Deutsche Bank AG v (1) Sebastian Holdings Inc. (2) Mr Alexander Vik (Defendant for costs purposes only/Applicant)
| Jurisdiction | England & Wales |
| Judge | His Honour Judge Waksman |
| Judgment Date | 28 April 2016 |
| Neutral Citation | [2017] EWHC 913 (Comm) |
| Docket Number | Claim No: CL-2009-000709 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 28 April 2016 |
[2017] EWHC 913 (Comm)
His Honour Judge Waksman QC
(sitting as a Judge of the High Court)
Claim No: CL-2009-000709
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Duncan Matthews QC, Charlotte Tan and Alistair Wooder (instructed by, Brecher LLP, Solicitors) for the Defendant for costs purposes only/Applicant
Sonia Tolaney QC, James MacDonald and Andrew Lodder (instructed by Freshfields Bruckhaus Deringer LLP, Solicitors) for the Claimant/Respondent
Hearing dates: 10 April 2017
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
INTRODUCTION
This is an application made by Mr Alexander Vik to set aside an order made against him on paper by Sir Jeremy Cooke on 10 October 2016 ("the Order"). Because the Order was made on paper and without a hearing and not with his consent, Mr Vik was given express permission to apply to vary or set it aside.
As explained in more detail below, Mr Vik was the individual behind the Defendant in the substantive proceedings, namely Sebastian Holdings Inc. ("SHI") a Turks and Caicos company. The proceedings concerned a claim by the claimant bank, Deutsche Bank AG ("DB") for monies due to it in respect of a number of very large trading transactions on which SHI had made huge losses. After a 44-day trial, Cooke J gave judgment for DB for US$243m and dismissed SHI's counterclaim for US$8bn. He also awarded to DB 85% of its costs on an indemnity basis.
In his judgment given on 8 November 2013, Cooke J described Mr Vik and SHI as follows:
"SHI is a shell company incorporated in the Turks and Caicos. It is a special purpose vehicle which is the creature company of Mr Vik who is its sole director and shareholder. [Mr Vik] stated that it was his "trading company"… Apart from trading through third-party managers, Mr Vik was the "embodiment of SHI"… SHI had no employees so that… Mr Vik alone could be said to represent SHI generally."
He also made severe criticisms of SHI's conduct of the litigation and Mr Vik, whom he found had lied and fabricated documents. Hence the indemnity costs order. He also made some criticism of DB though by no means of the same order.
Thereafter, DB applied for a non-party costs order ("NPCO") against Mr Vik. In a lengthy judgment handed down by Cooke J on 24 June 2014, he granted that application and said as follows:
"103. In all the circumstances I consider that it is entirely just that a non-party costs order be made against Mr Vik so that he is liable for all sums owed by SHI to DBAG in respect of costs awarded by me in my order of 8 November 2013.
104. It follows also that absent any special considerations of which I am unaware, that the costs of the non-party costs application… should be paid by Mr Vik to DBAG.
105. The form of the order may be capable of agreement between DBAG and Mr Vik but if there are issues which I need to resolve, I will do so."
Pursuant to that judgment, on 2 July 2014 Cooke made an order which included the following provisions:
"1. Pursuant to s. 51 Senior Courts Act 1981, Mr Vik is to pay DBAG the sum of £36,204,891 by 4pm on 8 July 2014.
2. DBAG's costs of the Non-Party Costs Application are to be paid by Mr Vik…
9. Liberty to restore."
("the July Order").
Although this was the obvious consequence of his judgment, the July Order did not expressly contain a more general order that Mr Vik was liable to pay all of the costs payable by SHI to DB. But that was in my view implicit in the interim payment order at paragraph 1.
Mr Vik made the interim payment within two days. At that stage, he made no application for a stay of the July Order whether pending an appeal or otherwise. Appeal he did, however, but following a three-day hearing, the Court of Appeal dismissed that appeal on 21 January 2016 ( [2016] 4 WLR 17). It referred to the appeal being against the order that Mr Vik make the interim payment as it obviously was. That said, the Court of Appeal dealt in detail with the judgment of Cooke J, considering, as it did, that Mr Vik should be liable for all costs payable by SHI. There can be no doubt that the Court of Appeal dealt in principle with Mr Vik's liability to pay all the costs, even though the order in question concerned the interim payment only. Thus, it upheld the finding that "Mr Vik was the real party" and that he "had a full opportunity to deal with" all of the facts relevant to that finding and so there was "no reason in principle… why [Mr Vik] should not be required to pay the whole of the costs for which [is SHI] is liable."
