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You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Otuo v Brierley [2015] EWHC 1938 (Ch) (06 July 2015) URL: http://www.bailii.org/ew/cases/EWHC/Ch/2015/1938.html Cite as: [2015] EWHC 1938 (Ch) |
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CHANCERY DIVISION
Strand, London, WC2A 2LL |
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B e f o r e :
(sitting as a Deputy Judge of the Chancery Division)
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FRANK KOFI OTUO |
Claimant |
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- and - |
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DAVID BRIERLEY |
Defendant |
____________________
Mr Gideon Roseman (instructed by Sherwood Solicitors) for the Defendant
Hearing dates: 10, 11 and 12 March 2015
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Crown Copyright ©
Edward Murray (sitting as a Deputy Judge of the Chancery Division) :
Principal issues
i) whether, prior to his issue of these proceedings, Mr Otuo was entitled to exercise certain rights under clause 4.3 of the Settlement Agreement;ii) if so, whether, prior to his issue of these proceedings, he had effectively exercised those rights; and
iii) if so, whether, as a result of such exercise, Mr Otuo is entitled to an indemnity from Mr Brierley in relation to any payments made by Mr Otuo to certain creditors of the partnership that had existed between them (the "Partnership") and that was effectively dissolved by the Settlement Agreement.
Background
The evidence
The Law
The Settlement Agreement
"Frank has had the de facto control of the development and management of the Properties to the date hereof."
i) £160,000 was to be paid on or before 31 January 2011. This amount was paid in full to Mr Otuo on the date of signing of the Settlement Agreement.ii) A further £60,000 was due on the first anniversary of the date of the Settlement Agreement. This amount was paid to Mr Otuo on 29 April 2013, so it was over a year and three months overdue when finally paid.
Clause 5 of the Settlement Agreement provided for default interest to be payable by a party in relation to any payment not made when due under the Agreement. In his Amended Particulars of Claim, Mr Otuo claims the amount of £3,825 under this clause in respect of the late payment of the sum of £60,000. Mr Brierley does not deny that this is due.
"2. PRINCIPAL TERMS
In consideration of the obligations of David and Frank to each other under this agreement:
2.1 IT IS HEREBY AGREED AND DECLARED that:
(a) Frank has been entitled to a salary of £5,000 per month since May 2006
(b) From the date of payment of the sum of £160,000 to Franks solicitors, Frank shall have no entitlement to any property income capital or profit of the Partnership nor any obligation to contribute to losses of the Partnership and shall only be entitled to receive from David the Principal Sum and other payments set out in this agreement
(c) Frank shall be deemed to have retired from the partnership upon the date of payment to his solicitors of the sum of £160,000 as set out in clause 3(a)(i) of this agreement);
(d) David shall thereupon succeed to all of Frank's interest in the Partnership and Frank shall then (if he has not already done so) immediately execute and deliver such documents and perform such acts as may be required to vest the entire legal or equitable ownership in any property of the Partnership (or the Properties) in David including but not limited to the documents set out in the schedules hereto. To the extent necessary any such documents will be deemed to be delivered by Frank upon the payment of £160,000 as per clause 3(a)(i) of this agreement to Frank's solicitors;
(e) Unless and until any such property is transferred or assigned, Frank shall hold it and any monies, goods or other benefits received in relation to it as trustee for David.
