Metropolitan Housing Trust Ltd v Tominey [2012] EWHC 3580 (Ch)

[2012] EWHC 3580 (Ch)IN THE HIGH COURT OF JUSTICECHANCERY DIVISIONHC-12-B003356Venue The Rolls BuildingDate Friday, 30 th November 2012
Before
HIS HONOUR JUDGE PURLE QC(Sitting as a Judge of the High Court)
Between
Metropolitan Housing Trust LtdClaimantTomineyDefendantB E T W E E N:METROPOLITAN HOUSING TRUST LTD.(formerly RTY) Claimant/Applicant- and -BERNARD CHRISTOPHER TOMINEY (formerly FGH)& Ors.Defendants/Respondents
Transcribed by BEVERLEY F. NUNNERY & COOfficial Shorthand Writers and Tape TranscribersQuality House, Quality Court, Chancery Lane, London WC2A 1HPTel: 020 7831 5627 Fax: 020 7831 7737info@beverleynunnery.com
MR. A. TWIGGER QC and MR R HANTUSCH (instructed by Devonshires Solicitors) appeared on behalf of the Applicant/Claimant.Venue MR. M. ZAMAN QC (instructed by Cobbetts Solicitors, Birmingham) appeared on behalf of theFourth, Eighth and Ninth Respondents/Defendants.
J U D G M E N TJUDGE PURLE:
[1]In this action the claimant, which is a housing association, sues a number of people in respect of alleged bribes paid directly or indirectly to the first defendant, a Mr. Tominey, who acted previously as its procurement director, and the third defendant, Commark Ltd. (“Conmark”), which was ostensibly a supplier but which, according to the claimant, had duties which made it effectively a fiduciary such as to attract the consequences the law prescribes in relation to bribes. The significance of the point is that the fourth defendant, Business Phones and Networks Ltd. (“BPN”) made a number of payments to Commark under what it claims was a legitimate introducer’s agreement for the provision of services by Commark, enabling BPN to get its foot into the door of the claimant, and thereafter to provide telephony services under a number of contracts which appear to have been lucrative. If of course Commark was an agent or fiduciary of the claimant standing in the same position as Mr. Tominey then, at least provided BPN knew that, the payment to Commark could be characterised as a bribe for which BPN would become liable to the claimant. Whether or not that is so, Commark, on the evidence before me, undoubtedly made payments which appear presently to have the character of bribes to Mr. Tominey and other members of his family, or a company associated with Mr. Tominey, Procurematrix Ltd., the tenth defendant. Moreover, these payments were in fact funded, at least in part so it is alleged, by BPN. It is to be inferred, the argument goes, even if Commark was not a fiduciary or agent, that the payments by BPN to Commark were merely a convenient means of bribing Mr. Tominey.[2]In support of that, Mr. Twigger, for the claimant, points to the fact that on the presently available evidence Commark seems to have done nothing to earn its money from BPN and, moreover, points to suspicious circumstances surrounding the alleged introducer agreement. There are in fact two versions, one of which is clearly, if genuine at all, backdated. The claimant will be inviting the court at trial to infer that this agreement is a late invention designed to cover up the true nature of the payments in question. All that is for the trial, but there is certainly suspicion in abundance and the claimant is justified in pursuing its claim in the way it does. Whether it will succeed is another matter.[3]What I am concerned with is freezing relief. The defendants I am concerned with on this application are the fourth, eighth and ninth. As I have indicated, the fourth defendant is BPN, the eighth and ninth defendants are its shareholders and directors. I shall call them collectively the “BPN defendants”. The eighth defendant, Mr. Arundale, is an individual based in the West Midlands who lives a settled life there. The ninth defendant, Mr. Boylett, is also based, when he is in this country, in the West Midlands and owns a property there. He does, however, see himself as having his home in the USA where he also holds a number of assets. The injunction against BPN relates solely to its business premises, against Mr. Arundale relates solely to assets in England and Wales, but in relation to Mr. Boylett relates to his worldwide assets.[4]I have summarised in the briefest of outline the nature of the claims and clearly there is a good arguable case. Mr. Zaman, for the BPN defendants, says it is, so far as concerns his clients, a weak case, but nonetheless did not seriously dispute that there is a good arguable case for some relief at the end of the day. He made a more sustained attack upon the quantum of relief that is sought and I am bound to say that the evidence presently in support of the quantum claim is lacking in detail which is capable of being cross-checked because it simply has not been provided. It is said that there is a claim for in excess of £2 million and some general description of how that claim is made up has been put in, but the underlying documentation to support the claim has not been produced, so the defendants have not had the opportunity properly to check the basis of the claim. Those are valid criticisms but nonetheless, on any footing, there is a claim of a substantial amount. It may not be as much as £2 million but at the end of the day it may just be of that order, especially if one takes into account, as I think I am entitled to do, future costs and interest. Moreover, there is an alternative claim for the amount of the alleged bribes, if made good, which is at least of the order of £600,000 or £700,000, those being the monies paid by BPN alone.[5]I therefore proceed on the basis that there is a good arguable case though there is a question mark over the quantum, and turn to what is to my mind the critical question in this case: Is there a real risk of dissipation or secretion of assets by the BPN defendants? Mr. Zaman in his challenge to the continuation of the freezing order against the BPN defendants focused largely upon non-disclosure and what he alleged was unfair presentation of the case. In my judgment, it is logical first to consider the question of whether the conditions for granting a freezing order, apart from questions of non-disclosure and fairness, have been met. These are, as is well known, the existence of a good arguable case, which is present here, and a real risk of dissipation or secretion of assets.