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	England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Bank Of Credit & Commerce International SA & Anor v Zafar [2002] EWCA Civ 1896 (22 November 2002) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2002/1896.html Cite as: [2002] EWCA Civ 1896

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IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE CHANCERY DIVISION
COMPANIES COURT
(MR JUSTICE RIMER)

		Royal Courts of Justice Strand London, WC2 Friday, 22nd November 2002

Friday, 22nd November 2002

1. LORD JUSTICE PETER GIBSON: I will ask Carnwath LJ to give the first judgment.
2. LORD JUSTICE CARNWATH: We have before us an application to extend time for appeal, and to admit new evidence.
3. The background is that on 25th January 2001, Rimer J gave judgment against the defendant, Mr Zafar, for a total of £985,742.41 (of which £356,977.37 was the basic claim to which was added interest) plus costs. The claim was based on allegedly dishonest appropriations of money paid into the account of a company called Transect Ltd.
4. Mr Zafar was unrepresented at that hearing. His former solicitors had come off the record in August 2000, following withdrawal of legal aid. The judge satisfied himself that Mr Zafar was aware of the hearing date, and in the absence of any application for an adjournment decided to proceed with the case in his absence.
5. The case was presented by Mr Dicker QC, and was based on the evidence of Mr Humphry Hatton, of Deloitte & Touche, for the liquidators. There was no evidence for Mr Zafar, he having failed to comply with directions to exchange witness statements. According to Mr Hatton's evidence, Mr Zafar was employed by BCCI SA, as head of the group's Africa III Region Department (and subsequently Africa II Region Department) from August 1982 to September 1990, when he was made redundant. In the course of earlier proceedings before Lightman J (the "stigma proceedings" -- see BCCI v Ali (No.2) (1999) 4 All ER 83), in which Mr Zafar had been a claimant, an internal memorandum had come to light raising questions over the use of a so-called Southern Africa Region Call Account, at BCCI Paris, apparently operated on the "verbal instructions" of Mr Zafar, which was used to make payments to Transect, of which his two brothers were sole shareholders and directors. As a result of further investigations, Mr Hatton identified 16 payments, totalling the amount of £356,000 odd to which I have referred, which had found their way to Transect allegedly at the instigation of Mr Zafar. The judge accepted that evidence and gave judgment for that sum plus interest and costs.
6. On hearing of the order (according to him on 31st January 2001) Mr Zafar sent a fax to the judge asking him to set aside the order. The judge replied the following day pointing out that Mr Zafar had a right to apply to set aside the judgment under CPR 39.3, and advising him to proceed promptly. On 23rd February 2001, BCCI's solicitors wrote to Mr Zafar pointing out that the time for appealing had expired, and suggesting that if he intended to appeal he should do so without delay. An application to set aside the judgment was lodged on 1st March 2001. That came before Rimer J after some adjournments on 2nd November 2001, at which time Mr Zafar was represented by Mr Jacob (who has also appeared before us), instructed by Finers Stephens Innocent. By that time, Mr Zafar had filed a number of witness statements, purporting to explain both his reasons for failing to attend the trial and his defence on the merits.
7. To succeed under CPR 39.3 he had to get over three hurdles: (i) that he had acted promptly, (ii) that he had good reason for not attending the trial, and (iii) that he had reasonable prospects of success at trial. As the judge rightly said, he only had jurisdiction to reopen the matter if Mr Zafar could satisfy all three tests. There was no residual discretion. The judge went into the history in some detail. As to the first point he concluded "with some hesitation" that Mr Zafar had applied with sufficient promptness, taking account of the fact that at the time he was acting in person. On the second point, however -- good reason for not attending trial -- he concluded against Mr Zafar. He said this:

"In summary, this is a case in which Mr. Zafar knew that the trial was due to start during the week commencing 22nd January, knew that it had not been adjourned, but still did precisely nothing to find out when it was starting. A telephone call to Miss Scully [of the Chancery Listing Department] was all that was required to find that out, if he had any intention of doing so. He was, however, anyway told of the start time and place by Lawrence Graham on 23rd January, but he deliberately chose not to attend, preferring instead to pretend that he had not received the letter and to write his own letter of the same day."

He then refers to Mr Zafar's explanation as to why he did not attend the trial in his witness statement. The judge continued:

"For reasons I have given, and in the light of the correspondence to which I have referred in some detail, I regard that as a disingenuous and untruthful explanation. I confess that I do not understand what Mr. Zafar's agenda was in his decision not to attend the trial, but he has not satisfied me that he had a good reason for not doing so."

