One Unique Llc v Babaee & Ors [2025] EWHC 2635 (Comm) (14 October 2025)

Neutral Citation Number: [2025] EWHC 2635 (Comm) Case No: LM-2025-000145 IN THE HIGH COURT OF JUSTICE BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES CIRCUIT COMMERCIAL COURT (KBD) Royal Courts of Justice, Rolls Building, Fetter Lane, London, EC4A 1NL 14 October 2025 B e f o r e : His Honour Judge Hodge KC Sitting as a Judge of the High Court ____________________ Between: One Unique LLC Claimant - and – (1) Kambiz Babaee (2) K10 Developments Limited (in liquidation) (3) K10 Management Account Limited (4) K10 Group Limited (5) Bhupen Varsani Defendants - and – (6) Ali Kian Shokrollah Babaee (7) Ana Totoc Respondents/Proposed Defendants ____________________ Mr Luka Krsljanin (instructed by Mishcon de Reya) for the Claimant The First Defendant and the Fifth Defendant appeared in person None of the other defendants and respondents/proposed defendants appeared or were represented Hearing date: Tuesday, 14th October 2025 ____________________ HTML VERSION OF JUDGMENT APPROVED ____________________ Crown Copyright © HIS HONOUR JUDGE HODGE KC: This is my extemporary judgment in a claim proceeding in the London Circuit Commercial Court under claim number LM-2025-000145. The claimant is a limited liability company incorporated in the State of California, USA, One Unique LLC. Its ultimate beneficial owner is Ms Bita Daryabari. There are presently five named defendants. The lead defendant (the first) is Mr Kambiz Babaee. He is in his late 50s. The next three defendants are companies that were effectively owned and controlled by Mr Babaee. They are K10 Developments Limited (which is now in liquidation, a Mr Daniel Taylor having been appointed as liquidator); K10 Management Account Limited; and K10 Group Limited. Mr Babaee was adjudged bankrupt, on his own application, on 13 May 2025. As a result, there is presently no directing mind for the third and fourth defendant companies. The fifth defendant is Mr Bhupen Varsani, who was a manager employed by Mr Babaee and the three corporate defendants. The application which is presently before the court was issued on 11 September 2025. It seeks to join two additional defendants to the claim, alleging that they are liable as constructive trustees and in knowing receipt. The application seeks to make consequential amendments to the existing particulars of claim, and to re-amend the claim form. The application also includes a number of minor tidying-up and corrective amendments to the defence. The application is supported by the sixth witness statement of Ms Naomi Frances Ruth Simpson, dated 11 September 2025. She is a solicitor and partner in the claimant's solicitors, Mishcon de Reya LLP. She exhibits various documents as exhibit NFRS-6. The application to amend and to join the additional two defendants is not opposed either by the fifth defendant, Mr Varsani, or the liquidator of the second defendant company. As I have said, the third and fourth defendants are presently taking no active part in the proceedings. The application is, however, vehemently opposed by the first defendant, Mr Babaee, who appears as a litigant in person. It is also opposed by the proposed two additional defendants. Defendant number 6 is Mr Ali Kian Shokrollah Babaee. He is the adult son of the first defendant and is in his mid-20s. He served, briefly, from 9 January to 10 May 2024 as a director of the third defendant company. The other proposed defendant is Ms Ana Totoc. She is 30 years of age and is the present wife of the first defendant. They married on 14 March 2024. The proposed additional defendants also firmly oppose the application. They have been put on notice of this hearing, but they have made it clear that they are not going to attend today. They have, however, put in witness evidence, as has the first defendant. I therefore have three witness statements in opposition to the application, all dated 1 October 2025, and exhibiting various documents. These are the eighth witness statement of the first defendant, and the first witness statements of each of the proposed sixth and seventh defendants. There is evidence in reply to those witness statements from Ms Simpson in the form of her seventh witness statement of 8 October 2025, together with exhibit NFRS-7. I have had the benefit of detailed written skeleton arguments from both Mr Luka Krsljanin (of counsel), who appears for the claimant and applicant, and from the first defendant, on behalf of himself and the two proposed additional defendants. Mr Krsljanin addressed me for about an hour and 20 minutes this morning. After a short break for the benefit of the transcriber, the first defendant addressed me in response for about 45 minutes; and Mr Krsljanin addressed me in reply for about 15 minutes. I adjourned over lunch, and I am now delivering this short extemporary judgment. The claim concerns what the claimant alleges was a fraudulent scheme whereby Mr Babaee and the other defendants, whilst