[6]As I have said, the defendants are settled here and hold relatively substantial assets here, in the case of Mr. Boylett with his wife and in the USA as well. There are no, as is sometimes found, complex holding structures involving overseas companies or trusts in far-flung jurisdictions or anything of that nature. Mr. Twigger, for the claimant, invites me to infer a risk of dissipation or secretion largely from the nature of the allegations that are being made, and I agree with him that those allegations if made good would naturally suggest some risk of dissipation or secretion. But is that a real risk in all the circumstances of this case? I was referred to the decision of Flaux J in Madoff Securities International Ltd. v. Raven [2011] EWHC 3102 (Comm), as approved by the Court of Appeal in VTB Capital v. Nutritek International [2012] 2 Lloyds Rep.313. Those decisions confirm that whilst a mere unfocused allegation of dishonesty is not in itself sufficient to ground an application for a freezing order, the court can properly infer a risk of dissipation in the light of the particular dishonest conduct alleged against the particular respondents. I have some doubts whether the mere fact of payment of a bribe would necessarily justify such an inference, though if of course the bribe was paid in a devious way through offshore structures and that sort of thing the inference may become stronger. But here there is said to be more than that. It is part of the claimant’s case, which may - I am not saying it will, but which may - be established at trial, that the BPN defendants have concocted documents, namely the introducer agreements, in order to cover up their tracks, and someone who does that might well, one can see, be tempted to dissipate or secrete assets.[7]I must, however, look at the allegations of dishonesty against the background of all the known facts. I mention one other allegation of dishonesty before I do that. It is said against Mr. Arundale that he, as is evident from documents that have been produced, was prepared to produce false invoices for the purpose of evading VAT for the benefit of the claimant. This does not appear to have materialised eventually, but his willingness to act in that way is symptomatic, it is said, of the sort of person who will evade the enforcement of any judgment that may be made against him. That, it seems to me, does not necessarily follow. I am afraid that the world is full of people who have a less than wholesome attitude towards their obligations to the public purse but who would not defraud others. It seems to me that that is a factor I must take into account but is of relatively little weight.[8]Another point made by Mr. Twigger, and one of real force, relates to the way in which the BPN defendants denied in correspondence having paid £250,000, or indeed any sum, in order to secure contracts. This point was raised openly in correspondence by the claimant’s solicitors in July of this year. Curiously, the correspondence had started with a pre-action protocol letter by BPN itself, because there were issues arising out of the commercial relationship between BPN and the claimant which threatened litigation. In response to that, the claimant’s solicitors highlighted what they understood to be a payment of £250,000 to a third party, and wanted to know from BPN whether such a payment had been made and, if so, to whom and why. The point was evaded on BPN’s side in ensuing correspondence but eventually, in October of this year, BPN’s solicitors issued a clear denial that any sum had been paid to secure contracts. Mr. Twigger complains that that is a downright lie or at least deliberately disingenuous. I am bound to say that I read the correspondence in the way that Mr. Twigger did, though Mr. Zaman urged upon me that the claimant was guilty of a wilful misreading of the correspondence. It is evident also from the note of the without notice hearing before Warren J that he too, according to Mr. Zaman, must have misread it because he regarded that as a clear denial of what was being alleged. Moreover, if the introducer agreement, or dealer agreement as it is elsewhere called, between BPN and Commark was genuine and Commark did something in order to assist in the obtaining of contracts, it seems to me that the denial can fairly be described as a lie, as Mr. Twigger did. If of course no services were provided by Commark then that raises the at present unanswered question, what on earth BPN was doing paying these large sums of money to Commark. The particular figure of £250,000 was in fact a payment to terminate the introducer agreement which, coincidentally, was not long after Mr. Tominey left the services of the claimant. The denial was quite general, however, denying that any sum had been paid to secure contracts. I regard the way in which that allegation was dealt with in correspondence by the BPN defendants as thoroughly unsatisfactory to put it at its lowest, but does it follow from that there is a real risk of dissipation or secretion? Curiously, and paradoxically, what the correspondence shows is that the BPN defendants knew from July onwards that the claimant was on to them in relation to the payment of £250,000. One might expect, especially as litigation was clearly in the air, that if there was to be any dissipation or secretion of assets, that would have occurred then. But there has been no or at least no demonstrable dissipation or secretion of assets. Moreover, the individual BPN defendants have now made disclosure of assets, as required by the without notice freezing order, and did so timeously. There are substantial assets within the jurisdiction, including real estate. In Mr. Arundale’s case it is clear that there is at least one unencumbered property having a value of around £900,000. In Mr. Boylett’s case there is a substantial property having an equity shared with his wife of something like £800,000. None of that adds up to £2 million but there are other assets all held in an uncomplicated manner where no attempt has been made to secrete or dissipate those assets. In addition, as I have indicated, the quantum claim is somewhat ambitious.[9]Looking at the matter in the round, I am not satisfied in this case that there is a real risk of dissipation or secretion of assets notwithstanding the criticisms that I have made of the BPN defendants, and it is not, in those circumstances, appropriate for any freezing order to continue. There is always a temptation, especially when one finds real estate, to grant some relief, for example, restraining the disposal of that property upon the grounds that it will not really do any harm, especially if there is no intention to dissipate, but that is not the way in which freezing orders should be granted, even limited freezing orders. They should only be granted when reasonably necessary to protect the process of justice. I am not satisfied that it is necessary in this case for the claimant to have the benefit of a freezing order against these defendants.