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 ORDER OF HIS
HONOUR JUDGE CHAMBERS QC
APPLICATIONS FOR PERMISSION
TO APPEAL AN EXTENSION OF TIME
AND A STAY OF EXECUTION

		Royal Courts of Justice Strand London WC2 Friday, 5th July 2002

1. LORD JUSTICE RIX: This is a renewed application for permission to appeal by ABCI in three actions, the background facts of which are very complex. Which I will not seek to gloss or encapsulate the in this judgment as, in any event, we are minded to give permission to appeal on the outstanding matters in respect of which application is made following the permission given on paper by me in one of the actions, namely Folio 838, the settlement agreement action. Suffice it to say that in Folio 1527, the conspiracy action, the background facts cover essentially the same history as that which will already be in issue in this court in the appeal already granted in Folio 838.
2. I was concerned in Folio 1527 as to how ABCI put its case for permission to serve out of the jurisdiction in respect of a contract which appears to have been made on 2nd April 1982 at a time when, as is now common ground, ABCI had not yet been incorporated and therefore could not be in existence. Mr Haddon-Cave QC, who appears for ABCI, has submitted that it is ABCI's case that the ineffective contract made on that day - ineffective because ABCI was not yet incorporated - was ratified after incorporation at a board meeting of ABCI on 19th July 1982. He submits that the judge simply failed in his judgment to take account of that submission. The judge's reason for finding against jurisdiction in this forum for ABCI's case in Folio 1527 was essentially premised on the non-incorporation point. While it may be, speaking for myself, that if this point had stood alone I would not necessarily have granted permission to appeal, it seems to me that when viewed against the background of what is, in any event, going to be in issue in this court under the permission already granted in Folio 838 that it would be right, albeit the points arise in separate actions, that this court should be able to view the matters raised in these actions as a whole.
3. Therefore I would now grant permission to appeal in respect of Folio 1527 as well in part for the reasons set out on paper in my decision of 11th June 2002 and, in part, as developed in this judgment.
4. Mr Haddon-Cave's next application is in respect of the costs judgment and orders of the judge. Mr Haddon-Cave raises three points. First, he submits that the judge was wrong to give a costs order in favour of each of the various respondents to ABCI's claims in each of the actions. The focus of this point lies, in particular, in relation to Folio 838 and Folio 1527. (In relation to the third action - Folio 933 - the only point that arises on costs is the interest point to which I will come in a moment.) Mr Haddon-Cave's first complaint, then, in Folio 838 and Folio 1527 is that the judge erred in principle in giving orders in respect of each of the respondents.
5. His second point is that the judge erred in making an award of costs on an indemnity basis in those two actions. His third point is that the judge erred in principle in believing himself to be limited to an interest rate of 8 per cent.
6. Mr Haddon-Cave supports those submissions with a case decided in this court (shortly after the judge's orders herein below) in Home Office v Lownds [2002] EWCA Civ 365. He submits that that decision has highlighted, in a way in which this may not have been appreciated before, the importance of the fact that in the case of an order for indemnity costs the concept of proportionality has no role to play whereas it does in the case of a costs order on the standard basis. He submits that therefore following that decision the difference between the two bases of assessing standard costs and indemnity costs is widening; and he submits that that process is in tension with a separate philosophy under which an order for indemnity costs, which at one time had been thought to apply only in cases where a party had acted in some reprehensible manner, is however now - already perhaps in the dying days of the RSC but more so under the CPR regime - being awarded in cases very different from that degree of criticism. So in this case the judge accepted that that degree of criticism has not been made of ABCI, while noting criticisms of lesser weight about the conduct of the proceedings.
7. In those circumstances there are matters of real principle here which this court should properly look at. The order for indemnity costs has been granted in addition to an order in favour of each of the several defendants but that latter order was disputed and the judge himself contemplated in his judgment that any possible unreasonableness arising out of such an order in favour of more than one defendant would be within the discretion of the costs judge to take into account. So, for myself, I would now give permission to appeal in respect of both the duplicated representation point and indemnity point. In those circumstances the interest point, on which I have more doubts as to whether it involves more than one of ultimate discretion (see my previous decision on papers in folio 933) being a very short point, is a matter on which I am willing to give permission as well. On those three points I now give permission to appeal.
