Pathfinder Minerals Plc & Ors v Velso & Ors [2013] EWCA Civ 505

[2013] EWCA Civ 505Case No. A3/2012/2892 A3/2012/2892(A)
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Venue The Royal Courts of JusticeDate Monday, 22 April 2013
The Strand
London
Before
LORD JUSTICE LEVESONLORD JUSTICE BEATSONLADY JUSTICE GLOSTER
Between
Pathfinder Minerals PlcDefendantIM Minerals LimitedDefendantInternational Mercantile Group LimitedDefendantVelso & OrsRespondentPathfinder Minerals PlcIM Minerals LimitedInternational Mercantile Group LimitedDefendants/Claimantsand:Jacinto Soares VelsoDiogo Jose Henriques CavacoJ. V. Consultores Internacionais LimitidaApplicants/Defendants
(Transcript ofWordWave International LimitedA Merrill Communications Company165 Fleet Street, London EC4A 2DYTel No: 020 7404 1400, Fax No: 020 7831 8838Official Shorthand Writers to the Court)
Mr Craig Orr QC and Mr Oliver Butler (instructed by Travers Smith) appeared for ClaimantsMr Peter Irvin (not instructed) appeared for Defendants
Judgment
[1]The court has before it: first, an application by the would-be appellants (whom I shall refer to as "the defendants") made by notice dated 7 November 2012 for permission to appeal against the judgment of Mr Justice Field, sitting in the Commercial Court, dated 19 October (which I shall refer to as "the permission to appeal application"), and, secondly, an application, the draft of which was dated 19 April 2013, by the claimants/respondents for an order that the defendants' PTA application be dismissed and that their appellants' notice, dated 7 November 2012, be struck out pursuant to the CPR (which I shall refer to as "the strike-out application"). A formal notice of application was issued by the claimants this morning, 22 April.[2]Before setting out the grounds upon which the claimants base their strike-out application, I should mention additionally the following matters: (1) On 31 January 2013 Lord Justice Aikens gave directions (a) that the PTA application and any appeal, if permission were granted, be heard at one hearing; and (b) that the threshold issue identified in his order dated 21 December 2012, namely:
"whether the defendants have any right at all to bring in an appeal and, if so, on what basis"
Should be the first issue heard at the combined hearing unless the Lord Justice presiding at the appeal directed otherwise. (2) On 25 March 2013 Lord Justice Aikens made a further order requiring the defendants to give by no later than 4 pm on Friday, 19 April 2013 security for: (a) the amount due under the orders of the Teare J, dated 30 May 2012, and Christopher Clarke J, dated 6 July 2012, in the combined sum of £106,000; and (b) the claimants' costs of the application or the PTA application and appeal, if permission were to be granted, in the sum of £90,000. He also ordered that, in the event of the defendants failing to provide any security pursuant to the foregoing the appeal proceedings should be stayed. In that event the claimants were given liberty to apply to have the appeal proceedings dismissed. It was pursuant to that liberty to apply that the claimants made the strike-out application to which I have already referred.[3]Last Friday, 19 April, at 5.30 in the afternoon, Mr Peter Irwin, then counsel for the defendants, emailed Mr Craig Orr, leading counsel for the claimants, to inform the latter that neither he nor his solicitors were instructed to appear on the application for permission to appeal this morning. On the same date, by an e-mail timed at 18.47 (that is to say after close of the court's business) Smithfield Partners, the defendants' English solicitors, sent a letter by e-mail to the court. It contained the following passage:
"Our clients, the Applicants, have not provided the security required under the Court's Order dated 25 March 2013, and are aware of the consequences. They believe that the conditions attached to the continuation of the appeal were unduly onerous, and that as a result, their genuine and meritorious appeal has been prevented from proceeding. "
