Simantob v Shavleyan (t/a Yacob's Gallery), Court of Appeal - Queen's Bench Division, August 03, 2018, [2018] EWHC 2005 (QB)

Resolution Date:August 03, 2018
Issuing Organization:Queen's Bench Division
Actores:Simantob v Shavleyan (t/a Yacob's Gallery)
 
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Neutral Citation Number: [2018] EWHC 2005 (QB)

Case No: HQ16X01517

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

Royal Courts of Justice

Strand, London, WC2A 2LL

Date: 03/08/2018

Before :

THE HONOURABLE MR JUSTICE KERR

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Between :

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JAMES RAMSDEN QC (instructed by Devonshires Solicitors) for the Claimant

KEITH KNIGHT (instructed by Greenwood & Co) for the Defendant

Hearing dates: 11th-12th June 2018

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Mr Justice Kerr :

Summary

  1. In this case I have to decide whether Mr Shavleyan, the defendant, still owes money to Mr Simantob, the claimant. They are businessmen and dealers in antiquities. Their association goes back many years. In 2010, their relations became difficult. A settlement agreement was reached that year and Mr Shavleyan paid Mr Simantob various sums under it.

  2. But Mr Shavleyan did not pay all he owed. That led to this suit and to Master McCloud granting summary judgment last year, for 600,000 US dollars ($) plus $171,999 interest and assessed costs. Mr Shavleyan accepts that judgment. He did not appeal against it. The Master left open the issues which have now been tried before me over two days.

  3. The main issue now is whether Mr Shavleyan's obligations under the 2010 settlement agreement have been varied and replaced by new and different obligations limiting his liability to the amounts already covered by the summary judgment in favour of Mr Simantob; or whether, as the latter contends, his obligations are unchanged since 2010 and largely undischarged.

  4. As at 13 June 2018, Mr Simantob calculates his claim at $2,375,001, over and above the existing and partially unsatisfied judgment debt, of which, as at 12 June 2018, GBP (£) 266,240.59, including judgment debt interest, remained unpaid. Mr Shavleyan accepts liability only for the outstanding £266,240.59 and any further judgment debt interest, nothing more.

  5. Mr Shavleyan provided certain postdated cheques, mostly not presented due to an expectation that they would be dishonoured if presented. One was presented and honoured; one, for $220,000, was presented and dishonoured. I may have to decide whether $20,000 of the proceeds of that cheque is included within the summary judgment debt or not. Mr Simantob says the $20,000 forms part of the $2,375,001 due or, alternatively, that it is in any event due.

    Findings of Fact

  6. The parties are of Jewish Iranian heritage. Both deal in antiquities. They communicate in Farsi and English. Mr Simantob is resident in Los Angeles. Mr Shavleyan lives in London and trades as Yacob's Gallery in Davies Street, Mayfair. Their business relations and family connections go back some 20 years. Both are part of the close knit Persian business community in London. Both parties gave written and oral evidence. There were conflicts of evidence.

  7. Neither was a reliable witness in all respects; nor was either straightforwardly dishonest. Both were self-serving; neither was meticulous or accurate in matters of detail. I preferred the evidence now of one, now of the other. It was necessary to compare their versions issue by issue. I find that Mr Shavleyan had far greater expertise than Mr Simantob on the subject of antique Islamic art and the market for it, particularly the London market.

  8. In 2008, Mr Simantob acquired 10 pieces of tiraz (inscribed medieval Islamic textiles) and five pieces of Savafid (17th century Persian) and Turkish textiles, for a modest price. Mr Shavleyan said that in spring 2010 Mr Simantob told him he had acquired them for 10,000 euros (€). Mr Simantob did not wish to disclose his acquisition price, eventually denying that it was €10,000. I accept that Mr Simantob told Mr Shavleyan he had acquired the pieces for €10,000, whether or not that was the actual acquisition price.

  9. He placed them with Mr Shavleyan by agreement. There is a dispute, which I need not resolve, about the terms of the placement. Mr Shavleyan said he purchased the pieces from Mr Simantob outright, for £226,000. Mr Simantob said he consigned them to Mr Shavleyan for the latter to sell in return for, according to his pleading, an unspecified ``payment of a percentage of the ... sale proceeds''.

  10. I accept Mr Shavleyan's evidence that by, at the latest, spring 2010 no buyer had been found for the pieces and that Mr Shavleyan offered to deliver them back to Mr Simantob on the basis that Mr Simantob would pay Mr Shavleyan £206,000 for them, £20,000 less than the sum of £226,000 previously identified by Mr Shavleyan (whether or not agreed) as the amount he should pay Mr Simantob for the pieces.