8. In reaching those views on Mr Zafar's veracity the judge may also have had in mind what, in his previous judgment, he had referred to as "Lightman J's blistering criticism of Mr Zafar's truthfulness and reliability as a witness" in the `stigma proceedings'. Accordingly, the application failed under the second test. Having reached that view, the judge dealt more shortly with the third test.
9. On the third point -- the prospects at trial -- the judge summarised Mr Zafar's case as presented by Mr Jacob in terms similar to the case presented before us. He said:

"Mr Zafar's case is that he knows nothing about Transect, or what his brothers were doing, but that there is no reason to assume other than that these were lawful transactions effected by his brothers with BCCI clients whom he says his brothers would have met at his house."

A little further down the same page, he continued:

"Mr Zafar says that the burden is on BCCI to prove that he was party to the dishonest conduct that they level at him, and he says that they have simply failed to do that. The documents relating to the various transactions appear to show that a good number of BCCI personnel all played their role in the various internal BCCI operations, resulting ultimately in the various payments to Transect; and he says that it is improbable that he had, or could have, procured them all to take part in the unlawful conspiracy alleged against him. He says that a proper search amongst BCCI's millions of documents would be likely to yield documents providing conclusive evidence of proper instructions for each of the 16 transactions. He says that there is no evidence that BCCI has suffered any loss, because none of its customers appear to have claimed their accounts have been wrongfully debited with the Transect payments. He says that a defence of laches or acquiescence would be available to him because the claim is substantially based on a report about these transactions dating back to about 1990, although the action was only started in 1999. Mr. Jacob also took me through all the transactions, emphasising what he said was a paucity of evidence showing that Mr. Zafar had played any key role in the making of the payments."

The judge expressed his conclusions on that, as follows:

"The question under this head of the application is whether Mr. Zafar has a reasonable prospect of success at a new trial. I do not believe that requires me to be satisfied that he would be likely to win, nor am I so satisfied. In my view, however, it must at least require me to be satisfied that he has more than a fanciful prospect of defending the claim. I approach that by asking myself how I would be likely to deal with an application by BCCI for final judgment under Part 24. Were such an application before me, I have little doubt that I would dismiss it and hold that Mr. Zafar ought to be entitled to defend the claim, to test BCCI's evidence at trial and to adduce such positive evidence as might be available to him by way of an answer to the claim, although at the moment there appears to be relatively little of that. This is a major claim in which the burden of proof is squarely on BCCI, and Mr. Jacob's very cogent argument for Mr. Zafar persuaded me that he would at least have a good arguable case for contending that BCCI do not establish their claim to the requisite standard of proof. I hold, therefore, that Mr. Zafar does satisfy the third requirement of Part 39.3(5).

Despite my conclusion on this part of the application, I have explained why I consider that I have no choice but to dismiss it. I confess that that has given me some anxiety, for perhaps obvious reasons. However, Part 39.3 makes it plain that it is not enough for Mr Zafar merely to show that he has a reasonable prospect of success at a new trial. He must also satisfy each of the other two requirements as well, and he has failed on one of them. That leaves me with no jurisdiction to decide this application in his favour."

One notes from that passage that the judge expressed some anxiety over his conclusion, no doubt reflecting the fact that the defendant had lost, albeit through his own fault, the chance to present an arguable defence to a very substantial claim.

10. The present application for permission to appeal was lodged on 19th November 2001 following that judgment by Mr Zafar's solicitors. That was an appeal against the original judgment. There is no appeal against the judgment of November 2001 in which Rimer J refused to set aside the earlier judgment. The grounds of appeal, in summary, are that there was no evidence that the defendant had caused payments out of BCCI to Transect; no evidence that any customer had complained about unauthorised payments; and no evidence of loss by BCCI. The grounds also raise a distinct issue that the judge had been misled in relation to one document, which he was led to believe was a forgery; that is the subject of the application to admit new evidence to which I shall come.
11. Hale LJ on the paper application adjourned the matter for oral hearing on notice. She identified as a particular matter the question: in what circumstances is it a good ground for extending time to file an Appellant's Notice that the applicant has in the meantime been pursuing an application under CPR 39.3 which has failed because of the criteria in rule 39.3(5).

