England and Wales Court of Appeal (Civil Division) Decisions

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
(MR JUSTICE TEARE)

		Royal Courts of Justice Strand, London, WC2A 2LL
		16th January 2013

Lord Justice Rix:

1. This is a further outing in international litigation which has ranged across an arbitration tribunal, litigation in this country, in Colorado, in Australia, in the Channel Islands, in Switzerland and elsewhere. It arises out of a dispute between Commonwealth lawyers acting in Kazakhstan. There is concern by Michael Wilson and Partners Limited, one of the firms in Kazakhstan, who at one stage employed three lawyers who later left and founded their own firm, that there was wrongdoing there and I am unable to say, on the very narrow points that I have to deal with this afternoon, where the merits of the underlying litigation lie or indeed whether there remain any merits which have not been subsumed within disastrous litigation. Certainly, from both the much and the little that I have read in the six files before me for these narrow points that I have to decide this afternoon, it suggests that this litigation is of the kind which ought not to take place and use up rare resources which ought to be available to more deserving litigants. So, even at this very late stage in this terrible litigation, I would urge the parties -- perhaps many judges have urged them before but I would add my urgings -- to draw a deep breath and consider where they are going.
2. But to return from those general comments to the points before me. There are two narrow points: one is whether I should stay an order for interim payment on account of costs which Teare J has ordered against Michael Wilson and Partners Limited following the failure of at any rate part of their claim in these proceedings in England for abuse of process subject to an appeal which the judge has himself granted to Michael Wilson and Partners on the abuse of process question. The interim payment of costs are £125,000 in respect of the first and second defendants and £25,000 in respect of the part 20 defendant, Mr Emmott, making a total of £150,000. That was due by 12 October 2012, and on that day, without payment, Michael Wilson and Partners issued their Appellant's Notice, for which as I said the judge gave permission, together with an application for a stay on execution of those costs orders.
3. On behalf of MWP, as I shall call the appellants and applicants for a stay, Mr  Atkins submits that there are much larger costs orders in favour of MWP against Mr Sinclair. I am not sure about the other defendants or the Part 20 claimant in the Bahamas. The trouble with litigation in the Bahamas is that that has its own problems, raising appeals for the second time to the Privy Council, and it is uncertain as things stand at present whether the orders for costs which have been made in that jurisdiction in favour of MWP can ever be liquidated and enforced. It seems to me that I cannot go into the details and uncertainties of litigation in another place and that I should consider, at any rate against the background about which I am told, what is the fair thing to do in this jurisdiction. It seems to me that the fair thing to do is to ensure that the monies which Teare J ordered should be paid should be at any rate available to the court to deal with. Mr Fealy submits that the monies should be paid outright. Mr Atkins submits that if it is paid outright there is uncertainty as to whether it could be recovered. I cannot resolve those matters this afternoon, but it does seem to me that the orders for costs made by the judge should be put into court to await the outcome of MWP's appeal and the decision of the court as to what it should do in the light of the outcome of that appeal. I do not put wholly on one side the possibility that, if there is clarity as to what is going on in the Bahamas, that may be taken into account on any application for payment out of the sums, but I am not at present prepared to take account of Bahamian litigation in its present state of uncertainty.
4. So, on the question of a stay, I will grant a stay but only on condition that the sums of £125,000 and £25,000 to which I have referred are paid into court. The offer was to pay them into court immediately. Mr Atkins then said something about 14 days, but the promise in the skeleton argument was to make immediate payment if I thought that that was the right solution and that is what I will require. "Immediate" means immediate: that is to say, as soon as what I assume will be an international transfer can be made, which I do not think takes very long these days, and until it is made the appeal is stayed.
5. Mr Fealy submits that I should order a sanction of the dismissal of the appeal unless the monies are paid within a certain shortish length of time. I will not say that. I will require immediate payment or a stay, and any payment of that beyond an immediate payment will require the stay to be undone. If Mr Fealy has concern that MWP wants nothing more than for the appeal to go off into the long grass, for which he has not given an explanation, then that is a matter that would have to be addressed in the future were there to be a breach of my order.
6. Therefore there will be a stay on condition of an immediate payment of £150,000 into court pursuant to Teare J's order. There will be a stay of the appeal if that payment is not made by the end of the week, by Friday.
7. The second matter which I have to deal with is the respondent's application for security for costs in the total sum of £150,000 to secure the possibility that MWP will lose its appeal and will be made liable for costs on appeal. MWP do not say that they are unable to pay that sum or that it will stifle the appeal. What they submit is they are a very successful Kazakhstan law firm. Some details have been given to me by Mr Atkins such as an annual turnover of $11 million, 27 fee-earners and so forth, and that in the litigation in England or in the English arbitration all orders for costs were met, even if generally speaking, if not always speaking, they were paid late and under pressures of one kind or another.
8. So Mr Atkins submits that, although there may be prima facie jurisdiction to order security for costs under CPR 25.15(1) taken together with CPR 25.13(2) (a)(i), that is to say because the appellant is resident out of the jurisdiction but not within the member states of the European Union, nevertheless it would not be just to make an order. It is not said that that is because the further hurdle required by Nasser v United Bank of Kuwait [2002] 1 WLR 1868 is not met. Mr Atkins has not submitted that it would be easy to enforce an order for costs in Kazakhstan or anywhere else where MWP might have to be chased for any of its uncertain assets. Mr Atkins has not made that submission. What Mr Atkins has submitted is that MWP is a firm in profitable business in Kazakhstan which has always met its costs obligation in this jurisdiction in the past. I accept that it has always done so, albeit late and under pressure, but I also take account of the fact that that situation may very well depend upon the fact that ultimately, in the circumstances which arose in the past, it was in the interests of MWP not to be put into deliberate and longstanding contempt of court. It is submitted by Mr Atkins that that may well remain the position in the future, since despite the stay of part of or dismissal of part of its action for abuse of process by the judge, there are other parts of its claim which have not been struck out and which are worth $1 million to it as a claim. Nevertheless it seems to me that, when I bear in mind the strictures which the Arbitration Tribunal, a distinguished tribunal, have had to make about Michael Wilson, the principal of MWP, at paragraphs 131 and 812 of the arbitration award and the further strictures that Teare J in an earlier judgment of his had to make in Emmott v Michael Wilson Partners Limited (No.2) [2009] EWHC 1 (Comm) at paragraph 86, it seems to me that it is necessary for the court to be cautious in this matter.
9. The discussion before me is of course only about security at this point. I am not required to make an ultimate judgment about where the merits of the appeal lie. It seems to me that, in the circumstances to which I have referred, it would be just for this court to exercise its undoubted jurisdiction to require the appeal costs of MWP's respondents to be secured, pending the appeal.
10. So my order is that there should be a payment into court of £150,000 as security for costs of MWP's appeal, that that payment should be made within 14 days and that if it is not made the appeal should be stayed.

Order: Appeal allowed