Red River UK Ltd & Anor v Sheikh & Anor

MR JUSTICE HENDERSON: This is an application by the first defendant, Miss Sheikh, for an order that I should recuse myself from this case and from hearing any matter concerning the defendants. The second defendant is Miss Sheikh’s mother, Mrs Rabia Sheikh. She has at all material times made common cause with her daughter, but this application is brought by Miss Sheikh alone. I should say at once that I do not attach any significance to that fact, because the second defendant is an old lady in her eighties and, as Miss Sheikh has told me, is also in poor health.

Miss Sheikh has made and argued the application as a litigant in person. She addressed me yesterday for at least four hours. She was accompanied by a friend and financial adviser, Mr Sampat, whom I permitted to address me on her behalf on a number of issues when it seemed convenient to do so. The claimants, Red River UK Limited and Mr Dogan, did not attend the hearing. In a letter from their solicitors, Isadore Goldman, dated 18^th November they explained that no discourtesy was intended but in their view it was entirely a matter for me how to deal with the application.

The application was brought by an application notice issued on 20^th October. On the second page of the notice Miss Sheikh said that she would be relying on the papers already in court, by which I think she meant various files which she has lodged in connection with earlier hearings over the last two years. She then detailed her allegations against me as follows:

“The First Defendant alleges that Henderson J has behaved in a racially discriminating manner in this case with the purpose and intention of causing the First Defendant and her mother hardship and suffering. Without limiting the generality of the allegations against Henderson J:

(1)

He has concealed or caused two ‘white’ firms to conceal that they were going to complete what the First Defendant has termed ‘the Fraudulent Transaction’ (in effect a phoenix mortgage or sale to a phoenix entity).

(2)

He has encouraged a ‘white’ firm to proceed with a sham and fraudulent claim against the First and Second Defendants whereby they have lost everything they own.

(3)

He has refused to acknowledge trite Court of Appeal authority and Rimer LJ’s findings in this case.

(4)

He has taken advantage of the fact that the First and Second Defendants are litigants in person.

The First Defendant seeks directions such as an order that Henderson J responds to a Flannery v Halifax questionnaire, and that evidence be adduced that Henderson J has discriminated against other Muslim persons.”

Similar allegations were repeated by Miss Sheikh in a letter dated 16^th November 2009 to the Bank of Ireland’s solicitors, Burges Salmon, which she copied to me, and in a letter dated 17^th November to Norris J, which she again copied to me.

On 18^th November she wrote to me, copying her letter to Isadore Goldman, Briggs J and the Chancellor. I will quote the first part of that letter:

“I am preparing my application for the recusal application. I may have the statement ready by the end of the week, but my circumstances are such, dealing as I am with a multiplicity of applications which no person could deal with, a situation I say on good grounds, your Lordship has deliberately engineered, that I doubt I will be able to finalise the statement until the end of the week. It will be ready on Monday.

So that no one can say they are prejudiced, I set out my grounds:

(1)

In 2007 Briggs J conducted a series of the most extraordinary interim applications in legal history in which my mother and I lost everything we possess at one without notice application. He breached five CA authorities and departed from the case he argued as a silk, the Daybells case.

(2)

In order to cover it up he set me up with a damaging judgment based on a finding on paper that I, an experienced commercial conveyancing practitioner, ‘sabotaged’ a settlement agreement which was highly beneficial to me in that I would today be receiving £7,500 per month, within a few weeks of having agreed it.

(3)

I say what was happening was that my opponents were carrying out a ‘phoenix mortgage’ or ‘sale to a nominee company’ which is commonly undertaken by practitioners. I say that any reasonable person would see that my account is the right one. The emotive language used in the Briggs J judgment e.g. “sabotage” “she persists in objecting to the deed of priority” immediately discredits Briggs J and undermines his judgment.

(4)

The Chancery Division is extremely embarrassed that I, a person the judicial system has historically regarded as ‘an educated wog’, is challenging the notion that the ‘whites’ have a monopoly on intelligence, expertise, integrity, truth and decency.

