Peak Hotels And Resorts Limited v Tarek Investments Limited & Ors [2016] EWHC 333 (Ch)

[2016] EWHC 333 (Ch)Case No HC-2014-000497
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Venue Royal Courts of Justice, Rolls Building, Fetter Lane, London, EC4A 1NLDate Friday 12 th February 2016
Before
MRS JUSTICE ASPLIN
Between
Peak Hotels and Resorts LimitedClaimantTarek Investments Limited & OrsDefendants
Richard Hill QC & Alex Cook (instructed by Candey) for ClaimantDaniel Jowell QC & David Caplan (instructed by Herbert Smith Freehills) for Defendants 1, 5, 6 and 7Michael Brindle QC & Matthew Parker (instructed by Berwin Leighton Paisner) for Defendants 3 and 4Hearing Hearing dates: 12 th February 2016

APPROVED RULINGS

[1]In this regard between these parties, given that the issues have narrowed considerably, it seems to me that it would be helpful, if I were to go through this final amended draft proposal and I deal with the outstanding points, rather than delay and write a full-blown judgment..[2]The first point which is taken, in relation to the final draft proposal, put forward on behalf of Mr Jowell's clients, is relation to paragraph 1(a).It is said by Mr Hill that the beginning date of 1 July 2013, in relation to this particular search is insufficient and that it ought to go back to 2010, because he says that it is known that the social relationship, between Mr Doronin and Mr Eliasch existed before 2013. It is said on the other side by Mr Jowell that that is onerous, the period is too long and it would be disproportionate. He also points out that the 1 July 2013 was the date which was originally suggested on behalf of Mr Hill's clients.[3]It seems to me in this regard that given that the 1 July 2013 was the date which was originally in one of the questionnaires or correspondence between solicitors in this regard, and was put forward on behalf of Mr Hill’s client, that that is the right date to insert in 1(a).Furthermore, it seems to me that to go back a further two and a half years, is to increase the burden to an extent which I consider would be disproportionate.[4]Paragraph 1(c) relates to SMS/text messages, received on mobile telephones of Mr Doronin to or from Mr Eliasch for the period from 1 October 2014 until 14 August 2015. In that regard, Mr Hill asks why is it only texts between Mr Doronin and Mr Eliasch; there are many other protagonists in this matter; and furthermore, he wants the start date to be April if not January 2014. Mr Jowell in response says this was a concession in the first place, and furthermore, the key issue arises between the key protagonists Mr Doronin and Mr Eliasch, and that will do; and furthermore, that there is no reason which is given for why the search should go back before the 1 October 2014.[5]It seems to me that the central protagonists are Mr Doronin and Mr Eliasch, and that, therefore, the search in paragraph 1(c) should be restricted in relation to the texts passing to and from those parties. In relation to the April date, which Mr Hill suggested, it seems to me that that is not a great deal further back, and therefore I do not consider, that it would be disproportionate or onerous to add those few additional months to the period over which the search should take place; and it seems to me that it does cover a period of direct interest and direct relevance. The start date therefore, in my judgment, ought to be 1 April 2014.[6]I then come on to a paragraph 6. In relation to paragraph 6, it is said that both sets of search terms, but for the term "Aman", should be applied in relation to the new searches which are being proposed in relation to Mr Jolivet, Mr Checoury and Mr Cole. In this regard, I note that the original proposal was from PHRL, which was that the second set of key terms be applied to the further searches. It seems to me that is sufficient and appropriate.[7]I then come to paragraph 8, and I think that that is no longer in contention. It was said by Mr Hill that he was concerned that there should be some form of disclosure statement, and Mr Jowell says that there will be such a statement in the form at least of a witness statement. So I do not understand that to remain in issue between the parties.[8]In relation to the Russian documents, Mr Hill says that he has been given various confirmations outside court and that those ought to be distilled into a letter from Mr Jowell's solicitors. Mr Jowell on the other hand says that this issue was sprung on his clients at the last moment, in fact in oral submissions during these applications. He says that in those circumstances, it is up to PHRL's solicitors to write to his solicitors, and that they will reply. It seems to me that that is a perfectly sensible modus operandi to adopt, and I consider that that is the appropriate way of dealing with the Russian documents at this stage.[9]In relation to privilege and redaction, which in many ways are linked, it is still said by Mr Hill that no explanation has been given of the legitimate basis for sharing various documents. He nevertheless offered a solution to this difficult problem, and said that perhaps it could be dealt with, certainly at first, by way of correspondence. Of course I will come back to the issues which are outstanding in relation to Mr Brindle. But that is what he is saying in relation to Mr Jowell's clients.[10]Mr Jowell points out that the onus is not on his clients; he says that sharing documents subject to privilege in confidence is enough, and that is shown by the Gotha City case, and that it is for Mr Hill’s clients to show that there are purposes of fraud, and therefore to show a strong case, and they have not done so here. He says therefore that there is no reason, to go behind what has been said in the witness statements sworn by the relevant solicitors as to how they have gone about these matters.[11]It seems to me, in fact, that, despite the fact that there is a document referred to as number 210, which appears not to fall properly within the categories which have been said to have been applied, there is nothing else which suggests that it is appropriate to go behind the evidence of the solicitors in this case. In the circumstances, it seems to me that it is not appropriate that further steps should be taken by the solicitors on behalf of Mr Jowell's clients in that regard.

