“23. In those circumstances, the case depends upon the resolution of disputed evidence, relating to events primarily in 2005 through to 2007. Much therefore depends upon my assessment of the witnesses whom I have heard and seen giving evidence, both in chief, because I requested that, in relation to the most disputed areas, the [Defendant], [the First Claimant] and [Mounissa]gave oral evidence in chief, and when cross-examined and, to an extent, re-examined. Inevitably a judge of oral evidence will make allowances for inconsistencies and contradictions in relation to the recounting of recollections of events many years ago. He will also be astute to appreciate and to take account of those inconsistencies and contradictions which appear immaterial or can be accounted for or accepted as inevitable or accidental. The judge will also be looking for what has been described as a hook, upon which to peg a conclusion, or to give corroboration to one side or the other, which is not dependent upon the vagaries of recollection. In this case there was some contemporaneous documentation, although not as much as there should have been because for some reason ENRC, and/or the [Claimants’] companies, have operated an unusually radical programme of disposition, not only of hard copies but of documents contained on computer. Clearly the most important contemporaneous documents were the January Term Sheet, and the draft Darcon contract referred to in paragraph 9 above. The other hook upon which a Judge can feel confident in resting, or at any rate testing, his conclusions is that of unchallenged evidence. In this case the evidence of two of the witnesses for the [Defendant] was not challenged, that of Mr Lucas, then of ABN Amro, and of Mr van Broekhoven, who gave evidence as to the Trade Finance. There was also third party evidence, from apparently independent parties with nothing to gain from their evidence (who in both cases attended under witness summons), both of whom supported the [Defendant’s] case as to his entitlement and involvement in respect of the IPO, Mr Barinstein, then of Deutsche Bank, the relationship banker for the [Claimants] but also a friend, and original recommender, of the [Defendant], and Mr Radjabov, the former long-term boyfriend of [Mounissa].” (ii) Paragraph 24: “24. Inevitably there was some interlocutory jostling for position, not all of which reflected well on either party. The [Defendant] included in his witness statement a good deal of background information as to his work with the [Claimants] and their businesses in 2006, which the [Claimants] say was only included in order to create embarrassment for them and perhaps to encourage them to settle short of the court door. . . [T]he[Defendant] asserted, an issue which I cut short because it seemed to me likely to lead into collateral issues, that the influence of the [Claimants] has been such that he has not been able to obtain relevant work in his specialist field in Russia since bringing these proceedings. And just before the start of the trial separate leading and junior counsel and solicitors instructed by the now privatised ENRC intervened in order to seek injunctions not only preventing the airing of some of the matters in the [Defendant’s] witness statement to which I have referred (and which I excluded), but also of documents which, given the paucity of disclosure from the [Claimants’] businesses, for the reasons I have given, were essential for him to seek to prove his case as to his involvement in the IPO . . . I do not regard any of this as playing any material role in my assessment of the witnesses.” (iii) Paragraph 25: “25. Inevitably when assessing the credibility of a witness who seeks recovery of a very substantial sum allegedly due pursuant to an oral agreement made 8 years ago, a judge would approach such claim with scepticism, even without encouragement from the [Claimants] by reference to the words of Gloster J in paragraphs 90 to 95 of Berezovsky v Abramovich[2012] EWHC 2463 (Comm) . However I found the [Defendant] a most impressive witness. He met the able cross-examination by Mr Flynn QC with steadfastness, moderation and credibility. On occasion he may have embellished his case – although it may well be that he was simply belatedly remembering matters which after so long had been forgotten – as in his assertion of the discussion of a 12 month ‘tail’ (referred to in paragraph 21 above) with [Mounissa]at St. Jean Cap Ferrat, or his recollection of a particular conversation with the [First Claimant] in Moscow in early 2008, not mentioned specifically in his witness statement and not put by Mr Oudkerk QC his equally able counsel, in cross-examination, to the [First Claimant], some time after the completion of the IPO. However, I found his evidence credible and consistent, and, in particular, consistent with and supported by the contemporaneous documents and the independent witnesses.” (iv) Paragraph 26: “26. As