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OUTER HOUSE, COURT OF SESSION
[2008] CSOH 176
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A898/08
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OPINION OF LORD PENTLAND
in the cause
MRK 1 Limited
Pursuer;
against
(First) Mohamed
Zahir Sakur and Suneia Momade Bachir, as Partners of and Trustees for the
Firm of Sara Properties and (Second) the firm of Sara Properties
Defenders:
________________
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Pursuer: Sanders; Wright and
Crawford, LLP
Defender: Logan; Fyfe Ireland
16
December 2008
Introduction
[1] By
Interlocutor of 24 October 2008 Lord Malcolm granted warrant for inhibition and
arrestment on the dependence of this action and assigned 5 November 2008 as a
diet for the hearing of any application under section 15K of the Debtors
(Scotland) Act 1987, as amended ("the 1987 Act"). On 5
November 2008 Lord Matthews, on joint motion, assigned 3 December 2008 as a half-day
continued hearing on the defenders' application under section 15K. By the time the matter came before me on 3 December 2008, defences had been
lodged. There were also various
productions and affidavits, to which both sides made reference in the course of
the hearing.
[2] At
the continued hearing Mr Logan, counsel for the defenders, moved me to recall
the warrant for diligence on the dependence under section 15K(7) of the 1987
Act. He submitted, under reference to section 15K(8), that the court could no
longer be satisfied as to the matters mentioned in section 15K(9) and that it
was reasonable in all the circumstances for the warrant to be recalled. Mr Logan relied on each of the matters mentioned
in section 15K(9). Accordingly, his argument was that (a) the pursuers did not
have a prima facie case on the merits
of the action; (b) there was no real and substantial risk that enforcement of
any decree would be defeated or prejudiced by reason of (i) the defenders being
insolvent or verging on insolvency or (ii) the likelihood of the defenders
removing, disposing of, burdening, concealing or otherwise dealing with all or
some of their assets; and (c) that it was unreasonable in all the circumstances
for the warrant to continue to have effect.
I shall consider each of these matters in turn.
Prima Facie case
[3] The
pursuers sue for specific implement of the defenders' obligations under an
Option Agreement dated 26 June 2008
("the Option Agreement"). They aver (and
this is not disputed) that the defenders exercised their option to buy the
subjects known as Dens Road Market in Dundee ("the subjects") by letter dated 2
July 2008 and accordingly became liable to pay the balance of the agreed
purchase price. The parties are in agreement that the outstanding balance now amounts
to £1,550,000. The pursuers aver that
they were (and remain) in a position to convey title to the subjects, but that the
defenders have failed to pay the remaining consideration due. The pursuers sue alternatively for damages, laid
at £1, 550,000, for breach of the Option Agreement. In the third conclusion they sue for interest
accrued thereunder amounting to £26,739.72.
[4] In
the defences the defenders aver that they entered into the Option Agreement and
exercised the option in reliance on their agent, Mr Imran Sakur. He is the brother of Mr Mohamed Sakur, one of
the two partners of the firm of Sara Properties, who are the second defenders. The defences contain lengthy averments
attempting to set out what appears to amount to an alleged fraudulent scheme
involving Imran Sakur, the pursuers and a Mr Fraser Coutts. The nature of the defenders' case is not particularly
easy to understand from their averments, but it appears to be to the effect
that they were induced to enter into the Option Agreement by fraudulent
assurances made to them by Imran Sakur, who had received substantial payments
from the pursuers in return for persuading the defenders to enter into the
Option Agreement. The defenders' fourth
plea-in-law seeks decree of absolvitor on the basis that the Option Agreement
was induced by fraud. It is important to
note that the defenders do not seek reduction of the Option Agreement either ope exceptionis (under Rule of Court
53.8) or by means of a Counterclaim. Nor
do they seek damages for loss suffered as a result of the alleged fraud. Their
defence is just to the effect that they are not liable to pay because the
Option Agreement was induced by fraud. When I raised with Mr Logan the absence
of any attempt to reduce the Option Agreement he said, as I understood him,
that this was an issue to which he might have to give further
consideration. Leaving aside the absence
of a claim for reduction or damages, it is reasonably clear from the defences
and from the submissions made on behalf of the defenders at the hearing of the
motion, that they contest the pursuers' claims on the ground that they have no
liability to pay under a contract which was induced by fraud on the part of the
pursuers.
