Cavadore Ltd v Mohammed Jawa
| Jurisdiction | England & Wales |
| Judge | Master Francis |
| Judgment Date | 13 December 2021 |
| Neutral Citation | [2021] EWHC 3382 (Ch) |
| Docket Number | Case No: BL-2021-000228 |
| Court | Chancery Division |
[2021] EWHC 3382 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
BUSINESS LIST (Ch D)
Royal Courts of Justice
Fetter Lane, London, EC4A 1NL
DEPUTY Master Francis
Case No: BL-2021-000228
Barnaby Hope (on 29 November 2021) and Max Cole (on 3 December 2021) (instructed by DMH Stallard LLP) for the Claimants
Denise McFarland (instructed by LK Law LLP) for the Defendants
Hearing dates: 29 November, 3 December 2021
APPROVED JUDGMENT
Deputy Master Francis
I have before me three related applications brought by the claimants, Cavadore Limited (“Cavadore”) and Magenta Black Trading Limited (“Magenta Black”), seeking further time for compliance with an unless order made by Deputy Master Arkush on 26 August 2021 (although only drawn up in a perfected order on 20 September 2021), and, if necessary, relief from sanctions for failure to comply with that unless order. The applications raise questions as to the exercise of the court's power to permit amendments to an application notice, and the treatment of applications which, as issued, were in-time applications for extensions of time but which, absent amendment, are now superseded by lapse of time and are moribund; am I to apply the Denton criteria in ultimate determination of the applications, or the less stringent test which applies to in-time applications?
The applications have been argued with considerable force and skill, on behalf of the claimants by Mr Barnaby Hope, in writing and at the first hearing on 29 November 2021, and at the adjourned hearing on 3 December by Mr Max Cole; and on behalf of the defendants throughout by Ms Denise McFarland.
Background
Cavadore and Magenta Black are companies registered in the Republic of Cyprus, with which Marios Georgallides and his wife Kalliopy Georgallides are closely associated. Cavadore is stated to be the ultimate beneficial owner of the business that operated and managed the Japanese restaurant Nozomi in Knightsbridge, and claims to have established an international reputation and goodwill in the name “Nozomi”; it has registered the word “Nozomi” and its distinctive logo as trade marks in the United Kingdom and, it is alleged, other countries around the world. Magenta Black is entitled to exploit the intellectual property rights relating to Nozomi under the terms of a licence granted by Cavadore.
Mohammed Jawa, the first defendant, is a national of the Kingdom of Saudi Arabia (“KSA”). Modern Food Company Limited (“MFC”), the second defendant, a private company operating under the laws of KSA. Mr Jawa was formerly a shareholder in, and director and CEO of MFC, but is said to have ceased any association with MFC since July 2020.
The present claim concerns five franchise agreements entered into by Magenta Black with Mr Jawa and MFC in the period between 2012 and 2016 for restaurants to be opened in Riyadh and Jeddah, as well as Kuwait City and Dubai, operating under the Nozomi brand and in accordance with the Nozomi system. Those agreements have since been terminated but Magenta Black claims damages from the defendants for breaches of those agreements and consequent on the defendants' alleged repudiation of the agreements. Furthermore Cavadore and Magenta Black both seek injunctive relief and damages for the wrongful interference with, and misappropriation of their intellectual property rights in Nozomi. The value of the claims is stated to be at least £23 million.
The claims are disputed but it is unnecessary for present purposes to consider their merits in any detail; I have seen nothing to suggest they are not ones which are properly arguable.
This is in fact the third claim brought in this jurisdiction by the claimants against the defendants based on the same allegations. The first claim, BL-2018-001468, was commenced in the Business and Property Courts in June 2018. On 4 July 2018 Master Price granted permission for service of the claim on the defendants out of the jurisdiction in KSA, and subsequently granted the claimants default judgment on 10 October 2018. The defendants thereafter brought an application to set aside the default judgment on grounds the claim form had not been validly served in accordance with the laws of KSA, which succeeded before Deputy Master Bowles on 12 December 2019; and, as time for service of the claim form had by then expired, the first claim was struck out. The claimants were ordered to pay the defendants' costs of the claim, with an interim sum of £90,000 ordered on account on such costs on 21 January 2020 and the defendants subsequently obtaining a default costs certificate on 13 May 2020 for £210,036.61. To date the claimants have not paid a penny to those costs.
