Koo Golden East Mongolia v Bank of Nova Scotia
| Jurisdiction | England & Wales |
| Judgment Date | 20 May 2008 |
| Neutral Citation | [2008] EWHC 1120 (QB),[2007] EWHC 2998 (QB) |
| Court | Queen's Bench Division |
| Docket Number | Case No: IHQ/08/0095 |
| Date | 20 May 2008 |
[2008] EWHC 1120 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr. Justice Silber
Case No: IHQ/08/0095
Andrew Fulton of Denton Wilde Sapte for the First and Second Defendants
Andrew Miller (instructed by Squire, Sanders & Dempsey) for Squire, Sanders & Dempsey, the respondents to the wasted costs application
The Claimants and the Third Defendant did not appear and were not represented.
Hearing date: 30 April 2008
Written submissions were submitted on 1 and 6 May 2008
Mr Justice Silber:
I. Introduction.
This judgment relates to an application for wasted costs, which raises interesting issues and which was made after KOO Golden East Mongolia (“the claimant”) had commenced proceedings against the Bank of Nova Scotia and Scotia Capital (Europe) Ltd (hereinafter collectively referred to as “the Bank”) and the Central Bank of Mongolia (“MongolBank”). The proceedings have terminated and the Bank now seeks an order that the solicitors for the claimant, Squire, Sanders and Dempsey (“SSD”) show cause why they should not be ordered to pay the Bank's wasted costs of the action.
This matter was listed before me for the present hearing in order to ascertain if there is a case for SSD to answer on the wasted costs application. Both the Bank and SSD have adduced evidence and have served lengthy written skeleton arguments. Neither side objected to my suggestion based on the need to reduce costs that if I decided that there was a case for SSD to answer, I should then proceed to determine the matter as if there had been a substantive hearing.
The thrust of the claim for wasted costs made by the Bank is that SSD's “conduct has been persistently negligent (as to both procedure and substantive law) and unreasonable”. This allegation is strenuously denied by SSD.
II. The Main Litigation.
The claimant is a Mongolian mining company, which deposited around 3 metric tonnes of gold with “MongolBank” under a “Safe Custody/Sale” agreement. The terms and effect of the claimant's agreement with MongolBank are complex but they provide that disputes between the claimant and MongolBank should be resolved in the Mongolian courts. At the centre of the dispute is the claimant's allegation that MongolBank breached the agreement by exporting the claimant's gold overseas for refinement. The claim was brought after the claimant realised that its gold had passed into the possession of the London branch of the Bank. The claimant's objective in the proceedings was to recover the physical possession of its gold.
The claimant's first step in this action was to make an application without notice on 19 October 2007 to Saunders J for an order that the Bank and MongolBank be restrained from moving or otherwise dealing with the gold. Saunders J declined to make such an order on the grounds that there was no good reason why the Bank and MongolBank should not be put on notice of this application.
An application was then duly made on notice to the Bank although not to MongolBank. The matter came before Lloyd Jones J on 25 October 2007 and as he explained in paragraph 3 of his judgment “I drew the attention of the parties to certain provisions of the State Immunity Act 1978 (“the 1978 Act”)”. He duly adjourned the hearing for a short time in order (in the words again of paragraph 3 of his judgment) “to allow the parties to consider further this aspect of the case.”
The Judge then later heard these submissions and he held that an injunction should not be granted against MongolBank because of the effect of the 1978 Act. So although MongolBank was not represented, the Judge declined to grant an injunction against it.
The Judge at the same hearing adjourned the claimant's application against the Bank for an injunction restraining them from moving out of the jurisdiction or otherwise dealing with the claimant's gold but he expressed doubts as to whether he could grant this injunction in the light of sections 13 (2) (b), 13 (4) and 14(4) of the 1978 Act. Lloyd-Jones J also expressed some concern as to whether the claimant could meet any undertaking in damages.
The Judge then considered a further application by the claimant that the Bank should swear and serve an affidavit relating to its knowledge of the gold. Mr. Andrew Fulton, who then appeared on behalf of the Bank, did not object to an order that the appropriate officer of the Bank should produce such a witness statement. It is noteworthy that the Bank did not then contend that because of the connection with MongolBank, it was not obliged to make this statement or more significantly that it was immune from any claim. So the Judge ordered the Bank:
“ to swear and serve an affidavit identifying to the [claimant] in Schedule form each and every unrefined or refined gold ingot, including the identifying marks, the weight of each ingot and its refined and unrefined gold content where known, deposited by [MongolBank] with either of them or any other depository if held on their behalf between July 2006 and the date of this Order together with the date(s) upon which the ingots were removed from the custody of the [Bank] and the details of the persons and/or locations by whom and to which the said ingots were removed (if known)”.