2.2 Frank must upon signing the agreement return to David all books of account, records, deeds, drafts, letters and other documents, whether in paper or electronic form, relating to the Partnership which are in his possession or under his control
2.3 Further Frank:
(a) WARRANTS AND UNDERTAKES TO AND COVENANTS WITH David and the Partnership that:
(i) So far as Frank is aware
(A) the creditors and liabilities of the Partnership are only those set out in schedule 2 ("the Creditors") which include any liability for any tax due and unpaid or which is later due and assessed as unpaid which shall include but is not limited Corporation Tax Value Added Tax or any levy or payment due in respect of any Construction Industry Scheme or arrangement by which the Company or the Partnership may howsoever be liable to any taxation in respect of any work carried out by any person by or for or on behalf of the Company or the Partnership
(B) In relation to the Partnership and the Company
1. without prejudice to the generality of clause [2.3(a)(i)(A)] the only claims against Frank the Partnership and the Company are those set out in Schedule 2
2. he has disclosed all and any claims against Frank the Partnership and the Company in Schedule 2
(C) all and any tax or levy of any nature (whether related to building work construction work or otherwise) which has accrued or is payable by or in respect of the Company has been paid
(D) he has not misappropriated or misapplied any asset of the Company or of the Partnership (but having regard to clause 2.1(a)).
(ii) he will
(A) act in good faith and fully co-operate with David in respect of the affairs of Partnership
(B) unless required to by law or by any Court of competent jurisdiction not howsoever assist any person (other than any creditor of the Partnership) in respect of any claim against the Partnership.
(iii) he will do all such things and sign all such documents as may be required in order to give effect to the provisions of this agreement.
(iv) …
(v) …
(D) Frank undertakes that he is not aware of any outstanding claims against the Partnership, or of circumstances which could lead to such a claim, which have not been fully and promptly reported to the insurers of the Partnership.
(E) Frank undertakes that he will NOT incur or purport to incur any liability cost or expense of any nature whatsoever on behalf of the Partnership from the date of this agreement without David's prior written consent."
"SCHEDULE 2
CREDITORS AND LIABILITIES
Creditors | Amount | Interest | Date |
Karen Lawton | 6600 | ||
Jay Thenuwara | 35180 | 6% | Jun-08 |
Robert Wee | 17500 | 7.75% & 8.25 |
Jun-08 |
Hanna Otoo | 4750 | ||
Greg | 10300 | ||
Phillip Preston | -6000 | ||
Twumasi Otuo | 12000 | ||
Derick Campbell | 3750 | ||
tenants deposits total |
19945.68 | ||
inland revenue | 3454 | ||
Building control Fees |
872.85 | ||
Drain test Fee | 575 | ||
Holmewood | 1132" |
It is not in dispute that the amounts in the second column of Schedule 2 are denominated in Sterling.
"4. WARRANTY AND INDEMNITY TO FRANK
4.1 David warrants and undertakes to Frank that he will, in good faith, ensure that payment in full of such sums as are due is made to the Creditors from the assets of the Partnership. If David does not pay the same from non-partnership assets, he will use reasonable endeavours to sell a property or properties owned by the Partnership which after the deduction of any charges or encumbrances over any such property and the costs and expenses of sale will be sufficient.
4.2 David further warrants and undertakes to Frank that the net proceeds of sale of any Partnership properties shall first be applied in discharging such sums as are due to the creditors of the partnership.
4.3 If Frank is concerned that such sum as are due to the Creditors have not been paid
(a) Frank may in writing require David in writing to state within 14 days of such written request from Frank whether David has paid such sums as are due to the Creditors of the Partnership;
(b) If Frank wishes to make any further payments in addition to those which David has paid he shall give David 14 days written notice thereof
(c) If David does not agree to pay any such creditor being one of the Creditors the Partnership shall indemnify Frank in respect of such sum as is due and David consents to the amount of such payment as is due being secured by Frank against the titles to the properties owned by the Partnership.
4.4 In respect of 42 Holmewood Road London SW2 3RR David warrants and undertakes as soon as is reasonably practicable to grant long leases."
Whether Mr Otuo was entitled to exercise his rights under clause 4.3
"Referring to the Agreement we signed in January [the Settlement Agreement], in order for me to validate the so called creditors you listed in Schedule 2, can you please send me their contact details and supporting documentation.
