Energy Venture Partners Ltd v Malabu Oil & Gas Ltd [2014] EWHC 663 (Comm)

Case No 2011 Folio 792[2014] EWHC 663 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Venue Royal Courts of Justice, Rolls Building, Fetter Lane, London, EC4A 1NLDate 14 March 2014
Before
MR JUSTICE EDER
Between
ENERGY VENTURE PARTNERS LTDClaimantMALABU OIL AND GAS LTDDefendant
MR MARK HOWARD QC & MR FIONN PILBROW (instructed by McGuireWoods London LLP) for ClaimantMR CHARLES GRAHAM QC & MR ANDREW LODDER (instructed by Edwards Wildman Palmer UK LLP) for DefendantHearing Hearing dates: 7 March 2014
Judgment

Introduction

[1]On 7 March 2014, I heard three separate applications to vary a previous Order of Gloster LJ dated 18 July 2013 (the “Order”) which she made in these proceedings following a trial in the Commercial Court between the Claimant, Energy Venture Partners Ltd (“EVP”), and the Defendant, Malabu Oil and Gas Ltd (“Malabu”). At the end of that hearing, I informed the parties of my decisions with regard to each of those applications. This Judgment sets out briefly the reasons for such decisions.[2]For present purposes, the details of the original claim and Judgment of Gloster LJ are not directly material. It is sufficient to note that Malabu was the owner of a 100% interest in an oil prospecting licence for Block 245, an oil field located in the Eastern Niger Delta in the offshore territorial waters of Nigeria until April 2011 when it sold its interest for US$ 1.3bn; that EVP advanced a claim for commission against Malabu for services provided in connection with the sale on a number of different bases; and that at an early stage of the proceedings, EVP had obtained a freezing order in support of its claim which resulted in Malabu paying US$ 215m into Court in August 2011 by way of security.[3]The trial before Gloster J (as she then was) commenced on 27 November 2012 and concluded on 20 December 2012. Judgment was handed down on 17 July 2013 (the “Judgment”). In essence, Gloster LJ (as she had become by that date) concluded that EVP’s primary claim for an orally-agreed sum of US$ 200m failed but that EVP’s first alternative claim succeeded, with the result that EVP was entitled, on the basis of an implied contract, alternatively implied term, to a reasonable fee for the services performed by it in the sum of US$ 110.5m plus interest (the “Composite Judgment Sum”).[4]There then followed a consequentials hearing on 17 and 18 July 2013 addressing various matters includingMalabu’s application for permission to appeal all of which were dealt with by Gloster LJ, in part in a further extempore Judgment (the “Consequentials Judgment”) and in part in a further written Judgment handed down on 9 August 2013, and subsequently incorporated in the Order.

The Order dated 18 July 2013

[5]The Order provided in material part as follows:
“1. Judgment is hereby entered in favour of the Claimant against the Defendant in the sum of US$110,500,000, and pre-judgment interest in the sum of US$11,034,863.01 (being simple interest at a rate of 4.5% from 29 April 2011 to 17 July 2013). As from 17 July 2013 (being the date of this Judgment Order), interest on this composite sum, being US$121,534,863.01, shall run at the rate of 8% per annum (pursuant to section 17 of the Judgments Act 1838) until the date of payment. 2. The Defendant shall pay 90% of the Claimant’s costs of the action on the indemnity basis, save for the costs already provided for in paragraph 9 of the Order of David Steel J dated 29 July 2011, which the Defendant shall pay on the standard basis, all of such costs to be the subject of detailed assessment if not agreed. For the avoidance of doubt, this paragraph does not apply to any costs already provided for by costs orders made during the course of the proceedings. 3. The Defendant shall pay to the Claimant interest on the Claimant’s recoverable costs at the rate of 2.50% per annum (being 2% over the base rate of the Bank of England) from the date the Claimant paid each invoice to 17th July 2013 (being the date of this Judgment Order). As from 17th July 2013 (being the date of this Judgment Order), interest on these sums shall run at the rate of 8% per annum (pursuant to section 17 of the Judgments Act 1838) until the date of payment. 4. The Defendant shall make a payment on account of costs (and interest on costs) in the amount of £2,500,000.00. 5. As to the sum of $215 million paid into Court on 4 August 2011 pursuant to the Order of Griffith Williams J dated 3 July 2011 (as amended on 5 July 2011, 13 July 2011 and 18 & 19 July 2011) (“the July 2011 Order”): 5.1. The sums payable to the Claimant under paragraphs 1 and 4 of this Judgment Order shall forthwith be paid to the Claimant out of the sum of $215 million paid into Court; 5.2. The sum of US$6,712,121.21 shall remain in Court pending the completion of the detailed assessment provided for in paragraph 2 of this Judgment Order, and the final quantification of the sum payable by the Defendant to the Claimant by way of costs pursuant to paragraphs 2 and 3 above, alternatively the conclusion of an agreement between the parties finally resolving all issues of costs between the parties; 5.3. The residue of the sum of $215 million paid into Court on 4 August 2011 pursuant to the July 2011 Order following the application of paragraphs 5.1 and 5.2 of this Judgment Order, along with accrued interest on such sum of $215 million, shall be paid out of Court to the Defendant; and 5.4. To the extent that the freezing injunction in the July 2011 Order was not already discharged by the payment into Court on 4 August 2011, it is hereby discharged. For the avoidance of doubt, the Claimant’s cross-undertaking in damages pursuant to the July 2011 Order is not discharged. 