The extension of time

12. The notice of appeal should have been filed within 14 days of the order, that is by 8th February 2001. It was filed more than nine months late.
13. There is no evidence to explain that delay, other than that given in the Notice of Appeal, supported by a Statement of Truth from the solicitor. She notes that Mr Zafar was unrepresented until about May 2001; she refers to the judge's letter of 8th February 2001 which drew attention to the possibility of applying to set aside his order; she continues:

"While that application was proceeding (and it proceeded for many months before the Appellant was represented) it would or might have caused a waste of costs if the appellant had sought to appeal against the order."

There is no direct evidence as to what, if any, consideration was given to the possibility of an appeal either by Mr Zafar before he was represented or by his advisers thereafter.

14. CPR 54.4(2) fixes a time of 14 days for filing a Notice of Appeal, and it is provided that an application to vary the time must be made to the appeal court. A useful checklist of relevant considerations is that in CPR 3.9, which deals with the "relief from sanctions" (see Sayers v Clarke Walker [2002] 1 WLR 3095). Those considerations include the interests of the administration of justice, the promptness of the application, whether the failure to comply was intentional, whether there is a good explanation, the extent of compliance with other procedural requirements, whether the failure was caused by the party or his legal representatives, and the effect on each party of the failure to comply or the grant of relief. The court must also keep in mind, of course, the overriding objectives of dealing with cases justly, including dealing with them "expeditiously and fairly" (CPR 1.1).
15. The real emphasis of Mr Jacob's submissions is on the effect on the parties, the prejudice to Mr Zafar and the relative lack of prejudice to the claimants. The main part of his submissions was directed to showing, as he had done before Rimer J in November, the paucity of actual evidence of loss by BCCI, and of direct involvement by Mr Zafar -- either in authorising payments or in influencing those who made them. He says that BCCI's case was "paper thin" and based on "suspicion, innuendo and speculation". The prejudice to Mr Zafar, he says, is obvious -- he is left facing a judgment for a £1 million, which he had good prospects of defending, with "his reputation in tatters". On the other hand, the extra delay can be of little prejudice to BCCI, whose losses, if they occurred at all, were suffered over 12 years ago.
16. As it seems to me, the other points in the checklist are all against Mr Zafar. The interests of administration require finality in proceedings and that time-limits are observed. The application was not made promptly; it was nine months out of time. Mr Jacob does not suggest there is any excuse for the failure. He accepts that the fact that an application had been made to set aside the judgment was not in itself a bar to lodging an application for permission to appeal. We have no direct evidence of why the failure occurred, nor of the extent to which the blame (after May 2001) was shared with his advisers. As to compliance with other rules, Mr Zafar failed to comply with directions for lodging evidence before the trial; and there is no appeal against the finding that his failure to attend the trial was deliberate, and that his application to set aside the judgment was based on statements which were "disingenuous and untruthful". He was in every sense the author of his own misfortunes.
17. The last point is in my view the determining consideration. Mr Zafar had his opportunity to be heard and he failed to take it. CPR 39.3 ensures that where there is a good reason for such failure, the court can give the defendant a second chance, provided his case has reasonable prospects and he acts promptly. The converse is that, if he had no good reason for failing to attend, then in normal circumstances he will not be able to reopen the matter, however strong his case may appear to be. To that extent it is a draconian provision, but one reflecting the overall objectives of fairness to both parties, expedition and finality. The defendant is entitled to his day in court, but not a day of his own choosing. The court's discretion to extend time for appeal should not be seen as a means of getting round the clear purpose of that rule. The claimant chose to use the 39.3 route in a dishonest attempt to persuade the court that his failure to attend the hearing was excusable. Having failed in that attempt, the court should not in my view allow him to achieve the same end by a different course.
18. I would therefore refuse an extension of time.

New evidence

19. There were two points raised in the notice of appeal, but only one has been pursued. It concerns a document, dated 6th June 1990, which on its face appeared to be an instruction from a company called Loch Ltd to BCCI Newcastle to pay $61,570.44 to Transect Ltd. The potential significance of this was as evidence that at least one of the payments (No 15) on which Mr Hatton relied had been duly authorised by a customer. What the Notice of Appeal says is this:

"The Claimants alleged that the Defendant somehow caused payments out of the accounts of customers to be made without the authority of the customers and for the benefit of a company called Transact Limited. The Claimants in fact produced at the trial a letter of authorization from a customer called Loch Limited directing payment to Transact Limited, but on the basis of smudging across the copy suggested (and the judge accepted) that the letter may have been a forgery being a composite of two letters. In fact the Claimants at all times had in their possession a clean copy of the letter which they failed to disclose to the Defendant or to the Court and only produced in the course of the application to set aside the judgment by exhibiting it to the second witness statement of Mr Hatton dated May 25 2001."

