Rahman v Rahman & Ors

Introduction:

On 28 June 2019 I heard argument on matters falling into two categories. The first category concerned consequential orders following my dismissal on 17 April 2019 of an appeal from an order made on liability by Ms Recorder McAllister (“the judge”) after a five-day trial in February 2017 at Central London County Court. That appeal was allocated to the Queen’s Bench Division of the High Court of Justice. I gave judgment on 17 April 2019 in my capacity as a judge of that division: see Rahman v Rahman [2019] EWHC 1011 (QB).

The second category concerned the remainder of the claim after the judge gave judgment below. Her judgment dealt with liability only. Following the judgment, she initially gave directions for the remainder of the claim (“the relief proceedings”) in the Central London County Court. However, information provided pursuant to those directions indicated that the sums at stake warranted a transfer to the High Court. The judge made an order for transfer to the Business and Property Courts, Business List. I am told that neither side considered the possibility of applying for a consequential transfer of the appeal, or indeed the application for permission to appeal, to the Business List. I add that Business List matters are dealt with by judges of, or authorised to sit in, the Chancery Division. There were occasions in the present case when the term “Chancery Division” was used to denote the Business List. Where the present judgment deals with such occasions I have simply substituted “Business List”.

In mid-June it became apparent that the terms of my consequential orders in the appeal might depend upon the outcome of a possible application to vary an order made in the Business List by Mr Justice Arnold, with the consent of the parties, on 15 September 2017 (“the Arnold order”, see sections A3 and B1.3 below). It was initially thought that the most efficient course would be to transfer the relief proceedings from the Business List to the Queen’s Bench Division in this regard. On the assumption that such a transfer would take place an application notice (“the variation application”) to vary the Arnold order was filed and issued on 20 June 2019 in the Queen’s Bench Division.

I had earlier advised the parties that a possible course would be to seek permission from the Chancellor for me to sit as a judge of the Business List. On 19 June 2019 I was given permission to deal with interlocutory matters in the relief proceedings in the Business List. By an order dated 24 June 2019 (“the combined directions order”) I directed that the variation application should be treated as if it had been issued in the Business List. That order also directed that the variation application should be heard on 28 June 2019.

The appeal was from an order made by the judge on 14 July 2017 (“the liability trial order”). The appellant, Mr Azizur Rahman, was the first defendant in the proceedings below. The respondent, Mr Habibur Rahman, was the claimant in the proceedings below. They share the same surname, but are not related. I shall refer to them as “Aziz” and “Habib” respectively.

The main question at trial was resolved in favour of Habib. The judge found that in April 2003 Habib, Aziz and a third party, Dr Nurun Nabi, had made a contract (“the 2003 agreement”) under which they were to be equal shareholders in a joint venture. In due course that joint venture was embodied in two companies, the second and third defendants, which I shall refer to as “the Icon companies”. As explained in my judgment dated 17 April 2019 (“the appeal judgment”), Habib’s case was that the second defendant, Icon College of Technology and Management Limited (“Icon College Ltd”) was incorporated for the purpose of conducting the business of a fee paying educational establishment, called Icon College of Technology and Management (“the college”). Dr Nabi was the principal of the college. He, like Aziz, was and is an employee of Icon College Limited, as was Habib during the period from

The judge further found that Aziz, as sole director and shareholder of the Icon companies, was obliged to “allot”, in the sense of “procure the allotment of”, a one third shareholding to Habib. All avenues of challenge to these findings have been exhausted, subject only to two issues concerning delay in the bringing of proceedings. The judge held that the 2003 agreement was made in April 2003. However it was not until 27 May 2015 that these proceedings were begun. The questions which arose on the appeal concerned findings by the judge that delay was no bar to Habib’s claim. Aziz raised issues at trial both on the Limitation Act 1980 and on equitable principles, known as “laches”, concerning delay. Aziz made assertions that, as regards relevant parts of Habib’s claim, the judge wrongly concluded that Habib was neither barred by the 1980 Act nor barred by laches. In the appeal judgment I gave reasons for rejecting Aziz’s assertions on these issues. My order dated 17 April 2019 extended the time within which Aziz may apply to the Court of Appeal for permission to bring a second appeal on these issues of delay in the bringing of proceedings. Aziz has not thus far made any such application to the Court of Appeal. Under my order it would be open to him to make such an application no later than 19 July 2019.

