Bonhams 1793 Limited & Anor v Al-Thani & Anor [2012] EWHC 4054 (QB)

Case No HQ12X04042

[2012] EWHC 4054 (QB)

IN THE HIGH COURT OF JUSTICE

QUEEN’S BENCH DIVISION

Venue The Royal Courts of Justice

Date Monday, 3 December 2012

Strand

London, WC2A 2LL

Before

MR JUSTICE MALES

Between

BONHAMS 1793 LIMITED & ANRClaimant

AL-THANI & ANRDefendant

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MR A HUNTER QC (instructed by Jones Day) appeared for Claimant

MR R CHATTERJEE (instructed by Squire Sanders) appeared for Defendant

Judgment

[1]MR JUSTICE MALES: I have before me three applications in this case, which involves a claim by the claimants, to whom I shall refer, without distinguishing between them, as Bonhams, and the defendant, Sheikh Saud bin Mohammed bin Ali Al-Thani, who is a member of the Qatari royal family. The claim is by Bonhams for sums which are said to be due as a result of successful bids made by or on behalf of the sheikh in five auctions held between October 2011 and May 2012.

[2]The three applications before me today are, first, an application by Bonhams for summary judgment on their claim; second, an application by Bonhams to continue post-judgment a worldwide freezing order, which has been put in place in these proceedings already; and third, an application by the defendant to adjourn the hearing of the summary judgment application for 28 days, which, in practice, means until about the beginning of next term.

[3]The claimants’ claim, as I have said, arises from successful bids made in five auctions held in four cases in London and in one case in Hong Kong. Under the terms of Bonhams’ terms and conditions, the successful bidder is liable to pay the bid price, together with the buyer’s premium. The claim amounts in total, including interest and converting the Hong Kong dollar figure into sterling, to approximately £4.5 million as of today.

[4]The way in which Bonhams put their case is that the sheikh is liable as the principal who made the successful bids, or whose staff did so on his behalf. Alternatively, if the principal is to be regarded as the second defendant, a Mr Hassan Mohammed al-Dehaimi, who is a friend of the sheikh and who was introduced to Bonhams by the sheikh, then it is said that the sheikh or his staff were acting as agents and are liable, under the terms and conditions, as Mr al-Dehaimi’s agents. Thirdly, it is said that in any event, in a series of meetings and in correspondence, the sheikh undertook and accepted liability for the amounts in question.

[5]Until this morning, or possibly some time over the weekend, the sheikh had never at any stage denied liability. He had written at least one letter, dated 17 July, which, on one reading, although a reading which the sheikh now disputes, appears to accept liability for the sums in question. The sheikh never responded to or disputed letters written to him after meetings with Bonhams, in particular two letters dated 4 September 2012, which made it as clear as it could possibly be that Bonhams were saying that it was the sheikh who was personally liable for the amounts in question.

[6]The procedural history of this matter is that the claim form with the Particulars of Claim was issued on 27 September of this year. A worldwide freezing order was made by Cox J on 2 October, which, in the usual way, required disclosure of assets and restrained removal from England and Wales of assets up to the value of £4.3 million and restrained disposal of or dealing with or diminishing the value of assets outside England and Wales, although the order was expressed not to apply to any assets located in Qatar, which is the sheikh’s home country. That order was continued by Openshaw J on 9 October and varied in some respects, and again by Roderick Evans J on 24 October.

[7]The hearing before Openshaw J on 17 October was attended by the sheikh, not in person but through solicitors, SJ Berwin, who were representing him and, as I understand it, also by counsel. On 17 October those solicitors served an acknowledgement of service and sought an extension of time for serving a Defence. A letter written shortly after that, on 26 October, said that it had been difficult to take the sheikh’s precise instructions and requested consent to a 28-day extension of the deadline but did not give any hint of what the defence might be. On the same day as that letter, 26 October, Bonhams made their application for summary judgment and the sheikh was due to serve any evidence in response by no later than 19 November, although he did not do so. Instead, on 21 November, his solicitors served an order permitting them to come off the record.

