Mustafa Ontulmus and Others v Sir Ian Collett and Others
| Jurisdiction | England & Wales |
| Judge | Mr Justice Warby |
| Judgment Date | 05 December 2014 |
| Neutral Citation | [2014] EWHC 4117 (QB) |
| Docket Number | Case No: HQ12D03628 |
| Court | Queen's Bench Division |
| Date | 05 December 2014 |
[2014] EWHC 4117 (QB)
Mr Justice Warby
Case No: HQ12D03628
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
James price QC and Alexandra Marzec (instructed by Peters & Peters) for the Third Defendant
The Claimants and the First and Second Defendants did not appear and were not represented
Mr Smith for Ford & Warren, solicitors interested party
Hearing date: 15 October 2014
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 a libel action brought by three claimants against three defendants in respect of emails sent in January and July 2012. The action was listed for a 1 day case management conference on 15 October 2014 to deal with an application for permission to amend the third defendant's Defence, and costs budgeting. However, on 9 October 2014 the claimants each accepted offers of settlement which had been made by the third defendant on 13 November 2013. At the same time the claimants gave notice of discontinuance of their claims against the first and second defendants.
That leaves for determination the appropriate final orders in respect of damages and costs to give effect to the settlements and the discontinuance. The defendants have made applications for what they say are appropriate orders. The main issues arise from the application of the third defendant. They are whether such costs orders as are made against the claimants should be on the standard or the indemnity basis; whether the claimants should be jointly and severally liable for costs ordered in favour of the third defendant; and whether and if so to what extent costs and damages due to the claimants should be set off against costs due to the third defendant.
Background
The account of the factual background which is set out below is derived from the materials put before the court on behalf of the third defendant. It does not include any findings of fact as to the matters alleged by him.
The claimants described themselves in this way in the Re-Amended Particulars of Claim. The first claimant ("Mr Ontulmus") is a shareholder in the second claimant ("MTH") and a consultant to MTH and to the third claimant ("Kaiserwerft"). MTH is a Turkish company carrying on business as a yacht builder, seller and charterer. Kaiserwerft is a German company engaged in the same business. The claimants are said to have international reputations.
The third defendant ("Mr Moore") is a former client of MTH who ordered a number of successively larger yachts from MTH. He and his wife became engaged in a dispute with the claimants. The first defendant is the managing director of the second defendant. The first and second defendants were instructed to advise Mr & Mrs Moore in relation to the dispute with the claimants.
The main claim in the libel action related to an email and attachments sent by Mr Moore to a watchmaker and businessman named Franck Muller and a business associate of Mr Muller, in Switzerland, on 28 July 2012. It is unnecessary to set out details of the words complained of or the full extent of the defamatory meanings complained of. In summary, the Re-Amended Particulars of Claim alleged that the words complained of imputed to all the claimants fraud and manipulation, a variety of other acts of dishonesty, and gross negligence. All three defendants were sued in respect of the publication of this email and attachments. This was the only claim against Mr Moore.
Each of the claimants advanced a substantial claim for special damage. They did so on the basis that the publication of the 28 July 2012 email caused Mr Muller to withdraw from an agreement made in May and June 2012 to place an order with Kaiserwerft for the construction of an approximately 45 metre motoryacht, at an agreed price of €21m.
Mr Muller's decision not to proceed with this order was alleged to have caused Mr Ontulmus to lose €630,000 by way of a 3% commission which he would have obtained on the purchase price of the yacht. MTH complained that it had lost €900,000 which would have been due under a licence agreement with Kaiserwerft. Kaiserwerft claimed €1.35m in wasted costs and €4.5m in lost profit in relation to the order from Mr Muller. Kaiserwerft also claimed that very substantial profits would have been earned from the production of further yachts based on the same model. In Further Information of 17 July 2013 it was said that it had been intended and planned to attract 3 customers a year over 10 years, with each yacht yielding a profit of at least €4.5m. The claim implied by those figures was therefore €135m.