(5)

Your Lordship knows that this case is difficult. It requires an enormous investment of time to read and understand it. It is obvious that you have not read the file. Isadore Goldman, Counsel for them, and the parties acting in the fraud case - Withers, WCHH, Beale, etc have not read it. They don’t need to. They know they can come into court with a skeleton a few pages long with some defamatory material about me, and people lie [?about] me and win. They know the judge also can’t be bothered to read the file, but has worked out that he can simply give a bad judgment against ‘the black man’ and send him on the appeal route. They being ‘white’ know that a ‘white’ judge will protect them.

(6)

The strategy in the Chancery Division again, so stupidly obvious, is to (1) not bother to read the file, (2) make irrational judgment, (3) send people like me on the scenic appeal route, (4) wait for them to go bankrupt, (5) in my case wait for my mother to die.”

Miss Sheikh then went on to list a number of questions that she required me to answer, and to ask, among other things, for a transcript of all the numerous telephone calls that she has made to my clerk and to Security. She also asked me to list all other cases in which a Muslim party has appeared before me.

On 19^th November I replied to Miss Sheikh’s letter through my clerk. I said that I did not consider it appropriate for me to be subjected to a questionnaire of that nature. I said I was not aware of any circumstances giving rise to a possible conflict of interest on my part, either now or on any previous occasion when I had heard applications in the Red River litigation. I said Miss Sheikh should, therefore, not draw any inferences from my refusal to answer these specific questions. I did say, however, that I was prepared to inform her, first, that to the best of my recollection I was never instructed by Isadore Goldman when in practice at the Bar; secondly, that I have never had any communication of any nature with Mr Dogan; and, thirdly, that I have never communicated with the Law Society in relation to Miss Sheikh or Ashley & Co. I also refused the request for a transcript of the telephone calls, assuming (which is most uncertain) that it would be possible to obtain one.

On the morning of yesterday’s hearing Miss Sheikh produced a witness statement and a skeleton argument. In her skeleton argument she helpfully referred me to some well-established principles of judicial conduct and to recent case law on the subject of recusal, including Porter v Magill [2001] UKHL 357, [2002] 2 AC 357; Locabail (UK) Ltd v Bayfield Properties Ltd [2000] QB 451; AWG Group Ltd v Morrison [2006] EWCA Civ 6, [2006] 1 WLR 1163; and Helow v Home Secretary [2008] UKHL 62, [2008] 1 WLR 2146.

In her witness statement Miss Sheikh described the background to the case in the following terms:

“2.

At the heart of this case is a routine conveyancing transaction whereby a creditor for £1.2 million was to be given a second legal charge subject to a first legal charge limited to £1.75 million.

3.

The settlement agreement of 29^th June 2007 recording the above also records that my mother and I were to receive £300,000 rising to £7,500 per month in May 2008 until December 2009. We have not received a penny piece.

4.

I refer to my fraud synopsis which sets out how the fraud, in this case a phoenix mortgage, was going to be conducted and not the ‘composite transaction’ as Briggs J assumed.”

She then said in paragraph 5:

“The fraud is so obvious to a commercial conveyancing practitioner it beggars belief that Henderson J cannot see the fraud. It is known as phoenix lending and is commonly used to emasculate the interests of secondary lenders.”

She went on to say in paragraph 6 that, having obtained discovery from Burges Salmon, she could now confirm that the Bank of Ireland did not even know that Mr Dogan owed her and her mother £1.2 million, and in his mortgage application form he specified a net worth of £3.78 million, although Briggs J had described him as a “man of straw”. Secondly, she purported to confirm that during the key period Mr Schaffer, the solicitor partner acting on behalf of the defendants, duped Briggs J into believing that the composite transaction was being completed, whereas, unbeknown to him, Mr Schaffer was completing a different mortgage or was selling. Thirdly, she said that it was now apparent that she and her mother were the lynchpin in the transaction, that Mr Schaffer had to prevent her contacting the Bank of Ireland at all costs, and this was the reason why he applied for what she calls a “gagging order” in what should have been a routine conveyancing transaction. In paragraph 7 Miss Sheikh referred to various other documents which she had prepared for the purposes of the present application, including a lengthy questionnaire with supporting documents in which she asks me to give my reasons for various things I have said or done in the past, and a smaller file purportedly showing what she describes as “some 20 sample lies by white firms and barristers”.