6. The Defendant’s application for permission to appeal is refused. 7. For the purposes of CPR r. 52.4(2)(a), the Defendant must file any Appellant’s Notice (including any application for any further or continued stay of execution) in this case at the Court of Appeal by no later than 4.30 pm on Friday, 13th September 2013. 8. The following stays of execution are ordered on the following terms: 8.1. The obligations on the part of the Defendant to make payments to the Claimant pursuant to paragraphs 1 – 4 of this Judgment Order, and the order requiring payment out of Court to the Claimant in paragraph 5.1 of this Judgment Order, shall be stayed. This stay (“the EVP Stay”) shall remain in place until (a) 13th September 2013, in the event that the Defendant fails to file an Appellant’s Notice at the Court of Appeal by 4.30 pm on that date or (b) in the event that the Defendant does file an Appellant’s Notice at the Court of Appeal by 4.30 pm on 13th September 2013, the final resolution by the Court of Appeal of the Defendant’s application for permission to appeal and the determination of the Court of Appeal as to whether to impose any further or continued stay of execution of paragraph 5.1 above (and if so on what terms). 8.2. During the currency of the EVP Stay (and any further or continued stay of paragraph 5.1 above granted by the Court of Appeal): 8.2.1. the sum of US$125,322,741.80 (being US$121,534,863.01 plus £2,500,000 converted to US dollars) shall be paid out of Court to McGuireWoods London LLP, solicitors to the Claimant, to be held by them until further order on the terms of the McGuireWoods Undertaking … 8.3. The order requiring payment out of Court to the Defendant in paragraph 5.3 of this Judgment Order shall be stayed. The terms of this stay (“the Malabu Stay”) are as follows: 8.3.1. The Malabu Stay shall stay in place until: (a) 13th September 2013, in the event that the Defendant fails to file an Appellant’s Notice at the Court of Appeal by 4.30 pm on that date; or, (b) In the event that the Defendant does file an Appellant’s Notice at the Court of Appeal by 4.30 pm on 13th September 2013 and in the event that the Court of Appeal refuses the Defendant permission to appeal, that final refusal of permission to appeal; or, (c) In the event that the Defendant does file an Appellant’s Notice at the Court of Appeal by 4.30 pm on 13th September 2013 and in the event that the Court of Appeal grants the Defendant permission to appeal: (i) The final determination by the Court of Appeal of any application by the Claimant for permission to cross-appeal and the determination of the Court of Appeal as to whether to impose any further stay of execution (and if so on what terms); or, (ii) The failure by the Claimant to make an application for permission to cross-appeal in its Respondent’s Notice, in accordance with the provisions of CPR r. 52.5. 8.3.2. During the currency of the Malabu Stay (and any further or continued stay of paragraph 5.3 granted by the Court of Appeal): (a) the sum of US$82,965,136.99, being that part of the sum of $215 million paid into Court on 4 August 2011 pursuant to the July 2011 Order not referred to in paragraph 8.2.1, along with accrued interest on such sum of $215 million, shall remain in Court unless it is paid out in accordance with sub-paragraph (b) immediately below; (b) upon the Defendant’s solicitors, Edwards Wildman Palmer UK LLP, (i) giving at least seven days’ notice to the Claimant’s solicitors, McGuireWoods London LLP, containing the equivalent account details to those set out in paragraph 8.2.1 above and (ii), giving an undertaking to the Court that is equivalent in terms to the McGuireWoods Undertaking and which is recorded in a further order of the Court (“the Edwards Wildman Palmer Undertaking”), then upon the making of that further order the monies referred to in sub-paragraph (a) immediately above may be paid out of Court to Edwards Wildman Palmer UK LLP, solicitors to the Defendant, to be held by them until further order on the terms of the Edwards Wildman Palmer Undertaking, such payment being made to the Edwards Wildman Palmer UK LLP client account identified in the notice; (c) If monies have been paid out of Court to Edwards Wildman Palmer UK LLP pursuant to sub-paragraph (b) immediately above, then, upon giving at least 7 days’ notice to McGuireWoods London LLP containing the equivalent account details to those set out at paragraph 8.2.1, those monies may be transferred to another Edwards Wildman Palmer US dollar client account to be held subject to the Edwards Wildman Palmer Undertaking. 8.3.3. Upon the Malabu Stay (or any further or continued stay of paragraph 5.3 granted by the Court of Appeal) ceasing to have effect, such monies as the Court shall by further order direct shall be paid out to the Defendant, and in this regard it is recorded (for the avoidance of doubt) that the sum of US$6,712,121.21 shall remain in Court, even after the EVP Stay or any further or continued stay ordered by the Court of Appeal ceases to have effect, pending final completion of the detailed assessment provided for in paragraph 2 above or the conclusion of an agreement between the parties finally resolving all issues of costs between the parties. 