Jaswinder Singh Bahia v Inderdeep Singh Sidhu & Anor

1. This is a consequentials hearing following a judgment that I handed down in this matter at the end of last term. At the outset of the hearing, Mr Sidhu, representing himself and the other defendants and Part 20 claimants, makes an application to adjourn the consequentials hearing on the grounds that he no longer has legal representation and that he must otherwise represent himself at the hearing. The solicitors who acted on behalf of the Sidhus at trial (and were still acting at the time of the Order made upon hand down of my judgment) came off the record pursuant to an Order dated 21 April 2022.

2. I asked Mr Sidhu about the circumstances in which he finds himself in this position and he told me that there have been difficulties over communication with his (former) solicitors, that he is not up-to-date with his bills in relation to those solicitors, that he has been unable to contact leading counsel because counsel was on holiday, that he has contacted three firms of solicitors in an attempt to obtain representation at this hearing and that he has tried to obtain direct access for this hearing. He also told me that he had discovered nearly two weeks ago that his solicitors were coming off the record. When I asked him for more detail in respect of the new firms of solicitors that he had contacted, he said that in fact he had only contacted two firms of solicitors with a view to asking them to represent him and that he had made a call to one set of chambers in relation to direct access work.

3. In his response to the application, Mr Temmink QC, acting on behalf of the claimant, said that Mr Sidhu’s submissions were contrary to information he had received from Mr Ian Clarke QC, who appeared for the Sidhus at the trial. Mr Clarke told Mr Temmink that Ralli, Mr Sidhu’s former solicitors, had extended credit to pay Mr Clarke’s brief fee prior to trial but that, following the trial, Ralli had still not been paid and, for that reason, they had made an application to come off the record. Mr Clarke told Mr Temmink that he had been back from holiday for some time, that he had made numerous fruitless attempts to obtain instructions from the Sidhus and that, in those circumstances, and following his solicitors coming off the record, he had made it clear to the Sidhus that he was not prepared to act on a direct access basis. Mr Clarke would, however, have been prepared to act on the Sidhus’ behalf had he received instructions from solicitors to do so.

4. Mr Temmink rightly says that, in those circumstances, the way to ensure Mr Clarke’s attendance at this hearing would have been simply to instruct new solicitors to act, effectively, as a post-box to provide instructions to Mr Clarke. Unfortunately, Mr Sidhu did not take that course. Instead, he says that he has made efforts to obtain alternative representation but he has not been able to tell me that he has now retained any particular firm or that he has paid any particular firm to act on the Sidhus’ behalf or indeed that any firm has, in fact, agreed to represent the Sidhus at any future hearing, nor has he identified any alternative counsel that he has been able to retain on a direct access basis. Mr Temmink pointed out that having said he had contacted three firms of solicitors, Mr Sidhu then changed his story upon further questioning and said that he had in fact only contacted two firms.

5. Mr Temmink invites me to approach Mr Sidhu’s submissions with caution, not least in light of the findings I made as to his credibility as a witness in my judgment. He says that this application is a stalling tactic and that the Sidhus have had ample time in which to obtain representation and instruct counsel in the two weeks since they became aware that their solicitors were coming off the record. He points out that this hearing date was set by agreement for the availability of counsel following the hand down of the judgment and that it would be unfair in all the circumstances for there to be any further delay.

6. In all those circumstances, doing the best I can and having regard to the overriding objective to be fair and to ensure a level playing field for the parties, it seems to me that the right course is to continue with this hearing today. Mr Sidhu has had ample opportunity, in my judgment, to obtain alternative representation, whether by instructing solicitors to act as a post-box and instructing Mr Clarke QC or by obtaining, at least, representation from an alternative solicitor who could have come today to seek an adjournment on the basis that he or she needed more time to prepare for this hearing. Neither of those things has happened and, in those circumstances, it is difficult not to arrive at the conclusion (based on the information I have been given) that this application is indeed a stalling tactic.

7. The hearing must continue and Mr Sidhu must do his best to respond to the arguments that are going to be advanced by Mr Temmink on behalf of the claimant.

8. In that regard, I know that Mr Sidhu has some legal training albeit I, of course, accept that he is not a practising lawyer. However, I am satisfied that he understands the issues that the court is dealing with here today because he himself identified them during his submissions.