to his witnesses, the credibility or honesty of Mr Barinstein was not challenged. It was pointed out that he was a long standing friend, and indeed business associate of the [Defendant], but also (indeed for longer) of [Mounissa], and not only does his wife remain in business with [Mounissa], but he continues to have a professional relationship with ENRC. His evidence was sensible and persuasive, and he gave accounts of conversations both with the [Defendant] and with [Mounissa] at the relevant time which substantially supported the case of the [Defendant]. I have already referred to the supportive evidence of the plainly independent, and unchallenged, Mr Lucas of ABN Amro. So far as concerns Mr Radjabov, he was not challenged in relation to any specific evidence he gave as to the conversations at the material time, of which he also spoke, both with the [Defendant], with whom he was friendly, and with [Mounissa], with whom he had a long standing and intimate relationship. I am entirely satisfied that he was giving honest evidence and was not in any way motivated, as was suggested, by any antipathy towards either [Mounissa], with whom he had had a close relationship, on and off, for some 8 years, or her father, the [First Claimant]. I am entirely satisfied that the third party witnesses called by the [Defendant] were indeed independent.” (v) Paragraph 27: “27. As for the [Claimants], they called no independent witnesses. The [First, Second and Third Claimants] are all very experienced and powerful men. They gave evidence with the assistance of an interpreter, but such was the ability of the interpreter that I am satisfied nothing was lost in relation either to lack of spontaneity or comprehensibility in relation to their giving of evidence. I found Mr Olim Chodiev an unpersuasive witness, although he gave evidence primarily only of the meeting of April 2007, particularly in the respect detailed below. There were material differences between theevidence of the [First and Fourth Claimants], to which I shall return, and which Mr Flynn invited me to accept were the inevitable differences of recollection by witnesses honestly intending to give a true account. There was however a significant feature in relation to the [Claimants’] evidence, which is relevant to the credibility of all their leading witnesses. I shall describe below how Dr Sittard, the CEO of Alferon UK, and subsequently the CEO of ENRC after the IPO, included a false case in his witness statements, which he only (and then at first only partially) corrected on going into the witness box, and before deposing to the truth of those statements in the witness box. He in fact was the last witness to go into the box, and therefore that false case was not withdrawn until he did so on Day 11.” (vi) Paragraph 28: “28. The case was that the [Defendant] had never had anything material to do with the IPO, and that Mr Amre Youness was appointed in October 2006 to lead the IPO, not the [Defendant]. Dr Sittard accepted, by his correction, that Mr Youness was not appointed to lead the IPO until after the [Defendant] had left in April 2007 (a case which had been painstakingly put by Mr Oudkerk to the earlier witnesses and rejected by them), and that he had appointed the [Defendant] to lead the IPO (admittedly only in February 2007, on his case). Prior to this correction, in relation to a matter of considerable importance to the question of whether the [Defendant] had been asked to lead the IPO on terms of receiving a success fee, all of the [First, Second and Fourth Claimants] and a Mr Ehrensberger, who had been called specifically to give evidence as to the preparatory work done on the IPO prior to April 2007, had firmly rejected any suggestion of the [Defendant] having any role, never mind a leading one, in the IPO or its preparation. For example the [First Claimant] said (Day 10/47): “Absolutely wrong position, wrong picture. Absolutely wrong. It was Mr Youness who was coordinating the [IPO] work. Mr Stein had nothing to do with it.”” “Absolutely wrong position, wrong picture. Absolutely wrong. It was Mr Youness who was coordinating the [IPO] work. Mr Stein had nothing to do with it.”” (vii) Paragraph 29: “29. Careful assessment of the evidence is required, and the [Defendant] carries the burden of proof of the oral agreement. But I preferred his evidence and those of his witnesses.” (viii) At paragraph 53 of the judgment, in dealing with the central issue, Issue 2, I set out more fully my findings as to the false case which the Claimants put forward, after recording in paragraph 52 the false evidence which had been set out by the Claimants both in their witness statements and those of the five witnesses called by the Claimants prior to Dr Sittard, in oral evidence by them: “In fact, as set out above, Dr Sittard was not prepared when he went into the witness box to support what he had said in his witness statement and (Day 11/62-3, 91-8) after