8.4. There be liberty to apply …” 5.1. The sums payable to the Claimant under paragraphs 1 and 4 of this Judgment Order shall forthwith be paid to the Claimant out of the sum of $215 million paid into Court; 5.2. The sum of US$6,712,121.21 shall remain in Court pending the completion of the detailed assessment provided for in paragraph 2 of this Judgment Order, and the final quantification of the sum payable by the Defendant to the Claimant by way of costs pursuant to paragraphs 2 and 3 above, alternatively the conclusion of an agreement between the parties finally resolving all issues of costs between the parties; 5.3. The residue of the sum of $215 million paid into Court on 4 August 2011 pursuant to the July 2011 Order following the application of paragraphs 5.1 and 5.2 of this Judgment Order, along with accrued interest on such sum of $215 million, shall be paid out of Court to the Defendant; and 5.4. To the extent that the freezing injunction in the July 2011 Order was not already discharged by the payment into Court on 4 August 2011, it is hereby discharged. For the avoidance of doubt, the Claimant’s cross-undertaking in damages pursuant to the July 2011 Order is not discharged. 8.1. The obligations on the part of the Defendant to make payments to the Claimant pursuant to paragraphs 1 – 4 of this Judgment Order, and the order requiring payment out of Court to the Claimant in paragraph 5.1 of this Judgment Order, shall be stayed. This stay (“the EVP Stay”) shall remain in place until (a) 13th September 2013, in the event that the Defendant fails to file an Appellant’s Notice at the Court of Appeal by 4.30 pm on that date or (b) in the event that the Defendant does file an Appellant’s Notice at the Court of Appeal by 4.30 pm on 13th September 2013, the final resolution by the Court of Appeal of the Defendant’s application for permission to appeal and the determination of the Court of Appeal as to whether to impose any further or continued stay of execution of paragraph 5.1 above (and if so on what terms). 8.2. During the currency of the EVP Stay (and any further or continued stay of paragraph 5.1 above granted by the Court of Appeal): 8.2.1. the sum of US$125,322,741.80 (being US$121,534,863.01 plus £2,500,000 converted to US dollars) shall be paid out of Court to McGuireWoods London LLP, solicitors to the Claimant, to be held by them until further order on the terms of the McGuireWoods Undertaking … 8.3. The order requiring payment out of Court to the Defendant in paragraph 5.3 of this Judgment Order shall be stayed. The terms of this stay (“the Malabu Stay”) are as follows: 8.3.1. The Malabu Stay shall stay in place until: (a) 13th September 2013, in the event that the Defendant fails to file an Appellant’s Notice at the Court of Appeal by 4.30 pm on that date; or, (b) In the event that the Defendant does file an Appellant’s Notice at the Court of Appeal by 4.30 pm on 13th September 2013 and in the event that the Court of Appeal refuses the Defendant permission to appeal, that final refusal of permission to appeal; or, (c) In the event that the Defendant does file an Appellant’s Notice at the Court of Appeal by 4.30 pm on 13th September 2013 and in the event that the Court of Appeal grants the Defendant permission to appeal: (i) The final determination by the Court of Appeal of any application by the Claimant for permission to cross-appeal and the determination of the Court of Appeal as to whether to impose any further stay of execution (and if so on what terms); or, (ii) The failure by the Claimant to make an application for permission to cross-appeal in its Respondent’s Notice, in accordance with the provisions of CPR r. 52.5. 8.3.2. During the currency of the Malabu Stay (and any further or continued stay of paragraph 5.3 granted by the Court of Appeal): (a) the sum of US$82,965,136.99, being that part of the sum of $215 million paid into Court on 4 August 2011 pursuant to the July 2011 Order not referred to in paragraph 8.2.1, along with accrued interest on such sum of $215 million, shall remain in Court unless it is paid out in accordance with sub-paragraph (b) immediately below; (b) upon the Defendant’s solicitors, Edwards Wildman Palmer UK LLP, (i) giving at least seven days’ notice to the Claimant’s solicitors, McGuireWoods London LLP, containing the equivalent account details to those set out in paragraph 8.2.1 above and (ii), giving an undertaking to the Court that is equivalent in terms to the McGuireWoods Undertaking and which is recorded in a further order of the Court (“the Edwards Wildman Palmer Undertaking”), then upon the making of that further order the monies referred to in sub-paragraph (a) immediately above may be paid out of Court to Edwards Wildman Palmer UK LLP, solicitors to the Defendant, to be held by them until further order on the terms of the Edwards Wildman Palmer Undertaking, such payment being made to the Edwards Wildman Palmer UK LLP client account identified in the notice; (c) If monies have been paid out of Court to Edwards Wildman Palmer UK LLP pursuant to sub-paragraph (b) immediately above, then, upon giving at least 7 days’ notice to McGuireWoods London LLP containing the equivalent account details to those set out at paragraph 8.2.1, those monies may be transferred to another Edwards Wildman Palmer US dollar client account to be held subject to the Edwards Wildman Palmer Undertaking. 