Michael Wilson & Partners Limited v John Forster Emmott [2025] EWHC 747 (Comm)

[2025] EWHC 747 (Comm)IN THE HIGH COURT OF JUSTICEBUSINESS AND PROPERTY COURTS OF ENGLAND AND WALESCOMMERCIAL COURT (KING'S BENCH DIVISION)Venue 7 Rolls Buildings, Fetter LaneLondon EC4A 1NLDate Wednesday, 15 January 2025
Before
HIS HONOUR JUDGE PELLING, KC(Sitting as a Judge of the High Court)
Between
MICHAEL WILSON & PARTNERS LIMITEDClaimantJOHN FORSTER EMMOTTDefendantMR WILSON appeared for ClaimantMR EMMOTT appeared in person for in person
APPROVED JUDGMENT
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[1]This is the delivery of judgment in respect of three applications which I heard at the end of last term being:a. an application by Mr Emmott by an application notice dated 22 July 2022 in effect for a declaration that, as a matter of principle, he is entitled to set off a judgment debt in his favour against the claimant (“MWP”) against various cost orders obtained by MWP against him in various different claims, concerned with or related to his attempts to enforce his judgment against MWP;b. an application by MWP, by an application notice dated 20 October 2023 for an order rescinding a series of costs orders made in favour of Mr Emmott against MWP i. by the Arbitral Tribunal in arbitration proceedings that led to the awards that were directed to be enforced as if a judgment of the high court some 10 or more years ago; and ii. various costs orders made by commercial court judges between October 2010 and May 2015 in proceedings relating to or connected with the enforcement proceedings; andc. an application by MWP by an application notice dated 19 June 2023, for an order debarring Mr Emmott from participating in all or any proceedings unless and until Mr Emmott pays all sums said by MWP to be due to MWP by way of costs.[2]After the hearing of these applications, which as I have said took place in the last week of last term, I reserved judgment with the intention that it be delivered today being the date convenient to the parties. Late last week, Mr Wilson issued on behalf of MWP an application for an order that I should “… recall and reopen the hearing in the light of new and further evidence available, from which it is clear and beyond all, and any doubt that the respondent judgment debtor has nothing left in terms of principle since 25 June 2013. In terms of principle plus interest since 17 July 2014". The application was supported by the 61st witness statement of Mr Wilson, which, after introductory remarks, says at paragraph 5.1 that the witness statement was filed in support of the application to which I have referred:
"… by which [MWP] seeks to recall and reopen the hearing in light of the new and further evidence available, as shown and explained below from which it is clear and beyond all and any doubt that the respondent judgment debtor has had nothing left in terms of principle since 25 June 2013 and has had nothing left in terms of principle plus interest since as long ago as 17 July 2014 as the record shows and proves and accordingly never had any judgment, debt, and basis to purport to file and serve a set off application on 22 July 2022 to further seek to amend the same on 19 February 2024, and further, not only purport to make any set offs after 25 June 2013 …"
The statement then goes on to refer to some ill health suffered by Mr Wilson that I need not take up describing, which is used implicitly to explain why the application was not issued and served earlier than it was. It addresses the ostensible reason for filing the evidence of paragraph 9, following which Mr Wilson purports to suggest that the application or statement had been filed on the basis of a request made by me at the hearing on 17 and 18 December last. For the avoidance of all doubt, I gave no such direction to that effect but sought to explore in the course of submissions made by Mr Wilson what date he said or could say that set off ceased to be available to Mr Emmott.[3]The witness statement then goes on to refer to what Mr Wilson has consistently referred to as the “net TQA calculus”. Quite why he calls the document by this name is unclear but in any event, it is a spreadsheet which purports to set out all the sums which are due and owing from MWP to Mr Emmott including interest accumulating on that sum from time to time and all sums which are alleged by Mr Wilson on behalf of MWP to be due to MWP from Mr Emmott, as a result of various transactions and costs orders over a number of years made by courts both in England and Wales and elsewhere around the world. The then latest iteration of this document was in evidence at the hearing that took place on the 17 and 18 December. The document, which is now exhibited to the 61st statement of Mr Wilson is described as being a new iteration of that document which has been prepared apparently by, "MWP and its accounting team, which includes two fellows at the Institute of Chartered Accountants of England and Wales Messrs … Morgan and … Bridgen ..." There is no witness statement from either of those gentlemen, nor is there any evidence as to what their contribution has been to the generation of the spreadsheet.[4]The conclusion, which Mr Wilson seeks to derive from the document is that as a result of the additional work that has been done to the document, it is now that document now:
"… unequivocally shows and proves that as early as 26 June 2013, the respondent judgment debtor had no principle left, see cell 36K. Also, that as early as 17 July 2014, respondent and judgment debtor also had no interest left either, see cell 49/M. So that since 25 June 2013, as to principle, and since 17 July 2014 as the principle and inference(?), the respondent and judgment debtor has committed and is continuing to commit a litigation fraud of an epic and enormous scale, which beggars belief as the respondent judgment debtor knows full well and has always known the same, and has nevertheless sought to prolong the litigation as the serial and pathological litigant he is and always has been with no other relevant skills, experience, or knowledge …"
Mr Wilson then goes on to say that Mr Emmott:
"… has continued to mislead the courts and MWP for years on end, just as occurred with his and Mr Shepherd's lies to the court as to there allegedly being no debt due and payable when there always was. Their cynically false and misleading opposition to and defence of the Sinclair and so-called TPDO in 2016, and none of which should have occurred ..."
[5]The paragraphs that follow then proceed to effectively draw attention to particular rows in the updated spreadsheet, then to assert again that Mr Emmott has:
"… nothing left in terms of principle since 25.06.13, and nothing left in terms of principle and interest since 17.07.14 …"
And further adds that as a consequence, I should conclude that Mr Emmott is "… a serial and pathological litigant focused only on keeping MWP tied up in continuous litigation loop, and so as to enable him to try and delay and avoid the inevitable as well as to claim and seek costs to which he is not, and was never entitled …" The witness statement then continues in much the same tone before concluding by making the same point, which is summarised most clearly in paragraph 15 of the witness statement where Mr Wilson says this:
"Accordingly, MWPs application should be granted and allowed, and the hearing reconvened and reopened for all the reasons set out above. Quite clearly, the fact that the respondent judgment debtor has nothing left since 2013/2014 is game changing, and when a finding is made such effect, much of the litigation can now be quickly brought to a conclusion. The respondent judgment debtor bankrupted, and his estate sequestered."
