England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

		List No: IHC 366/15 Royal Courts of Justice Strand, London, WC2A 2LL
		3 July 2015

RICHARD SPEARMAN Q.C.:

1. This is an application for interim relief, including freezing injunctions, under section 25 of the Civil Jurisdiction and Judgments Act 1982 ("s25"). It came before me on 18 June 2015 amidst a flurry of activity in the run up to that hearing, continuing into the hearing.
2. On that occasion, the Applicants were represented by Stephen Moverley Smith QC and Alexander Pelling, and the majority of the Respondents were represented by Philip Marshall QC and Ruth den Besten, who also appeared for an individual known as Gela Mikadze ("Mr Mikadze") - who has or is said to have an interest in all or some of the Respondents - for the purpose of giving certain undertakings on behalf of Mr Mikadze.
3. Due to a large measure of good sense on both sides it was possible to avoid a lengthy contested hearing and, in sum, to give directions for the matter to be listed for an effective hearing over 2-3 days later this year, but subject to suitable undertakings in the meantime.
4. Following the hearing on 18 June 2015, the parties made substantial progress in agreeing an appropriate form of Order. However, they have been unable to resolve a number of differences, and have asked me to rule on the outstanding matters without a hearing.

Whether a claim is needed

5. Ms den Besten contends that:

(1) a claim form ought to be issued by the Applicants;

(2) this accords with the CPR and the notes thereto (relying on (a) note 25.4.2 "A claimant applying for relief under s.25 of the 1982 Act must use the Part 8 claim form and follow the Pt 8 procedure…", and (b) CPR 25.4 and the commentary at 25.4.1);

(3) the fact that the application is to be made in accordance with CPR 23 is of no import, since CPR 23 itself proceeds on the basis that a claim form either has been or will be issued; and

(4) there is no good reason for the Applicants not to issue a claim form, in particular because (a) the absence of a claim number may cause administrative difficulties and (b) if they do not issue a claim form, the Applicants will avoid payment of a fee which is otherwise due to the Court.

6. Mr Pelling submits that:

(1) the Respondents who were represented at the hearing did not take any point on the fact that no substantive claim has yet been issued in this jurisdiction;

(2) it is too late for those Respondents to take that point now;

(3) the provisions of the CPR and the notes thereto are unclear and contradictory with regard to the issue of whether the Applicants should be required to issue a Part 8 claim (note 6.37.33 states with regard to applications under s25 that "In the Commercial Court applications for relief are made under CPR Part 8; elsewhere they are made under Pt 23", whereas note 25.4.2 states as quoted above); and

(4) in the circumstances, the court should not make any order on this point at this stage and should instead leave it to the parties to resolve any issue about it between themselves between now and the effective hearing of the s25 application.

7. In my judgment, this issue is covered by CPR 25. This provides at CPR 25.1(1) that the court may grant various interim remedies, including an interim injunction (which plainly includes a freezing injunction made pursuant to s25), and, at CPR 25.2(3), that "Where it grants an interim remedy before a claim has been commenced, the court should give directions requiring a claim to be commenced".
8. I consider that this also makes sense: a claim provides a vehicle for an application for an interim remedy; and the existence of a claim enhances the court's ability to control the proceedings. Further, Mr Pelling has not cited any case in which an applicant for interim relief has not been required to commence a claim, and I am not aware of any case in which a claim form has not been required to be issued when interim relief is being sought at an effective hearing (although in cases where an urgent injunction is obtained and the proceedings are entirely compromised very shortly afterwards, as sometimes happens in privacy cases, I daresay there have been instances where no claim form has been issued).
9. Part of note 25.4.2 states with regard to CPR 25.2(3) that "In terms this rule applies where the court grants an interim remedy in support of foreign proceedings yet to be commenced (perhaps on the undertaking recited in the order that proceedings will be commenced in the foreign jurisdiction)". At least on one reading, this suggests that the references in CPR 25.2(3) may be interpreted as being to a claim in a foreign jurisdiction. In my judgment, however, if that is what is intended by the note, it is not correct. As I read CPR 25, it is concerned, and only concerned, with claims in this jurisdiction. That is not to say that the existence of foreign proceedings should not be considered by the court when granting relief pursuant to s25, but merely that such proceedings are properly dealt with not by directions but instead by an undertaking of the type referred to in the note.
10. The explanation for the language used in note 6.37.33 is that the general rule contained in CPR 25.4(2) that an application for an interim remedy in (among others) a s25 case must be made in accordance with CPR 23 is overridden in the Commercial Court by paragraph F15.15 of the Admiralty and Commercial Courts Guide, such that where that paragraph applies a Part 8 claim form must be used rather than an application notice. That has the effect of bringing forward the issue of a claim in those circumstances, but leaves untouched the requirement to commence a claim in any case where CPR 25.2(3) applies.