8.3.3. Upon the Malabu Stay (or any further or continued stay of paragraph 5.3 granted by the Court of Appeal) ceasing to have effect, such monies as the Court shall by further order direct shall be paid out to the Defendant, and in this regard it is recorded (for the avoidance of doubt) that the sum of US$6,712,121.21 shall remain in Court, even after the EVP Stay or any further or continued stay ordered by the Court of Appeal ceases to have effect, pending final completion of the detailed assessment provided for in paragraph 2 above or the conclusion of an agreement between the parties finally resolving all issues of costs between the parties. (i) The final determination by the Court of Appeal of any application by the Claimant for permission to cross-appeal and the determination of the Court of Appeal as to whether to impose any further stay of execution (and if so on what terms); or, (ii) The failure by the Claimant to make an application for permission to cross-appeal in its Respondent’s Notice, in accordance with the provisions of CPR r. 52.5. 8.4. There be liberty to apply …”
[6]As to the terms of this Order, the following points are of importance in the context of the present applications:(i) It is common ground that under paragraph 1, Malabu was and remains under a continuing obligation to pay interest on the Composite Judgment Sum at the rate of 8% until payment equivalent to a daily rate of US$ 26,637.79. Accrued interest to date amounts to approximately US$ 6.18m.(ii) An important feature of the Order is the two stays i.e. the EVP Stay and the Malabu Stay. The background to these stays is that Malabu sought permission to appeal against the Judgment on various grounds. It also sought a stay of execution so as to preserve the position pending the resolution of its application for permission to appeal. It was EVP’s position that permission to appeal should be refused and that no stay of execution should be granted. However, in the event that the Court was minded to grant a stay, EVP contended that (a) such stay should remain in place only so long as EVP did not provide adequate security for the repayment of the sums in question; and (b) that the stay should be on terms that the sums payable to EVP under the Order should be paid out of Court to EVP’s solicitors, McGuireWoods, to be held by McGuireWoods subject to the terms of an appropriate undertaking. Before me, Mr Howard QC submitted on behalf of EVP that the purpose of this latter request was two-fold: (a) to increase the rate of interest earned on the money (to the benefit of Malabu, it being recognised on EVP’s part that it was entitled only to Judgment Act interest, not Judgment Act interest plus the interest in fact accruing); and (b) to ensure that, as and when the stay was lifted, the sums were more readily available to EVP (given the time-consuming process of arranging the transfer of a substantial sum of money out of the Court Funds Office would already have been accomplished). In addition, EVP also submitted that if the Court were minded to grant a stay, then it should also stay that part of the Order requiring the residue monies to be paid out of Court to Malabu. According to Mr Howard, the reason for this was that, in the event that Malabu obtained permission to appeal in relation to the quantum of the reasonable fee (on the basis that it was too high), EVP would want to seek permission, in its Respondent’s Notice, to cross-appeal on quantum (to contend that the Judge had erred and the figure she had set was too low); and accordingly, it was submitted, the position should be preserved so as to protect that possibility. The Judge dealt with this in paragraphs 4-10 of her Consequentials Judgment. The Order reflects what she ordered.(iii) Accordingly, paragraphs 1-4 and paragraph 5.1 of the Order (which ordered the payment out to EVP from the US$ 215m in Court) were stayed – see paragraph 8.1 of the Order. This stay was called the “EVP Stay”. This stay was to remain in place until, in essence, the determination of Malabu’s application for permission to appeal. During the currency of this stay, the sums payable to EVP were to be paid out of Court to McGuireWoods, to be held by McGuireWoods on the terms of the “McGuireWoods Undertaking” – see paragraph 8.1 and the fourth recital to the Order.(iv) In addition, the order requiring payment out of Court of the residue sums was also stayed – see paragraph 8.3 of the Order. This stay was called “the Malabu Stay”. This stay was to remain in place until, in essence, the determination of Malabu’s application for permission to appeal or, in the event that Malabu obtained permission to appeal, the determination of any application for permission to cross-appeal made by EVP. That money was to remain in Court during the currency of the stay, though provision was made for Malabu to seek, on notice to EVP, to have the money paid out to Malabu’s solicitors, Edwards Wildman Palmer UK LLP (“Edwards Wildman”), on the terms of an equivalent undertaking. Malabu has never in fact sought to have the money paid out to Edwards Wildman.(v) Finally, paragraph 8.4 of the Order provided a “liberty to apply”. An important dispute on these present applications before me concerned the scope and effect of this liberty to apply. In particular, Mr Howard submitted on behalf of EVP that the liberty to apply applied only to the “following stays of execution ... ordered on the following terms” provided for by paragraph 8 of the Order. However, Mr Graham QC submitted on behalf of Malabu that it was of wider scope.