The remainder of the witness statement contains a series of allegations against me, many of which I will not repeat because they are in much the same terms as allegations which I have already mentioned. In paragraph 9 she alleges that I have demonstrated my willingness to overlook the following conduct of white firms of solicitors and barristers, namely (1) lying to the court; (2) the doctoring of evidence; (3) criminal acts contrary to the Proceeds of Crime Act 2002; (4) money laundering; (5) mortgage fraud; and (6) criminal acts contrary to the Fraud Act 2006. In paragraph 11 she says that she has made various applications with a view to bringing the proceedings to a rapid end, including applications to strike out the manifestly bad claim, to close a hearing which took place before Mann J, to revoke all judgments in 2007 on the grounds that the court was misled, to require Mr Dogan to particularise his claimed loss of £5 million, and for the court to retain a conveyancing expert to assist it. In paragraph 17 she says that so long as I hold unshakeable views which I have expressed in the past, she has no belief that she has any hope of success in the case and “I may as well give up today”.

In paragraph 18 she says she has now obtained evidence of the fraud which was being conducted, “if that were even needed because the facts speak for themselves”, but there is a real risk, if not certainty, that I will continue to ignore such evidence because I now have a vested interest in upholding my earlier robust judgments against her. In paragraph 21 she says that as a litigant in person she is now obliged to educate a Chancery judge in the drafting of mortgage deeds, because she would have to do that before being able to persuade me that the legal charge was ineffective. She says that would take some three days of the trial and is only one of a great many issues which again affect her right to a fair trial. She says to educate me in conveyancing alone would take the better part of two weeks.

In paragraph 22 she goes on to say that she believes I have irrationally and unfairly reversed the burden of proof from Mr Dogan to herself in relation to a number of issues, and in paragraph 23 she gives a number of purported examples. In subparagraph 23(2) she points out that a 15-day trial date has been set, but no witness statements have yet been exchanged and no reply to her defence has yet been served. She complains that Mr Schaffer is apparently producing expert reports to substantiate the loss claimed, but without liability having been established it is difficult to know how loss can be shown. She says that Mr Schaffer obviously plans to use the 15-day trial to deal with liability and damage, and I appear to be willing to permit him to do so. In paragraph 27 she complains that I have removed or procured the removal of hearings listed before other judges which were likely to be successful, namely: an application before Peter Smith J on 6^th October to strike out a case brought by her against a broker; a hearing before Mann J; a hearing on 13^th October for disclosure against Burges Salmon originally listed to be heard by Chief Master Winegarten; a matter that came before Lewison J at the end of September; and a request that she made to Warren J on 6^th November.

The relevant legal principles which apply to an application of this nature are well established. If actual bias on the part of a judge could be established the judge would, of course, be disqualified from hearing the case. More commonly, however, the issue is not actual bias but the appearance of bias. On that, it is enough to quote the conclusion which was stated by Lord Hope, with the agreement of all of their Lordships, in Porter v Magill at paragraph 103, where he said:

“The question is whether the fair-minded and informed observer, having considered the facts, would conclude that there was a real possibility that the tribunal was biased.”

In using this language Lord Hope emphasised that the relevant test was whether there was, in the eyes of a fair-minded and informed observer, a real possibility of bias. He said that the alternative formulation in terms of a real danger of bias served no useful purpose and should therefore be discarded. Lord Hope went on in paragraph 104 to make two points which, in my view, bear repetition First, he said that assertions by the judge that he was unbiased are unlikely to be helpful in the context of the question whether the test of appearance of bias is satisfied. Secondly, he endorsed the view of the European Court of Human Rights in one of the leading cases “that what is decisive is whether any fears expressed by the complainer are objectively justified.” I emphasise, therefore, that the test is one of objective justification.

I have also read and reminded myself of the authoritative guidance given by the Court of Appeal consisting of the then Lord Chief Justice, Lord Bingham, Lord Woolf MR and Sir Richard Scott V.-C in the Locabail case. In particular, I draw attention to paragraphs 22 and 24 of the judgment, where the Court of Appeal said that they found great persuasive force in three extracts from Australian authority, two of which seem to me particularly apposite. First, they quoted what Mason J, sitting in the High Court of Australia, said in In re JRL ex parte CJL (1986) 161 CLR 342 at 352:

“Although it is important that justice must be seen to be done, it is equally important that judicial officers discharge their duty to sit and do not, by acceding too readily to suggestions of appearance of bias, encourage parties to believe that by seeking the disqualification of a judge, they will have their case tried by someone thought to be more likely to decide the case in their favour.”