  11. It is common ground that Mr Shavleyan then placed them for auction with Sotheby's and that the suggested guide price for the items in the auction catalogue was £300,000 to £500,000. Mr Simantob accepted that Mr Shavleyan may have ``assumed'' he, Mr Shavleyan, could purchase the items for £226,000. I accept Mr Simantob's evidence that he saw the guide price in the Sotheby's catalogue and objected to the sale of the items at auction.

  12. I infer what I consider the most likely explanation: Mr Simantob considered the items belonged to him and feared that Mr Shavleyan did not share that view and would attempt to retain the proceeds of sale at auction, less £226,000; whereas Mr Simantob considered that Mr Shavleyan was entitled only to a much lower unspecified, undocumented percentage of the proceeds.

  13. The potential for a dispute to emerge was compounded when the auction took place on 14 April 2010. The items were sold as lot number 165. The auction price achieved was £1.4 million, of which the net proceeds after Sotheby's commission of £200,000 would be £1.2 million. The question that arose was which of the parties became entitled to that amount, or the lion's share of it.

  14. Mr Simantob implausibly denied feeling angry about what had happened and denied seeking out Mr Shavleyan to demand the proceeds of sale during the second half of April 2010. However, there was contact between them that month, either in Israel (where Mr Shavleyan's wife was giving birth), London or both. I accept Mr Simantob's evidence that there was a meeting at Mr Shavleyan's gallery on or about 28 April 2010 to discuss the issue.

  15. I accept also and that an associate of both men, Mr David Aaron (also written as Davoud Aron), was most likely present. He trades from the David Aaron gallery in nearby Berkeley Square. I accept that it was this meeting that paved the way for a more formal mediation or arbitration meeting which, it is agreed, took place a few days later at Mr Aaron's gallery, on 1 May 2010.

  16. The agreed arbitrators or mediators were Mr Aaron and a Mr Hamid Sabi. They examined the documents relating to all the claims that were the subject of the dispute. They also considered payments already made. The claims apparently included not just the dispute arising from the Sotheby's auction sale but other, lesser claims about which I am not informed.

  17. An agreement (the settlement agreement) was prepared in Farsi script. I have an agreed English translation. It was signed by both parties on 1 May 2010 and it is now common ground that it is binding. Mr Shavleyan later disputed its validity on the grounds of lack of consideration and that he had signed it under duress, owing to Mr Simantob's threat to harm himself if Mr Shavleyan did not sign it. Those contentions were recently rejected in the (unappealed) summary judgment application.

  18. The settlement agreement provided for payment, in full and final settlement of all claims between the parties, of $1.5 million by Mr Shavleyan to Mr Simantob. The payment had to be made in full within two days of receipt by the former from Sotheby's of the net proceeds of sale of lot number 165. The parties knew that Sotheby's had 35 days in which to pay over the net proceeds of sale to the seller. The 35 day period was therefore due to expire on 19 May 2010, so payment in full of the $1.5 million was due by 21 May 2010.

  19. The settlement agreement also included a provision that in the event of non-payment by the due date, Mr Shavleyan ``shall pay 1,000 dollars ... to Mr. Simantob for each extra day as penalty''. Mr Simantob's present claim is based on the proposition that payment has not been made in full and therefore includes a claim for $1,000 per day from 22 May 2010 up to 13 June 2018.

  20. The ``$1,000 a day clause'', as I shall call it, has been described as setting ``interest'' at that daily amount. I understand Master McCloud left open what meaning and effect should be given to the clause. It was suggested by Mr James Ramsden QC, for Mr Simantob, in the alternative to his primary case, that it might provide implicitly for the $1,000 payable each day to abate in proportion to the amount of debt paid down, if payment were made by instalments.

  21. But that suggestion was not pressed before me as it is not what the $1,000 a day clause states. It says what it plainly means, namely that $1,000 a day is payable for each day on which the debt has not been paid in full. As at the first day of non-payment, it represents an annual rate of interest of 24.333 per cent, a rate that is high but, it was agreed, not particularly unusual in this particular market.

  22. By 19 May 2010, Sotheby's had paid the net proceeds of sale to Mr Shavleyan. Assuming the payment was made on 19 May itself, the $1.5 million became payable by Mr Shavleyan to Mr Simantob by the end of 21 May 2010. That is not in dispute. Nor it is disputed that, by the end of that date, no payment had been made and that the $1,000 a day clause therefore became operative from 22 May 2010.

  23. Mr Shavleyan made a part payment of $500,000 on 9 August 2010. Contrary to the position applying a true interest provision, the daily amount payable remained at $1,000 a...

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