Subsequent Events

[7]As to subsequent events, it was Mr Graham’s submission that there was what he described as a “material change in circumstances”a few weeks later i.e. in August 2013. In particular, Mr Graham relied on the following:(i) On 16 August 2013, Malabu’s solicitors sent a letter to EVP’s solicitors with a draft consent order to the effect that “subject to agreeing a suitable consent order”, Malabu offered not to pursue its application for permission to appeal, to agree to a lifting of the stays and to the implementation of the Order.(ii) On the same day i.e. 16 August 2013, EVP’s solicitors responded by email making certain suggested amendments to the draft consent order, expressly subject to obtaining EVP’s instructions.(iii) On 19 August 2013, Malabu’s solicitors sent an email to EVP’s solicitors agreeing the various amendments which they had proposed and enclosing a further draft consent order which accepted those amendments and added Malabu’s solicitors’ client account details under and for the purposes of para 3.4 of that draft consent order.(iv) On 22 August 2013, EVP’s solicitors, having obtained instructions from EVP, wrote a letter to Malabu’s solicitors. In particular, EVP’s solicitors proposed agreement on the quantum of EVP’s costs in the sum of £8,901,159.08; and indicated that if this was not agreed then EVP would wish to be heard on Malabu’s application to implement the Order and would consider “all of its options including whether to seek permission to appeal out of time to increase the amount of the award”. Before me, Mr Graham submitted that this new demand by EVP was unreasonable in particular because (i) the stated figure was not only more than four times Malabu’s own costs but substantially (i.e. 44%) higher than EVP’s original stated grand total (i.e. £6,180,571.90); and (ii) agreement would necessarily preclude Malabu from having that increased figure made the subject of a detailed assessment as provided for by paragraph 2 of the Order. In the event, Malabu was not prepared to agree to EVP’s new demand.(v) On 28 August 2013, Malabu issued an application seeking an order, in the terms of its original draft consent order dated 16 August 2013 implementing the Order.(vi) On the next day, i.e. 29 August 2013, EVP issued its own application for permission to appeal seeking US$ 200m by way of quantum meruit (plus interest) in substitution for the US$ 110.5m (plus interest) ordered by Gloster LJ. In its Appellant’s Notice, EVP sought an extension of time for the filing of its Appellant’s Notice. It explained why it was doing so as follows (in Section 10 of that Notice): “The Claimant did not seek permission to appeal from Lady Justice Gloster. It was initially content to await the outcome of the Defendant’s application for permission to appeal and then to decide what cross-appeal(s) (if any) to bring in light of the scope of any permission to appeal granted to the Defendant. The Claimant has now learned that the Defendant has decided not to pursue an appeal against the Judgment of Lady Justice Gloster. In the circumstances the Claimant wishes to pursue its own free standing appeal in respect of the quantification of the reasonable fee to which the Learned Judge ruled it was entitled. Given that the Defendant was granted until 13 September 2013 to apply for permission to appeal, it is just and reasonable that the Claimant should also have until 13 September 2013 to file its Appellant’s Notice (which it has in fact done two weeks in advance of that date).”(vii) Thereafter, Malabu withdrew its application to implement the Order (because, as submitted by Mr Graham, there was no prospect of either the EVP Stay or the Malabu Stay being lifted now that EVP had issued its free standing application for permission to appeal); and on 13 September 2013, filed its own Appellant’s Notice. According to Mr Graham, the latter course was taken because Malabu had “… no option but to resurrect its application for permission to appeal in the circumstances, in particular in the light of the contents of the 22 August Letter and EVP’s Appellant’s Notice dated 29 August 2013 …”.(viii) Thereafter, both applications for permission to appeal were refused on paper by Aikens LJ. Both parties have since sought to renew their permission applications orally. The hearing of those oral permission applications is listed for 26 March 2014. Meanwhile, both the EVP Stay and the Malabu Stay remain in place.