Secondly, in what they refer to as the Clenae case [1999] VSCA 35, Callaway JA observed at paragraph 89(e):

“As a general rule, it is the duty of a judicial officer to hear and determine the cases allocated to him or her by his or her head of jurisdiction. Subject to certain limited exceptions, a judge or magistrate should not accede to an unfounded disqualification application.”

I emphasise these points because the natural first inclination of any judge faced by a recusal application brought by a litigant who says that he or she has no confidence in the judge and believes a fair trial to be impossible is probably to think that it might be better if he stepped down, even if the complaint is objectively unjustified. However, it is important that judges should guard against that inclination and that they should only recuse themselves if satisfied that good grounds for their doing so have been made out. It is the duty of a judge to hear and determine the cases which are allocated to him regardless of his personal preferences and regardless of the fact that one or more of the parties might prefer the case to be heard by somebody else. If it were otherwise, a litigant could in practice obtain a judge of his or her choice by the simple expedient of asking judges assigned to the case to recuse themselves on grounds of lack of confidence in them until a judge acceptable to the litigant was finally found.

An additional factor in the present case is that I have been designated by a direction of the Chancellor as the judge who is to hear the Red River case and all related matters. It is the existence of that direction, and nothing else, which explains why a number of Red River related matters have been transferred for hearing by myself. Miss Sheikh’s apparent inability to understand this simple point is worrying, because in my judgment it betrays an irrational tendency to suspect a conspiracy where there are no objective grounds to justify it. The point about the risk of serial recusal applications is also one that cannot be dismissed as fanciful in the present case. Norris J was recently appointed by the Chancellor as the designated judge to hear two separate actions started by Miss Sheikh in the Chancery Division against a number of defendants, including Red River and Mr Dogan. She has already stated that it is her intention to ask him too to recuse himself: see paragraphs 16 and 17 of a judgment which Norris J handed down last week on 17^th November, [2009] EWHC 2935 (Ch) Sheikh & Another v Dogan & Others.

Before moving on, I should say that I accept and have well in mind certain further points made by Miss Sheikh in her skeleton argument on the basis of recent authority. First, if there is real ground for doubt about the applicability of the apparent bias test, the doubt should be resolved in favour of recusal: see Locabail at paragraph 25, [2000] QB at 480G. Secondly, where an objection is taken in advance of a hearing there is scope for the sensible application of the precautionary principle, as the Court of Appeal recognised in AWG Group Ltd v Morrison at paragraph 9, [2006] 1 WLR at 1167D-E. Thirdly, if the test of possibility of bias is satisfied, there is no balancing exercise to be performed and the judge is obliged to recuse himself. As the Court of Appeal said in AWG at paragraph 29:

“In terms of time, cost and listing it might well be more efficient and convenient to proceed with the trial, but efficiency and convenience are not the determinative legal values: the paramount concern of the legal system is to administer justice, which must be, and must be seen by the litigants and fair-minded members of the public to be fair, and impartial. Anything less is not worth having.”

I now turn to the question whether I should recuse myself. I begin with the question of actual bias. Miss Sheikh has, I think, accused me of being consciously and deliberately biased against her on the grounds of one or more of her sex, race, skin colour or religion. These are very serious allegations to level against any serving judge. I can assure Miss Sheikh that they are completely groundless. I have done my best to deal with all her applications and all matters relating to this case in accordance with the law and in accordance with the solemn judicial affirmation which I made on appointment to the High Court bench. If I do not recuse myself, I will continue to act in accordance with the same principles. Her sex, race, skin colour and religion are matters of complete indifference to me. In my judgment, there is no more that I can or should say in relation to that aspect of the case.

