Kausar Raja v Terry Godrick McMillan

This is an application by the defendant by application notice dated 16 January 2023 for:

Judgments, at first instance and in the Court of Appeal set out the background, in detail, but by way of the shortest summary, the claimant claims damages from the defendant for losses she says were caused by the collapse of a scheme to avoid the affordable housing obligation required by section 106 of the Town and Country Planning Act 1990. The claimant had to sell the flat she purchased and incurred substantial losses, mainly due to the bridging loan she took on.

The claimant claims in deceit and unlawful means conspiracy and says she was deceived into buying the flat by fraudulent misrepresentation, namely, that the flat was free of the affordable housing obligation as it had been staircased to 100%. The claimant says that the defendant masterminded the scheme and is liable as he was party to the unlawful means conspiracy or a joint tortfeasor.

The conspiracy claim is set out in paragraph 37 of the particulars of claim:

PGPL and TPIL are companies owned by the defendant and controlled by him. “AHU” means affordable housing unit and the AHUs are all 11 flats within the Signal Building in London. The fraudulent misrepresentation claim is pleaded at paragraphs 43 to 53 and the losses at paragraphs 54 to 59. The updated schedule of losses totals just under £1,400,000, the bulk of which is interest due to TN(UK) and CCC at £691,000 and £641,000 respectively, the purchase price of £714,000 plus professional fees, legal costs and interest, less rent received as it was an investment property, the proceeds of sale in the settlement with the London Borough of Southwark of £283,000 plus the proceeds from the settlement of the claimant’s claim against her previous solicitor of £471,000.

The defendant applied for summary judgment or strike-out of the particulars of claim, which was dismissed by Dame Sarah Worthington KC on 22 April 2020, in her judgment with NCN [2020] EWHC 951 (Ch), (“the first instance judgment”). She sets out a detailed summary of the issues and outline facts at paragraphs one to nine. The defendant has been especially critical of the particulars of claim in respect of the pleading of fraud and dishonesty: see, particularly, paragraphs 20 and 23 and 24:

The Court of Appeal, on 21 July 2021, dismissed the defendant’s appeal in a judgment with NCN [2021] EWHC Civ 1103. The background to the claim appears in substantial detail at paragraphs 2 to 32. The defendant’s application for permission to appeal to the Supreme Court was dismissed on 27 June 2022.

The Part 18 request was first made by the defendant on 15 July 2020, seeking further particulars of the conspiracy claim, unlawful means, bridging loans and fraudulent misrepresentations. That was answered on 14 July 2022 without prejudice to the claimant’s contention that the particulars of claim were properly pleaded. On 14 October 2022, the defendant said the pleaded case was unacceptable and it was not possible for the allegations to be inferred. On 4 November 2022, the claimant, again, without prejudice to her primary stance that the claim was adequately pleaded, provided further responses. This application was then issued.

CPR 18.1 states:

The Practice Direction to Part 18 at paragraph 1.2 states:

As to that, Mr Coppel cited HRH Prince Khaled Bin Abdulaziz Al Saud v Gibbs [2022] EWHC 706 (Comm), where Richard Salter KC sitting as a deputy High Court judge said, at paragraph 35:

The note in the 2023 White Book at 18.1.10 says:

Mr Khan referred me to Loreley Finance (Jersey) Limited v Credit Suisse Securities (Europe) [2022] EWCA Civ 1484 at paragraph 57 where Males LJ said:

Then:

Mr Khan submits that I should have regard to some nine points he sets out at paragraph 27 of his skeleton argument, which, in short summary are:

Mr Coppel reminded me of the ingredients of a claim in unlawful means conspiracy: see Civil Fraud 1^st Edition, paragraph 2.008:

These have been helpfully copied into a composite schedule by Mr Coppel. That schedule is attached and accordingly I will not set out all of the requests and the responses.

Mr Coppel, understandably, places substantial emphasis on the very basis of the claim in unlawful means conspiracy that the defendant has to meet. He submits these are most serious allegations levelled at a businessman and the findings could go beyond the parties themselves. The legal principles underpinning this arise from the decision of Lord Diplock in Lonrho v Shell Petroleum Co Limited (No 2) [1981] 3 WLR 33, in that conduct, not actionable when undertaken by a single person becomes actionable when, in combination with a number of people, and each conspirator is jointly and severally liable for all losses, notwithstanding that the act was by someone else.

That oddity has, he submits, an explanation in that individuals in a group, team or herd will do whatever they would not do individually. Therefore, the identity of that group is not just a nice detail in the conspiracy claim but critical to the tort itself and transforms what may be benign conduct into actionable conduct.

