Habib Bank Ltd v Liverpool Freeport (Electronics) Ltd & Ors

Delay in delivering judgment does not itself justify appellate intervention. The appellate court must determine whether the judgment is unsafe and whether allowing it to stand would be unfair. Excessive delay may nevertheless require particularly careful scrutiny of factual findings and reasons.

A court may draw such inferences from a party’s failure to give evidence as logic and common sense permit. Where delayed and incomplete reasons, inconsistent findings and unresolved material evidence undermine confidence in the trial judge’s assessment, a retrial may be required. Rectification and estoppel by convention depend on proof of a sufficiently clear common intention or assumption; an imprecise belief that some security existed is insufficient.

The Bank appealed against decisions made in two actions tried together by His Honour Judge Kershaw QC. In the first, the Bank sought to enforce a guarantee and mortgage against Mr Iqbal. In the second, Mrs Iqbal, as assignee of two companies, alleged that the Bank had wrongly debited their accounts and wrongfully exercised a lien over goods.

The trial judge held that Mr Iqbal had no personal liability under the security documents. He also made findings generally favourable to Mrs Iqbal, but did not determine the companies’ account balances conclusively. His final judgment followed lengthy delay, two instalments of draft reasons and a Scott schedule containing abbreviated and inconsistent findings.

The central questions were whether the guarantee or mortgage secured the companies’ indebtedness and whether the findings supporting Mrs Iqbal’s claims were safe.

1. The Bank’s appeal against Mr Iqbal was dismissed. On its natural construction, the guarantee secured a dollar letter-of-credit facility granted to Streed UK Ltd and was limited to $146,000. The owner of the dollar account providing the deposited security was Streed, so Mr Iqbal had signed on its behalf rather than as a personal guarantor. The words concerning other liabilities remained related to the stated principal amount and did not make the guarantee unlimited.

2. Rectification was unavailable. The documents suggested that Mr and Mrs Iqbal signed security documents in blank and relied on the branch manager to complete them as required for the facilities sought. The evidence did not establish a different common intention shared by Mr Iqbal and the Bank.

3. The mortgage secured Mr Iqbal’s own liabilities and did not indirectly secure the companies’ debts because he incurred no personal liability under the guarantee. Although the documents suggested a general assumption that the property provided some security for one or both companies, they disclosed no sufficiently clear joint assumption about how the security operated, which indebtedness it covered or any applicable limit. The claim based on estoppel by convention therefore failed. It was unnecessary to decide the separate contention, based on Amalgamated Property Co v Texas Bank [1982] QB 84, that estoppel was being used as a sword.

4. The Bank’s appeal in Mrs Iqbal’s action was allowed and her claim was ordered to be retried before a different judge. Following Cobham v Frett [2001] 1 WLR 1775, delay alone did not invalidate the judgment. The excessive and unexplained delay nevertheless required careful scrutiny of the factual findings.

5. That scrutiny disclosed inconsistent treatment of alleged cash deposits, abbreviated findings in place of reasoned conclusions, omissions concerning disputed items and a failure to resolve the account balances after trying that issue. Those defects, together with the unusual production of the judgment, deprived the Court of confidence in the assessment of Mrs Iqbal’s evidence.

6. Mrs Iqbal bore the burden of proving that the Bank was indebted to the companies. Contemporary evidence indicated instead that the companies had conducted themselves as substantial debtors. Mr Iqbal’s failure to give evidence did not necessarily prove any fact, but logic and common sense permitted the Court to regard his silence as casting doubt on the case where he had played the principal role in relevant dealings.

1. Court of Appeal (Civil Division): The Bank’s appeal concerning the guarantee and mortgage was dismissed. Its appeal concerning Mrs Iqbal’s claims was allowed, the relevant findings were set aside and the claim was directed to be retried before a different judge.

2. Queen’s Bench Division, Manchester District Registry, Mercantile List: His Honour Judge Kershaw QC held that Mr Iqbal had no personal liability under the guarantee or mortgage. He made findings generally favourable to Mrs Iqbal concerning the companies’ accounts and the alleged wrongful lien, but did not determine the account balances conclusively.