Ruling 2 by MRS JUSTICE ASPLIN

[1]There are two outstanding issues in relation to the application against Mr Brindle's clients, which relates to texts and social media. In that regard, Mr Brindle says no complaint was made until the skeleton was received last Friday, and that is much too late. He says therefore that the history is different, and one should not apply a "well everyone is doing it" test. In relation to deleted emails, he says that the issue was not raised until Mr Hill’s oral argument.[2]It seems to me that in relation to deleted emails, oral argument is much, much, much too late; and that, in any event, these items are perhaps covered in other categories, which are already the subject of disclosure. In relation to texts, I take the same view. No complaint was made until last Friday. Just because Mr Jowell's clients, as a result of numerous discussions and proper concessions, agreed to provide disclosure, does not mean that it necessarily applies to Mr Brindle.[3]I think that has dealt with what I call the "fifth application".[4]I have been able to give judgment in relation to 1st, 2nd and 3rd applications, which are the two security for costs applications and the application for further information. I have not had opportunity properly to deal with the other specific disclosure application, which I call the "fourth application". I am going to give judgment now in relation to the first three, but not the fourth. I will not be able to give you judgment in relation to that application until Wednesday morning.[5]Even if that means that people have to attend who are not here at present, I nevertheless think that it is important that that takes place as soon as possible. It is better that you make other arrangements that juniors attend if necessary. I appreciate that in the light of the imminent trial in this matter, it is particularly important that you have all decisions as soon as possible.

Ruling 3 by MRS JUSTICE ASPLIN

[1]The form of the order is not an unless order, but given the fact that the company is now in liquidation, I think it is reasonable that the period should be 21 days. Ruling 4 by MRS JUSTICE ASPLIN It seems to me that, quite clearly, the applicants have both been successful in these applications, and despite the fact that they have obtained security for much less than they sought, I think that that is probably in the nature of applications of this kind. No offers had been made by PHRL of any kind, and no negotiation had taken place.[2]I hear what Mr Hill says. He says it would not have been likely that they would have accepted as little as they have actually obtained by pursuing this case, but I do not see that there is anything which justifies a reduction in the costs in the way that Mr Hill suggests to 25 per cent of what is sought in order to match the kind of level of the security which has in fact been awarded.[3]This has been very hard-fought, and there have been numerous issues which have been taken, including of course the strong chances of success of various elements of the claim; and it seems to me that, in the usual way, costs should follow the event. Ruling 5 by MRS JUSTICE ASPLIN