9. For all those reasons, I am going to hear the matter today. (There followed further submissions – please see separate transcript) MRS JUSTICE JOANNA SMITH:

10. I am now called upon to deal with the question of interest arising on figures I have awarded in my judgment in relation to various of the Inquiries. The principal amounts that are due and owing pursuant to the judgment may be summarised as follows: a. the Sidhus owe £991,014.56 to the Partnership; b. the Sidhus owe £294,940.72 to ASL; c. the claimant owes £79,047.00 to the Partnership; and d. the claimant owes £6,266.97 to the Greatway Partnership.

11. Mr Temmink, on behalf of the Bahias, seeks compound interest in relation to the sums owed by the Sidhus. He submits that this is a case where the claimant is entitled to claim an account of profits which the delinquent partner made from his misuse of the Partnership assets. He points to a list of properties purchased by the Sidhus between 1988 and 2014 and submits that it is reasonable to infer that the purchase of at least some of these properties has been facilitated by the use of both Partnership and ASL monies; the Sidhus have benefited from capital appreciation of these properties and from rental income, making use of the Bahias’ share of Partnership proceeds in so doing.

12. Mr Temmink points out that, rather than attempting a complicated tracing claim (necessitating detailed consideration of rental receipts, the cost of obtaining valuations of the Sidhus’ property portfolio and the almost inevitable difficulties that would arise on disclosure), a claim for compound interest on the sums found to be due to the Partnership and to ASL in lieu of an account of profits represents a more pragmatic and less costly approach which is likely to be to the advantage of the Sidhus.

13. In respect of the sums owed to the Partnership and to the Greatway Partnership by the Bahias, Mr Temmink accepts that interest must be paid on those sums but he submits that an award of simple interest would be appropriate in circumstances where the issues around dishonesty and breach of fiduciary duty do not apply to the Bahias, the sums are much smaller and there is no evidence of generating profits from the sums which all the partners knew had been taken by Mr Bahia.

14. Mr Sidhu rejected these submissions, saying that it was wrong to assume that there had been any misappropriation and that the Claimant’s aim was in fact to penalise the Sidhus.

15. Turning to the period of interest, Mr Temmink submits that there is no reason to depart from the usual rule that interest runs from the date of loss/accrual of the cause of action. I accept that submission which seems to me to apply both to the interest in relation to the defendants and to the claimants. Mr Sidhu, did not suggest otherwise.

16. As to the rate of interest, Mr Temmink relies upon a detailed schedule setting out the interest calculations and it is clear from this schedule that base rates have changed very dramatically over the lengthy period with which we are concerned in this case. In order to avoid complicated interest calculations, the claimant has split the relevant time into four periods averaging the base rates over each period.

17. Mr Temmink pointed out, quite correctly, that the rate of interest must be compensatory and not punitive - see Kuwait Airways Corporation v Kuwait Insurance SAK [2000] EWHC 1919 Comm. The court has a general discretion in this regard, but one way to assess the level of interest (commonly applied in commercial cases) is to look at the rate that the receiving party would have been charged to borrow the funds it has been kept out of. However, in doing so, the court does not have regard to the rate at which the particular receiving party might have borrowed funds, it looks instead at the rate applicable to a businessman or a company of the same type as the particular businessman or company in the case with which the court is concerned.

18. In this case, I am concerned with a small businessman who is involved in a partnership. Mr Temmink showed me a number of authorities which indicated that a rate in such circumstances of base plus 3 per cent was an appropriate and realistic rate to charge, including Carrasco v Johnson [2018] EWCA Civ 87 and Challinor v Juliet Bellis & Co [2013] EWHC 620. I did not understand Mr Sidhu seriously to raise any objection to this proposition.

19. Having regard to the authorities and bearing in mind that I am entitled to take a relatively broad-brush approach and also having regard to the fact that Mr Bahia was an individual who would not have been able to leverage favourable borrowing rates available to large institutions, it does appear to me that the suggestion that a rate of 3 per cent over average base rate changing from time to time is perfectly reasonable and within the bounds of my discretion.