acting as property managers for a high-value residential apartment at One Hyde Park and situated at 100 Knightsbridge SW1, are said to have misappropriated in excess of £2.347 million from the claimant, as the property's owner. In summary, the allegations are that between 2020 and 2024, Mr Babaee was involved in the management of the property whilst it was let to three consecutive high-net-worth residential tenants. The defendants are said to have overseen the letting arrangements on the claimant's behalf, including procuring the execution of tenancy agreements and collecting the rent. What is said is that after the execution of the true tenancy agreements, Mr Babaee and the other defendants generated false tenancy agreements, with lower rents, and used these, and other written statements, fraudulently to misrepresent to the claimant that the tenants had agreed to pay rent in sums much lower than they had actually agreed to pay. By way of example, one tenant signed a tenancy agreement for a rent of £15,000 per week, but the defendants presented the claimant with a fabricated tenancy agreement, representing that the same tenant had agreed to pay only £11,000 a week. Income from the tenants was received by the corporate defendants under Mr Babaee's control, principally the second and third defendants. The defendants sent the claimant misleading landlord statements, purporting to record the rental income, which concealed how much had actually been paid by the tenants. It is said that the defendants underpaid the claimant by accounting to it only for a portion of what the tenants had paid, 'skimming' the difference. It is said that that constituted a breach of fiduciary duty on the parts of the defendants. The claimant is said to have discovered this allegedly fraudulent scheme on or about 26 June 2024. Alongside personal claims, the claimant has brought proprietary claims in respect of what are said to be proprietary assets, seeking to trace and recover them, or their traceable proceeds. The proceedings started in the Commercial Court on 23 August 2024 under claim number CL-2024-000490. The claim is one in deceit, unlawful means conspiracy, breach of fiduciary duty, dishonest assistance, knowing receipt, and restitution. It is said that sums amounting to in excess of £2.347 million were misappropriated by the defendants over a four-year period, from June 2020 to June 2024. There are said to have been misrepresentations as to the rental value and the deposits paid in respect of the three successive tenancies. All of this was directed to deceiving the claimant into believing that the rents were lower than they in fact were, thereby misrepresenting the difference between the real, and the represented, rental values. The matter began with a without-notice application to Mr Justice Bryan, on 28 August 2024. Sitting in private, he granted a proprietary injunction, a worldwide freezing order, and a passport order. There was a return day before Mr Justice Calver on 17 September 2024. Mr Justice Foxton varied the order on 19 December 2024. On 25 February 2025, Mr Justice Henshaw made an order which had the effect of transferring this matter to the London Circuit Commercial Court. There was a first case management hearing before Mr David Bailey KC, sitting as a judge of the High Court, on 4 June 2025. By that time, a bankruptcy order had been made in relation to the first defendant. As a result of Mr Bailey's order, directions were given for disclosure and witness statements; and a trial of eight days, with two days' pre-reading was ordered. All matters of cost management were adjourned. There are presently no less than four extant applications, which I understand are due to be heard on 15 January 2026. Three of those applications are by the first defendant. They are to stay the proceedings because of the existence of a pending private criminal prosecution, and a later application to strike out the claim. There is also an application by the fifth defendant for a stay of the proceedings; and a later application by the first defendant, consequent upon his bankruptcy, seeking a stay of the claim under section 285(3) of the Insolvency Act 1986. The present application is to add Mr Babaee's son, and his wife, as sixth and seventh defendants to the claim respectively, on the basis that they are constructive trustees of proprietary assets in the form of rents paid under the tenancies, and for knowing receipt. As I say, that application is opposed by the first defendant and also the proposed sixth and seventh defendants. I have heard no argument from any of the defendants in opposition to what I might refer to as the minor tidying-up and corrective amendments; and I am satisfied that it is just and convenient to give permission for those. What is really in issue are the paragraphs of the proposed amended particulars of claim which are directed to the claims against the proposed sixth and seventh defendants. Essentially, these are paragraphs 10A, 10B, 80A to