The main thrust of her application, as I understand it, is that the test for apparent bias is satisfied and I am therefore bound to recuse myself for that reason. I find myself faced here with a real difficulty in deciding how best to deal with the question. I have heard over four hours of oral submissions from Miss Sheikh and Mr Sampat, and a large quantity of paperwork has been placed before me. To deal with each and every point in detail would, in my view, be wholly disproportionate and would occupy an unacceptable amount of court time. On the other hand, if I deal with the issue in short order, Miss Sheikh will take that as further proof that I do not take her case seriously, that I am biased in favour of the claimants and white lawyers, and that I cannot be bothered to get to grips with the detail of the matter.

The root problem, I think, is this. The case that Miss Sheikh wishes to run depends on establishing that a fraudulent conspiracy took place in 2007 to which at least Mr Dogan, Red River and Mr Schaffer were parties, with the object of ensuring that the financial interests of herself and her mother under the settlement agreement were not protected, as they should have been, by a valid second charge subject only to a replacement first charge in favour of the Bank of Ireland capped at £1.75 million. The object of the alleged conspiracy was to leave Miss Sheikh and her mother without any effective security for the sums in excess of £1 million owing to them under the settlement agreement, and to leave Red River free to dispose of or remortgage the property free from all encumbrances apart from the existing first mortgage in favour of the Bank of Scotland. This conspiracy, says Miss Sheikh, was aided and abetted by a series of lies told to the court and others by at least two junior counsel and at least three solicitors, including Mr Schaffer. A succession of Chancery judges who heard urgent interim applications between September and December 2007 were thus kept in the dark about the true nature of the composite transaction which they wrongly supposed all parties had a common interest in trying to bring about, and by their orders and directions they unwittingly enabled the fraud to be perpetrated under their eyes. I should add that at most, although not all, of those hearings Miss Sheikh and her mother were represented by either leading or junior counsel.

I was not involved in any of the hearings which took place in 2007, and my first substantial involvement was in April 2008 when I heard a total of 12 applications by the Sheikhs. I dismissed them all and certified 11 of them to be totally without merit, for the reasons which I gave in the judgment I delivered on 21^st May 2008: see Red River (UK) Ltd & Dogan v Sheikh & Sheikh [2008] EWHC 1380 (Ch). In paragraphs 5 to 28 of that judgment I set out the background as I then understood it and expressed some views on the interpretation of the settlement agreement and the wording of the second legal charge. I emphasised in paragraph 5 that I had considered the whole matter afresh and did not regard myself as bound in any way to follow the views which Briggs J had expressed in his judgment of 15^th November 2007. In paragraph 57, having certified that in my view 11 of the applications were totally without merit, I pointed out that I was also required by CPR 23.12 to consider whether it was appropriate to make a civil restraint order. I recorded that I had warned Miss Sheikh on 25^th April that the time was fast approaching when the court might need to consider whether to take that step. I said, however, that I did not propose to make a CRO on that occasion, but gave her what was in the nature of a final warning. I said that if she made any further applications which the court considered to be totally without merit, I would be strongly disposed to make a CRO with immediate future effect, whether or not I was asked to do so by Red River and Mr Dogan. I concluded:

“I very much hope that it will not be necessary for me to take that step, but in my judgment the remedy lies in Miss Sheikh's own hands.”

Miss Sheikh now places that judgment at the forefront of her case. She submits that I expressed myself so forcefully in a number of respects that a fair-minded and informed observer would conclude that there was a real possibility of my being biased against her. She also says that the warning which I gave her about making a CRO had an inhibiting effect which prevented her from dealing with her case effectively. She accepts, that she did not even seek permission to appeal against my decision, but says that it would have been pointless to do so in the circumstances because the Court of Appeal already had pending applications to appeal brought by her against most, if not all, of the orders which had been made in 2007.

I am unable to accept these submissions. In my judgment, it should have been obvious, in the context of a hearing of 12 applications of an interim nature, that I was not expressing finally concluded views on any questions which might eventually be in issue at a trial of the action, but was instead trying to set the scene as it then appeared to me before dealing with the particular applications in turn. With the benefit of hindsight, I accept that it would have been preferable if I had said explicitly that my views were provisional and based on the material then before me without the benefit of oral evidence or cross-examination. However, I do not believe that that omission would lead the informed observer to conclude that I might be biased, especially as I have assured Miss Sheikh on numerous subsequent occasions that I will approach all issues at trial with an entirely open mind and on the basis of the evidence that is then before the court.