[8]Meanwhile, a hearing had been fixed, when those solicitors were still acting, for 27 or 28 November for the summary judgment application to be heard. That was due to come on before Kenneth Parker J last week on 27 November. A few minutes before 10.30am on that morning, there was an email from Mr Weekes of Squire Sanders to Bonhams’ solicitors, saying that they had just been instructed on the Bonhams matter to seek an adjournment of the hearing. I understand that counsel who had previously been acting on the instructions of SJ Berwin attended before Kenneth Parker J and requested that adjournment. Kenneth Parker J did adjourn the hearing but he made it clear that the court was unhappy about the sheikh’s conduct and was concerned that the court procedures were being manipulated for illegitimate and impermissible ends and he directed that the application should be restored today, thus an adjournment of seven days. I understand that he also indicated that he could not envisage circumstances in which any further adjournment would be permitted, although the terms of his order simply adjourn the hearing and do not formally preclude any further adjournment. He ordered that the freezing order would continue without further variation and also ordered the sheikh to pay the costs of the application to adjourn, and costs thrown away by reason of the adjournment, on an indemnity basis.

[9]Squire Sanders have now been formally instructed, which I understand happened on 28 November, thus last Saturday, but nothing was heard from them until I think the end of last week, indicating that it was likely that a further adjournment application would be made. This morning that application was made in the form of an application notice in which Rebecca Coombes, an associate of the firm, set out the grounds, stating that they had not been able to arrange a meeting with the sheikh or his representatives until the afternoon of 30 November and did not yet have full instructions, and requesting an adjournment of 28 days, saying that this was a complex case in which the sheikh must be given a reasonable opportunity to put his case to the court in order to ensure compliance with the overriding objective and with

Article 6 of the European Convention

[10]There was, at that stage in the application notice, no indication of what the defence might be, but that has followed in a skeleton argument and witness statement received by me and by the claimants’ representatives a few minutes before coming into court. The application goes on to say that the claimants are fully secured under a worldwide freezing order, a point which was also made in the skeleton argument of Mr Chatterjee, counsel who has appeared on behalf of the sheikh this morning. The submissions which Mr Chatterjee makes in support of his application to adjourn are summarised usefully at paragraph 9 of his skeleton argument, where he says that:

“In determining whether to grant an adjournment of a hearing, the Court must have regard to the overriding objective of dealing with cases justly. 10. In the present case it is just, in all the circumstances, to grant an adjournment for the following reasons (in summary) ...”

[11]Each of which he then develops further, those reasons being:(1) The sheikh has defences to the claim which, at the very least, have a real prospect of success.

(2) There would be substantial and irremediable prejudice to the sheikh if the hearing of Bonhams’ application were to proceed today.

(3) By contrast there would be no prejudice to Bonhams were an adjournment to be granted. It is, of course, necessary to deal with cases justly. It hardly needs the overriding objective to say that, but in any event that is clear, although that of course operates both ways. There must be justice to claimants as well as to defendants. The court has to balance those considerations.

[12]As for the first of those three points which Mr Chatterjee makes, his submission that the sheikh has defences to the claims with a real prospect of success, what is said in outline in the witness statement which the sheikh has now provided, as of this morning, is that he personally did not bid for any of the lots in question and, with one possible exception, which he is not sure about, did not attend any of the auctions in question; that the claimants have not identified the staff members who are supposed to have bid on his behalf; that if they were bidding they were not doing so on his behalf; and that the invoices which the claimants raised were all addressed to Mr al-Dehaimi, showing, therefore, that he is the party whom Bonhams regarded as the principal liable on these bids. He disputes, although without giving any details, the accounts of the meetings which took place at which the Bonhams’ witnesses say that he repeatedly accepted liability. He suggests that the letter of 17 July, which I referred to earlier as saying, on one reading, that he was accepting responsibility, is in fact properly to be understood in a different sense, although he does not address the follow-up letters, that is to say the letters written by Bonhams following some of the meetings which took place, in which it is as clear as it can be that Bonhams were saying that the sheikh was the person liable. Mr Chatterjee says that those are letters which would need to be addressed in any further evidence, and indeed they would. At present they are not addressed, and although I make no final decision it seems to me that, unless and until they are, the claimants would have a strong case. So although it may be that the sheikh has defences to the claim which have a real prospect of success, at present he has gone some distance towards suggesting why that would or might be so but there are certainly other matters which would need to be covered.

