One Unique LLC v Kambiz Babaee & Ors

This judgment deals with 3 applications brought by the First Defendant Mr Kambiz Babaee (“KB”). There are two applications for a stay, the first issued on 18 February 2025 seeking an order that this claim be stayed pending the outcome of parallel criminal proceedings and the second seeking an order that the proceedings are stayed pursuant to the discretion set out at section 285(2) of the Insolvency Act 1986 because KB is a bankrupt. The third is a strike out application seeking an order that the claim be struck out or in the alternative that part of the Particulars of Claim be struck out. The strike out application is based on the assertion that the Claimant has relied upon (and pleaded) without prejudice communications.

For the applications I had 4 skeleton arguments from KB including closing submissions filed and served the day before the hearing and 1 from Mr Krsljanin who appeared for the Claimant. I had (in addition to an agreed authorities bundle) a 4-part bundle comprising 2,974 pages. The majority of the bundle was not referred to and the vast majority of it was included at the insistence of KB who acted before me as a litigant in person but who from time to time has (as he accepted) legal advice. Mr Krsljanin told me KB had a habit of “putting a mass of documents before the court often with relatively limited time for a court to review it.” Fortunately, and partly by reason of the sensible and pragmatic approach adopted by the Claimant, this dumping of documents has not hampered the progress of the hearing.

I am satisfied that appropriate allowances were made for the fact that KB acted as a litigant in person. Where possible I attempted to summarise the points, he was making and gave him an opportunity to agree or disagree with that summary. He was afforded plenty of time to make his submissions and I was entirely satisfied that he fully understood and was able to deal with the points made by Mr Krsljanin.

The claim (which insofar as it relates to a fraud claim is denied) is summarised in this way at paragraph 4 of the Claimant’s skeleton argument:

A spreadsheet prepared by the Claimant in June 2024 (and referred to in the emails below) shows that the apartment was occupied between 28 September 2018 and June 2024 by 4 different tenants (Wennberg, Allana, Kan and Barzilai) who had contracted to pay (and had paid) rents of between £14,500 and £21,000 per week.

The present pleaded case is that the Claimant has lost £2,347,234 plus interest.

I will deal with the applications in the order of time they took to argue. I will start with the strike out application, then deal with the stay based on the criminal proceedings and end with the stay based on bankruptcy.

The Claimant’s pleaded case is that the fraud was discovered on or around 26 June 2024 when the Claimant discovered that a tenant (Mr Kan) had agreed to pay £21,000 per week for the apartment whereas KB had represented to it that the rent payable was £15,000 per week.

The Claimant goes on (at paragraphs 75 to 80 of the Particulars of Claim) to plead reference to four emails between Ms Bita Daryabari (“BD”) of the Claimant and KB and one voice mail left for BD's husband. The emails and voice mail covered the period from 26 June 2024 to 28 June 2024. If the emails are indeed subject to without prejudice privilege, two choices arise: they should be removed (or reference to them struck out) or the claim struck out.

I was referred to a large number of emails and messages. It is not helpful to separate the pleaded emails and communications for particular attention. The question is, did they form part of a without prejudice chain. If they did the privilege in them is joint and cannot be unilaterally waived. It is helpful to set out a brief and summarised chronology of these emails and their contents.

Between 9:46am and 10:04am on 26 June there was an exchange of WhatsApp messages between KB and BD. It appears there was a telephone call at 9:47am which lasted 10 minutes, in which BD accused KB of being a conman and thief. KB left a voicemail message for BD’s husband which included the following:

There then followed a series of emails and messages. It is convenient to summarise them in tabular form:

The case against KB has moved on. It is said now that he is responsible for fraudulently taking in excess of £2m due to the Claimant.

