De Beer v Kanaar & Company
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE JONATHAN PARKER |
| Judgment Date | 09 August 2001 |
| Neutral Citation | [2001] EWCA Civ 1318 |
| Docket Number | Case No: A3 2001 0891 CHANI |
| Court | Court of Appeal (Civil Division) |
| Date | 09 August 2001 |
[2001] EWCA Civ 1318
Lord Justice Jonathan Parker and
Mr Justice Rimer
Case No: A3 2001 0891 CHANI
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM Miss Elizabeth Gloster QC
Sitting as a Deputy Judge of the High Court
The Royal Courts of Justice
The Strand, London, WC2A 2LL
Mr Philip Marshall (instructed by Messrs. Reynolds Porter Chamberlain) for the
Appellant/1 st Defendant
Mr Pushpinder Saini (instructed by Messrs. Pritchard Englefield)for the Respondent/Claimant
This is the judgment of the court.
Introduction
This is an appeal by Kanaar & Co ("Kanaar"), the first defendant in the action, against an order made by Miss Elizabeth Gloster QC, sitting as a Deputy High Court Judge in the Chancery Division, on 19 February 200By her order, the judge dismissed Kanaar's application that the claimant in the action, Mr Hans David de Beer, give security for its costs of the action. The judge concluded that on the true construction of the relevant provisions of the Civil Procedure Rules ("the CPR") the court had no jurisdiction to make the order sought. In the light of that conclusion further questions as to whether the discretion to order security for costs should be exercised, and if so on what terms, did not arise.
Notwithstanding that Mr de Beer is ordinarily resident in the United States, the judge concluded that there was no jurisdiction to order security for costs against him since he currently had assets in Holland and in Switzerland, which states are respectively parties to the Brussels Conventions and the Lugano Convention (as defined in section 1(1) of the Civil Jurisdiction and Judgments Act 1982). There is no material difference for present purposes between the provisions of the Brussels Conventions and those of the Lugano Convention. For convenience we will refer hereafter to the Brussels Conventions and the Lugano Convention as "the Conventions", and to states parties to the Conventions or either of them as "Convention states". The judge held that the fact that Mr de Beer had assets in a Convention state meant that the court had no jurisdiction to order him to give security for costs.
The judge gave permission to appeal against her dismissal of the application for security for costs, but refused permission to appeal against her dismissal of two further applications made by Kanaar. Kanaar applied for permission to appeal against the dismissal of the other applications, but permission was refused by Jonathan Parker LJ on the papers on 23 May 2001 and the application for permission has not been renewed.
Kanaar appears on this appeal by Mr Philip Marshall of counsel; Mr de Beer by Mr Pushpinder Saini of counsel. Both counsel appeared before the judge.
The background to the dispute
Kanaar is a firm of solicitors. The principal of the firm is Mr Nicholas Kanaar. The second defendant in the action, Mr Richard Kendall-Bush, is a former solicitor who acted at the material time (1991) as consultant to Kanaar. On 9 December 1998 Mr Kendall-Bush was ordered to be struck off the roll of solicitors for serious misconduct arising out of the transactions which have given rise to the present dispute. Mr de Beer is a Dutch national who lives in Florida. He is a real estate dealer and managing director of a company which carries on business in real estate.
In her judgment, the judge summarised the background to, and nature of, the dispute as follows:
"In July 1991, Mr de Beer and several other individuals, described in the Statement of Claim as 'the Associates', agreed to act together as brokers in seeking to introduce a buyer for letters of credit to the value of US$300 million which were purportedly being issued [by] a self-styled Polish bank, Banque pour le Developement du Commerce ('Decobank'). However, the genuineness of the letters of credit is in issue, and [Kanaar] allege that the whole transaction was a prime bank instrument fraud. Indeed, the Law Society Disciplinary Tribunal concluded that, on the face of it, the purported transaction bore every hallmark of a prime bank instrument fraud. I would agree with this view. As now accepted by [Mr de Beer] in his Reply, Decobank was not registered with the Polish authorities as a banking institution and there is no reference to any such bank in leading bank directories.
