Soir Contracting & Ors v Desai

LORD JUSTICE LATHAM: This is an appeal from a decision of Gray J of 27 June 2005, when he dismissed an appeal from a decision of Master Fontaine of 11 February 2005, when she dismissed the appellant’s application to set aside a judgment which had been obtained on 21 February 2002. The judgment was in default of acknowledgement of service and was a judgment in respect of a claim for US$706,300 plus interest. The particulars of claim were that the appellant and the respondent had been, over a period of some years, trading in valuable jewellery and other ornaments. It was asserted that running accounts were maintained both in US dollars and in sterling and the basis of the trading was that the respondent would consign to the appellant such items for her to sell, the obligation on her being to account for the proceeds of sale as and when they were sold.

The assertion in the particulars of claim was that the state of account between the respondent and the appellant as at 28 July 1997 was the sum that I have already referred to of US$706,300 and that that was owing and immediately payable; clearly it follows that the claim was in respect of items which had been sold, the proceeds of sale not having been remitted to the respondent. It is further asserted in the particulars of claim that by letter dated 30 July 1997, and signed by the appellant in London in about September 1997, she acknowledged that she owed that sum; and the claim was based fairly and squarely on the debt asserted and acknowledged. The judgment that was obtained, including interest, amounted to £667,341.46. Thereafter over a period of some two years, attempts were made to enforce that judgment; but ultimately they resulted in the application to set aside and for an extension of time within which to do so, which was the application dismissed by Master Fontaine.

As far the extension of time was concerned, the appellant asserted that she had been out of the country for substantial periods in the interval between the issuing of the particulars of claim and the time of the application and that was the reason for her failure to make any application before that. As to the merits, her case was that she did not owe the money said to have been admitted as owed by her on the relevant date. The Master correctly identified the test which she had to apply in deciding whether or not to set aside a regularly obtained judgment, namely that under CPR Part 13(3), which was whether the appellant had shown any real prospect of successfully defending the claim or whether there was some other good reason why the judgment should be set aside or varied, and the appellant be allowed to defend the claim.

The claim had in fact been preceded by a letter before action on 16 August 2001, to which was annexed the two documents referred to in the particulars of claim. Those two documents show, as stated in the particulars of claim, firstly that there was a document dated 28 July 1997 apparently signed by the appellant which set out the statement of account to Soir Contracting and General Trading Company, which was the name at the head of the document, amounting to, after the details had been given, the sum claimed of US$706,300. The other document was the document dated 30 July 1997 which is relied on as the acknowledgement, which can be found at page 114 of the bundle of documents, again headed with the respondent’s name:

“Dear Mrs Maharukh Desai, This is to inform you that you owe a sum of US $706,300.00 (US Dollar Seven Hundred and Six Thousand Three Hundred Only) to us as of 30th July 1997. Please confirm the same. Yours sincerely. Mohammed Hussain.”

Underneath that in the same apparent type is the following paragraph:

“I agree that I owe US$ 706,300.00 (US Dollars Seven Hundred Six Thousand and Three Hundred Only) to Soir Contracting and General Trading Company Kuwait, which I intend to settle soon.”

That is apparently signed by Mrs Desai; and her name is typed underneath the signature. To that letter Mrs Desai replied, after referring to the letter and saying that she noted the contents:

“I shall send you a detailed response as soon as possible after consideration of all my documents.”

There was no further letter from her before the issuing of the particulars of claim. In answer to the claim, Mrs Desai has put forward an account in, firstly, a statement by her solicitor and, secondly, a statement of her own where she sets out the circumstances in which she states that the documentation came into existence. The background she explained was that she had, until the coming into existence of those documents, no knowledge of the respondent, but she had traded with a Mumbai-based jewellery dealer called Ahmed Joo. Mr Joo had family who, it would appear, were behind the respondent company. At Mr Joo’s direction, she said, she made payments for the jewellery which she had bought from Mr Joo to various members of his family and again, her description of trading accords with the description of trading in the particulars of claim by the respondents, namely that the items would be consigned to her for sale which she would, if a sale was effected, account for the proceeds to, she said, various members of the family; implicitly, it was to whichever member of Mr Joo’s family he asked her to account.

She asserts that she never made any payments to the respondent and she did not have any contractual dealings with the respondent at all. Accordingly, at no stage did she owe any money to the respondent. The documents came into existence, she said, after an unhappy incident in April 1997 when she was the subject of a robbery at her flat in Ealing. That made her concerned about the stock which she held on behalf of Mr Joo and his family because, she accepts, as is undoubtedly the case, there was very little written record of the business activities with which she was engaged.

In paragraph 18 of her statement of 29 November 2004, she said this about how those documents came into existence:

“18.