The second claim, BL-2020-000106, was issued on 17 January 2020 seeking only injunctive relief. That claim was never served after the defendants' English solicitors, Lipman Karas LLP, declined to accept service in this jurisdiction and so simply fell away.
As a result of non-payment of the costs order in the first claim, the defendants presented a winding up petition against Cavadore on 28 August 2020 in the Republic of Cyprus. That petition is yet to be determined, having been adjourned on a number of occasions. I understand that Cavadore relies by way of answer to the petition on the contention that it is entitled to set off against the costs order the sums which it expects to recover in its substantive claim against the defendants.
The present claim was issued on 11 February 2021. On 10 March 2021 the claimants applied without notice for permission for service of the claim on the defendants out of the jurisdiction in KSA, and for an order permitting service by alternative means including by e-mail on Lipman Karas. The application came before Deputy Master Teverson on 1 April 2021 who granted permission for service out and for service by alternative means by serving the claim on Lipman Karas by first class post. However, his order was conditional upon an undertaking which he required the claimants to give to pay the costs of the first claim, which he had been informed by their counsel, Mr Hope, was due and outstanding in a sum of £90,000, the amount of the interim costs order.
Mr Hope had been unaware at the hearing of the default costs certificate obtained in the first claim, but was advised of this by his solicitors shortly after the hearing. As a result, before the master's order was perfected he wrote to Deputy Master Teverson on 6 April 2021 to inform him of the full amount of the outstanding costs, and to request that the requirement for the claimants to undertake to pay this larger sum as a condition of the grant of permission be removed on the grounds that the claimants did not have the means to do so, and their claim would otherwise be stifled. On 22 April 2021 Mr Georgallides made a witness statement in support of the request that the condition be removed or varied, stating inter alia that the claimants “did not have the ready cash” to meet the costs order, and submitting that the court should instead leave it for the defendants to apply for a stay of the claim following service until the earlier costs order was satisfied, at which point the court would be in a better position to determine whether it was just to impose such requirement having regard to its assessment of the strength of any defence to the claim. At a further hearing on 27 April 2021 Deputy Master Teverson was persuaded to remove the condition, no doubt on the strength of those submissions, and the order for permission for service out and for service by alternative means, now in unconditional terms, was drawn and sealed accordingly.
On 18 June 2021 the defendants applied to set aside or vary the 27 April 2021 order on the grounds (i) the claimants had failed to give full and frank disclosure, (ii) there was no good reason to have given permission for service by alternative means and (iii) the court should in any event reinstate the condition for payment of the unsatisfied costs order. The application was supported by a lengthy statement from Mr Andrew Ford, a solicitor at Lipman Karas, of the same date, in which a number of complaints were set out as to the manner in which the claimants had pursued its application for service out and alternative service without notice to the defendants, and as to the failure to provide full and frank disclosure on various matters including the amount of the unsatisfied costs of the first claim.
The defendants' application came before Deputy Master Arkush on 26 August 2021. He expressed some concerns at the outset of the hearing about the manner in which the claimants had proceeded, in pursuing its application on a without notice basis and in failing to set out the costs position in evidence up front, and indicated that he would need to be persuaded why he should not order a stay until the costs of the first claim had been paid; he further indicated that he was minded tentatively to set aside the order for alternative service on the basis that the only ground relied on to justify such order, that of the prospective 12 month delay in effective service through official channels in KSA, was inadequate. In the light of those indications, counsel for the claimants requested some time to take instructions, and if so instructed to enter discussions with counsel for the defendant, Ms McFarland.
The master acceded to that request, and later that day counsel returned with agreed terms to dispose of the application on the basis that (i) the existing permissions for service out and alternative service would be set aside, and new permission granted for service out in KSA by official channels, with time for service extended to...
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