[10]In those circumstances, it is unnecessary for me to consider the questions of non-disclosure and unfairness. It is only right, however, that I should record that I did not regard the criticisms that Mr. Zaman made of solicitors and counsel under his heading of “Fairness” as made out. MR. ZAMAN: My Lord, there is the question of costs in respect of this application. They made the application, they have lost, and the natural consequence of that is that they should pay the costs. JUDGE PURLE: Yes. MR. ZAMAN: My Lord, first of all the matter of principle and, secondly, the basis of assessment. Your Lordship has not dealt with the material non-disclosure aspects and of course I therefore cannot rely upon anything in your Lordship’s judgment to support an application on indemnity principles. JUDGE PURLE: You can repeat the allegations and I will treat them, as you say, in support of an indemnity costs application? MR. ZAMAN: In support of indemnity. Your Lordship I hope will appreciate that really, even though I would have had to on instructions deal with the fair presentation, that was not really the core of our researches. JUDGE PURLE: I understand. There is a whole raft of non-disclosure, and you say that takes it out of the ordinary. MR. ZAMAN: Yes. The core of the assertion is actually that we would have asked your Lordship to find -- we have justified a finding of discharge, were really Bisseru, Mr. Shaw and the going without notice. I do not really intend to rehearse them because they are fresh in your Lordship’s mind. I can just deal with them very swiftly though. In respect of Mr. Bisseru ---- JUDGE PURLE: Mr. Bisseru is a private detective. Mr. Shaw is the person who does not disclose his sources. MR. ZAMAN: He does not disclose his sources and we say it was because ---- JUDGE PURLE: And they should not have gone without notice and they did not have their tackle properly in order for that purpose. MR. ZAMAN: So I ask on principle, first of all, for an order for costs in our favour; secondly, that it be on an indemnity basis. The third point is I am not going to ask for a summary assessment today but I am going to invite your Lordship to make an order for payment on account. I will hand up a schedule. JUDGE PURLE: We will get to that. Let us see what order for costs I make, yes. Mr. Twigger? MR. TWIGGER (who was not situated near a working microphone): I say that your Lordship should order costs in the case in these circumstances. There were, in my submission, very serious problems about what we have been told and, in the circumstances, the defendants have really brought this application on themselves. We did ask in correspondence what was going on and your Lordship has in a sense agreed with me that the correspondence was unsatisfactory. JUDGE PURLE: Yes. MR. TWIGGER: And, in those circumstances, in my submission, it was not at all surprising that we made the application that we did, and if we turn out at the end of the day to be justified in our allegations in my submission it would be wrong that we should end up paying the costs of this ---- JUDGE PURLE: Yes. You are asking for you to have the costs if you win. Your argument tends to go in the direction of defendants’ costs in the case. MR. TWIGGER: No, the defendants’ costs in the case I would ----[11]Mr. Zaman referred to three matters in particular: firstly, what he calls the “Bisseru point”. That relates to the activities of a private detective, not all of whose investigations were put before the court. It seems to me that that does not justify an indemnity costs order whether by itself or in combination with the other matters I shall come to. It seems to me that it is highly debateable whether it was necessary to disclose a second visit at all. It depends possibly on what occurred on the second visit, and that is very much in issue. Mr. Zaman’s bottom line is that the second visit should at least have been mentioned. Even if nothing material came from it, the inference was that the claimants were digging around and were unsuccessful. The fact that some digging around is done and produces nothing is quite a common feature of many cases in my experience, and one does not expect to have to tell the court all the digging that has been going on. In my judgment, the Bisseru point would not have carried the day and does certainly not justify indemnity costs.[12]The second point is what Mr. Zaman called the “Shaw point”. Mr. Shaw is the person who gave the evidence of £250,000 initially from undisclosed sources. It seems now that the source wished to remain undisclosed because the source was itself acting in breach of confidence. It is or may be a fair inference that Mr. Shaw knew or at least should have known that the source was breaching a confidence. If the source was unwilling to be identified the obvious question was to ask why. If the source was under an obligation of confidence that is something which clearly, in my judgment, should have been disclosed because it would have alerted the court to the possibility of tainted evidence and might have affected the exercise of the court’s discretion(a) as to whether to entertain that evidence, and(b) as to whether to grant any relief. However, the Shaw evidence had become of historical moment only by the time the freezing order was made because the payment of the £250,000 was demonstrable from other documents that had been obtained from third party banks and no one has sought to set the orders for third party disclosure aside. Accordingly, it seems to me that the Shaw evidence and the way in which it was adduced would not have been sufficient to justify setting aside the earlier orders for non-disclosure and, equally, does not justify an indemnity costs order now.[13]The third point that Mr. Zaman relies upon was the inappropriateness and impropriety involved in seeking relief without notice, without proper compliance with the rules and Practice Direction, explaining why the matter was proceeding on a without notice basis. I find it difficult to see how that can justify indemnity costs for subsequent hearings, which were on notice. It was simply not causative of any of the costs which Mr. Zaman is now claiming. Moreover, it seems to me that this point is intimately tied up with the risk of dissipation or secretion point. If there was a real risk, then it seems to me that the risk would have been heightened by putting the BPN defendants on notice. This point therefore does not add anything, in my judgment, to the point upon which I have decided the application, hence it will be standard costs.