Case No. FD05D04818

38.I stated earlier in this ruling that I have borne very much in mind throughout that Ms Behbehani has become involved in this third party litigation because she is the beneficiary of a matrimonial award which has remained unpaid for several years. The Former Receivers have played their role in relation to the ongoing efforts which have been made in relation to enforcement but it is important to state that they have no part in, or liability for, the substantive default which is the responsibility of her former husband, the respondent in the matrimonial proceedings.39. In essence, Ms Behbehani seeks the further indulgence of this court in relation to her ability to pursue her proposed claim against the First Receivers. She has not paid anything to the Former Receivers in satisfaction of the costs order I made over a year ago. It appears she is also technically in breach of the court’s last deadline for filing her particulars of claim. In this context the court will be seeking an outcome which is fair to all parties and proportionate to the issues engaged. For these purposes, the three-stage test endorsed by the Court of Appeal in Denton v TH White [2014] EWCA Civ 906 (“the Denton test”) is engaged.40.I take as my starting point the litigation history of this application as it has developed.41.Ms Behbehani first raised the existence of a potential claim against the Former Receivers almost two years ago in July 2020. She quantified that claim at between £5 million and £10 million. In terms of developing that claim, little progress was made despite the fact that the Former Receivers were obliged to put their indemnity insurers on notice of its existence. The basis of the claim was initially put in this way:-(i)the Former Receivers had not made progress in obtaining control of the Setubal shares with the consequence that various properties had been disposed of with a consequent reduction in the underlying share value; and(ii)the costs and expenses incurred by the Former Receivers in the period of their appointment were excessive.42.I pause there to observe that it is difficult to see how that second limb can be said to found a cause of action in negligence. It is in terms a complaint about quantum. The essence of the complaint appears to be that delay in progressing the Receivership led directly to a loss in the value of the shares.43.The Former Receivers’ response to the claim is to be collected from the various witness statements filed by Mr Short. Had Ms Behbehani not defaulted on her own obligations to fund the expenses and other disbursements incurred by the Former Receivers (relied on as a clear term of their Receivership), Mr Short expressed his belief that the shares could, and would, have been realised. Further, for a significant period of time between 2017 and 2019, there had been a hiatus in their status as Receivers because of the appeal from the order of Parker J in July 2017. The application to set aside the Receivership order was made in September 2017, their appointment was discharged, and it was not reinstated by the Court of Appeal until 20 December 2019.44.It is clear from the material before the court from Setubal’s own solicitors that the sale of six of the properties owned by the company had been agreed prior to the date when the Receivership was reinstated and without the involvement of the Former Receivers. Further, whilst the completion of those sales took place as scheduled in February 2020, there was no evidence that the company had suffered any loss or that the sales had any impact on the company’s balance sheet. That much has been confirmed by both Mr Short and the company’s solicitor.45.Ms Behbehani elected not to challenge that evidence. She did not file any evidence to contradict Mr Short’s sworn evidence or the evidence from the company’s solicitor. That was the position when the matter returned to court at the hearing before me on 20 May 2021. She was represented by counsel at that hearing. He conveyed to the court Ms Behbehani’s instructions that, at that point in time, she did not intend to pursue a claim against the Former Receivers. That position was reflected in the recital to the order which I made on that date. Nevertheless, despite what was in effect a concession that she was not intending to proceed with a formal claim at that point in time, her counsel sought a final extension in order to allow his client further time to make her enquiries and take advice on the position.46.I declined to allow her the further six months which was sought. I did allow her a final opportunity to investigate whether share value had been affected as a result of the sales or for any other reason but I determined that the Former Receivers should be released from any further exposure to claims after three months (i.e. by 20 August 2021) unless she had by then filed and served particulars or points of claim.47.Ms Behbehani then instructed an individual called Robert Donald of Hellas Commerce to compile a report in relation to these matters. It is that report which appears to inform the base line of her claim that there were “missing assets” with a value of c.£5 million or more. On 9 July 2021 HA Law sent to Summit Law a preliminary notice of claim pursuant to the pre-action protocol together with a copy of Mr Donald’s report. On the same date she issued a further application for a second extension of time to prepare her pleaded case. With a hearing already listed to consider Ms Behbehani’s second Share Transfer application on 28 July 2021, I indicated through my clerk that I would list the application for further time to be considered at that hearing but that my provisional view was that any challenge to the earlier three month limit which I imposed was more properly the subject of an appeal rather than a second application for more time.48. I have already dealt in paragraph 16 above with the outcome of that hearing. Conscious of Ms Behbehani’s status as a former wife seeking to enforce a matrimonial order, and in the teeth of opposition from Mr Chichester-Clark, I agreed to allow her one further and final indulgence. I listed a substantive directions hearing on 25 November 2021 in order to consider her pleaded case which I made clear must be available by that date. I took that course notwithstanding the discontinuance of her