initially correcting some of his statements, he was driven to correct them all. What he now said was that Mr Youness had not been brought in to lead the IPO, and had never done so until after the [Defendant] departed in April 2007 (as the [Defendant] had always said), and that the [Defendant] was indeed appointed to lead the IPO, and was announced as such at the kick-off meeting in February 2007. He gave no explanation as to why his witness statements were so inaccurate, and it is clear, that unlike all the other witnesses for the [Claimants], he was finally prepared to correct those misstatements. Of course the fact that once the IPO started to be prepared and in due course got off the ground the [Defendant] did indeed lead it does not prove that in January 2006, when it is plain that the IPO was already in the minds of the [Claimants], he was asked to take up that role, as he asserts. Nor does the fact that a deliberately inaccurate case to the contrary was put forward by the [Claimants’] witnesses, and pursued until Dr Sittard went into the witness box, prove that the [First and Fourth Claimants] are not to be believed in relation to their denial that they had asked him to take on that role in return for a success fee in January 2006, but it plainly supports the [Defendant’s] case and his credibility, and undermines the [Claimants’]. (ix) Paragraph 54: “54. In fact it is clear that at least from October 2006 he – and not Youness – was putting the IPO together on behalf of the [Claimants]. This is supported by the evidence from the independent witnesses:- i) Mr Barinstein persuasively describes the [Defendant’s] role in his witness statement (paragraphs 70-77) and in evidence (Day 7/59-60) from the point of view of Deutsche Bank, which was lead underwriter on the IPO. He confirmed (paragraph 79) that by April 2007 almost all of the work on the IPO was completed. There was then a delay, as accountancy problems were revealed within the Group, which required to be resolved, and work on the IPO restarted, after the [Defendant] had left, in September 2007, leading to listing in December. ii) Mr Lucas of ABM Amro, joint book runner on the IPO, gave evidence which was unchallenged, and consequently, although he attended at court, he did not need to give evidence. In paragraphs 13 and 16 of his witness statement he confirms his understanding that the [Defendant] was deal co-ordinator of the IPO, and that he was his principal point of contact in relation to the IPO until (paragraph 22) the [Defendant] ceased to be deal co-ordinator and Mr Youness took over.” i) Mr Barinstein persuasively describes the [Defendant’s] role in his witness statement (paragraphs 70-77) and in evidence (Day 7/59-60) from the point of view of Deutsche Bank, which was lead underwriter on the IPO. He confirmed (paragraph 79) that by April 2007 almost all of the work on the IPO was completed. There was then a delay, as accountancy problems were revealed within the Group, which required to be resolved, and work on the IPO restarted, after the [Defendant] had left, in September 2007, leading to listing in December. ii) Mr Lucas of ABM Amro, joint book runner on the IPO, gave evidence which was unchallenged, and consequently, although he attended at court, he did not need to give evidence. In paragraphs 13 and 16 of his witness statement he confirms his understanding that the [Defendant] was deal co-ordinator of the IPO, and that he was his principal point of contact in relation to the IPO until (paragraph 22) the [Defendant] ceased to be deal co-ordinator and Mr Youness took over.”
“36. Although I have made criticisms in my judgment, upon which [the Defendant’s solicitor] has based her own arguments, I conclude that there is only one area in this case which really is so out of the ordinary by way of unreasonableness or impropriety that it should be marked by indemnity costs. That is the fact that, in my judgment, a false case was put together by the [Claimants’] witnesses. In particular, Mr Ehrensberger, who gave evidence solely in relation to the IPO, but clearly also the [First and Fourth Claimants] and Dr Sittard, who all in their witness statements, as I have described in my judgment, put a false case forward. 37. The first three whom I have named, and indeed the other [Claimants] to an extent, all gave oral evidence in support of that false case, but Dr Sittard was not prepared to do so and for that he must get credit - - although he did not immediately abandon the entirety of it, as I point out in my judgment, and as Mr Oudkerk has pointed out in his submissions: namely the false case that Mr Youness led the IPO, indeed was brought in to lead the IPO from October 2006 onwards, and that the [Defendant] had nothing whatever material to do with it, which was a significant part of their defence and which, if right, would have cast a considerable doubt on whether there ever was such an agreement as the [Defendant] asserted.”
