Deutsche Bank AG v (1) Sebastian Holdings Inc. (1st Defendant) (2) Alexander Vik (2nd Defendant for Costs Purposes Only)
| Jurisdiction | England & Wales |
| Judge | Mr Justice Cooke |
| Judgment Date | 30 January 2014 |
| Neutral Citation | [2014] EWHC 112 (Comm) |
| Docket Number | Case No: 2009 Folio 83 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 30 January 2014 |
and
[2014] EWHC 112 (Comm)
Mr Justice Cooke
Case No: 2009 Folio 83
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Ms Sonia Tolaney QC (instructed by Freshfields Bruckhaus Deringer LLP) for the Claimant
Mr Stephen Rubin QC (instructed by Cooke, Young and Keidan LLP) for 2nd Defendant
The 1st Defendant was not present or represented
Hearing dates: 24th and 30th January 2014
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.
Mr Justice Cooke Mr Justice Cooke On 8th November 2013 I gave judgment against the first defendants (SHI) in the sum of $243,023,089.00 including interest and ordered payment by it of that sum and £32 million (plus non-recoverable VAT of £2,517,115.30) on account of costs, to be paid by 22nd November 2013.
No payment was received and on 28th November 2013 the claimant (DBAG) applied without notice for Mr Vik to be added as a party to the proceedings for the purpose of costs only, in order to seek a non-party costs order against him. DBAG also sought permission to serve that application for a non-party costs order on him out of the jurisdiction at 10 Ashton Drive, Greenwich, Connecticut 06831 USA pursuant to CPR 6.36, PD 6B 3.1( 18), CPR 6.15( 1), CPR 6.37(5)(b) and paragraph 9 Appendix 15 of the Commercial Court Guide. The documents were provided to the English and New York legal advisers of both Mr Vik and SHI on the same date.
In the witness statement filed in support of the application for permission to serve out, reference was made to the firm of English solicitors CYK which had advised Mr Vik personally in the course of the proceedings and to the attendance, on occasions during the trial, of leading counsel who was also instructed by him personally. It was suggested that Mr Vik had submitted to the court's jurisdiction but, with the intention of avoiding any dispute on that issue, permission was sought for service out of the jurisdiction. DBAG contended that there were strong grounds for making a non-party costs order.
The critical evidence relied on in support of service out of the jurisdiction by an alternative method to that for which the provisions of the CPR ordinarily provided was set out in paragraphs 35–40 of the eighth witness statement of Mr Snelling, which I recite out in full:
"35. It is apparent from Mr Vik's evidence that, whilst he is a Monaco resident, he lives for periods of the year at a property owned and resided in by his wife at 10 Ashton Drive, Greenwich, Connecticut 06831, USA (the Connecticut Property). Indeed, Mr Vik maintains an " office" at the Connecticut Property at which he employs a number of " administrative assistants" and he instructed CYK to search this office for personal documents which may be disclosable in these proceedings. The Connecticut Property is also the location from which Klaus Said conducted the FX trading which was the primary focus of the proceedings. Evidence from an internet search suggests that Mr Vik was very recently (and so may currently be) in New York (Manhattan is less than 50 miles from the Connecticut Property).
36. I am informed by David Januszewski of Cahil Gordon & Reindel LLP (DBAG's New York counsel), who is admitted to the Connecticut Bar, that it is permissible under Connecticut law to serve foreign proceedings otherwise than through the Hague Convention.
37. The Connecticut Property is the address where service was effected upon Mr Vik in the Vik Millahue proceedings in 2009. Mr Vik did not seek to set aside service of these proceedings on the basis of invalid service; however he did not accept that such service was effective on the basis that the Connecticut Property is not his "usual place of abode" and he was not personally present when the proceedings were served.
38. DBAG recognises that there are numerous places where, owing to the international nature of Mr Vik's business interests and lifestyle, it might attempt to effect service upon him. Cooke J describes Mr Vik as someone who " travels the world". The evidence before the Court showed that, whilst he may be a Monaco resident, he has significant business interests in North and South America and frequently travels there and to Europe. However, for the reasons set out in this statement, it is DBAG's view that effecting service at the Connecticut Property would be the most practical and expedient. Even if Mr Vik is not physically present at the time of service, the relevant documents are likely to be brought to his attention without delay as his wife resides there and his office is located there, as are his administrative assistants.