Ruling 4 by MRS JUSTICE ASPLIN

[1]These were very hard fought and detailed applications. There were five applications before the court in all. I can see that it may well have been difficult to break down the costs in relation to each of the applications. However I am now considering the security for costs applications.[2]It also seems to me that it is appropriate when looking at the comparative costs to look at Mr Hill's costs both in relation to Mr Jowell's application and to Mr Brindle's application together. And if one does, one comes to a figure which is not dissimilar from that which is being sought by Mr Brindle.[3]Of course, there is another costs schedule, to which I will come, which is that of Mr Jowell's clients. He is seeking £33,720, which is less than that sought by Mr Brindle, and the combined cost of the two schedules which are put together on behalf of Mr Hill's clients.[4]I note that all of the schedules are based on fee earners who are charging hourly rates, which very much outstretch that which is considered to be "the norm", certainly in this division.[5]I also note that the brief fees for Mr Brindle and Mr Parker exceed, by some amount, that for Mr Hill and his junior. But it is not clear to me that Mr Hill’s fees have not been broken up between the two applications rather than one. It is true that Mr Brindle and his clients were only making one application, but nevertheless he has been present for the whole of the time.[6]In any event, looking at the costs in the round, it seems to me that for a single day over which both the applications for Mr Jowell's clients and Mr Brindle's clients were dealt with, the figure of £48,000 is not entirely unusual. But as I say, it is based on rates which are not considered to be acceptable in this division, and on that basis, I consider that there ought to be a reduction in the fees to be summarily assessed. I do so in the round, and I consider therefore that it would be appropriate that the costs in relation to Mr Brindle's clients be summarily assessed at £40,000.[7]It follows, therefore, that when I look at the schedule in relation to Mr Jowell's clients, and the total amounts to £33,720, that, overall, given that the applications covered, to a great extent, much the same ground, or were required to meet much the same opposition, it is logical, despite the rates which are charged, there should be only a very small reduction in that regard. I summarily assess those costs should at £30,000. Ruling 6 by MRS JUSTICE ASPLIN

Ruling 5 by MRS JUSTICE ASPLIN

[1]The third application is made by the Sherway defendants pursuant to CPR Rule 18.1. They seek further and better information from PHRL. CPR Rule 18.1 provides that:

