Pharmagona Ltd v Taheri & Anor

Introduction

On 11th December 2019, I made an order (“the Unless Order”) requiring the Defendants to deliver to the Claimant a signed letter of authority. The Unless Order provided that, in default of compliance, the Defendants would be debarred from defending the claim and the Claimant would be at liberty to enter judgment for the amount claimed. The Claimant contends that the Defendants have failed to comply with the Unless Order and thus seeks judgment. The Defendants deny non-compliance. The First Defendant has also submitted an application for a “stay of execution and reconsideration (rehearing)…” of the Unless Order.

Before me, Mr Nicholas George, of counsel, appeared on behalf of the Claimant and the First Defendant appeared in person. The Second Defendant did not appear. Although she is married to the First Defendant, I have not seen written authority providing for the First Defendant to make submissions on her behalf. However, the First Defendant maintains he has authority to make submissions on their joint behalf and he has filed a witness statement from the Second

At various stages in this litigation, the Defendants have been represented by solicitors or counsel. However, they had ceased to have the benefit of legal representation by the time that I made the Unless Order.

In Barton v Wright Hassall [2018] UKSC 12, Lord Sumption observed, at

The Unless Order was in simple and straightforward terms. It required the Defendants to deliver to the Claimant an original signed Letter of Authority in a form specifically appended to the Unless Order itself. The First Defendant is an intelligent and determined litigant with a good command of the English language. He could reasonably be expected to understand the Unless Order itself and the consequences of non-compliance. Indeed, he confirmed that he had understood these matters at the hearing before me. In the Second

The substantive proceedings are founded on allegations of fraud and dishonesty.

By its amended claim, the Claimant seeks £452,912.58 in respect of misappropriated funds and £1,200 as damages for the conversion of some computer equipment.

At an early stage, the Claimant obtained a freezing order against the Defendants prohibiting them from removing their assets in England and Wales up to a value of £500,000. There has been a series of orders and directions, including repeated orders for disclosure and inspection. On 18_th December 2019, I made a freezing order in respect of the First Defendant’s shares in an Iranian company, Padideco, in the light of evidence recently obtained by the Claimant.

The case was initially listed for trial commencing on 8_th July 2019. The parties attended for trial but it was adjourned and re-listed for hearing in October 2019. Although it was adjourned to release funds for the Defendants to obtain legal representation, the Defendants were not culpable for the adjournment.

The Defendants then instructed counsel, Mr Joseph Giret QC, to attend on their behalf. However, at the adjourned hearing, counsel for both sets of parties advised the Court that the case was not ready for trial albeit the First Defendant apparently interceded at the hearing to disagree with his counsel on this issue. The Judge reluctantly decided to adjourn the case again and, on 9_th October 2019, he made an order providing for the trial to be re-listed for hearing from 12_th February to 28_th February 2020.

In the exercise of his case management powers, the Judge also made an order

In his submissions before me, the First Defendant submitted that the 9_th October 2019 Disclosure Order was not made pursuant to a specific application. He also submitted that it was made without detailed argument. I am content to accept that these submissions are correct. However, there was a compelling logic to the order. In determining the substantive merits, it will be important for the judge to make findings about the ultimate destination of the proceeds of the alleged fraud. If and to the extent that the Defendant has any interest or connection with the bank accounts, entries on the statements are capable of throwing light on this aspect of the case. When he made the 9_th October 2019 Disclosure Order, it can reasonably be inferred the Judge was mindful of these considerations and considered that there was reason to believe the Defendants might have an interest or connection with the bank accounts. In view of the fact that the relevant bank statements had not been disclosed, he thus made an order for their disclosure.

However, in view of the fact there was an issue as to the extent to which such statements were in the possession and control of the Defendants, the order was limited so as to require the Defendants to disclose such documents “by taking

Following the 9_th October 2019 Disclosure Order, the Defendants disclosed a limited amount of documentation including screen shots of obscure documents, in Farsi, apparently showing random information such as the balance on an unidentified account and an identification number for the First Defendant, together with an account number in the name of one Jazayeri, a letter from Sepah Bank referring to accounts in the name of one Zahra Amini and a joint account apparently in the names of the First Defendant and Zahra Amini and documents relating to some form of on-line facility. In the absence of an explanation as to the steps taken by the Defendants to obtain the documentation identified in the 9_th October 2019 Disclosure Order, the Claimant maintains that there is an overwhelmingly strong inference that the Defendants failed to take all reasonable steps to do so by 4pm on 5 November 2019, as required, and indeed, they failed to do so afterwards.