C, paragraphs 103 and 112, and sections I and J of the proposed amended particulars of claim, together with their annexes A and B. The relevant paragraphs are paragraphs 118 to 125. Objection is also taken to the consequential amendments to the prayer for relief at paragraphs 18 to 27. It is not in issue that the proposed sixth and seventh defendants have received payments from either the first defendant or the corporate defendants. The sums in issue, as set out in annexes A and B, are not in dispute. In the case of the sixth defendant, the sums amount to almost £238,000, received between 12 August 2020 and 15 July 2024. In the case of the proposed seventh defendant, the sums amount to £162,900 received by her between 10 February 2022 and 28 June 2024. In his witness statement, Mr Babaee addresses a number of issues. Some are directly relevant to the joinder application and others are matters of background and peripheral relevance. Mr Babaee alleges that the beneficial owner of the claimant company was engaged in multiple-jurisdiction customs and VAT frauds; and he says that that affects the credibility, and the honesty, of the claimant's evidence and claim. He asserts improper motivation on the part of the claimant in bringing this joinder application. He asserts that there are no causes of action against the proposed new defendants; rather, the claimant is simply seeking to expand the range of its recovery options. He asserts a lack of knowledge of the source of the payments on the part of the proposed new defendants. He asserts that he has given comprehensive voluntary disclosure, and that there has been an absence of any substantive response from the claimant. He emphasises that the rents from the apartment were not the only income source of the three corporate defendants. He also asserts that the monies paid to the additional defendants are no longer available to them. He asserts that the joinder of his son would interfere with the son's legitimate business activities, and with third-party funding sources. He alleges the absence of any sufficient supporting evidence to back up the new claims. In his witness statement, the proposed sixth defendant speaks to the catastrophic effect that his joinder would have upon his entirely separate business ventures. This would result from his unfair stigmatisation as a party to fraud. He emphasises that he has had no material involvement in his father's business operations and activities. He asserts that he, too, has given voluntary disclosure, and has displayed complete transparency. He admits to receiving the sum of £273,000-odd from the second and third defendants; but he says that all such payments were entirely proper, and that the monies have since been spent. The seventh defendant describes her background and relationship with both the beneficial owner of the claimant, Ms Daryabari, and her present husband. She emphasises her ignorance of the dispute until a dinner in an upmarket restaurant in Mayfair towards the end of June 2024. She categorically denies any wrongdoing. She asserts that she is an entirely innocent third party, who has had no involvement in her husband's business affairs. She, too, is said to have made voluntary disclosure, and to have displayed full transparency in relation to her financial affairs. She addresses the nature of the payments that she received, and the destination of those monies. She emphasises that there were alternative sources of funds received by the companies from which the payments were made; and she disputes that they were proprietary assets. She asserts her ignorance of any misapplication of the claimant's funds. She characterises her proposed joinder as the product of the personal, and vindictive, nature of the allegations made by Mrs Daryabari. I have naturally had regard to the contents of the first defendant's skeleton argument in opposition to the claim. I have also had regard to his oral submissions. The first defendant made it clear that he was here to oppose the joinder of two entirely innocent people. He asserts that he will fight this claim all the way, and that the truth will prevail. He disputes the need for the claimant to bring members of his family into this litigation. He asserts that they have spent all the monies in question, and that there is nothing left for the claimant to pursue. In his reply, Mr Krsljanin, for the claimant, emphasised that during his oral address to the court, Mr Babaee proclaimed that if he were found liable, then the claimant could go after the money. Mr Babaee emphasises that his son was not in any way connected to the alleged wrongdoing, which was his own problem. He emphasises that his son was a director of one of the defendant companies only for some three months; and even then, that was just, as he put it, "to keep the rudder straight" whilst he, the first defendant, was fighting an individual voluntary arrangement. Since the claim form has been served, the court's permission is required, both for the