[5] The
detail of the defence advanced in the pleadings may be summarised as
follows. The defenders aver that,
without their knowledge, Mr Mark Harris, who is said to be the director and
principal shareholder of the pursuers, had agreed to pay Imran Sakur a fee for
persuading the pursuers to enter into the Option Agreement. Imran Sakur is averred to have acted for the
firm of Sara Properties as an agent in respect of numerous property
transactions. The defenders allege that
his advice, upon which they relied, was in the pursuers' interests rather than in
the defenders' interests. The defenders
go on to aver that on 28 June 2008
Mohamed Sakur and Suneia Bachir, the first named defenders, signed four
documents provided to them, without reading them. They did, it is said, because Imran Sakur
told them that it was in order to sign.
After the four documents had been signed on that date Mr Harris is
averred to have paid Imran Sakur £25,000 in cash. The defences say that this was a "down payment"
and that a further £25,000 was to be paid to Imran Sakur by the pursuers on the
completion of the transaction. The four
documents signed at the meeting of 28
June 2008 are said to have included the Option Agreement; a Minute
of Agreement settling previous litigation between the parties; a personal
guarantee by Mr Harris of the pursuers' obligations and a fourth document which
is believed to have been the document exercising the option. The defenders allege that the fourth document
was not signed, as it bears to have been, on 2 July 2008 nor was it witnessed by the purported
witnesses, who are believed to be employees of a firm of solicitors known as
the Chamber Practice in Dundee; that firm was at that
time instructed on behalf of the defenders.
The defences then narrate that all of these documents, including those
purportedly drawn by the defenders, were in fact prepared by "the pursuers and
Mr Andrew Drummond of the pursuers" in anticipation of the meeting on 28 June
2008.
[6] The
next stage in the sequence of events set out in the defences relates to what
occurred in July 2008. It is alleged
that in early July 2008 Imran Sakur advised the defenders to transfer
properties at 269 High Street,
Arbroath to the pursuers. He is said to
have explained that Mr Harris was concerned about the defenders' ability to
complete the transaction and wanted payment of a deposit. Imran Sakur advised the defenders that he had
agreed a value of £145,000 for these properties. The defenders say that, in terms of the
contract, the pursuers have no right to any such deposit or to any payment
prior to the date of entry, but again they followed Imran Sakur's advice and
transferred to the pursuers three flats at 269 High Street, Arbroath, as
acknowledged in a letter of 15 July 2008 from the pursuers' solicitors, Messrs
Rollo Davidson McFarlane in Dundee. The
defence then continues by alleging that within a short time Imran Sakur advised
the defenders that Mr Harris wanted further security. Imran Sakur advised that he had agreed a
value of £250,000 for flats at 44 Marketgait, Arbroath belonging to Sara
Properties. Again relying upon Imran
Sakur's advice, the defenders transferred these properties to the pursuers, as
acknowledged in a letter of 29 July
2008 from Messrs Rollo Davidson McFarlane. It is next alleged that the defenders had
been induced to enter into the Option Agreement by assurances that Imran Sakur
had a purchaser for the subjects at a "slightly higher price than that being
paid to the pursuers". The proposed
purchaser was Fraser Coutts.
Mr Coutts was known to Imran Sakur and was in turn seeking to sell
the subjects on to a fourth party. It is
contended that Mr Coutts agreed to pay Imran Sakur a commission of £15,000 from
his profit on the transaction. This also
is said not to have been disclosed to the defenders at that time.