Mr Wilson adds that Mr Emmott:
"…has committed an abuse of process and collateral attack and engaged in serial and pathological litigation since 2013 2014, wasted much time of the courts and costs misleading the courts into error, and none of which should have occurred."
[6]At the commencement of the hearing, which, as I have said, was for me to deliver judgment on the three applications I heard on the 17 and 18 December last, Mr Wilson sought to expand upon the substantive points which are referred to in his witness statement, even though in fact, the order that he asks me to make is limited to an order that I direct Mr Emmott to file and serve evidence in answer to the application and the 61st witness statement of Mr Wilson by a fixed future date and to direct Mr Emmott to include with that evidence, even though it appears to be acknowledged that Mr Emmott has no obligation to file any such evidence, that he must include within the evidence:
"… his own version of the net TQA calculus with all backup and supporting documents and the respondent/Judgment debtor shall produce and provide MWP and the Court with all of his prior calculations in both an electronic/soft, and hard copy format, including without limitation those cited and referred to in the vesting letter."
[7]The vesting letter is a letter dated 1 May 2020, apparently from Mr Emmott to Mr Sinclair which Mr Wilson relies upon as demonstrating that such accounting material is available to Mr Emmott because he refers in terms to having done various calculations as set out in the letter. Perhaps the more fundamental point that appears from that letter is that in it Mr Emmott asserts that:
"After various recoveries and set off amounts due, I have calculated that as at 30 April 2020, MWP £2,100,648 including interest to that date, plus $1,086,026 US including interest to 17 January 2020"
The letter also goes on to refer to costs supposedly due in respect of cost orders made in the arbitration, to which reference will have to be made much later in this judgment.[8]In the result, what Mr Wilson argued was that the material which he relied upon, namely his 61st statement plus the spreadsheet exhibited to it, together provided new evidence showing that in fact, as he would have it, it was beyond argument that Mr Emmott ceased to have the benefit of any net sums due under the judgment he has against MWP from either mid 2013 or mid-2014 - that is to say about four years earlier than the date he contended for at the hearings on the 17 and 18 December.[9]In addition, and despite his protestations to the contrary, for the first time in the course of his oral submissions in support of the application, Mr Wilson contended that Mr Emmott's ability to enforce the judgment that he has against MWP is now time barred and apparently that as a consequence it is no longer available for the purposes of set off. That is something which is not foreshadowed in the witness statement in support of the application. It was not foreshadowed in any skeleton argument in support of the application because none was filed and was mentioned for the first time in oral submissions made by Mr Wilson. What I have described so far is regrettably entirely typical of the manner in which Mr Wilson conducts this litigation. Applications are made at the last minute supported by prolix and repetitiously expressed material that de rails hearings convened for specific purposes and involves the deployment of points at the last minute without notice to Mr Emmott, so that he has no proper chance of responding, thereby resulting in yet further delay and confusion. The deployment of the limitation point would have been a forensic ambush but for the fact that it is without merit for the reasons I explain below.[10]Returning to the new limitation point, in his oral submissions in support of the application to reopen, Mr Wilson sought to place reliance on section 7 of the Limitation Act 1980. Section 7, under the subheading "Time limit for actions to enforce certain awards" provides that "An action to enforce an award where the submission is not by an instrument under seal shall not be brought after the expiration of six years from the date on which the course of action accrued" In my judgment Mr Wilson’s submission based on this provision is wholly unarguable because proceedings were commenced many years ago by Mr Emmott to enforce the award he obtained from the arbitrators against MWP as a judgment of the High Court, which is what has given rise to the applications which I heard on 16 and 17 December, which I am due to give judgment on today. All that section 7 is concerned with is to limit the time within which such enforcement proceedings can be commenced. That is apparent from the law as summarised in the footnote to section 7 contained in volume 2 of the white book, which is in these terms:
"It was common ground in the Good Challenger … [2003] EWCA Civ 1668 2004, 1 Lloyds Rep 67 Court of Appeal that when an ex parte application for leave to enforce an award that was made under section 26 of the Arbitration Act 1950, an action was brought for the purposes of section 7 above. This was because such an application was an alternative to proceeding by way of writ or originating summons. In the Amazon Reva [2009] EWCA Civ 1330, it was held at the limitation period of six years under the Limitation Act section 7 was applicable to an application to enforce an arbitration award in the same manner as a judgment under the Arbitration Act 1966, section 66"
Mr Wilson's reliance upon section 7 is therefore is wholly unarguable.[11]Having indicated that I intended to deliver judgment in relation to the application I am now going judgment on after a short delay of 30 minutes, to allow myself to collect my thoughts following the submissions of the parties, an email was received from Mr Wilson by my clerk, indicating an intention to rely on section 24 of the Limitation Act 1980 in the alternative to section 7. Aside from it being entirely inappropriate for Mr Wilson to conduct himself in this manner, in my judgment, his attempt to rely on section 24 is as unarguable as is his reliance on section 7.[12]Section 24(1) of the Limitation Act 1980 provides that "(a)n action shall not be brought upon any judgment after the expiration of six years from the date on which the judgment became enforceable." As the notes to section 24 set out in volume 2 of the White Book at paragraph 8/64, say:
"The House of Lords has held the proceedings to execute a judgment debt in that case by charging and garnishee orders was not an action upon a judgment within the meeting of section 24(1), and were not barred after six years by that subsection, action meant a fresh action …"
