Dumford Trading AG v OAO Atlantrybflot

JurisdictionEngland & Wales
JudgeLORD JUSTICE CLARKE,Lord Justice Rix,Lord Justice Jonathan Parker,Lord Justice Brooke
Judgment Date26 January 2005
Neutral Citation[2005] EWCA Civ 24,[2004] EWCA Civ 1265
Docket NumberCase No: A2/2004/1237,A2/04/1237(A)
CourtCourt of Appeal (Civil Division)
Date26 January 2005
Dumford Trading Ag
Claimant/Respondent
and
Oao Atlantrybflot
Defendant/Appellant

[2004] EWCA Civ 1265

Before:

Lord Justice Clarke

A2/04/1237(A)

IN THE SUPREME COURT OF JUDICATURE

IN THE COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE HIGH COURT

COMMERCIAL COURT DIVISION

(HIS HONOUR JUDGE CHAMBERS QC SITTING AS A JUDGE OF THE HIGH COURT)

Royal Courts of Justice

Strand

London, WC2A 2LL

MS JULIA DIAS (instructed by Messrs Baker & McKenzie, London, EC4V 6JA) appeared on behalf of the Appellant

MR PHILLIP MARSHALL QC (instructed by Messrs Nabarro Nathanson, London WC1X 8RW) Appeared on behalf of the Respondent

LORD JUSTICE CLARKE
1

There are four applications before the court. The appellant, OAO Atlantrybflot, ("OAO"), seeks an order staying execution of the judgment pending the determination of the substantive appeal. The respondent, Dumford Trading AG, ("Dumford"), seeks an order that as a condition of being allowed to proceed with the appeal, OAO pay the whole of the judgment debt and/or the costs ordered to be paid on account into court and ordered to provide security for costs.

2

The applications arise in connection with an appeal from an order made by His Honour Judge Chambers QC in the Commercial Court on 11 May 2004, in which he gave judgment for Dumford in the sum of �1,890,007.87 together with interest of �206,657.88 and costs to be the subject of a detailed assessment. He also ordered OAO to pay �75,000 on account of the costs. He refused permission to appeal but directed that OAO should make any application to this court for permission to appeal on or before 8 June 2004. The judge stayed enforcement of the order until seven days after the decision of the Court of Appeal on OAO's application for permission to appeal. On 2 July permission to appeal was granted by Longmore LJ, who observed that its prospects of success was not "wholly unrealistic". The stay of enforcement of execution thus expired on 9 July.

3

The claim arose under a guarantee dated 22 November 2001 as amended by a guarantee dated 5 November 2002. The guarantees were given to secure the repayment of a loan by Dumford to Shelley Marketing LLC, ("Shelley"). The loan was in respect of the financing of a number of fishing vessels. Dumford is incorporated in Liechtenstein, Shelley is incorporated in Delaware and OAO is incorporated in Russia, its registered office being in Kaliningrad.

4

OAO's defence is that the guarantors were not OAO but ZAO Atlantrybflot. There is an entity called ZAO Atlantrybflot, ("ZAO"), whose registered office is in Moscow which, at the time of guarantees, was a subsidiary of OAO. ZAO is no longer a subsidiary of OAO. The shares in OAO were sold in late November 2003 to a number of shareholders, the majority shareholder being a company called OceanProduct. The shares in ZAO were sold elsewhere.

5

In paragraph 3 of her skeleton argument for the appeal, Ms Dias describes the main point at issue in the appeal as follows:

"It is whether ZAO or OAO is the true party to guarantees given in favour of Dumford, in circumstances where.

(a) The guarantees were expressed on their title pages to be contracts with ZAO;

(b) The guarantees were signed in the name of ZAO without qualification; but

(c) Under the heading 'Parties, the guarantor was described as 'ZAO Atalantribflot� whose registered office is at 19 K Marks Str., 26000, Kaliningrad, Russia�' when in fact ZA0's registered office was in Moscow and the address given was the trading address (but not the registered office) of its parent company, OAO."

