Dr Daniel Vaz de Souza & Anor v Dr Rekha Shrestha

HIS HONOUR JUDGE HODGE KC:

1. This is my extemporary judgment on an application by Dr Daniel Vaz De Souza and his wife, Dr Ana Luisa Morais Massada De Souza, against Dr Rekha Shrestha. The claim is proceeding under claim number BL-2025-MAN-000021 in the Business and Property Courts in Manchester.

2. This is an application which was listed for an hour and a half at 10:30 this morning when I already had another matter in this morning’s list which was estimated for two hours which I have already disposed of. I have another Circuit Commercial Court matter listed for two hours at two o’clock this afternoon. This judgment is therefore shorter than I would have liked.

3. On 25 March 2025, the claimants issued a pre-application injunction notice. Essentially, they seek a mandatory injunction requiring the respondent to authorise payment from the parties’ joint bank account with Lloyds Bank Plc in a sum of £103,235.30, to be made to the applicants. They also seek to rectify the current bank mandate to allow for payments from that account to be authorised by any two of the three parties. That is said to reflect the original agreement which applied between the parties, and which was amended by the respondent without the applicants’ consent. The applicants also seek an order that any future amendments to the bank mandate should only be authorised by all three parties.

4. The application is supported by the first witness statement of the second applicant, dated 24 March 2025. Although, I was not aware of this when I came into court because (since the respondent is a litigant in person) the relevant documents had not been CE-Filed, there is a witness statement in answer from the respondent which is dated 15 April 2025.

5. The applicants are represented by Mr Richard Wilcock (of counsel), who has produced a detailed written skeleton argument which I have had the opportunity to pre-read. The respondent had produced her own skeleton argument for this hearing yesterday in response to Mr Wilcock’s skeleton. Again, that was not available to me on CE-File and I have therefore had to receive, and read it, before coming back into court.

6. At the outset of this hearing, I expressed my concern to Mr Wilcock that even though a Part 7 claim form had been drafted as long ago as 21 March, it had not yet been issued and the appropriate fee paid. Unfortunately, that is becoming a common practice in this court: a practice whereby parties issue pre-application injunction applications when there is ample time for them to have issued a claim form, and yet they do not do so, merely proffering an undertaking to do so if and when any order is made. If there is a view prevailing that this is an appropriate course of action, I would firmly disabuse practitioners of that. CPR 25.2 (2) provides in terms that the court may grant an interim remedy before a claim has been started only if the matter is urgent, or it is otherwise desirable to do so in the interests of justice. It is the issue of the originating process that founds the jurisdiction in the court to grant interim relief. The court should only grant such relief where the matter is so urgent that it is not practicable to issue a claim form in advance of a hearing or, for some other good reason, it is desirable to grant interim relief in the interests of justice before a claim form has been issued.

7. The matter was addressed by my adjourning the matter to hear the other case in my list, during which time Mr Wilcock arranged for a claim form, and the appropriate fee, to be submitted for processing. I can see from the CE-File that there is now a pending claim form waiting to be issued. That adjournment also gave me the opportunity to read the respondent’s witness statement and her skeleton argument.

8. Essentially, the parties are practising dentists, operating from a dental practice in Norwich. They are not in partnership in the accepted legal sense; rather they are participants in an expense-sharing agreement. That agreement is dated 17 December 2021, and it is made between the respondent, as the first party, and the applicants, together as the second party. Essentially, the respondent and the applicants (together) each have a 50% interest in the association between themselves. Although individual dental practitioners, they operate pursuant to a single NHS contract. That requires the NHS to pay to the practice a monthly sum, equal to one-twelfth of the annual contract value, in advance. The parties undertake a certain number of units of dental activity( or UDA) each month. Each party is entitled to a fixed monetary sum for each unit of dental activity. At the end of each month, the parties calculate the number of units of dental activity undertaken. They are then entitled to remuneration equivalent to the number of those activities, less any shared expenses. The parties produce monthly pay statements; one example (from the applicants) is at page 29 of the hearing bundle.

9. The parties maintain a shared bank account with Lloyds Bank. The mandate originally required only two signatures; but the applicants complain that the respondent has changed this so as to require three signatures. The respondent explains that the previous requirement for only two signatures meant that the applicants, as together representing only half of the association, were able, effectively, to control all payments to her, as the other equal owner.