Mr Emmott is not seeking to bring a fresh action by reference to the awards. What Mr Emmott has done now many years ago, as I said, is to take steps under the Arbitration Act to enforce the award in his favour as a judgment of the court. Once that step was taken (as it was within time) no limitation issues that are relevant arise. Furthermore, as I have already said, this is an argument which surfaced for the first time in oral submissions made by Mr Wilson in support of his application to reopen. He did not cite any relevant case law. He did not develop in any way a submission that either of the provisions on which he relies in some way precludes as a matter of law Mr Emmott relying upon a defensive set off.[13]In those circumstances and returning to the re-opening application, in my judgment, it must fail and be dismissed for the following reasons. First, as the application notice and evidence in support of it expressly knowledges, to succeed he application must be by reference to new evidence. In my judgment, such an application must not merely be in relation to evidence which was not put before the court when the application was heard but must be in relation to evidence that could not with reasonable diligence have been put before the court on that date. There is nothing in the application, or the material relied upon in support of it, which satisfies these criteria. There must be an end to litigation and to applications if the finality principle is to be honoured. The original applications were argued over a period of two days and judgment reserved. Unless it can be demonstrated that there is new evidence not reasonably available to MWP at the date the hearing took place, then this application is bound to fail at the first hurdle.[14]Secondly, as I have already indicated, the attempt for the first time to suggest that set off was not available because Mr Emmott's judgment was statute barred by section 7 of the Limitation Act, is manifestly unarguable for the reasons I have given. Mr Wilson's further attempt to rely upon section 24, after the conclusion of the argument in support of the application to reopen had concluded, is equally unarguable for the reasons I outlined earlier in this judgment as well as being contrary to the finality principle and an illustration of why this litigation has become such a disproportionate burden.[15]Finally as it seems to me, the re-opening application is a collateral attack on an earlier ruling I gave in the applications for which I am meant to be giving judgment namely a ruling that Mr Emmott could not be required by MWP to file evidence in answer to the application which assisted Mr Wilson to make good the submissions he makes on behalf of MWP. The point in essence is that if Mr Wilson wishes to establish that set off is not available because either as a result of admitted sums due from Mr Emmott to MWP, and/or as a result of agreed set offs, which have taken place down to a particular date, no further set off is possible then it is for MWP to prove that. In the absence of either admission or evidence, which proves such allegations to the summary judgment standard then by definition the point is not one which can succeed, even in principle that is a point which I should be required to decide on these applications.[16]In those circumstances, the application to reopen is dismissed. I record that what should have been a straight forward and time limited exercise involving the reading down of a reserved judgment has been derailed and its completion material delayed by an application that on analysis should never have been made.[17]I now turn to my judgment in relation to the three applications that I heard in December last namely the application by Mr Emmott for a declaration that as a matter of principles, he is entitled to set off the judgment debt in his favour against cost orders made in favour of MWP, secondly, the application by MWP for an order rescinding the cost orders, which I referred at the outset of this judgment; and thirdly, the application by MWP for a debarring order precluding Mr Emmott from participating further in these proceedings, unless and until Mr Emmott pays all sums due to MWP by way of costs.[18]The debarring application predates MWPs application to set aside the various costs orders made against it, and was issued by Mr Wilson on behalf of MWP, as part of its response to Mr Emmott's application in relation to the availability of set off. The outcome of the set off application may be affected by the outcome of the set aside application since if that application succeeds, it will increase substantially for sums due to MWP from Mr Emmott and may provide support for MWPs case, that the judgment debt has been exhausted and set off therefore is no longer available. For these reasons I intend to address the applications that I have to determine in the following order,(a) the rescission application,(b) the set off application, and(c) the debarring application.[19]Before turning to the detail, I record once again the time and cost that this litigation has involved by incorporating into this judgment by reference, what I set out in my judgment of 1 November 2024 staying on this litigation at [2024] EWHC 2731 (comm). My reasons for making that order appear from that judgment and do not require repetition. However, I draw specific attention to what I say in paragraph 23:
"Following that judgment, the New South Wales claim was tried on its merits, and despite Mr Wilson's confidence that MWP would succeed, the claim failed on its merits and was dismissed - see the judgment in MWP v. Emmott [2024] NSWSC 1489. The substantive detail does not matter. The detailed criticism of the conduct of MWP and Mr Wilson in relation to those proceedings at paragraphs 3 to 9 is worthy of note, as is [the Chief Judge‘s] criticism of this litigation generally at paragraphs 10 to 12. Much of the difficulty over the years has been caused by MWPs unremitting attempts to avoid the effect of the judgment entered in Mr Emmott's favour many years ago. This has resulted in the pursuit of claims and applications by MWP in particular that have had no merit, appeals to similar effect and the making of ECROs, both by me and the Court of Appeal. I mentioned this only because Mr Wilson submitted that unless I acceded to his submissions, there would be no end to this litigation. The difficulty about that is that much of what has happened historically could have been avoided if MWP conducted this litigation in a procedurally sound, reasonable, and proportionate manner."
