England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
(MR. JUSTICE NEUBERGER)

		Royal Courts of Justice Strand London WC2 Thursday, 13th December 2001

Thursday, 13th December 2001

1. LORD JUSTICE POTTER: Lord Justice Rix will give the first judgment.
2. LORD JUSTICE RIX: There are before the court two linked applications for permission to appeal, one from the judgment of Neuberger J. of 30th June 1999 and one from the judgment of Rimer J. of 28th January 2000. Both those judgments arise out of an arrangement (the basis of which is still in dispute) back in 1997, when $30 million dollars was paid to the applicant, Mr. Tsuru, to invest on a confidential basis and apparently, says Mr. Tsuru, on the basis that this payment was coming from Casio Computer Co. Ltd. ("Casio") on a fully authorised basis for confidential investment.
3. Mr. Tsuru entered into three agreements with a representative of Casio and proceeded to dispose of the $30 million. In due course, a default judgment was given against him for the repayment of the whole amount. That default judgment went on appeal to Neuberger J. Neuberger J. considered that Mr. Tsuru had a very weak case in his defence that not only Casio had been a victim of fraud in this transaction, but that he, Mr. Tsuru, had always been deceived and was another victim of the fraud of third parties. He filed evidence before the court to the effect that he had been the victim of such a deception and that the amounts of over $3 million which he had retained personally from the $30 million that had been transferred to him was something to which he was entitled as either a matter of expenses or fees, or a payment on account of profits or future profits.
4. Neuberger J. set aside the default judgment in its entirety on the ground that, weak as Mr. Tsuru's case was to the effect that he was a victim of the deception rather than part of it, nevertheless it was a matter that the judge felt that he could not deal with summarily and he could not say that there was no real prospect of success for Mr. Tsuru at all on that basic defence.
5. However, the judge then turned to deal with an application for interim payment which, for present purposes, focused on Mr. Tsuru's claim to be entitled to retain three sums as either fees on account of profits or expenses. Those three sums were a payment of $2.5 million, a separate payment of $600,000 and a payment of $280,000 in respect of expenses. In connection with those three payments, which were payments which had gone into Mr. Tsuru's own pocket, as distinct from the balance of the funds where it was Mr. Tsuru's case that he had transferred them to third parties, Neuberger J. held that there was no real prospect of success.
6. As for the funds totalling $1.3 million which Mr. Tsuru said had been paid to him, either up front on account of future profits or on account of fees, having, as the judge pointed out, given both explanations at different times, Neuberger J. continued his review of that part of Mr. Tsuru's defence with these words at page 43 of his judgment:

"That a appears to me to be absurd: the sum is enormous, the basis for it is hopeless and it seems to me that his claim to retain it is fanciful."

7. Accordingly, as Neuberger J. went on to say at page 44:

"...I consider Casio is entitled to an order against Mr. Tsuru for the $3.1 million."

8. He then went on to consider the claim to retain the expenses of $280,000 dollars. In that respect the judge distinguished between expenses which arose out of the investment transaction itself and the general expenses of Mr. Tsuru's personal affairs. Neuberger J. considered that, as for the expenses arising out of the transaction itself which he estimated at $50,000, that took its place with the judge's general view that, weak as Mr. Tsuru's defence was, it was a matter that ought to go for trial. But as for the balance of $230,000 he said that there again:

"I simply cannot accept that Mr. Tsuru can have been told that he could recover whatever he spent on living, whether personal or in terms of business, whether connected with Casio in any way or not, from Casio."

9. He therefore concluded:

"Bearing in mind the limited amount of work which Mr. Tsuru did and the limited period over which he had any control over the $30 million, it appears to me that I would be acting generously towards him if I was to allow him $50,000 in respect of such expenses. That leaves a balance of $230,000 in respect of which I think I should make an order in favour of Casio."

10. He therefore made an interim payment order against Mr. Tsuru in the total amount of $3.33 million.
11. Following his judgment, there was a question as to how long Mr. Tsuru should be given to pay this substantial sum. The period suggested on his behalf by leading counsel then representing him, Mr. Purle Q.C., was six weeks, and the judge acceded to that.
12. There was no argument before Neuberger J. to the effect that Mr. Tsuru simply did not have the funds to meet that interim payment and that therefore he was being prejudiced in respect of any potential hope of turning that provisional order into a final result under which he could, at the end of the day, recover his payment. The judge made it clear that if, at the end of six weeks, Mr. Tsuru needed more time, an application could be made. No further application was made.
13. The judge also made it clear to Casio that if they thought that it was right in due course for them to bring a further application for summary judgment under Part 24, that was something that they could do, and that was reflected in the discussion at the end of his judgment. As I have said, there was no application on the part of Mr. Tsuru to the court, either in respect of time to pay or in respect of any fundamental difficulties in making that payment.
14. In due course Casio made a further application, which came before Rimer J. on 28th January 2000, under Part 24 for final judgment against Mr. Tsuru in respect of the $3.33 million. In his judgment, Rimer J. raised the question of why, in the face of the interim payment order, there was a need for final judgment. He set out in his judgment the reason that was given to him and which satisfied him, that such a judgment could be more easily enforced in America or in the Bahamas, where it might be necessary for Casio to pursue Mr. Tsuru.
15. Rimer J. acceded to the application before him to add summary judgment under Part 24 to the interim payment order which had already been made against Mr. Tsuru. He said:

"As to that, it seems to me that the matter has really been decided against Mr. Tsuru by Mr. Justice Neuberger. He was not, as I understand it, giving a judgment under Part 24, he was giving a judgment for an interim payment order. But, as I read his judgment, he made that order on the basis that Mr. Tsuru had no real prospect of defending at any rate that part of the claim, or that issue in the claims against him, and therefore it was appropriate to make an interim payment order.