In the County Court Mr Changez Khan, instructed by Laderman & Co (“Laderman”), appeared for Habib, while Mr Thomas Graham, instructed by Penningtons Manches LLP (“Penningtons”), appeared for Aziz. On the appeal senior counsel were instructed: Mr Robin Hollington QC led Mr Graham for Aziz, while Mr Andrew Clutterbuck QC led Mr Khan for Habib. Following my dismissal of the appeal on 17 April 2019, Mr Graham has appeared for Aziz and his co-defendants, and Mr Clutterbuck QC and Mr Khan have appeared for Habib.

Following transfer to the Business List, only one substantive step has been taken in the relief proceedings. This was the granting of the Arnold order by consent on 15 September 2017. The Arnold order included the following provisions among others:

I shall refer to paragraphs 2 and 3 of the Arnold order as “the restraint injunctions”. They are, in effect, a form of freezing order which applies only as a bar on certain transactions in certain circumstances. In the present case the barred transactions are payments by Icon College Ltd to Aziz or Dr Nabi in circumstances where the payments are neither salary in the sum of £4,973.92 net each month nor reimbursement of legitimate business expenses personally incurred.

It is the restraint injunctions which Aziz and the Icon companies, by the variation application, sought to alter. At the start of the hearing on 28 June 2019 I directed that the variation application should be the first matter argued that day. At the conclusion of oral argument I dismissed the variation application for reasons to be given later. In the present judgment I set out those reasons.

The variation application: proposals and evidence

The liability trial order provided in paragraphs 5 and 6:

The schedule referred to in paragraph 6 of the liability trial order was served by Aziz on 24 July 2017. I shall refer to it as “the July 2017 schedule”. Aziz verified the July 2017 schedule in a third witness statement (“Aziz 3”) which included a statement of truth signed by him with a date of 24 July 2017.

As to distributions made by Icon College Ltd to Aziz the July 2017 schedule set out payments which included:

As to distributions made by Icon College Ltd to Dr Nabi, the July 2017 schedule set out payments which included:

From these figures it can be seen that, as at 24 July 2017, the July 2017 schedule showed that:

Relevant parts of the Arnold order are set out in section A3 above. The interim payments described in paragraph 1 of that order were additional to an interim payment of £100,000 on account of damages made in July 2017 pursuant to a requirement in paragraph 10 of the liability trial order. The first additional interim payment of £200,000 was duly made in September 2017. The second additional interim payment, of £300,000 under paragraph 1(c) of the Arnold order, would only arise if a specified trigger occurred: a failure by Aziz to obtain “permission to appeal as contained in his application for permission to appeal dated 3 August 2017”.

Prior to the Arnold order Laderman had requested an additional interim payment and agreement to proposed restraint injunctions in a letter dated 16 August 2017. That letter made reference both to the amount of dividends received by Aziz as shown in the July 2017 schedule and to “the significant payments” made by Icon College Ltd to Aziz and Dr Nabi. The letter was followed a few days later by an application notice seeking an additional interim payment of £500,000 and also seeking what became the restraint injunctions. The application notice was filed with the court on 24 August 2017, along with a letter from counsel seeking an urgent hearing as vacation business. As will appear later in this judgment, correspondence between Laderman and Penningtons continued, in due course enabling the parties to agree on the terms in the Arnold order.

Meanwhile Aziz had prepared an appellant’s notice seeking permission to appeal from the liability trial order, along with (among other things) permission to adduce fresh evidence. The appellant’s notice was issued in the Queen’s Bench Division on 3 August 2017.

The application for permission to adduce fresh evidence was refused on the papers by Mrs Justice Jefford on 10 August 2017. The application for permission to appeal was refused on the papers by Mr Justice Jeremy Baker on 15 September 2017. Aziz gave notice that he would make a renewed oral application for permission to appeal. At that stage the grounds of appeal comprised a principal challenge alleging fundamental flaws in the judge’s finding that the 2003 agreement had been made, along with a subsidiary challenge to the judge’s conclusion on laches. On 8 November 2017 Aziz sought to amend the grounds of appeal so as to challenge the judge’s findings on statutory limitation.

The oral renewal application was heard by Mr Justice Spencer on 9 and 10 November 2017. In a reserved judgment dated 7 December 2017 Mr Justice Spencer refused permission to adduce fresh evidence and refused permission to challenge the judge’s findings in favour of the 2003 agreement. However he granted permission to amend the grounds of appeal so as to rely on statutory limitation, and granted permission to appeal on both statutory limitation and on laches.