The Applicants continue strongly to maintain that any further steps by the Respondents in proceedings in London will be a criminal breach of the anti-suit injunction originally granted in Maputo, which, whatever the Respondents may say about it, remains in force by virtue of the Suspensive Order referred to in the Respondents' recent Supplementary Skeleton Argument. "We are instructed that our clients have been advised by their lawyers in Mozambique that as a consequence the Mozambique Court will not recognise the English judgment. "In the circumstances, from today we are no longer instructed in the permission to appeal/appeal proceedings, and apply forthwith to come off the record. We enclose a Notice of Change filed on behalf of each Applicant for your attention. "Without intending any discourtesy to the Court, please note that neither counsel, nor the clients, will be attending the hearing listed for Monday. Our clients have, of course been advised upon, and fully understand, the possible consequences of their decision."[4]In the event, however, as a matter of courtesy, and although no longer instructed, counsel for the defendants, Mr Irwin, attended court this morning, together with Ms Anumrita Dwarka, a solicitor from Smithfield Partners. Mr Irwin informed the court that he was without instructions and had no instructions to oppose any of the applications that might be made by Mr Orr. The defendants did not otherwise appear and were not otherwise represented in court. There was however no formal withdrawal of their PTA application.[5]The grounds on which the claimants base their strike-out application are the following (and I quote from the application notice issued this morning):
"The Defendants are in breach of the order of Aikens LJ, dated 25 March 2013, ordering the defendants to provide security for costs in the amount of £196,000 by 4 pm on 19 April 2013. The defendants failed to provide any of the security ordered as at 4 pm [on that date] ... the Defendants' disregard of the order of Aikens LJ is deliberate and contumacious and in the circumstances their extant application for permission to appeal is an abusive and should be dismissed and/or struck out. Further or alternatively, the defendants have also breached and are in ongoing and wilful breach of the following orders..."
I refer to these below: 6. "By the second witness statement of Mr Cavaco, the second defendant, [dated 4 March 2013] the Defendants have made clear that they have no intention of complying with any order of the English court regardless of the outcome of their application for permission to appeal or, if permission is granted, the appeal itself. In the premises the Defendants' application for permission to appeal is abusive and should be dismissed and/or struck out."

I refer to these below:

[6]In fact, the further grounds referred to above also reflect the grounds upon which the claimants contend in their written skeleton argument, in relation to the threshold issue, that the defendants do not have any right in the circumstances to apply for permission to appeal or to bring an appeal.[7]The history of this litigation is fully set out in the judgment of Field J and in the judgment of Aikens LJ dated 25 March 2013 dealing with the application for security for costs. For the sake of convenience I quote paragraphs 4 to 11 of that judgment:
"The matter arises from a dispute concerning shareholding in a Mozambique company, and in particular, concerning certain agreements ('the agreements') entered into between the appellants and the respondents, pursuant to which, it is said, that the second respondent, IM Minerals Limited (IMM), acquired ownership of 99.99 per cent of shares in a Mozambique company known as Compagnia Miniera de Naburi, or CMDN. The agreements were all governed on their face, expressly by English law, except as to 5 per cent of the shares where it is said that they are impliedly governed by English law. The written agreements all provided for the jurisdiction of the English courts. "
Until late 2011, CMDN held two mining concession licenses issued by the Mozambique Ministry of Mineral Resources for the extraction of heavy mineral sands in Mozambique. However, it is said by the respondents-- the claimants in the original proceedings in this country -- that in late 2011 the applicants unlawfully and without notice to the respondent/claimants diverted those licences away from CMDN to Pathfinder Mozambique SA ('Pathfinder Mozambique') which was then a newly incorporated company, which was, it is said by the claimants/respondents, a newly incorporated company owned and operated by the applicants. "It is said by the claimant/respondents as a result of this action that the applicants sought to take control of CMDN to prevent it from taking any steps to recover the licences and/or compensation for its loss by purporting to terminate or rescind the agreements and to cancel IMM's shares in CMDN. In order to counter this, the claimant/respondents brought proceedings in the Commercial Court in December 2011 to establish the validity and enforceability of the agreements. That led to a number of interlocutory applications concerning proceedings which had been brought by the current applicants in Mozambique. These proceedings in Mozambique were brought by the applicants effectively against the