[7] The
defences then move on to set out certain events said to have occurred in early
September 2008. It is alleged that at
that time Mr Sakur met Mr Coutts and Mr Harris at a hotel in Dundee. At the meeting Mr Coutts is alleged to have
"purportedly provided" a bankers' draft to Mr Harris in the sum of £100,000 as
a payment to account for the subjects.
At a later meeting at around the same time between the defenders and Mr
Coutts, the latter explained that the payment of £100,000 had been a part of
the arrangement between himself and Mr Harris.
The defenders say that they do not know the details of this arrangement. Reference is then made to a cheque for the
sum of £100,000 drawn on a company owned or controlled by Mr Coutts, Turnhouse
Investments Limited, dated 30 July
2008 and addressed to the defenders. It is said that this cheque had already been
returned unpaid.
[8] The
next stage, according to the defences, was that on 8 October 2008 Mohamed Sakur received an e-mail from Mr
Harris setting out a further proposal in respect of the subjects. This "agreement", as it is put in the
defences, sought to require further payments by the defenders and the transfer
of further property owned by them at 18 Arbuthnott Loan, Dundee for the sum of
£202, 000. This sum is averred to have
been approximately £50,000 less than the value of said property. The defences then continue by averring that
in terms of Clause [Eleventh] of "said draft agreement" the pursuers sought to
bind the defenders not to take any legal proceedings against Mr Coutts or
any company associated with him without the pursuers' permission. Mohamed Sakur refused to sign this
agreement. In response, Mr Harris is
alleged to have stated that if he did not do so he would proceed with the
present action.
[9] The
defenders' averments in support of their defence of fraud are sought to be
drawn together at the end of Answer 5 of the defences. It is alleged, on the basis of the draft
agreement and what has now been disclosed by Imran Sakur, that the defenders
"believe and aver" that Mr Coutts and Imran Sakur "have been used to
fraudulently induce the defenders to enter into the option to purchase with the
intention of removing their assets by inducing the defenders to transfer
properties to the pursuers." It is said
that Mr Coutts never had the resources or any agreement to resell the
subjects. It is then alleged that Imran
Sakur spoke to the good standing of Mr Coutts and encouraged the defenders
to enter into the Option Agreement for Imran Sakur's own financial benefit and
undisclosed inducements from the pursuers.
This section of the defences concludes by alleging that as a result of
these fraudulent misrepresentations the defenders have transferred property to
the value of £395,000 to the pursuers for no consideration.
[10] Mr Logan for the defenders submitted that that defences set out
a substantial defence to the action. He
drew attention also to paragraph 3 of an affidavit provided by Mr Harris which
had been sworn on 1 December 2008. This had been lodged in process by the
pursuers. Mr Harris stated in the
affidavit that in June 2008 Imran Sakur asked him for £50,000 as a commission
in the course of discussions about the sale of the subjects. Mr Harris said that he and Imran Sakur
negotiated that "he would get £25,000 once Sara Properties agreed to the option
to purchase Dens Road Market, and a further £25,000 when Sara Properties
actually settled the transaction." In
paragraph 5 of the affidavit Mr Harris stated that at a meeting on 26 June 2008 at Mohamed Sakur's house,
he gave Imran Sakur £25,000 "since I was happy with the formalities". He added
that "the agreement was all signed at that time". Mr Logan submitted that this passage in
Mr Harris' affidavit lent support to the averments in the defences about Imran
Sakur's rôle in the fraudulent scheme.
Mr Logan acknowledged that in paragraph 4 of his affidavit Mr Harris
stated that Mohamed Sakur was present at a later meeting at which Imran Sakur
kept asking Mr Harris when he would be paid the sum of £25,000 and that Mohamed
Sakur never made any comment about this and clearly heard the whole discussion.
