W Nagel (A Firm) v Pluczenik Diamond Company NV
| Jurisdiction | England & Wales |
| Judge | Mr Justice Griffiths |
| Judgment Date | 21 November 2019 |
| Neutral Citation | [2019] EWHC 3126 (QB) |
| Date | 21 November 2019 |
| Docket Number | Appeal No: QA-2019-000140 |
| Court | Queen's Bench Division |
[2019] EWHC 3126 (QB)
IN THE HIGH COURT OF JUSTICE
ON APPEAL FROM
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
LONDON CIRCUIT COMMERCIAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Justice Griffiths
Appeal No: QA-2019-000140
and
Simon Colton QC and Peter Head (instructed by Mishcon de Reya LLP) for Appellants (Defendants)
Jonathan Cohen QC (instructed by DWF LLP) for Respondent (Claimant)
Hearing date: 5 November 2019
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.
The main question argued in this appeal is whether CPR Part 71 allows a person to be compelled for examination as a “judgment debtor” when the only outstanding parts of the judgment against him are costs orders for sums which have yet to be agreed or determined by assessment. Payment of those sums has not yet, therefore, fallen due.
The appeal is against an order of Master McCloud on 7 May 2019 (“the McCloud Order”) whereby a part heard hearing under CPR Part 71 in respect of orders made after a trial by Popplewell J was adjourned (para 1 of the McCloud Order). Two officers of the company against whom judgment had been entered were directed to attend the adjourned hearing “to provide information about the judgment debtor's means and any other information needed to enforce the order” (para 4), to produce documents (para 5) and to submit to questioning before the High Court Judge under oath (para 6).
The company appeals on behalf of its officers, contending that since, by the date of the McCloud Order, no ascertained sums of money were outstanding, but only the orders for costs which had not been quantified, the Master had no jurisdiction to continue the CPR Part 71 procedure, alternatively ought not, in her discretion, to have ordered it to continue.
There are three Grounds of Appeal:-
i) That the Master erred in finding that the Court had power to re-list a hearing under CPR 71 in respect of an order for costs to be assessed if not agreed, where the amount of costs had not been assessed or agreed.
ii) That the Master erred in finding that the application for a CPR Part 71 examination in this particular case, and the order made upon that application, had been made in respect of orders for costs.
iii) That the Master's exercise of discretion (if she had a discretion) involved an error of principle and was plainly wrong.
Facts
None of the facts which give rise to the questions in this case are disputed. It is only the extent of the jurisdiction which may flow from them and how it should be exercised which is contested.
The parties and the trial
The Claimant in the action (“the Claimant”) is a firm which for many years acted as diamond broker in London for the Defendant, Pluczenik Diamond Company NV (“Pluczenik”). Pluczenik, a company incorporated in Belgium, but operating globally, is one of the world's leading diamantaires, buying rough diamonds and processing them into polished diamonds and jewelry for retail sale, or selling them on for profit as rough diamonds.
Pluczenik terminated its relationship with the Claimant in 2013, when De Beers transferred its diamond wholesaling operation from London to Botswana.
Litigation followed, in which the Claimant sued Pluczenik for commission and other sums, including compensation for failure to give due notice. After a 9 day trial in the Commercial Court, Popplewell J gave judgment for the Claimant: see W Nagel v Pluczenik Diamond Company NV [2017] EWHC 1750 (Comm), dated 13 July 2017.
Orders made by the trial judge
On 21 July 2017 Popplewell J ordered Pluczenik to pay some of the Claimant's costs on the indemnity basis (and on 28 November 2018 the Court of Appeal increased this so that Pluczenik had to pay all the Claimant's costs on the indemnity basis). £400,000 was ordered to be paid on account of these costs and that payment has been made.
On 3 October 2017 Popplewell J made a second order, which ordered Pluczenik to pay damages, commission and interest totalling more than US$4 million as a result of the judgment he had given in the Claimant's favour. He made a further order for costs in relation to quantum issues, but this time it was in Pluczenik's favour, and on the standard basis. Neither the costs ordered on the indemnity basis against Pluczenik, nor the standard costs order in Pluczenik's favour, have been agreed or assessed. However, it seems likely that there will be a substantial balance of costs to be paid by Pluczenik to the Claimant, the lion's share of the costs incurred having been awarded to the Claimant, and £400,000 having been ordered by way of payment on account (which has, I understand, been paid).