current claimant/respondents. "Anti-suit injunctions were also issued in the Commercial Court against the applicants. There were also anti-suit injunction proceedings brought by the applicants against the respondents in the Mozambique courts. "The present position with regard to anti-suit injunctions is that there are outstanding anti-suit injunctions against the applicants which have been made by the Commercial Court. There are no anti-suit injunctions in favour of the applicants and against the respondents in the Mozambique court. However there is, I am told, an outstanding appeal in the Mozambique courts in an attempt to obtain such injunctions in favour of the applicants. "In the proceedings in this jurisdiction there was a trial before Mr Justice Field in September of last year. The applicants did not take part in that trial because their defence and counterclaim had been struck out by order of Mr Justice Clarke in interlocutory proceedings as a result of the applicants' failure to comply with previous orders of the Commercial Court. "In a judgment dated 19th October 2012, Mr Justice Field found that IMM had acquired 99.9 per cent of the shares in CMDN, pursuant to the agreements. The judge granted declarations confirming the validity, enforceability and the effect of those agreements. The judge also granted an injunction restraining the applicants from taking any steps to interfere with IMM's rights of ownership of its shares in CMDN. "Following that judgment, the applicants issued and served an appellant's notice on 7th November 2012 in which they sought permission to appeal the judgment of Mr Justice Field. The respondents opposed this, saying that no permission should be granted, bearing in mind the outstanding orders that still had not been obeyed by the applicants. It was also submitted by the respondents that even if permission were to be granted, it should be on conditions."[8]Since this security for costs hearing before Aikens LJ there have been further developments in the Mozambique court. Thus, on 28 March 2013, the claimants were notified that, as a result of an ex parte application made by the defendants, Judge Mutepua of the First Commercial District of the Judicial Court of the City of Maputo, had apparently on 26 December 2012 made an order suspending the effect of Judge Monjane's previous judgment, dated 27 November 2012, pending the defendants' appeal to the Mozambique Court of Appeal against Judge Monjane's order. By that judgment, Judge Monjane had revoked the anti-suit injunction which she had originally granted to the defendants against the claimants (or some of them) on the basis that her anti-suit injunctions had been excessive and outside the normal rule of law. She thereby confirmed that it was not appropriate for any such injunction to extend to the existing proceedings in London; that action was subject to English jurisdiction provisions and which had already been underway at the time she had made her original order.[9]The claimants contend that the suspensive order obtained by the defendants was irregular and made in breach of the requirements under the Mozambique Code of Civil Procedure, on the grounds that one of the claimants, IMM, should have been formally notified of the defendants' application for suspension and been given an opportunity to be heard on that application. IMM has issued an urgent challenge in Mozambique to set aside the suspensive order. Those are therefore the recent development in Mozambique.[10]In my judgment, there is no doubt that the defendants' application for permission to appeal should be dismissed. I reach that conclusion not only on the grounds that the defendants have failed to comply with Lord Justice Aikens' order dated 25 March 2013 for the provision of security for costs, but also on the grounds that the defendants have deliberately and, in certain cases, contumaciously breached and/or not complied with previous orders of the court. The conduct of the defendants, in my judgment, amounts to a cynical abuse of this court's process.[11]My reasons can be summarised as follows.[12]The legal principles are well-established. The court has a discretion to decline to hear a party in contempt (see X Ltd v Morgan-Grampian [1991] 1 AC, 1at 46-47, per Lord Bridge). As Lord Bingham said in Arab Monetary Fund v Hashim (unreported 21 March 1997) in a passage often since cited and applied) the question is:
"Whether in the circumstances of an individual case the interests of justice are best served by hearing a party in contempt or by refusing to do so or bearing in mind the paramount importance which the court must look at to the prompt and unquestioning observance of court orders."