When refusing permission to appeal against the judge’s findings on the 2003 agreement, Mr Justice Spencer noted a complaint by Aziz that the judge had not explained sufficiently why she rejected his evidence on the central issue of agreement. Rejecting this complaint, Mr Justice Spencer commented:

The consequence of Mr Justice Spencer’s decision was that the trigger in paragraph 1(c) of the Arnold order took effect: Aziz had not obtained “…permission to appeal as contained in his application for permission to appeal…”. It followed that under the Arnold order Aziz was required not only to pay £200,000 by 22 September 2017, but also to pay to Habib the further sum of £300,000 by way of interim payment “… within 28 days of the date of the appeal judgment”. My order dated 17 April 2019 included at paragraph 3(2) an initial extension which took effect so as to allow Aziz 28 days from 28 June 2019.

My order dated 17 April 2019 included a timetable of preparatory steps to be taken prior to the hearing on consequential orders. Once the date for that hearing had been set as 28 June 2109, the timetable included the following:

The first preparatory step for the 28 June hearing, notification of the consequential orders sought by each side, was scheduled for 7 June 2019. Six days prior to this Penningtons wrote to Laderman on 31 May 2019. In this letter Penningtons sought Habib’s consent, “in accordance with” the Arnold order, to:

I shall refer to this as “the 31 May net dividend proposal”. I add that, bearing in mind that specific performance of the 2003 agreement had been refused by the judge, the wording of item 3 in the 31 May net dividend proposal does not seem apt. Nothing, however, turns on this.

The letter of 31 May said that such a net dividend would, among other things, still leave more than a year’s running costs in reserve as at 22 May 2019. In that regard Icon College Ltd’s management accounts to 30 September 2018, and bank statements to 7 May 2019, were enclosed with the letter.

In conclusion Penningtons’ letter of 31 May 2019 stated that if consent were not given:

By 7 June, however, when giving notification of proposed consequential orders in the appeal, Aziz was putting forward a different proposal. It is a proposal which he has consistently maintained, in substance, from 7 June 2019 onwards. I shall refer to it as

“the conditional general release proposal”. It was put forward on 7 June 2019 as paragraph 3 of Aziz’s draft consequential order in the appeal:

What was thus proposed on 7 June 2019 by Aziz was very different in substance from the 31 May net dividend proposal. Rather than permitting a one-off dividend it would enable Icon College Ltd to make any distribution it liked to Aziz and Dr Nabi provided that a 1/3 portion was retained and that, no later than a week after the distribution, Habib was notified of what had happened.

As put forward on 7 June 2019, moreover, the proposal did not just differ in substance: it differed procedurally. Penningtons’ 31 May letter envisaged a specific and urgent application to the court. It did not suggest that judicial consideration of the 31 May net dividend proposal could be left until 28 June 2019 and treated as a matter which was consequential on the dismissal of Aziz’s appeal.

Laderman’s response, in a letter dated 7 June 2019, but emailed on 10 June 2019, included:

The response noted in sub-paragraph (4) above was in these terms:

On 11 June 2019 Penningtons emailed Laderman maintaining that the conditional general release proposal was consequential on the dismissal of the appeal. Penningtons added:

In the light of Laderman’s stance that Aziz’s variation proposal required an application in the Business List, Penningtons sought agreement to a transfer by consent of the relief proceedings from the Business List to the Queen’s Bench Division to enable Aziz’s variation proposal to be dealt with at the consequential hearing fixed for 28 June 2019.

Laderman sent a reply on 12 June 2019 which:

Penningtons replied to Laderman on 13 June 2019, asserting:

Penningtons asserted, among other things, that as the Arnold order was a species of freezing order, it would clearly be an abuse of process to prevent a party from drawing funds required for the purpose of taking legal advice, or complying with orders of the court. Penningtons attached updated bank statements for Icon College Ltd’s account indicating that it held £7.3 million. In addition Penningtons said that in the absence of agreement it would be minded “to make both an application for transfer and/or an abuse of process application.”

Penningtons did not, as had been threatened on 13 June 2019, make an abuse of process application. However on behalf of Aziz and the Icon companies on 14 June 2019 it electronically filed a transfer application in the Business List. A statement of truth in support of the transfer application:

I observe at this point that nothing had been done prior to 14 June 2019 to inform me that there was a proposal by Aziz and the Icon companies to make the transfer application. Nor had anything been done to inform me that at the hearing on 28 June 2019 I would be asked by Aziz and the Icon companies to make an order varying the Arnold order.