[11] Mr Logan also pointed to paragraph 6 of Mr Harris' affidavit in
which he stated that, shortly prior to the anticipated settlement date, Mohamed
Sakur and Imran Sakur came to see him at his house with Mr Coutts, who was then
unknown to him. They said they wanted an
extension of time for the date of entry because Mr Coutts was planning to
purchase the subjects from Sara Properties once they had purchased them
themselves. Mr Logan submitted that this
evidence about Mr Harris not knowing Mr Coutts was inconsistent with clause [Eleventh]
of the draft Minute of Agreement prepared by the pursuers in October 2008, in
which the pursuers sought to impose an obligation on the defenders not to take
any legal action against Mr Coutts or any company associated with him in
respect of the second defenders' interest in the subjects without the prior
written consent of the pursuers.
[12] Mr Logan founded also on the fact that the option agreement had
been drafted for the defenders by the pursuers.
This was admitted by Mr Andrew Drummond in an affidavit dated 1 December 2008 (see paragraph 4).
[13] Mr Logan referred in addition to paragraph 7 of Mr Harris'
affidavit in which he stated that at another meeting, about one week after the
meeting at his house, he agreed to an extension to the settlement date
"conditional on being paid the £100,000".
Mr Coutts gave Imran Sakur a cheque for that amount payable to Sara
Properties Limited (not Sara Properties). This cheque was later dishonoured.
[14] In summary, the defence advanced, according to Mr Logan, was to
the effect that Imran Sakur, Fraser Coutts and the pursuers were all parties to
a fraudulent scheme designed to induce the defenders to enter into the Option
Agreement in the belief that they would be able to sell the subjects on to Mr
Coutts at a profit. In truth, the
parties to this fraud knew that there was no prospect of such an onward sale ever
being achieved. The outcome actually
brought about as a result of the fraudulent scheme was that the defenders
transferred ownership to the pursuers of various properties, amounting in value
to some £395,000, in circumstances where there had never been any real prospect
of an onward sale being achieved. On any
view, Mr Logan submitted, there were a number of what he characterised as very
peculiar features of the transaction constituted by the Option Agreement.
[15] The question which I must consider at this stage is whether the
pursuers have a prima facie case on
the merits of the action. The onus is,
of course, on the pursuers to satisfy the court that no order for recall should
be made: section 15K(10) of the 1987 Act. Ultimately, Mr Logan accepted that,
leaving aside responses set out in the defences, the pursuers had put forward a
prima facie case in relation to their
claim for specific implement, as sued for in the first conclusion of the
summons. It was necessary, however, to
take account of the defence in assessing whether it could be said that the
pursuers had a prima facie case. My attention was drawn to the discussion of
the relevance of the existence of a defence to a pursuer's claim by Lord
Drummond Young in Barry D Trenthan
Limited v Lawfield Investments
Limited 2002 SC 401 at paragraph 19 where his Lordship said:
"... The existence
of a defence may cast doubt on the pursuer's prospects of success in the
action. If the doubt is sufficiently
substantial, it may not be reasonable to grant judicial security in respect of
the pursuer's claim. In Karl Construction Limited v Palisade Properties Plc 2002 SC 270 I
suggested that, before inhibition on the dependence could be granted, the
pursuer required to establish a prima
facie case on the merits of the action.
I intended this test to be a substantial hurdle for the pursuer to
surmount. The expression "good arguable
case", used in English law in relation to Mareva injunctions, may give a good
idea of what is intended. If, at the
stage of a motion for recall, an apparently substantial defence is put forward
to the pursuer's claim, it is in my opinion appropriate for the court to
scrutinise the claim and the defence and to determine whether in all the
circumstances inhibition is appropriate, or whether it should be recalled,
either absolutely or subject to conditions.
This is in my view an aspect of the requirement of a prima facie case, in the sense of a good
arguable case; if there is an apparently substantial defence to the pursuer's
claim it is difficult to say, on the basis of the whole of the material before
the court, that that claim amounts to a good arguable case. If no substantial defence is put forward, of
course, all that the court requires to consider is whether the pursuer has set
out a good prima facie case."