“Mr Flynn submitted that if there was an exclusive agreement between the [Defendant] and Aurdeley, then he could not contract personally with the [Claimants]. I was satisfied that this contention was unarguable and in any event was not entitled to be pursued at the trial, and did not call upon [Mr Oudkerk] in his following closing submissions: (i) I was satisfied that the point was not expressly pleaded in paragraph 8(c) of the Re-amended Defence. If I permitted such an amendment as was suggested by the [Claimants] in their supplementary closing submissions, there would be substantial, if not irremediable, prejudice to the [Defendant], as the [Defendant] would have needed to seek an adjournment to consider calling Mr Zakharov, and/or causing Aurdeley to be joined as a co-claimant, to which there would almost certainly be a limitation defence. (ii) Even if it could be said that the Defence did not require amending, I am satisfied that the question whether Aurdeley rather than the [Defendant] was party to the January Agreement was not one of the list of issues which had been ordered to be tried and which I had tried for thirteen days. (iii) It could not be said that the point had only arisen for the first time as a result of the precise evidence given by the [Defendant]. Indeed the issue had been canvassed, but not pursued, in a summary judgment application, upon which I made no order on the first day of the trial . . . (iv) Even if all the above could be excused and overlooked on the basis that the [Defendant] still retains the burden ofproof to establish entitlement pursuant to the January Agreement, I am satisfied that the [Defendant’s] own answer in evidence is perfectly satisfactory, certainly given the belated way in which the point has arisen. No doubt if it had been made earlier Mr Zakharov could have been called: (a) As the [Defendant] explains, there was no breach of the exclusive agreement, because it is part of his arrangement with Aurdeley that he could contract in his own name where appropriate. (b) This is exemplified by the fact that some but not all of the written contracts in this case were with Aurdeley. (c) In any event the [Defendant] as agent for an undisclosed principal would be entitled to sue (see Bowstead & Reynolds on Agency (19th ed) 9-005).” (a) As the [Defendant] explains, there was no breach of the exclusive agreement, because it is part of his arrangement with Aurdeley that he could contract in his own name where appropriate. (b) This is exemplified by the fact that some but not all of the written contracts in this case were with Aurdeley. (c) In any event the [Defendant] as agent for an undisclosed principal would be entitled to sue (see Bowstead & Reynolds on Agency (19th ed) 9-005).”
“Our law had long permitted the party against whom an English judgment had been given to bring an independent action to set aside the judgment on the ground that it had been obtained by fraud, but strict limits were imposed in order to preserve the principle that a judgment which brings litigation to an end should not be too easily disturbed. In particular the Court would not permit the new action to proceed unless the plaintiff would put forward fresh evidence, discovered since the first trial, being evidence which could not have been produced then with reasonable diligence and which is such that, if it had been put forward at the trial, it would in probability have caused a different conclusion to be reached”
“The common law rule that the unsuccessful party who has been sued to judgment is not permitted to challenge that judgment on the ground that it was obtained by fraud unless he is able to prove that fraud by fresh evidence that was not available to him and could not have been discovered with reasonable diligence before the judgment was delivered . . . is the rule to be applied in an action brought to set aside an English judgment on the ground that it was obtained by fraud. The rule rests on the principle that there must be finality in litigation which would be defeated if it were open to the unsuccessful party in one action to bring a second action to re-litigate the issue determined against him simply on the ground that the opposing party had obtained judgment in the first action by perjured evidence. Your Lordships were taken, in the course of argument, through the many authorities in which this salutary English rule has been developed and applied and which demonstrate the stringency of the criterion which the fresh evidence must satisfy if it is to be admissible to impeach a judgment on the ground of fraud. I do not find it necessary to examine these authorities. The rule they establish is unquestionable and the principle on which they rest is clear.”