[14]I will now entertain an application for interim payment. MR. ZAMAN: My Lord, two points. First of all, a slight omission on my part: could I ask your Lordship for permission to commence the assessment forthwith because if it were not otherwise it would leave the balance right until the end of these proceedings. JUDGE PURLE: I will have to hear argument on that. MR. ZAMAN: Yes, and I should have mentioned that. But, so far as the payment on account is concerned, I invite your Lordship to have regard -- can I hand up our schedule of costs. JUDGE PURLE: This has been seen by the other side? MR. ZAMAN: Yes. Does your Lordship have my learned friend’s costs schedule so you can do it ---- JUDGE PURLE: No, no. I will have a look at them because that does make me feel envious! MR. ZAMAN: You may just be helped, as my learned friend always tries to do a cross-check. JUDGE PURLE: It is obviously at least as much as yours because you are very keen that I should see it. MR. TWIGGER: There is a new version. JUDGE PURLE: He was arguing on more fronts though. (Documents handed) MR. ZAMAN: So far as our costs schedule is concerned, the bottom line, as it currently appears, is £148,000. That was the schedule prepared on the 23rd November in anticipation that there was going to be a two-day hearing. There have been my refreshers incurred in respect of days 3 and 4 and the solicitors’ attendance for which, in round terms, we add £20,000 plus VAT. JUDGE PURLE: That is the rule, VAT, is it? MR. ZAMAN: Yes. What I say is that the total sum actually ---- JUDGE PURLE: It is not cabling? MR. ZAMAN: No, and there is no invoice to anybody in Ireland either. It is £162,000, and actually the VAT is recoverable, so therefore the total sum that we start with is £135,000. JUDGE PURLE: Yes. What are you asking for? MR. ZAMAN: I am asking for £100,000, which we say is not in any sense ---- JUDGE PURLE: Do these fees include the bit I am going on to next? MR. ZAMAN: No. There is a separate schedule in respect of that. JUDGE PURLE: Right, yes, fine. MR. ZAMAN: So it is a claim only in respect of this application. You have got the contrast been my learned friend’s client’s schedule and ours. Theirs is actually about £100,000 more, in rough terms. JUDGE PURLE: But they were fighting on several fronts. MR. ZAMAN: Yes, I understand that. JUDGE PURLE: This explains why yours are less, not because you are a cheapskate! MR. ZAMAN: My fees are no doubt modest compared with my learned friend. We ask for £100,000. I am not going to do any sham or scientific exercise to take your Lordship to that. It is £135,000 and we seek £100,000. JUDGE PURLE: Yes. Mr. Twigger? MR. TWIGGER: My Lord, there is a point of principle here. Of course this is a hearing at a very early stage of the case. We say we have very good grounds for thinking we are going to win this case at the end of the day and the amount of costs being sought is very high. We have very little detail as to the way in which various costs have been incurred, so we would say it would be better to have an assessment at the end of the day. JUDGE PURLE: Yes, and no interim payment? MR. TWIGGER: And no interim payment. JUDGE PURLE: I will hear argument on that. Yes, you say it is a point of principle. What is the principle? MR. TWIGGER: My Lord, in the circumstances, where we have got a strong case, there are going to be no doubt other costs incurred in relation to this case, and it is not ---- JUDGE PURLE: But the practice these days is to -- there is no absolute rule, but there is an inclination in favour of paying up as you go along, is there not? MR. TWIGGER: Well, yes, my Lord, although certainly where there has been a trial, like the Mars Technology case ---- JUDGE PURLE: I can see you say it sticks in the throat to have to pay 100 grand now when you might be recovering if not £2 million at least 900 grand, whatever it is, at the end of the day. MR. TWIGGER: Exactly, so where we have allegations that there are bribes, where there are unexplained agreements and where there have been letters written which do not tell the truth, and in those circumstances to have to pay money over now, which we would say we are likely to recover at the end of the day, is inappropriate. JUDGE PURLE: There are two points. I could order the assessment at the end but make a payment on account now. What directions for trial are in place, if any? MR. TWIGGER: None yet. JUDGE PURLE: Their defence so far? MR. TWIGGER: No. MR. ZAMAN: We have only had the particulars about a week or two. JUDGE PURLE: Yes, I realised that everything had been done sort of upside down in this case - disclosure first at a time when Mr. Justice Morgan thought you did not even have a case, or at least, sorry, not a case for a freezer -- disclosure first, freeze next and get round the particulars of claim really some little while down the line. Am I being asked to give directions? I will if anyone wants them. MR. ZAMAN: I will invite your Lordship to give directions. JUDGE PURLE: But there are other parties not here, that is the problem. MR. TWIGGER: That is the problem, yes. I was going to suggest that we try and agree, subject to the various parties, in relation to that. It is difficult to make orders without them being represented. JUDGE PURLE: I could make orders. MR. TWIGGER: You could. JUDGE PURLE: And they could have permission to apply. It is only directions. It depends what they are. MR. TWIGGER: Yes, and it would in the first instance ---- JUDGE PURLE: It is in their interests because they have got these freezes against them to get on with it. Who are their freezes again? You have got a freeze against Mr. Tominey, have you not? MR. TWIGGER: Yes, but he has given undertakings. JUDGE PURLE: Yes, Mr. Oakton and Commark. MR. TWIGGER: Yes, all the others. JUDGE PURLE: Yes, all the others except Jack. MR. TWIGGER: Except Jack, yes. So I suppose in a sense, under the CPR, there is already in place a requirement for them to do their defences, so in the circumstances we do not need directions for that. JUDGE PURLE: No, but you normally get a -- where there is a freezer in place, which there still is, you get them on quickly usually, because it should be in place for as limited a time as possible. MR. TWIGGER: Yes, I accept that, but of course ---- JUDGE PURLE: And you obviously want this on as quickly as possible. MR. TWIGGER: Yes. JUDGE PURLE: Okay. On costs then, I am just thinking aloud. If I am going to give directions for a trial there is another point here. We really could do without the distraction of an assessment process. MR. TWIGGER: Yes, indeed. JUDGE PURLE: You really want to be getting on with the trial. MR. TWIGGER: Yes. JUDGE PURLE: But that does point in favour of a generous payment on account. MR. TWIGGER: Well, my Lord, I come back to my original submission in relation to that, which is in all the circumstances of this case it is not appropriate. I think the guidance set out in the White Book says that the Mars case - and your Lordship knows what I mean by the Mars case, that is ---- JUDGE PURLE: What page are you on? Let us have a look at this.[15]MR. TWIGGER: Yes, p.1328 of volume 1. This is in the section dealing with r.44.3.8, about payment on account, and you see in the middle of the page there is a reference to the Mars case, and then the penultimate paragraph on the page says:
“Whilst the decision in Mars … (reading to the words) … should be made and no presumption against.”