At that point of time, I was rather nervous and uncomfortable working closely with Mr Joo’s jewellery without anything recorded in writing. I suggested to them that it was worth recording the value of the jewellery that was in the safe at any one time, on an ongoing basis. On that basis, Hussain Wani [who, I interpose, was the son-in-law of Mr Joo] prepared a letter dated 30 July 1997 (‘the letter’), stating that I owed, at that time, US$706,300 and asking me to confirm the same, which I did. This was merely intended to record the fact that I held the jewellery valued by Mr Wani in the sum in my safe. I signed the letter although I noticed that the notepaper was headed Soir Contracting and General Trading Company. Until then I had never heard of the name Soir Contracting. I did not even know until then that such a company existed in Kuwait!

….

“19.

The idea behind the letter was that we would review this figure on an ongoing basis, but this was never done. It was not intended in July 1997, that I would arrange to repay US$706,300 immediately. The arrangement remained as it always had been. It was not envisaged that I make payments to Soir Contracting and General Trading Company in Kuwait. I continued to make payments from the sale proceeds either into the Swiss account or as directed by the Joo family. If the jewellery was not sold, I would return it to the family members of Mr Joo …

“20.

I have now seen a note, which appears to have been attached to the letter, a copy of which is at page 31. I saw this note for the first time when it was sent to me by Henri Bradman & Co, acting for the Claimant, with their letter of 16 August 2001. I had not seen this statement of account before and do not believe that this was created in July 1997 as indicated. There is no detailed reference to the balance as at 11 March 1996 and I do not know what items were in my safe at the gallery at that time.”

That account was returned to by the appellant in her second witness statement of 10 February 2005, by which time her solicitors had discovered that Mr Wani had been found by the High Court to have been involved in a dishonest attempt by a member of the family, Mr Mubarak, to persuade the court in his divorce proceedings that what was apparently a business asset solely belonging to him was in fact a shared asset. A joint venture agreement was concocted by Mr Wani and Mr Mubarak to seek to mislead the court; but the fraud was discovered during the course of the proceedings and recorded by the judge in his judgment in the family proceedings and by another High Court judge in subsequent partnership proceedings in the Chancery Division.

Against that background, the appellant in paragraph 17 of the second statement said as follows:

“I now refer to paragraphs 14 to 16 of Mr Wani’s witness statement. I reiterate what I have said in my first witness statement. My husband was never involved in my business and did not at any time assist me in the business. The purpose of the exercise in signing the document which I now know was in fact an acknowledgment of debt was my uneasiness after the burglary and my consequent desire to record the fact that I held jewellery for Mr Joo. Since, as now appears, the relevant document was in the form of an acknowledgment of debt, then Mr Wani clearly misled me as to the purpose of the document that I signed, since there was no such debt. He obviously must have done so dishonestly. I would add that since the jewellery was on a sale or return basis, I made payments fairly soon after the sale was made and therefore there was never any reason for there to be any ‘acknowledgment of debt’ at all.”

It is submitted on behalf of the appellant by Mr Graham that that account raises an issue which should be resolved at trial after the evidence of both the appellant and witnesses for the respondent have been able to explain to the court the background and the circumstances leading up to the creation of the documentation and matters which have happened since. In support of his argument, in addition to the evidence given in the statements by the appellant herself, he prays in aid the fact that there are no particulars of the alleged oral agreement relied upon set out either in the particulars of claim or in the evidence put forward on the respondents’ behalf. The claim relates just to that one single document; it would clearly depend essentially on oral evidence. The appellant is accusing Mr Wani of fraud. There are no or no sufficient underlying documents capable of substantiating the assertion of the debt in the document dated 30 July. That is so despite the fact that in his statement, Mr Wani asserted that the document was produced after he had consulted his records. Accordingly, Mr Graham submits the document must for that very reason be suspect.

The appellant, he submits, has made substantial payments which are recorded in her statement, subsequent to the making of the document, which accordingly must cast doubt on the extent to which the amount stated in the document could in any event be accurate. He relies heavily on the fact that Mr Wani has been found dishonestly to have manufactured a document, or been party to the dishonest manufacturing of a document by the High Court and that that gives colour to the appellant’s assertion that she was the subject of a dishonest ruse to make her admit a non-existent debt, which is essentially the basis of the defence. The fact also is, it is said, that at the time of the divorce to which I referred, she was asked to give some evidence to the solicitors, Machins, who were acting in the case; and in a letter that she wrote it is apparent that she was then asserting in 1999 that there was no extant debt owed by her to Mr Joo or, inferentially, to any of his family or therefore to the respondent.