Ruling 9 by MRS JUSTICE ASPLIN

"The court may, at any time, order a party to (a) clarify any matter which is in dispute in the proceedings, or (b) give additional information in relation to any such matter, whether or not the matter is contained or referred to in the Statement of Case."
[2]It is also clear from the Practice Direction to CPR Part 18 at paragraph 1.2, that a request for further information should be concise and strictly confined to those matters which are reasonable necessary and proportionate to enable the first party to prepare his own case, or to understand the case that he has to meet.[3]Of course, it is obviously also true that the overriding objective found in CPR Rule 1.1 applies in this regard.[4]The Sherway defendants served their original request for further information on 30 November 2015, and the Tarek defendants served their own request on the same date. PHRL provided its response to the Sherway defendants on 24 December 2015, which is cross-referred to its response to the Tarek defendants of the same date.[5]Mr Brindle on behalf of the Sherway defendants now seeks some further information under four main heads. The first is PHRL's efforts to secure a refinancing of the Pontwelly loan; the second general head is the questions which arise in relation to that refinancing; the third is the questions they say arise in relation to the potential for servicing the Pontwelly loan; and the fourth relates to Chapter 11 proceedings.[6]The first head, which is efforts to secure refinancing, arises from paragraph 67A(a)(ii) and (iii) of the Amended Defence to Counterclaims, which I will read. The Amended Defence to Counterclaims at paragraph 67A states:
"At paragraph 119K.17, Sherway/Mr Eliasch makes the allegation (which is not properly incorporated into its Counterclaim but which is dealt with here for the sake of completeness) that; ‘PHRL and Mr Amanat were determined, in any event, to prevent any realistic and reasonable commercial resolution of the problem. Their motive was to pressurise the other shareholders in the JVC into buying out PHRL at an inflated and unrealistic price, or to force Mr Doronin and Sherway to sell their shares at a heavily discounted rate.’ "
This paragraph, which appears to be a paraphrasing of its case on the alleged ‘Greenmail Strategy’, is wrong and is denied:" (a) "Paragraphs 174 to 190 and 190A to 190AG of PHRL's Amended Particulars of Claim are repeated. In short: (i) “PHRL has, at all material times, acted in good faith and in the interests of the JVC and/or ARGL.” (ii) “PHRL has made every effort to obtain a refinancing of the Pontwelly Loan, which is (and has at all material times been) capable of being refinanced by a third party lender. The only material impediment to this happening has been the wrongful actions of the Defendants as pleaded in the Amended Particulars of Claim.” (iii) "ARGL could have serviced, and could in future service, interest payments due under the Pontwelly Loan (including such interest payments following any entry by ARGL into Chapter 11 proceedings under the United States Bankruptcy Code and the amendment by the New York court of the rate and timing of the payment of interest.)” (iv) "PHRL's case is that the value of the Silverlink Shares was greater (and PHRL say substantially greater) than the outstanding balance of the Pontwelly Loan." It is not necessary for me to also go on to read sub-paragraph (v).[7]Mr Brindle's request has a number of heads. First, he says, in general terms: what effort was made to refinance the loan? And then secondly: what refinancing and by whom and on what terms? Thirdly, in relation to the servicing of the Pontwelly loan, he asks: how was it to be serviced? He says that he needs the information properly to prepare the case on behalf of the Sherway defendants and to instruct experts. In relation to the fourth head, the Chapter 11 head, he asks what is the jurisdiction of the New York court, how could the New York court, and how would it have varied the rate or the timing of interest payments, and what terms would it have imposed? He accepts that there has been a partial answer in this regard in a witness statement, but says that it is not sufficient.[8]Mr Hill says that the responses have already been given and that they are sufficient, and that this application should never have been made.[9]The response, in fact, is dated 30 November 2015, and basically it says that the applicants are not entitled to the further information, but that Aman Resorts was a very valuable company and asset, and goes on to say that any number of third-party lenders, including, for example, a lender in the banking, real estate or private equity sectors, or indeed by any high net worth individual could have refinanced the loan. It goes on to say:
"This would include those lenders with whom PHRL was in correspondence, but that the list of lenders was not so limited."
[10]As to Chapter 11, the response states that the further information will be contained in disclosure given by the HSF defendants, that is a reference to Tarek defendants, which PHRL was in the process of reviewing, and that the Sherway defendants should see the responses given to the HSF defendants. In those further responses it was said that the HSF defendants did not need the information sought, but that, in any event, much of what was sought, was at paragraphs 174 to 190 of PHRL's pleading.[11]Mr Hill also referred me to Lexi Holdings (in administration) v Pannone and Partners [2010] EWHC 1416 (Ch), in which Briggs J, as he then was, addressed the approach to be adopted in relation to CPR Rule 18 at paragraph 9 of his judgment in the following way:
"The regime for further information introduced by Part 18 is based upon the test of necessity and proportionality. Paragraph 1.2 of the Practice Direction to Part 18 provides that: 'a Request should be concise and strictly confined to matters which are reasonably necessary and proportionate, to enable the first party to prepare his own case or to understand the case he has to meet'. The CPR thus takes a more restrictive approach to what used to be regarded as an entitlement to particulars under the RSC, for reasons explained by Lord Woolf, M.R. in McPhilemy v Times Newspapers Ltd [1999] 3 All ER 775 at 793, 792 to 3, as follows: "