Symptomatic of the problem is the application to re-open dismissed a moment ago and what Mr Wilson has said in his 61st statement, in support of the application to reopen this application, much of which I quoted earlier in this judgment.[20]I now turn to the set aside application. As I have said, the cost orders that MWP seeks to set aside, falls into fall into two categories, being(a) the cost orders made by the arbitrators following publication of their Quantum Award, and(b) various cost orders in the proceedings that followed as Mr Emmott sought to enforce the award in his favour as a judgment of this court. The common theme in relation to these orders is that Mr Emmott has never sought to have those costs assessed notwithstanding that MWP has been required to provide substantial security or make payments on account, which MWP paid many years ago. In essence, MWP maintains that I should order Mr Emmott to repay all these sums with interest at the judgment rate from the date when the payments were made originally. Mr Wilson submits that I should do so on the basis that Mr Emmott's ability to seek a detailed assessment was lost many years ago when his right to do so became "time barred".[21]I turn first to the arbitration costs; Mr Emmott submits I have no jurisdiction to make the order sought because that was exclusively a matter for the tribunal. In my judgment, that submission is wrong. Firstly, it was not supported by reference to any authorities. Secondly, it ignores the fact that the tribunal became functus many years ago. Thirdly, it ignores the fact that MWP has commenced proceedings by an arbitration claim number CL-2024-000172, seeking effectively, the relief sought on this application.[22]In those proceedings I have made a debarring order under section 63(4) of the arbitration Act 1996, and CPR Rule 47.82, requiring Mr Emmott to initiate the detailed assessment procedure within two months. Mr Emmott maintains he has complied with this direction. Mr Wilson maintains that he has not because(a) Mr Emmott sent the documents he relies on to MWP by email, and MWP does not accept service by email as Mr Wilson maintains has been made clear on numerous previous occasions, and(b) the bill accompanying the notice is manifestly defective. This leads Mr Wilson to submit that I should hold that Mr Emmott is in breach of my order and that in consequence, he is disbarred from seeking his costs of the arbitration and that I should order repayment of all sums paid by MWP on account of those costs.[23]There are a number of difficulties about this part of the application of which the first is that the application notice seeking rescission of the costs orders made by the arbitrators was not issued in the arbitration claim, which I referred a moment ago. This led Mr Wilson to apply in the course of his oral submissions for permission to amend his application notice. In my judgment, that too was misconceived. Firstly, no notice of any such application had been given to Mr Emmott, who unsurprisingly submitted it was procedurally unfair for him to have to face such an application without the opportunity to consider it, and the evidence he would wish to adduce in relation to it, he having taken the point concerning jurisdiction in response to the application. I agree that Mr Emmott took the point in his evidence and that his submissions in answer set out this point. Mr Emmott submits that there is no excuse for MWP not addressing the point earlier. Again, I agree.[24]Secondly, and more importantly, Mr Emmott maintains that given the history of dealing between the parties, he should be given permission to treat service by email as good service. I agree that issue has to be addressed, however, that issue together with whether the detailed bills on which Mr Emmott relies are adequate, and what, if anything should happen if they are not, in my judgment, are matters that must be addressed by the costs judge in the SCCO, not by me. Even if that is wrong and I could in principle deal with the issues that arise, the short point is the evidence is not available to enable me to do so because the application to amend the application notice was made only in the course of the hearing. As it seems to me, that is sufficient to deal with this aspect of the rescission application, to the extent that it concerns the arbitration costs.[25]Two points remain, however, firstly, Mr Wilson submits that Mr Emmott should not be permitted to seek his costs of the arbitration proceedings because he is in breach of his undertakings to do so. In my judgment, that is not something that I should consider at this stage, not least because Mr Wilson on behalf of MWP has commenced contempt proceedings against Mr Emmott, in which that allegation is to be determined. It would be wrong for me to make findings in relation to this point until after a final determination of the contempt proceedings because it would or might require Mr Emmott to take steps that he could not be required to take in the contempt proceedings and which might prejudice his position in relation to those proceedings by forcing him to file evidence in answer, which he could not be compelled to file in the contempt proceedings, that might then become admissible in the contempt proceedings.. In any event this point has been overtaken by MWP'S application for an order requiring Mr Emmott to have his arbitration costs assessed pursuant to CPR Rule 47.7. Such an application is entirely inconsistent with, indeed is the very opposite, of a submission that Mr Emmott should be treated as debarred from recovering his costs by reason of the alleged breach of his undertaking.[26]The final point that arises is an assertion by Mr Wilson that Mr Emmott's right to seek an assessment of his arbitration costs is "time barred". Mr Wilson made no attempt to justify this submission by reference to any authorities other than section 24 of the Limitation Act 1980, which Mr Wilson submits applies not merely to an attempt to enforce a costs order after assessment but to the right to seek an assessment of those costs. There are a number of difficulties about that submission. Firstly, as I have said already, it is entirely inconsistent with the position that Mr Wilson adopted when applying for the order I made under CPR Rule 47.7. Secondly, it is contrary to what I held in Michael Wilson and Partners v. Emmott [2024] EWHC 1385 (comm), from which there has been no appeal. In those proceedings, I rejected precisely the submission that Mr Wilson has made again in the course of his submissions in relation to the application I am now determining, see paragraph 17. It is another feature of the way in which Mr Wilson conducts this litigation that he will not accept points decided against him even where there is no appeal outstanding where he perceived that to do so would be contrary to MWP’s interests. That is reflected in the application earlier to re-open the hearings I am giving judgment in, it was reflected ion the collateral attack on an earlier ruling I had given that I referred to when dismissing the application to re-open and this regrettably is another example. Such conduct is unreasonable to a high degree and is entirely unacceptable.[27]In those circumstances, I conclude that not merely is this point unarguable, but it is one that should not have been argued. Furthermore, Mr Wilson should have drawn my attention to what I decided in the judgment referred to above but failed to do so. It was only because I recalled it that it features in what I have said so far.[28]In the result, I reject the rescission application in relation to the arbitration costs on the basis that the application has not been made by reference to the arbitration claim that led to the order under CPR Rule 47.7; that in any event Mr Emmott's right to have his costs assessed is not statute barred and because any assertion that his right to have the costs assessed has been lost by reason of Mr Emmott's alleged breach of his undertakings became unarguable once MWP applied for and obtained its order under CPR Rule 47.7.