[13]Factors to which the court may have regard in exercising its discretion not to hear the contemnor or to dismiss an application for permission to appeal in circumstances such as these include whether:(1) the contemnor's contempt is and has been deliberate and contumelious (see Arab Monetary Fund v Hashim, supra);(2) the contempt of the court's order impedes the course of justice or is otherwise an abuse of the process of the court (see X Ltd v Morgan-Grampian supra at 46-47 per Lord Bridge;(3) refusing to hear the contemnor is a proportionate means of securing compliance with the court's orders (see JSC BTA Bank v Ablyazov above). It is also clear that the exercise of such a discretion, where appropriate, is compliant with article 6 of the European Convention of Human Rights.[14]In the context of appeals an important consideration (as Mr Orr submitted) is whether the contemnor "not only fails wilfully and contumaciously to comply with an order of the court but makes it clear that he will continue to defy the court's authority if the order should be affirmed on appeal" (see again per Lord Bridge in X Ltd v Morgan-Grampian at 46-47): a litigant who puts his opponent to the expense of an appeal in such circumstances is clearly abusing the court's process (see ibid, per Lord Bridge at 47 and per Lord Oliver at 51).[15]The court will pay particular regard to the paramount importance of securing compliance with its orders (as Arden LJ said in Stolzenberg v CIBC Mellon Trust at paragraph 167:
"... compliance with orders of the court is not a question of judicial amour propre. It goes to the essence of the rule of law that parties subject to the court's jurisdiction ... should comply with the court's orders. The gravity of the matter of non-compliance is plainly increased where the non-compliance results from a conscious decision, as in this case. It follows, as Ward LJ said in Hytec v Conventry City Council [1997] 1 WLR 1666 at 1674 to 1675, that 'if a party intentionally or deliberately ... flouts the order, he can expect no mercy'. He has to persuade the court that in all the circumstances the injustice to him outweighs the interests of the administration of justice and the injury to the other party."
[16]I accept Mr Orr's submission that this is a plain case for the exercise of the court's discretion not to hear the defendants on the PTA application for the exercise of the Court's discretion to dismiss the PTA application. First, this is a clear case where the relevant agreements relating to the sale of shares are governed by English law and are subject to an English jurisdiction clause or clauses. The defendants have persistently disregarded their contractual obligations in this regard. Second, the defendants have deliberately abused the court's process and breached its orders. Thus, for example, the defendants are and have been in deliberate and persistent breach of no less than six orders pre-dating the trial before Field J, none of which is subject to appeal. These are:(1) The orders for directions which required, amongst other things, that the parties exchange a list of documents by 1 June 2012;(2) the anti-suit order, dated 15 May 2012, and continued on 30 May 2012, requiring the defendants to withdraw their anti-suit proceedings in Mozambique; I comment that those proceedings were issued the day after the defendants had abandoned their challenge to the jurisdiction of the English court and the same day on which they confirmed to the court that they consented to the dismissal of their jurisdiction challenge;(3) the anti-suit order made on 15 May 2012 and continued on 18 May and 30 May 2012 prohibiting the defendants from pursuing their anti-suit proceedings in Mozambique;(4) the anti-suit order made on 18 May 2012 requiring the defendants forthwith to notify the Maputo Court in Mozambique of the May injunction and to request the Maputo Court not to issue a ruling on its anti-suit proceedings pending 30 May return date;(5) the costs orders made by Teare J on 30 May 2012 requiring the defendants to pay on an indemnity basis within 14 days the respondents' costs of their anti-suit injunction in an amount of £56,000;(6) the costs order made by Christopher Clarke J, on 6 July 2012, requiring the defendants to pay on an indemnity basis within 14 days the respondents' costs of their strike-out application in the sum of £50,000.[17]In addition, the defendants are in breach of the injunction granted by Field J on 19 October 2013 restraining the defendants from taking any steps to interfere with IMM's (one of the claimants) rights of ownership in the shares of the underlying Mozambique company, CMDN, pursuant to the agreements by reason of their continued pursuit of anti-suit orders from the Mozambique court and their launch of proceedings there designed to relitigate the issues determined against them by Mr Justice Field in these proceedings. They are also in breach of Mr Justice Field's order of 27 November 2012 requiring the defendants to make an interim payment of the respondents' costs in the proceeding below in an amount of £850,000 by 27 December 2012.