Tankaria & Ors v Morgan & Ors

This is an application for committal in proceedings commenced by claim form, issued on 24 September 2004.

Claimants 2 to 7 are property development companies. Claimant 1 is Mr Raj Tankaria. He is the director of all of the other claimants, except for claimant 4, of which he claims to be a shadow director.

The defendants are three individuals. They are, or were partners in a firm of solicitors called L Morgan and Company. They are said to have acted largely through the first defendant, Miss Lorna B Morgan in various conveyancing transactions in 2003 and 2004 on behalf of the claimants.

It is alleged by the claimants that the defendants failed to account for large sums of money passing through the firm’s hands. According to the claimants, the defendants have made numerous attempts to produce definitive completion statements, but they have proved to be mutually inconsistent with each other.

In all material respects, it is said that the person primarily responsible for the alleged wrongful acts of the defendants is Miss Morgan herself.

The claim in the claim form is in the following terms:

“(1)

The claimants ask for delivery to each of the claimants of a cash account verified by affidavit, in relation to each and every transaction between December 2002 and May 2004, in which the defendants have acted as solicitors for each of the claimants. (2) Payment to each of the claimants of all money in the custody or control of the defendants on behalf of each of the claimants. (3) Delivery to each of the claimants of all securities in the custody or control of the defendants on behalf of each of the claimants. (4) An order that the defendants do deliver to Messrs Ronaldsons, 55 Gower Street, London WC1E 6HQ, solicitors for all the claimants, all files and supporting papers relating to the conveyancing transactions undertaken by the defendants on behalf of each of the claimants as set out in schedule 1 hereto. (5) Interest on such monies as may be found to be due to each of the claimants pursuant to s.35(A) of the Supreme Court Act 1981, at the rate of 8 percent per annum, for such period as this honourable Court should deem fit. (6) Such further or other relief as may be necessary. (7) Costs.

This serves as background for the current application against Miss Morgan. On 24 September 2004, the claimants served evidence in support of, amongst other things, their claim to have all their documents returned by the defendant and for an account. That evidence consisted of the first witness statement of Mr Tankaria, sworn on 18 September 2004.

Apparently, a hearing of the application was fixed to come before the Master on 3 February 2005. On 11 October the defendants served a notice asking for more time to serve their evidence. That application came before Master Bragge on 1 November 2004. He extended the defendants’ time, set a new timetable, and re-fixed the full hearing for 14 February 2005.

Miss Morgan’s evidence stated, amongst other things, that her firm had agreed to hand over relevant conveyancing files subject to the payment of her firm’s photocopying charges.

The matter came before Master Bragge on 14 February 2005. The claimants were represented by counsel. The defendants were represented by Miss Morgan. On that date Master Bragge made an order, the terms of which I will come to in a moment. Counsel for the claimants supplied a draft of the order to Miss Morgan on 18 February 2005 for her approval. She did not respond. On 20 February 2005 the claimants returned to Master Bragge and the order of 14 February was sealed by him, but was sealed on that day. The order contains the following provisions:

“Upon hearing counsel for the claimants and the first defendant in person, and on behalf of the second and third defendants, and upon it appearing that the solicitors for the claimants and the first defendant should cooperate by having a meeting to determine by reference to a sample conveyancing file, documents which are the property of any mortgagee, and those the property of the claimants or any of them, should do so within seven days of the date of sealing of this order.

It is ordered: (1) The defendant shall deliver up to the claimants’ solicitors the following documents from the files of all transactions relating to the claimants’ properties as set out in the schedule attached to the Part 8 claim form herein namely; (1) Forthwith, upon the request of the claimants’ solicitors and their undertaking to pay the defendants’ reasonable photocopying charges, photocopies of any documents which are the property of any mortgagee by whom the defendants were jointly instructed, along with any of the claimants. (2) Forthwith, the originals of all remaining documents save for those which are the sole property of the defendants. (3) It is ordered that the defendants shall forthwith deliver up to the claimants’ solicitors the title deeds of 119 Rosslyn Crescent, Harrow, HA1 2RY in accordance with the written request dated 3^rd February 2005, from Barclays Bank plc, who shall give a receipt therefore on behalf of the claimant. (4) The defendants shall, by 4pm on 7^th March 2005, serve on the claimants the defendants’ finalised cash statements in relation to each transaction. Such accounts to be verified by a statement of truth.”