[29]I now turn to the various costs orders made by judges in the past in these proceedings. I can, I think, take this point more quickly. First, Mr Emmott Submits and Mr Wilson does not, I think, dispute that an application that was expressed in similar terms was dismissed by me by an order made on the 20 December 2020. I do not consider that to be material however, because the basis of the challenge to those orders on that occasion was different from that advanced on this application. The allegation at that stage was that the costs orders should be set aside because they had been obtained by fraud. That application failed because any such challenge was required to be brought by separate claim, as in fact happened subsequently, and not as an application under CPR Rule 3.17. Although it is true to say there has not so far been any application by MWP under CPR Rule 47.7 in relation to the court orders, the subject of this part of the application, all the other substantive points I have made so far apply with equal force. It is not open to Mr Wilson to allege that Mr Emmott's right to seek an assessment of his costs has becomes time barred for the reasons I have already given or otherwise has been lost by reason of his alleged breach of his undertakings for the reasons set out by me in MWP v. Emmott [2024] EWHC 1385 [2024] 4 WLR 66 at paragraph 17 to 19. That must be read subject to the availability of the penalty under CPR Rule 44.11, although the circumstances in which that rule will be applied will be exceptional - see the principle summarised in the notes in volume one of the white book at paragraph 47.8.3 and 47.8.4, and the authorities they referred to. In the result, there is no arguable basis for contending that Mr Emmott's right to seek assessment has become time barred. MWPs remedy is to seek a debarring order under CPR Rule 47.7.[30]In the result, I conclude that the rescission application must be dismissed. Given what I said in the judgment I referred to earlier, which as I have said Mr Wilson should have, but failed to refer me to, this is an application that not only fails but is one that ought not to have been issued. For that reason, I certify it as totally without merit.[31]I now turn to Mr Emmott’s set off application for a declaration that he is entitled to set off the sums due from him to MWP under a costs order made by me on 20 November 2020, following a detailed assessment of the sums due under that order by cost Judge Rowley on 7 July 2022. Mr Emmott seeks to set that sum off against the judgment sums due to him from MWP as a result of the Arbitral Award dated 5 September 2014, which as I have said, he was given leave to enforce, as if it were an order at the high court by an order of Mr Justice Burton made on 27 June 2015. At that time, the sums due to Mr Emmott were(a) £3,209,213(b) $841, 213 US odd. This application was last before me on 7 February 2024 when there was listed (a) an application by MWP to strike out the set off application and (b) the debarring application to which I referred earlier in this judgment. On that occasion, I dismissed the strikeout application and stayed the debarring order application until after the final determination of the set off application.[32]The procedural history relevant to the set off application in summary is as follows:(a) by my order date 20 November 2020, I directed that Mr Emmott pay to MWP, a payment on account of costs of £255,000;(b) by an email of 3 December 2021, Mr Emmott asserted a right to set off the payment on account against the judgment debt in his favour;(c) on 7 July 2022, Costs Judge Rowley assessed the costs due to MWP in the sum of £309,439.47, held at MWP was entitled to interest on that sum from 20 November 2020 until 26 May 2020 on the balancing sum of £54,439.47 and that Mr Emmott was to pay that sum by 29 July 2022, but stayed that order on the basis that Mr Emmott would issue an application seeking an order that he was entitled to set off the sum due from him to MWP against the judgment sum due to him from MWP.[33]The application was duly issued by Mr Emmott on 22 July 2022. He submits, and I accept that he only did so because that was the requirement imposed upon him by Costs Judge Rowley. In giving his reasons for making the order he did, Costs Judge Rowley stated that:
"It is clear from the party's submissions that save for repeated applications to vary the freezing order, there have been no judicial decisions at high court judge level regarding the appropriateness of setting off orders for costs such as the one that underpins these proceedings, or other extent orders between the parties."
It is unclear to me from these reasons whether Costs Judge Rowley was referring to a general absence of authority in this area, or whether he was referring to a determination specific to this case. Mr Emmott maintains that the only reason for Cost Judge Rowley's order was that Mr Wilson had submitted that as a matter of principle set off was not available. The inference I draw on balance is that Costs Judge Rowley was concerned with a submission then being made on behalf of MWP by Mr Wilson that set off simply should not be permitted as a matter of law. I accept this because otherwise there would have been no point in the Costs Judge making the order he did. The issue would be resolved by a direction that there be set off if available and the issue would then be one for the insolvency court if a statutory demand was issued and application to set aside the demand was made. Mr Wilson maintains that whilst that was so, his point was that in any event, on the analysis which he advances the state of account between MWP and Mr Emmott means that there was nothing left of the judgment debt against which set off could be asserted. Whilst he maintains that in principle Set off should not be available to Mr Emmott he also maintains, therefore, that I can and should make findings about the state of account between MWP and Mr Emmott.[34]There is an additional point on which Mr Wilson places significant reliance. MWP became the assignee of all the rights of a Mr Sinclair against Mr Emmott under a deed of assignment in favour of MWP by Mr Sinclair's trustee in bankruptcy. Mr Wilson maintains that as a result of an instrument entered into by Mr Emmott and Mr Sinclair. Mr Emmott came under an obligation to transfer all sums recovered from Mr Wilson to Mr Sinclair. I explain in more detail below the relationship between Mr Sinclair and Mr Emmott, and the terms of the instrument on which Mr Wilson relies. Mr Wilson's underlying thesis is however, that given what he maintains is the effect of that instrument, all sums ostensibly due to Mr Emmott, from MWP, have become due to MWP by operation of the trustees' assignment so there is nothing against which Mr Emmott can claim to set off the cost orders.[35]So far as general principle is concerned, it has been held consistently for many years that set off operates as a defence where a defendant to a claim has a cross claim against the claimant and the claim and cross claims are so closely connected that it would be inequitable to require the claimant's claim to be met without taking account of the defendant's cross claim - see Lockley v. BTS [1992] 1 WLR 492 per Scott LJ at 496(h); Gary Firms v. Anglo Dutch Paint and Chemical Company Limited [2010] EWHC 2366 Chancery per George Leggatt QC, as he then was at 26 and Semcor UK Limited against Global Steel Holdings [2015] EWHC 363 (comm) per Hamlin J, as he then was, at paragraph 34. The current state of English law is that the test for the availability of equitable set off as a defence requires a court to determine two questions, being(a) whether there is a sufficiently close relationship between the relevant transactions, and(b) whether it would be manifestly unjust for the claim to be enforced without regard to the cross claim - see Geldof Metaalconstructie NV v Simon Carves Ltd[2010] EWCA Civ 667 per Rix LJ at paragraph 43(v) to (vi).