I would like to draw your attention to the following:
Clause 2.3(a)(i)(A) states the following: 'So far Frank is aware, the creditors of and liabilities of partnership are only those set out in schedule 2.[']
Clause 4.1 states the following: 'David warrants and undertakes to Frank that he will, in good faith, ensure that payment in full of such sums as are due is made to made to [sic] the creditors from assets of the partnership'[.]
You did not provide me with any contact details or supporting documentation prior to signing; however; [sic] unless I can validate that the creditors listed by you in schedule 2 are liabilities of the partnership, I do not acknowledge any sums are due.
Delivery notice: As you are aware, there is no postal service in Dubai, thus when using a commercial courier, please make sure my address including cell number is listed and once dispatched, provide me with the waybill number in order for the delivery to be tracked."
Whether Mr Otuo effectively exercised his rights under clause 4.3
i) a written request under clause 4.3(a) from Mr Otuo to Mr Brierley, to which Mr Brierley must respond within 14 days as to whether Mr Brierley "has paid such sums as are due to the Creditors of the Partnership", followed byii) a written notice by Mr Otuo to Mr Brierley under clause 4.3(b) giving him at least 14 days' written notice of his intention to make "further payments" to Creditors in addition to any payments already made by Mr Brierley.
Jay Thenuwara, Derrick Campbell and Grzegorz Klisiewicz
HM Revenue & Customs
Karen Lawton
Robert Wee
"In the event that the payment [on 30 June 2009] has not been made Frank Otuo and David Raymond Brierley and 'the Company' will have by virtue of this agreement authorised the sale at current market values, of all their assets mentioned hereunder in order to pay the debt owed to Robert Wee."
The document then lists seven of the Properties, provides for English law to govern and the English courts to have jurisdiction, and is signed by each of Mr Otuo and Mr Brierley above their own names and by Mr Otuo on behalf of the Company.
The remaining Schedule 2 creditors
i) that any such creditor is a creditor of the Partnership as opposed to the Company or Mr Otuo individually; orii) that Mr Otuo has fulfilled the condition precedent to the obligations of Mr Brierley under clause 4.1 that I have found to apply in paras 39 to 41 above.
Tenants' deposits
"All deposits have been dealt with in line with the tenancy deposit scheme. Deposits have been passed to Mr Otuo with the confirmation of the tenants in each case and on receipt of confirmation of his membership to [sic] an approved scheme."
"Foxtons has provided notice that the deposit is registered with the TDSL in a letter date [sic] 18 February 2009, yet when we asked them for it, they say it is landlord held."
"All the deposit [sic] where [sic] put into company account and were used for the building projects. It changes nothing as they were listed and declared as creditors."
Estate Agents' Fees claim
No cause of action at the date of the claim
i) Assuming that it is correct, as a matter of construction of the Settlement Agreement, that it is a condition precedent to the obligations of Mr Brierley under clause 4.3 that Mr Otuo should provide sufficient evidence of each claim in Schedule 2, it becomes a question of fact and evidence, rather than construction, as to what constitutes sufficient evidence in relation to a specific claim. In other words, if Mr Brierley was already in possession of sufficient information regarding a claim listed in Schedule 2, then it cannot be right to deny Mr Otuo his rights under clause 4.3 for failure to provide further information regarding that claim. It being a matter of fact and evidence, Birss J concluded that it needed to be addressed at trial and not decided on an application for summary judgment.ii) Regarding Mr Roseman's argument that Mr Otuo failed to comply with the procedure required by clauses 4.3(a) and (b), Birss J considered that it was a matter of fact, to be considered at trial, whether there had been a communication by Mr Otuo to Mr Brierley capable of amounting to satisfaction of clause 4.3(a) so that the letter dated 25 February 2011, found by Birss J to have been received by Mr Brierley in June 2011, would have been the notice required by clause 4.3(b). This was another reason for his refusing to grant Mr Brierley's application for summary judgment or to strike out the claim, the same test applying in either case.
Interest due on late payment of £60,000
Conclusion