[18]The evidence clearly demonstrates that the defendants' breach of each of the above orders has been conscious and deliberate. It shows that in defiance of the orders and judgment of this court they deliberately chose to continue to pursue their abusive anti-suit proceedings in Mozambique notwithstanding their submission to the jurisdiction of the English courts and their participation in the case, at least to a limited extent, prior to their defences and counterclaim being struck out. It is plain from the defendants' conduct that they intended to continue to defy the authority of the English court if they fail on their proposed appeal or their application for permission to appeal is dismissed. This appears clearly, not merely from the letter dated 19 April 2013, to which I have already referred at the start of this judgment, but also from paragraph 18 of Mr Cavaco's second witness statement dated 21 March. It is also evidenced from their appeal against the recent judgment of Judge Monjane and the commencement of their new claim in Mozambique which is designed to relitigate the matters already determined by Mr Justice Field. They make clear in their new claim that they regard the English court's anti-suit injunction as an interference, the validity of which they do not accept. This, as Mr Orr submits, counts strongly against permitting them to invoke the appeal process for their benefit (see X Ltd v Morgan-Grampian in passages already cited).[19]Next, the defendants have made no attempt to purge their contempt, nor have they offered or promised compliance or proffered any apology whatsoever to the court. In particular, the defendants cannot seek to justify their defiance of the court's authority by arguing that they should be permitted to appeal the very orders which give rise to their past contempt. There is no appeal against the anti-suit and indemnity costs order of which they are in contempt. They cannot say and do not say that those orders are wrong. There is no possible justification for their continuing defiance of them.[20]As Lord Bingham, Chief Justice, said in Arab Monetary Fund v Hashim and Others:
"It would, in my judgment, be contrary to law, justice and commonsense that a man who has shown himself willing wantonly to abuse the process of the court should be permitted to invoke that same process for his own aims. I would deny him that right."
[21]Moreover, the defendants have only themselves to blame for the position in which they find themselves. They deliberately chose to abandon these proceedings and to allow their defence and counterclaim to be struck out; they failed to appear at the trial and never, in my view, provided any cogent or coherent answer to the mass of documentary evidence which the trial judge found supported the claimants' case on estoppel.[22]Importantly, there is no evidence before the court to support the claims made by the defendants in correspondence that any requirement to put up security for costs, or any requirement that they should make a payment as part of a condition of proceeding with the proposed appeal, would stifle it. The defendants have put forward no or no satisfactory evidence to support that proposition. Indeed they have coyly refused to make any, or any adequate, disclosure of their assets. The claimants' evidence as to the defendants likely assets demonstrated that this plea would in any event be implausible. The order providing for security was in the circumstances clearly proportionate. Moreover, the decision of this court in Societe Generale SA v Saad Trading [2012], EWCA Civ 695 demonstrates that the onus is on the proposed appellant to demonstrate that any appeal would indeed be stifled by the imposition of financial terms.[23]For all the above reasons, I accept the claimants' submissions that this PTA application should in all the circumstances be dismissed. There is no doubt that the pursuit and continuation of these appeal proceedings since last November and up until last Friday evening has been a cynical tactical ploy on the part of the defendants to buy more time in the Mozambique proceedings and no doubt an attempt to present their position in Mozambique in a better light on the basis of an extant appeal continuing in England. In my judgment, it is a clear abuse of this court's process. If the application for permission to appeal had been allowed to proceed it would have brought the administration of justice into disrepute.[24]Moreover, although the court has not heard any arguments on the substance of the defendants' appeal, it has read in depth both sides' extensive written arguments and the various bundles of evidence which were lodged in connection with the application. Speaking for myself, I have seen nothing in the defendants' grounds of appeal, or in the written arguments, that provides any basis whatsoever for disturbing the conclusions reached by Field J in his careful and comprehensive judgment. On the contrary, the defendants' grounds appear, on the basis of the reading which I have done and the written arguments which I have read, to be wholly devoid of merit.[25]Finally, I should mention what I regard as the wholly inappropriate way in which this application for permission to appeal has been conducted. It is perfectly plain that a decision must have been reached at the latest some time during the course of last week by the defendants that they were not going to provide the security and that they were not going to be represented or appear on the application. The fact that the claimants' professional advisers were only so informed at 5.30 pm last Friday evening, and that the court only effectively received notice this morning, is wholly deplorable, given both the pressure of work on this court and the interests of other court users. It is no way to conduct commercial litigation, whether at first instance or at appellate level. In the circumstances I would order that the defendants must pay the claimants' costs of and incidental to the application for permission to appeal on the indemnity basis. I would also make an order for an interim payment to be made by the defendants to the claimants in the sum of £150,000 in respect of the claimants' estimated costs which appear to be approximately £355,000, excluding VAT.

