Kanat Shaikhanovich Assaubayev and Others v Michael Wilson & Partners, Ltd
| Jurisdiction | England & Wales |
| Judge | Master Campbell |
| Judgment Date | 26 October 2012 |
| Neutral Citation | [2012] EWHC 90223 (Costs) |
| Court | Senior Court Costs Office |
| Docket Number | Case No: 1104228 |
| Date | 26 October 2012 |
[2012] EWHC 90223 (Costs)
IN THE HIGH COURT OF JUSTICE
SENIOR COURTS COSTS OFFICE
Royal Courts of Justice
Strand, London, WC2A 2LL
Master Campbell, Costs Judge
Case No: 1104228
Mr Nicholas Bacon QC and Mr George McDonald (instructed by Reed Smith) for the First to Sixth Clamiants
Mr David Holland QC and Mr Paul Joseph (instructed under the Public Access Scheme) for the Defendant
Hearing dates: 21 st and 24th June 2012
This judgment addresses a further issue in these part 8 proceedings which the Claimants began on 16 th August 2011 under the Solicitors Act 1974 ("the Act"). On 27 th January 2012 the Defendant ("MWP") issued an application notice seeking an order in the following terms:—
"Pursuant to section 9 of the Arbitration Act 1996 and/or inherent jurisdiction of the court, all further proceedings in this action be stayed".
The hearing of MWP's application was listed for 3 hours on 21 st June 2012. In the event it lasted until 4.30pm that day, resuming on 24 th June when it was concluded at 5.30pm. Prior to the hearing, the parties lodged 4 ring binders of documents together with 2 further bundles of authorities. The bundles contained witness statements: for the Claimants, those by Patrick Beale (solicitor of Reed Smith) dated 15 August 2011 ("Beale 1"), 15 August 2011 ("Beale 2"), 20 February 2012 ("Beale 4"), 6 March 2012 ("Beale 5") plus exhibits PB 1 to 5, by the first to fifth claimants, all dated 17 February 2012 and by Uatay Kablan (Director of the 6 th Claimant) dated 1 June 2012. For MWP, by Mr Michael Wilson, the Managing Director of MWP dated 27 January 2012 ("Wilson 1"), 13 February 2012 ("Wilson 2"), 5 March 2012 ("Wilson 3"), 7 June 2012 ("Wilson 4") plus exhibits MEW 1 to 4. At the hearing, Mr Holland QC and Mr Joseph appeared for MWP and Mr Bacon QC and Mr McDonald represented the Claimants. Both sides lodged skeleton arguments. I reserved judgment but subsequently notified the parties of the outcome in writing, with full reasons to follow.
The background is set out in the judgment I handed down on 11 th May 2012 (" Campbell 1") paragraphs 3–4. For convenience, I repeat it here:—
"Michael Wilson contend that they are legal advisers. In that capacity, Michael Wilson advised all seven Claimants in significant disputes with various entities including OJSC Polyus Gold, Polygus International, Jenington International Inc, Kazakhgold Group Ltd and their various subsidiaries, related companies and affiliates. The Claimants are all residents in Kazakhstan and all were parties to an engagement letter dated 2 July 2010 which set out the terms on which Michael Wilson would be retained on their behalf. According to Mr Patrick Beale, Mr Bacon's instructing solicitor, Michael Wilson handled "a very major piece of commercial litigation" on the Claimants' behalf (see his first witness statement dated 15 August 2009), in respect of which the firm issued 26 invoices amounting to $8,605,030.03 for its work. The Claimants have objected to the invoices. In their view, the engagement letter (and a further separate letter of engagement dated 24 August 2010 between Michael Wilson and the Fourth Claimant) are unfair, unreasonable and should be set aside. The Claimants further assert that the fees charged by Michael Wilson are excessive and they wish to exercise their statutory rights under Section 61(1) and Section 61(2) Solicitors Act 1974, before they pay Michael Wilson any more money."
Concurrently, MWP have issued proceedings under the Arbitration Act 1996 ("the 1996 Act"). Thus, at the present time, there are the following proceedings –
i) Arbitration proceedings initiated by MWP against all the Claimants and also against Gold Lion Holdings Limited ("GLH") under LCIA Arbitration number UN111913;
ii) These proceedings under the Act initiated by the Claimants for the relief set out in paragraph 4 of Campbell 1 namely:—(a) for an order pursuant to Section 61(2) of the Act that the letter of engagement (which they consider to be a contentious business agreement) dated 2 July 2012, be set aside as being unfair and unreasonable; (b) for an order pursuant to Section 68 of the Solicitors Act 1974 that MWP deliver a bill of costs to the Claimants; and/or (c) for an order for the detailed assessment of MWP's bill (whether as delivered or of the invoices already issued by MWP).