The form of recital in this particular case

11. The second issue which has arisen is whether it should be expressly recited that Mr Marshall QC and Ms den Besten appeared at the hearing on 18 June 2015 on behalf of the Third, Fourth, Sixth to Eighth, and Tenth to Fourteenth Respondents for the purposes of that hearing only (it being common ground that they appeared for the First and Second Respondents in any event and they did not appear for the Fifth and Ninth Respondents).
12. Ms den Besten argues that this should be recorded in the form of Order that is to be made following on from that hearing, if only to avoid any confusion about the basis upon which Mr Marshall QC and she appeared in future.
13. Mr Pelling submits that:

(1) the Applicants' draft of the Order that I am being asked to make "straightforwardly records" that Mr Marshall QC and Ms den Besten acted for the specified Respondents and Mr Mikadze; 

(2) this is what the court was told, and how matters should be recorded in the Order;

(3) the Applicants are right to object to the attempt to break this recital into two and in the second part to add "the opaque qualification" that Mr Marshall QC and Ms den Besten only acted for the Third, Fourth, Sixth to Eighth, and Tenth to Fourteenth Respondents "for the purposes of this hearing" because (a) it is entirely unnecessary and (b) it is not clear what effect it may be designed to have.

14. I consider that a form of recital which records that, at the time of the hearing on 18 June 2105, Mr Marshall QC and Ms den Besten had only obtained instructions to appear for the Third, Fourth, Sixth to Eighth, and Tenth to Fourteenth Respondents for the purposes of that hearing reflects (a) the facts (as they have been represented to me by them, and as I have no reason to doubt, and as the Applicants do not appear to assert to be incorrect) and (b) what I was told at the hearing.
15. I do not consider that such a recital is opaque. Nor am I persuaded that it is, or may be, designed to have any effect other than to record the true position (and no actual or potential consequence that is sinister or detrimental to the Applicants has been identified by Mr Pelling).
16. Accordingly, I decide in favour of the form of recital for which Ms den Besten contends.

The form of undertakings

17. The third issue that has arisen concerns the form of certain undertakings offered to the court in connection with the ascertainment of the balance of various ABLV bank accounts. There are two aspects to this issue. The first concerns the identity of the person who should be undertaking to use best endeavours to provide the account balance and supporting documents. The second concerns the documents that are to be provided.
18. With regard to the first aspect, Mr Pelling submits that:

(1) The obvious person to do this would be in each case the account holder, namely the relevant Respondent LLP (the Respondents which are relevant for these purposes being the First, Second, Third, Sixth and Seventh Respondents). 

(2) Those Respondents were all represented before the court and there is no reason why the court should not require them to give that undertaking as a condition of granting an adjournment of the applications against them.

(3) It was the understanding of the Applicants' representatives that this was the footing on which these undertakings were discussed at court.

(4) The Applicants' draft of the Order I am asked to make is intended to give effect to that principle.  

(5) The Respondents' legal representatives want to involve Mr Mikadze in these undertakings, and as regards the Third, Sixth and Seventh Respondents, to limit the undertaking to an undertaking by him to "so far as he has an interest in the Third, Sixth and Seventh Respondents or each of them and the power to do so use his best endeavours … [etc]". It makes no sense to adopt this "rather woolly formulation" providing for an indirect undertaking by Mr Mikadze when each account holder is itself represented before the court and perfectly capable of giving the undertaking and directly demanding the information and statement from the bank.

(6) The position that Counsel instructed by Peters & Peters adopted before the court was that Mr Marshall QC said that they acted for all the Respondents. It is far from clear why, now that the matter has been adjourned on the basis that those Counsel acted for all the Respondents, they now say (in Ms den Besten's email containing her submissions on the issues that I am now asked to decide) that they only act for the First and Second Respondents and Mr Mikadze.