“There must be apparently credible evidence as to the fraud or perjury which not only was not available at the trial and could not have been obtained with reasonable diligence for use at the trial, but which is such as entirely changes the aspect of the case, in the sense that it must be likely to be decisive of the outcome of the claim in question.”
“(a) A judgment obtained by perjury is a judgment obtained by fraud for this purpose. (b) The action seeking an order setting aside the earlier judgment must be based on new evidence which was not before the Court that first heard the action and which the claimant could not with reasonable diligence have placed before that Court. (c) The new evidence must establish perjury in the sense that a person or persons sworn as a witness in the earlier action who could properly be treated as the successful party itself wilfully made a statement in those proceedings which statement the person knew to be false or did not believe to be true. (d) The burden is on the claimants to establish perjury as “distinctly more probable than not”. (e) The disparity between the perjured evidence and the new evidence would be material if it “entirely changed the nature of the case”.”
“so strong that it would reasonably be expected to be decisive at the rehearing and if unanswered must have that result” (Dicey, Morris & Collins), “such that it would in probability have caused a different conclusion to be reached” (Parker LJ in Owens), then as per Hunter, as interpreted by Langley J at 182(3) and by David Steel J in his further KAE v IAC judgment[2005] EWHC 2524 (Comm) (colloquially called “Perjury II”) at 197-8, that the “disparity between the concealed (or perjured) evidence and the new evidence would be material if it “entirely changed the nature of the case” . . . [which] at least requires material which was likely to be decisive of the outcome”
“if . . . this Court is to depart from its invariable practice of confining such evidence to the relevant issues and is to admit fresh evidence directed solely to credit, I am of opinion that such a course would, if ever, only be justified where the evidence is of such a nature, and the circumstances of the case are such, that no reasonable jury could be expected to act upon the evidence of the witness whose character had been called in question. It would, in my view, be wrong for this Court to admit fresh evidence directly solely to credit, merely because there is a possibility, or merely a reasonable probability, that such evidence would result in a different verdict”
“It is well established that fraud or dishonesty . . . must be distinctly alleged and as distinctly proved; that it must be sufficiently particularised, and that it is not sufficiently particularised if the facts pleaded are consistent with innocence”
“distinctly more probable than not”
“i) The court must consider whether the claimant has a "realistic" as opposed to a "fanciful" prospect of success. ii) A "realistic" claim is one that carries some degree of conviction. This means a claim that is more than merely arguable. iii) In reaching its conclusion the court must not conduct a "mini-trial". iv) This does not mean that the court must take at face value and without analysis everything that a claimant says in his statements before the court. In some cases it may be clear that there is no real substance in factual assertions made, particularly if contradicted by contemporaneous documents.”
“since 2003 Aurdeley has entered into many transactions and I have made many payments (other than the documents produced herewith) which, though to the best of my knowledge and belief, are not related in any manner whatsoever to Mr Stein, and the instructions upon which they were made did not come from him”
“7. . . at a late stage in the process, Mr Stein identified an individual named Mr Zakhar Zakharov to act instead of him as owner on the record of the new company. It was clear to me that Mr Zakharov was acting as the nominee shareholder, whereas the actual ultimate beneficial owner was Mr Stein.”
“9. Since2 June 2003 , when the company became active, any and all the instructions concerning Aurdeley’s administration were coming from Mr Zakharov. 10. In January 2004, Mr Zakharov informed us in his letter of14 January 2004 that he instructed Mr Stein to represent him in certain business activities, and consequently he provided us with the directions to accept Mr Stein’s instructions on certain matters concerning trading and transactions in foreign currency . . . 11. . . for each instruction concerning payment to Mr Stein, in all cases other than those covered by the [exhibited] authorities . . . we asked Mr Zakharov’s approval.”