Now, my Lord, I say there is no guarantee that they are entitled to an interim payment in the circumstances of this case. JUDGE PURLE: I am not sure I understand that. What has proportionality got to do with what I am considering at the moment. The court has not heard the trial and has not had the opportunity to assess the proportionality of what? MR. TWIGGER: Proportionality of the costs and, as I understand it, that is one of the grounds on which the costs judge then comes to assess ---- JUDGE PURLE: On the standard basis, yes. On the standard basis proportionality is one of the standards. MR. TWIGGER: Yes. JUDGE PURLE: But when the judge has heard the full blown application the judge can form a view on the proportionality issues in a broad way for the purpose of costs. MR. TWIGGER: Yes. It is more the next point, I think, that no details regarding the nature and strength of the arguments and so on, and we would say we put it slightly differently in this case. We would say you can form a view we have got a good case and that that leans very much in favour of not making an interim award at this stage, and all I am trying to point out there is that there is no presumption either way. It is not standard either to make an interim order or not to make an interim order.

JUDGE PURLE: Looking at the previous paragraph:

“In general an interim order for payment for costs prior to assessment should be made but the court has to take into account all the circumstances, including the … parties wish to appeal, the relative financial position of each party, the court’s overriding objective to deal with cases justly …”
But it is not certain that at the end of the day they will recover any of these costs because if you get an order for costs at trial they will be set off. MR. TWIGGER: Yes. JUDGE PURLE: But then they would never make an order that costs should go along on that basis, whereas normally you have a summary assessment. It is just because it has been more than a day we are not having one. MR. TWIGGER: But my point here would be that the nature of the allegations is rather different from the normal run of cases. JUDGE PURLE: Yes, but there is another reason underlying this. The whole landscape changes when this practice came in of ordering costs as you go along and it means that applications like this are actually very rare now for them to be fought, because the losing party knows they are at real risk of having to put their hand in their pocket now. Certainly we used to have such fun when I was at the Bar. Every interlocutory hearing went on for ever and the clients did not like it because no matter how much they won they never saw any money from the other side, and then some judge will put his oar in and insist on having a trial, and you say, “What do you want a trial for, the interlocutories are keeping us going”. So that is what it is meant to stop. And what is the disincentive to you if you think you are not going to have to pay your costs as you go along. You say in the circumstances of the case ---- MR. TWIGGER: It would simply be ---- JUDGE PURLE: It is not fair in these circumstances. MR. TWIGGER: In the circumstances of this case, yes. JUDGE PURLE: Right, Mr. Zaman, I think you had better answer those points. MR. ZAMAN: First of all, I did ask my learned friend to point your Lordship to his solicitor’s letter, which may not have been handed up, which accompanied the costs schedule. JUDGE PURLE: No, I have not got that. What does it say?[17]MR. ZAMAN: I am sure he is not going to ask me to hand it up but I can read from it. The letter was sent yesterday attaching their costs schedule and saying:
“We do not consider the learned Judge will be in a position to summarily assess these costs [if they had won]. However …”

JUDGE PURLE: Yes, so we are asking them to make a payment on account.

[18]MR. ZAMAN: Yes. “However, we will seek an interim payment in respect of these costs.” So it rather blows my learned friend’s submission that it is highly inappropriate bearing in mind if they had won he would have been arguing in absolutely the other direction. It is a pay-as-you-go system now and the balance is as follows: interlocutory applications are not intended to crush under-resourced litigants. The claimant is a billion pound company. It has assets of that level. These defendants do not. In those circumstances, it is appropriate that they should -- otherwise interlocutories are a way of crushing an under-resourced litigant.[19]It does, however, mean that I must, in fairness to the BPN defendants, give serious consideration to their costs schedule. It seems to me right to order a payment on account under the present system, which is described by Mr. Zaman as pay-as-you-go. There is no absolute rule and the court has a discretion and has to act fairly in all the circumstances of the case. But the BPN defendants are not massively resourced. The individuals are fortunate to have a fair degree of personal wealth underpinning them resulting from the sale of a previous business for £5 million. But looking, as I do now, at the costs schedules in this case for just three of the parties, and that is only stage one of the proceedings, those resources sadly are going to be much taxed in the defence of these proceedings. It does seem to me wrong to keep the BPN defendants out of their money indefinitely. The costs schedule is of the order of £130,000 and it is, in my judgment, appropriate to order a payment on account of £85,000.