20. I note also that Mr Temmink drew my attention to the fact that the rate of the Aylmer Road mortgage obtained by Mr Sidhu was a fixed rate for six years at 5.75 per cent for a secured equity release loan, albeit I note that that was a very specific type of loan.

21. In the circumstances, I am going to order that interest should be paid at the rate of 3 per cent over average base for the relevant time periods in respect of the sums owed by the Sidhus.

22. Returning to the question of whether the interest should be compound or simple interest, Mr Temmink drew my attention to the authorities of Westdeutsche Landesbank Girozentrale v Islington BC [1996] UK HL12 and FM Capital Partners Limited v Marino & Others Quantum [2019] EWHC 725 Comm, which both support the proposition that a person who is in a fiduciary position should not make a profit from his own wrong-doing and that the case law does clearly favour an award of compound interest in such a situation.

23. I accept his submissions that compound interest is justified in this case because Mr Sidhu was in a fiduciary position and abused that role. The removal of funds from the Partnership was dishonest, the removal and hiding of funds from ASL was dishonest and it would appear that the Sidhus have profited from their wrong-doing and it is to be inferred that the substantial property portfolio that they built up between 1988 and 2014 was built up, at least in part, using funds that were taken from the Partnership and ASL. I am afraid that insofar as Mr Sidhu suggests that it is wrong to assume that there has been any misappropriation of monies, that submission is not open to him in light of my main judgment.

24. In so far as the money owed by the Bahias to the Partnership and the Greatway Partnership are concerned, I am going to order that interest on those sums (also at 3% over the relevant averaged base rate) should be awarded as simple interest only, on the basis that similar issues do not apply in relation to the Bahias.

25. In all the circumstances, I am going to make an award of interest in the figures identified in Mr Temmink’s skeleton argument. In relation to (i) the principal sum owed by the Sidhus to the Partnership of £991,014.56, interest over the last 35 years from 1997 to date amounting to £1,784,532.94, a total sum of £2,775,547.50 ; and (ii) the principal sum owed to ASL by the Sidhus being £294,940.72, interest over the last 32 years from 1990 to date amounting to £181,505.23, a total sum of £476,445.95 .

26. In respect of (i) the sum owed by Mr Bahia to the Partnership, interest accrues from 2013 in relation to the sum of £79,047.00 in the sum of £16,972, a total sum of £96,018.69 , and (ii) the principal sum owed by Mr Bahia to the Greatway Partnership of £6,266.97, interest on that sum amounts to £2,565.78, a total sum of £8,832.75 . (There followed further submissions – please see separate transcript) MRS JUSTICE JOANNA SMITH:

27. The claimant seeks an interim payment of £1.3 million which is slightly less than 50 per cent of the money owed by the Sidhus to the Partnership. In seeking that interim payment, Mr Temmink drew my attention to Lindley & Banks at 23-96 which points out that such an interim payment will be rare because it should only arise in cases where on the taking of the account a sum is bound to be due to the applicant.

28. Mr Temmink drew my attention to the fact that Lindley & Banks refers to a Court of Appeal decision ( Muckerjee v Sen [2012] EWCA Civ 1895 ) in which there was a claim for a share of profits diverted by one of the alleged partners as well as a claim for dissolution of the alleged partnership; in that case, the Court of Appeal took the view that an interim payment was appropriate. However, I was not shown Muckerjee v Sen and have not had an opportunity to look at the specific circumstances of that case and compare them with the circumstances of this case. Mr Sidhu has not had a chance to look at that case. Mr Temmink may very well be right that this is a situation where the Bahias are bound to recover some sum from the Sidhus but, in all fairness to Mr Sidhu and in circumstances where I have not had an opportunity to consider the case, I am not going to make this order.

29. Mr Sidhu tells me that he does not have funds of anything like this order of magnitude, that all of the Sidhus’ funds are tied up in their properties and that money will not be available until the properties are sold. Whether or not that is the case, I am conscious that I will be making an order for costs against the Sidhus which will require a very substantial payment to the claimant. I am also conscious that, in relation to the principal sums that are due to the claimant, interest will continue to run and so, although they will be kept out of their money for a little longer, they will, nevertheless, have interest on that money and so ought not to be prejudiced by my refusal to award an interim payment. (There followed further submissions – please see separate transcript) MRS JUSTICE JOANNA SMITH:

30. The claimant applies for his costs of the action to date. The court has a wide discretion and should have regard under CPR 44.2 to all the circumstances, including: “(a) the conduct of all the parties [which can include conduct before proceedings as well as during]; (b) whether a party has succeeded on part of its case even if that party has not been wholly successful; and (c) any admissible offer to settle made by a party which is drawn to the court’s attention and which is not an offer to which the costs consequences under Part 36 apply”.

