Vald. Nielsen Holding A/S and Another v Mr Victor Baldorino and Others
| Jurisdiction | England & Wales |
| Judge | Mr Robin Dicker |
| Judgment Date | 05 May 2017 |
| Neutral Citation | [2017] EWHC 1033 (Comm) |
| Court | Queen's Bench Division (Commercial Court) |
| Docket Number | Case No: CL-2015-000305 |
| Date | 05 May 2017 |
[2017] EWHC 1033 (Comm)
Mr Robin Dicker QC (sitting as a Deputy High Court Judge)
Case No: CL-2015-000305
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice, Rolls Building
Fetter Lane, London EC4A 1NL
Michael Booth QC and Christopher Lloyd (instructed by Keystone Law) for the Claimants
Alain Choo Choy QC and Nicholas Sloboda (instructed by Cooke, Young & Keidan LLP) for the Defendants
Hearing date: 28 April 2017
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.
Mr Robin Dicker QC:
Introduction
On the hearing of the second CMC in this matter on 28 April 2017, I gave certain further directions for the trial of the claim, including a direction that the trial be listed to start not before 1 March 2018 with an estimate of 20–24 days. This judgment deals with two further matters which arose for determination on that hearing.
The first matter concerns an application by the Defendants dated 20 April 2017 for an order that the Claimants do provide additional security for costs.
It follows an earlier application by the Defendants for security for costs which was issued on 12 October 2016 and heard by Carr J on 20 December 2016. At that stage, the Defendants estimated their costs at some £4 million and sought security in the sum of £3 million. On 21 December 2016 the Judge ordered the Claimants to provide security in the sum of £1.2 million. In doing so, she took account of £1.8 million potentially available under ATE policies which had been obtained by the Claimants, which, together with the £1.2 million security ordered, was 75% of the Defendants' estimated costs figure and the sum sought on the application. Carr J explained, however, that this was not the basis of her ruling. Rather, she said, her decision was based on " all the circumstances, including the nature and size of the claims, the defence estimate of costs and the Claimants' criticisms of those figures, the existence of the ATE policies, the timing of this application and the likely future progress of the litigation".
At the time of the hearing before Carr J, the trial was listed for trial commencing on 6 March 2017 with an estimate of 18–20 days although, as will become apparent, that date was already in jeopardy. On 12 January 2017 the Judge ordered by consent that the Claimants do have permission to file and serve Re-Amended Particulars of Claim and at the same time adjourned the trial and ordered that the existing trial listing be vacated.
The Defendants contend that, in the circumstances, there has been a material change of circumstances which justifies an order for additional security. They estimate that the increase in their costs as a result of the re-amendments and the adjournment of the trial to be approximately £1.18 million. They seek additional security of £885,000, being 75% of such total additional costs.
The Claimants oppose the application. They contend that there has been no material change in circumstances, as both the re-amendments to the pleadings and the adjournment of the trial were matters which were envisaged when the matter was before Carr J on the earlier application, and furthermore were taken into account by her as likely to happen when determining the amount of security for costs to be provided. They also contend that the Defendants' evidence in support of the application for further security is inadequate and unsatisfactory, and that the estimate of additional costs is excessive.
The second matter concerns certain costs, that were reserved to this hearing by Carr J in her subsequent order of 12 January 2017, relating to the costs of the application to re-amend the Particulars of Claim and to adjourn the trial.
Summary of the claim
The background to the litigation is summarised in the judgment of Carr J and it is not necessary to set it out in detail here.
The claim concerns the sale of a company called Updata Infrastructure (UK) Limited ("Updata UK"). The company was sold as part of a management buy-out on 11 July 2009. The Defendants were three members of the former management of Updata UK who participated in the management buy-out. The predecessor in title for the First Claimant ("Updata Europe") owned 60% of the shares of Updata UK and the Second Claimant owned 12.4%.
The Claimants claim, amongst other things, that, as a result of fraudulent misrepresentations by the Defendants, the Claimants sold their shares in Updata UK at a substantial undervalue. The claims are denied by the Defendants.
The Claimants claim that, if they had known the truth about Updata UK's financial position, they would not have sold their shares. The loss suffered by Updata Europe as a result of the undervalue is said to have been approximately £17.6 million; alternatively, if Updata Europe had retained its shares and sold them in March 2014, its loss is said to have been between £34.67 million and £38.52 million.
The First Claimant's claim, as originally pleaded, was as assignee of Updata Europe's rights under an assignment dated 19 November 2010.
The principles
Under CPR 25.13(1)(a) the court has a discretion to award security in an amount which it considers just having regard to all the circumstances of the case. The appropriate amount will generally be the sum which the court considers that the applicant would be likely to recover in a detailed assessment if awarded costs on a standard basis following the trial, having regard to the factors set out in CPR 44.5(3).
There is no dispute between the parties about the principles that are applicable to an application for additional security for costs.
In Republic of Kazahstan v Istil Group [2005] EWCA Civ 1468 Sir Antony Clarke MR said at [32] that:
"… where the court has awarded security in respect of, say, the whole of an action or application, it will not make a further order in the absence of a material change of circumstances. However, it will or may do so if there has been a material change of circumstances, depending, of course, upon the circumstances of the particular case… That principle applies where a court makes an order for security for costs and is asked to make a further order."
In Stokors SA v IG Markets Limited [2012] EWHC 1684 (Comm) Popplewell J said at [13]:
" The next matter of principle which is important is that where a security for costs up to a particular stage of proceedings has already been provided, a defendant who applies to increase the amount of security for the costs of that same stage in proceedings will generally have to justify a further order byreference to circumstances which did not exist or were not apparent at the time the order was made. For it to be just to order further security, a defendant will generally have to show a material change of circumstances from those which pertained or were envisaged when the matter was before the court making the order. Otherwise the court is simply being asked to reconsider a decision made on the basis of arguments which were made or could have been made at the time".
The initial application for security
At the time of the hearing of the application for security on 20 December 2016, the trial was fixed to be heard starting on 6 March 2017 with an estimated length of 18–20 days. As Carr J said in her judgment, by that stage there were, however, other applications in the pipeline, including the Claimants' application for permission to re-amend their Particulars of Claim which would need to be determined at a later date, and it was clear that the trial date of March 2017 was in jeopardy. For reasons that will become apparent, it is necessary to consider such developments and the approach to them in the evidence and at the hearing of the application in a little detail.
By the time of the hearing, the Defendants' application for security was supported by three witness statements by Philip John Young ("Mr Young") of Cooke, Young & Keidan, namely his third, fourth and fifth statements dated 2 October 2017, 1 December 2017 and 14 December 2017 respectively.
Mr Young's third statement started by saying that the application was made without prejudice to the Defendant's right to make a further application for security in the event that the case materially changed. In addition:
(1) Having set out the background and having dealt with the Claimants' financial position, he then set out, at some length, the developments which had occurred in relation to the assignment to the First Claimant. During the course of disclosure, the Claimants had disclosed three materially different deeds of assignment signed in late December 2010 or January 2011 but backdated to 19 November 2010. Mr Young said that that the assignment and the circumstances in which it was entered into were murky and suspicious and that the explanations offered to date were unconvincing. He added that these were serious matters as, if the assignment was not enforceable, then the First Claimant's claim would fail, which would dispense with the majority of the litigation as the assignor's claim was now time barred.
(2) Mr Young also set out the basis for the application for security. He identified a number of factors, on the basis of the existing directions, that were relevant, referring to the fact that the matter had been listed for a five week trial commencing on 6 March 2017, commenting that " the procedural timetable is compressed and this means that several workstreams must be worked on simultaneously and urgently which...
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