10. The reason this matter comes before the court today is that the applicants say that they are presently owed sums totalling £103,235.30. This represents outstanding payments by way of remuneration for units of dental activity undertaken by them during the months of August 2024 through to February 2025 (inclusive).

11. The defendant has produced a statement headed ‘Latest Summary of Liabilities’ in respect of the period up to March 2025, which appears to show that she is entitled to a little under £16,000 up to March 2025. The reason for this disparity between their respective entitlements would appear to be that the applicants undertake a great deal more NHS dental activity than the respondent, who principally undertakes private dental practice. The respondent told me that she had sought to retain the services of an associate dentist to boost her NHS dental practice, but she said that that has caused friction with the applicants, who had resisted the associate dentist’s engagement to such an extent that s/he had withdrawn from the arrangement.

12. It is quite clear that the imbalance between the applicants and the respondent as to the volume of NHS dental work undertaken, and the break down in trust and confidence that has occurred between the parties, mean that the present arrangement for the sharing of expenses and NHS receipts, and their receipt into the Lloyds Bank account, needs some drastic revision. That is not a matter within the competence of this court.

13. What the court is being asked to do is, first, to order payment out of the bank account of the £103,000 odd due to the applicants since August of last year, and also to change the bank mandate. So far as this latter limb of the application is concerned, I do not consider that it is appropriate to do that in the context of an interim application that was served on the respondent only last Friday.

14. In my judgment, the court should, at this present hearing, consider only the application in relation to the £103,000 odd. The applicants say that these are their moneys, and that they are entitled to them. They point to the substantial problems that are occurring, and will intensity if they cannot receive these monies. They need them for their living expenses, particularly since the second applicant is shortly to give birth, and to undertake a period away from practice following that event. They also need them to be able to pay the expenses of those within the practice whom they engage as receptionists and hygienists; and they need these moneys to undertake works to the dental surgery, and to ensure that it is fit to continue as an NHS dental practice.

15. The applicants’ evidence does not give any details of their financial means and resources. They are prepared to offer the usual cross-undertaking in damages; but there is no evidence as to how they could satisfy this, if called upon to do so. There is no evidence of any home or other property that they own, or of any incumbrances that there may be over any such assets. They are willing to offer undertakings in damages; but there is no evidence as to how readily they would be able to satisfy them if required to do so.

16. Whilst she does not necessarily accept that the £103,000 odd is correctly quantified, the respondent does not directly take issue with the amount. The thrust of her opposition to the injunction application appears from her summary of liabilities (previously mentioned). Essentially, she says that there is a present claw-back to the NHS in a sum of almost £300,000; and she estimates a further claw-back for the year ending March 2025, in a sum in excess of £500,000. The respondent says that these liabilities would overtake the amount of money presently in the association bank account. She wants to preserve that account to meet these potential liabilities.

17. It is common ground that the applicants and the respondents will be jointly and severally liable for any claw-back to the NHS. The claw-back arises because the NHS makes its monthly payments on the assumption of a target of 27,000 completed units of dental activity each year. There would appear to have been only some 10,000 or so in the year ending March 2025, resulting in a shortfall of in excess of 17,000 units – more than two thirds of the total; and that is why there is estimated to be such a substantial claw-back.

18. Clearly, the NHS has been making payments on the assumption that far more units of dental activity will be completed than is in fact the case. That may well be because of: (1) the respondent’s focus upon private dental treatment, rather than the provision of NHS dental care; and (2) the apparent inability to find sufficient, appropriate dental associates to undertake more NHS dental work for the practice, thereby reducing the shortfall.

19. What this court has to do is to determine whether, on this interim application, an order should be made for the payment to the applicants of the £103,000 odd that they say is due and owing to them. That, essentially, turns upon the terms of clause 6.1 of the expenses sharing agreement. This provides that gross receipts, profits, salaries, fees, or other remuneration, and expenses thereof, derived from treatment or any appointment, contract work or consultations held or carried out by the individual party at the association hereto, shall belong to, or be paid by, him, and not to the association.