On 11_th December 2019, I made the Unless Order at a subsequent case management hearing. At that stage, I was satisfied the Defendants had failed to comply with 9_th October 2019 Disclosure Order and I was mindful the trial was listed to commence no more than two months later, a period itself truncated by the Christmas vacation.

The Unless Order provided, in terms, that “the First and Second Defendants having failed to comply with [the 9_th October 2019 Disclosure Order], each Defendant must by 4pm on 19_th December 2019 deliver an original signed letter of authority, signed by the First and Second Defendants, to the Claimant in the form set out in the Appendix hereto. In default of compliance, the Defendants and each of them be debarred (without further order) from defending the

In view of the potential severity of the consequences of a peremptory order, no such order should be made lightly. This is particularly the case where the parties are thus at risk judgment will be entered against them. However, in the present

By an email timed at 4:12 pm on 11_th December 2019, Mr Jones emailed the Court a draft order for approval appending a draft letter of authority. The draft letter provided as follows.

“To each bank in respect of each of the accounts there specified.

We, Sayed Mostafa Taheri and Bahereh Mohammedi, each hereby authorise each bank operating or holding out each bank account set out in the Schedule hereto to produce and disclose to Pharmagona Limited (or its appointed representative in Iran) true and authenticated bank statements in respect of any account held by Sayed Mostafa Taheri and Bahereh Mohammedi or either of them, whether individually or jointly with any other person whomsoever, during the period 1 January 2016-08 October 2019 (inclusive).

Signed:

…………………………………… …………………………..

Sayed Mostafa Taheri Bahareh Mohammadi

Dated: December 2019

There was a schedule to the draft order appending each set of bank statements identified in the 9_th October 2019 Order save for a set of bank statements in respect of a bank account at Bank Shahr.

By an email to the Court timed at 11:35 pm, the First Defendant emailed some draft amendments. These included an amendment to the draft letter of authority providing inter alia that the banks’ authority was limited to “the accounts specified” in the schedule. By way of amendment, the First Defendant also incorporated a proviso that “for the avoidance of doubt, We, Sayed Mostafa Taheri and Bahareah Mohammedi, do not authorise any bank or any other person to produce or disclose any documents or date except in respect of the

Ultimately, I amended Mr Jones’s draft so as to provide expressly that the

By an email message dated 13_th December 2019 to me, the First Defendant raised several issues with the order, some of which he had already raised before. These included a concern that “the Claimant may wish to appoint anyone or even multiple people as its…representatives and our private information be ended up in the hands of numerous people” and an objection in relation to the use of the formula “whether individually or jointly with any other person whomsoever”.

Litigants cannot generally expect the Courts to engage in explanatory correspondence by email. However, by return of email copied to the other parties, I pointed out that, in the Order, the Claimant’s original draft Letter had been amended to provide that the Defendants’ authority was limited to the scheduled bank statements. I also explained the importance of complying with the Unless Order.

By an email to the Court timed at 11:24 pm on 15_th December 2019, the First Defendant requested me to put the deadline on hold. By return of email, at 12:37 pm the following day, I advised the First Defendant that I would not put on hold the deadline for compliance and confirmed that the order must thus be complied with according to the original time scale. However, on 16_th December 2019, I made an order confirming that all disclosed documents, including documents disclosed and produced to the Claimant under a letter of authority from the Defendants under the Unless Order could only be used for the purpose of these proceedings subject to the provisions of CPR 31.22.

The Unless Order required the Defendants to deliver to the Claimant, by 4pm on 19_th December 2019, an original signed copy of the Letter of Authority. The Claimant maintains that the Defendants did not deliver such a document to the Claimant by the specified deadline and, indeed, that they failed to deliver such a document at any time prior to hearing before me on 10_th January 2020. Before me, the First Defendant sought to deny non-compliance. He did not make submissions as to the date of delivery. However, he contended that the Defendants had posted signed copies of the Letter of Authority on two occasions, on 18_th and 31_st December 2019.

