John Anthony Popely v Ronald Albert Popely
| Jurisdiction | England & Wales |
| Judge | Hacon |
| Judgment Date | 19 March 2020 |
| Neutral Citation | [2020] EWHC 667 (Ch) |
| Docket Number | Case No: HC-2017-000808 and HC-2017-000904 |
| Date | 19 March 2020 |
| Court | Chancery Division |
[2020] EWHC 667 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
BUSINESS LIST (ChD)
Royal Courts of Justice, Rolls Building
Fetter Lane, London, EC4A 1NL
HIS HONOUR JUDGE Hacon
(Sitting as a Deputy High Court Judge)
Case No: HC-2017-000808 and HC-2017-000904
Christopher Boardman (instructed by Charles Russell Speechlys LLP) for the First Defendant
Timothy Harry (instructed by RadcliffesLeBrasseur) for the Second Defendant
The Fourth Defendant appeared in person
Hearing dates: 18 December 2019
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.
HIS HONOUR JUDGE Hacon
Introduction
On 13 June 2019 I handed down judgment in these joined actions, [2019] EWHC 1507 (Ch). Permission to appeal having been refused, it marks the end of a long dispute conducted in many jurisdictions between John Henry Popely (‘John Snr’) and his brother Ronald Albert Popely (‘Ronald’). By the time of the trial before me Ronald was still a defendant, but John Snr was no longer a party. The claimants were John Snr's sons, John Jnr and Andrew. Ronald was successful. The claimants' claim for fraudulent breach of fiduciary duty was dismissed.
Ronald now seeks a third party costs order against John Snr. In an order dated 21 October 2019 I gave Ronald permission to join John Snr as Fourth Defendant solely for the purposes of any costs order that may be made. Ronald also seeks a cost order against the Second Defendant in the proceedings (‘Cosmos’).
Christopher Boardman appeared for Ronald, Timothy Harry for Cosmos. John Snr appeared as a litigant in person.
Background
In my earlier judgment I set out the background as follows:
“[2] The present joined claims began as an action brought by John Snr in August 2001. He alleged that Ronald had defrauded him of assets arising out of a business offering time shares in holiday properties in the Turkish Republic of Northern Cyprus (‘Northern Cyprus’) and at Hever in Kent.
[3] The Third Defendant (‘Casterbridge’) is a company registered initially in the British Virgin Islands, later in St Vincent and currently in Nevis. Casterbridge was set up to play a role in the marketing of the timeshare business. The shares in Casterbridge were owned 70% by Ronald and 30% by John Snr. Each of the brothers subsequently assigned their interest to trusts set up for the benefit of their respective families, in the case of Ronald the Mars Trust and in the case of John Snr the Blue Ridge Trust. The trustee for both trusts is St Vincent Trust Service Ltd (‘SVTS’).
[4] After the first English claim was started in 2001, Ronald challenged the validity of service, so John Snr started a second action in 2003. Ronald then challenged the jurisdiction of the English courts. On 11 November 2003 Evans-Lombe J ruled that there had been valid service and that the English courts had jurisdiction in both actions.
[5] In January 2005 John Snr's son and the Second Defendant in the present proceedings (‘Andrew’) brought proceedings in St Vincent on behalf of the beneficiaries under the Blue Ridge Trust.
[6] On 25 September 2005 a bankruptcy order was made against John Snr. His causes of action became vested in his trustee for bankruptcy which sold the causes of action to SVTS. SVTS applied to the court to discontinue the proceedings. In response, John Snr's family, the beneficiaries under the Blue Ridge Trust sought to be substituted as claimant in order to pursue the claims on behalf of Casterbridge.
[7] On 6 March 2007 by the Order of Master Moncaster six members of John Snr's family were substituted for John Snr as claimants in the 2001 and 2003 proceedings so far as they concerned the timeshare business in North Cyprus; SVTS and Casterbridge were joined as defendants. The Master also stayed the claims pending the outcome of the proceedings in St Vincent. Towards the end of his judgment Master Moncaster said:
“Therefore, in this unhappy dispute, in this unhappy family, very little progress I am afraid is being made because although, as I said, I think twice already, that what seems to me to be required is for the substantive issues to be decided between the two brothers or their respective trusts and companies.”
[8] Madame Justice Thom gave judgment in the St Vincent proceedings in 2012. There was an appeal which was compromised on 2 February 2015 on terms which included the substitution of Cosmos Trust Ltd (‘Cosmos’), the Second Defendant in the present proceedings, for SVTS as trustee for Blue Ridge Trust.
