Catalyst Investment Group Ltd (now dissolved) & others v Max Lewinsohn & others
| Jurisdiction | England & Wales |
| Judge | Master McQuail |
| Judgment Date | 15 March 2022 |
| Neutral Citation | [2022] EWHC 522 (Ch) |
| Docket Number | Case No: BL-2020-001467 |
| Court | Chancery Division |
[2022] EWHC 522 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
BUSINESS LIST (ChD)
Royal Courts of Justice, Rolls Building
Fetter Lane, London, EC4A 1NL
DEPUTY Master McQuail
Case No: BL-2020-001467
Mr William Buck (instructed by Cooke, Young & Keidan LLP) for the Fifth Claimant
Mr Rory Brown (instructed by Brandsmiths) for the Defendants
The other Claimants were not represented and did not appear
Hearing date: 25 January 2022
Approved Judgment
DEPUTY Master McQuail
On 25 January 2022 I heard the adjourned application dated 9 September 2020 by which the defendants sought an order “under CPR 3.4(b) and/or CPR 3.4(c) to strike out the following claims for want of prosecution: HC08C30158 and HC08C03241.”
That application was supported by a witness statement dated 8 September 2020 of Mr Adam Morallee of Brandsmiths who represent the defendants.
The application was first listed before me on 7 April 2021. On that occasion I gave an ex tempore judgment and made orders in relation to the two sets of proceedings. Shortly after that further documentation came to light and the application was listed before me again on 23 June 2021. I gave a reserved oral judgment on 10 August 2021 the contents of which I will not unnecessarily repeat.
I made an order dated 10 August 2021 in the HC 08C03158 (now BL-2020-001467) proceedings by which:
(i) the indefinite stay of the proceedings made by the consent order of Master Moncaster dated 10 May 2010 (“the 2010 Consent Order”) was lifted;
(ii) my order of 7 April 2021 (made in ignorance of the stay) was set aside;
(iii) the injunction made by order of Lewison J dated 29 December 2008 as extended by a consent order of Blackburn J on 12 January 2009 was discharged;
(iv) directions were given for re-listing the application (so far as it concerns the HC 08C03158 (now BL-2020-001467) proceedings only) and a timetable for filing any further applications and evidence was set;
(v) I ordered that the defendants should pay the fifth claimant's costs of the three hearings that had taken place and of the fifth claimant's costs of responding to my directions of 13 May and of corresponding with the defendants' solicitors in relation to the discovery of the 2010 Consent Order.
Since the hearing on 7 April 2021 the following evidence has been filed:
(i) on behalf of the defendants, Mr Morallee filed a second witness statement dated 12 May 2021 and a third witness statement dated 5 November 2021 and the first defendant (“Mr Lewinsohn”) filed witness statements dated 26 May 2021, 5 November 2021 and 17 January 2022; and
(ii) on behalf of the claimants, Mr Daniel Burbeary of Cooke, Young & Keidan LLP, solicitors for the fifth claimant filed witness statements dated 9 June 2021 and 8 October 2021.
Chronology of the Proceedings
The full history of the two sets of proceedings of which strike out was sought (and a third set of related proceedings) is not entirely certain. The chronology set out in the following paragraphs is evidenced by documents which were in the bundles before the court on 25 January 2022 and by the terms of the judgment of Barling J given on 16 November 2009.
Three sets of related proceedings were issued in late 2008 as follows:
(i) On 7 November 2008 Catalyst Investment Group Limited (“Catalyst”) issued claim HC08C03158 against (1) Mr Lewinsohn and (2) Maximillian & Co (A Firm) (“M & Co”);
(ii) On 17 November 2008 Catalyst and Tim Roberts (“Mr Roberts”) issued claim HC0803421 against (1) Mr Lewinsohn and (2) M & Co;
(iii) On 17 December 2008 ARM Asset-Backed Securities SA (“ARM”) issued claim HC08C03618 against (1) Mr Lewinsohn, and (2) M & Co.
The disputes between the parties to the three sets of proceedings had their origins in connection with Eneco Inc (“Eneco”) a now defunct Utah corporation, certain promissory notes it had issued to lenders and the security interest it had granted in its interest in certain international patents (“the IP Rights”).
HC0803421 and HC08C03618 were essentially mirror image declaratory proceedings to proceedings in Utah arising out of the liquidation of Eneco. By HC08CO3158 Catalyst claimed that Mr Lewinsohn and M & Co, which is his alter ego, had been in breach of contractual, fiduciary and trust duties by virtue of his position as collateral agent of certain of the promissory noteholders under a contractual agreement (“the Intercreditor Agreement”) and sought relief including declarations that Catalyst was the rightful holder of certain of the promissory notes and had acquired certain of the IP Rights that had belonged to Eneco.