The applications

[8]The three applications are as follows.[9]First, there is an application by Malabu to vary paragraph 1 of the Order so that it reads as follows:
“Judgment is hereby entered in favour of the Claimant against the Defendant in the sum of US$110,500,000, and pre-judgment interest in the sum of US$11,034,863.01 (being simple interest at a rate of 4.5% from 29 April 2011 to 17 July 2013). As from 17 July 2013 (being the date of his Judgment Order), interest on this composite sum, being US$121,534,863.01, shall run at the rate of 8% per annum (pursuant to section 17 of the Judgments Act 1838) up to and including the 22 August 2013. Interest shall not run on the composite sum from the 23 August 2013).”
[10]Second, there is a further application by Malabu for(i) a declaration that the Order does not stay the assessment of costs by EVP and(ii) an order that “costs proceedings should be commenced by [EVP] within 14 days of this order in accordance with CPR 47.8”.[11]Third, there is an application by EVP for the following orders:
“(1) The sum of US$6,400,043.58, being post-judgment interest due for the period 17 July 2013 to 7 March 2014 on the sum of US$125,322,741.80, shall be paid out of Court to the following client account of the Claimant’s solicitors, McGuireWoods London LLP, to be held by them on the terms of the McGuireWoods Undertaking (as given in the Judgment Order): ... (2) Each month hereafter until the EVP Stay is lifted and commencing on 7 April 2014, such sum as is agreed between the parties (or, in default of agreement, as the Court shall further direct) as being the additional amount of post-judgment interest due to the Claimant pursuant the Judgment, once credit is given for that interest which has accrued on the sums held in the McGuireWoods Client Account, shall be paid to a client account of the Claimant’s solicitors on the same terms as the payment provided for by paragraph 1 of this order.”
A. Malabu’s application to vary paragraph 1 of the Order[12]As to this application, there was an important threshold issue with regard to the Court’s jurisdiction to vary paragraph 1 of the Order. Mr Graham submitted that such jurisdiction existed by virtue of the express “liberty to apply” in paragraph 8.4 of the Order on the basis that such liberty covers Malabu’s application to vary the interest consequences of the stay in paragraph 8 of the Order; alternatively by virtue of CPR 3.1(7) which provides:
“A power of the court under these Rules to make an order includes a power to vary or revoke the order”
. As to the latter, Mr Graham submitted that this gave the Court a jurisdiction to vary an order (including even a “final order” which had continuing consequences) at least where there has been a “material change of circumstances” which, as Mr Graham submitted, occurred in this case when Malabu withdrew (or at least gave notice of intention to withdraw) its application for permission to appeal and EVP subsequently sought permission to appeal for the first time. In that context, he relied on a number of authorities including (in chronological order) Powell v Herefordshire Health Authority [2002] EWCA Civ 1786; Lloyds Investment (Scandinavia) Ltd v Ager-Hanssen [2003] EWHC 1740 (Ch); Collier v Williams [2006] EWCA Civ 20 at [119]-[120] (Dyson LJ); Edwards v Golding [2007] EWCA Civ 416 at [23] (Buxton LJ); Roult v North West Strategic Health Authority [2009] EWCA Civ 444;Kojima v HSBC Bank Plc [2011] EWHC 611(Ch); K/S Victoria Street (A Danish Partnership) v House of Fraser (Stores Management) Ltd [2011] EWHC 3179 (Ch); Tibblesv SIG Plc [2012] EWCA Civ 518. Both limbs were strongly disputed by Mr Howard on various grounds.[13]In addition, there was a further threshold issue as to whether the Court had power to make the Order now sought by Malabu to stop post-judgment interest running from a certain date i.e. 22 August 2013. Mr Graham submitted that the Court has such power under the Judgments Act 1838 and pursuant to CPR 40.8(1)(b). However, although Mr Howard acknowledged that s17(2) of the 1838 Act provided that rules of court may provide that interest otherwise payable under s17(1) may be disallowed by the Court, there was nothing in CPR 40.8(1)(b) or otherwise in rules of court which permitted the imposition of an “end-date”.[14]In the event, I do not consider that it is necessary to determine these issues. For present purposes, I am prepared to assume in favour of Malabu that the Court has the power(i) to vary paragraph 1 of the Order pursuant to the “liberty to apply” in paragraph 8.4 alternatively CPR 3.1(7); and(ii) to impose an “end-date” to the running of post-judgment interest.[15]However, it remains to consider whether such variation is justified whether as a matter of principle or discretion.