The need for extensive pleadings including particulars should be reduced by the requirement that witness statements are now exchanged. In the majority of proceedings identification of the documents upon which a party relies, together with copies of that party's witness statements, will make the detail of the nature of the case the other side has to meet obvious. This reduces the need for particulars in order to avoid being taken by surprise. This does not mean that pleadings are now superfluous. Pleadings are still required to mark out the parameters of the case that is being advanced by each party. In particular, they are still critical to identify the issues and the extent of the dispute between the parties. What is important is that the pleadings should make clear the general nature of the case of the pleader. This is true both under the old rules and the new rules."[12]Mr Hill says, therefore, that this is neither necessary nor proportionate, and that the response has already been given. He says that the request at (1) increases the burden by reference to “steps”, a term which is not in the pleading. As to (2), he says that the loan was not refinanced and that it is more than enough information that has been given already and that the requests are counter-factual and absurd. In relation to (3) he says that they have already been answered. He says that: the “Lexi test” has been met; these requests pre-empt the experts and work on disclosure received before Christmas; and that in effect what the applicant is trying to do is put pressure on PHRL to provide an analysis at an earlier stage. He says that the requests expand on the pleadings and are very detailed. As to (4), which relates to the Chapter 11 issues, Mr Hill says that (a) has already been answered, and that (b) and (c) are not necessary. I will come back to the precise requests that are made.[13]In response Mr Brindle says that the request at (1), merely requires PHRL to confirm whether it has taken steps other than those set out in the Particulars of Claim and if so what they are. He says the information is necessary to determine what witness evidence the Sherway defendants might wish to produce and to enable them properly to prepare for trial. In relation to the potential to refinance the Pontwelly loan, Mr Brindle says that the answer given at present is much too wide and general. In relation to servicing the Pontwelly loan, he says that the answer given so far was that it turned on an analysis of disclosure which had not yet taken place. Mr Brindle says that it must by now have taken place and yet no answer has been forthcoming. He also points to the general nature of the response to the Tarek defendants' request which lists possible savings which the Aman Group could have made, rather than stating how the loan could have been serviced. He also says that the answers in relation to Chapter 11 are inadequate, and that there is nothing, contrary to the “Lexi principle”, in what is being sought.[14]I come to this matter bearing in mind the wording of CPR 18 and the Practice Direction and the dicta in the Lexi Holdings case. Keeping those principles firmly in mind, it seems to me that it is reasonable, necessary and proportionate that PHRL should clarify its pleading that it made every effort to obtain a refinancing of the Pontwelly loan. Although the reference in the draft order is to "steps", it seems to me that PHRL can legitimately be required to clarify whether it has made any efforts, other than those set out in the Particulars of Claim, and if so what those efforts are. This is slightly different from paragraph 1(1) of the draft order. In my judgment, such clarification is necessary to enable Mr Brindle's clients to prepare their case and understand the case against them, and it is a straightforward exercise which is not in itself disproportionate.[15]In relation to the request made as to the refinancing of Pontwelly loan, it seems to me that, given the response which has already been provided which was dated 30 November 2015, the requests are not proportionate or necessary in order to understand the case against Mr Brindle's clients or for them to formulate their own case. Although the response already given refers to lenders in particular sectors, it also makes reference to those with whom the company was in correspondence. In the circumstances, it seems to me that further particulars are not reasonably necessary therefore, and as Mr Hill puts it, they are counter-intuitive. The issue will be a matter for expert evidence.[16]Thirdly, as to servicing of the Pontwelly loan, which PHRL pleads could have been serviced and is dealt with in the Defence to Counterclaim at paragraph 68A(a)(iii) and (iv), it seems to me that it is necessary and proportionate that further information should be provided. In its response to the request for further information from the Tarek defendants, it is stated that it is not possible to give an exhaustive list of examples pending disclosure. This is a reference to a list of expenditure which could have been avoided within the Aman Resort Group and moneys which it is said could have been, it is said, redirected to servicing the Pontwelly loan. Now that disclosure in this regard has taken place, it seems to me that a better list of examples ought to be provided, and that in each case the sum which it is alleged could have been saved and redirected to servicing the Pontwelly loan should be specified. Such a list is necessary, it seems to me, for the Sherway defendants fully to understand the case and to prepare them for trial. However, it seems to me that the information requested in the draft order is in some respects excessive.[17]The fourth heading is the Chapter 11 proceedings. In this regard I agree with Mr Hill that sufficient information is contained in the response to the Tarek defendants in relation to the basis upon which the New York court would have accepted jurisdiction. That is a request in (a). As to (b), the basis on which the New York court would have varied the rate and/or timing of interest payments under the Pontwelly loan, it also seems to me that the answer given to the Tarek defendants is sufficient. It refers to the United States Bankruptcy Code. I also agree that the answer given to the Tarek defendants in relation to the rate and timing of the interest payments, which the New York court would have imposed, is sufficient for the Sherway defendants to understand the claim and prepare for trial. In summary, the response is that fair market terms would have been imposed. It seems to me that that is sufficient for the expert evidence to be prepared.[18]I therefore grant the relief to the Sherway defendants but only in part, and it will be necessary to look back together at the terms of the draft order. Ruling 7 by MRS JUSTICE ASPLIN

