Grecoair Inc. v John Tilling & Others
| Jurisdiction | England & Wales |
| Judge | MR. JUSTICE BURTON |
| Judgment Date | 14 January 2009 |
| Neutral Citation | [2009] EWHC 115 (QB) |
| Docket Number | No. 20001004 |
| Court | Queen's Bench Division |
| Date | 14 January 2009 |
[2009] EWHC 115 (QB)
Before: Mr. Justice Burton
No. 20001004
IN THE HIGH COURT OF JUSTICE
COMMERCIAL COURT
MR G Kealey QC and Mr R Sarll (instructed by Clyde & Co.) appeared on behalf of the Applicants/Defendants
Mr J Harvie QC and Mr P Toms (instructed by Penlaw) appeared on behalf of the Respondent.
These applications, made on behalf of the Defendants in the original action in the Commercial Court, tried before Langley J, whom I shall call “the Applicants”, have come before me for decision today relating to the manner in which an application pursuant to s51 of the Supreme Court Act 1981 is to be resolved as between the Applicants and the Respondent to the s.51 application, Mr. David Tokoph.
That application arises in circumstances in which a company, Grecoair Inc, made claims in the Commercial Court against the three Applicants as reinsurers whereby it was alleged that the reinsurers were directly liable to Grecoair to pay subject to deductions, the allegedly insured costs of damage caused, it was said, in two incidents to an insured and reinsured aircraft owned by the Claimant.
That claim came on for trial before Langley J in the Commercial Court. In a judgment which is reported at [2005] Lloyds Insurance and Reinsurance Reports 151, Langley J dismissed the claims and ordered costs to be paid by the unsuccessful Claimants, Grecoair Inc. Those costs have not yet been fully assessed, but an interim order of £225,000 was made by him. Some further £600,000 is said to be due and payable on top of that sum once the assessment takes place, but, for understandable reasons, the Applicants have decided not yet to have the balance of the costs assessed, but to rely upon the interim order —which has been registered as a judgment in Texas and sought to be executed against Grecoair Inc —for the time being, until it can be established whether there is likely to be success in recovery of the first amount.
Of that £225,000, £25,000 has been received by the Applicants, because it was the subject of a very limited security for costs order made in the course of the Commercial Court proceedings. The Applicants had made a total of three applications for security for costs and were almost entirely unsuccessful, save to that very limited extent, in obtaining orders, because the judges found, the matter not ever being taken on appeal to the Court of Appeal, that they had not satisfied the burden of showing that Grecoair Inc was a suitable target for security for costs, because Grecoair Inc was, and is, a private company registered in Texas, and private companies in Texas are not required to provide anything very much by way of information, as a result of which the Applicants were unarmed with what the Commercial Judges thought to be sufficient to satisfy the burden of proof.
That turns out to have been extremely unfortunate for the Applicants because, as I have indicated, the claim failed and, notwithstanding considerable efforts, the only sum that they have been able to recover at all is the £25,000 which was the subject matter of the limited security for costs order. That itself took some time to be produced. There was a stay until its production, and it seems very likely that if there had been an order for a considerably larger sum by way of security for costs the stay which had been imposed in that regard would never have been lifted; but at least if it had been lifted then there would have been a much larger sum to recompense the Applicants. As it is, they are left with a very substantial shortfall in relation to their costs of the action in which they were the successful Defendants.
As I indicated earlier, they sought to enforce the interim costs order as a judgment in Texas and took enforcement proceedings there, which included the deposition of a number of witnesses, including Mr. Tokoph, and also a lady, Mrs. Esquivel, who was connected with and/or an employee of Grecoair Inc. Those execution proceedings resulted in a nil return for the Applicants, and only achieved for them the information that Grecoair Inc is without assets now and may well have been without any assets at any material time.
The disclosures, including disclosure on deposition by Mr. Tokoph himself, have led the Applicants to form the conclusion that Mr. Tokoph is a suitable candidate for a s.51 application. Langley J gave leave for that application to be made and to be served out of the jurisdiction on Mr. Tokoph, who has been joined and taken appropriate steps to defend himself as a Respondent to the application.