[16] In Gillespie v Toondale Limited 2006 SC 304 an Extra Division of the Inner House agreed
with the approach set out by Lord Drummond Young in Barry D Trenthan Limited. At
paragraph 13 of the Opinion of the Court it was stated:
"We agree with
that approach (sc. the approach set out by Lord Drummond Young). In particular, it is in our opinion necessary
for the court at the stage of a motion for recall to consider the pleadings as
a whole, both the pursuer's averments and the defence stated, and the
submissions made by both counsel to determine whether, in all the
circumstances, inhibition is appropriate on the basis of the existence of a prima facie case. We also agree that the prima facie test is a substantial hurdle for the pursuer to
surmount. It is not sufficient for him
to advance a colourable case. The grant
of judicial security and the serious interference with the defenders' property
warrants the application of a higher test ... Our law now recognises the
potential for harm through unwarranted diligence and for abuse based on a
pretended or imagined debt ... The safeguard now imposed is the requirement of
judicial assessment of the validity or otherwise of the pursuer's claim. It is for the pursuer to demonstrate good
cause for the remedy he seeks."
[17] Both sides accepted that the approach set out in Barry D Trentham Limited and Gillespie was relevant for the purposes
of section 15K of the 1987 Act.
[18] In response to Mr Logan's submissions, Mr Sanders for the
pursuers emphasised what he said was the simplicity and straightforward nature
of the pursuers' claim for specific implement.
He said that the pursuers offered to prove the existence of a binding contract
and that they were entitled to implement of it.
There was far more than a mere colourable case. There had never been any suggestion of fraud
until the defences were intimated, although he accepted that there had been
what he described as a hint of this in the course of the hearing before Lord
Matthews. Mr Sanders founded also
on the fact that the defenders did not seek to reduce the Option Agreement on
the ground that it was vitiated by fraud.
He observed that the defence was a highly unusual one and said that he
had some difficulties in understanding it.
He submitted also that it was inappropriate to approach matters as if
the present hearing on the motion roll was a procedure roll debate.
[19] I have reached the view, applying the approach set out in Barry D Trentham Limited and Gillespie that, as matters presently
stand on the pleadings for both parties, the pursuers have a prima facie case on the merits of the
action. Essentially, the defenders
allege that the Option Agreement was induced by fraud. If that contention is
correct, the contract would be voidable rather than void (McBryde, The Law of Contract in Scotland, 3rd edition, paragraphs 14-49 to
14-56). Accordingly, the contract is valid until it is rescinded. The remedies
available to the innocent party in such circumstances are either to seek
reduction of the contract or to sue for damages reflecting any loss suffered
due to the fraud. The defenders seek neither of these remedies, however. All
that they say is that they are not liable to pay the outstanding balance
because the Option Agreement was induced by fraud. In my opinion, such a defence
is irrelevant and cannot detract from the validity of what the defenders admit
is otherwise a prima facie case advanced
by the pursuers.
[20] Had it not been for this fundamental deficiency in the
defenders' approach, I would have been inclined to accept that there was some
support for the allegations set out in the defences to be found in the material
to which my attention was drawn in the course of the hearing. For example,
there is the admission by Mr Harris in his affidavit that he paid Imran
Sakur the sum of £25,000 once the Option Agreement had been signed. I acknowledge, of course, that Mr Harris
claims later that Mohamed Sakur was aware of Imran Sakur's double rôle. That is an issue which may have to be
resolved after evidence has been led and tested at a proof. The other features relied upon by Mr Logan,
under reference to the affidavits of Mr Harris and Mr Drummond, lend some
further possible support to the defence.
Again, there is more than one possible interpretation of events, but it
does seem to be the case that the pursuers were responsible for drafting the
Option Agreement in the name of Sara Properties, that Mr Coutts became involved
in the transaction and issued a cheque for £100,000 which was dishonoured and
that there was a desire on the part of the pursuers to protect Mr Coutts from
litigation at the instance of the pursuers.