amendments, and for the joinder of the two additional defendants. The application is governed by CPR 19.2. Sub-rule (2) provides that: The court may order a person to be added as a new party if -- (a) it is desirable to add the new party so that the court can resolve all the matters in dispute in the proceedings; or (b) there is an issue involving the new party and an existing party which is connected to the matters in dispute in the proceedings, and it is desirable to add the new party so that the court can resolve that issue. Mr Krsljanin emphasises that the touchstone is desirability and not necessity. He submits that both limbs of the twofold test in CPR 19.2(2) are satisfied in the present case: it is both desirable to add the new parties to enable the court to resolve all the matters in dispute in the proceedings; it is also desirable to add the new parties so that the court can resolve issues common to the new and the existing defendants which are connected to the matters in dispute in the proceedings. Essentially, what is said is that the proposed new defendants received rental monies which, in equity, belong to the claimant; that they did so as volunteers; and that they are liable to account for them as constructive trustees. It is also said that they were knowing recipients of the monies, and are thereby liable to account for them in equity. During the course of his oral submissions, Mr Krsljanin emphasised that this is simply a conventional and appropriate case for joinder of the new defendants. Nothing in their responsive evidence indicates that it would be undesirable for them to be joined. Mr Krsljanin made the overarching point that what is being sought is the recovery of proprietary assets against a background where there is already a finding by Mr Justice Calver that the first defendant has given inadequate disclosure, and has demonstrated evasiveness in his sworn evidence as to what has happened to the rental monies. Mr Krsljanin correctly identified three themes running through the defendants' opposition to the joinder application. The first is that joinder is tainted by reliance on what is said by the first defendant to be 'without prejudice' material contained within a communication which is pleaded at paragraph 78 of the particulars of claim. That is the subject of one of the strike out applications which is listed to be heard on 15 January 2026. Mr Krsljanin submits that the court should not in any way prejudge the outcome of that application. It is the claimant's case that the document in question, although headed 'Without prejudice', contained no offer to settle the claim, and is not truly covered by 'without prejudice' privilege. I am satisfied that I should approach this matter without regard to that pleaded admission in paragraph 78 of the particulars of claim. I cast it entirely from my mind; and I approach this application without reference to that paragraph of the existing particulars of claim. I am satisfied that it has no bearing on the issue of joinder. There is ample evidence of the allegedly fraudulent scheme without the need to look at that paragraph of the particulars of claim. The second strand underlying the defendants' objections to joinder is that there is no merit in the proposed new claim. The claimant says that there are triable issues as to the existence of equitable proprietary claims in constructive trust and knowing receipt. The defendants do not dispute that monies were received from the corporate defendants. The evidence from the claimant's forensic accountant is that those monies were derived from proprietary assets of the claimant in the form of rental payments made by the successive tenants of the apartment. The fact of the payments is not in dispute. It is clear that, by the latest, at the end of the summer of 2024 or the autumn of that year, the defendants had sufficient knowledge. They say that they had no such knowledge earlier. I am satisfied, on the terms of the proposed amended pleading, that there is a sufficiently pleaded case of knowledge, or from which knowledge can be inferred, on the part of each of the proposed additional defendants. In any event, they were volunteers, and the claimant is entitled to hold them liable as constructive trustees, and to seek to trace the monies that they received into any assets they may have acquired with those monies. I have been taken to a number of extracts from Civil Fraud . The first is paragraph 9-073. That is headed 'Constructive trust of property received from the principal/beneficiary of the fiduciary duty in a transaction tainted by breach of fiduciary duty' . The relevant part of the extract reads: There are numerous cases … in which a third party who has received property from the principal/beneficiary pursuant to a fiduciary's breach of duty (other than a bona fide purchaser for value of the legal estate without notice) has been found to receive it on constructive trust. I was also taken to paragraph 23-036. This addresses what is required