The Judge also directed the service of a claim form in 7 days. On 31 October 2007, the claimant's solicitors SSD issued a claim form naming the Bank and MongolBank as defendants. The claim was against the Bank and MongolBank for the delivery up of the gold, for damages and for other relief in relation to the gold. No claim was then made for Norwich Pharmacal relief and MongolBank was not then or at any time served with the claim form.
In the meantime, Mr Simon Weeks who is a director of the Bank made a witness statement dated 29 October 2007 pursuant to the order of Lloyd Jones J. It included the assertion that in the period from July 2006, MongolBank had not deposited with the Bank any gold ingot whether refined or unrefined. The witness statement also stated that MongolBank did not hold an allocated account with the bank but that it did hold an “unallocated” account. The claimant's solicitors complained that the statement did not comply with the Judge's order.
By a letter dated 1 November 2007, the Bank's solicitors confirmed that it had received no physical gold from MongolBank during the period in question. By a letter dated 16 November 2007, the claimant again asked MongolBank for the whereabouts of the gold. It replied on 19 November 2007 stating that :
“With the purpose of increasing the state currency reserves MongolBank when purchasing from business entities purified gold produced by them would calculate its pure weight according to common practice of the international financial market and would make settlements for the value of the gold based on the markets price of the gold as of a particular day.
“Given that MongolBank has an obligation to refine the purified gold purchased into the state currency reserves and place the same in the international financial markets pursuant to the most favourable arrangements, MongolBank refined 3.1 tons of your gold, being in possession of MongolBank in accordance with the law.
“With this please be informed that as of November 16, 2007 out of the total amount of gold delivered by your company under the agreement, 190.8 kg are kept in custody of MongolBank as 43 unrefined gold bullion bars, whereas 3,.109 kg of 999.9 fineness are held in our metal account in London.
“If your party wishes to rescind the agreement, we ask that a formal request be submitted in accordance with the law of Mongolia. We are prepared to resolve this issue expeditiously within the framework of Mongolian law.”
In giving the reserved judgment of the Court of Appeal which was handed down on 21 December 2007 ( [2007] EWCA Civ1443) and to which I will refer in greater detail in paragraphs 20 to 23 below, Sir Anthony Clarke M.R. explained that the words in that letter “our metal account in London” was a reference to MongolBank's unallocated account with the bank. When however, the claimant's solicitors wrote to MongolBank on 20 November 2007 asking who was holding the 3,109 kilograms of gold in London, MongolBank replied on 22 November 2007 as follows:
“In response to your letter ref 1440/05 dated November 20, 2007. Pursuant to section 1.1 of the Agreement for Safe Custody, Purchase and Sale of Precious Metal, which reads that: 'The Seller shall deliver into custody of and subsequently sell to the Bank … gold bars', 3109 kg of gold deposited by you were refined in accordance with international standards and are kept in custody with Bank of Nova Scotia/Scotiamocatta/London GB.”
As a result of receiving this information, the claimant then decided to restore the application which had been adjourned by Lloyd-Jones J. It did so because the contents of the letter of 22 November 2007 appeared to be inconsistent with Mr Weeks' statement that MongolBank had not deposited any gold at the Bank. The claimant accordingly issued an application in which it sought injunctive relief against the Bank and an affidavit in relation to the physical gold in its possession. The application did not include an application for Norwich Pharmacal relief of the kind later ordered by Royce J.
Mr Weeks then made a second witness statement on 6 December 2007 in which he exhibited a letter he had written to MongolBank asking for an explanation of the statement about the physical gold in the letter from MongolBank dated 22 November 2007 from which I have just quoted in paragraph 13 above. This letter included the sentence that:
“I would...
To continue reading
Request your trial
-
R (Mohamed) v Secretary of State for Foreign & Commonwealth Affairs (No 1)
...that it was necessary to go so far as King J went in that case. That is because as Sir Anthony Clarke, MR said in Koo Golden East Mongolia v Bank of Nova Scotia and Ors [2007] EWCA Civ 1443 at paragraph 37 it is necessary to consider all the circumstances in the light of the fact that Norwi......
-
Rugby Football Union v Consolidated Information Services Ltd
...the remedy should be granted: Ashworth Hospital Authority v MGN Ltd [2002] 1 WLR 2033, para 57 per Lord Woolf CJ; Koo Golden East Mongolia v Bank of Nova Scotia [2008] QB 717, paras 37–38 per Lord Clarke MR. It is not necessary that an applicant intends to bring legal proceedings in respe......
- Cheltenham Borough Council v Laird
-
Claimants A, B, C and D v Respondent E
...Axa Equity and Law Life Assurance Society v National Westminister Bank. 80 The court accepts the principles enunciated inKoo Golden East Mongolea v Bank of Nova Scotia. 81 In relation to potential foreign proceedings or pending foreign proceedings, the court has no doubt that the evidence t......