The Court has yet to decide whether the relief sought under the Act should be granted and it is important to stress at the outset of this judgment what the application it addresses is not. Although Mr Bacon has invited the court in paragraph 66 of his skeleton to make orders reflecting the relief sought in paragraph 4 (ii) above, it is only MWP's application for a stay with which the court was seised on 21 and 24 June 2012. Indeed, thus far, the parties' attention has been directed only at (i) whether these proceedings should be transferred to the Commercial Court (in Campbell 1, I ruled that they should not) and (ii), this application. For that reason, whether there should or should not be an assessment under the Act is not within the scope of this judgment. Instead, it is limited to the relief sought in the application notice, namely MWP's case that the proceedings under the Act should be stayed and that the arbitration should continue on the basis that there was a valid arbitration agreement incorporated into the retainer which existed between MWP and the Claimants.
MORE BACKGROUND
On 15 th September 2010 Vos J gave a judgment in the proceedings involving Jenington and the Claimants (excluding the 7 th Defendant ("JSC") but including GLH) which, as I have said, Mr Beale has described as a very major piece of litigation.
Somewhat confusingly, the Claimants in these proceedings were the Defendants in the Chancery action. Vos J began his judgment by saying the following:—
"1. In this action the Claimants make claims for recovery of what is alleged to be fraudulently obtained property and for damages amounting in total to over US$ 400 million. Peter Smith J granted a worldwide freezing order made against the Defendants on 23 rd June 2010 and at the same time ordered the Defendants to disclose the whereabouts and details of their assets in support of that freezing order….
4. It would not be an exaggeration to say that the Claimants' applications have resulted thus far in a huge amount of litigation activity since 23 rd June 2010, including some fourteen hearing days, including today. Indeed Mr John Wardell QC, leading counsel for [Kanat, Marusya and Sanzhar Assaubayev] told me that his clients had already incurred more than GBP £1 million in legal costs in their efforts to comply with the court's orders."
At paragraph 2, Vos J continued:—
"… The three individual defendants concerned are (1) the first defendant, Mr Kanat Shaikhanovich Assaubayev, whom I shall call "Kanat", (2) the second defendant Mrs Marusya Maralovna Assaubayev, whom I shall call "Marusya", Kanat's wife and (3) the fourth defendant, Mr Sanzhar Kanatovich Assaubayev whom I shall call "Sanzhar", who is the son of Kanat and Marusya …"
At paragraph 65, Vos J continued:—
"(2) The defendants have shown themselves keen, if not desperate, to obtain the return of their passports. I make no complaint about that…"
According to Mr Holland's skeleton argument at paragraph 14, "It was in these circumstances that MWP was approached by C3 [Baurzhan Assaubayev ("Baurzhan")] and C4 [Aidar Asssaubeyev ("Aidar")] in Kazakhstan to act on behalf of the family. This approach resulted in the engagement letter."
MWP subsequently went on the court record in the proceedings involving Jenington on behalf of Aidar and Baurzhan.
The family is thus Kanat and his wife Maruysa, their son Sanzhar and their other sons (Sanzhar's brothers), Baurzhan and Aidar Assaubayev. In paragraph 3, Vos J described the family as "close-knit". For convenience, I shall refer to each by their christian names or collectively as "the Family".
To complete the story, I need to add that the proceedings in the Chancery Division and other proceedings worldwide were settled, with a Memorandum of Understanding being entered into on 18 th September 2010, a principal agreement being signed (in Moscow) on 8 th December 2010 and a final agreement (again signed in Moscow) on 7 th April 2011 which became unconditional on 7 th May 2011 (see Mr. Holland's skeleton at paragraph 18).
THE ENGAGEMENT LETTER AND SECOND ENGAGEMENT LETTER
Mr Holland's reference to the engagement letter is to the letter dated 2 July 2010, which evidences the terms upon which MWP were retained ("the engagement letter") (bundle 2 page 441 to 445). Given its importance, the letter will be considered in some detail. In addition, there is a separate letter of engagement ("the second engagement letter") signed by Aidar bearing the date 24 th August 2010 (bundle 2 pages 567–579).
MWP addressed the engagement letter to the Family, also to GLH, JSC Credit Altyn Bank ("JSC") and Hawkinson Capital Inc ("Hawkinson"), a BVI registered company controlled by the Family and the holder of some of their assets (see Vos J's judgment at paragraph 29).
The engagement letter was signed by Kanat, Baurzhan, Marusya, Sanzhar and Aidar Assaubeyev (see exhibit PB4 pages 441 to 447). JSC and GLH were also signatories but nothing turns on that. It was also signed on behalf of Hawkinson, although the validity of the signature is in...
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