for a claimant to make out a proprietary claim: that is simply that the claimant can demonstrate beneficial rights to the relevant property as against the defendant who currently holds it. In this sense, it is not a fault-based liability (save to the extent that an initial breach of trust must be proved). I do note that, as Mr Babaee emphasises, that passage refers to a defendant who "currently holds" trust property; but I accept that it is possible to trace property that has been received by a volunteer into other assets into which it has been applied. In this regard, I was taken to paragraph 12-048 of Civil Fraud . That states that: … if a defendant is a volunteer, and acquires knowledge which would make continuing retention of the claimant's assets unconscionable at a time at which those assets or - and I emphasise this - their traceable proceeds still rest in his hands, then the defendant may become liable in knowing receipt from that point forward. I am satisfied that as a result of the lack of any full disclosure on the part of the defendants as to what has happened to payments received by the proposed sixth and seventh defendants, there are triable issues as to whether traceable proceeds still remain in their hands. I agree with Mr Krsljanin's submission that a combination of the evidence before the court, the absence of evidence highlighted at paragraphs 28 and 29 of Ms Simpson's seventh witness statement, and the legal propositions to which I have made reference show that the claimant has demonstrated, at the very least, an arguable case in support of its proposed amended pleading. On the material presently before the court, I have no doubt that it is desirable to add both the sixth and seventh proposed defendants as additional defendants. That will enable the court to resolve all the matters in dispute in these proceedings, and also to resolve issues involving those new parties and the existing defendants which are connected to the matters that are in dispute in the proceedings already, namely the claimant's beneficial entitlement to monies received by the corporate defendants and paid over to the proposed sixth and seventh defendants as volunteers. I am not satisfied that there is anything in any of the objections taken by any of the three defendants, or proposed defendants, who oppose this application. I am satisfied that there is nothing abusive in the claimant seeking to identify, protect, and preserve its proprietary assets. I emphasise two points of clarification that Mr Krsljanin made at the outset of his submissions. First, I am not joining the sixth and seventh defendants on the basis that they are said to have been parties to the existing defendants' underlying allegedly fraudulent scheme. They are being joined because they have received, as volunteers, what are said to be the claimant's proprietary assets. Secondly, I venture no -- and I am not asked to venture any -- assessment of the strength of the claims. I am simply determining that they are properly arguable. I am not making any final determination on the merits. I am merely satisfied that the objections raised by those present and proposed defendants who object to the joinder are not sufficient to enable the court to dispose summarily of the proposed new claims in favour of the proposed additional defendants. So, for all those reasons, I will allow the joinder of the proposed sixth and seventh defendants; and give permission for all of the amendments proposed to the particulars of claim, and the re-amendments to the claim form. That concludes this extemporary judgment. LATER I have delivered judgment on the substantive joinder and amendment application; inevitably, I now have to address the issue of costs. For the successful claimant and applicant, Mr Krsljanin invites the court to make an order for costs, not only against the first defendant, but also against the proposed sixth and seventh defendants. He does so on the basis that they have all resisted this application; and in that resistance, they have been unsuccessful. He submits that, in accordance with the usual principle, costs should follow the event. So far as the basis of assessment is concerned, he invites the court to order that costs should be assessed on the indemnity basis, although he recognises that the more egregious conduct is that of the first defendant. He recognises that the court may order an assessment against the first defendant on the indemnity basis, but against the sixth and seventh defendants on the usual standard basis. In support of his indemnity costs application, he points to three matters. All of these relate to the first defendant alone. The first is that his engagement in these proceedings has displayed a persistent breach of court orders. He gives four examples of that. The second matter on which Mr Krsljanin places reliance is the deployment of irrelevant, and prejudicial, material in all three witness statements: essentially, the introduction of references to improper