[20]Was that £130,000 VAT inclusive? MR. ZAMAN: No, it was VAT exclusive. JUDGE PURLE: £85,000 plus VAT, whatever that is. It is quite a simple matter of arithmetic. MR. ZAMAN: Thank you. JUDGE PURLE: So you can work that out and put it in the order, and that is the usual 14 days, is it? Do you need longer? I do not know how long you want or what your cash flow is like. MR. TWIGGER: I will find out. (After taking instructions): I am asking for 21 days, please. JUDGE PURLE: You cannot really resist that, can you? MR. ZAMAN: No, my Lord. JUDGE PURLE: Fine, yes. Shall we go on to stage three, is it? Shall we do stage three first and then directions, if we have still got time? MR. TWIGGER: Yes, my Lord. As far as stage three, the business continuation injunction, is concerned, it did appear this morning before your Lordship came in as though there were some discussions going on as to whether this could be resolved by agreement. JUDGE PURLE: Do you want time then? MR. TWIGGER: My Lord, I am just wondering if ---- JUDGE PURLE: Would that be sensible? MR. TWIGGER: ---- if Mr. Zaman agrees. My Lord, 20 minutes? JUDGE PURLE: Yes, fine. I will go and have a cup of tea. (Short adjournment) JUDGE PURLE: Yes. MR. TWIGGER: My Lord, thank you very much for the time. We have made some progress at least. We have not been able today to finally agree precisely what is to happen in terms of handing over of passwords and user codes and all the rest of it. So what we have agreed, subject to your Lordship, is that this application that is before you to continue the order and to make the additional orders for disclosure of passwords and so on be adjourned to the week commencing the 17th December for half a day I think, to be fixed for counsels’ convenience, but we think we should be able to do that week; for the existing order, i.e. the prohibitory order and the one mandatory bit that says carry on providing the services, with the undertaking that we have given as the other side have had to continue to paying, that should remain in place until that date, the adjourned date, and we will have a recital in the order that says whether I win or my learned friend wins if we end up coming back it will be costs reserved. We agreed that on the basis that ---- JUDGE PURLE: Sorry, today’s costs reserved or next time will be costs reserved? MR. TWIGGER: Both, so that there is not then a risk of one side ---- JUDGE PURLE: Well, it does not I suppose theoretically bind the court, but the court is not, I should not have thought, going any other way. MR. TWIGGER: No, exactly, but we have agreed between us that that is the way would should do it, and then the idea is that that will hopefully give us long enough to resolve the discussions which are about quite technical things, and obviously we need to have them. JUDGE PURLE: So the hope is that you will be able to discuss -- are you expecting to come back before me or any old judge? MR. TWIGGER: My Lord, as far as we are concerned, as long as it can be fixed in that week then your Lordship or any old judge will do, unless your Lordship feels strongly that it should come back before you. JUDGE PURLE: No. I am in Birmingham that week. MR. TWIGGER: We would be happy then, because I think the issues are discrete. MR. ZAMAN: I would be happy for it to be in Birmingham! MR. TWIGGER: I am sure you would. The issues really are discrete and ones your Lordship has already decided, so there is no particular need for it to come back before you. JUDGE PURLE: Yes, except I have read the evidence insofar as it means anything to me. MR. TWIGGER: Yes, but of course the evidence that you were looking at was more to do with the freezing and the ---- JUDGE PURLE: Yes. Well, there is a bit of technical evidence, is there not? MR. TWIGGER: Yes, there is, my Lord. JUDGE PURLE: Anyway, I am ---- MR. TWIGGER: If your Lordship is happy with that? JUDGE PURLE: I am, yes, I suppose. Mr. Twigger, it is a Friday. MR. TWIGGER: It is. JUDGE PURLE: And you are saying I do not need to do any more work. Why should I not be happy! MR. TWIGGER: My Lord, can I ask one thing I should have asked before and omitted to, and that is permission to appeal in relation to the freezing order. JUDGE PURLE: Yes, you can ask for it. MR. TWIGGER: I will ask, and I am not sure I need to make any detailed submissions. JUDGE PURLE: No. MR. TWIGGER: It is obvious what they would be. JUDGE PURLE: I am not going to give permission to appeal. I think the authorities say these things should be dealt with relatively economically - we have probably spent too long on it - and appeals should be rare. MR. TWIGGER: Thank you, my Lord. JUDGE PURLE: I looked at Derby, volume No. 1 last night to remind myself what is said, and that bit is in there somewhere. So it is really for the Court of Appeal to decide if I have gone off the rails, which I think is usually the test when you are veering from the exercise of a discretion. It is put more eloquently than that I think. MR. TWIGGER: Thank you. We will draw up an order to deal with that, and then I think my learned friend wants to ask for an extension of time to put in his defence. JUDGE PURLE: Yes. Let us deal with directions as best we can, and I will do it on the basis that any absent defendant will have a separate order for directions. What we will do is you can circulate the draft order to the absent defendants as well and if people have got any observations or objections they can make them in writing to my email address or the Birmingham Chancery email address, which I do not know but Mr. Zaman has it on his system somewhere. You have got my email address, have you not, Mr. Zaman? MR. ZAMAN: I am not sure I do, but I will be able to locate it. JUDGE PURLE: Good. MR. ZAMAN: I think someone in my chambers has it. JUDGE PURLE: I do not mind if it comes to my email address. I am just not prepared to shout it out in open court. MR. TWIGGER: No, of course not. JUDGE PURLE: I get enough spam without getting hate mail from litigants! MR. TWIGGER: Just on that, I understand that there has been correspondence with the Oaktons about the defence and I think all they did was ask for confirmation from my instructing solicitors that under the rules the 13th December was the date for service of the defence, and we said “Yes”. So I rather understood by that that they were intending to produce it by the 13th. JUDGE PURLE: They are going to put in the defence by the 13th December. So that is the starting point, the 13th December. MR. TWIGGER: Yes. I do not know, I am afraid, about the Tomineys, and my learned friend will say how long he needs. MR. ZAMAN: My Lord, so far as the BPN defendants are concerned, your Lordship has seen that we have been rather distracted, instead of concentrating on the