[36]It is important to understand how the set off defence works. Its effect is to prevent a creditor from asserting money is due from an alleged debtor to the extent of the set off claimed but it does not extinguish liability unless and until such is agreed to be its effect or such is determined to be the result by a court or Arbitral tribunal - see Stemcor UK Limited ibid at paragraph 34. It is no doubt for that reason, that when set off may be available in respect of an order by a court, the advocate for the party relying on set off will normally ask the judge to direct set off or the court will direct it of its own accord on the basis that the availability of set off is obvious. An example of the latter is the order made by Lord Justice Henderson in the Court of Appeal order relied upon by Mr Emmott in his submissions on the application. Pending judgment, award or agreement, the availability of set off depends upon whether the debtor has shown to that it has a reasonably arguable case that it is entitled to a set off. Referring specifically to costs and judgments in Lockley ibid at 497, Scott LJ distinguished between a set off of one costs order against another costs order incurred in the same claim, which were to be regarded as a matter of general principle as so obviously satisfying the applicable tests as not to require further discussion. However, he described as "less obvious" the proposition that set off of costs against damages, "… would always be justified ..."[37]If, and to the extent that MWP contends that as a matter of principle set off could never be permitted, I reject that suggestion because plainly it can be, as the authorities to which I have so far referred clearly demonstrate. Whether in any given case a party against whom a costs order has been made is able to assert set off the sums due against sums claimed by that party from the cost judgment creditor is a fact sensitive question in which the party asserting set off will have to establish(a) a cross claim to the summary judgment standard (that is of realistic arguability);and(b) that (i) there is a sufficiently close relationship between the costs claim and the cross claim and (ii) that it would be manifestly unjust to permit enforcement of the costs order without regard to the cross claim. In carrying out that assessment, one factor that is likely to be relevant in most cases is that as a matter of juridical policy, interlocutory costs are generally required to be paid on a pay as you go basis. If the cross claim is realistically arguable but is no more than that, it is doubtful (at any rate in most cases) whether it would be manifestly unjust to permit enforcement of the costs order without regard to the claim given the policy that applies to interlocutory costs. However, that is plainly of no application on the facts of this case because Mr Emmott has established his right to recover the judgment sums from MWP by having the Arbitral Award made in his favour enforceable as if it was a judgment of the High Court by the order of Mr Justice Burton I referred to earlier. By asserting a set off at the time when the costs concerned are assessed, the policy concerning the payment of costs on an as you go basis is satisfied because there is at that point a pro tanto reduction in the judgment sum that Mr Emmott is entitled to enforce.[38]In my judgment, therefore, there can be no real doubt that in principle, Mr Emmott is entitled to set off his liability under costs orders as and when they arise in these proceedings against the judgment sum together with interest as it has accrued down to the date when the right to set off is asserted. As I have said, set off operates as a defence and will generally arise where there is a dispute either before a court at determining a summary judgment application on the cross claim or an insolvency court determining an application to set aside a statutory demand or adjudicating upon a winding up or bankruptcy petition. Generally, it is inappropriate to expect a court to resolve such an issue other than in the context of such proceedings, where the issue that arises can be determined in the relevant context. There will generally be a need to determine the state of account at such a hearing. There may well be a dispute as to when the set off should be applied, which will be relevant to how interest should be treated as accumulating on the judgment on the one side, and on the sums due under the costs order on the other. There may be issues as to what, if any, sums should be treated as set off prior to considering the particular costs order concerned as there would be in this case, on the basis that MWP seeks to assert that the right of set off has been lost by reference to a myriad of different transactions, with only those about which there is no dispute or which can be established to the summary judgment standard being available to be taken into account.[39]I now turn to MWPs responses to the application. As I have explained, MWP took an assignment of all Mr Sinclair's rights against Mr Emmott. The background to this is set out in paragraph 10 and following of my judgment in these proceedings at [2024] EWHC 449 (comm). Mr Wilson maintains that the funding arrangements between Mr Emmott and Mr Sinclair were the subject of a funding deed that in turn was subject to various addenda, including addendum No.2. Two provisions are relied upon by Mr Wilson as material to the issues that arise being paragraphs 1 and 2. Those paragraphs must be read in the context of recital (e) to addendum number two. The relevant provisions therefore are to the following effect:
" … (E) Mr Sinclair has since provided and agreed to provide a further funding in the sum of £1,265,281.50 on account of defence costs, bringing the aggregate total funding of defence costs by Mr Sinclair to £397,500 plus all amounts in clause one below. The parties wish to amend amended funding by executing this addendum to reflect this further funding and certain other matters. IT IS AGREED (1) Mr Emmott acknowledges and agrees that since addendum number one was executed, Mr Sinclair has provided and agreed to provide further funding on account of defence costs in the sum of £867,781.50 as set out below. With the result that the aggregate of the sum so advanced or to be advanced as indicated below is £1,265,281.50, and clause 2 and 5 of the funding fees should be amended and construed accordingly. (a) £33,285.50 advanced to Michael Robinson on behalf of Mr Emmott on , (b) £24,988, advance to Michael Robinson on behalf of Mr Emmott on 8 September 2008 (c) £9,988 advanced to Michael Robinson on behalf of Mr Emmott on 7 October 2008 (d) £50,000 advanced to Michael Robinson on behalf of Mr Emmott on 11 June 2009, (e) £50,000 advanced to Michael Robinson on behalf of Mr Emmott on 16 July 2009, (f) £50,000 advanced to Mr Emmott by Mr Sinclair under the Ayrton loan note between Mr Sinclair and John Anthony Cleve Ayrton dated 7 November 2008 (g) £300,000 advanced to counsel on behalf of Michael Robinson on (h) £164,000 pounds advanced and agreed to be advanced to counsel on behalf of Michael Robinson, payable on or before 28 February 2010 (i) £100,000 advanced and agreed to be advanced Kernan & Co on behalf of Mr Emmott on or before 28 February 2010, (j) £85,520 agreed to be advanced to accounts on behalf of Kernan & Co payable on or before 31 March 2010. (2) there should be new clauses 5.1(a) and 5.1(b) of the funding deed as follows, 5.1(A), any recovery made by Mr Emmott from MWP in or arising from the arbitration proceedings, including the security for cost pledged by MWP and the arbitration proceedings is to be applied first in repayment of the amounts advanced by Mr Sinclair pursuant to the amended funding deed and this addendum before being applied by Mr Emmott for his own benefit or for the purpose of paying other sums then owing by him to others, including sums owing by Mr Emmott to his legal advisors …"