20. In his judgment of November 2001 the judge referred to this matter, having reviewed the other evidence. He said this at page 83 of the bundle:

"Mr. Dicker properly drew my attention to what purports to be a letter of instruction from Loch requesting BCCI to make one of the payments to Transact(sic) Ltd. There are various oddities about the letter which cast doubt on its authenticity, and Mr. Dicker suggested that its appearance indicates that it may be a false composite of two separate halves. If it was a genuine instruction, then it is surprising that Mr. Zafar has not explained it. The evidence satisfies me that none of the other payments to Transect was authorised, and nor am I satisfied that this one was either."

The reference to "various oddities" can be understood by reference to the transcript of the argument of the hearing before Rimer J on 24th January. Mr Dicker referred to this document and commented as follows:

"My Lord, I say a letter purporting to be from Lock. There are a number of oddities about it. One, the liquidators have been unable to find the original of the letter; two, it is a letter that although addressed to BCCI Newcastle, appears to have come into London, because it certainly is sent out from London by fax on the same day -- one can see that from the top. It is not clear how the letter was received. There does not appear on this photocopy at least to be a fax transmission report showing it was sent by Lock Limited. As I say, we cannot find, or the liquidators cannot find, the original. Half way down the page just above the words `For and on behalf of Lock Limited', your Lordship will not that the copy changes tone. There is a rather sort of smudgy black line across. That is something which I was going to suggest to Mr. Zafar often happens if you cut and paste two documents and then photocopy them together."

The transcript also notes Rimer J commenting at the bottom of the same page:

"How, from this letter, is BCCI supposed to know who Transect Limited is? Does Lock assume they already know all about Transect Limited?"

He added:

"It is just rather an odd letter, is it not? Unless there was a regular series of instructions from Lock to the bank to pay Transact Limited, where one could understand it, but if this is a one-off letter it is a very odd one, is it not?"

Mr Dicker replied that this was another matter to be added to the list of oddities.

21. Mr Jacob accepts that reliance on new evidence is strictly controlled; in particular the evidence should be such as would probably have had an important influence on the trial, following the principles in Ladd v Marshall [1954] 1 WLR 1489. What is suggested is that if the judge had had the clean copy he would have reached, or might have reached, a different view.
22. In support of that submission Mr Jacob took us through the documents relating to payment 15 to show that they did not justify the inference of anything untoward. However, that is not the issue for us, which is much more limited. The question is not what a more detailed analysis of the documents might have revealed, but whether the judge's conclusion would have been likely to have been different if he had had a clean copy rather than a smudged copy of the letter of 6th June 1990. In my view, this has not been shown. It is clear from the passages I have read that the point about smudges is very much an incidental point. The other "oddities", about this letter, to which the judge referred would have remained. Furthermore, it was but one aspect of one of 16 transactions. The relative insignificance of this point in the judge's mind is underlined by the lack of any reference to it in his November judgment, when he was reviewing, with some "anxiety", the merits of Mr Zafar's case.
23. In my view, therefore, there is no case for admitting this evidence. Nor does this point do anything to reinforce the case overall.
24. In conclusion, I would therefore dismiss the application to extend time and the application to admit new evidence. In those circumstances the application for permission to appeal does not arise.
25. LORD JUSTICE KAY: I agree and would only wish to emphasise one aspect of the matter. The court is generally not unsympathetic to a litigant in person who may fail to take a step within the proper period through ignorance of what is required of him. This, however, is not such a case.
26. On 23rd February 2001 BCCI's solicitor, Lawrence Graham, wrote to Mr Zafar pointing out that the time for appealing the order had expired and suggested that if he intended to apply for permission to appeal he should do so without delay. It is clear that the only reason why he did not do so is because he wished to persist in his untruthful application to set aside the judgment. In such circumstances, the failing is not one of lack of knowledge but, rather, one of an attempt to upset the judgment by other dishonest means. In such circumstances it would, in my judgment, run counter to the overriding objective of the CPR to extend time.
27. I, thus, share the view of Carnwath LJ and agree with his judgment in all other aspects.
28. LORD JUSTICE PETER GIBSON: I agree with both judgments.

Order: Applications dismissed with costs to be determined in accordance with section 11(1) of the Access to Justice Act 1999.