Mark Alan Holyoake and Another v Nicholas Anthony Christopher Candy and Others
| Jurisdiction | England & Wales |
| Judge | Mr Justice Nugee |
| Judgment Date | 29 November 2016 |
| Neutral Citation | [2016] EWHC 3065 (Ch) |
| Docket Number | Case No: HC2015003369 |
| Court | Chancery Division |
| Date | 29 November 2016 |
[2016] EWHC 3065 (Ch)
The Honourable Mr Justice Nugee
Case No: HC2015003369
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice, Rolls Building
Fetter Lane, London, EC4A 1NL
Roger Stewart QC and Richard Fowler (instructed by gunnercooke LLP) for the Claimants
Thomas Plewman QC, Alexander Polley and Geoffrey Kuehne (instructed by Gowling WLG (UK) LLP) for the Defendants
Hearing dates: 14th & 16th September 2016
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.
Introduction
This is an application by the Defendants for security for costs. I need not recite the background to the action: a summary of it (almost wholly taken from an earlier judgment of Arnold J) can be found in a judgment which I handed down on 29 April 2016 on the Claimants' application for a notification injunction; see Holyoake v Candy [2016] EWHC 970 (Ch) at [2]–[3]. As there appears, Mr Holyoake and Hotblack Holdings Ltd ( "Hotblack"), a Jersey company ultimately owned by Mr Holyoake, claim damages in excess of £132m effectively for conspiracy to injure; the Defendants deny all liability.
The application is brought under CPR 25.13(2)(c) on the basis that Hotblack is a company and there is reason to believe that it will be unable to pay the Defendants' costs if ordered to do so. It is not disputed that Hotblack does not itself have the resources that would be required to meet the Defendants' likely costs if the claims fail (other than the policy referred to below), but the Claimants' answer to the application is three-fold: (i) this is the second time the Defendants have applied for security, and having withdrawn the previous application, it is an abuse of process for them to pursue the question again; (ii) if the claims fail, the Defendants will also obtain an order for the costs of the action against Mr Holyoake and he will be able to meet them, so the inability of Hotblack to do so is no reason to order security; (iii) Hotblack has obtained an after-the-event or ATE insurance policy which is either sufficient to show that it will be able to meet the Defendants' costs, or at any rate adequate security.
So far as the insurance policy is concerned, a number of points were argued at the hearing as to whether the Defendants (and the Court) could be confident that the policy could in fact be relied on if the Defendants were successful at trial, but in correspondence after the hearing the position was reached that the Defendants accepted that the policy might serve as adequate security up to its limit of £4m; however they continue to maintain (i) that it was not an abuse of process for them to renew the application for security; (ii) that they are entitled to security; and (iii) that £4m is inadequate and further security should be ordered to be provided by payment into court or bank guarantee.
Abuse of process – the facts
I will consider first whether it is an abuse of process for the Defendants to bring the application.
The facts are as follows. The action was commenced by claim form dated 12 August 2015. As early as 18 September 2015 the Defendants' solicitors (then called Wragge Lawrence Graham & Co LLP, and now called Gowling WLG (UK) LLP ( "Gowling")), wrote to the Claimant's solicitors, gunnercooke LLP ( "gunnercooke"), expressing concern that Hotblack would not be able to meet any order for costs and threatening an application for security in the absence of the Claimants providing information allaying their concerns; and on 4 December 2015 the Defendants issued an application for security for costs against Hotblack.
The hearing of that application was ultimately listed for Monday 23 May 2016 before Newey J. A considerable amount of evidence was served, consisting of witness statements of Mr Andrew Smith of Gowling in support of the application, and of Mr Harvey Stringfellow of gunnercooke in opposition to it. I will refer to them as "Smith 2", "Stringfellow 4" and the like. For present purposes, as will become apparent, what is significant is what this evidence said about Mr Holyoake's interests in a seafood business referred to as the Iceland Seafood Group.
In Smith 2 (dated 4 December 2015), Mr Smith dealt in some detail with what the Defendants then knew about Mr Holyoake's financial standing. After dealing with his property assets, he referred to Mr Holyoake's "only other appreciable known asset", namely his investment in the Iceland Seafood Group. Mr Smith referred to accounts showing that the group had made a loss in each of the last three years, and to litigation between Mr Holyoake and a Mr Peter Whitfield. Mr Smith described Mr Whitfield as the other major shareholder in the business, and indeed the documents exhibited by Mr Smith included both a report on an Icelandic company called Iceland Seafood International ehf ( "ISI"), which showed it as owned by a Luxembourg company called International Seafood Holdings S.àr.l. ( "ISH"), and also an extract from the Luxembourg register of companies which showed Mr Whitfield as owning 45% of ISH (being the owner of 5,582 shares, and Oakvest S.àr.l., a company owned by Mr Holyoake, being the owner of the other 6,823 shares). In the litigation Mr Whitfield (and a company owned by him called The Conon Fishings Company Ltd) had sued Mr Holyoake for repayment of certain loans; Mr Holyoake's defence was that it had been agreed that repayment of the loans would not be made until after a proposed sale by ISH of its shares in ISI, at which point the proceeds would be divided in such a way that Mr Whitfield would receive 45% of the sale proceeds plus the debts due to him and his company.
In a letter also dated 4 December 2015 gunnercooke referred briefly to the litigation between Mr Whitfield and Mr Holyoake, saying that Mr Holyoake had cross-claims against Mr Whitfield which meant that there was a balance due in his favour. When the Claimants' evidence in response to the application was given (in Stringfellow 4, dated 16 March 2016), it asserted that Mr Holyoake was a man of considerable means but said nothing about his interest in ISH and ISI or the dispute he had with Mr Whitfield. Nor was anything relevant said in further rounds of evidence (Smith 7 dated 13 April 2016, Stringfellow 8 dated 28 April 2015 and Smith 10 dated 12 May 2016).
At 16.29 on Friday 20 May 2016 (the last working day before the hearing of the application) Stringfellow 9 was served. This said a number of things about "Mr Holyoake's company Icelandic seafood group", which I should set out in some detail:
(1) Mr Holyoake had informed Mr Stringfellow that the dispute with Mr Whitfield had been resolved by Mr Holyoake buying all of the remaining shares in the company.
(2) The business was being made a public company by being listed on the NASDAQ First North Iceland Market, the listing being conducted by Kvika Bank in Iceland.
(3) Mr Stringfellow exhibited a letter from Mr Jónsson, the CEO of Kvika Bank, about which he said this:
"The letter … confirms that Kvika bank acted on behalf of Iceland Seafood International hf (which was until the share offering ultimately 100% owned by Mr Holyoake) in a pre-IPO share auction which has resulted in 40% of the shares in the company being sold for a value in excess of €20 million, with Mr Holyoake retaining a 60% controlling interest in the company, which it is said, by the bank, to be valued at a minimum of €30 million. Therefore, quite the contrary to Smith 2 and Defendants' suggestion that Mr Holyoake's seafood business is not valuable, and is difficult to realise, the Defendants assertion is demonstrably wrong. Clearly the value of the whole of Mr Holyoake's interest in Icelandic Seafioods hf, at the time the application for Security for Costs was made, was in the region of at least €50 million, which has been demonstrated by the evidence I have referred to."
Mr Jónsson's letter in fact showed that the bank had been appointed as advisor to ISH at the instruction of Mr Holyoake ("the ultimate beneficial owner of ISH") and confirmed the sale by ISH of 40% of its shares in ISI for in excess of €20m, the funds being paid out on 20 May 2016, with ISH legally retaining a 60% interest with a value of at least €30m.
(4) Mr Stringfellow had spoken on the telephone that day to Mr Prastarson (in fact I think Mr Prastarson), the manager of the Capital Markets division, who had told him that there was no lockout preventing Mr Holyoake selling further shares in the company. He added:
"He confirmed that the monies have been paid by the investors and are sitting in Mr Holyoake's account."
Faced with this last-minute evidence, the Defendants decided to withdraw their application, and there was an exchange of e-mails over the weekend. Again it is necessary to set out the exchange in some detail. At 17.22 on Friday 20 May 2016 gunnercooke followed up the service of Stringfellow 9 with an e-mail containing a letter without prejudice save as to costs; this said that since the service of confirmation of an ATE policy and Stringfellow 9 the application was hopeless; if the Defendants withdrew their application, the claimants would agree to costs being in the case. This was followed by two e-mails sent on Saturday 21 May, the first by Gowling at 17.39 which read:
"Our clients accept your offer of withdrawal of the Security for Costs application, with an order that costs be in the case.
This is on the basis that:
1. Your...
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