Griffins Successful in Defending Counter Claim of Sham in Respect of Secured Lending to Associate of Insolvent Company

Partners at Griffins were successful at trial this week in defending a counter claim of sham brought in possession proceedings in relation to secured lending.

 

In October 2020 Stephen Hunt and Kevin Goldfarb were appointed as joint administrators of Berkeley Asset Finance Ltd (“BAFL”) and on 24 September 2021 it moved into creditors’ voluntary liquidation.  BAFL was part of a group of companies owned and controlled by Nurul Miah which entered into formal insolvency in 2020 following the intervention of the Solicitors Regulation Authority after it was discovered that around £10.5m of client account funds had been misappropriated with a significant portion flowing into and through BAFL.

 

Upon a review of the books and records of BAFL evidence was located which showed that BAFL had lent £65,000 to Lalou Tifrit.  This evidence included a signed facility letter and a charge which had been registered at Land Registry against a property owned by Mr Tifrit (“the Property”).  Mr Tifrit had worked for BAFL and other associated group companies although the exact terms of how he provided his services, including whether he was an employee or a freelance consultant was not clear from documentation recovered.

 

Mr Tifrit had failed to repay the money lent to him by BAFL in accordance with the loan documentation.  When initially contacted by the office holders Mr Tifrit claimed he could only afford to pay £20 per month.  On 20 August 2021 BAFL appointed a fixed charge receiver and on 23 December 2021 the receiver issued a claim against Mr Tifrit and others who may have been residing at the Property seeking vacant possession of the Property.  In Mr Tifrit’s Defence dated 25 April 2022 and his Part 20 Claim dated 31 May 2023 he asserted that the money he received was either a bonus or funds he was owed for work he carried out for BAFL and its associated companies and the charge and lending documents were a sham designed to give the appearance that BAFL had a larger book of loans than it really did.  This is despite Mr Tifrit seeming to admit the debt was owed in his first correspondence with Griffins and that the £65,000 lent to him was a small fraction of the £2m of current assets reported in the 2019 accounts of BAFL.

 

At trial, Recorder Mullen found the evidence from Griffins as to the documents recovered by the joint liquidators honest and helpful.  The judge noted that the account of Mr Tifrit changed between his Defence, witness statement and his cross examination.  It was also found that a 2017 service agreement disclosed by Mr Tifrit, which stated the address of the employing company as Griffins despite being over 3 years prior to the appointment of Stephen Hunt and Kevin Goldfarb as joint administrators, was a dishonest confection for the purposes of bolstering Mr Tifrit’s claim which could only have been done by Mr Tifrit or at his behest.  Ultimately Recorder Mullen found entirely in favour of BAFL in respect of the Counter Claim and ordered that vacant possession be granted to the Receiver.  Further, the conduct of Mr Tifrit warranted an order that Mr Tifrit pay the costs of BAFL with said costs to be assessed on the indemnity basis if not agreed.

 

Stephen Hunt of Griffins said “This was what should have been a fairly simple and straight forward application to enforce security in respect of well documented lending.  Mr Tifrit chose to put forward a defence of sham despite no independent evidence to support that case and this caused the matter to take much longer to come to trial and incurred significant further costs dealing with the claims made in his Defence.  We are pleased that the judge agreed with out view of what the documentary evidence shows and has found in favour of BAFL.  The indemnity basis of the legal costs award will increase the recovery of the costs incurred by the liquidation estate and so will reduce how much creditors will have to bear the costs of the consequences of the Defence Mr Tifrit chose to deploy.”

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Stephen Hunt and Kevin Goldfarb were assisted by Jim Varley at Devonshires and Cecily Crampin of Falcon Chambers. 

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Stephen Hunt of Griffins added "We continue to bring claims that will lead to a return to creditors."