31. In the first instance, I must decide where the costs should lie. In my judgment, the only answer to that question is that the Sidhus must pay the Bahias’ costs of the action to date. The Bahias were the overall and obvious winners of the action, having succeeded on the vast majority of the Inquiries before the court. Mr Temmink has set out in paragraph 29 of his skeleton argument the outcomes in relation to all of those Inquiries and it is plain that the overall winners were the Bahias and so the Sidhus must pay the costs.

32. As to the question of whether those costs should be paid on a standard basis or an indemnity basis (as Mr Temmink contends), Mr Sidhu submits that they should be paid on a standard basis and has made various points to the court about the failure of the Bahias to engage with the issues involved in this case over a long period of many years, suggesting that the Bahias have been evasive and have refused to meet to discuss the issues.

33. Mr Temmink draws my attention to the test that I should apply in considering an application for indemnity costs, namely that I must look to see whether there is something about the circumstances which takes the case “out of the norm”. He points me to the case of Takhar v Gracefield Developments Limited [2020] EWHC 3025 (Ch) , a judgment of Mr Steven Gastowicz QC sitting as a Deputy High Court Judge, at paragraphs [4] and onwards. I have particular regard to paragraphs [6] to [8]: “6. In Excelsior Commercial Holdings Ltd v Salisbury Hamer Aspden & Johnson [2002] EWCA Civ 879 , as noted at para 44.3.8 of the White Book 2020, the Court of Appeal held that the making of a costs order on the indemnity basis would be appropriate where the conduct of the parties or the particular circumstances of the case are such as to take the situation ’out of the norm’ in a way that justifies an order for indemnity costs (at para 31 per Lord Woolf and at para 39 per Lord Waller LJ).

7. Further clarification was provided by the Court of Appeal in Esure , which is also summarised at para 44.3.8 of the White Book. The court stated (1) that the decision in the Excelsior Commercial case was made in the context of previous decisions where the argument mounted was that under the CPR indemnity costs should only be ordered where there was some sort of lack of probity or conduct deserving of moral condemnation on the part of the paying party, (2) that the word ’norm’ was not intended to reflect whether what occurred was something that happened often, so that in one sense it might be seen as ’normal’, but was intended to reflect ’something outside the ordinary and reasonable conduct of proceedings’, (3) that ‘to bring a dishonest claim and to support a claim by dishonesty cannot be said to be the ordinary and reasonable conduct of proceedings’ (at paras 17 and 25 per Waller LJ). See also Whaleys (Bradford) Ltd v Bennett [2017] EWCA Civ 2143 , at para 22, where Newey LJ disagreed with the judge below holding that the paying parties’ conduct was not exceptional ’because many debtors try to avoid paying that which is due’.

8. There is nothing confining these principles to the conduct of claimants, as opposed to defendants, nor is there any reason why they should be so confined. If the conduct of a party, on whichever side of a case, is found to take the situation ’out of the norm’ in the sense referred to, an order for indemnity costs can be considered appropriate”.

34. I have addressed in my main judgment on numerous occasions all of the examples of Mr Sidhu and Mrs Sidhu not giving honest evidence, manipulating evidence for their own purposes, seeking to deflect the court’s attention from their own activities, doctoring documents and tampering with other evidence.

35. In my judgment, that is not conduct which should result in an order for standard costs; on the contrary it plainly takes this case out of the norm. I also have regard to the fact that, although there is no Part 36 offer in this case, there was an admissible offer to settle made by the Bahias’ solicitors on 11 July 2018 which received only a brush-off response and was never responded to in any detail.