“(1) Mr Stein brought the claim in his own name rather than in the name of Aurdeley Enterprises Limited (“Aurdeley”) knowing that the claim, if any, was really Aurdeley’s claim. He did this to prevent exposure of the fact that he had been using Aurdeley as a vehicle to evade tax in the United States and/or to prevent the proper disclosure of documents and/or to prevent it being apparent that the claim was truly Aurdeley’s claim. (2) To maintain that deception he was obliged to give knowingly false evidence at the trial about Aurdeley and his relationship with it. (3) The Original Stein Proceedings were thus fraudulent in their very inception (the “Fundamental Deception”).”
“10A Mr Stein, while acknowledging the existence of previous agreements for service between Aurdeley and various companies in the ownership or control of the Claimants, asserted that the agreements set out in paragraph 9 above were made between him in his personal capacity and the Claimants, even though he had previously drafted a letter for Aurdeley to send (9th February 2010 ) claiming the same bonus payments for that company and which he deliberately did not disclose.”
“As was made clear to the Client by the Consultant during this conversation, any agreement regarding a future working relationship must take into account amounts previously earned by the Consultant several years ago, that have still not been paid. More specifically, the Consultant successfully performed its services in connection with securing trade financing in the amount of one billion five hundred million US dollars ($1,500,000,000 ) for the benefit of the Client and his partners. By prior oral agreement with the Client and his partners, the Consultant was to receive a fee for these services. To date, the Client has still not paid the balance of this fee, in an amount equal to three million US dollars ($3,000,000 ). Moreover, the Consultant has also successfully performed its services in connection with the Initial Public Offering of Eurasian Natural Resources Corporation. By prior oral agreement with the Client and his partners, the Consultant was also to receive a fee for performing these services. To date no amounts whatsoever have been paid to the Consultant in this regard. It is the express wish of the Consultant to seek an amicable resolution of these issues and to agree new terms that will enable the Client and the Consultant to continue their working relationship in a mutually advantageous manner. We note, however, that very little time remains to have discussions and reach an agreement on these issues. In the event no discussions are had and no new agreement is reached, it is the intention of the Consultant to cease its services to the Client immediately upon the expiry of the Term. The Consultant expressly reserves all of its rights to seek legal redress with respect to all moneys owed to it.”
“In this context, it is often said that the right of the principal is superior to that of the agent, and it is a defence for the third party to prove that the principal has intervened and claimed payment or damages, or that the agent’s authority to sue is otherwise terminated. ”
“58. Without waiving privilege, I understand from the Claimants’ representatives that Capellen is a company within the Chodiev family companies, that it has no assets and carries on no commercial activity and that its principal function is to act as a post room for the Chodiev family and its companies. The Claimants’ representatives have been able to confirm that the [9] February 2010 Letter was received by Capellen. I am instructed that the Claimants do not recall locating or identifying the [9] February 2010 Letter in the course of their disclosure searches in the Original Proceedings. I further understand from King & Wood Mallesons LLP, the Claimants’ solicitors in the Original Proceedings, that they have checked their files and confirmed that they were not provided with a copy of the [9] February 2010 Letter in the course of the disclosure exercise or otherwise. I understand that a search of Capellen’s documents repositories is currently under way.”