merits, from dealing with this, and so we have lost some time already, that we could have ---- JUDGE PURLE: Yes, how long do you want? MR. ZAMAN: I was going to ask until the last Friday in January. JUDGE PURLE: Why do you need quite so longer? MR. ZAMAN: It is a combination of ---- JUDGE PURLE: There are other defendants against whom there is a freezing order and you are off the freeze now, so ---- MR. ZAMAN: It is a combination of personal circumstances, of mine and my instructing solicitor’s. My instructing solicitor actually managed to make it here despite his paternity leave. He is off for a number of weeks. I am actually abroad and ---- JUDGE PURLE: He is on paternity leave? MR. ZAMAN: Yes. JUDGE PURLE: Well, he should not have children! MR. ZAMAN: One would have thought one was enough! JUDGE PURLE: And you are abroad? MR. ZAMAN: I am abroad at least once between now and the end of the first week ---- JUDGE PURLE: Well, there is Christmas coming up. MR. ZAMAN: ---- the first week of January. If your Lordship were to say to me, “Well, Mr. Zaman …” ---- JUDGE PURLE: What about Mr. Brown? Is he not doing the lead on the pleading? I am not saying you will not be looking at it, but you are not doing the donkey work. MR. ZAMAN: I have an interventionist approach. I asked for the 25th January and it is of course a matter for your Lordship. JUDGE PURLE: How long? MR. ZAMAN: The 25th January. JUDGE PURLE: What do you say to the 25th January? MR. TWIGGER: That sounds rather long to me, my Lord. JUDGE PURLE: It does to me, yes. MR. TWIGGER: Given that the date is the 13th December. One can understand of course that there is the Christmas period intervening the dates, but we would say early January at the latest, obviously not the 1st January. The 4th January? MR. ZAMAN: My Lord, perhaps while my learned friend is on his feet I could make one last bid. I return from Hong Kong on the 7th January, and if you really were going to push Mr. Brown to get on with it I still need some time in that week. JUDGE PURLE: The 10th January. That is your time for service of the defence. You just recite ---- MR. TWIGGER: Recite the date under the rules of the 13th. JUDGE PURLE: Yes, the date. MR. TWIGGER: And there will be a counterclaim ---- JUDGE PURLE: That is the time for defence and counterclaim. You have done your pre-action protocol. You should be ready to do it straight away. You have done your pre-action protocol. That is the counterclaim but not necessarily the defence, yes. MR. TWIGGER: My Lord, they have not asked for a longer ---- JUDGE PURLE: No, they have not. MR. TWIGGER: So it should be recorded that it is the 13th, but if they would seek longer, but I suspect they could probably write to us and agree. JUDGE PURLE: Once one party has got the 10th January the reality is that no one is going to -- I know there are differences between the defendants but you cannot treat one any differently, so we will say the 10th January for defences, yes. MR. TWIGGER: Yes, my Lord, and we will put in the bit that they can apply if there is a problem. JUDGE PURLE: Yes. Then disclosure? You just want to agree some timetables for that. MR. TWIGGER: My Lord, I think we were just going to pause there for the time being because there probably needs to be a case management conference at some point once we have seen what the issues are, which is rather difficult at the moment without seeing the defences. My learned friend is optimistically saying there may be mediation. JUDGE PURLE: I hope it is not too optimistic. MR. TWIGGER: We hope that too, my Lord. So I think, unless your Lordship is keen to give further directions, we have probably ---- JUDGE PURLE: I am keen for those who want them but as no one is asking for them I am not going to impress my own stamp overmuch on the case. Should there be another CMC before who? It will have to be before a master then. What are masters’ appointments like? MR. TWIGGER: I think reasonably okay. JUDGE PURLE: I will just give those directions. You will just have to take out an application and ---- MR. TWIGGER: Sorry, you were directing a CMC to be listed thereafter or ---- JUDGE PURLE: No. MR. TWIGGER: No, we will just leave it. It will work in the normal way I think once the defences are in. JUDGE PURLE: I think it will just work in the normal way. There is bound to be disclosure but people will want to have a disclosure meeting perhaps to discuss the scope of it. There might have been some electronic disclosure except it has all been wiped. MR. TWIGGER: That was the telephone recordings, yes. JUDGE PURLE: This is a case where one should give serious consideration to such electronic disclosure as is thought possible because that is where you find out who has been talking to whom and when, and that sometimes is as important as anything irrespective of what was said. MR. TWIGGER (After taking instructions): My instructing solicitor was saying that obviously we would be keen for a trial as soon as possible, but again I think really it has to be a matter ---- JUDGE PURLE: I think if you ask me for directions beyond -- there seems to be some tension between you and your solicitor. I do not mind giving you directions beyond the defence if you want me to. MR. TWIGGER: I think we think that we cannot really seriously progress it until we have seen the defences and we know what those are, and it is really that as soon as possible ---- JUDGE PURLE: I do not mind - what can I put in the order which records that the trial is for expedition? The only reason it is for expedition -- I say the only reason -- it is a very good reason - is because of the freezing orders which are outstanding. MR. TWIGGER: But that is a point that can be made obviously at the CMC and no doubt the defendants will include in the defence to whom ---- JUDGE PURLE: I think you can put a paragraph in:
“The court expects the claimant to apply for further directions at a case management conference as soon as reasonably practical after” whatever date it is, the 10th January, “as the court takes the view that this case is fit for expedition in the light of the outstanding freezing orders.”