[40]Although Mr Wilson appears to disagree, for present purposes it is at least realistically arguable that paragraph one records sums advanced by way of cost funding as at its date (12 February 2010) of £1.265 million odd. Mr Wilson maintains that other higher figures appear in other documents but that does not assist for present purposes. What sums ultimately were owed by Mr Emmott to Mr Sinclair, by way of legal costs, can only be determined at the trial of the proceedings to which I refer below. The provision that Mr Wilson maintains has the effect he alleges is the new clause 5.1(A). It requires the payment of any "Recovery" by Mr Emmott from MWP arising out of the arbitration to be applied first in repayment of the sums advanced by Mr Sinclair. It does not have the effect that all sums recovered will be paid to Mr Sinclair unless the sums recovered are less than the sums due to Mr Sinclair. Mr Emmott relies on the deed of assignment of 26 November 2018, which records the sums advanced under the funding deed as being £937,745, and US$105,801. Those sums are lower than the sums referred to in the second addendum. However the sums there recorded include some sums which were to be advanced after the date of the deed. In my judgment, it is hopeless for Mr Wilson to submit, on the basis of this material, that I can safely conclude to the summary judgment standard that all the sums paid by MWP over time by way of security or as a part payment of costs, were payable to Mr Sinclair. What has been and what remains to be paid will require detailed accounting only possible at a trial before it can be resolved. Such a trial would take place following a comprehensive disclosure process and with a much more detailed analysis of the material available than is it possible on an interlocutory application of this sort.[41]Further, Mr Wilson maintains that Mr Emmott is required to pay interest on all sums that should have been but were not paid to Mr Sinclair at the rate of 8.25% by operation of Clause 5.2 of the funding deed, which addendum No.2 varies. However, accepting that variation was not possible other than in writing, there is no express provision that precludes Mr Emmott from asserting an estoppel by reference to any agreement, arrangement or understanding between him and Mr Sinclair on these issues. Although Mr Wilson relies on a spreadsheet, he has had prepared, which he describes as a ledger, and which he maintains shows the state of account between Mr Emmott and Mr Sinclair, providing a ledger is not proof of what is due, although Mr Wilson maintained that his calculations are beyond dispute, in particular because of the admitted agreement to set off £1.468m contained in the deed entered into in November 2018. In contrast when considered together with all the costs orders that are outstanding, it is difficult to see how Mr Wilson could have been agreeing in 2018 to the set off of the sort contained in that deed, if as he now maintains, there was nothing that was due in owing after 2013 or 2014. It also ignores the fact that Mr Emmott was maintaining to Mr Sinclair in 2020 that there was in excess of £2 million and $1 million due to him from MWP. Mr Wilson maintains that his agreement to the set off of £1.468m was before he was aware of what he claims was due from Mr Emmott to Mr Sinclair. However, that focusses attention back on what sum was due from Mr Emmott to Mr Sinclair. That is in dispute and can only be resolved at a trial. I conclude, therefore, that on the material currently available, I cannot properly hold that set off is not available in relation to the costs order the subject to Judge Rowley's order, much less that such a set off is not available in respect of any other cost orders in favour of MWP.[42]The alternative way in which Mr Wilson maintains that I should conclude that there is nothing left is to set off concerns what is set out in what he calls MWP’s net TQA calculus - that is to say the spreadsheet I referred to much earlier in this judgment when dismissing the application to reopen these applications. The TQA calculus is a spreadsheet. As I have said, it has gone through a number of different iterations over time as Mr Wilson adds items to it. The most recent version or the version that was most recent at the time the hearings before me took place on the 16 and 17 December, was that served on Mr Emmott by Mr Wilson very shortly before the hearing and not exhibited to a witness statement.[43]On the application to reopen, as I have said Mr Wilson sought to rely upon a further revised version of the TQA calculus. As before its contents has not been verified by witness statement or expert report even though it is said by Mr Wilson to have been prepared by accountants by or on behalf of MWP. The TQA calculus purports to be a running account that consists of a series of items which, when interest is added and then that item, and the interest that is said to have accumulated, is deducted from the judgment debt together with accumulating interest there on, demonstrates that the judgment sum together with interest was exhausted at some earlier date. At the hearing in December MWPs submission was that date was 3 December 2018. As I have said, by the time the application to reopen had been issued the date which was relied upon was either June 2013 or July 2014.[44]The iteration that was before me at the hearing, consisted of 73 items in all and consists of costs orders which MWP alleges Mr Emmott has not paid, sums paid by MWP under orders made by various courts here and in various foreign jurisdictions, which Mr Wilson maintained should be repaid by Mr Emmott because they were on account of costs that Mr Emmott has not had assessed and sums that Mr Wilson maintains have been agreed to be set off. Mr Emmott admits some of these, but not all of them, and maintains that those he admits do not add up to the judgment debt. He also drew attention to what he maintains are various inaccuracies in the schedule. One example which, identified in the course of his submissions in relation to the reopening application, was in relation to a sum of £25,000, which appears to have been referred to on three separate occasions within the schedule. Aside from that, because the spreadsheet purports to be a running account, it works only on the basis that all the items are correctly stated down to the last dollar or pound in the schedules which are relied upon. Further, whilst the document appears to take into account interest continuing to accumulate on the reducing judgment sum, it only does so correctly only if everything that has gone before is correct in every particular.[45]More importantly, no attempt has been made to provide any coherent supporting evidence. It was only at the end of the weekend before the hearing that commenced on Tuesday, 16 December, that a bundle of material was produced. This was so, even though the application had been listed for months, and Mr Emmott had been asking for such material for weeks, if not months prior to the start of the hearing. This material was not in the form of a witness statement, but of various documents or extracts from documents said to support what is alleged in the spreadsheet. Mr Emmott complained in the strongest terms about this, on the basis that he had been seeking the underlying material to support what was contained in the spreadsheet for months, and he had had no chance to respond sensibly to the material given when it was served. I agree.[46]In my judgment, this was in effect, if not by intention, a forensic ambush that would have given MWP an illegitimate procedural advantage over Mr Emmott. It is something I am not prepared to countenance. In fact however it does not matter because there are many more fundamental objections to Mr Wilson's approach.[47]Firstly, as I have explained, set off operates as a defence, and thus the time for deciding whether it is available, is when it is necessary to deploy that defence. Where set off is properly asserted, following a costs order, that does not entitle MWP to continue to claim interest notwithstanding that assertion. What it does is to reduce the sum due on the judgment sum due to Mr Emmott together with interest thereon down to the date when the set off is asserted. That is now how the iteration of the spread sheet deployed at the hearing has been prepared. If at a subsequent hearing (for example an application to set aside a statutory demand) it should turn out that Mr Emmott is unable to demonstrate a realistically arguable right to assert set off when he did, then interest will accumulate on the sum outstanding in the normal way and either the sum due is paid or a bankruptcy petition will be issued with the statutory demand not being set aside.