[16]In that context, Mr Graham submitted in summary as follows:(i) Following the handing down of the Judgment in July 2013, EVP’s conduct was “unreasonable”. In particular, when Malabu indicated its intention to withdraw its appeal in August 2013 and the parties were on the verge of lifting the stays and implementing the Judgment, EVP suddenly reversed course: in circumstances where it was earning a highly attractive post-judgment interest rate of 8% per annum for so long as the stays of execution remained in place, EVP demanded Malabu accept vastly more onerous costs orders than those already made by Gloster LJ or face a free-standing appeal by EVP that would have the effect of maintaining the stays of execution until it was determined. To make matters worse, EVP then refused to commence detailed assessment of its costs in October 2013, which enabled it to maintain its unreasonable demand to be paid costs totalling some four times those incurred by Malabu as quid pro quo for implementing the Judgment.(ii) The stays of execution were never intended to create this highly unsatisfactory state of affairs; it was brought about by EVP’s own actions in refusing to implement the Judgment, refusing to commence detailed costs assessment and, most significantly, refusing to disclose information about its current financial position. The result is that EVP is profiting from its own bad behaviour: due to EVP’s opaque financial position, Malabu has no choice but to maintain the stays of execution for so long as EVP’s appeal is extant or else it has no real prospect of recovering any sums paid to EVP. The purpose of Malabu’s applications is to prevent EVP from exploiting these unintended consequences of the stays of execution any further. If Malabu had not done so the EVP Stay would have been discharged pursuant to paragraph 8.1 of the Order and Malabu would have had no realistic prospect of recovering from EVP the difference between the amount EVP was awarded by way of quantum meruit in the Judgment and any lower amount it was awarded following any hearing of EVP’s appeal and Malabu’s resurrected appeal (the “Quantum Meruit Repayment Amount”).(iii) Malabu would have no realistic prospect of recovering the Quantum Meruit Repayment Amount in such circumstances because there are no reasonable grounds for supposing that Malabu could enforce an order that EVP should pay it the Quantum Meruit Repayment Amount. EVP has consistently refused, from July 2011 onwards, to give any information or accounts relating to its financial position, its assets or liabilities. There are further reasons for supposing that EVP would “not be good for the money” in the event that the EVP Stay were discharged and EVP subsequently ordered to repay to Malabu the Quantum Meruit Repayment Amount. If Malabu had not resurrected its application for permission to appeal the EVP Stay would have been lifted and EVP would have been in the same position of “having its cake and eating it” that EVP’s Counsel told the Judge that Malabu would enjoy if it were permitted to pursue its appeal without the imposition of the Malabu Stay.(iv) In truth, post-judgment interest is continuing to accrue on the Composite Judgment Sum at a daily rate of US$26,637.78 because of (i) EVP’s refusal to implement the Order, unless Malabu agreed to the onerous and unreasonable terms demanded by EVP in its 22 August letter; and (ii) EVP’s own decision to launch a free standing appeal against the Order out of time.[17]Thus Mr Graham submitted that justice demands that paragraph 1 of the Order relating to the running of post-judgment interest should be varied so as to provide that interest should cease to run on the Composite Judgment Sum as from the date on which EVP effectively refused to implement the Judgment Order when invited to do so by Malabu, i.e. 22 August 2013.[18]In support of this application, Mr Graham further submitted that the justice of this approach can be tested by asking what order as regards the running of post-judgment interest Gloster LJ would have been likely to have made in the event that, at the time at which the Order was made, the position had been in effect the reverse of what it actually was; i.e. if the position had been as follows:(i) EVP had been the party that had made an application for permission to appeal before her and had indicated its intention to make the same application before the Court of Appeal;(ii) Malabu had indicated that it was willing to implement the Judgment Order without delay, save that it wished to reserve the right to launch its own appeal against the Order in the event that EVP’s application for permission to appeal were successful; and(iii) Malabu’s contingent right to cross-appeal would be rendered effectively worthless unless payment out of the Composite Judgment Sum was stayed because of EVP’s on-going refusal to give any information or accounts relating to its financial position, its assets or liabilities. If that had been the position, Mr Graham submitted that she would have ordered that no interest should run in the post-judgment period on the grounds that the party responsible for EVP being kept out of the Composite Judgment Sum was EVP itself.[19]As to these submissions, I readily accept that EVP’s position changed in August 2013 after the making of the Order. In particular, I recognise that at the consequentials hearing, EVP did not themselvesask for permission to appeal; that EVP’s intention at that stage appears to have been that it would, at most, seek to cross-appeal if (but only if) Malabu were granted permission to appeal; and that this position changed with EVP’s subsequent decision to pursue its own self-standing appeal.