The basis of the application is that Mr. Tokoph funded the company, Grecoair Inc, and in particular the litigation, that he controlled the company, both at the time and subsequently to the extent that the company has in fact taken steps, properly or improperly, to divest itself of any assets it did have subsequent to the judgment, and that he controlled the litigation.
That case was based substantially upon the information that the Applicants obtained in Texas, including evidence given both by Mrs. Esquivel, but in particular by the Respondent himself on deposition. In particular, in the course of deposition, the Respondent, Mr. Tokoph, stated that he had paid the legal fees in respect of the litigation and that Grecoair Inc had no assets with which they could have paid such fees.
There was evidence of a number of intertwined companies, with which I do not need to deal in the course of this judgment, in the management of which Mr. Tokoph was, and is, engaged, quite apart from his own unincorporated business of Aviation Consultants, which was also closely interwoven with the affairs of Grecoair Inc and the registration of its aircraft.
The s.51 application for which Langley J gave leave was to come on at a date fixed by the Applicants on 29 th September 2008, for one day. The result of that fixture was that the Respondent, and those advising him, perfectly understandably made an application on 2 September to Blair J to vacate the date on two bases: first, that it had been fixed without consultation of the convenience of Mr. Tokoph and his witnesses, and they wished and intended to give oral evidence at the hearing of the application, and, secondly, that one day was insufficient for such a hearing.
In a letter dated 13 th August 2008, sent by fax to the Listing Officer and copied to the Applicants' solicitors, the Respondent's solicitors said as follows:
“Our client is a foreign resident. He is not a party to these proceedings.” -
that is the original proceedings —
“He wishes to attend court personally to give evidence as to why he should not be made a party to the proceedings. We suggest that he should have the right to do so. It is clear in these circumstances that justice will not be done when the case is fixed without proper co-ordination between the parties and without reference to our client's leading counsel.”
They continue:
“Our client will wish for himself and others to be presented as live witnesses given the importance of this case. We expect there to be three witnesses.”
Somewhat ironically, as things turn out, the parties' positions before Blair J on 2 nd September was in each case the exact reverse of what it is now. The position of the Respondent, although not expressly, it seems, reiterated before Blair J had not changed from the position in the13 th August letter, because, of course, that was the primary basis on which it was being sought that the 29 th September date be broken. The position of the Applicants was that one day was enough, and that it was not appropriate or necessary for there to be the oral evidence which the Respondent was asserting he required to put forward; their case was strong enough to stand alone.
There had at that stage been no evidence served by the Respondent. He took steps thereafter to serve evidence. The basis of his case is not only that he did not fund the proceedings, and did not control them, and was not, effectively, the alter ego of Grecoair, but that the answers that he gave on oath, and those of others deposed with him, were inaccurate, or wrong, and that the explanation for that, at least in part, is that he had not expected to be questioned about his own personal involvement, or questioned as to whether he personally had funded the proceedings, and had he done so he would have given different or more informed answers.
It is pointed out by Mr. Gavin Kealey QC, for the Applicant, that even taking that into account there are very substantial inconsistencies, which I do not need to set out in this judgment, between the evidence given on deposition and that now given, and between that now given and the evidence appearing from the documents, contemporaneous or otherwise. Mr. Kealey QC has also pointed out that the accounting documents now produced in relation to Grecoair Inc are unusual, to say the least, both in respect of their explanation of the financial affairs, such as is given, of Grecoair Inc, and in particular in relation to the disappearance of its only apparent asset.
The s.51 jurisdiction has now been established for many years. The leading case which considered it and set it in context was that in the House of Lords in Aiden Shipping Co Ltd v Interbulk Ltd, five years after the passage of the Supreme Court Act 1981 [1986] 1 AC 965.
There have been many reported decisions on s.51. A good many of them have, as a result of the diligence of both parties in this case, been put before me. But there is little doubt that there are many cases coming before the court,...
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