The second preparatory step for the 28 June hearing required the parties to exchange skeleton arguments and rival draft orders by 14 June 2019. This was duly done on that day, and the material exchanged was filed with the Queen’s Bench Division. Paragraph 3 of Aziz’s 14 June draft order embodied the conditional general release proposal, using the same wording as had appeared in the 7 June draft order (see section B2.2 above).

Aziz’s 14 June 2019 skeleton said at paragraph 27 that Aziz sought an order releasing him from the restrictions in the Arnold order. It was said that the release was upon terms intended to give reasonable protection to Habib. Reference was made to paragraph 3 of Aziz’s draft order in this regard. Aziz’s 14 June 2019 skeleton argument continued in paragraphs 28 to 37:

It will be seen from those paragraphs that the only ground advanced on 14 June 2019 for seeking to vary the Arnold order was that, in circumstances where Aziz’s salary was not enough to fund payments that he would now have to make, Aziz needed further dividends in order to make those payments. An assertion was made that Icon College Limited “is in good health and has ample funds”. But this assertion did not include a “sufficient funds assurance” of the kind often found in applications to vary freezing orders. By a “sufficient funds assurance” I mean an assurance, in the context

Habib’s 14 June 2019 skeleton noted that it was proposed either by Aziz or by Icon College Ltd to seek to vary paragraph 2 of the Arnold order. The stance of Habib in that regard was set out in paragraphs 21 and 22:

After preliminary consideration of the material filed on 14 June, I prepared a note dated 17 June 2019. It was sent to the parties on the morning of 17 June. Among other things, it asked for information about the relief proceedings in the Business List, and what steps had been taken in those proceedings. The parties were requested to prepare a joint note dealing with questions raised in my note of 17 June 2019.

On the afternoon of 17 June 2019 Laderman, in the light of my enquiries in the note sent that morning, advised the court that Aziz was “already applying… for the proceedings to transferred to the Queen’s Bench Division”. Laderman attached a copy of the unissued transfer application. Laderman also enclosed a letter sent on behalf of

An email from Penningtons on the morning of 18 June 2019 confirmed that it was attempting to get the relief proceedings transferred “for the obvious reason that this will enable Mr Justice Walker to deal with all consequential matters together”.

In the light of these emails I prepared a note which was sent to the parties at 12:10 on 18 June 2019. It included the following:

A response from Laderman that afternoon gave provisional consent to the timetable proposed in my note. That consent was subject, among other things, to my being willing to extend the time for argument on 28 June 2019 from half a day to a day. In an email later that evening Penningtons said, in effect, that it would endeavour to meet the timetable proposed in my note.

In the event there was some slippage: as noted in section A1.3 above it was not until the morning of 20 June 2019 that the variation application was issued.

When issued on 20 June 2019 the variation application was supported by a fifth witness statement of Aziz dated 19 June 2019 (“Aziz 5”). Relevant assertions in Aziz 5 for present purposes can be summarised:

Paragraph 70 of Aziz 5 repeated his assertion that there had been obstructiveness by Habib in refusing to agree to transfer the relief proceedings to the Queen’s Bench Division. It added an accusation that Habib had adopted an “extravagant attitude to costs” by instructing leading counsel for the hearing on 28 June 2019.

Paragraphs 71 to 74 of Aziz 5 stated:

It may be noted that Aziz 5:

As noted in sections B2.1 and 2.2 above, Aziz’s initial proposal on 31 May 2019 was that there be permission for a “one-off” net dividend of £1.2m. This was replaced on 7 June 2019 by the more radical conditional general release proposal.

Aziz’s 14 June draft order and accompanying skeleton argument, as regards variation of the Arnold order, focused entirely on the conditional general release proposal. The

Also on 14 June, however, Aziz filed in the Business List his transfer application. Paragraph 17 of the witness statement in support of the transfer application described the application which Aziz intended to make “discharging or varying the Arnold order”. As noted in section B2.5 above, paragraph 17 set out two alternatives. The first of these was the conditional general release proposal. The second alternative was the 31 May 2019 net dividend proposal.

What happened on 20 June 2019 was that the draft order accompanying the variation application set out both the conditional general release proposal and, as an alternative, a revised version of the 31 May 2019 net dividend proposal. This revised version remained a proposal for a £1.2m net dividend of which £300,000 would be used to make an interim payment on account of damages. However the setting aside of £400,000 was no longer expressed to be “as a dividend for Habib”, but was instead to abide the determination of the court. As to the remaining £500,000, this would no longer be expressly for legal costs.