“12. The greater argument that was put forward before me related to the fact that [the Defendant] gave evidence in the course of the hearing that he had reached an agreement, when he went independent, effectively, as a consultant, that he would account to Aurdeley Enterprises Limited 60/40 in their favour in respect of any success fees that he earned. And when he was [paid] the 4 million, which was the only time during the course of this relevant dispute that the [Claimants] paid him anything, he did in fact account to Aurdeley Enterprises as to 100 per cent of that sum. 13. He gave evidence by the end of the trial that he regarded himself as obliged to pay Aurdeley, although not under any contractual obligation to do so. Perfectly understandably, Mr Wolfson raised, through Mr Shiu's witness statement, thequestion as to whether the fact that the [Defendant] had said at the outset that he had a contractual obligation to pay to Aurdeley 60 per cent of any success fee affected his entitlement to interest. 14. A number of authorities were looked at, but effectively, the nub of Mr Wolfson's argument was that, whereas he would have perhaps argued that, if the interest was payable to Aurdeley Enterprises, it might perhaps have been at a different rate by virtue perhaps of some greater borrowing power on the part of Aurdeley, that was not an argument he pursued. 15. But what might be the case would be if there was an obligation to pay Aurdeley Enterprises the capital but not to pay any interest. That would have led to a windfall by Mr Stein, and Mr Wolfson submitted that the [Defendant] should in those circumstances only become entitled to 40 per cent of the sum otherwise recoverable against his client. 16. Mr Oudkerk QC took a strong position in relation to this. First of all, he said this was simply a continuation of a failed argument at the hearing, indeed only at the end of the hearing, and in the Court of Appeal, which rejected it, that Aurdeley Enterprises, rather than the [Defendant], ought to have been making the claim. 17. Mr Wolfson made plain that that was not the case, and I accept that it is not the case, by virtue of his submission, to which I have referred, that he accepted that if in fact there was the contractual obligation to Aurdeley, he would not be pursuing this argument. 18. His argument depended upon there being a contractual obligation to Aurdeley, but not a contractual obligation to pay the interest. 19. Mr Oudkerk's second submission was that this was nihil ad rem as between the [Defendant] and the [Claimants], and just as the Court is not interested in how in fact a judgment creditor has financed himself, whether he had had to borrow money or not, whether he had had the funds or not, but, nevertheless, the appropriate rate of interest was judged on the basis of how he could have borrowed, so here it was not of any interest, and should not be of any interest to the [Claimants], whatever his arrangement was with Aurdeley. 20. The latter argument by Mr Oudkerk is an interesting one, and I raised in the course of argument what the position would be if a claimant had, and it was known that he had had, an interest-free loan which he then was in a position to repay out of judgment proceeds. Would such a person be prevented from recovering against a defendant interest which he in fact had no obligation to pay to the person who had put him in funds? 21. It seems to me Mr Oudkerk had a powerful case that that would indeed be nihil ad rem, but, not least because this was a point that effectively only came up in the course of argument, he had no authorities at his hand to deal with the point. 22. It seemed to me that the sensible course, given that the [Defendant] himself was at court, that this should be put beyond doubt by a witness statement from him. And it has been put beyond doubt, namely that he is under an obligation to pay to Aurdeley Enterprises, after receiving credit for the$4 million which he has already paid over to them in full, 60 per cent of the net proceeds and including 60 per cent of the interest. In those circumstances, the point falls away. I conclude that it is appropriate to award the interest at 4 per cent over prime rate on the full amount of the damages.”
“29. At the same time, the circumstances in which in practice the just order is that no interest shall accrue on the costs from any date are likely to be highly exceptional. It may be that that was what Master O'Hare meant when he said that the court should not exercise its discretion readily, but only in exceptional circumstances. 30. Since the payment of solicitors' costs involves the payment of money which could otherwise have been profitably employed, the overwhelming likelihood is that justice requires some recompense to be made in the form of interest. If the receiving party has financed the costs from his own money or from money that he has borrowed at interest, the case for his receiving interest on his costs, at least from some date, is likely to be overwhelming. The position might be different if the finance had been advanced entirely voluntarily, interest free, from a sympathetic relative or institution, as Akenhead J contemplated in Fosse Motor Engineers Limited v Conde Nast and National Magazine Distributors Limited[2008] EWHC 2527 QB, or conceivably from a lender which mistakenly failed to call for interest. In some cases it may be necessary to examine the underlying financial arrangements. 