Referring to paragraph 37 of the particulars of claim, Mr Coppel submits that there are two groups of legal entities: those who are unknown and those who are nominees. Everyone in paragraph 37, named, is a puppet of the defendant, the concept being the puppet master conspiring with his puppets. The Court of Appeal said it is arguable but more facts are needed. The draft is, therefore, added, “with another person or persons unknown” to provide protection from the puppeteer or puppet master which might arise. However, the substantial importance of knowing if they exist and who they are becomes apparent. If the defendant cannot conspire with his company’s nominees or the LBHA, then, the conspiracy must fall at the first hurdle. The pleaders recognised that but he submits that that is not good enough.

As to request two, Mr Coppel submits that the claimant may not know the names but to make the allegation of other conspirators, there must be a factual basis for saying the same. Mr Coppel submits, if there are others, they need to be named. They want to approach them and take statements. In essence, it is known or not known. If the latter, it should not be in the particulars of claim.

Mr Coppel then referred to requests three, four and five as they are all similar, concerning paragraph 37(d). None of (a), (b) and (c) are unlawful, only (d) is. In summary, what he is asking goes to the root of the allegation as to if there is an unlawful means conspiracy by 2012 as if there was not, the claim is doomed. In particular, Mr Butt, as chairman of LDHA is central to the whole transaction. He is not named as a conspirator but LDHA is.

Request six also relates to paragraph 37(d). Mr Coppel submits the November response was evasive in that intentionality matters as it is an essential component of the claimant’s cause of action, and again, the defendant needs to know what the claimant’s case is. The defendant requests a detailed explanation as to what is being alleged about the timing of the conspiracy and the timing of the alleged beliefs, so as to amount to the requisite intention necessary to amount to an intention to harm.

Mr Khan emphasises in the first instance judgment paragraphs 37 and 39 and especially:

In the Court of Appeal Lord Justice Nugee said:

Nugee LJ ended his judgment by repeating the first instance judgment:

Mr Coppel submits the claimant’s pleading is incomplete in that whilst it names various entities, it leaves open that there are others potentially party to the conspiracy. Accordingly, the defendant does not know how the claimant will present her case. He poses the question that if the persons are unknown, how does she know they exist, let alone, are part of the conspiracy? Once they are identified, then, the defendant can approach them for their account. He will seek to obtain witness statements and evidence from them.

Mr Coppel submits the reference to the first instance and Court of Appeal judgments are irrelevant in the summary judgment and strike-out jurisdiction and Part 18 requests are, together with their applicable tests, wholly different. In other words, the fact the particulars of claim survived the applications under 34.3(4)(1)(a) and Part 24 does not decide this application. They are dissimilar, like, as he put it “apples and oranges”. The pleading and particulars of it are especially important due to the need for any allegation of fraud or dishonesty to be “distinctly alleged and as distinctly proved and it must be sufficiently particularised”: Three Rivers DC v Governor of the Bank of England (Number 3) [2001] 3 All ER at 184 to 185.

Mr Khan submits in the light of the Court of Appeal decision the particulars of claim is compliant for the purpose of trial. Further, necessity is a strict test: see Stocker v Stocker, :

Mr Khan submitted that the defendant’s application is a collateral attack and an abuse of process as it is founded on the premise that the particulars of claim are inadequately pleaded and that the defendant cannot understand the case against him; but the pleading was found to be adequate in the sense the defendant knows the case he has to meet as to conspiracy as set out in the judgments of first instance and in the Court of Appeal, especially at paragraphs 66 and 67 and 72 and 73.

Mr Khan cited Hunter v Chief Constable of West Midlands Police [1982] AC 529 at page 541(b):

Mr Coppel submits that Hunter can easily be distinguished. It involved a criminal conviction at a final trial, whereas, here, there has been no full trial, section 11 of the Civil Evidence Act 1968 which is, again, not involved here, and the above quotations are, in his submission, unhelpful. I agree with his submission. This is a very different case with a different question. The position here is far from being on all fours with Hunter, and I do not accept Mr Khan’s submission that this is a collateral attack. There is a substantial difference between the requirements for a pleading, see, also, CPR 16, and a request that should be answered, if necessary, by compunction of this Court.

Mr Frankel, the solicitor for the defendant, in his witness statement in support dated 16 January 2023, at paragraph 37(d) and paragraphs 33 to 34 of the particulars claim says, at paragraph four:

He slightly tempers this later at paragraph 14, where he says:

Mr Pabla, the claimant’s solicitor, in his witness statement, at paragraph 12, referring to costs and delays says:

Then, at paragraph 13:

Mr Khan conveniently divides the requests into two categories which I adopt, namely “Category One”: requests which relate to the alleged inadequacy of the particulars of claim concerning the pleaded claim of conspiracy and fraudulent misrepresentation which are requests two, three, four, five and six, and “Category Two”: requests which relate to the evidence such as bridging loans upon which the quantum claim is based, although they are based upon the alleged inadequacy of the pleaded case: requests 20 and 21. As for Category One, Mr Khan’s submission was that this is a collateral attack: see Hunter, but I have explained I do not accept his submission in that respect, and also that sufficient information has been provided so the defendant is not entitled to anything else, especially as the claimant does not and probably never will have all the details of the conspiracy, and as applies to several requests, the claimant may plead additional details post disclosure, as is also noted in the Court of Appeal judgment at paragraph 68, with regard to paragraph 37 of the particulars of claim.