So it is there, so that whenever anyone does fix a trial it is recorded by me for what it is worth. MR. TWIGGER: I am obliged, my Lord. JUDGE PURLE: I do not need to see the order, do I? You can agree it between you? If there is any dispute I will resolve it. MR. TWIGGER: Yes, my Lord -- no, I would not have thought so. JUDGE PURLE: Was there not some point which arose from the other day’s order? MR. TWIGGER: Yes. Mr. Zaman and the costs of the application, of the disclosure ---- JUDGE PURLE: So I left those open, did I? MR. TWIGGER: Yes, I think you did. May I take instructions, my Lord? (After taking instructions): My Lord, we do ask for the costs of that application. JUDGE PURLE: What did I order at the time against ---- MR. TWIGGER: Against Mr. Piccinin. I think it was that we get our costs in any event. JUDGE PURLE: I think it was. MR. TWIGGER: To be assessed if not agreed. JUDGE PURLE: I cannot remember what I ordered. MR. TWIGGER: I am pretty sure that is right. I can check. JUDGE PURLE: Has anyone done an order yet or is it ---- MR. TWIGGER: My Lord, I think it was all intended to be built into one big order at the end of the day, so that is why ---- JUDGE PURLE: Yes. MR. TWIGGER: And I am asking for the same again to my learned friend. I am not asking you to assess them or give an interim payment or ---- JUDGE PURLE: I remember, yes. What I ordered was that you be at liberty to tell the police and your regulator. MR. TWIGGER: That is it, yes. JUDGE PURLE: That is right. You had an argument and you won and he lost. MR. TWIGGER: Yes. JUDGE PURLE: And he wins because he said your case only became clear at the last moment and that does not really have any impact on the question of costs. Mr. Zaman said I should reserve the costs until the end of all this because this might have some impact, which it does not. MR. ZAMAN: Your Lordship gave the order without being taken to the authorities and costs on that particular point. My Lord, had that point been considered at the end, which in the ordinary circumstances was a point that would have been dealt with right at the end of the hearing, the only reason it was dealt with at the beginning was because Mr. Piccinin needed to get in and out, so to speak. That part of my learned friend’s application was of course an incidental application that arose in the context of the freezing injunction. JUDGE PURLE: It was all part of the same application notice. MR. ZAMAN: Exactly, and the ordinary principle in respect of applications where a claimant applies for an injunction which is determined on the balance of convenience is that the order should be costs reserved. JUDGE PURLE: I did reserve the costs of the injunction, did I not? MR. TWIGGER: No. You made us pay the costs of the injunction. JUDGE PURLE: No. Between you and Mr. Piccinin it was all done -- was that done on undertakings? MR. TWIGGER: He was giving undertakings, yes. JUDGE PURLE: And the cost of the injunction application? MR. TWIGGER: Those were reserved. JUDGE PURLE: Yes, they were reserved, so we have carved out the separate costs of the application for the little argument we had, which then formed, for whatever reason, a discrete head of costs. It was a discrete argument. MR. ZAMAN: In my submission, it should not have formed a discrete head because it was part and parcel of the entire application. The authority for the usual rule, that costs in such matters are reserved to the end of the trial, is of course Picnic at Ascot v. Kalus Derigs. JUDGE PURLE: Where is that? MR. ZAMAN: Divider 27 ---- JUDGE PURLE: Rule 14.3. MR. ZAMAN: Yes, 14.3. Really it is ---- JUDGE PURLE: Picnic at Ascot.[21]MR. ZAMAN: Yes, and Kalus Derigs. It is an excellent name. If you look at the headnote, this is a Court of Appeal decision -- no, it is not, sorry, it is Mr. Justice Neuberger, but he is reciting the Court of Appeal decision Dachem Giralle (?). The sub-heading “H6”:
“A defendant who acceded to the grant of an interlocutory injunction before the hearing should not for that reason alone normally be subject of a more disadvantageous costs order than if he had fought and lost.”
I pause here. What your Lordship did was to fall into, if I may say so, an error in the order your Lordship made against Mr. Piccinin’s client because really if you look at the whole you would have come to the conclusion that really Mr. Piccinin could have had his entire fight in respect of the injunction and the only order that your Lordship would have made was costs ---- JUDGE PURLE: How does this help me on the application to use information which you have already got under a previous set of orders which are now, at least so far as Mr. Piccinin was concerned, no longer challenged. MR. ZAMAN: I have an idea of the law. Can I go on to the facts. Insofar as my client is concerned, when I stood up and took the objection on principle, which I did, I did make the observation that what -- I asked for my learned friend to identify what it was as against my clients that they wanted to be able to disclose to the regulator and the police, and the answer is he was able to identify absolutely nothing, nothing at all. The bank statements were not bank statements that relate to the BPN defendants because they are not the BPN defendants’ documents, they were the bank statements of Mr. Tominey, they were the bank statements of the Oakton and Commark defendants. So what do they want permission for to take from the BPN defendants? The answer is nothing. JUDGE PURLE: But they have got it, have they not? MR. ZAMAN: They have got an order for disclosure of nothing and, my Lord, in those circumstances the proper order ought perhaps to be they should pay my costs of taking the point. JUDGE PURLE: Yes. Mr. Twigger? MR. TWIGGER: The point is we asked again all of the defendants for permission to disclose all of the material and it is impossible to say, “Well, we’re going to disclose this material to the police as against one defendant but not as against the others”, and it would have been open to them, if my Lord had thought that there was nothing in the material that concerns it, to simply say, “That’s fine by us. We are perfectly happy for you to make that order.” But that is not what he is saying. JUDGE PURLE: He is. Given though it is not his document, he is protected by the undertaking previously given in the sense that insofar as the documents contain information about his clients, they could not be disclosed wherever they came from. MR. TWIGGER: Exactly, and if he was happy for us to disclaim he could have said that but that is not what he said. He opposed it and in those circumstances we got an order against all the defendants and, insofar as there are any costs - we are taking up more time now and more costs arguing about the costs than they incurred - but, insofar as there are any costs against his clients arising out of that submission we should have them, and the Picnic at Ascot case has really got nothing to do with the freezing orders, this is obviously a separate ---- JUDGE PURLE: Well, what it does have is the costs of the hearing in any event. MR. TWIGGER: Yes. It says at point number ---- JUDGE PURLE: Claimants in any event. Why? Because had there been an argument about the costs ---- MR. TWIGGER: Yes. Point No. 5 ---- JUDGE PURLE: No, no, wait a minute - yes.[22]MR. TWIGGER: ---- in the headnote is:
“Where a claimant has obtained an interlocutory injunction … (reading to the words) … costs of the application.”

JUDGE PURLE:

Yes, and they were the ones who were asking for their costs. MR. TWIGGER: I think here it was the defendants actually who -- no, the defendants said they were going to oppose and then did not, and I think that is why the claimant got the costs because they could have said at a much earlier stage. JUDGE PURLE: Yes. MR. TWIGGER: Yes, and the costs of the hearing had been in effect thrown away because the defendants had said that ----[23]The same order for costs will apply to Mr. Zaman’s clients as the order I made on Monday in relation to Mr. Piccinin’s clients. It seems to me that Picnic at Ascot, apart from being close to at least one counsel’s name, has an overall relevance to this case.[24]I suppose technically we give people permission to apply if they object to that, but at the moment all they have got is an extension of time for their defence. I suppose they might complain about it but if there is any difficulty it can be referred to me in written submissions.