Edward Wojakovski v Arthur Matyas
| Jurisdiction | England & Wales |
| Judge | Mr Justice Zacaroli |
| Judgment Date | 18 February 2020 |
| Neutral Citation | [2020] EWHC 328 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: BL-2018-002541 |
| Date | 18 February 2020 |
[2020] EWHC 328 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
COMPANIES COURT
IN THE MATTER OF TONSTATE GROUP LIMITED
AND IN THE MATTER OF TH HOLDINGS LIMITED
AND IN THE MATTER OF THE COMPANIES ACT 2006
7 Rolls Building
Fetter Lane, London
EC4A 1NL
Mr Justice Zacaroli
Case No: BL-2018-002541
Muhammed Haque QC (instructed by Candey) for the Petitioner
Mrs Rachel Robertson appeared in person on her own behalf and on behalf of (as sole director of) the Seventh Respondent
Hearing date: 16 January 2020
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.
This is an application by the sixth and seventh respondents for security for costs in relation to the unfair prejudice petition under s.994 of the Companies Act 2006 (the “Petition”) brought against them (and others) by Edward Wojakovski (“Mr Wojakovski”).
The sixth respondent (“Mrs Robertson”) is the owner and sole director of the seventh respondent, Betchworth Consulting Limited. I will refer to them together as “the Applicants”.
Mr Wojakovski was represented by leading counsel, Muhammed Haque QC. Mrs Robertson appeared in person, on her own behalf and on behalf of the seventh respondent. She was previously represented by solicitors and counsel and intends to engage legal representatives for the purposes of the trial of the Petition, in the event that it is pursued as against her.
The Applicants' application for security for costs was issued in July 2019 but, through no fault of the parties, came on for hearing only on 16 January 2020.
The Petition is currently listed for a trial estimated to last two months commencing on 2 June 2020, together with two other actions involving Mr Wojakovski, companies in the Tonstate group and Mr and Mrs Matyas (the first and second respondents to the Petition). The first of those actions (the “Main Action”) primarily involves a claim against Mr Wojakovski for improper extractions made by him from the companies that are the claimants to that action. The second action relates to a claim by Mr and Mrs Matyas to recover shares in the Tonstate group previously transferred to Mr Wojakovski.
As a result of various orders made at the CMC held on 16 January 2020, however, the trial commencing on 2 June 2020 will be used to determine only certain of the principal issues raised in the three actions (the precise details of which are to be confirmed at a further CMC to be held shortly). The claims as against the Applicants will not be heard at that trial and, depending on its outcome, may never come on for trial. In those circumstances, the Applicants' application for security for costs at this stage relates only to the costs incurred to date. These total approximately £193,000 (or £163,000, depending on the view I take as to a sum of £30,000 already paid by Mr Wojakovski in respect of an earlier costs award in the Applicants' favour but which may have been paid from funds which are the traceable proceeds of property beneficially belonging to the claimants in the Main Action).
The application is made under CPR 25.12. The Applicants rely on the grounds set out in CPR 25.13(2)(c) and (g).
CPR 25.13(2)(c)
Under this ground, security may be ordered where “the claimant is a company or other body (whether incorporated in or outside Great Britain) and there is reason to believe that it will be unable to pay the defendant's costs if ordered to do so”.
In my judgment, this has no application to the facts of this case. It applies only where the claimant is an incorporated body. It therefore has no application where the claimant is an individual. This is clear from the language of the rule, and is consistent with the long-standing principle that so far as individuals are concerned, impecuniosity is not a ground for ordering security for costs: see Harris v Wallis [2006] EWHC 630 (Ch), per Sir Francis Ferris at [19].
CPR 25.13(2)(g)
Under this ground, security may be ordered if “the claimant has taken steps in relation to his assets that would make it difficult to enforce an order for costs against him.”
The principles to be applied under this ground were summarised by Roth J in Ackerman v Ackerman [2011] EWHC 2183, at [16], as follows:
“i) The requirement is that the claimant has taken in relation to his assets steps which, if he loses the case and a costs order is made against him, will make that order difficult to enforce. It is not sufficient that the claimant has engaged in other conduct that may be dishonest or reprehensible: Chandler v Brown [2001] CP Rep 103 at [19]–[20];
ii) The test in that regard is objective: it is not concerned with the claimant's motivation but with the effect of steps which he has taken in relation to his assets: Aoun v Bahri [2002] EWHC 29 (Comm), [2002] CLC 776, at [25]–[26];
iii) If it is reasonable to infer on all the evidence that a claimant has undisclosed assets, then his failure to disclose them could itself, although it might not necessarily, lead to the inference that he had put them out of reach of his creditors, including a potential creditor for costs: Dubai Islamic Bank v PSI Energy Holding Co [2011] EWCA Civ 761 at [26];
iv) There is no temporal limitation as to when the steps were taken: they may have been taken before proceedings had been commenced or were in contemplation: Harris v Wallis [2006] EWHC 630 (Ch) at [24]–[25];
v) However, motive, intention and the time when steps were taken are all relevant to the exercise of the court's discretion: Aoun v Bahri, ibid; Harris v Wallis, ibid;
vi) In the exercise of its discretion, the court may take into account whether the claimant's want of means has been brought about by any conduct of the defendant: Sir Lindsay Parkinson & Co v Triplan [1973] QB 609 per Lord Denning MR at 626; Spy Academy Ltd v Sakar International Inc [2009] EWCA Civ 985 at [14];
vii) Impecuniosity is not a ground for ordering security; on the contrary, security should not be ordered where the court is satisfied that, in all the circumstances, this would probably have the effect of stifling a genuine claim: Keary Developments Ltd v Tarmac Construction [1995] 3 All ER 534 at 540, para 6. Thus the court must not order security in a sum which it knows the claimant cannot afford: Al-Koronky v Time-Life Entertainment [2006] CP Rep 47 at [25]–[26] (where this was referred to as ‘the principle of affordability’);
viii) The court can order any amount (other than a simply nominal amount) by way of security up to the full amount claimed: it is not bound to order a substantial amount: Keary at 540, para 5;
ix) The burden is on the claimant to show that he is unable to provide security not only from his own resources but by way of raising the amount needed from others who could assist him in pursuing his claim, such as relatives and friends: Keary at 540, para 6. However, the court should evaluate the...
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Nihal Mohammed Kamal Brake v Geoffrey William Guy
...v Yurov [2014] EWHC 2575 (Comm), [27], Al Jaber v Al Ibrahim [2019] EWHC 1136 (Comm), [4], and Wojakovski v Tonstate Group Ltd [2020] EWHC (Ch) 328, [11]. Neither side in the present case suggested that this summary of the law was wrong or that I should not follow it. The claimants also s......