I shall call this alternative “the revised net dividend proposal”. It was in these terms:

A hearing of the transfer application had been scheduled to take place in the Business List before Deputy Master Stephen Lloyd on the afternoon of 20 June 2019. An attempt was made to pre-empt this hearing by filing a consent order for transfer which had been signed that morning. Laderman, however, said that its consent had only been given if I were to extend the time for argument from half a day to a day. If such consent were given then the parties agreed the timetable set out in my note of 18 June 2019.

In a note to the parties sent at 12:59 on 20 June 2019 I advised that the time for argument on 28 June was extended. I added that I had the permission of the Chancellor to act on 28 June as a judge of the Business List for the purposes of the variation application in addition to sitting as a judge of the Queen’s Bench Division for the purposes of the appeal. There was thus no longer any need for the transfer application, and the hearing scheduled for the afternoon of 20 June was accordingly vacated.

My combined directions order of 24 June 2019 (see section A1.4 above) embodied the remainder of the agreed revised timetable. Accordingly Habib’s answering evidence was to be filed later that afternoon, and Aziz’s evidence in reply by 4pm the following day. Paragraph 3 of that order put back the time for the second round of skeleton arguments, which were to cover all matters to be dealt with at the 28 June hearing, to 4pm on 26 June 2019.

In response to Aziz 5 Ms Sadia Anwar of Laderman made a second witness statement dated 24 June 2019 (“Anwar 2”). Among other things, Anwar 2:

On 25 June 2019 Aziz made a sixth witness statement (“Aziz 6”). I summarise material assertions in Aziz 6:

Submissions and analysis

In accordance with the combined directions order the parties exchanged further skeleton arguments on 26 June 2019. In my analysis below I deal, where appropriate, with submissions in the initial skeleton arguments of 14 June, in the further skeleton arguments of 26 June, and with oral submissions on 28 June 2019.

Aziz did not contest the assertions in Anwar 2:

I do not need to examine here the context in which Aziz made these untruthful assertions. There was no new finding by Mr Justice Spencer, who simply repeated part of what had been said by the judge in the liability trial judgment (see section B1.3

The opening oral submissions for Aziz frankly acknowledged the lateness of the variation application. Frankness was called for in this regard. It was undoubtedly right to accept that the variation application had been made at a late stage:

The opening oral submissions claimed that there were three explanations for the lateness of the variation application:

None of these three claimed explanations can possibly explain Aziz’s failure from shortly after 31 May until late on 18 June to take the procedural course which Aziz’s solicitor had recognised on 31 May as requisite: to make an urgent application to the court. The position from at latest Tuesday 4 June until Tuesday 18 June, was that whatever the merits of these three explanations:

Turning to the position immediately after my draft judgment was emailed on 6 March 2019, I cannot see how these claimed explanations, even taken at face value, can possibly justify Aziz’s failure to raise at that time the alleged need to vary the Arnold order. For the reasons set out in subparagraph (3) above, at the very least my request on 6 March 2019 that the parties advise agreed consequential orders ought to have prompted Aziz, if he did indeed need a variation of the Arnold order, to work out the variation he wanted and seek Habib’s consent to it.

Moreover I am not persuaded that any of the three claimed explanations has merit. It is convenient to start with Aziz’s first and third explanations, putting on one side the assertion in the first explanation that there was “sufficient” in Icon College Ltd. As justification for saying that the terms of the Arnold order were agreed on the basis that there would be further drawdowns from Icon College Ltd, and for thinking it would be uncontroversial for Aziz to draw down from Icon College Ltd for funds he needed to pay to Habib and to fund any appeal, Aziz relies on an exchange of correspondence between solicitors prior to the making of the Arnold order.

Laderman on 5 September 2017 wrote to Pennington, noting that Penningtons had confirmed that there were no loans due from Icon College Ltd to Dr Nabi or Aziz, and had also confirmed that Aziz does not envisage any bonuses being due to him or Dr Nabi. Laderman’s letter continued:

Aziz’s oral submissions relied on the sentence saying that if Icon College Ltd wanted to make any other payments, paragraph 4 provided liberty to apply. I cannot see how this assists Aziz. Laderman noted that there was liberty to apply, but it is elementary that such a liberty merely enables a party to bring the matter before the court. It could not conceivably be read as a guarantee that the court would give the applying party what that party wanted.