I have considered with care those assertions and submissions by Mr Graham. It seems to me, however, that the difficulty for him in relation to the main issue in the case, which is the validity of the documents upon which the respondents rely, is the very nature both of the documents and of the explanation that she gives for their coming into existence. The documents are not in any way unclear. The document dated 28 July, which has her signature on it, which she does not deny, is clearly a statement of account. It is not and could not by any stretch of the imagination be thought of as being an inventory. There is, as it happens, in the papers a document signed by her in relation to jewellery held by a daughter of Mr Joo, which is an inventory. So she clearly knew, as one would expect of an intelligent person, what sort of document an inventory was likely to be.

The document dated 30 July is a clear acknowledgment of debt. It does not purport to be anything else. In those circumstances, it is beyond belief that she could be able to satisfy a court that she was in some way misled as to its nature by anything said by Mr Wani; and it will be noted that she does not assert that Mr Wani did in fact say anything to mislead her. In other words, she does not make any assertion as to the circumstances in which that document came to exist which could give any colour to the idea that it was put in front of her in such a way as to prevent her from seeing quite clearly what the document was, reading it and signing it, as she would assert, in some way mistaken as to its nature.

It seems to me that despite the points which Mr Graham makes, to the effect that there would appear to be no substantiating documentation and that Mr Wani has been shown to be prepared to be dishonest in the past, these cannot undermine the matters that I have referred to. As far as the underlying documentation is concerned, it is clear from the papers that both sides in this dispute accept that such trading as took place took place without proper documentation. It is true that Mr Wani purports in his statement to say that he made the two documents from his records; and it is fair to say that one can readily understand what line of cross-examination might take place were that matter to be the subject of trial, as to what records he was referring to and the fact that he had been found to have been dishonest in the past.

But that does not go to the nature of the problem that the appellant faces in this case, which relates to straightforward documentation which does not have any element of fraud on its face and could not, it seems to me, enable a judge to come to any other conclusion but that the appellant must have appreciated the nature of the two documents upon which the respondent relies. As I have said, she does not deny signing the one dated 28 July and she admits signing the one dated 30 July. It is not, it seems to me, unimportant that there is in the papers before us a document dated 29 July 1994 which sets out a statement of account between the respondent and the appellant as at that date, showing a balance of £941,874 as being the amount then owing. This is entirely consistent with the respondent’s case, and wholly inconsistent with the appellant’s.

That is also signed by the appellant and she does not deny that she signed that document. In those circumstances, it is difficult to see how she can maintain her assertion firstly that she had no knowledge of Soir Contracting, that is the respondent, or that the document of 28 July was in some way an unusual document. It is entirely consistent with the way in which matters were being dealt with in 1997. It is also of significance, it seems to me, that when confronted with the two documents upon which the respondent relies in the letter before action the appellant provided no response and in particular did not, either immediately or at any stage thereafter until the first statement in support of this application, deny that those documents mean what they say. It seems to me accordingly that there was no material upon which either the Master or the judge could sensibly have come to any other conclusion but that there was no real prospect of the appellant being able to deny that she owed the sum claimed on the 30 July 1997.

The sole question, it seems to me, which is raised by the material before us is whether the payments that she asserts that she made after July 1997 in any way undermine the claim made by the respondent. In my judgment they do not. They do not for this reason: if in fact, as is asserted by both sides, any trading took place it was on the basis that the debt was only in existence once the appellant had received the sale price of the items sold. That is when the obligation to account arose. In the statement that she has made, to which I have already referred, it is plain that she is there saying that the trading which took place after July 1997 was trading which resulted in her making appropriate payments to those to whom she owed the money.

It follows that, on her own account, those payments relate to trading after July 1997. They cannot accordingly affect the amount which she admits on those documents that she owed on 30 July 1997. In those circumstances, in the absence of any material before the court to suggest that the payments that were being made were payments in respect of pre-July 1997 debts, the fact that those payments were made, even if the appellant was able to establish that they were payments to or on behalf of the respondent, could not affect the liability which she had accepted as of that date.

In those circumstances, it seems to me that the judge and the Master both came to the right conclusion on the facts. For completeness, it should be noted that the main ground upon which permission was given to appeal to this court, even though this was a second appeal, was that it would appear as though Gray J had made a mistake in one passage in his judgment where he seems to be suggesting that the appellant had herself added the words in typewriting on the document of 30 September which preceded her signature. There is undoubtedly no material to suggest that those words had in fact been typed by her. They were merely acknowledged by her signature. To that extent clearly the judgment of the judge is open to criticism, but it does not affect in my judgment the issue in the appeal to us today, which I have considered essentially on the merits of the material with which we have been provided. I would accordingly dismiss the appeal.

LORD JUSTICE WARD: I agree.

LORD JUSTICE HOOPER: I also agree. So the appeal is dismissed.