39. DBAG recognises that CPR 6.40(3)(c) provides that service is permissible " by any other method permitted by the law of the country in which it is to be served". However, DBAG is mindful of: (a) the stance previously adopted by Mr Vik that the Connecticut Property is not his "usual place of abode"; (b) the practical difficulties of effecting service by alternative means, such as personal service upon Mr Vik (and the potential personal embarrassment that may be caused by this); and (c) the uncertainty as to whether service upon Mr Vik by leaving documents in another location, such as Monaco, would be brought to his attention more expediently. DBAG is keen to avoid the possibility of any argument as to whether Mr Vik has been validly served and therefore invites the Court to exercise its power, under CPR 6.15(1), 6.37(5)(b) and paragraph 9 of Appendix 15 of the Commercial Court Guide, to make an order permitting service by leaving a copy of the Non-Party Costs Application at the Connecticut Property. As noted above, service upon Mr Vik by leaving documents at the Connecticut Property has been effected previously and will ensure that the documents are brought to his attention expeditiously. It is therefore hoped that this pragmatic approach will assist the efficacious determination of the Non-Party Costs Application.
40. Mr Vik has, in his personal capacity, instructed lawyers both in London (CYK) and New York (Becker Glynn, Muffly, Chassin and Hosinksi LLP ( Becker Glynn) to advise and represent him in both these proceedings and the concurrent proceedings in New York. DBAG therefore intends, as a matter of courtesy, to provide both CYK and Becker Glynn with a copy of the documentation relating to both this Application and the Non-Party Costs Application."
It was implicit from paragraph 36 of the witness statement that service of proceedings in Connecticut was theoretically possible under provisions of the Hague Convention, although no evidence was provided as to how that might be done and whether personal service or any particular method would be required to do so validly. No evidence was provided as to how service might be effected under the Hague Convention in Monaco, which is also a party to the Convention. Because DBAG invited the Court to exercise its powers under CPR 6.15(1), 6.37.5(b) and paragraph 9 of Appendix 15 to the Commercial Court Guide, it was clear that it was seeking an order for alternative service — an order for "service by method or at a place not otherwise permitted" by Part 6 of CPR, which governs service of documents.
Paragraph 36 of the witness statement was directed to the point raised by CPR 6.40(3) which allows service on a party out of the UK "by any other method permitted by the law of the country in which it is to be served". The hearsay evidence of US counsel admitted to the Connecticut Bar was that it was possible to serve foreign proceedings in that state otherwise than through the Hague Convention. DBAG submitted that service could be effected in accordance with any order of the English Court.
The basis upon which alternative service was sought can be summarised as follows:
i) Effecting service at the Connecticut property would be "most practical and expedient" because even if Mr Vik was not present at the time the documents were thus served, they would be brought to his attention expeditiously and without delay.
ii) Such service had been effected previously in the Vik Millahue proceedings and although it had not been accepted that such service was effective, the documents thus served had come to his attention.
iii) As both Mr Vik's personal lawyers in London (CYK) and in New York (Becker Glynn), along with SHI's lawyers in both jurisdictions, were to be sent copies of the documentation served, it was hoped that the pragmatic course to be adopted would assist in the efficacious and speedy determination of the non-party costs application.
On 3rd December 2013 I made the order sought, providing at paragraph 3 that "the Non-Party Costs Application is to be served, together with the Application Notice, this Order, and Snelling Eight, on Mr Vik pursuant to CPR 6.15(1), 6.37(5)(b) and paragraph 9 of Appendix 15 to the Commercial Court Guide by leaving a copy of the document set out above at 10 Ashton Drive, Connecticut, 06831, USA no later than 4pm on the date 10 working days after the sealing of this order."
On 12th December 2013, on the evidence of Eric Rubin, in an affidavit of service sworn on 17th December 2013, the relevant documents were firmly and conspicuously affixed on the front gate of 10 Ashton Drive, which is a gated mansion with a call box. Mr Rubin had used the call box but been refused entry by a female.
By an application notice dated 13th January 2014, Mr Vik challenged both the order for service out by alternative means and the service itself. It was not admitted that the documents had been affixed to the...
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