Mr de Beer's case is that, in about September 1991 it was agreed between the Associates and [Kanaar] that [Kanaar] would act for the Associates in the sale of letters of credit and would share any commission to be paid as a result of brokering the transaction. [Kanaar] sought various buyers of the letters of credit on behalf of the Associates and found a so-called 'Tunisian Group' whose representative was a Mr Victor Cruz who was based in Tunis. Mr Kendall-Bush went with a Mr Henriod (both of whom, together with [Kanaar], were to share in the commission) to Tunis in September 1991 with the aim of executing the sale of the letters of credit to the Tunisian Group.
Mr de Beer alleges that Mr Kendall-Bush and [Kanaar] have misappropriated $250,000 belonging to him in the following circumstances. Mr de Beer claims that on 31 October 1991 he transferred the sum of 374,210 Swiss francs (equivalent to US$250,000) to the credit of an account of Mr Kendall-Bush …. in Tunis. This transfer was made in response to a letter dated 18th October 1991 in which Mr Kendall-Bush requested the Associates to remit to him in Tunisia the sum of $250,000. Mr de Beer alleges that in this letter and orally Mr Kendall-Bush and Mr Kanaar assured him that the money was in effect to indicate bona fides on the part of the seller and that it would be returned without use within a matter of days. Mr de Beer claims that, on the same day that he transferred his money to Mr Kendall-Bush, the latter transferred the sum of 291,600 Swiss francs (equivalent to US$200,000) to Mr Cruz. Mr de Beer claims this transfer was pursuant to a declaration by Mr Kendall-Bush on 19th October 1991 to remit to Mr Cruz US$200,000 by way of penalty for non-performance by Decobank. Mr de Beer claims that the remaining US$50,000 was at a later date transferred to Mr Kendall-Bush and that none of the money has been returned to him; in other words, that Mr Kendall-Bush has misappropriated Mr de Beer's money.
Mr de Beer further alleges that at all material times Mr Kendall-Bush acted with the authority of [Kanaar] and that [Kanaar] expressly authorised Mr Kendall-Bush to act on their behalf in relation to the letters of credit. Mr de Beer therefore claims to be entitled in restitution to the return of $250,000 by [Kanaar] and/or Mr Kendall-Bush as money had and received.
[Kanaar] claims by way of defence that, in relation to the transaction involving $250,000, Mr Kendall-Bush acted on his own behalf and not on behalf of the firm. [Kanaar] maintains that the whole nature of the transaction had changed, and that a letter dated 18th October 1991, which was faxed to the Associates, indicated that any ostensible authority which Mr Kendall-Bush had had from [Kanaar] was terminated.
[Kanaar] further claim that Mr de Beer was involved in a fraudulent and unlawful design in that Mr de Beer and the Associates sought to obtain substantial funds by selling the letters of credit, when he knew that Decobank was not bona fide and that the letters of credit were bogus and worthless. [Kanaar] further contends that Mr de Beer pressed on with what he must have appreciated was a fraudulent transaction in order to obtain very substantial funds on the basis of false instruments. …… In short, [Kanaar] contends that [Mr de Beer] was an active participant in the fraudulent scheme to obtain funds by means of discounting false bank instruments and that the deposit of the sum for which he now makes a claim formed a step in an attempt to implement the fraud.
The exact nature of Mr Kendall-Bush's defence is unclear from his pleaded defence. It appears that he also alleges that Mr de Beer was involved in a fraudulent scheme."
The writ was issued on 28 October 1997, shortly before the expiry of the limitation period. On 28 March 2000, following close of pleadings, Master Bowles gave directions for a case management conference. By an application notice dated 30 June 2000 Kanaar applied for an order that Mr de Beer give security for its costs. The sum sought by way of security was £130,000, representing Kanaar's estimated costs to the end of the trial. On 2 November 2000 Master Bowles directed that Kanaar's application be listed with the case management conference. The case management conference was held before the judge, and led to the order dismissing the application against which Kanaar now appeals.
In his evidence in opposition to the application Mr de Beer disclosed that he had a right to an interest in the estate of a deceased person which was in course of being administered in Holland by executors appointed there, and that he currently owned cash and equities held by UBS Bank in Switzerland. The situs of Mr de Beer's interest in the unadministered estate in Holland may have been open to question, but the judge regarded this as immaterial in the light of evidence that his assets in Switzerland were worth about £177,000. The judge was accordingly content to proceed on the footing that the Swiss assets were of sufficient value to meet any order for costs which might be made in favour of Kanaar.
In the course of the hearing of this appeal Mr Saini told us that the current net value of Mr de Beer's assets in Switzerland was only some US$28,753. He...
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