An application by Mr Vik to the Supreme Court for permission to appeal from the Court of Appeal was dismissed on 19 July 2016 on the ground that no arguable point of law of general public importance had been raised.
THE ORDER
In the light of the exhaustion of Mr Vik's rights of appeal, DB's solicitors wrote a series of letters asking him to agree to pay the various specific costs orders made specifically against SHI including the balance of DB's general costs of the action awarded as against SHI by the order of Cooke J on 8 November 2013. On 12 August 2016, his solicitors replied saying that they would take further instructions and would respond within 14 days. They did not do so and on 6 September 2016, DB's solicitors said that they would now commence work on the assessment of costs due under the specific costs orders made against SHI and an application to restore the application that he pay the outstanding costs orders as against SHI.
The application itself was made by DB on 13 September 2016 and it included a witness statement in support with a long exhibit. The application sought:
(a) payment by Mr Vik pursuant to section 51 of the Senior Courts Act 1981 of the balance of DB's costs as awarded against SHI;
(b) that Mr Vik be made a party to any detailed assessment of the costs awarded against SHI;
(c) payment by Mr Vik of DB's costs of the detailed assessment of those costs; and
(d) payment by Mr Vik of DB's costs of this application.
The enclosed draft order was to the same effect.
On 16 September 2016 Mr Vik's solicitors wrote to say that they needed more time but would be in a position to say whether he consented to the application being dealt with on paper within 14 days i.e. at the end of September.
However, nothing further was heard from Mr Vik's solicitors by the end of September and so on 4 October 2016 DB's solicitors wrote to the Court setting out the history and saying that, for its part, DB was content for the matter to be dealt with on paper while recognising that if Mr Vik objected to any of the orders sought it would be necessary to have an oral hearing. This letter was copied to Mr Vik's solicitors who wrote to the Court on 5 October 2016 saying that the delay in responding was due to Mr Vik's dealing with other litigation commenced by DB and Counsel's availability. However the letter said that he would respond substantively to the application by 14 October 2016 and also say by then whether he consented to it being dealt with on paper.
In fact, and in the meantime, the application was dealt with on paper by Sir Jeremy Cooke on 10 October 2016. His order in full reads as follow:
"UPON the Claimant (DBAG) having applied on 5 December 2013 for a non-party costs order against the Second Defendant (Mr Vik);
AND UPON the judgment of Cooke J dated 24 June 2014;
AND UPON the order of Cooke J dated 2 July 2014;
AND UPON having reviewed DBAG's Application dated 13 September 2016 (the Application) to restore its application dated 5 December 2013:
IT IS ORDERED THAT:
1. Pursuant to s. 51 Senior Courts Act 1981, Mr Vik is to pay DBAG's costs awarded against the First Defendant (SHI) pursuant to paragraphs 3 and 4 of the order of Cooke J dated 8 November 2013 plus interest accrued thereon.
2. Mr Vik shall be made a party to any detailed assessment of the costs awarded to DBAG against SHI pursuant to paragraphs 3 and 4 of the order of Cooke J dated 8 November 2013.
3. Mr Vik shall be entitled to set off the sum of £36,204,891 from any amount payable under paragraph 1 above.
4. Mr Vik is to pay DBAG's costs of the detailed assessment of the costs awarded to DBAG against SHI pursuant to paragraphs 3 and 4 of the order of Cooke J dated 8 November 2013.
5. Mr Vik is to pay DBAG's costs associated with the Application, to be the subject of summary assessment if not agreed.
6. Liberty to apply within seven days of the date of this order. In particular, liberty to the Second Defendant to apply as, despite request, he has failed to consent to the Application being considered on paper."
I should add that, on DB's case, the balance of the costs could be as much as £16m, although Mr Vik says that little or nothing further remains to be paid after an assessment i.e. the £36m interim costs order already paid represents all or most of what DB could hope to achieve on a detailed assessment.
MR VIK'S APPLICATIONS
The application made before me by Mr Vik is to set aside the Order and to stay the prior application made by DB for the balance of the costs together with any detailed assessment as against SHI and/or Mr Vik, alternatively simply to stay the assessment in any event, pending the outcome of an application made by Mr Vik to the ECHR in Strasbourg, on 28 November 2016 ("the ECHR Claim").
The ECHR Claim
The ECHR Claim argues that the NPCO originally made (and any ancillary orders thereafter) was in breach of Mr Vik's Article 6 rights. The essential reason for this was said to be that during...
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