And then at 8:

“The first defendant shall by 4pm on 7^th March 2005, serve a further witness statement containing all facts and matters relied upon by the defendants in support of the statement made to this Court that the first defendant sent by email to the first claimant on 14^th May 2004, a full set of cash statements in relation to the transactions, the subject matter of this claim, in identical form to those exhibited to her first witness statement at LM1, save for a number of minor amendments made, as a result of comments by the first claimant, and identifying those amendments.”

There is no dispute between the parties that the order in paragraph 1 covered both the claimants’ purchase and sales files. There may be mortgage documents in the former, but not in the latter.

As Mr Rupert Higgins for the claimants explains in his skeleton argument:

“In view of the Master’s indication not forming part of the order, hence it being recorded in the preamble only, that the parties ought to meet to identify which documents fell within paragraph 1(1) of his order, and which within paragraph 1(2), the claimants’ solicitors wrote on 28^th February 2005 inviting the first defendant to such a meeting, and proposing a formula for identifying which document would be which. The latter demanded immediate compliance with the order in so far as it related to documents, indisputably the property of the claimants, for example, sale files and other files where there was no mortgagee. The first defendant acknowledged receipt of the letter, but did not respond to the invitation.”

None of the documents were produced at that stage.

An attempt to serve Miss Morgan personally with a copy of the February order, endorsed with a penal notice, was made on 2 and 3 March. It was not successful. A copy of the order was left at her home. No attempt was made by the claimants to secure an order for substituted service.

On 11^th March Miss Morgan applied for an extension of time to comply with the forthwith provisions in Master Bragge’s order. Her application notice is a surprising document. Besides seeking an extension of time to enable the defendants to comply with the order, the application notice states that Miss Morgan was ill and the volume of work needed to comply with the order was underestimated. She went on to make a number of attacks on the order itself, asking for it to be varied, saying that the order was wrong in certain respects, requiring the officers of the fourth claimant to produce passports or birth certificates, and asking for the claim to be struck out because of the alleged inequitable conduct of the claimants throughout the matter.

On 14 March the present contempt application was served on her. In fact, it was drafted on 10 March, although there is no reason to believe that Miss Morgan was aware of it when she served her application for an extension of time.

Miss Morgan’s application came before Master Bragge. It was supported by evidence from her. In her evidence served in support of an extension of time, Miss Morgan said, amongst other things:

“I make this statement in the utmost humility, mindful that I, a solicitor of the Supreme Court of Justice, have not fully complied with the order of Master Bragge dated 17^th February 2005, and that the Court will view my non-compliance unfavourably. I humbly ask this honourable Court to bear in mind that my failure to comply with the order firstly arose out of illness and secondly, out of the series of events which arose from 4^th March 2005, details of which are set out.”

She provided with that evidence, no details of the illness, nor any medical certificate.

She went on in her evidence to explain why she believed the claimants had behaved inequitably, attacking some of the provisions in the order and she asked for the claimants to be made to pay the costs.

Of course, by the time the matter came on before Master Bragge, Miss Morgan and the Master were aware of the pending committal application. Master Bragge refused to accede to Miss Morgan’s attempts to revise or revoke his February order, or to extend time. All of these matters, except for some which are not central to the issues I have to decide, were stood over to me.

However, Master Bragge did make some comments about the February order. At paragraph 19 of his judgment he said:

“Miss Morgan will be very well advised in deed, if she now gives the most careful thought to compliance with the order, by which I mean full and prompt compliance. It is not for the Court to tell a party how to comply with its orders. She is, for example, concerned about retaining copies of conveyancing files. If it was simply that, I would be satisfied that she would this very day, deliver up to a commercial organisation all these, some 60 files for professional and immediate copying. I might have been prepared to substitute some date for the word “Forthwith” in the order.

I asked Mr Hayter what his position would be upon compliance with paragraph 1.2 namely; delivery up of all remaining documents to a request for Mrs Morgan to have copies back of all of those files. Mr Hayter, understandably, does not have instructions about it, but I understood him not actually to raise any problems about that, and I may say if it assists Mrs Morgan, that I would expect the claimants’ solicitors to accommodate such a request, provided they were satisfied the copying bill would be paid by Mrs Morgan. I can see no reason why they should not do so, and I expect they would do so.”

And at paragraph 23 he said this:

“So what I shall therefore do, is direct that this application notice is listed before the judge hearing the application for committal. I do very much indeed hope that, as I say, Mrs Morgan will very carefully look at the terms of the order. There has been some compliance. There has undoubtedly been some attempt to comply, but that is not yet complete, and she may be well advised to get advice about compliance.”

This committal application came before me on 7 April of this year. Miss Morgan eventually appeared at half past eleven. No documents had been produced; no evidence had been produced by Miss Morgan in relation to the contempt, no apologies, no explanation.