[48]Secondly, even if those difficulties could be overcome and they cannot, it is impractical and wrong in principle for me to attempt to resolve the factual and legal issues that arise in relation to the various items identified in the spreadsheet, on an application of this sort. If Mr Wilson wishes to demonstrate that by reference to such material, no set off is available, he needs to establish that by simply setting out the judgment sum plus accruing interest on one side of a very simple table, with the cost orders against Mr Emmott on the other, the date when set off has been asserted and the agreed set off of £1.468 million being applied to the reducing balance of the judgment and interest accumulating there on. If defeating the set off defence involves anything more complex and controversial than that, then it will have to await the trial now of the part 7 claim, that MWP has commenced, to which I now turn.[49]MWP has commenced a part 7 claim against Mr Emmott, bearing the number CL-2021-000728, in which many of the claims referred to in the spreadsheet, although not all have been claimed against Mr Emmott. No doubt Mr Emmott will plead set off in defence of that claim in addition to any other affirmative defences advanced concerning the effect of the various instruments relied upon, for example. If and when that claim comes to trial, the issues that arise will be resolved, and what Mr Wilson claims to want, namely, the final account between him and Mr Emmott will be the result. There may be other procedural routes to what Mr Wilson wishes to achieve that are quicker or cheaper. However, that is one of the routes at least that will enable the set off factual issues to be resolved finally.[50]Aside from the part 7 claim I have just referred to, there are now at least 14 outstanding applications by Mr Emmott to have set aside statutory demands served on him by MWP. The availability of a set off to the level of realistic arguability will have to be resolved on the hearing of those applications. However, in those proceedings, demonstrated Mr Emmott has to demonstrate merely a realistically arguable case that he remains entitled to set off to obtain the set aside of the statutory demands. Any sums not admitted by Mr Emmott, or are not proved by MWP to the summary judgment standard will have to be left out of account.[51]Mr Wilson argued that if certain items were taken in isolation, then they demonstrated by themselves that there was nothing left. However, the figures he relied on did not add up to the whole of the sum claimed, particularly when account was taken of accumulating interest on Mr Emmott’s side of the account and what was submitted by MWP would only work if the figures were recalculated against interest accumulating on the judgment debt, with only those figures being taken into account that were admitted or were unchallengeable being deducted from the judgment sum and interest thereon at the date when set off had been claimed. Admitted set offs, as with the sum of £1.468 million would have to be accounted for by applying the set off to the judgment sum plus interest thereon that accumulated down to the date when set off had been agree. That would require a complete recalculation that was not offered by MWP as part of its evidence at the hearing of the application.[52]Before leaving this application, I should record that it was not argued by Mr Wilson that in principle the connection between the cost orders against Mr Emmott and the judgment debt due to him was not sufficiently close to permit set off one against the other, nor that it would be manifestly unjust in principle to permit set off, even though all this started with an assertion by Mr Wilson to a Costs Judge that set off was not available as a matter of principle. Instead, Mr Wilson sought to argue for the first time at the hearing that Mr Emmott was not asserting a set off defence in good faith. The basis for this assertion was that Mr Emmott had asserted he was entitled to the whole of the judgment debt when under any view, he admitted to having a signed a £1.468 million of it to MWP in settlement of a claim MWP had against Mr Sinclair.[53]In my judgment that is not a point which is properly available to MWP. First, Mr Emmott did not say in his witness statement what Mr Wilson alleges he says. In paragraph 7 of his statement, he makes perfectly clear that in referring to the judgment debt, he is referring to so much of it as it is outstanding from time to time. In any event the functional element of the test for the availability of set off is concerned with whether it will be manifestly unjust to permit recovery as would be the case in these proceedings, if MWP was permitted to enforce its costs claims without regard to that part of the judgment debt and interest thereon that remained outstanding at the date when Mr Emmott claimed the right to set of any particular costs order. That is not concerned with how Mr Emmott describes the judgment debt but whether MWP can make good its case to the requisite standard that the judgment debt has been discharged.[54]Returning to the application, I am prepared to declare that as a matter of general principle, Mr Emmott is entitled to resist enforcement of the costs order made against him by reference to the judgment debt. However, all questions concerning whether in fact such a defence is available must be resolved either at the hearing of the application to set aside the statutory demands when the issue will be whether Mr Emmott has established a right to set off to the limited level required for such an application, or at the trial of the Part 7 claim or any other claim or application issued by MWP where the issue can be properly resolved – something that will involve MWP preparing an account along the lines explained earlier and supporting the sums claimed in it with proper evidence, which in the case of proving the costs claims may involve nothing more than producing the orders containing the summary assessment or the orders of the SCCO evidencing the detailed assessments or default assessments.[55]The debarring application necessarily fails, given the conclusions I have reached on the other applications.[56]I should make one further comment before closing this judgment. In the course of his submission, as it was suggested by Mr Wilson, but denied by Mr Emmott, that Mr Emmott seeks to persuade courts, as Mr Wilson put it, “all around the world” that he was necessarily entitled to set off of any costs orders made against him, against the judgment outstanding in his favour against MWP. Mr Wilson expressed the view that any judgment I gave dealing with the general principle but not determining the factual issues that arise in relation to the sums that MWP maintains are due by reference to the current iteration of the TQA calculus would result in courts around the world simply concluding that set off was available. In my judgment, no court anywhere reading this judgment could conclude that was what its effect was or was intended to be. All that this judgment resolves is whether, as a matter of English law, Mr Emmott is in principle entitled to seek to set off against any costs order made against him in favour of MWP so much of the judgment debt owed by MWP to Mr Emmott as remains unpaid or unaccounted for by earlier set offs. Whether as a matter of fact set off is available will depend upon a careful factual analysis at any particular date when set off has been asserted by Mr Emmott of the state of account between MWP and Mr Emmott. What test a court will apply in resolving that factual question will depend on the nature of the application being determined and the law that governs the application.[57]In the result(a) the re-opening application fails and is dismissed;(b) the costs order set aside application fails and is dismissed and certified as totally without merit,(c) in respect of the set off declaration application, Mr Emmott is entitled to the limited declaration mentioned earlier and(d) the debarring order application fails and is dismissed. Epiq Europe Ltd hereby certify that the above is an accurate and complete record of the proceedings or part thereof. Lower Ground, 46 Chancery Lane, London WC2A 1JE Email: civil@epiqglobal.co.uk This transcript has been approved by the Judge

Cited in 1 later judgment