LORD JUSTICE BEATSON:

[26]I agree. I observe that in the light of the extent to which the defendants participated in earlier stages of these proceedings and submitted to jurisdiction, abandoning its challenge to the jurisdiction only on the eve of a hearing that was listed for challenge by agreeing to give undertakings to the court, and their conduct before Mr Justice Teare; serving an acknowledgment of service intending to defend and indicating that they would defend the application for an anti-suit injunction which had been granted by Mr Justice Hamblen, the cumulative effect of the conduct is singular and quite unusual even in the sort of litigation which is hard fought with people taking all points. The failure to appeal the decisions of the various judges who made orders in these proceedings; the non-compliance with orders for direction, for payment of costs and, in the case of Mr Justice Field, for an interim payment on account of costs all show the most flagrant disregard for this court and fully justify this court not being willing to entertain applications by the defendants. Secondly, the application for permission to appeal largely depends on the anti-suit injunction the defendants obtained in Mozambique on 19 March 2012. Their assertion that these proceedings are in breach of that and that the anti-suit injunction applied to these proceedings is inconsistent with the evidence submitted on behalf of the claimants; as to the hearing in Mozambique on 3 May, that evidence stands uncontroverted. It also is inconsistent with the decision of Judge Monjane in her judgment dated 27 November 2012. It appears that the defendants did not disclose the existence of these proceedings to Judge Monjane when applying for the Mozambique anti-suit injunction.[27]For these reasons, I agree with the disposition that my Lady has stated in her judgment.

LORD JUSTICE LEVESON:

[28]I agree with both judgments. I emphasise only one aspect: the obligations pursuant to the overriding objective on those acting in civil litigation must include keeping the court fully informed of developments likely to affect its work. It is very difficult to imagine that the decision communicated after the close of the court on Friday not to pursue this application or participate in this hearing had not been reached until then. As long ago as 21 March 2013 Diogo Cavaco included within a witness statement the assertion that the defendants did not accept that the orders of the English court should have been made or that they should be complied with. There is ample evidence that this is exactly what the defendants have done throughout this litigation. As soon as it was clear that they did not intend to provide security, as ordered by Lord Justice Aikens, it was the responsibility of their legal advisers to inform the court. Time thus put aside for this appeal could, if appropriate and possible, then have been allocated to other cases. Simply to allow time to run and expire, irrespective of the likely work that the court would put into an appeal, is simply insufficient and wrong.[29]Mr Orr, would you please draw up a minuted order that incorporates my Lady's recommendations. I think it is essentially the draft which you have submitted? MR ORR: I will. May I just mention one thing. We are very grateful for the court's judgments. My Lady, just a very minor point. It was not a telephone call by which Mr Irvin informed me. LADY JUSTICE GLOSTER: I am sorry, I thought it was. I will correct it in the transcript. MR ORR: It was an e-mail. LADY JUSTICE GLOSTER: An e-mail. MR ORR: Yes. LADY JUSTICE GLOSTER: I got the timing right, 5.30. MR ORR: Indeed you did, my Lady. LADY JUSTICE GLOSTER: I am sorry, I picked that up wrongly. MR ORR: Yes, my Lady, we have provided for 14 days in the draft. LADY JUSTICE GLOSTER: 14 days. LORD JUSTICE LEVESON: That is fine, thank you. LORD JUSTICE BEATSON: And you can add it to the total. MR ORR: Yes. LORD JUSTICE LEVESON: Thank you very much. It looks also that it is your solicitors who prepared the papers for this appeal. MR ORR: They did, my Lord. LORD JUSTICE LEVESON: I am grateful to them. Thank you. (2.35 pm)