The law on how to identify without prejudice privilege is clear and well settled. Mr Krsljanin sets it out clearly and fairly at paragraphs 34 to 36 of his skeleton argument. I am satisfied that the summary is a full and fair one. I did not understand KB to raise any issue with the summary. I take the following principles which can be stated shortly:

Applying these principles to the facts before me and in particular considering the totality of the discussions above (on an objective basis) it is in my view important to bear the following points in mind: first, BD was plainly persuaded that KB had stolen from her, let her down and had abused her trust. Whether that view was right or wrong is a matter for trial. It appears very clearly from the correspondence that BD was upset and in no mood to negotiate. She obviously wanted back what had been (in her mind) stolen from her. She wanted what was due to her (or owed to her). Objectively viewed, it does seem clear that she wanted every penny of what was owed (as she put it in a message sent at 19:40 on 27 June 2024: “all the money you stole”) and was in no mood for compromise or negotiation. BD’s initial position was that she was owed £988,000 (at 15:28 on 26 June 2024) that sum increased by £364,000 (at 21:36 the same day). At 16:42 on 27 June 2024, BD offered a “deal” which was to accept repayment of (to paraphrase) “all the stolen money”. That was the full £1,352,000. In my judgment that is not in truth “a deal,” it is a demand for full repayment. There is an argument that BD was demanding the return of that sum and more; a reasonable reading of the email sent at 21:36 on 26 June 2024 was that she wanted payment of £1,364,000.

In my judgment, it is clear that the policy on which the privilege is set is not engaged. There was in my judgment no common negotiation. The fact that from time-to-time KB added words suggesting a deal might be made and added the “without prejudice” badge does not alter that analysis.

For those reasons I am satisfied that no without privilege attaches to the communications so that the Claimant's pleading does not offend any privilege. Had I been persuaded that the communications were subject to privilege, I would have struck out the offending references to them. I would not have struck out the whole of the proceedings (including the claim form). Had I been required to consider the matter, I would have concluded that removing the offending references was proportionate and that striking out the whole claim would have been obviously and clearly disproportionate. It would have been perfectly possible and practical to have an entirely fair trial had I decided to strike out the references alone.

I then turn to consider the application for stay based on the existence of concurrent criminal proceedings brought by way of a private prosecution. The criminal proceedings have now proceeded to an arraignment, and the matter has been referred for trial to the Crown Court. KB says that the civil proceedings should be stayed pending the outcome of the criminal proceedings.

Mr Krsljanin sets out the applicable principles at paragraphs 43 to 46 of his skeleton argument. I accept those principles as a fair summary of the law. The following points appear:

KB expressed concern that findings in the civil trial would prejudice a fair outcome in the criminal trial. He felt that adverse findings in the civil trial could prejudice a jury. His concern is heightened because he describes himself as a “high profile individual” and so the civil trial is likely to attract some press interest. He felt that prejudice might arise if he was forced to reveal his defence in the civil proceedings and was concerned about funding both sets of proceedings.

I am satisfied that there is nothing in any of these points taken individually or together that would warrant a stay of the civil proceedings:

For those reasons I am not persuaded that if the civil proceedings continue there is a real risk of serious prejudice which may lead to injustice. The application to stay the civil proceedings because of the criminal proceedings is therefore refused. Had it been necessary to consider the effect of a stay on the Claimant, I would have concluded that the prejudice to the Claimant that would arise if the stay was ordered would far outweigh the prejudice suffered by KB if the stay was refused.

I then turn to the application for a stay on the basis of the bankruptcy. KB expects to be discharged from bankruptcy in May 2026. The stay would (if the bankruptcy is not extended) therefore be short lived. KB suggested that a stay would protect his creditors.

The power arises under section 285 of the Insolvency Act 1986. In my judgment there is no realistic prospect that the debt said to be owed could be proved in the bankruptcy. This is a complex fraud claim best determined in legal proceedings. The Trustee in Bankruptcy has raised no concerns about the proceedings and their impact on the creditors and any judgment based on fraud against KB will survive his bankruptcy. There is nothing in the stay application based on bankruptcy and I dismiss it.

For these reasons each of KB’s applications fails.