31. Does the fact that in the present case it is BS 2000 which has financed the costs make any difference? In my judgment, it does not. The trustees had to finance the payment of the costs. It no doubt made sense for BS 2000, a company which was owned by the trustees as an asset of the trusts, to advance the necessary funds without interest. The effect of BS 2000 making that advance was to deprive it of the use of that money. As a result, the trusts have been deprived of the benefit which they would have received indirectly from the use of the money. In effect, they have, through BS 2000, borne ultimately and indirectly the expense of the litigation. The interest received by the trustees will enure to the benefit of the trusts. It represents compensation to the trust estate for a company owned by the trust being unable to use the money in question. 32. Mr Ullstein submitted that such an approach ignored the distinction between the assets of BS 2000 and the assets of the Trusts. . . 33. Further, as he submits, what BS 2000 would have done with the monies which it was prepared to lend without interest if it had not made the loan is quite uncertain. There is no indication that, if the costs had not been financed by BS 2000, any monies would have come into the hands of the trustees from interest earned on the amount expended on the costs. The supposed loss is illusory and unestablished. 34. I regard this approach as losing touch with commercial reality and substantial justice. It is idle to suppose that the£275,000 -odd advanced would not have been used to earn a return if not used to pay costs, and unrealistic to suppose that the fact that a company wholly owned by trustees for the benefit of the trusts was deprived of the use of that money represents no loss to the trusts, even if the loss be indirect and through the trusts' wholly owned company. 35. In addition, it seems to me that the Master was entitled to look at the position of the defendants, who included BS 2000 which had advanced the monies, collectively. Between them they were out of pocket and the payment of interest to the trustees was a proper means of compensating them. The position was not that a benevolent third party with no personal interest in the dispute had advanced the funds.” b) In Simcoe per Lord Neuberger MR: “47. We were referred to Fattal v Walbrook Trustees (Jersey) Ltd [2009] 4 Costs LR 591, paras 25-30 in which Christopher Clarke J held, in summary terms, that the effect ofCPR r 40.8 was that (a) the general rule is that interest on costs runs from the incipitur date, (b) a departure from that general rule is justified if it is “what justice requires”; (c) the notion that a departure can only be justified in “exceptional” cases is an unhelpful guide; (d) the primary purpose of an award of interest is “ to compensate the recipient for [having] been precluded from obtaining a return on [his] money”; (e) “[s]ince the payment of solicitors’ costs involves the payment of money which could otherwise have been profitably employed, the overwhelming likelihood is that justice requires some recompense… in the form of interest”. 48. I agree with all those observations, but would add two precautionary comments on his observations. First, I would discourage too detailed an approach into the facts of the particular case in hand for the purpose of determining the date from which interest should run. As Lord Ackner’s speech in the Hunt case [1990] I AC 298 implies, when making such a determination, the court should take a broad view of the position. Prolonged argument, let alone detailed evidence, on the issue must be avoided. There will often be no perfect date, and the decision inevitably will, indeed should, be broad bush. Further, if interest was to run from different dates on different components of the costs, it would, in many cases lead to arguments which would do the legal system no credit. The second observation is that I would not necessarily agree with the suggestion [2009] 4 Costs LR 591, para 30 that it may be inappropriate to award interest on costs where the case is being funded by a third party entirely voluntarily or otherwise free of any cost. I would have thought that, following the logic of reason (v) in para II above (and see para 46 above), if interest on costs is payable from the incipitur date, the party to whom it is paid may have to account for it to the third party, and if that is correct, there would seem to me to be a powerful argument for saying that the third party should get interest on costs in the normal way ”
“In order to further the progress of each Project, Mr Stein is permitted to be employed by the Client or engage as a consultant or member of the board provided that Mr.
“73.4 There was no evidence apart from Mr Stein’s that there was any genuine obligation to pay interest over to Aurdeley. Hence, the Fifth Witness statement was not a proper basis for making the award of interest. The court could not have been satisfied that any obligation to pay the principal sum to Aurdeley also carried with it an obligation to pay over interest also. 74. If Burton J had known that what Mr Stein had said at the trial about Aurdeley was knowingly false he would not (or may not) have accepted the Fifth Witness Statement and in any event would not have made the award of interest. The award of interest was thus procured by fraud. Or Burton J would not have awarded interest to Mr Stein at the rate he did or would not have awarded interest on the Judgment sum in full.”
“29. Whereas the First to Third [Claimants] have unlimited resources, I have been forced to use my life savings to fund my living expenses and the substantial litigation costs of pursuing the claim. . . 31.2 As a result of funding the litigation from my savings, I have been deprived of the interest which I would have been entitled to on those sums had I held them in a personal savings account where they would have accrued interest on a compound basis.”