36. In my judgment, the appropriate basis for an award of costs is the indemnity basis. (There followed further submissions– please see separate transcript) MRS JUSTICE JOANNA SMITH:

37. The claimants now apply for an interim payment on account of costs. They seek 75 per cent of their costs in the figure of £833,675. That has been calculated by reference to a summary of their incurred costs up to and including 26 April 2022 which Teacher Stern has put together and is not purporting to be a detailed assessment of costs but, nevertheless, identifies the fees outstanding as at that date.

38. Mr Sidhu suggests that I should only make an order of 50 per cent of that figure and that I should order a sale of Partnership properties in order to enable the Sidhus to pay. I do not accept this submission.

39. The ordinary order in a case such as this is to require an interim payment of costs at an appropriate level and I am going to order 70 per cent of the figure of £1.1 million odd set out in the Teacher Stern schedule.

40. The reason for adopting 70 per cent rather than 75 per cent is because it does seem to me that some of the costs incurred to date (albeit not a substantial amount) will have been incurred in relation to matters which are going to go forward for the purposes of a future Inquiry. I will make an order for an interim payment of costs at 70 per cent of the figure put forward on behalf of the claimant. (There followed further submissions – please see separate transcript) MRS JUSTICE JOANNA SMITH:

41. Two issues now arise, following my judgment in relation to 8 King Street. The first concerns whether I should make an order for possession of 8 King Street. Mr Temmink says that I should, and that I should make it effective immediately, but not to be enforced before Monday 16 May 2022. Mr Temmink has researched the question of whether an order for possession is in fact needed, and has identified that section 3 of the Protection from Eviction Act 1977 prevents eviction, save by court proceedings, unless the letting or licence is excluded by section 3 (a). Section 3 (a)(8) excludes licences which are not granted for money or money’s worth, which is an exception applying in this case. The effect of section 3 (a)(8), he submits, means that no order is technically required from the court in order to secure eviction and possession of the property. MR SIDHU: Could I just – I do apologise. The asking of rent is for money’s worth, so if they are asking for no rent, then that is fair enough. If they are not asking for rent, then this section may apply. You know, it is common sense. MRS JUSTICE JOANNA SMITH:

42. Mr Sidhu says that, in fact, a court order would be required. Fortunately I do not have to decide the point because in any event, Mr Temmink submits that it would be sensible for the court to make an order, so as to regularise the position.

43. I am going to make an order for possession of 8 King Street, because it follows on naturally from the judgment that I have made in respect of that property.

44. As to the period in which Mrs Sidhu must vacate the property, Mr Sidhu has argued that Mrs Sidhu has been in the property for some 50 years and he has said that in the event that I order possession, he will have to find her somewhere else to live in Southall. He has not, however, said that he will not be able to do that, or that he does not have any other property in which he can house her. When I asked him how long she would need in order to vacate the property, he at first suggested a period of six months, and when I questioned that he then said that she would need a minimum of four months. He did not explain in clear terms why such a lengthy period for giving up possession of the property would be required, save to say that he would need to find suitable alternative accommodation.

45. I am afraid that I do not accept that a four-month period is required in order to find somewhere for Mrs Sidhu to live. I have already made clear in my judgment that the evidence shows that the Sidhus have another very substantial property at Aylmer Road, where she could, no doubt, be housed either permanently or temporarily, if Mr Sidhu wishes to find her alternative accommodation in Southall.

46. In those circumstances, I am going to order that Mrs Sidhu must give up possession of the property at 8 King Street by 30 May 2022, which gives her a little longer than Mr Temmink has suggested is necessary, i.e. just over a month from today’s date. In my judgment, that is a fair and reasonable period, not least in circumstances where my main judgment determining the Inquiry in relation to 8 King Street was handed down before Easter.

47. The second issue arising in relation to 8 King Street concerns my order that Mrs Sidhu must pay an occupation rent from 3 August 2017 until the date of vacant possession. Insofar as that is concerned, the Bahias seek an interim payment on account of the use and occupation of the property for the roughly five-year period that I identified in my judgment in the sum of £114,000. They have calculated that figure having regard to various comparables that have been obtained from searches on the internet, and I have been shown a number of comparables taken from Zoopla, as at April 2022. It is fair to say that, as Mr Sidhu correctly pointed out, these comparables are not exact, some having fewer bedrooms or more bedrooms, one having a garden and driveway, another being in a purpose-built block of flats, and so forth, but I accept from Mr Temmink that the claimant has done his best to find accommodation which is as comparable as possible to the accommodation at 8 King Street.