Miss Morgan asked for five more days to comply. She also indicated that she was not pursuing any of her other applications, such as the application to strike out the action or to criticise the claimants for inequitable conduct.

I gave her five days within which to comply with the order. That time limit would expire on 12 April. The committal application was stood over to 15 April. The 12 April came and went. No documents were delivered. On the morning of 15 April, just before the matter came on a bundle of documents were supplied to the claimants, which purported to be the documents covered by the February order. Because of the timing of delivery, for which there was, then and now, no explanation or apology, Mr Higgins, counsel for the claimants, sought time to check them. This request was not resisted by Mr Downey, who now appeared as counsel for Miss Morgan, although he was, unsurprisingly, instructed very late in the day.

I therefore stood the matter over to 19 April. I also ordered Miss Morgan to serve any evidence she wished to rely on by 2pm on 18 April. In fact, it appears that the documents handed over on 15 April were not all those covered by the February order. No documents from any of the 32 purchase files were included. Even as I write, Miss Morgan has failed to produce a single document from this category. There is no dispute that Miss Morgan is obliged by the February order to hand over the originals of all documents in the purchase files, save that she only has to hand over copies of mortgagee documents, and she does not have to hand over originals or copies of documents which are solely her firm’s, for example, attendance notes. Why none of the originals covered have not been delivered has not been explained. As usual, no apology was offered.

In addition it was discovered that three sales files were omitted. The last two of them arrived on the morning of 19 April. Again, no explanation or apology for the delay was offered.

As far as Miss Morgan’s evidence was concerned, and not withstanding my order that it be served by 2pm on 18 April, it was not served on the claimants until 10.30 on 19 April. Once again, there was no explanation or apology.

In keeping with her performance to date, when the committal application came on for hearing at 2pm on 19 April, Miss Morgan was not present. She strolled in some ten minutes into the hearing, needless to say, no explanation or apology for her late arrival was offered.

Applications for committal or punishment for contempt of Court are treated with particular care. They are quasi criminal in nature. The applicant must prove the breach beyond reasonable doubt; furthermore, there are strict formal requirements as to the service and content of the order which is alleged to have been breached, and the content of the application notice. Perhaps of greatest significance in this case is the importance of the date and content of the application notice. The respondent is only obliged to meet the “charges” set out in the application notice. In other words, the charges are those specified in the application notice. The question of whether there has been contempt has to be determined as of the date of the application notice. Subsequent behaviour of the respondent may be highly relevant to whether he or she has purged or mitigated the alleged contempt. It may also throw light on the accuracy or otherwise of any evidence served. However, it seems to me that actions or inactions after, and therefore not encompassed within the application, cannot themselves be considered as part of the charges against the respondent.

Mr Higgins argues that this is too narrow a view. He says that subsequent acts or omissions can be added to the charge; otherwise it would be impossible to bring contempt proceedings against someone who is in continuing default. I do not agree. If someone has committed a contempt of Court, that is to say a breach, as specified in the application notice, he can be punished for that. Acts or omissions subsequent to the application notice may, if properly ventilated before the Court, go towards determining the penalty to be imposed. But that does not avoid the necessity of finding one or more of the contempts alleged in the application notice.

In the alternative, Mr Higgins says that in the case of a continuing or growing contempt, it is possible to apply to amend the application notice, or to serve a new application notice covering more recent events. It is highly likely that the first of these is possible; the second certainly is.

In any event, any such application would give rise to costs consequences, which would be dependant upon the particular circumstances of the case. It is not necessary to consider these issues further, because there is here no application to amend, nor has there been service of a new application notice.

It follows, that I have to consider whether the claimants have proved the breaches alleged in the application notice as of 10, or perhaps 14 March, the latter being the date upon which the application notice was served.

Mr Downey for Miss Morgan argues that the claimants fail, both on the merits and for a number of technical reasons. I will consider the merits first. As Mr Downey argues, and Mr Higgins agrees, mere failure to comply with a mandatory injunction does not prove contempt. It is necessary to show that the breach was intentional. Mr Downey says that there is no material which would justify finding any such intention here, and certainly not beyond reasonable doubt. In relation to this he places particular reliance upon the very great speed with which this application was launched. The lack of any prior attempt to discover why the documents had not been handed over, by example, by a suitable letter from the claimants’ solicitors and also, the explanations for delay, which Miss Morgan has very belatedly given in her evidence.