On 29 December 2008 Lewison J made an order at a without notice hearing in HC08C03158 granting permission to add Micropower Global Limited (“Micropower”), to which the IP Rights were being transferred by Mr Lewinsohn and M & Co, as a defendant and injuncting the defendants from disposing of certain IP rights. Costs were reserved. On 12 January 2009 a consent order made by Blackburn J continued the injunction until the following week and reserved the costs of the adjournment. It seemed that the injunction remained in place until my order discharging it in August 2021 (Mr Morallee's evidence in his first witness statement was that the injunction remained in place until my order, although paragraph 40 of Barling J's judgment of 31 July 2009 suggests that the injunction had by then been replaced by undertakings). It is unclear whether the costs of the injunctive proceedings were ever determined or were reserved until a later occasion.
On 21 January 2009 Mr Lewinsohn and M & Co made applications to challenge jurisdiction under CPR 11 in each set of proceedings. On 13 February 2009 Micropower made its own application to challenge jurisdiction in HC08C03158. These applications were heard over four days in May 2009 by Barling J. On 31 July 2009 Barling J gave judgment dismissing the jurisdiction challenges in each of the three sets of proceedings. The determination of costs was adjourned to a later date. Defences were directed to be filed by 25 September 2009 and replies by 16 October 2009. In addition, the Judge ordered that ten further claimants, who had assigned the promissory notes to Catalyst, be added as parties to HC08C30158.
On 24 September 2009 the claimants received the defendants' notices conceding liability for the entirety of the claimants' claims made in HC0803421 and HC08C03618.
Re-amended particulars of claim in HC08C03158 are dated 5 October 2009 and the amended defence and M & Co's counterclaim in those proceedings are dated 30 October 2009. By the counterclaim M & Co claims against the claimants all its costs incurred as collateral agent including costs and legal expenses in Utah and England and an indemnity against liability for costs in the proceedings themselves. The counterclaim is made pursuant to the terms of the Intercreditor Agreement.
On 11 November 2009 M & Co issued an application for summary judgment on the counterclaim in HC08C03158; judgment was sought in the sum of “$US1,755,381 and £293,610 and in the form of an indemnity”. On the same date the defendants issued an application for security for costs against the first, second, third, fourth, ninth and eleventh claimants in HC08C03158.
On 13 November 2009 Barling J heard argument about the costs of the failed jurisdiction challenges and the two conceded claims. Barling J gave judgment on 16 November 2009. It was ordered that:
(i) the defendants pay ARM indemnity costs in HC08C03618 and make a payment on account;
(ii) the defendants pay Catalyst and Mr Robert's costs in HC0803421 and pay £94,727 on account;
(iii) the defendants pay Catalyst's costs of the jurisdiction challenge in HC0803158 and pay 50% of £249,502.62 on account.
A hearing, presumably of at least one of the defendants' applications for summary judgment on M & Co's counterclaim and the defendants' application for security, was listed to be heard on 12 January 2010 before Master Moncaster. It seems that that hearing did not take place and a further hearing was listed for 10 April 2010. Again, it appears that that hearing did not take place and instead the 2010 Consent Order staying the proceedings indefinitely was made.
Thereafter there is no documentary evidence or certain witness evidence before the court of any step taken by any party in relation to the proceedings until the application of 8 September 2020 was made. Mr Brown told me on instructions that:
(i) the costs liabilities pursuant to Barling J's orders in November 2009 were paid by the defendants; and
(ii) a settlement in HC0803158 was reached with the eleventh claimant.
The defendants' application to strike out was made in apparent ignorance of the 2010 Consent Order and of the final disposal of the HC08C03618 proceedings in November 2009, as explained in my judgment of 10 August 2021.
All that is known about the costs in proceedings HC0803158 is that the defendants were ordered to pay Catalyst's costs of the jurisdiction challenge.
Mr Morallee's first witness statement stated that the costs of defending HC08C03158 and HC08C03241 totalled £854,314 and that interest at 8% on that sum amounted to £747,925.02. Mr Lewinsohn's third witness statement acknowledged that his record of historic costs relating to the two sets of proceedings were not complete. He explained the quantification of the costs claim advanced by Mr Morallee as follows:
(i) 25% of the...
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