Aziz’s oral submissions also drew attention to point 2 in Laderman’s letter of 5 September 2017. Again I cannot see how this assists Aziz. Point 2 noted that the then current draft order prevented Icon College Ltd from paying sums to Aziz and Dr Nabi over and above their salary. The letter pointed out that this did not affect Icon College Ltd’s ability to manage its business. That was plainly right. There might be a dispute as to whether a proposed course of action was a payment to Aziz over and above his salary, or merely involved Icon College Ltd managing its business. If there were such a dispute then it could be put before the court for determination under the liberty to apply.

Point 2 of Laderman’s letter of 5 September 2017 also said that the draft order did not affect Aziz’s ability to deal with or dispose of his assets. Plainly this was a reference to assets other than any such right as Aziz might have to insist that Icon College Ltd pay him a sum over and above his salary. Any other reading would make a nonsense of the draft order. Again, there might be a dispute as to whether a proposed course of action was a payment to Aziz over and above his salary, or merely involved Aziz dealing with or disposing of an asset not falling within that category. If there were such a dispute then it could similarly be put before the court for determination under the liberty to apply.

The oral submissions then noted that Penningtons’ reply dated 6 September 2017 said that the confirmation it had given was only that no bonuses to Aziz or Dr Nabi were envisaged in the immediate future. There might also be future loans by them to Icon College Ltd which Icon College Ltd would then repay. To allow for future payments Penningtons proposed that they might be permitted by wording which allowed future payments to be made on 14 days’ prior notice. In reply, a letter dated 7 September 2017 from Laderman said:

In its response dated 8 September 2017 Penningtons said:

These exchanges do not appear to me to assist Aziz. It is not clear what the revised draft included at paragraph 4. It must have been something other than the liberty to apply found in paragraph 4 of the Arnold order. Be that as it may, this correspondence simply shows that the parties were, as regards any future payment, in agreement that either side could ask the court under the liberty to apply to decide whether a proposed future payment should be allowed. By definition, this would be a proposed future payment which Habib had not consented to.

Accordingly, on review of the correspondence relied on in oral submissions, nothing justifies Aziz’s assertion that the terms of the Arnold order were agreed on the basis that there would be further drawdowns from Icon College Ltd. Nor is there anything in the correspondence that justifies Aziz’s assertion that the Arnold order was agreed on the basis that it would be uncontroversial for him to draw down from Icon College Ltd funds he needed to pay to Habib and to fund any appeal.

I turn to the second claimed explanation, along with the assertion in the first claimed explanation that the Arnold order was agreed on the basis that there was “sufficient” in Icon College Ltd. Aziz’s case in this regard has two elements. The first element is that in 2019 no difficulty was foreseen in securing a variation to the Arnold order because Habib was amply protected against enforcement problems by the value and assets of Icon College Ltd. The second is that this was part of the basis for agreeing the Arnold order. I reject both these elements. Neither has any express support in

Accordingly I conclude that Aziz has no good excuse for the lateness of the variation application. This is a factor which in itself would weigh against the grant of the application. Additionally, and importantly, Aziz’s failure to make any mention before 31 May 2019 of a suggested need to vary the Arnold order casts considerable doubt on whether there was in truth any such need.

Oral submissions for Aziz included an assertion about Habib. The assertion was that Habib had not said that he needed the Arnold order to be maintained so as to preserve sufficient funds to enable him to enforce a judgment in the relief proceedings for damages and costs. It was noted in this regard that Habib had not served evidence as to how much would be needed for this purpose.

It seems to me that if Aziz had wanted to say that the Arnold order as varied would safeguard sufficient funds to enable Habib to enforce a judgment in the relief proceedings for damages and costs, then this should have been advanced as part of the variation application. As identified in sections B2.6 and B3 above, however, although the conditional general release proposal had been advanced in Aziz’s 14 June 2019 skeleton, there had been no suggestion of a sufficient funds assurance in that skeleton. Similarly, when Aziz 5 was filed in support of the variation application, it was not suggested that either the conditional general release proposal or the revised net dividend proposal carried with it a sufficient funds assurance.

It was only in Aziz 6 that Aziz first made an assertion that there were ample assets to meet Habib’s damages claim. That assertion came far too late. For that reason alone it cannot be advanced. Habib has had no opportunity to deal with it.

