Ras Al Khaimah Investment Authority and Others (Claimants /Respondents) v Bestfort Development Llp and Others (Defendants /Appellants)
| Jurisdiction | England & Wales |
| Judge | Mr Justice David Richards |
| Judgment Date | 05 November 2015 |
| Neutral Citation | [2015] EWHC 3197 (Ch) |
| Court | Chancery Division |
| Date | 05 November 2015 |
| Docket Number | Case No: HC-2015-003056 |
[2015] EWHC 3197 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
ON APPEAL FROM MASTER BOWLES
IN THE MATTER OF AN APPLICATION UNDER SECTION 25 OF THE CIVIL JURISDICTION AND JUDGMENTS ACT 1982
Royal Courts of Justice
Rolls Building
London, EC4A 1NL
Mr Justice David Richards
Case No: HC-2015-003056
Philip Marshall QC and Ruth den Besten (instructed by Peters & Peters Solicitors LLP) for the 1 st— 6 th, 8 th and 10 th— 14 th Defendants/Appellants
Stephen Moverley Smith QC and Andrew Holden (instructed by Dechert LLP) for the Claimants/Respondents
Hearing date: 3 November 2015
The defendants in these proceedings apply for permission to appeal against the dismissal of their application for security for their costs of the proceedings and, if permission is granted, for the order below to be set aside and for an order for security for costs to be made in their favour. The hearing before me proceeded on the basis that, if I gave permission, I would also determine the appeal and I accordingly heard full argument from both sides on the substance of the appeal.
The proceedings are brought under section 25 of the Civil Jurisdiction and Judgments Act 1982 for a worldwide freezing order and associated disclosure orders against the defendants and for the appointment of receivers. These orders are sought in support of pending or intended proceedings by the claimants against a Mr Mikadze in Georgia and in Ras Al Khaimah in the United Arab Emirates. The claimants are entities associated with the government of Ras Al Khaimah and the claims are said to arise out of dealings between the claimants and Mr Mikadze, a citizen of Georgia, in respect of property developments in Georgia. It is alleged that Mr Mikadze misappropriated large sums and the claim against him is said to be for US $42 million. The allegations are strongly denied. The claimants allege, among other things, that the defendants are beneficially owned or controlled by Mr Mikadze, and that it will be possible to enforce a judgment against Mr Mikadze against the defendants' assets. This allegation is denied by the defendants. The details of the claims made or to be made in the foreign proceedings and in the present proceedings are not relevant to the present application.
The application for the worldwide freezing orders and other relief was commenced on 1 May 2015 and evidence of both fact and Georgian law have been filed. The application is due to be heard with an estimate of three days starting on 9 November 2015.
The application for security for costs is made by all the defendants, except the seventh and ninth defendants who are not represented in the proceedings, by an application notice issued on 21 August 2015. Evidence of fact and expert evidence of Georgian law was filed on the application which was heard by Master Bowles on 7 October 2015. Towards the end of the hearing he invited further written submissions on a particular topic and submissions were supplied to him between 8 and 12 October 2015. The Master gave judgment on 16 October 2015 dismissing the application.
CPR 25.12 entitles a defendant to any claim to apply for security for its costs of the proceedings but the court may make an order for security for costs under CPR 25.13 only if (a) it is satisfied, having regard to all the circumstances of the case, that it is just to make such an order, and (so far as relevant to the present application) one or more of the conditions in CPR 25.13(2) applies. The application was made only by reference to the condition specified in paragraph (2)(a) of CPR 25.13:
"the claimant is –
(i) resident out of the jurisdiction; but
(ii) not resident in a Brussels Contracting State, a State bound by the Lugano Convention or a Regulation State, as defined in section 1(3) of the Civil Jurisdiction and Judgments Act 1982."
It is common ground that none of the claimants is either resident within the jurisdiction or resident in any of the states referred in paragraph (2)(a)(ii) (Convention states). It is not said that the claimants lack the means to meet an order for costs against them, but it is common ground that none of them has any assets in the UK or in any Convention state.
It is also common ground that an application for security for costs against a claimant falling within paragraph 2(a) engages articles 6 and 14 of the European Convention on Human Rights. An order for security for costs against a claimant resident outside the United Kingdom or a Convention state is capable of amounting to discrimination under article 14 in the entitlement to effective access to the courts under article 6, on grounds of national origin where such an order could not be made against a person who was resident either in the United Kingdom or in a Convention state. This was established by the decision of the Court of Appeal in Nasser v United Bank of Kuwait [2001] EWCA Civ 556, [2002] 1 WLR 1868.
