Bankrupt’s Set Aside Claim Hopeless And Bound To Fail Says Court

Bankrupt’s Set Aside Claim Hopeless And Bound To Fail Says Court was a claim by Mohammed Razeem against Vibhutiben Desai in respect of the case unsurprisingly named Razeem v Desai [2024] EWHC 689 (Ch).

Master Marsh sitting in retirement handed down this 50 paragraph judgment on 2 April 2024 said it was:

… hopeless and is bound to fail

The incurious observer perhaps could be forgiven for not noting both parties to this litigation were represented by way of direct access. Perhaps this chimes with the fact the two parties had become accustomed to litigation as the judge highlighted that there had been “multiple” prior claims and applications. 

Title To The Bankrupt’s Set Aside Application

However, a curious observer may note this was an application by Mr Razeem who on 27 February 2020 had been the subject of a bankruptcy order. Ordinarily, the assets and property of the bankrupt within the meaning advanced in Section 436 of the Insolvency Act 1986:

would appear to include claims such as the one brought by Mr Razeem; vest in the Trustee in Bankruptcy under Section 306 of the Insolvency Act 1986. One may wonder how the matter came to be heard at all without assignment from the Trustee in Bankruptcy.

Perhaps it was the litigation labyrinth at large, historically occasioned by not one but two civil restraint orders against Mr Razeem, which led the Trustee in Bankruptcy to adopt a neutral stance as opposed to descending into what might have looked a rather arid arena for the bankruptcy estate. That is of course pure speculation but nevertheless, the Trustee did keep the door ajar in respect of cost orders. In light of the judgment handed down this did not bear any fruit for the bankruptcy estate.

Grounds Of Bankrupt’s Set Aside Application

Mr Razeem sought to set aside four judgements Mrs Desai had obtained on the grounds of being obtained by fraud.

The newsworthy factual background fleshed out by the judge noted the case had its roots (and potential rewards) in the sale of a newsagent by Mr Razeem to Mrs Desai in 2012 for it then to be flipped and sold back in 2014.

The judge articulated seventeen instances in which Mr Razeem was shown to have taken steps to set aside the judgments obtained by Mrs Desai or where he had submitted she acted fraudulently in respect of the claims made.

Master Marsh seemed to struggle with Mr Razeem’s particulars of claim. His deprecation of them said:

The pleading is prolix, repetitive and hard to follow which made the following allegations that the judge noted were serious:

(1) Mrs Desai had signed the 5-year lease, despite her alleged assertion to the contrary and that was the lease she was returning, not a 15-year lease. [Paragraphs 24 and 37]

(2) Mrs Desai misled the court when saying that her signature on the 5-year lease was a forgery. [Paragraph 35,36,37,39,40 and 41]

(3) Mrs Desai lied to the court when she said she paid £88,000 for the business including a 15-year lease. [Paragraph 26,32,39,40,42 and 47]

(4) Mrs Desai denied that she had signed the Memorandum of Sale in 2012. [Paragraphs 44,45 and 46]

(5) A handwritten record of payments submitted by Mrs Desai’s husband comprising £51,099 paid to MR Multibusiness Limited to support the claim for £88,000 was fraudulently tampered with by him. [Paragraph 27]

(6) The stock taking notes that formed the basis of the agreed price for stock were fraudulent and Mr Desai gave false evidence about them. [Paragraphs 61 and 62]

Alleged Non-Disclosure By Defendant To Bankrupt’s Application

A key feature of Mr Razeem’s claim was the alleged failure by Mrs Desai to disclose to him her husband’s conviction of an offence at the Newsagent which made operating it as a corner shop untenable.

However, the court said:

This court has been provided with Mrs Desai’s particulars of claim but not Mr Razeem’s defence. There is no basis for inferring that the reason Mrs Desai chose to re-sell the business was an issue in the claim. There is a very brief mention of the background to the re-sale in 2014 in paragraph 8 of the judgment. The fact there was an agreement to re-sell was not in dispute (hence Mrs Desai obtaining summary judgment on the unpaid instalments prior to the trial). The focus of the trial was whether the agreement included or excluded stock. There is therefore no basis for saying that there was an obligation to disclose documents relating to the conviction, such as communications with the Probation Service about Mr Desai’s supervision, his unpaid work and appearance in the Sex Offenders Register.

The particulars of claim in the 2023 claim appear to assume that any such document would be relevant because they were adverse to Mrs Desai’s claim to recover the sum agreed for stock. However, there is no freestanding obligation in CPR rule 31 to disclose adverse documents unless (a) there is an order for disclosure and, if no other type of order for disclosure is made, (b) they fall within the test for standard disclosure as documents which adversely affect the disclosing party’s case or another party’s case. In other words, they must relate to an issue between the parties in the claim. Mr Razeem does not plead that the conviction was relevant to any issue in the claim. It is trite that documents relating only to cross-examination as to credit and to no other issue in the trial are outside the scope of standard disclosure: see Favor Easy Management Ltd v Wu [2010] EWCA Civ 1630.

It follows that Mr Razeem’s case based upon the failure to disclose Mr Desai’s conviction is hopeless and is bound to fail. It fails as a matter of fact, given the disclosure of the charge, and it fails as to materiality on both the first and second limbs of the materiality test in RBS v Highland Partners.

…

I am satisfied that Mr Razeem’s claim is

hopeless and is bound to fail. The additional allegations he makes, to the extent they are coherent, do not allege dishonesty that is relevant or material. I will therefore make an order striking out his particulars of claim and the claim form. It is therefore unnecessary to consider the application for security for costs.