19. The second aspect concerns the circumstances in which the relevant Respondents may provide a document from the bank verifying the balance that is not a bank statement.  Mr Pelling's draft Order provides that the relevant Respondents must use their best endeavours to provide a bank statement "or, in the absence of a bank statement being available from the bank" such other document as may be available from the bank verifying the balance.  On this draft the Respondents do not have a choice as to whether they produce a bank statement or some other document: if a bank statement is available to them, as one would expect it to be, they have to produce it. The Applicants resist the contrasting wording put forward by the relevant Respondents, which leaves them free to avoid producing a bank statement if some other document is available. Mr Pelling suggests that, at the hearing, I was unsympathetic to suggestions by Mr Marshall QC that there was no need for bank statements to be produced.
20. Ms den Besten submits that:

(1) With regard to the first aspect, the relevant Respondents did not undertake to provide this information themselves. Indeed Mr Marshall QC and she were not authorised to offer any undertakings on their behalf, as was made clear during the course of the hearing. The relevant undertaking was instead offered by Mr Mikadze, so far as he has an interest in these Respondents or each of them and the power to do so, using his best endeavours. This is reflected in the form of Order that accompanied Ms den Besten's written submissions.

(2) With regard to the second aspect, the appropriate form of wording is one that provides that the relevant bank balances are to be confirmed by any appropriate bank documentation, as opposed to a form that requires confirmation (i) by a bank statement and (ii) only where a bank statement is not available, by other documentation from the bank. At the hearing on 18 June 2015, the court was keen to ensure that the order was not overly restrictive. Further, nothing material can turn on whether the confirmation is given in a statement or in another document issued by the bank.

21. It is unfortunate that I should be asked to make rulings based on rival assertions by opposing Counsel in written submissions as to (a) what was said in court, and (b) the understanding of the parties based on what occurred at the hearing. The details of what was said will be recorded on a transcript, although none has been obtained. A detailed attendance note of solicitors – such as I believe I am right in saying that the applicants' solicitors are required to produce on a without notice application for a freezing injunction – may be an adequate substitute, but I do not have the benefit of that either.
22. In these circumstances, and doing the best that I can to remember what transpired at the hearing, I prefer Ms den Besten's submissions with regard to the first aspect. I should say that in the event that I am wrong in my reasoning on this point that will emerge from the transcript, and it will be open to the Applicants to raise the matter in future if that transpires to be the case, certainly by comment and potentially by application to the court.
23. So far as concerns the second aspect, however, I prefer the submissions of Mr Pelling. I consider that it is desirable that, as a preferred option, a bank statement should be produced if practicable, and I consider that the remaining form of wording suggested by both sides contains the necessary flexibility to cater for that not being practicable.
24. Accordingly, my ruling on this issue is that the undertakings following undertaking (c) in Schedule A to the Order should take the form of paragraphs (d) and (e) in the draft submitted by Ms den Besten, save that the concluding words should read "(ii) provide to the Applicant's solicitors a bank statement (or in the event that a bank statement is not available such other documents as may be available) verifying the said balance".

Service of the Order

25. The final issue relates to service of the Order.
26. The Applicants contend that the Order should reflect that, as they submit to be correct, they may serve it on the Respondents by serving it on Peters & Peters. They rely on the fact that, at paragraph 11 of his witness statement dated 18 June 2015, Keith Oliver of Peters & Peters stated that firm had instructions "to represent the Third to Fourteenth Respondents at the hearing on 18 June 2015 for the purpose of seeking an adjournment".  In Mr Pelling's words: "The Applicants cannot see why the order granting the adjournment in favour of the Respondents should not be served on Peters & Peters".
27. Ms den Besten submits that since Mr Marshall QC, she and Peter & Peters appeared for the Third, Fourth, Sixth to Eighth, and Tenth to Fourteenth Respondents for the purposes of the hearing on 18 June 2015 only, they cannot agree to the Applicants' proposal that service of the Order should be effected upon all the Respondents by service on Peters & Peters. The order should be served upon the Respondents in the usual way (that is to say, apart from the First and Second Respondents, at their separate addresses), and only upon Peters & Peters if and to the extent that they continue to be retained by the Respondents.
28. I consider that Ms den Besten is right on this point, and I rule accordingly. Whether and to what extent the adoption of that stance by the relevant Respondents will or may reflect well or badly (or not at all) on them as the litigation progresses is not for me to say.