These allegations were set out in the Particulars of Claim and in extensive Further Information provided during July 2013, together with supporting documentation. Among the documents was a copy of what was said to be the licence agreement between Kaiserwerft and MTH. This document is headed "Subcontractor agreement" and provides for the carrying out of a "Work Segment" at a price of €900,000. The document appears to be a standard form building contract referring to a "lot of land" and appears to relate to the USA.
Simultaneously with the issue of these proceedings MTH began arbitration proceedings against Mr Moore claiming some €13 million in respect of yacht contracts between them. There were also proceedings in Italy and Malta.
On 2 August 2013 Mr Moore filed his Defence in this action, containing among other defences a plea of justification. The defence of justification included allegations of fraud and improper manipulation against Mr Ontulmus and MTH. As against Kaiserwerft Mr Moore sought to justify a meaning that it was so closely related to and/or involved with MTH that " considerable caution should be exercised before any financial commitment is made to Kaiserwerft". The Defence disputed the special damage claim in detail, denying that there had been any contract between Kaiserwerft and Mr Muller, and taking issue with the allegation that there had been any licence agreement between MTH and Kaiserwerft.
On 4 October 2013 the claimants served a Reply taking issue with the Defence of Mr Moore and the Amended Defence of the first and second defendants, which had adopted much of the content of Mr Moore's defence.
On 13 November 2013 Mr Moore made offers of settlement to each of the claimants. The offer to Mr Ontulmus was a Part 36 offer to settle the whole of Mr Ontulmus' claim. The offer was that: "Our client will pay Mr Ontulmus, within 14 days of acceptance of this Offer, the sum of £75,000, including interest, in full and final settlement of the whole of Mr Ontulmus' claim against our client in the above proceedings."
In accordance with Part 36.10(1) the letter stated that Mr Moore would pay Mr Ontulmus' costs on the standard basis to be assessed if not agreed up to the date of written notice of acceptance if the offer was accepted within 21 days, the Relevant Period for the purposes of CPR 36. The end of the Relevant Period was therefore 3 December 2013.
The offer made to Kaiserwerft was also a Part 36 offer. It was in terms materially identical to those of the offer to Mr Ontulmus, except that the sum offered was £25,000 including interest.
The offer to MTH was not made under Part 36. It was instead a without prejudice save as to costs offer. It suggested that MTH did not appear to have been trading and that it therefore had " no trading reputation which could have been damaged by our client's allegedly defamatory communication". It went on:
"Nevertheless, our client is mindful of the provisions of the CPR which expect litigants to resolve disputes where possible. Accordingly, our client is prepared to offer [MTH] the sum of £500 in full and final settlement of the whole of [MTH]'s claim against our client in the above proceedings. If your client accepts this offer of damages, the amount of any costs owing to either MTH or to our client can be determined by the court at a suitable time.
Please note that this offer will remain open until such time as it is withdrawn in writing."
On 18 February 2014 Tugendhat J gave judgment on an application for security for costs made by Mr Moore against all the claimants: [2014] EWHC 294 (QB). The Judge declined to order security against Mr Ontulmus, finding that he was resident in Germany and had not as alleged changed his address since proceedings with a view to avoiding the consequences. He did find at [34] that " Mr Ontulmus has been inconsistent and evasive in his statements about where in Germany he has been residing". He thought this may well have been due to a concern to avoid casting doubt on the legitimacy of his German residence permit, but made no findings about that.
Tugendhat J also found at [49] that the documents relied on by MTH in support of its claim included one which, as the claimants' counsel accepted, was not what it purported to be. This, I was told by Mr Price QC for Mr Moore, was a reference to the alleged licence agreement between MTH and Kaiserwerft. The Judge recorded that counsel had submitted that the document was created to be produced to the Turkish authorities. He said " Whether or not that is so, I find it very difficult to imagine a legitimate purpose for which this document could have been created or for which it could be produced, whether to the Turkish authorities or to this court". Since Mr Ontulmus had not been asked about the document in...
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