Sheikh Tahnoon Bin Saeed Bin Shakhboot Al Nehayan v John Kent (Also known as Joannis Kent)
| Jurisdiction | England & Wales |
| Judge | Mrs Justice Nicola Davies |
| Judgment Date | 21 March 2016 |
| Neutral Citation | [2016] EWHC 623 (QB) |
| Court | Queen's Bench Division |
| Docket Number | Case No: HQ13X03549 |
| Date | 21 March 2016 |
[2016] EWHC 623 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Mrs Justice Nicola Davies
Case No: HQ13X03549
Mr James Laddie QC (instructed by Simons Muirhead & Burton) for the Applicant
Paul Burton (instructed by Davis Law) for the Respondent
Hearing dates: 2 March 2016
The defendant applies for security for costs of the entirety of the action. The claimant is a United Arab Emirates (UAE) national, resident in Abu Dhabi and a member of the ruling family. In these proceedings the claimant has acted as an investor in international real estate and allied business opportunities. The defendant is a business man with a particular interest in hotels and tourism. He is resident in Athens and carries on business, in particular in hotels in Greece and Cyprus.
The claimant invested money with the defendant for the purpose of the hotel businesses. He issued his claim on 8 July 2013. It pleaded that pursuant to a Framework Agreement dated 23 April 2012 and governed by English law, the defendant owed him nearly £2,000,000, the Agreement obliged the defendant to discharge "operational debts" and to indemnify the claimant against certain costs. A Defence and Counterclaim dated 29 August 2013 admitted the Framework Agreement, it alleged that the defendant had paid many of the operational debts but not all. The Counterclaim alleged that the claimant had broken the Agreement to obtain the release of certain personal guarantees given by the defendant. Draft Amended Particulars of Claim were served in December 2013. The revised amount claimed was in the order of £18,000,000 referenced by sums owing under a Promissory Note also governed by English law. On 10 January 2014 newly appointed solicitors acting for the defendant notified the claimant's solicitors of an application for an interim security for costs order. On 7 March 2014 an Amended Defence and Counterclaim was served which set out in detail the circumstances as between the parties and alleged breach of contract. Declaratory relief was sought namely that the purported agreement under the Framework Agreement and/or Promissory Note and any transactions effected in accordance with the same should be set aside as having been entered into under economic duress and/or as the result of undue influence and/or negligent misrepresentation by the claimant and/or his representatives. Equitable compensation was sought for breach of the claimant's fiduciary obligations to the defendant.
On 23 January 2014 Master McCloud conducted a case management conference. The Master's order provided for the filing and service of Amended Particulars of Claim and Amended Defence and Counterclaim. The Amended Defence and Counterclaim was in fact a substituted Defence and Counterclaim in that it advanced the defendant's case upon a different basis and with considerably more detail. The claimant took issue with the amended pleading which led to hearings before Master Eyre and a judgment from Cranston J [2015] EWHC 1176 (QB) on 5 May 2015. Cranston J upheld the amended defence pleading. Since that time there has been a hiatus in the proceedings.
On 29 July 2015 the defendant amended his application for interim security for costs, he now seeks security for his costs of defending the claimant's claim in the proceedings. The sum sought is £1,000,000 to be provided by the claimant by payment into court as follows:
i) £400,000 within 35 days of the date of the court's order;
ii) £250,000 by no later than 35 days after the hearing of the restored CMC;
iii) £350,000 by no later than 2 days before the date fixed for the trial in the action.
Further the defendant claims that if security is not so provided, the claim be struck out and the defendant be entitled to judgment for his costs of the proceedings.
The Law
CPR 25.13 provides;
25.13 – (1) The court may make an order for security for costs under rule 25. 12 if —
(a) it is satisfied, having regard to all the circumstances of the case, that it is just to make an order; and
(b) (i) one or more of the conditions in paragraph (2) applies, or ….
(2) The conditions are —
(a) 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 Judgements Act1982; …
The approach of the courts has been identified in a number of authorities.