On behalf of the Claimant, witness statements from Somaiyeh Hanaee dated

There was a sharp conflict of evidence between the evidence of Somaiyeh Hanaee and the Defendants, which could not be resolved on the face of their witness statements. In the absence of Reza Orang, Laura Darian and the Second Defendant, I thus invited the First Defendant and Somaiyeh Hanaee to confirm their testimony in the witness box on the basis they would each then be subject to cross examination.

The Unless Order did not provide for the Claimant to send a draft copy of the Letter of Authority to the Defendants for their signature. However, Ms Hanaee gave evidence she sent to the Defendants two prepaid stamped Royal Mail “signed for” envelopes. By email timed at 4:20 pm on 19_th December 2019, the

Ms Hanaee confirmed that, on 30_th December 2019, an envelope was finally delivered to the Claimant’s office, by Royal Mail, containing an un-signed copy dated 12 December 2019 of the Letter of Authority. The envelope was post marked 20th December 2019 at 17:55 hours. It bore the “signed for” label and the “track and trace” number issued by Royal Mail, namely WM 625769572GB. In cross examination, Ms Hanaee also confirmed that the Claimant’s offices were closed for an extended period over the Christmas vacation and accepted that Royal Mail had sought to deliver the envelope on 27_th December 2019 but was unable to do so owing to the absence of the Claimant’s staff that day.

By email timed at 12:28 pm on 31_st December 2019, the First Defendant advised the Claimant that “we have just signed and posted you another copy in front of a witness and she sent it off…” The Claimant subsequently received, from the Defendant, an envelope containing three ripped up pages from a notepad. It did not contain a signed copy of the Letter of Authority.

In contrast, the First Defendant confirmed the evidence in his witness statement that “the Claimant, despite what it falsely asserts, has had the letter of authority twice although we have made it clear that they must not use it until the court decides our application”. Consistently with the Second Defendant’s witness statement, he confirmed a signed letter of authority was posted to the Claimant on 18th December 2019. He also confirmed that “the signed version of the letter

It is a conspicuous feature of the Second Defendant’s witness statement that, as evidence of the first letter of authority, purportedly signed and posted on 18_th December 2019, she exhibited a draft un-signed letter of authority dated 24_th December 2019, not the letter of authority dated 12_th December 2019 which appears to have been returned to the Claimant on 30_th December 2019. Before me, the First Defendant referred to this as a mistake. No doubt, that is correct.

In assessing the evidence of the First Defendant and Ms Hanaee, I have not had the opportunity to independently evaluate the evidence of the Second Defendant, Reza Orang or Laura Darian. I must thus exercise a measure of caution. Moreover, whilst the standard of proof is no higher than the balance of probability, cogent evidence is required before I conclude a witness has given evidence which is deliberately false. However, I regret to say I have reached that conclusion when assessing the evidence of the First Defendant.

I am satisfied that, contrary to the First Defendant’s evidence before me, he did not send the Claimant a signed copy of the Letter of Authority at any time prior to the hearing before me on 10_th January 2020. On 19_th or 20_th December 2019, he posted an un-signed copy of the Letter of Authority and, later, he sent an envelope containing three ripped up pages from a notebook.

I have reached this conclusion for the following reasons.

It follows that the Defendants have failed to comply with the Unless Order and the Claimant is prima facie entitled to judgment for the amount claimed.

There were some developments following the hearing on 10_th January 2019. Shortly after the hearing itself, Mr George requested the First Defendant to provide him with the original signed Letter of Authority and the First Defendant advised him that, during the hearing itself, he had “written” or “doodled” over it so it could no longer be used. The First Defendant maintains he used the word “written” and, on behalf of the Claimant, it is alleged he said he had “doodled” but, in my judgment, the nomenclature is immaterial. Conversely, the First Defendant contends that, at noon yesterday, one Elias Bagheri sought to deliver a signed version of the letter of authority dated 16_th January 2020 to the Claimant’s office but, upon inquiry, he was advised by an employee that the