Each request clearly, in my judgment, relates to a “matter which is in dispute in the proceedings”, as the matters pleaded are denied by the defendant. Therefore, the first threshold is met.

I therefore next turn to whether the requests are “strictly confined to matters which are reasonably necessary and proportionate” to enable the defendant to prepare his own case “or understand the case he has to meet”. Then, if that threshold is met, I must determine whether I should exercise my discretion in the context of the overall case management of this claim, bearing in mind the benefit, cost and financial resources and the overriding objective as an umbrella above those factors.

This concerns paragraph 37. Here the claimant is asked to list all the facts and matters she relies upon in support of her allegation that the defendant, LDHA, PGP, PGPL, TPIL and M&E conspired and/or combined with another person or persons unknown to injure the claimant. This, Mr Coppel submits is fundamental as it goes to exactly who were the parties. Whilst she suggests, in her answer, as the defendant denies the conspiracy claim, “The full facts and matters of that conspiracy are unlikely to be uncovered”, that does not explain why she positively asserts another person or persons is likely to be involved.

Mr Coppel adds that the claimant’s explanation that the complexity of the scheme means it is probable others were involved, is insufficient as the defendant must be able to understand the fundamentals of the claim against him.

I disagree. I refuse to order the information sought for these reasons:

I must also consider my discretion in the context of overall case management if my above reasons are wrong. I must presume the financial resources of the claimant would not prevent her from replying to this and the other requests. I heard no evidence upon the point. Likewise, the cost of answering these few requests is not disproportionate nor costly in the overall scheme of this litigation for which some £1,400,000 is claimed.

I do have, in terms of case management, concerns as to the conduct of the defendant for these reasons:

The concerns I list in [44] above are such that it would not be in accordance with good case management and the overriding objective for me to make an order as the defendant requests, as this matter needs to proceed to trial as directly, efficiently, and cost-effectively as possible, in view of the substantial delays and costs which have occurred to date.

This concerns intention in the context of fraudulent misrepresentation as to the date and conception of the alleged conspiracy of 19 September 2012 which is fundamental, Mr Coppel submits and sets the bounds of the activity the participants conspired about. Mr Coppel further submits this is reasonably necessary and proportionate for the defendant to prepare his own case and/or understand that that he must meet. That especially relates to the exact period in time.

The November response accepts that paragraph 37 has not been “elegantly drafted” and refers to the first instance judgment at paragraph 41. It repeats reliance upon the pending disclosure and then the claimant sets out as much detail as she can, her case pending disclosure. In particular, the defendant’s belief, is, as the Court of Appeal found at paragraph 68, an issue at the trial.

Again, I refuse to order the claimant to answer this request for the reasons set out at [42] and in the alternative [44] above.

These concern paragraph 37(d) and the issue of fraudulent misrepresentation. Request four involves intention behind misrepresentation as to if the sublease had been staircased to 100% so as to ensure the exception applied to these flats. This is fundamental to the claim, and accordingly, the defence. Request five concerns the intention behind alleged misrepresentation to purchasers that the AHUs were sold free of the section 106 obligation.

The claimant’s response is that these matters are sufficiently set out, and secondly, it is not necessary for the defendant to prepare his case. However, Mr Coppel maintains both requests are reasonably necessary and proportionate and that the particulars of claim had been inadequately drafted and need clarification.

I will not order the claimant to answer requests four and five for the reasons that appear at 42 above, except at subparagraphs (1) and (2) and, in the alternative, at paragraph 44 above.

This also relates to paragraph 37(d) and the Part 18 request of July 2019. Critical, Mr Coppel submits, is intention to harm by no later than 19 September 2012, and the defendant wants a detailed explanation of what is alleged as to timing, including the timing of the belief set out in the request, as paragraph 51 of the particulars of claim does not, contrary to the claimant’s submission, sufficiently set out the necessary information. The claimant again says that her case has been sufficiently set out.

I agree. I refuse this request for the reasons at paragraph 42 subparagraphs (1) and (2) and, in the alternative, at paragraph 44 above.

These concern the basis of the quantum claim. As can be seen, they request detail of the agreement for the loans taken by the claimant from TN(UK) and CCC; the charges those companies had over the flat, the exact sums advanced and the claimant’s source of funds from the balance of the purchase price. The claimant says these matters are adequately pleaded and not necessary for the defendant to answer the case he has to meet.

I refuse these requests for the simple reason they concern documents and evidence, not information which are matters properly to be addressed on disclosure or in witness statements. The defendant well knows the case in this respect he has to meet. The schedule of loss has been updated and a further explanation given by Mr Pabla as to the figures.

If I am wrong as to that, in the alternative, I refuse, for the reasons set out at paragraph 44 above. I will now hear counsel as to costs and the form of the order.