Application to examine the officers
The Defendant, Pluczenik, was a company incorporated overseas and it seems that none of its officers were ordinarily in the jurisdiction. This meant that the CPR Part 71 procedure, which requires personal service on the company officers who are going to be examined, was not available in this case unless those officers happened to visit the jurisdiction: Masri v Consolidated Contractors International (UK) Ltd (No 4) [2008] EWCA Civ 876 paras 12–14, CIMC Raffles Offshore (Singapore) Pte Ltd and Another v Schahin Holding SA [2014] EWHC 1742 (Comm) para 22, and Deutsche Bank AG v Sebastian Holdings Inc and Vik [2015] EWCA 2773 (QB) para 23.
On 22 June 2018, the Claimant made an application for an order under CPR Part 71 against two named officers of Pluczenik: Mr Chaim Pluczenik (the Managing Director) and Mr Tsvi Pluczenik (another Director), whom I will refer to as “the Directors”. It was supported by a witness statement from the Claimant's solicitor, which explained that the Directors would be in the jurisdiction briefly, for a diamond industry event, on 24–25 June 2018, and any order had to be made while they were in the jurisdiction and in time for them to be served within the jurisdiction. This was achieved. On 25 June 2018, Master Kay QC made orders against both the Directors under CPR Part 71 (“the Kay Orders”) and these orders were duly served on the Directors before they left the country.
There is now no challenge to the validity of the service, or to the appropriateness of that order when it was made. When the Kay Orders were made, it was not only the Popplewell costs order which was outstanding, albeit not quantified, but also a significant part of the quantified money judgment of Popplewell J which had not been paid. None of the arguments about jurisdiction now advanced against the McCloud Order could, therefore, be advanced in relation to the original Kay Orders, because the Kay Orders were made when Pluczenik was still in breach of an order to pay specific judgment sums, and the date on which payment of those sums was due had passed.
The oral hearing
An oral hearing took place before Master Leslie on 8 November 2018 (after delays caused by ultimately unsuccessful attempts by Pluczenik to appeal, and to obtain a stay of execution, and to obtain adjournment of the oral hearing pending the appeal). At the oral hearing, the Directors were examined pursuant to the Kay Orders. However, the examination was not concluded on that day and it was adjourned. Master Leslie gave a short judgment, in which he said that the examination had ended “on an unsatisfactory note” because there were documents outstanding “which the officers have said are available and they will produce.” He noted that “if they do not produce them or further questions arise as a result of them, then everyone is going to have to come back.” In the meantime, however, and expressing the hope that it might not be necessary to come back, Master Leslie made an order for costs. Those costs (like the costs orders of Popplewell J) were on the indemnity basis. Master Leslie explained that this was because the Directors “refuse to pay”; had “wriggled and squirmed”; that the company was in “financially good health” but “It is not a question of cannot pay, it is plainly just a question of will not pay”. Master Leslie said that the hearing before him had been “entirely unnecessary” and was “a result of the judgment debtor company's intransigence” in refusing (for example) to pay money into court pending the outcome of its appeal.
Attempts to restore the oral hearing
Pluczenik's appeal ran its course, and failed on 28 November 2018, when the Court of Appeal dismissed the appeal, allowed a cross appeal, increased (as I have mentioned) the indemnity costs order made by Popplewell J to 100% of the Claimant's costs of the trial, and also made a further costs order (on the standard basis) in respect of the appeal.
Pluczenik did not, however, satisfy the judgment, and continued to resist the Claimant's attempts to continue the CPR Part 71 process. On 30 November 2018 the Claimant applied to restore the oral examination of the Directors which had not been completed at the hearing before Master Leslie. This was opposed by Pluczenik, which argued for adjournment. However, Master Kay QC ordered it to be resumed on 8 March 2019, and made another order for costs, again on the indemnity basis. Pluczenik subsequently made another application to adjourn. Master McCloud relisted the oral hearing for 11 March 2019 and made another order for costs against Pluczenik.
The adjourned hearing took place on 11 March 2019 before Master McCloud but the Directors failed to attend, although they and Pluczenik were represented by leading Counsel. It was argued on the Directors' behalf that...
To continue reading
Request your trial