I am also unable to accept that my certification of 11 of the applications as totally without merit, and the warning which I gave about making a CRO, prevented or inhibited Miss Sheikh from presenting and developing her case as she wished. There have been at least two subsequent case management conferences, in November 2008 and March 2009, when directions were given, among other matters, for her to prepare a properly pleaded defence and counterclaim and to make it clear what claims she wished to bring against parties other than Red River and Mr Dogan. Her response to those directions, so far as I have been able to ascertain, has been to produce an amended defence without any proper counterclaim, although its heading suggests that it includes a counterclaim, and to start the separate proceedings against Red River, Mr Dogan and many others for which Norris J is now the designated judge. Whether deliberately or otherwise, Miss Sheikh appears determined to make matters as complicated as possible, and to initiate a multiplicity of proceedings, instead of concentrating on getting her case in the Red River action into good order and ready for trial. Indeed, for reasons which I do not understand, she now seems to be convinced that the forthcoming trial in March 2010 will in some way be a sham.

At the heart of many of Miss Sheikh’s complaints lies the argument that the fraud allegedly perpetrated on her and her mother in 2007 is so obvious that any competent judge should at once be able to recognise it for what it is, on the strength of the paperwork which she has placed before the court on various occasions and in various different contexts. For example, the fullest exposition of her claim is still to be found, I think, in a 400-page skeleton argument that she prepared in support of her applications for permission to appeal to the Court of Appeal, and to parts of which she referred me yesterday. From this basic proposition various consequences are said to follow. Because the fraud is so obvious, the court should have taken steps of its own motion to strike out the claim against the Sheikhs in the present action, to enter judgment for them in the sums due under the settlement agreement, to report the professional people involved and Mr Dogan to the appropriate regulatory authorities and the Revenue, and so forth. Both I and a number of my fellow judges of the Chancery Division have been sent unsolicited requests of this nature over the last few months, usually by fax. When these requests do not achieve the desired result, it is then alleged that my failure to act shows that I have not read the papers, that I am ignorant about conveyancing, that I must be biased, that I favour white litigants and solicitors, and so on.

In my judgment, this approach by Miss Sheikh betrays a fundamental misunderstanding about the judicial process and the conduct of litigation. It is elementary that allegations of fraud have to be clearly and distinctly pleaded and supported by adequate evidence. It is equally elementary that, save in some wholly exceptional circumstances, the court should not act except in response to proper applications brought before it on appropriate notice to the other side, and it should then act only on the evidence which is properly before it. As I have said to Miss Sheikh on several occasions, judges in this country do not have a separate inquisitorial role. Nor can the court make findings of fraud on the basis of paperwork placed before it unilaterally by one party. This critical misconception appears to me to lie at the root of nearly all of her complaints about me. An informed observer would appreciate that the court cannot properly act in such a way and that no adverse inferences can or should be drawn from the failure of the court to do so. Such an observer would also recognise, in my judgment, that it is completely inappropriate to expect a judge to have to answer the kind of detailed questionnaire about his earlier conduct and judgments of the kind that Miss Sheikh now seeks to administer to me. If a litigant is dissatisfied with a judgment, the appropriate course is normally to seek permission to appeal. That is the way that litigation works in this country, and as a former solicitor Miss Sheikh ought to know it.

I do not propose to prolong this judgment. I will merely say that I have done my best to consider and give proper attention to the matters upon which she addressed me yesterday, but I have concluded that there is nothing which should cause me to hold that the test for apparent bias is satisfied. Nor am I aware of any other reason why I should recuse myself. In those circumstances, it is my duty to dismiss the application.

I would only add as a final comment that when I rose yesterday afternoon Miss Sheikh said that she wished to draw her submissions together in a written document which would be no more than one page in length and which I would receive early this morning. In the event, I have received over the course of the morning seven pages of further submissions accompanied by at least 40 pages of further documents. I decline to take these further documents into account, although I have read the further submissions and satisfied myself that they contain no new arguments of any significance that I have not already dealt with. Miss Sheikh was warned in the clearest terms by Norris J only last week about the need for restraint in submitting material to the court. It is, in my view, regrettable that she appears unwilling to heed that warning.