It may be that there is a valid defence potentially available to the
defenders, but as presently set out in the pleadings such a defence, in my
opinion, has not been relevantly pleaded.
[21] I should record that, in the course of his submissions, Mr
Logan made reference to Article 96 in Chapter 28 of Bowstead and Reynolds on Agency (18th edition). This deals with the rights of a principal
where a third party has been involved in violation of the agent's duties. Paragraph (1) of that Article states that a
contract made or act done by an agent which is, to the knowledge of the other
party involved, in violation of the agent's duty to his principal entitles the
principal to equitable relief against the third party. I am bound to say that the relevance of this
passage was not clear to me since no attempt has been made by the defenders to
seek any form of equitable relief in the present proceedings. Since the point
was not fully argued, I express no view as to whether any such relief would be
available under Scots law. In paragraph
(2), Article 96 states that where an agent is induced by bribery to depart from
his duty to his principal, the third party who bribed or promised a bribe to
the agent is liable at common law jointly and severally with the agent to the
principal (a) in restitution, for the bribe or (b) in tort, for any loss
sustained by the principal from entering into the transaction in respect of
which the bribe was given. Again, I note
that the defenders make no claim for restitution or in delict for any loss
sustained by them from entering into the Option Agreement. I conclude that the citation from Bowstead and Reynolds is of no
assistance for present purposes.
[22] I should record that Mr Logan advanced a number of criticisms
of the pursuers' pleadings in relation to the claims made in terms of the
second and third conclusions of the summons.
I need not, however, consider these since he eventually accepted in the
course of argument that, aside from the defences, the pursuers did at least have
a prima facie case in respect of
their primary claim for implement.
[23] In conclusion on this branch of the argument, I am satisfied
that the pursuers have advanced a prima
facie case on the merits of the action.
Are the defenders insolvent or verging on insolvency?
[24] The defenders also sought recall of the warrant for diligence
on the dependence on the basis that there had not been shown to be a real and
substantial risk that enforcement of any decree in favour of the pursuers would
be defeated or prejudiced by reason of the defenders being insolvent or verging
on insolvency. In the course of the
motion roll hearing both sides made reference to some documentary material
concerning the defenders' financial circumstances. I have to say, however, that the picture
which emerged was far from clear.
[25] Doing the best I can with the information put before me, it
seems that the defenders' financial position may be summarised as follows. The business of Sara Properties involves
buying and selling property. They are
essentially a family concern and were said by Mr Logan to have been established
in Dundee for some 13 years. They have a number of bank accounts with the
Royal Bank of Scotland. The most significant of these is a business
term loan of £393,000 which is due for repayment on 30 January 2009.
This loan is secured over property at 12 Elcho
Drive, Broughty Ferry, Dundee. I was told by Mr Logan that the present value
of this property is thought to be about £400,000. In Answer 7 of the defences there are
averments relating to the defenders' financial circumstances. These were expanded upon by Mr Logan in the
course of the hearing. In short, he
accepted that the firm's total indebtedness to the Royal Bank of Scotland
amounted to about £720,000. This was
made up of the loans secured over various properties amounting to £546,460 and
further indebtedness of approximately £182,422 averred to be in respect of the
property known as 44 Marketgait, Dundee. Against that total liability to the Royal
Bank of Scotland
of about £720,000, the defenders owned a number of heritable properties
referred to in the defences which were said to be valued at around £900,000 in
total. According to Mr Logan, there was,
therefore, in round terms what he described as free equity in the properties of
some £180,000. The difficulty about all
this for the defenders is that in the event that they are liable to implement
their part of the Option Agreement, they accept that the amount due to be paid
would be £1,550,000. There was no
explanation provided to me as to how the defenders would satisfy a liability of
that amount. In Barry D Trentham Limited the court held inter alia that the critical question to be considered when
determining the issue of insolvency in the context of recall of inhibition was
whether a significant risk of insolvency existed at the time when a claim if
sustained by the court fell to be paid.