I shall deal first with the application for me to reconsider the Unless Order. Although the First Defendant’s application was expressly based on CPR 40.8A, it is at least implicit in his application for “reconsideration (rehearing) of the matter” that I should also entertain his application under the Court’s wider case management powers. I have thus considered whether I should make an order varying or revoking the Unless Order under my case management powers in CPR 3.1(7). Having done so, I am satisfied it is inappropriate for me to do so. In Tibbles v SIG plc [2012] 1 WLR 2591, the Court of Appeal has provided authoritative guidance as to the grounds on which such an order can be made. As a general rule, it will only be warranted by a material change of circumstances or evidence that the original decision was based on a misstatement of facts. The order might also be revisited in the event of genuine error. However, none of these grounds apply here. There is nothing to suggest that the Unless Order was based on a misstatement of facts or otherwise in error. Nor has there been a material change of circumstances. If anything, the First

The Court has a general power under CPR 3.1(2)(a) to extend the time for compliance with a Court order. However, in the present case, the sanction in the Unless Order took effect once the deadline for delivery expired. To extend the time for compliance, I must thus grant the Defendants relief from sanction.

The First Defendant specifically relies on CPR 40.8A which provides for a party to seek a stay of execution or other relief “on the ground of matters which have occurred since the date of the judgment or order”. However, in substance, he is inviting the Court to revoke or vary the Unless Order rather than to stay or suspend it. In any event, no material matters have occurred since the Unless Order to warrant relief under CPR 40.8A. The Defendants have failed to comply with the Unless Order and it has thus become necessary for them to seek relief from sanction. However, in my judgment, these do not qualify as material “matters which have occurred since the date of the judgment…” so as to warrant relief under CPR 40.8A.

If the Defendants seek relief from sanction, such relief must thus be obtained under CPR 3.9.

At the hearing on 10_th January 2020, I referred the First Defendant to the Court’s jurisdiction to grant relief from sanction and the familiar three-stage test in Denton v TH White [2014] 1 WLR 3296. The First Defendant was initially reluctant to seek relief indicating that, at this stage, he was minded to await my decision on the Claimant’s request for judgment and his own application under CPR 40.8A. However, on re-consideration he sought relief from sanction. Mr George submitted that I should not entertain such an application since CPR 23.3(1) requires the same be submitted in an application notice and CPR 3.9(2) requires supporting evidence. However, CPR 23.3(2)(b) expressly provides that the court may dispense with an application notice. Moreover, the First Defendant has submitted evidence in support of his application under CPR 40.8A which can readily be deployed under CPR 23.3. It was apparent at the hearing that the First Defendant had been made aware of his right to apply for relief from sanction prior to the hearing itself and it is conceivable he has recently been in receipt of legal advice. However, he is now conducting the litigation in person. Whilst he can reasonably be expected to comply with Court orders subject to the same standards as other litigants, I am inclined to allow him a measure of latitude in connection with the procedural requirements of

The three-stage test in Denton requires me to:

In my judgment, the Defendants’ failure to comply with the Unless Order is serious and significant. The Unless Order was imposed following the Defendants’ failure to comply with their obligations to take all reasonable steps to obtain the documents listed in the 9_th October 2019 Disclosure Order. For reasons I have already given, these documents are material to an important issue and could potentially have a critical bearing on the outcome of these proceedings. The Unless Order was made two months prior to the date scheduled for trial. If the case is to proceed to trial, it is important that the scheduled trial date stands, not least owing to the procedural history and the estimated trial length. The Unless Order provides for the Defendants to deliver a signed letter of authority in relation to the listed bank accounts. It does not suffice to ensure disclosure. It is by no means clear that the process of obtaining the relevant documents will be a simple process or that it can be accomplished within a short time scale. If the Defendants’ breaches of the Unless Order do not imperil the trial itself, they could certainly have an adverse bearing on the case which the Claimant advances at trial.

In cross examination, the First Defendant accepted that he understood the

By virtue of CPR 3.9(1)(a) and (b), I must take into consideration the need for litigation to be conducted efficiently and at proportionate cost and the need to enforce compliance with Court orders. In the present case, the Unless Order was imposed owing to the Defendants’ failure to comply with the 9th October 2019 Disclosure Order. The need to conduct the litigation efficiently and at proportionate cost is underlined by the procedural history and the implications for the scheduled trial date.

I am mindful, more generally, of the Overriding Objective including the need to deal with cases justly and the principle of proportionality. However, the

The First Defendant’s application for relief from sanction is refused.

It follows that the Claimant is entitled to judgment in the sum of £454,112.58 and the First Defendant’s applications for a stay of execution, reconsideration and relief from sanction are dismissed.