All litigation lawyers, surveying their career from the armchair and gin ‘n tonic of retirement, will remember certain standout cases: possibly unusual or interesting facts, a challenging point of law, an honorable client, uncompromising opponents, a sense of poetic justice at the end…
I shall remember the case of Shirazi v Susa Holdings Establishment for all these reasons. The facts are not especially remarkable and belie the tortuous process leading to its eventual conclusion in May this year, but, like so many family disputes, they evidence the decline of a once happy and close family into what one of the judges involved rightly called “a bitter and very sad family dispute” which, as it progressed, had little to do with the actual issues, and still less the best interests of a very vulnerable claimant.
The facts
Mr and Mrs Shirazi and their children were Iranians who had fled their country in 1979 by reason of the Islamic Revolution, losing much of their wealth in the process. The family succeeded in building up a portfolio of assets in the UK, among them two flats and associated car parking spaces in central London worth about £2.5 million in 2015 when, his mental and physical health fading, Mr Shirazi transferred the properties to Susa (a Liechtenstein Anstalt – similar to a company) controlled by his elder son, Babak, with the consideration left outstanding as a debt to Mr Shirazi (“the Montrose sale”). Babak’s evidence was that the transfers were agreed between Mr Shirazi, Babak, and his younger brother, Borzou, in part to mitigate inheritance tax, in the execution of which they were all involved, and that the instructions were given by Mr Shirazi some years before his intentions were ultimately carried through.
In any event, four years later, Mrs Shirazi had herself appointed as Mr Shirazi’s ‘curator’ in Switzerland – where the Shirazis by then lived – and thereafter commenced proceedings to reverse the transactions on the grounds that Mr Shirazi lacked capacity at the time and that the transfers were procured by Babak’s undue influence.
There was a dispute as to Mr Shirazi’s capacity to enter into these transactions in 2015 but it was accepted that, by 2019, he had entirely lost capacity.
A person who lacks capacity under the Mental capacity Act 2005 (a ‘protected party’) can nonetheless bring civil court proceedings in the courts in England and Wales but requires a ‘litigation friend’ to do so. This will often be a Deputy appointed by the Court of Protection but, in the absence of such a person, anyone may act as a litigation friend under the Civil Procedure Rules if he (a) can fairly and competently conduct proceedings on the protected party’s behalf; and (b) has no interest adverse to that of the protected party. The procedure is remarkably lax: all the person needs do is file a certificate when issuing the proceedings self-certifying their own compliance with these requirements.
The removal application
Mrs Shirazi and her solicitors having refused to engage in any form of mediation or settlement – her position being that the properties had to be transferred back to Mr Shirazi unconditionally – Babak instructed me to apply to remove Mrs Shirazi as her husband’s litigation friend. The application was based upon a number of factors, but central to it was the assertion that it was Borzou Shirazi, not his mother, who had instigated and was controlling the claim and that thus it could not settle in Mr Shirazi’s best interests, because Borzou’s ultimate aim was the recovery of the properties, not for his parents, but rather for himself.
At first instance, Chief Master Shuman, having concluded that Borzou exercised “undoubted influence” over the lives of his parents, simply accepted Mrs Shirazi’s evidence that she made her decisions independently, and her lawyer’s that they were taking instructions from Mrs Shirazi and not from Borzou.
On appeal
Both missed the point according to Mrs Justice Bacon, on appeal: “The question is not whether Mrs Shirazi believes that she is acting independently or whether she, as opposed to Borzou, gives instructions to her solicitors. Rather, the question is whether, on all the evidence before the court, it appears that Mrs Shirazi is in fact able to act independently, objectively, impartially and in an even-handed manner in the present litigation, and in particular independently from Borzou and any interest that he may have.”
On the evidence, Borzou was the favoured child, at least since the Shirazis’ estrangement from their other two children, Babak included; he lived with his parents and was their primary carer; he sent Mrs Shirazi’s emails on her behalf to her solicitors, with her authority, and read incoming correspondence to her because she was not IT literate and had poor eyesight. Added to this, Mrs Shirazi was herself 84, in poor health, with a history of depression and some cognitive impairment, all of which added to her physical and emotional dependence on Borzou.
The Judge continued: “All of this might not have mattered if the proceedings in question were unconnected with the family relationships. The heart of the dispute is, however, a dispute between family members following an estrangement that appears to have taken place since the Montrose sale occurred. [Counsel] for the claimant says that the dispute is nothing to do with Borzou and Borzou’s financial interests, but it is common ground that Borzou was himself involved in the Montrose sale, and for that reason if no other [counsel] concedes that it would not have been appropriate for Borzou to act as Mr Shirazi’s litigation friend in these proceedings. That concession, however, underscores that Borzou is intimately connected with this dispute.”
“Moreover, …. there is no doubt whatsoever that Borzou does have an interest in the outcome of the dispute. Not only has Borzou very clearly aligned himself with his parents in the family estrangement arising out of these claims, but there is also considerable evidential support for the proposition that Borzou has been financially dependent on his parents for many years, possibly the whole of his life, and has received very large (indeed extraordinarily large) sums from them over the years. The [Swiss] Court of Trustees said trenchantly that there was no document before it to understand Borzou’s own resources and establish that Borzou was financially independent of his parents, and noted that the Shirazis had expressly confirmed in July 2013 that Borzou had no money or income and was financially dependent upon them. Borzou therefore has a quite specific interest, separate to that of his parents, in a dispute that concerns the location of assets within the family.”
Mrs Justice Bacon’s concluded: “… Mrs Shirazi cannot help but be influenced by Borzou. That is why Master Shuman correctly referred to the undoubted influence exercised by him over his parents. More than that, however, I also consider that that influence, in the circumstances described, inevitably affects and indeed compromises Mrs Shirazi’s independence and objectivity in the conduct of these proceedings, whatever she might believe as to that.”
Conclusion
The factual basis of Bacon J’s decision was contained within the Chief Master’s own judgment and looking at it as objectively as I now can, it should have been obvious to the court that Mrs Shirazi was unsuitable to represent her husband’s interests in complex, expensive and emotionally-charged litigation in a foreign jurisdiction and (to her) language, against one of their own children, with the active assistance and support of another.
This is particularly so when seen in the context that Babak Shirazi’s position throughout was that he had never wanted the properties, took ‘ownership’ of them only to help his father in his deteriorating condition, did not regard them as morally his, would treat them on his father’s death as part of his estate whatever the legal position might have been, and was more than willing to divest Susa of ownership, with one sole caveat: that they be protected from falling into the control or ownership of his younger brother, Borzou.
Yet, it took two years of hard-fought, costly, and entirely unnecessary litigation before the appeal court – three weeks before the scheduled trial – saw the case as it was and removed Mrs Shirazi, appointing an independent solicitor to represent Mr Shirazi instead.
Once that happened, there was no need for a trial and it then took less than a day to settle the essentials of the matter: the principle of the re-transfer of the properties, an account of Babak Shirazi’s dealings with the properties and even the huge costs of the dispute. The minutiae of the consent order took longer but there was never any doubt that the matter would settle in the best interests of Mr Shirazi and that that settlement would obtain court approval.
The judgment of Mrs Justice Bacon can be read here.
If you have any questions regarding the article, or have any litigation related queries, please contact Partner John Melville-Smith on [email protected] or 020 7725 8027.