Tonstate Group Ltd ((in Liquidation)) v Gil Wojakowski

Hearing date: 26 April 2024

Approved Judgment

This judgment was handed down remotely at 10am on Monday 20 May 2024 by circulation to the parties or their representatives by e-mail and by release to the National Archives.

Introduction & Background

This Judgment deals with a short but important question about costs.

Fieldfisher LLP (“ Fieldfisher”) acted for Mr Gil Wojakowski (“ Gil”) in connection with an application before me on 10 April 2024, seeking Bankers Trust relief. My Judgment on the application is at [2024] EWHC 975 (Ch). As will be apparent from that Judgment, Gil objected to the idea that the Court had jurisdiction over him. After I determined, part way through the hearing, that in my view the Court had at least personal jurisdiction over Gil, he instructed his legal team to withdraw, for fear that by remaining an active participant in the hearing, he might enter a submission which would then affect his ability to object to enforcement of any Judgment or Order in Israel, where he is resident. His legal team informed the Court that that was Gil's position, and accordingly played no further role in the application. At the end of the hearing, having heard further submissions from the Claimants/Applicants, I stated that I would make the Order they sought against Gil. I was also asked to make an Order dispensing with personal service of the Order and permitting service via Fieldfisher. I indicated I would do so.

In between the end of the hearing on Wednesday 10 April, and the point late in the afternoon of the following day, 11 April, when a sealed copy of the Order was ready for service, Gil sent to the Claimants' solicitor a Notice of Change, saying that Fieldfisher had ceased to act for him and that he was now acting in person. He gave an address for service in Israel. That was on the morning of Thursday, 11 April at approximately 10.26am.

This chain of events has given rise to an issue about the validity of the service of my Order, via service on Fieldfisher, later in the evening of the same day, Thursday, 11 April. The position the Claimants have taken is that such service was valid, because the Notice of Change served by Gil was deficient and thus ineffective to remove Fieldfisher from the record as a party authorised to accept service on behalf of Gil within the jurisdiction. The Claimants' argument relies on a combination of CPR, rule 6.23(1) and CPR 42.2(3). The gist of the point is that CPR, rule 6.23(1) requires “ a party to proceedings” to give an address for service which must be in the United Kingdom – either the address of a solicitor, or a place of residence or business, or some other UK address. So – the argument runs – when CPR 42.2(3) says that any Notice of Change must state the party's new address for service, that must also mean another address in the UK; and if a non-UK address is given, then the Notice of Change is defective, and the solicitor's address remains a valid address for service unless and until the solicitor makes an application under CPR, rule 42.3 that he has ceased to act (or as it is usually said, has “ come of the record”). There is some support for the argument in the decision of Chief Master Marsh, in Ashley v. Jimenez [2019] EWHC 1806 (Ch). (I should point out that here, Fieldfisher did apply to come off the record, but that was only by their later application dated 23 April 2024, which I granted by Order dated 25 April).

As I will explain further, the issue of service has yet to be determined, but the immediate costs question comes about in the following way.

After receiving Gil's Notice of Change referred to above, the Claimants' solicitor, Mr Rechtschaffen, replied by email to Gil early in the afternoon of 11 April, making (in effect) the argument above, to the effect that the Notice of Change was invalid. That correspondence was not copied to Fieldfisher, and so they were not aware of it, or of the argument Mr Rechtschaffen was relying on, when they sent an email to the Court (more precisely, to my clerk), on the morning of the following day, Friday 12 April, saying they were no longer on the record “ as of yesterday morning”, and so were not authorised to accept service of documents on Gil's behalf. The implication was that the attempted service on them the previous evening was ineffective.

Mr Rechtschaffen replied to Fieldfisher by letter almost immediately, setting out for them the gist of the argument I have referred to. In an email to Fieldfisher timed at 13.53 on Friday 12 April, Mr Rechtschaffen then also said that unless they could show that the Claimants were wrong in their interpretation of the rules, then they (Fieldfisher) should promptly write to the Court and “ withdraw your challenge to the effectiveness of service … and apologise for the inconvenience”.

That is how matters stood going into the weekend, but on the following Monday morning, 15 April, the Claimants issued an Application Notice, seeking “ A declaration the Gil Wojakowski was validly served with the 10 April 2024 order of Adam Johnson J by the Claimants serving a copy on Fieldfisher LLP”. The Claimants named as Respondents to that Order both Gil and Fieldfisher. As far as Fieldfisher are concerned, the Application Notice said the following:

“The Claimants seek an Order that Mr Wojakowski and Fieldfisher be jointly and severally liable for the costs of the present application, to be assessed if not agreed. Even if Mr Wojakowski (who as an Israeli lawyer is presumably unfamiliar with the CPR) did not understand the need to supply a new address for service within the jurisdiction, Fieldfisher should have been aware of this requirement. In circumstances where Mr Wojakowski is resident in Israel and refuses to recognise the English Court's jurisdiction over him, it would be unfair for the Claimants to be left out of pocket by reason of Fieldfisher's failure to interpret and apply the rules correctly. Fieldfisher should plainly have accepted the service upon them as valid.”

The Application Notice requested that the matter be dealt with without a hearing, but on 16 April I directed an oral hearing, which was later scheduled for Friday, 26 April, with a time estimate of 1 hour.

On Thursday, 18 April Mr Rechtschaffen wrote to Fieldfisher saying that the basis for seeking costs against them was that they had maintained a position in correspondence, including in correspondence with the Court (see above at [6]), which was “ plainly wrong”. He went on though to say that the Claimants would not seek any adverse costs Order against...