[20]However, contrary to Mr Graham’s submission, this did not mean that Malabu had “no choice” but to continue with its own appeal. As it seems to me, that is the fundamental flaw at the heart of Mr Graham’s submission. The fact is that there was nothing to prevent Malabu paying the Composite Judgment Sum and withdrawing its appeal if it wanted to do so. I accept, of course, that if Malabu did so and if EVP obtained permission to appeal, EVP’s appeal would - using Mr Graham’s description - be a “one-way bet” i.e. apart from costs, EVP would have nothing to lose and everything to gain and there would be no potential upside for Malabu. Be that as it may, the decision by Malabu whether or not to withdraw its appeal was and is ultimately a commercial decision for Malabu to take no doubt bearing in mind its own perception as to the prospects of its potential appeal. In such circumstances, I see no good reason for varying paragraph 1 of the Order in the terms sought by Malabu even on the assumption that I had jurisdiction or power to do so.[21]For the avoidance of doubt, if EVP’s position at the consequentials hearing on 17 and 18 July 2013 had been that it was intending to pursue its own free- standing appeal, I am unpersuaded that the Order made by Gloster LJ would necessarily have been different.[22]It is for these reasons that I dismissed Malabu’s application to vary paragraph 1 of the Order. B. Application by Malabu to require EVP to carry out a costs assessment.[23]In the event, Mr Graham indicated Malabu’s intention not to pursue this application for the time being. Accordingly, with Mr Howard’s consent, I adjourned this application with liberty to apply. C. EVP’s application for payment out[24]As set out in its skeleton argument, EVP’s position in relation to this application was as follows: i) Paragraph 1 of the Order orders Malabu to pay Judgment Act interest to EVP from 17 July 2013 until the date of payment. ii) Paragraph 5.1 of the Order orders that “the sums payable to [EVP] under paragraphs 1 and 4 of this Judgment Order shall forthwith be paid to the Claimant out of the sum of $215 million paid into Court”. iii) Paragraph8.1 of the Order stays “the obligations on the part of the Defendant to make payments to the Claimant pursuant to paragraphs 1 – 4 of this Judgment Order, and the order requiring payment out of Court to the Claimant in paragraph 5.1 of this Judgment Order”. iv) Paragraph8.2 of the Order makes express provision for the sum of US$ 125,322,741.80 (being the principal sum plus pre-judgment interest and the interim payment on account of costs) to be paid out of Court to McGuireWoods to be held on the terms of the McGuireWoods Undertaking. v) Paragraph 8.2 makes no express provision for the payment out of accrued Judgment Act interest (nor indeed does any other part of paragraph 8), the payment of which has been stayed by paragraph 8.1. But, paragraph 8.4 does provide for liberty to apply in relation to the operation of the stays and associated provisions (such as payment out under the McGuireWoods Undertaking), as found in paragraph 8. vi) Accordingly, this application plainly does fall within the liberty to apply. Indeed, this is just the kind of thing that the liberty to apply is there to cater for. vii) The same logic that caused Gloster LJ to order the payment out of the principal and pre-judgment interest to McGuireWoods applies to the accrued Judgment Act interest, and dictates that that too should be paid out to McGuireWoods, to be held subject to the McGuireWoods Undertaking. If the money is in the McGuireWoods client account it can earn more interest (to the benefit of Malabu) and EVP will have easier access to its money once the EVP Stay is lifted (to the benefit of EVP).[25]As to these points, Mr Graham raised two main objections. First, he submitted that this application did not fall within the liberty to apply. I do not accept that submission. Although not expressly stated in the Application Notice or draft order, it seems to me that this is in truth an application to vary paragraph 8.1 of the Order and to that extent, it falls squarely within the liberty to apply specified in paragraph 8.4.[26]Second, Mr Graham submitted that there was no good reason to vary the Order, in particular because there had been no material change in circumstances. As to that submission, I accept that as at the date of the Order, it was obviously envisaged that post-judgment interest would accrue on the Composite Judgment Sum; that EVP could have asked for such accruing interest payments to be dealt with in the same way as the Composite Judgment Sum – but did not do so; and that it may be that such an argument would be fatal to this application if it were made under CPR 3.1(7) rather than under the express liberty to apply. However, as already stated, I see no reason in principle why this application does not fall within the express liberty to apply; and given the circumstances, it seems to me that Mr Howard is right in saying that there is very good reason to make the orders sought – although in my view the precise wording requires some modification as I indicated in the course of argument.[27]For these reasons and subject to that modification of wording, I grant this application.