20. Mr Wilcock, for the applicants, submits that the monies held in the Lloyds account are, effectively, held on a resulting trust for the applicants, to the extent of the fees and other remuneration due and owing to them in respect of units of dental activity that they have carried out. That means that they are the beneficial owners of these monies. Mr Wilcock submits that it is irrelevant that there may, in the future, be a claw-back payable to the NHS. He submits that what, effectively, the respondent is seeking to do, is to exercise a lien over monies belonging to the applicants in the joint bank account, in order to meet potential shortfalls due to the NHS. He points to the fact that, on the respondent’s own figures, there is almost £300,000 due in respect of the claw-back, for the year ending March 2024. That has clearly not yet been required to be repaid by the NHS; therefore, one should ignore the shortfall that will be caused by the estimated claw-back for the year ending March 2025. That is a liability that will only fall due at some indeterminate future point. The respondent, on the other hand, says that she should be able to look to all the monies in the association account with Lloyds as a source of funds to defray future claw backs.

21. I have to bear in mind that this is not the trial of the claim, nor is it an application for summary judgment thereon. It is an application for interim mandatory relief for the payment of monies to the applicants.

22. I am satisfied that there are here serious issues to be tried. Clearly, there is force in the applicants’ case, advanced by Mr Wilcock, that these are monies beneficially owned by the applicants, and that the respondent should not be withholding them, effectively by way of security for future potential liabilities of the association.

23. In one sense, since we are concerned with monetary relief, damages would be an adequate remedy in principle; but the court should not blind itself to the practicalities of the situation. From the applicants’ point of view, these monies are required by the applicants for current living and business expenses. An award of damages in six months’ time may be too late if, as a result, the applicants have been unable to fund their living expenses, otherwise perhaps, than by way of expensive borrowings, or to meet necessary expenses incidental to their dental practice.

24. On the other hand, the respondent will say that she should not have to carry the risk of having to bear an undue proportion of the shortfall due in the future to the NHS if the applicants do not have the financial means to meet their undertaking in damages. In that event, the fact that that undertaking has been given, will be of little value to her.

25. The court therefore has to consider overall the balance of convenience; and that is difficult to apply in a situation such as the present. Mr Wilcock has referred me to my own decision in the case of ESL Fuels Limited v Fletcher [2013] EWHC 3726 (Ch). There I held that “when considering the balance of convenience, the court will look to maintain the position immediately before the commencement of any breaches on the part of the respondent”. It does seem to me that here, the relevant status quo is probably the fact that monthly payments to the applicants were being met out of the monies being received into the Lloyds account. Thus, if one is considering the balance of convenience in terms of preserving the status quo, it does seem to me that that would favour releasing the monies in accordance with the previous practice of doing so in response to pay statements of the kind exhibited at page 29 and following of the hearing bundle.

26. Given the mandatory nature of the relief the applicants are seeking, the court needs to ask itself where the balance of justice, and injustice, lies. The court must apply the basic principle that it should take the course which is likely to cause the least irremediable prejudice to both parties. The court must decide whether more prejudice is likely to be suffered by the respondent, if it grants the relief sought, than will be suffered by the applicants if the relief is withheld.

27. In the present case, it does seem to me that the balance of justice and injustice favours the applicants. The previous practice was that they would receive payments in accordance with the pay statements. There is no serious challenge to the amount that they say is due to them. It has been withheld now for a period beginning in August of last year. When one looks at the relative amounts due to the applicants and the respondent, on the respondent’s own summary, one has to balance a figure in excess of £103,000 due to the applicants against almost £16,000 due to the respondent.

28. The expense-sharing agreement does provide for the parties to be entitled to the remuneration for the work that they have carried out. The potential claw-back by the NHS, so far as the year ending March 2024 is concerned, is some considerable time in the future. That liability is unlikely to arise before the parties have had an opportunity, sensibly, to adjust their affairs. The applicants, on the other hand, have an immediate need for these monies.

29. Therefore, for those reasons I propose to grant mandatory injunctive relief for the release to the applicants of the sum of £103,235.30; but I would not grant any further relief. That must be left either to an application for summary judgment, or for trial. So that concludes this extemporary judgment. End of Judgment. Transcript of a recording by Acolad UK Ltd 291-299 Borough High Street, London SE1 1JG Tel: 020 7269 0370 [email protected] Acolad UK Ltd hereby certify that the above is an accurate and complete record of the proceedings or part thereof