There will be no breach of article 14 if the making of an order for security for costs is objectively justified. Potential difficulties or burdens of enforcement in the relevant state, which would not be encountered in enforcement in the United Kingdom or a Convention state, are capable of providing objective justification for these purposes. If that condition is met, the issue for the court is whether, having regard to all the circumstances of the case, it is satisfied that it would be just to make an order for security for costs.
The first and principal ground of appeal is that the Master applied too high a test in determining whether the defendants would face potential difficulties or burdens in enforcing an order for costs against the claimants. The Master held that the court must be satisfied that the defendants would be likely to face such difficulties or burdens of enforcement, whereas the defendants submit that the test is the lower test of showing that there is a real, as opposed to a fanciful, risk of such difficulties or burdens. If the defendants are correct, the Master made an error of law. The defendants submit that, if the right test were applied, the evidence showed that they would face a real risk of being unable to enforce an order for costs. A further ground of appeal is that, in any event, the Master erred in failing to take account of relevant matters or took into account irrelevant matters.
Some of the claimants are incorporated in Ras Al Khaimah while the others are incorporated in Georgia. Without conceding the point, the claimants did not seriously challenge before the Master the defendants' case that there would be difficulties of enforcement in Ras Al Khaimah. Their case before the Master, and before me, is that they have assets in Georgia and the defendants could not show that there would be such difficulties of enforcement in Georgia as would justify the making of an order for security of costs.
I will deal first with the main ground, and point of principle, on which the defendants seek to appeal the Master's order, namely the threshold test of the standard to which the court must be satisfied that there will be potential difficulties or burdens of enforcement in the relevant non-Convention state so as to constitute objective justification for the making of an order for security for costs that would otherwise be discriminatory in breach of article 14.
The Master held that the court needs to be satisfied that there is likely to be an obstacle or burden to enforcement, basing himself on the terms of the judgment of Mance LJ, with which Simon Brown LJ agreed, in Nasser and on a decision to the same effect, after argument on the point, by Hamblen J in Dumrul v Standard Chartered Bank [2010] EWHC 2625 (Comm). These authorities were cited to the Master by counsel for the claimants and no submissions to contrary effect were made in reply at the hearing on behalf of the defendants.
The Master dealt with the issue in his judgment as follows:
"25. I turn therefore to the question of whether such grounds exist, and to the question as to the burden to be satisfied by an applicant for security where security is sought upon such grounds. As to the latter I find myself in complete agreement with Hamblen J in Dumrul v Standard Chartered Bank [2010] EWHC, 2625 (Comm); namely that, as a matter of both principle and authority the authority being Nasser) the court needs to be satisfied that there is likely to be an obstacle, or burden, to enforcement, by which is meant, in accord with paragraph 62 of Nasser, that there is likely to be a substantial obstacle, or burden, to enforcement, and that a real possibility that such an obstacle or burden might exist is insufficient. The point of principle identified by Hamblen J. that a mere, or real, p ibilii5that there might be a substantial obstacle or burden in respect of enforcement should not be sufficient to justify different treatment being applied to a resident outside the UK, EEA or EU, as compared with a person resident within those jurisdictions.
26. In this regard, I received after the hearing, but not in the course of argument at the hearing, a supplemental submission from Philip Marshall...
To continue reading
Request your trial
-
Bestfort Developments Llp and Others v Ras Al Khaimah Investment Authority and Others
...to require the respondents/claimants to give security for the costs of the section 25 proceedings. His judgment is available at [2015] EWHC 3197 (Ch). In effect he upheld the approach adopted by the 17 The appellants/defendants duly paid the total sum of £76,000 in respect of the responden......
-
Mitsuji Konoshita v Jtrust Asia Pte Ltd
... [1988] 1 WLR 1350. 10 At para. 34. 11 [2003] EWCA Civ 1272. 12 [2012] EWCA Civ 808. 13 [2011] EWHC 3102. 14 [2015] EWCA Civ 906. 15 [2015] EWHC 3197. 16 [2014] EWHC 17 BVIHCVAP2007/0008 (delivered 29th October 2007, unreported). 18 [2018] SGCA 27. 19 See pg. 4 of the transcript of proce......