"It seems to me that the way in which Mr. Justice Neuberger expressed himself was a way which justified the conclusion that he could equally have made that order under Part 24. That is what I am asked to do, and I have come to the conclusion that that issue has in effect already been decided against Mr. Tsuru, namely that he has no real prospect of defending this issue in the action, namely the claim to recover from him that element of the $30 million which he took and retained for his own purposes."

16. Since that time there has been no application to appeal from either judgment until applications were filed in respect of both judgments on 25th July this year. Those applications have been renewed orally in relation only to a very limited point, which is that Neuberger J. took no account at the time of making his interim payment order of Mr. Tsuru's limited resources. There is some evidence before this court (not, I think, from Mr. Tsuru personally but through his solicitor) that Mr. Tsuru is without any resources and that he is only able to pursue these applications on the basis of loans to him from other parties, although the evidence about that is very jejune.
17. Of course these applications are very seriously out of time, and the application in respect of Neuberger J.'s judgment was over two years out of time and the application in respect of Rimer J.'s judgment is some 18 months out of time. What explanation has been given to support the ancillary application to this court to extend time by those substantial periods in Mr. Tsuru's benefit? In effect, no good reason by way of explanation has been given. All that is said is that, until very recently, Casio had not been pursuing Mr. Tsuru in America or the Bahamas or wherever they had to pursue him for payment upon these judgments, but that, on 11th June 2001, they did initiate proceedings in New York to enforce Rimer J.'s judgment. So the effect is that Mr. Tsuru has been lying low during this period and has only sought to appeal from these judgments when steps have been taken to enforce them against him.
18. It seems to me that there is no good reason shown to extend time. The court has no satisfactory evidence as to why Mr. Tsuru has left this time to pass. It has no really satisfactory evidence about his means and it has no satisfactory evidence about the state of these loans which it is said enabled Mr. Tsuru to resort again to defending his position in litigation. That said, a court, even after all this time, will always be anxious about deciding an application like this simply on the basis of absence of good reason to extend time and without some consideration of the merits of the application.
19. The merits are put forward by Mr. Warwick in this way. He says that, in the light of the absence of any argument or reliance upon Mr. Tsuru's means before Neuberger J., he is not able to criticise the judgment of Neuberger J. in terms. But he says that nevertheless the point about Mr. Tsuru's resources remains and he would, if given permission, seek to review the merits of Neuberger J.'s order for interim payment by way of review.
20. That is a bold submission against the background of this case. Mr. Warwick seeks to support it by saying that, an interim payment order being ultimately only a provisional order, it is one that should not be made without some consideration of the resources available to a defendant to meet such a payment. He refers to British Commonwealth Holdings Plc v. Quadrex Holdings Inc. [1989] Q.B. 842 where, under the previous RSC regime, this court held that the question of resources was relevant to a decision whether or not to make an interim payment and in what amount to make an interim payment, in particular in circumstances where an inability to meet the quantum of such an order would cause irremediable harm to a litigant.
21. I would accept that the question of resources is not irrelevant to the question of an interim payment because of its provisional nature. In this case, however, although Neuberger J. was perhaps being generous to Mr. Tsuru in making his order in the form of an interim payment order rather than, as he was entitled to do, by way of variation of the default judgment, limiting it in the circumstances to only $3.33 million, it is quite understandable why Neuberger J. adopted the form that he did, even against the merits of his views as to the $3.33 million, since, against the background of a claim for $30 million dollars and a default judgment, it is perfectly understandable that the judge should prefer to set aside the default judgment as a whole and make an interim payment order for the much smaller amount of $3.33 million on the basis that there was no real prospect of defence in that amount, rather than to leave that sum simply standing as a default judgment.
22. Rimer J. had another opportunity to consider the merits of the position when the matter came before him for summary judgment, and he considered that, in the light of the logic of Neuberger J.'s reasoning, he was entitled to and should give summary judgment. I can find no fault in that decision.
23. This case is quite unlike other cases of interim payments where a judge has, in effect, taken a proportion of some larger sum claimed by way of damages in order to say that that sum at least should be payable by way of interim payment. In circumstances like that it is always, of course, possible that at the end of the day the quantum figures could work out in a different way, and it may be that some part or indeed all of that interim payment should be returned. Nor is this like an application for security for costs where ex hypothesi, in the usual case of such an application, the court is not concerned with the ultimate merits of the claim or of the appeal but is concerned simply to hold the scales of justice balanced between the parties before it to ensure that neither the one party should waste irrecoverable costs upon a litigant from whom it will not be able to recover those costs if it is successful, nor, on the other hand, shut out that other litigant from all possibility of his day in court. But that is dealing with a case where, in essence, the merits of the litigation are not before the court dealing with security for costs. Even in a case which goes to this court on appeal where the merits have been decided (at any rate at first instance), but where it has also been decided that there is a realistic prospect of success on appeal, the court again has to hold the scales of justice balanced between the litigants on that appeal and will be reluctant to shut out a litigant from his appeal entirely by making an order for security for costs which simply cannot be met.
24. But that is something wholly different from this case. Two judges have considered the merits of Mr. Tsuru's position in respect of the entirely separate payments which he kept for himself of $3.33 million, and I see nothing in the underlying merits of the case to deflect me from the view that these are applications in respect of which an extension of time should not be granted.
25. Therefore these applications in my judgment fail.
26. MR. JUSTICE POTTER:I agree. The applications will therefore be dismissed.
ORDER: Applications dismissed.