So far as I understand it, nothing turns on the difference between ZAO Atalantribflot and ZAO Atlantrybflot. The judge held that OAO was the true party to the guarantees and gave summary judgment for the sums due under them pursuant to CPR Part 24. He rejected Ms Dias' submission that, construed objectively, the guarantees showed that ZAO was the guarantor and the only way Dumford could succeed would be by rectification of the guarantee, which it never sought. I say nothing further about the merits of the appeal because Longmore LJ has given permission to appeal, which must be on the basis that OAO has a real as opposed to a fanciful prospect of success.

6

Ms Dias concedes that the court has jurisdiction under CPR Part 25.13(2) (a) to order security for costs of the appeal on the ground that OAO is a foreign company resident in Russia. She correctly submits that the court should not order security for costs merely because of OAO's nationality, but only to reflect the additional burden of enforcement abroad: Nasser v United Bank of Kuwait [2001] EWCA Civ 596; [2002] 1 WLR 1868 at paragraph 61�67. However, Ms Dias correctly concedes that it is appropriate to make an order for security of costs in this case. The issue is essentially one of quantum and the time within which the security is to be provided.

7

Dumford estimates its costs for the appeal in the sum of more than �38,000. Ms Dias submits that that sum is wholly excessive in circumstances where the arguments are a repeat of those before the judge and OAO is likely to bear the bulk of the costs as appellant. OAO has offered to put up security in the sum of �25,067.00, which is 65 per cent of the amount claimed. Ms Dias submits that that is a reasonable figure in respect of Dumford's recoverable costs. She further submits that it would be reasonable to order such a sum to be put up over a six week period given OAO's financial position. I shall return below to the appropriate order to make after considering the other aspects of the case.

8

I turn to Dumford's application that conditions should be imposed on the permission to appeal. As indicated, Dumford invites the court to require OAO to pay into court some or all of the judgment sum including the amount which the judge ordered to be paid on account of costs as a condition of permitting OAO to proceed with the appeal. It is common ground that the court has jurisdiction to impose such conditions: see eg Hammond Suddards v Agrichem [2001] EWCA Civ 2065; CIBC Mellon Trust Co v Mora Hotel Corp [2002] EWCA Civ 1680; Bell Electric Limited v Aweco Appliance Systems GmBH & Co KG [2002] EWCA Civ 1501, [2003] 1 All ER 344; and Contract Facilities Ltd v The Estate of Rees [2003] EWCA Civ 1105. is also common ground that in the light of CPR 52.9 this court should only impose such conditions if persuaded by Dumford that there are compelling reasons to do so. The question is whether the court should make such an order on the facts of this case, since each case depends on its own facts.

9

In my view it will be an unusual, and perhaps rare, case in which it will be appropriate to make such an order, especially an order imposing as a condition the payment of the whole judgment sum into court. As I accepted in paragraph 48 when giving the judgment of the court in Hammond Suddards, it is appropriate to adopt a cautious approach to CPR 52.9. Subsequent cases, notably the CIBC Mellon Trust case, have perhaps emphasised the need for such caution.

10

Mr Marshall, on behalf of Dumford, relies upon a number of factors in support of the conditions sought. As summarised in his skeleton argument (since when it is fair to say there has been some development of the evidence) he put the factors thus in paragraph 3:

"3.1 OAO is an entity against which it will be difficult to exercise the normal mechanisms of enforcement. It is registered in Russia and has no assets in the United Kingdom or in any other European Union state. Moreover, there is strong evidence to suggest that it has already taken steps to denude itself of assets in anticipation of the judgment. There is accordingly, a very real risk that if the appeal fails, Dumford will be unable to recover the judgment debt and costs awarded in its favour in the court below.

3.2 OAO plainly as the resources or has access to resources which enable it to instruct solicitors and counsel to prosecute its appeal.

3.3 There is no convincing evidence that OAO does not have access to resources which would enable it to pay the judgment debt and costs.