Nasser v. United Bank of Kuwait [2002] 1 WLR 1868 CA
"58.The exercise of the discretion conferred by rule 25.13 (1) and (2) (a) (i) and (b) (i) raises, in my judgment, different considerations. That discretion must itself be exercised by the courts in a manner which is not discriminatory. In this context at least, I consider that all personal claimants (or appellants) before the English courts must be regarded as the relevant class. It would be both discriminatory and unjustifiable if the mere fact of residence outside any Brussels/Lugano member state could justify the exercise of discretion to make orders for security for costs with the purpose or effect of protecting defendants or respondents to appeals against risks to which they would be equally subject, in relation to which they would have no protection, if the claim or appeal were being brought by a resident of a Brussels or Lugano State. Potential difficulties or burdens of enforcement in states not party to the Brussels or Lugano Conventions are the rationale for the existence of any discretion. The discretion should be exercised in a manner reflecting its rationale, not so as to put residents outside the Brussels/Lugano sphere at a disadvantage compared with residents within. The distinction in the rules based on considerations of enforcement cannot be used to discriminate against those whose national origin is outside any Brussels and Lugano State on grounds unrelated to enforcement. …
61.Returning to rules 25.15(I) and 25.13(I) and (2)(a) and (b), if the discretion to order security is to be exercised it should therefore be on objectively justified grounds relating to obstacles to or the burden of enforcement in the context of the particular foreign claimant or country concerned.
62. The justification for the discretion under Rules 25.13 (2) (a) and (b) and 25.15 (1) in relation to individuals and companies ordinarily resident abroad is that in some — it may well be many — cases there are likely to be substantial obstacles to, or a substantial extra burden (e.g., of costs or delay) in enforcing an English judgment, significantly greater than there would be as regards a party resident in England or Brussels or Lugano state. …
63. It also follows, I consider, that there can be no inflexible assumption that there will in every case be substantial obstacles to enforcement against a foreign resident claimant in his or her (or in the case of a company its) country of foreign residence or wherever his, her or its assets may be. If the discretion under rule 25.13 (2)(a) or (b) or 25.15 (1) is to be exercised, there must be a proper basis for considering that such obstacles may exist or that enforcements may be encumbered by some extra burden (such as costs or the burden of and irrevocable contingency fee or simply delay).
64. The courts may and should, however, take notice of obvious realities without formal evidence. There are some parts of the world where the natural assumption would be without more that there would not just be substantial obstacles but complete impossibility of enforcement; and there are many cases where the natural assumption would be that enforcement would be cumbersome and involve a substantial extra burden of costs or delay. But in other cases—particularly other common law countries which introduced in relation to English judgments legislation equivalent to Part 1 of the Foreign Judgments (Reciprocal Enforcement) Act 1933 (or Part II of the Administration of Justice Act1920) — it may be incumbent on an applicant to show some basis for concluding that enforcement would face any substantial obstacle for extra burden meriting the protection of an order for security of costs. Even then it seems to me that the court should consider tailoring the order for security to the particular circumstances. If, for example, there is likely at the end of the day to be no obstacle to or difficulty about enforcement, but simply an extra burden in the form of costs (or an irrecoverable contingency fee) or moderate delay, the appropriate course could well be to limit the amount of the security ordered by reference to that potential burden.
65 I also consider that the mere absence of reciprocal arrangements or legislation providing for enforcement of foreign judgements cannot of itself justify an inference that enforcement will not be possible. …….."
The standard of proof was identified by David Richards J in Rasral Khaimah Investment Authority & ors v. Bestfort Development LLP & ors [2015] EWHC 3197 (CH) at [22].
"22. Reading the judgement of Mance LJ as a whole, but in particular in the light of the passages cited above, it is clear to me that he was setting the bar at likelihood, rather than a lower test of a real risk. It is, however, fair to make these points. First, it does not appear from the judgment to have been the subject of argument between the parties. Secondly, the word "likely" will not necessarily mean more likely than not. Its meaning will depend on its context; see In Re...
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