Accordingly the future required to be considered. In paragraph 8 of his Opinion Lord Drummond
Young said:
"...what is
material is the risk that the defender will not be able to satisfy the pursuer's
claim at the conclusion of the action.
For that reason it is not appropriate to look only at the defenders'
present financial situation; future events must be taken into account, so far
as they can be predicted with some degree of accuracy, because they will have
an important bearing on whether funds will be available if decree is pronounced
in favour of the pursuer."
[26] I see no reason why this approach should not be applied in the
context of a motion for recall under section 15K of the 1987 Act.
[27] It is also relevant to note that Mr Logan accepted in the
course of argument that the defenders were at risk of incurring what he
referred to as a substantial loss arising from investments they had made in
properties in Turkey. They had, I was told, invested in excess of
£400,000 in the purchase of holiday villas in the Bodrum region. These properties were intended to have been
bought in the name of Sara Properties by an agent for the defenders, one Kemal
Bal. Contrary to Mr Bal's instructions
he had, however, taken title to the villas in his own name. The villas had now been repossessed by
creditors who held securities over them.
Mr Logan frankly accepted that in
the light of this misfortune and the substantial indebtedness to the Royal Bank
of Scotland, the defenders' financial position was not, as he put it, an
entirely happy one. Mr Logan conceded
also that an Audi motor car registered in the name of Sara Properties has been
repossessed by the Bank of Scotland.
[28] Applying the approach set out by Lord Drummond Young in Barry D
Trentham Limited, it is clear on
the basis of the information put before the court by the defenders that there
exists a real and substantial risk that they will be unable to satisfy the pursuers'
claim for implement at the conclusion of the present action, if the claim is
upheld, because satisfaction of a such a claim would render them insolvent. In the circumstances, I consider that it can
be said at present that there is a real and substantial risk that enforcement
of any decree in favour of the pursuers would be defeated or prejudiced by
reason of the defenders being insolvent or verging on insolvency.
Likelihood of the defenders removing, disposing of, burdening,
concealing or otherwise dealing with all or some of their assets
[29] Under section 15K(9) of the 1987 Act, the pursuers argued that
there was a risk of the defenders dissipating their assets to Turkey. The only basis for this put forward by Mr
Sanders was that the defenders had invested in the Turkish villas referred to
above and therefore, as he put it, had a clear line of communication to Turkey. I did not consider this to be a sufficient
basis for holding that a risk of dissipation of assets had been made out.
Was it reasonable in
all the circumstances for the warrant to continue to have effect?
[30] Under reference to section 15K(9)(c) of the 1987 Act, Mr Logan
maintained that it was unreasonable for the diligence to be allowed to continue
in effect because the defenders had already transferred ownership of properties
worth about £395,000 to the pursuers; because the pursuers continued to occupy
the subjects and derive rents of nearly £2,000 per week therefrom; and because
they would also be in receipt of rents from the properties transferred to
them. In my opinion, these points are
not sufficient to show that it would be unreasonable for the warrant to remain
in effect in the particular circumstances of the present case. I accept that the subsistence of the warrant
will interfere with the defenders' ability to conduct their property business,
but the fact remains that the pursuers have a claim for £1,550,000 against the
defenders in circumstances where the defenders' financial position appears to
be somewhat perilous to say the least and they have no apparent means of
satisfying the pursuers' claim. In all the circumstances, I consider that it is
reasonable for the warrant to continue to have effect.
Conclusion
[31] For all the reasons set out, I consider that, on the basis of
the parties' pleadings as they currently stand, the pursuers have a prima facie case on the merits of the
action; that there is a real and substantial risk enforcement of any decree in
favour of the pursuers would be defeated or prejudiced by reason of the
defenders being insolvent or verging on insolvency; and that it is reasonable
in all the circumstances for the warrant for diligence on the dependence to
continue in effect. I have, therefore,
refused the defenders' motion for recall.
I shall leave it to parties to enrol whatever motion they consider
appropriate in regard to expenses.