3.4 The disclosure so far given by OAO of its financial affairs is inadequate and can give no confidence that anything near the truth has been revealed.

3.5 Accordingly the court cannot be satisfied that the appeal would be stifled if the order now sought was made.

3.6 In these circumstances, it is unacceptable that absent any other orders of the court OAO is intending to prosecute the appeal whilst at the same time not paying the judgment sum or costs awarded against it and instead disposing of its assets or dealing with them in such a way as to make the judgment and any subsequent award of costs against it impossible to enforce. It is adopting a 'heads I win tails you lose' approach which is wholly unfair and contrary to the overriding objective.

Such factors are sufficient to constitute a compelling reason for the imposition of the conditions sought pursuant to CPR r 52.9. See especially the judgment of the Court of Appeal in Hammond Suddards, paras 40�43; Bell Electric and Contract Facilities."

To my mind an important, indeed crucial, aspect of those submissions is the submission that there is strong evidence to suggest that OAO has already taken steps to denude itself of assets in anticipation of the judgment. Mr Marshall, again in his skeleton argument at paragraph 11, relies upon these underlying facts:

"11.1 On 5 February 2004 Dumford applied for summary judgment. The application was originally listed for hearing on 23 February 2004 but was adjourned to be heard on 31 March.

11.2 On 5 March the Board of OAO apparently resolved to transfer nine of its fishing vessels...

To continue reading

Request your trial
13 cases
  • Liberty Mercian Ltd v Cuddy Civil Engineering Ltd (1st Defendant) Cuddy Demolition and Dismantling Ltd (2nd Defendant)
    • United Kingdom
    • Queen's Bench Division (Technology and Construction Court)
    • 3 September 2013
    ...by the decision of the House of Lords in Shogun Finance Limited v Hudson [2004] 1 AC 919 or the Court of Appeal decision in Dumford Trading AG v OAO Atlantrybflot [2005] 1 Lloyds Law Rep 289 which are relied on by the Defendants. 62 The Defendants submit that in cases such as this where the......
  • Hotel Portfolio II UK Ltd ((in Liquidation)) v Andrew Joseph Ruhan
    • United Kingdom
    • Queen's Bench Division (Commercial Court)
    • 4 July 2022
    ...be an “unusual, and perhaps rare, case in which it will be appropriate to make” such an order: Dumford Trading AF v OAO Altantrybflot [2004] EWCA Civ 1265, [9]. ii) Guidance on relevant factors to be taken into account by the court was given by Christopher Clarke LJ in Merchant Internation......
  • Merchant International Company Ltd v Natsionalna Aktsionerna Kompaniia Naftogaz Ukrainy
    • United Kingdom
    • Court of Appeal (Civil Division)
    • 7 July 2016
    ...fail to obey orders for the payment of a judgment debt and costs when they can afford to pay them either themselves or through others". Dumford Trading 22 The matter came up for further consideration in Dumford Trading Ag v OAO Atlantrybflot [2004] EWCA Civ 1265. One of the applications m......
  • Seafood Shack Ltd v Alan Darlow
    • United Kingdom
    • Chancery Division
    • 19 June 2019
    ...has been misnamed in document. Some of these, including where the named party is non-existent, were summarised by Rix LJ in Dumford Trading AG v OAO Atlantrybflot [2005] EWCA Civ 24. Such cases were not cited before me, so I gave counsel the opportunity to make written 36 In Davies v Elsby......
  • Request a trial to view additional results
1 firm's commentaries
  • Recent Developments - Security For Costs
    • United Kingdom
    • Mondaq UK
    • 8 December 2016
    ...order which has [the effect of securing enforcement] if the judgment debtor has in the past [Dumford Trading Ag v OAO Atlantrybflot [2004] EWCA Civ 1265] or is likely in the future [Wittman (UK) Ltd v Willdav Engineering SA [2007] EWCA Civ 521] to take steps to denude itself of assets or to......

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT