Michael Wilson and Partners Ltd v Sinclair
| Jurisdiction | England & Wales |
| Judge | Lord Justice McCombe,Lord Justice Briggs |
| Judgment Date | 07 February 2017 |
| Neutral Citation | [2017] EWCA Civ 55 |
| Docket Number | Case No: A2/2015/3554 |
| Court | Court of Appeal (Civil Division) |
| Date | 07 February 2017 |
[2017] EWCA Civ 55
Lord Justice McCombe
and
Lord Justice Briggs
Case No: A2/2015/3554
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE QUEEN'S BENCH DIVISION
MRS JUSTICE WHIPPLE
QB/2015/0276
Royal Courts of Justice
Strand, London, WC2A 2LL
Charles Samek QC and Adam Solomon (instructed on a Direct Access basis) for the Appellant
The Respondent ( Mr T.I. Sinclair) in person
Hearing date: 13 December 2016
Approved Judgment
This is an appeal by Michael Wilson & Partners Limited ("MWP") from the order of 7 October 2015 of Whipple J. By her order the judge dismissed an appeal by MWP from the order of 9 June 2015 of Master Yoxall granting to Mr Thomas Ian Sinclair ("TIS") a stay of execution of an order of 19 October 2014 of Master Eyre registering certain judgments in favour of MWP against TIS under the Administration of Justice Act 1920. Permission to bring this second appeal was granted by Floyd LJ by order of 25 November 2015.
The registered orders were orders relating to costs of proceedings between the parties in the Bahamas. The proceedings had been brought by TIS against MWP seeking declarations as to the beneficial ownership of shares. The proceedings were unsuccessful in the sense that they were stayed/struck out, on jurisdictional grounds, in the face of MWP's contention that jurisdiction should properly be in England and Wales where related arbitration proceedings were under way, whereas (as it was submitted) the Bahamian proceedings were simply contrived in order to bring the dispute into that forum. As the judge recorded in her judgment, the registered orders included a certificate of taxation (assessment) of costs in the sum of approximately US$250,000; the remainder of the costs were in dispute and were awaiting taxation.
The present appeal is merely one episode in a long saga of arbitration and litigation that has been proceeding in various jurisdictions for a number of years. The judge sets out a helpful summary of the salient features of the matter in paragraph 4 of her judgment ( [2015] EWHC 2847 (QB)) as follows. (In this passage the judge refers to Master Eyre's order as "the Registration Order"):
"a) In June 2006, a Mr John Emmott (not a party to this appeal, but an individual who features in the underlying events) terminated his relationship with MWP, a law firm which operates in Almaty, Kazakhstan.
b) In August 2006, MWP initiated an arbitration in London against Mr Emmott, claiming that Mr Emmott had made a secret profit in relation to certain shares in a company called Max Petroleum Plc (the "Max shares"), which MWP contended belonged to it. A freezing order was obtained by MWP over Mr Emmott's assets, including the Max shares. MWP gave an undertaking in damages as condition of the freezing order.
c) Although the freezing order related to Mr Emmott's assets, and Mr Emmott was the registered holder of the Max shares, it was TIS' contention that he, TIS, was the beneficial owner of the Max Shares [sic] (a contention which I understand was accepted in the arbitration, by means of the Second Interim Award released in February 2010). Therefore, the freezing order impacted significantly on TIS who was unable to dispose of or otherwise deal with the Max shares while they were the subject of it. For that reason, I am told TIS funded Mr Emmott's legal costs in the arbitration (although he was not a named party to the arbitration), and involved himself in other aspects of the broader litigation against MWP.
d) In October 2006, TIS commenced proceedings in the Bahamas to confirm his ownership of the Max shares. MWP challenged the jurisdiction of that action, suggesting that the appropriate jurisdiction was England, where the arbitration was underway. In the end, TIS failed to establish jurisdiction in the Bahamas and the Bahamian action was struck out. The Bahamian costs orders which are the subject of the Registration Order relate to this piece of litigation.
e) Meanwhile, the arbitration progressed in London. The panel consisted of Lord Millett, Christopher Barry and Valerie Davies. MWP was unsuccessful in the arbitration. In September 2014, the panel determined quantum in favour of Mr Emmott, awarding him a substantial amount of damages, together with his costs of the arbitration (I am told that his costs had in fact been funded by TIS). The costs have yet to be quantified. Nothing has been paid.
f) In October 2010, MWP commenced a separate action in the High Court, seeking a declaration that the Max shares were owned beneficially by MWP and not TIS (the "Max action"). The Max action was struck out with costs, as an abuse of process given that the arbitration had already determined the issues now raised by MWP in the Max action. Costs orders in TIS' favour were made. Those costs have yet to be quantified on detailed assessment. An appeal against strike out is currently pending before the Court of Appeal, due to be heard November 2016. The costs of the Max action are therefore at large, at least until that appeal is determined.
g) Meanwhile, on 17 October 2010, the freezing order in MWP's favour was discharged.
h) TIS seeks to enforce the undertaking in damages given by MWP. He has permission from the Commercial Court to proceed with any enquiry. TIS will contend in that enquiry that he has sustained loss and damage consequent on the freezing order, including (i) the loss of value of the Max shares which are now worth substantially less than they were at the time of the freezing order in 2006; and (ii) the costs associated with the Bahamian proceedings which were initiated by TIS to establish TIS' ownership of the Max shares. (Permission was originally granted on condition that TIS abandoned his counter claim in the Max action. I am told that TIS has now done that.) "
Master Yoxall, we understand, granted the stay of the registration order on the basis that the underlying costs orders were not freestanding but formed part of what I have described as the "saga" which had at its core the dispute as to the beneficial ownership of the Max shares. That was a dispute which MWP had lost in the arbitration in which the assertion by Mr Emmott that TIS was the beneficial owner of the shares had been successful. Substantial amounts of costs (in significant part originally funded by TIS) and damages had been ordered against MWP in the arbitration and there were arguable claims in damages arising out of the freezing order which had been granted subject to the usual cross-undertaking in damages. If the Bahamian costs orders were paid to MWP, the Master held, there was a fear that the sums would be dissipated without meeting the significant liabilities of MWP outstanding from the arbitration proceedings. Thus, the Master granted the stay of execution sought.
MWP appealed to the judge and argued, first, that the court had no discretion at all to grant a stay of execution of the order, once the time had expired in which to apply to set aside the registration; alternatively, the Master had erred in exercising his discretion in granting a stay. The judge dismissed the appeal. She found that there was a discretion to order a stay of execution. The judge considered that once the judgments became registered as English judgments the court had the powers that were available to it to stay those judgments, just as it has power to stay any judgment granted in domestic proceedings. That power arose, in her view, under CPR 3.1(2)(f) which conferred a broad discretion. She referred to the notes in Civil Procedure Vol. 1 at paragraph 3.1 where it is said that the court has an inherent jurisdiction to stay the whole or any part of the proceedings.
The judge did not accept the proposition that the Master's discretion was governed by CPR 83.7 and that accordingly "special circumstances" had to be shown "which render it inexpedient to enforce the judgment" or that that rule together with CPR 40.8A set out the only circumstances in which a money judgment could be stayed. The judge's view was that the general discretion under CPR Part 3 applied. In the event that she was wrong about that and she had, therefore, to exercise the discretion under CPR 83.7 herself, the judge's view was that there were sufficient special circumstances in this case to warrant the grant of the stay sought.
On the present appeal, it is argued for MWP that the judge was wrong to hold that the relevant discretion arose under CPR 3.1(2)(f) and that she ought to have concluded that CPR 83.7 was the relevant provision. It is further submitted that the judge was wrong to hold that a stay should be granted, whichever of the two provisions applied. MWP does not pursue the point, argued before the judge, that there was no discretion left in the court to grant a stay once the period for applying to set aside the registration, as provided for in the registration order itself, had expired.
The relevant provisions of the rules, therefore, are (omitting immaterial parts) CPR 3.1(1) and ( 2)(f), 40.8A and 83.7(1), (4) and (5). These rules provide as follows:
"(1) The list of powers in this rule is in addition to any powers given to the court by any other rule or practice direction or by any other enactment or any powers it may otherwise have.
(2) Except where these Rules provide otherwise, the court may –…
(f) stay the whole or part of any proceedings or judgment either generally or until a specified date or event;…
40.8A Stay of execution and other relief
Without prejudice to rule 83.7(1), a party against whom a judgment has been given or an order made may apply to the court for —
(a) a stay of execution of the judgment or order; or
(b) other relief,
on the ground of matters which have occurred since the date of the...
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