The order requires documents to be handed over forthwith. Mr Higgins accepts that this is a relative term. Indeed, he says that forthwith in relation to sales files means something different in relation to purchase files. This is because the order contemplates a meeting between the parties to sort out the mortgagee documents, which will only be in the purchase files, before the order can bite in relation to that category of documents.

In any event, the claimants must show that Miss Morgan did not intend to hand over the relevant documents forthwith and prior to 14 March. In relation to this Miss Morgan has now put in evidence, that very shortly after 14 February order she became seriously ill with flu, and was confined to her bed until 2 March. She produced no medical evidence to support this. On the other hand she gave oral evidence before me, and the accuracy of this evidence was not challenged.

It seems to me that I have no alternative but to accept that she was ill and, at least until 2 March, was incapable of complying with the forthwith order. What then of the period from 2 March to 14 March? Miss Morgan has given evidence of the smallness of her firm, her very limited resources. The fact that photocopying will take a lot of time, and involved far more documents than she had anticipated, and that before it could be undertaken she had to go through each file to take out for special treatment documents which she had prepared for the client on the back of rough paper, which might contain details of other client’s matters. The latter was caused by her firm operating a recycling policy to re-use paper which only had print on one side. She also said that she took the decision that compliance with the order did not require her to supply documents in a piecemeal fashion, and that she should get all the documents together and hand them over in one go.

Although it was put to her that she could have avoided all the problems by sending all the documents to a photocopy bureau, as indeed was discussed by Master Bragge in his judgment, to which I have referred already, there was no challenge to her bona fides in wishing to photocopy herself. Nor was there any challenge to the existence of the so-called recycling policy in her offices, nor the fact that this resulted in a necessity to go through each of the bundles, nor any other part of this evidence.

In the circumstances, but with considerable reluctance, I find it impossible to conclude that it has been demonstrated beyond reasonable doubt that Miss Morgan intended not to comply with Master Bragge’s order.

Strong things may be said about her competence, but I do not think I can say on the present material, that it is proved beyond reasonable doubt, that she intended wilfully to breach Master Bragge’s order, at least up to 14 March.

In the result, this application must fail. However, that is not the only ground upon which I will dismiss it. The rules impose a strict regime concerning the service of the order which is alleged to have been breached. It must be endorsed with a penal notice and served personally. In this case the order was endorsed with a penal notice, but it was not served personally.

The evidence of the process server is that he was instructed to effect personal service on Miss Morgan, and for that purpose initially attended at 38 Litchfield Gardens, London, NW10 on the morning of Wednesday 2 March at eight o'clock. He says that he found that the premises were a Victorian house converted into two flats numbered 38a and 38. He says he interviewed an adult female who told him that the defendant was out on a school run, and that she would be returning later in the morning. At ten o'clock, he says, he returned to the address where he again met the same female, who claimed not to be the defendant, who told him that the defendant, that is Miss Morgan, was not at home. This person, who now turns out to have been Miss Morgan’s sister, produced a credit card bearing the name Dawn Henderson.

At seven o'clock later that evening, the processor server says that he returned to the address, but he could obtain no reply, and there were no lights on at the time of his attendance. He says that at seven o'clock on the morning of 3 March he returned to the address. He could not get a reply and at 7.15pm the same Dawn Henderson arrived and before entering the property the process server asked her to tell Miss Morgan to come to the front door to accept personal service. He says he waited until eight o'clock, but the defendant did not come to the door, and nobody answered the door entry phone.

He says that he then received further instructions from the claimants’ solicitors. He returned to the address, and as no reply could be obtained, he pushed through the letterbox the order, endorsed with the penal service.

The claimants suggest that Miss Morgan was evading service. This is hotly contested by Miss Morgan, who gives evidence as to why she was not at the premises. None of that was challenged. No attempt was made to serve again. No attempt was made to enquire of Miss Morgan where she could be located for the purpose of effecting the service; no attempt was made to secure an order for alternative service.

Even if, which Mr Downey disputes, a discretion exists to dispense with personal service of the endorsed order where a mandatory injunction is concerned under RSC Order 45 Rule 7, this is not a case where it will be appropriate to do so. The claimants were anxious to bring contempt proceedings as quickly as possible. That haste has led to them tripping over the procedural requirements.

In the result I will dismiss this application, but with very considerable misgivings. Miss Morgan is a solicitor. By her cavalier attitude to the February order and these proceedings, she has largely been responsible for the length and delay of these proceedings. She shows no sign, even now, of appreciating that she is under an obligation to comply with all orders promptly.

Her behaviour and attitude throughout has been worthy of the strongest criticism, but for the reasons I have given, I have come to the decision that the allegations of contempt of Court have not been made out.