8. LORD JUSTICE DYSON: I agree.
(Mr Haddon-Cave addressed the court on the matter of stay)
9. LORD JUSTICE RIX: This court has given permission to appeal in respect of issues arising out of three actions, Folios 933, 1527 and 838. The question raised is whether or not there should be a stay of execution of orders made by the judge below for the interim payment of costs arising out of those three actions. Those orders are made against ABCI in favour of the various defendants to those actions. Those orders amount in total to at least £600,000 and may be in excess even of that.
10. Mr Haddon-Cave QC, who appears on behalf of the appellant ABCI, accepts that the normal rule is that pending appeal there should be no stay of execution. Moreover ABCI has not put forward any evidence that it would be unable to prosecute the appeal for which it has now been given permission if it were compelled to meet the order for costs made against it, and indeed Mr Haddon-Cave makes no submission to that effect. Furthermore, any problem that might arise out of the possibility that if the costs were paid they would leave this country and could not be recovered from the respondents in Tunisia has been met by undertakings, offered on behalf of all the respondents in question, to leave the payment of such costs with their solicitors in London pending the appeal.
11. Nevertheless, Mr Haddon-Cave seeks to support his claim to a stay of execution essentially on the following grounds. First, he says that the respondents to the appeals are secured by security for costs. Nevertheless, he has to accept that that security is exceeded by the orders in question by many hundreds of thousands of pounds. This second reason that there is an ICC award in favour of ABCI against, at any rate, Banque Franco Tunisienne ("BFT") in the sum of I think $2,300,000, plus 15 years' interest. The validity of that award has been debated in France right up to the Cour de Cassation and the award has been confrimed to be a valid and effective award enforceable in France. Nevertheless, its validity and enforceability are at issue again in this country, and although ABCI submits that all theBFT's defences to enforcement in this jurisdiction are res judicata as a result of the litigation in France, it also has to accept that it has failed to strike out those defence in the enforcement action, Folio 933.
12. Next, and it seems to me most pertinently, Mr Haddon-Cave relies on a deposit of TD 1,000,000 worth approximately £1,500,000 which is held by BFT for the account of ABCI as a payment due to ABCI under the settlement agreement which is in dispute in the settlement agreement action, Folio 838. The issue there is that ABCI seeks to set aside these settlement agreement on the basis that it was procured by duress. In the case of success in that claim to set aside the settlement agreements, that payment of TD 1,000,000 would of course fall away. But in such a case ABCI would, ex hypothesi, succeed for costs at any rate in Folio 838. It would not necessarily succeed in the other actions albeit there is considerable cross-fertilisation of further issues of fact in the various actions. If however it failed in its actions in this jurisdiction, it would follow that the settlement agreement stood as a valid agreement so far at any rate as this jurisdiction is concerned.
13. Mr Smouha has appeared on behalf of BFT and also in a sense, if not formally instructed by them, as advocate for the other respondents on this application. He submits that the issue as to validity of the settlement agreement might start up all over again in another jurisdiction. So far as that submission goes, that is mere speculation. What this court is concerned with is what is happening in this jurisdiction. Moreover, Mr Haddon-Cave has given an undertaking on behalf of ABCI that the amount held to its credit by BFT, in the event that the settlement agreement remains on foot, will be available in case of need to pay for costs orders in favour of all the respondents. It seems to me that this point is a valid point. BFT holds in its hands and, as a result of Mr Haddon-Cave's undertaking, holds both in favour of itself and the other respondents in these appeals, a sum of money, £1,500,000, which very greatly exceeds the sums subject to the judge's interim payment costs orders.
14. In such circumstances it seems to me that it would be right and just to make the admittedly unusual order to grant a stay of execution pending the hearing of these appeals which in themselves seek to attack the level of the costs orders. So for those reasons I will grant a stay of execution on the judge's interim payment costs orders pending the hearing of these appeals, and also upon the basis of ABCI's undertaking that the sum of TD 1,000,000 dinars is available for payment of those orders in favour of each of the respondents.
15. LORD JUSTICE DYSON: I agree.
Order: Applications allowed