first claim against the Former Receivers on 20 May 2021.49.As at 25 November 2021, Ms Behbehani had not filed a pleaded case. She had not paid the sum of £40,000 on account of the Former Receiver’s indemnity costs which I directed must be paid as long ago as 20 May 2021. Somewhat surprisingly, her new counsel, Ms Venkata, was instructed on that occasion to seek yet a further extension until 25 March 2022 to pay the £40,000 on account of costs and until 25 May 2022 to file her particulars of claim. In support of that further extension, her counsel submitted that she still did not have sufficient information as a shareholder to identify the answers to the following questions:(i)whether the sale of the six properties was agreed prior to the Former Receivers resuming office and whether there was anything they could have done to prevent a sale. “This will assist her in identifying the specific breaches of duty”; and(ii)whether there was any loss incurred as a result of the sales1.50.In a final gesture of clemency, I gave her a further 7 days to comply with my original ‘unless’ order but made it absolutely plain that I would not countenance any further delay and that the debarring order would become fully operational if both defaults were not fully remedied.51.As Mr Hunter on her behalf accepts, the claim form which his client finally produced was not issued until 3 December 2021, more than seven days after the November hearing. He relies on the fact that the documents were filed with the court on 1 December. He accepts that service on the Former Receivers on 2 December 2021 may not have been in strict compliance with the CPR. Mr Hunter seeks to argue that in either case (failure of issuance in time, or failure to serve in time) does not represent a serious or significant breach and the court should not debar his client from proceeding with the claim. He seeks relief from sanction.52.The payment on account of the indemnity costs award in favour of the Former Receivers remains unpaid and outstanding. Ms Behbehani has paid nothing on account of their costs notwithstanding that my order was made over a year ago. Despite the fact that she continues to seek the court’s indulgence in terms of relief from sanction, she offers nothing and, as far as I am aware, no approach has been made to the solicitors acting for the Former Receivers with a view to making good that ongoing default since the last hearing on 7 March this year. Mr Hunter is sufficiently realistic to concede in his written submissions that “the payment of the £40,000 is perhaps more of a sticking point” (see para 13 of his skeleton argument dated 2 March 2022). Nonetheless, he argues that the court should not impose this condition if to do so would stifle the claim. He relies on Ms Behbehani’s assertion that she is not in a position to pay at this time.53.Mr Hunter may or may not be aware but I have on previous occasions made it quite plain to Ms Behbehani and her legal team what would be required to satisfy the court that she was without the means to meet that payment on account. I accept entirely that the hearing on 7 March this year was the first occasion on which he had appeared on her behalf. By her own account, she has recovered at least £10 million worth of property in Spain as well as shares in two offshore companies. Her financial disclosure in terms of an ability to meet the order which the court has made is limited to a single sheet of paper with 12 lines presented as bullet points without any narrative explanation. There is no accompanying statement of truth as to the contents. It has not been signed. She gives no explanation whatsoever about her current domestic arrangements or how she is funding her domestic economy given that she claims to have no income and cash of less than £5002 in the single bank account she has identified. Even that bank statement has been redacted to remove any information about cashflow or the source of monies coming into the account. She does not provide any information about attempts which she might have made to raise a sum of £40,000 against a property portfolio with a gross value of c. £10 million. I am driven to the clear conclusion that I can have little confidence in the accuracy of the financial disclosure which Ms Behbehani has put before this court in support of her application for relief from sanction.54.In the context of the Denton test, I regard the failure to make that payment on account of costs as a significant consideration. I am also conscious of the fact that she is also arguably in breach of the time limit I stipulated as the very final concession for the filing and service of her pleaded case. Whilst it might be argued on her behalf that she had taken all steps necessary to file her document with the court at the eleventh hour and that the default is merely technical, that has to be seen in the context of the successive indulgences which she has already been granted by the court. My order from 20 May last year was quite clear: she knew what had to be done and we are now more than a year further down the road in this litigation. The Former Receivers are still without the contribution to their increasing costs which I directed they should have received many months ago. Far from this being a case where unreasonable deadlines have been imposed, Ms Behbehani has been extended a very significant degree of latitude in terms of her compliance with court orders and deadlines. It is unfortunate that there has been a lack of consistency in terms of her legal representation and what appears to have been a revolving door in terms of the lawyers employed by HA Law to deal with her case. But that is not something which should operate to prejudice the legitimate interests of the Former Receivers. It is a curious feature of this case that I have no information as to how Ms Behbehani is funding her own legal costs at the present time given her current financial presentation. It seems to me not unreasonable to infer that her legal costs are being defrayed one way or another by her current partner, Mr Barosso, who appears to be playing a significant role in pursuing, or assisting in the pursuance of, the enforcement of her matrimonial award.55.At the third, and final, stage of the Denton exercise, these matters must all be considered against the wider factual matrix of this case. For these purposes I bear well in mind the two criteria set out in CPR 3.9 and the overriding objective reflected in FPR 2010 r.1(1). Alongside the need for litigation to be conducted efficiently and at proportionate cost is the equally important principle that orders and time limits require strict and timely compliance if that efficiency is to be maintained.56.In terms of “all the circumstances of this particular case” including the manner in which Ms Behbehani and those instructed by her have conducted this litigation, I have borne well in mind the following submissions made by Mr Chichester-Clark on behalf of the Former Receivers. In my judgment, they are all well made. The following matters are all relevant in this context.