48. The comparables show rents of between something in the region of £1,800 per calendar month to £3,500 per calendar month, albeit that the property commanding rental of £3,500 is a five bed end of terrace house which has its own driveway and appears to be a rather more spacious property than the one with which I am concerned.

49. Given those comparables and with a view to trying to arrive at an irreducible minimum, Mr Temmink suggests that I should make an order of £2,000 per calendar month – this is how he arrives at the total sum of £114,000.

50. Mr Sidhu opposes such suggestion, saying that the 8 King Street property is above a shop and has no outside space. He also points out that 2022 rents are significantly more than they were previously owing to the opening of Cross Rail.

51. I am very conscious of the fact that I have no expert evidence in this regard and that whilst I make no criticism at all of the claimant, this is not an ideal situation on the back of which to arrive at an appropriate figure. Nonetheless, I am not being invited to arrive at the exact figure for rent, merely something of an irreducible minimum that will have to be paid in due course.

52. To a certain extent, the court needs to put its finger in the air in this regard. I am not going to order the £2,000 per calendar month that Mr Temmink suggests, because I think I need to err more on the side of caution, not least because of the submissions made by Mr Sidhu. However, I am going to order £1,500 per calendar month, on the basis that it seems to me to be more than likely that this is a figure that would have been payable in respect of rent for 8 King Street over the five-year period. Obviously, if that figure turns out to be too much when the matter is looked at by experts in due course, if it ultimately has to be, then any excess will have to be repaid.

53. I add as a post script to this judgment, that Mr Sidhu was right in his submission at the hearing that this rental payment should be made to the Partnership and I realised upon revisiting my judgment that it included typos in paragraphs 164 and 165 which wrongly referred to rental payment being made to “Mr Bahia” when it should plainly have referred to “the Partnership”. I notified both parties of this error after the hearing and the Order of 26 April 2022 (at paragraph 10) reflects their agreement to an amendment to the judgment to correct this slip p ursuant to CPR 40.12(1). (There followed further submissions – please see separate transcript) MRS JUSTICE JOANNA SMITH:

54. The claimants have asked for a receiver to be appointed. Mr Temmink suggests that either or both Mr Bahia or Mr Hardeep Bahia should be appointed as receivers and managers of all the partnership business; alternatively, that a partner from the Bahia’s law firm should be appointed to act as receiver.

55. In response, Mr Sidhu says that he does not trust either of the Bahias (a fact which is absolutely plain from the history of this matter) and that he also does not trust their solicitor in circumstances where issues arose in relation to disclosure in advance of the trial.

56. I do not accept those assertions made against the Bahias’ solicitors, which appear to me (having regard to the observations I made in my judgment about disclosure) to be wholly unfounded. However I certainly accept that it would not be sensible, given the history of this matter, to appoint either Mr Hardeep Bahia or Mr Bahia to be receivers and managers, not because I do not think they would do a good job, but because Mr Sidhu would not trust them and because I fear that such appointment would only be likely to generate further costs going forward, not least by reason of the acrimony and distrust that exist on all sides.

57. The only other alternative that has been suggested, apart from the partner in the Bahias’ legal firm, is an independent party who would have to be brought up to speed with the complicated history of this matter and paid at a market rate. Mr Temmink says that if the court is minded to go down that route, then the claimant would seek an order that Mr Sidhu pays all the costs of that independent party. He points out that Mr Sidhu is not himself a partner and there is simply no reason to spend money on an independent party in circumstances where a solicitor with duties to the court and a pre-existing knowledge of the partnership assets is offering to conduct what should be a relatively straightforward dissolution following the death of one partner, with his costs to come out of the partnership accounts.

58. I have listened carefully to Mr Sidhu’s submissions and to his allegations about the conduct of the Bahias’ solicitor. I do not accept those allegations and I see no real reason for Mr Sidhu to distrust him; he owes duties to the court, as I have said. In order to avoid the need for any further payment over and above what is absolutely necessary in relation to a receiver I am going to appoint the Bahias’ solicitor to be the receiver and manager of the assets of the Partnership and the Greatway Partnership. --------------- This transcript has been approved by the Judge