Ruling 6 by MRS JUSTICE ASPLIN

[1]I have been made aware, perhaps only partially, of the murky waters in relation to dates and exchange of various things, including experts' reports. I am hugely aware of the fact that this trial begins on 5 April and will begin on 5 April, all things being equal. And on that basis the further information and the purpose of the further information is to enable people to prepare their cases properly and to instruct their experts. Therefore I am concerned that there should not be a lengthy period for this information to be provided, but on the other hand that it should not be a period which is either oppressive or unrealistic in relation to the claimant.[2]It seems to me, therefore, that despite the fact that that may have some effect on the arguments in relation to the experts' reports themselves, that two weeks is the answer, and the further information must be provided, therefore, by Friday, 26 February. Ruling 8 by MRS JUSTICE ASPLIN

Ruling 7 by MRS JUSTICE ASPLIN

[1]It is true that Mr Brindle succeeded in two heads of his request for further information and failed in two others. It seems to me that that does not give rise to a situation in which it would be just to make no order as to costs. But I am willing to make an order in favour of his clients. First of all, I take into account that the schedule is for a sum of £18,476 based on hourly rates which are far above those which are considered acceptable. Mr Brindle only asked for half of those costs because he has been successful only in part.[2]It seems to me given that, and given the hourly rates, I am willing to assess his costs in relation to his application at £7,500. Ruling 9 by MRS JUSTICE ASPLIN

Ruling 8 by MRS JUSTICE ASPLIN

[1]I have to say I find these orders for costs quite difficult because of the varying nature of these applications and the way in which they have been dealt with. It seems that there was a movement between the application, the skeleton, and the way they were presented, both against Mr Jowell's clients and Mr Brindle's clients; and that causes me some difficulty in relation to how to deal with the costs.[2]Also, the numerous issues unfolded as the applications, which were lengthy and detailed, went along. To some extent, and in part, as a result of comments that I made, concessions were made in relation to many matters which, for example Mr Jowell says, if they had been raised before may well have been dealt with in correspondence and would not have required a lengthy and detailed application of this kind to have been made. I have to say in some respects, at least, I agree. In relation to Mr Brindle's clients, also there was an unfolding of events.[3]However, the central planks against Mr Brindle, and Mr Jowell's clients, namely whether the individuals had been involved with the disclosure process, meaning the clients themselves, and whether that was appropriate.[4]Mr Hill’s clients were not successful in general in relation to the privilege and redaction issue. Although, as a matter of concession, certain documents, being the placeholders and the documents which were already in the public domain, have been agreed to be provided, the main issue in relation to privilege and redaction remains at present as it was.[5]It seems to me that those are central planks, despite the fact that the order in relation to Mr Jowell's clients will contain the many concessions which have been made. But I take Mr Jowell’s point that if those had been raised much earlier and not in the skeleton and then by Mr Hill on his feet, they may well have been dealt with in a different way. It was a shame that they took up so much time before the court.[6]Bearing in mind all of those matters, it seems to me that the measure of success which the claimant, PHRL, has had, is limited, and to the extent that it has been successful, those matters probably could have been dealt with earlier by correspondence.[7]Therefore, it seems to me overall that, given the balance between those matters on which there has been success and on those which are important on which there has been no success, it would be appropriate, overall, that there be no order for costs, both as to the application in relation to Mr Brindle's clients and Mr Jowell's clients.