(i)Ms Behbehani gave instructions to her legal representative as long ago as 20 May 2021 that she was not intending to pursue a claim against the Former Receivers. At that stage she had already recovered, or was in the process of recovering, the net value represented by six properties and two companies which represented corporate assets formerly belonging to Mr Behbehani. Her claim was formally abandoned in May 2021 and she was given a closed window of three months to make any further claims after which that avenue of litigation was expressly closed to her by reason of a debarring order.(ii)I reject entirely her suggestion, and am on the record as doing so, that her position on 20 May 2021 was informed or underpinned by some form of agreement, approved by the court, to the effect that she would discontinue her December 2020 application in return for the court permitting the New Receiver to transfer to her the Setubal shares for nil consideration. The contemporaneous court transcript makes it abundantly clear that there was no such agreement presented to the court and no quid pro quo for the abandonment of that claim.(iii)Despite the fact that she has, on her own account, recovered property in the liquidation with a potential value of £10 million, she has provided no proper excuse or explanation for her failure to comply with the court’s order. Even if part of that value has yet to be realised (and she has not provided the court with the assistance or information it is entitled to expect in this regard), the New Receiver, Mr Edwards, has confirmed that, prior to his departure to Brazil, he had transferred to her properties worth €4.6 million. Not only has she repeatedly sought extensions of time to comply with her obligations, she has consistently neglected to meet the indemnity costs order in terms of the payment on account which remains due and unpaid.(iv)During the course of the hearing on 1 July 2021 when she was attempting to lift the injunction in relation to the transfer of shares, she advanced through her solicitors allegations of professional dishonesty against the Former Receivers which were not only untrue but demonstrably so. Specifically, by letter dated 1 July 2021 sent to the court, but not copied to the solicitors acting for the Former Receivers, HA Law represented on her behalf that:-a.there had been a specific agreement to abandon her original claim against the Former Receivers in return for the transfer of the shares. I have dealt with this above;b.the New Receiver had been put under inappropriate pressure by the Former Receivers and his willingness to give the court an undertaking that he would not transfer the shares without further order was extracted under duress. That this allegation of litigation misconduct was plainly false was confirmed by Mr Edwards’ legal team who confirmed in response to a direct question from me that it was not true;c.there had been deliberate concealment by the Former Receivers of the report prepared on Ms Behbehani’s instructions by Hellas Commerce. In fact a copy of that report had been exhibited to a witness statement sworn by one of the Former Receivers, Mr Short, and its contents addressed in detail in the body of his statement. Its contents were also addressed by Mr Chichester-Clark in his skeleton prepared for the hearing on 1 July 2021. Each of those documents had been served on HA Law on 25 June 2020.57.I bear in mind that Ms Behbehani’s advertised claim against the Former Receivers is by no means negligible in terms of the sums sought. The potential merits of that claim are not matters before this court. However, the protracted delays in formulating her claim against the Former Receivers and her repeated requests for more time have to be seen against the background whereby, as at 9 July last year, HA Law had articulated the basis of her claims in their letter before action. Ms Behbehani’s own witness statement prepared at about the same time confirmed that she had all the information she needed to formulate her claims. In addition, her failure to meet a costs order in respect of which default has now been ongoing for over a year in circumstances where the applicants are already owed up to £400,000 and the absence of any proper or reliable explanation for her failure to comply with her obligations leads me to a clear conclusion that the applicants are entitled to the relief which they seek.58.For completeness I record that on 30 March 2022 Mr Hunter sent an email to the court which he has had the courtesy to acknowledge as being outside the process of what was agreed at court on 7 March as to the way forward. In that email, on his client’s specific instructions, he has proposed that the court should refuse to make the debarring order if his client makes a payment of £40,000 (the long overdue payment on account of the Former Receivers’ costs) within a further 30 days. The basis of that proposal appears to be her recovery of possession of one of the Spanish properties. Given that I had already determined in principle on 7 March 2022 that Ms Behbehani was not entitled to further relief from sanction, I do not propose to defer delivery of this written ruling and I decline to adjourn matters further. Ms Behbehani has had a significant measure of indulgence from this court for more than a year. 59.For these reasons, I have included within the approved order at paragraph 18 the debarring order which the Former Receivers seek. Having carefully weighed all these matters, including the requirements of CPR 3.9, this is the only fair outcome given the latitude already extended to Ms Behbehani.