motives, and to a 'grudge' on the part of the beneficial owner of the claimant, and her involvement in alleged VAT fraud. He emphasises that that is not an appropriate way to go about hostile litigation. The third matter is the manner of the opposition to the application. The defendants have all sought to oppose the application on the basis that any proprietary monies have all gone; none of them, however, has given any disclosure of relevant financial documentation. Mr Babaee opposes the application for costs, at least insofar as it relates to the proposed additional defendants. He points to passages in their witness statements which make it clear, he says, that they are simply acting in support of his own opposition to the amendment and joinder application. In his brief reply, Mr Krsljanin disagreed with Mr Babaee's attempted characterisation of the proposed additional defendants' opposition as mere witness support. They had made it clear that they themselves were opposing the joinder application. Mr Krsljanin also took me to the concluding paragraph of an email sent on 10 October 2025, addressed to both proposed additional defendants, with a copy to the first defendant (at page 20 of the supplemental bundle). That made it clear that the claimant's rights to seek any relief it deemed necessary at this week's hearing, including its right to seek costs orders against the proposed additional defendants on the basis of their opposition, remained fully reserved. I am satisfied that this application has been opposed both by Mr Babaee and by the proposed additional defendants. The whole thrust of Mr Babaee's opposition was that the additional defendants should not be joined to the proceedings. His opposition is rooted in the defence of the interests of his son and wife. His son and wife have joined with him in that opposition. In those circumstances, it seems to me to be clear that it is just and convenient for all three defendants to bear the costs of the opposition to this application jointly and severally. All of them have participated in opposing the application; and the real beneficiaries of that opposition succeeding would have been the proposed additional defendants, rather than Mr Babaee. All must therefore pay the costs of the failed resistance to the application. So far as the basis of assessment is concerned, I see no real reason to order that costs should be assessed on anything other than the usual, standard basis. Whilst I accept that the defendants have gone beyond the realms of necessity in resisting the application, and have introduced extraneous, and peripheral, matters, I am not satisfied that that has added materially to the length, or the costs, of the hearing; nor does it seem to me that it has trespassed beyond the norm of commercial litigation, particularly in a case where the respondents have not been in receipt of impartial, and independent, legal advice, but have been acting as litigants in person. My ruling, therefore, is that all three of those opposing the application, the first defendant, and now the sixth and seventh defendants, must bear the costs of the application; but those costs should fall to be assessed on the usual, standard, and not the indemnity, basis. LATER STILL I now have to conduct the summary assessment. In doing so, I bear in mind the terms, in particular, of paragraph 3 of Mr Babaee's letter of 5 September, refusing consent to a whole number of paragraphs of the proposed amended particulars of claim. I have two separate statements of costs. It seems to me that, given the terms of that letter to which I have just made reference, I should proceed to an assessment of both statements of costs. However, the hourly rates claimed are considerably in excess of the current guideline hourly rates, even for high-value commercial litigation. I am not proposing, in the time available, to go through each separate item in each statement of costs, and to try and make the appropriate deduction. What I propose to do is simply to take an across-the-board deduction of one quarter to reflect the discrepancy between the guideline hourly rates and the hourly rates applied in these two statements of costs. On that basis, looking at the solicitors' fees, for the first one I will assess the costs at £4,500 for solicitors, and on the second one at £33,000 for the solicitors; and I think for solicitors that means a total of £37,500. For counsel, I note that the total is £20,625. Even allowing for the work on the supporting skeleton argument, that does seem to me to be unreasonable and disproportionate for an amendment and joinder application. I therefore would propose to allow a total of £16,000 for counsel. That I think produces a figure of £53,500 in total, if my arithmetic is correct. Looking at it, that seems to me, in the round, to be a reasonable and proportionate figure. So I will assess the costs in total at £53,500. ______________ BAILII: Copyright Policy | Disclaimers | Privacy Policy | Feedback | Donate to BAILII