case concerned three interlocutory applications. Two of these applications raised difficult issues, including an application for an extension of time to file a defence where non-compliance with a freezing injunction was alleged. The application raised multiple issues concerning adjournments; extensions of time; bank statements; compliance; costs; default judgments; penal notices; time limits; and unless orders. The Court granted the Applicant an extension of time to file a defence. Arfan Khan appeared for the Applicant who was granted the extensions.

The judgment can be viewed through the following link: http://www.bailii.org/ew/cases/EWHC/Ch/2016/1295.html

Click here: Peak Construction (decision)

 

Freezing Injunction granted by the Chancery Division

Commercial and Chancery, Commercial and International Law, Company, Insolvency

Freezing Injunction granted by the Chancery Division in a £1.25 million claim

Mr Justice Warren granted one of the world’s largest multi-national data telecommunications company a freezing injunction. The freezing injunction was granted against multiple  companies and their directors in a £1.25 million claim. The claim involves alleged transactions defrauding creditors, contrary to s.423 and s.424 of the Insolvency Act 1986. The freezing injunction was initially granted urgently on a without notice basis, and then continued at an on notice hearing. Arfan Khan, instructed by a City Law firm, appeared for the successful Applicant at both hearings and is instructed in the claim by the same firm. The case is ongoing.

Arfan Khan awarded Banking & Finance Barrister of the Year 2016 in the Corporate Livewire Global Awards

Banking and Finance

Arfan Khan awarded Banking & Finance Barrister of the Year 2016 in the Corporate Livewire Global Awards

Arfan Khan awarded Banking & Finance Barrister of the Year 2016 in the Corporate Livewire Global Awards. The Corporate Livewire Global Awards recognise “outstanding performances” of individuals and companies who have demonstrated “excellence” over the past 12 months. The Awards are awarded strictly on merit on a no cost basis. Further information can be found through the following link http://www.corporatelivewire.com/awards.html?award=89. In so far as material, this states:

“The 2016 Global Awards Guide showcases the achievements of the most successful and ground-breaking individuals and companies of the last 12 months. Those who have achieved something special in the fast moving corporate finance arena…

We have also developed our processes in nomination and selection, ensuring that those we award meet high and strict standards of compliance and ethical business practises.

Our past winners have included global companies such as PwC, UBS, Clifford Chance, E&Y and Morgan Stanley as well as national or regional companies from around the world who simply deserve the recognition.”

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