Zarbafi v Zarbafi & Ors

Where a protected party’s litigation friend has a serious conflict of interest, the court must secure independent representation before determining substantive issues affecting that party. It may intervene of its own motion, even without an application by another party. Summary judgment is unsuitable where sham, laches or dishonesty issues depend on materially disputed evidence, unless the opposing evidence is manifestly incredible. Interim injunctions must then be assessed on the balance of convenience, rather than on assumed final ownership findings. Historic threats may justify protective relief, while marketing a wasting lease may be permitted up to the subject-to-contract stage where the commercial and welfare considerations narrowly favour that course.

Goli Zarbafi claimed beneficial interests in several properties and acted as litigation friend for her incapacitated father, Mahmood, who was also a claimant. Arsalan Zarbafi contended that the properties were beneficially owned by Mahmood alone. The Chancery Division granted summary judgment declaring the beneficial ownership and continued injunctions regulating Arsalan’s dealings with Eaton Square.

On appeal, Arsalan challenged the suitability of summary judgment, the findings of dishonesty, the continuation of the injunctions, and Goli’s ability to act as Mahmood’s litigation friend despite her competing beneficial-interest claim. The central issues were whether the ownership dispute and related defences were fit for summary determination, and how interim protection should be assessed pending trial.

Lord Justice Briggs, with whom Lord Justice Floyd and Lord Justice Rimer agreed, allowed the appeal against the First Order and set aside the summary declarations. The appeal against the Second Order was also allowed, the discretion was re-exercised, and the injunctions were continued subject to a variation permitting limited marketing of Eaton Square.

1. Conflict of interest. From at least the summary judgment application, Goli was seriously conflicted. She was asserting an interest which competed directly with the case that Mahmood owned the properties outright. Under the Civil Procedure Rules 1998, Part 21, the court has a duty to secure proper representation for a protected party. It may direct the removal or replacement of a litigation friend of its own motion. The need for an application supported by evidence under Part 21.7(2) does not prevent that course. Mahmood should have been separately represented, joined as a defendant to the ownership claim, and the proceedings stayed, save for urgent interim relief, until an unconflicted litigation friend was appointed. Goli was removed as litigation friend.
2. Summary judgment. The trust deeds could be displaced only by an arguable case that they were shams. Fresh evidence supported such an argument, and the possible application of the principles in Tribe v Tribe [1996] Ch 107 and Tinsley v Milligan [1994] 1AC 340 could not be resolved summarily. The laches defence likewise required a trial. Although dishonesty may be determined on summary judgment, the court must carefully analyse the evidence and may reject a denial only where it is manifestly incredible. The judge had not addressed materially conflicting evidence from Arsalan.
3. Injunctions. After the ownership findings were set aside, continuation of the injunctions had to be determined by the balance of convenience on the footing that Goli had a real case fit for trial. Earlier threats and conduct during family litigation justified a serious apprehension of renewed interference. The injunctions therefore remained appropriate. However, divergent expert evidence concerning the value of the wasting lease, and the need to secure future accommodation for Mahmood, narrowly favoured permitting marketing up to a subject-to-contract stage. A binding sale and dealings with the proceeds remained prohibited.

• Court of Appeal (Civil Division) — [2014] EWCA Civ 1267: allowed the appeal against the summary judgment order and varied the injunction order.
• Chancery Division — Mr Charles Hollander QC, sitting as a deputy High Court judge, granted summary judgment on 7 May 2014 and continued the injunctions on 20 June 2014.