[9] On 16 August 2016 the present claimants, i.e. John Snr's sons John Jnr and his younger brother Andrew, applied to continue the 2001 and 2003 actions against Ronald in their names. They claimed a cause of action derived from John Snr via Cosmos. Cosmos was substituted for SVTS as a defendant; Casterbridge remained a defendant because the assets of Casterbridge were at stake. Permission to do all of this was given by an Order of Deputy Master Lloyd dated 24 April 2017. 2017 claim numbers were allotted to the consolidated action.
[10] In short, this is a double derivative action. The claimants say that Ronald transferred Casterbridge's assets to the benefit of himself or his family and thereby, both fraudulently and in breach of his fiduciary duty to Casterbridge, deprived the beneficiaries under the Blue Ridge Trust of their entitlement to 30% of those assets.”
The law on non-party costs
An award of costs against a person who is not a party to the action is made possible by s.51 of the Senior Courts Act 1981, confirmed by the House of Lords in Aiden Shipping Co Ltd v Interbulk Ltd [1986] AC 965.
In Symphony Group Plc v Hodgson [1994] Q.B. 179, at pp.192–93, Balcombe LJ, with whom Staughton and Waite LJJ agreed, provided guidance as to the exercise of the court's discretion to order the payment of costs by a non-party. The third guideline was that the party seeking such an order should warn the non-party at the earliest opportunity of the possibility that he may seek to apply for costs against him.
In Dymocks Franchise Systems (NSW) Pty Ltd v Todd [2004] UKPC 39; [2004] 1 W.L.R. 2807 Lord Brown of Eaton-under-Heywood, giving the opinion of the Privy Council, considered the Symphony guidelines and summarised the main principles to be applied in exercise of the court's discretion to make a third party costs order in the following way (at [25]):
“A number of the decided cases have sought to catalogue the main principles governing the proper exercise of this discretion and their Lordships, rather than undertake an exhaustive further survey of the many relevant cases, would seek to summarise the position as follows:
(1) Although costs orders against non-parties are to be regarded as ‘exceptional’, exceptional in this context means no more than outside the ordinary run of cases where parties pursue or defend claims for their own benefit and at their own expense. The ultimate question in any such ‘exceptional’ case is whether in all the circumstances it is just to make the order. It must be recognised that this is inevitably to some extent a fact-specific jurisdiction and that there will often be a number of different considerations in play, some militating in favour of an order, some against.
(2) Generally speaking the discretion will not be exercised against ‘pure funders’, described in paragraph 40 of Hamilton v Al-Fayed [ [2002] EWCA Civ 665; [2003] QB 1175] as ‘those with no personal interest in the litigation, who do not stand to benefit from it, are not funding it as a matter of business, and in no way seek to control its course’. In their case the court's usual approach is to give priority to the public interest in the funded party getting access to justice over that of the successful unfunded party recovering his costs and so not having to bear the expense of vindicating his rights.
(3) Where, however, the non-party not merely funds the proceedings but substantially also controls or at any rate is to benefit from them, justice will ordinarily require that, if the proceedings fail, he will pay the successful party's costs. The non-party in these cases is not so much facilitating access to justice by the party funded as himself gaining access to justice for his own purposes. He himself is ‘the real party’ to the litigation, a concept repeatedly invoked throughout the jurisprudence – see, for example, the judgments of the High Court of Australia in Knight [ Knight v FP Special Assets Ltd (1992) 174 CLR 178] and Millett LJ's judgment in Metalloy Supplies Ltd (In Liquidation) v MA (UK) Ltd [1997] 1 W.L.R. 1613. Consistently with this approach, Phillips LJ described the non-party underwriters in TGA Chapman Ltd v Christopher [1998] 1 W.L.R. 12 as ‘the defendants in all but name’. Nor, indeed, is it necessary that the non-party be ‘the only real party’ to the litigation in the sense explained in Knight, provided that he is ‘a real party in …very important and critical respects’ — see Arundel Chiropractic Centre Pty Ltd v Deputy Commissioner of Taxation (2001) 179 ALR 406, referred to in Kebaro [ Kebaro Pty Ltd v Saunders [2003] FCAFC 5] at pp. 32–33, 35 and 37. Some reflection of this concept of ‘the real party’ is to be found in CPR 25.13(1)(f) which allows a security for costs order to be made where ‘the claimant is acting as a nominal claimant.’”
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