Even if it were a permissible assertion, moreover, it is unsupported by any analysis of what Habib’s damages claim may be worth. On Aziz’s own account Icon College Ltd is at present an extremely valuable asset. Its bank statements suggest that it has a large credit balance. But it is by no means clear that either of the proposed variations would mean that Aziz would, either in Icon College Ltd or elsewhere, retain accessible assets sufficient to cover such damages and costs as Habib might be awarded in the relief proceedings.

I noted in section B2.6 above that Aziz’s 14 June 2019 skeleton relied on a single ground in support of the conditional general release proposal. This was that Aziz needed to be able to draw down further dividends in order to fund the payments which he now had to make. The same applied to Aziz 5.

I observe that even if true this could provide no justification for the conditional general release proposal. Among other reasons, the notion that Habib could be adequately protected by notice 7 days after a distribution had been made was absurd. The assertion of financial need, even if true, could not warrant more than an order along the lines of the revised net dividend proposal.

Yet even in relation to the revised net dividend proposal Aziz 5 offered no more than Aziz’s own assertion of need. He gave no information about his own personal finances. For the reasons given in section C2 above I approach Aziz’s assertion of need with great caution. For the reasons given in section C3 above the background circumstances give no reason to think that there was in truth a need to seek a variation of the Arnold order: on the contrary, they cast considerable doubt on Aziz’s assertion that there was such a need.

In the circumstances of the present case Laderman’s letter of 7 June, emailed on 10 June, made reasonable requests for information about the proposed payments. No substantive response of any detail was given in correspondence to those requests. Nor did Aziz 5 give such a response.

Aziz, however, later decided that he would set out information about his personal finances. He purported to do so in the Aziz 6 table and elsewhere in Aziz 6.

I decline to allow Aziz to rely in his favour on anything in Aziz 6 about his personal finances. A timetable had been set which would, after weeks of skirmishing, force Aziz to set out the evidence he relied on. Aziz did this, albeit late, by serving Aziz 5 on Thursday 20 June 2019. Habib was then to file in evidence in response by 4pm on Monday 24 June. He did so by serving Anwar 2. There was then permission for Aziz to file reply evidence. The information given about his personal finances in Aziz 6, however, cannot properly be regarded as reply evidence. If it were to be relied upon, it ought to have formed part of Aziz 5. By keeping it back until Aziz 6 the result is that Habib has had no opportunity to respond to it.

In these circumstances I am not persuaded that Aziz’s assertions of need in Aziz 5 can be accepted as truthful.

In any event I add three comments on the information concerning personal finances in Aziz 6:

For all these reasons Aziz’s variation application fails in its own terms. The assertion of need, on which the application was founded, has not been made good.

I have not dealt with a number of additional contentions. They do not in my view call for resolution in present circumstances. Among them is a contention by Habib that the variation application was bound to fail because the circumstances relied on by Aziz were either no different from those pertaining at the time of the Arnold order, or no different from those which might at the time of that order have reasonably been expected to eventuate: see Chanel v Woolworth [1981] 1 WLR 485. As the application fails for other reasons it is unnecessary to examine this contention. I observe here only that Aziz and the Icon companies relied on estoppel by convention said to arise from the correspondence set out in section C3 above. On the facts in the present case it seems to me that there is an important distinction between jurisdiction of the court to deal with an application to vary, and the principles of law which are to be applied by the court if there is jurisdiction to deal with the application. It might have happened, although it did not happen here, that Habib advanced a contention that there was no jurisdiction for the court to entertain any application to vary the Arnold order. If that had happened, then the mutual understanding of the parties concerning the liberty to apply would have estopped Habib from relying on such a contention.

The other aspect which calls for mention concerns assertions that Habib’s stance on the transfer application amounted to an abuse of process and an attempt to obstruct justice (see Penningtons’ letter of 13 June 2019 set out in section B2.4 above, and Aziz 5 at paragraphs 36, 37, 70, 71 and 74). These assertions were baseless and should never have been made. It was perfectly reasonable, indeed as noted above plainly right, for Laderman to point out that the Arnold order could only be varied by an application in the Business List. It was similarly perfectly reasonable to observe that the transfer application could only serve a useful purpose if I was willing to add significantly to what had been envisaged for the hearing on 28 June 2019 by agreeing to deal with an as yet unissued variation application.

Conclusion

It was for these reasons that on 28 June 2019 I dismissed the variation application.