[13]So far as prejudice is concerned, it is necessary to balance the prejudice to the sheikh if the adjournment is refused, against the prejudice to Bonhams if it is granted. So far as the prejudice to the sheikh is concerned, it is of course true that if judgment were entered and if he does in fact have a good defence, then he would be prejudiced, but at present it is not clear whether there is such a defence, because some of the matters which cry out to be dealt with have not been. The point would also need to be considered in the context that, as Mr Hunter QC for Bonhams submitted, the sheikh has had ample opportunity to identify any defence that he may have, and give evidence to support it. He has, with the exception of a very short gap, been represented by experienced solicitors and counsel and it is not the claimants’ fault that he has changed his legal team. It is not entirely clear whether he sacked them or they sacked him. It is said that he was not in a position to give more detailed instructions because he had business commitments. That, I strongly suspect, is another way of saying that he could not be bothered to do so, or at any rate that he regarded himself as having higher priorities than responding properly to this claim.

[14]I indicated that it was said in the application notice, deposed to by Ms Coombes, that this is a complex case. In fact, it is not a particularly complex case. It is a very simple defence to say, “It is not me, it is my friend”, if that is what the defence is. Investigation of why that is so may or may not be complex but the basic defence is a very simple one to state.

[15]So far as the question of prejudice to Bonhams is concerned, they hold the assets which were the subject of the auctions in question, and ultimately those assets can be sold and will realise what they will realise. It is likely, however, that those would not cover the entirety of the claim, partly because the claim includes the buyer’s premium, which is, I think, 25 per cent, and partly because they are unlikely, it is said, and for present purposes I accept, to realise as much as the sheikh, or alternatively Mr al-Dehaimi, was prepared to bid for them. It is said by Mr Hunter that they are likely to realise £2 million or less, and for present purposes I proceed on that basis.

[16]Bonhams do have the benefit of the freezing order but, contrary to what is said in the application notice and in Mr Chatterjee’s skeleton, that does not provide Bonhams with security. That simply prevents dealing in the sheikh’s assets and, to the extent that those are outside the jurisdiction, there would be additional complications and the possibility of further proceedings abroad to enforce any order. There are also other claimants and other creditors. See, for example, the judgment of Haddon-Cave J dealing with a claim by AH Baldwin & Sons in proceedings in the United States. His judgment, given as recently as 9 November this year, is cited as AH Baldwin and Sons Limited & Others v Sheikh Saud bin Mohammed bin Ali al-Thani

[2012] EWHC 3156 (QB)

[17]There is, I am told, a particular item, a bronze, which is on loan to the Royal Academy, belonging to the sheikh, in an exhibition which is due to end on 9 December, which has a possible value of the order of £2 million. That is not a formal valuation and therefore is subject to a margin of error. I am told it has an insurance value of between £5 million and £10 million, although it does not follow, of course, that that is what it is actually worth. Again, however, as matters stand, that is an asset of the defendant but does not represent security for the claimants.

[18]It seems to me that although the sheikh is certainly not in a strong position to ask for an adjournment, a short adjournment can be given on terms which will not prejudice Bonhams significantly or perhaps at all, and will give the sheikh an opportunity to demonstrate both his good faith in dealing with this claim and that he has a defence to it, if indeed he has. I say that Bonhams would not be prejudiced, because under the rules, any judgment which might be given today would not require payment today and would not, therefore, be enforceable unless the time were shortened. Normally the rule would be that the judgment would be payable 14 days after the judgment is given, although there is power in the court to shorten that time. It seems to me that in practice there is therefore no real difference between a judgment given today, which becomes payable, say, in seven days’ time, and a judgment given in seven days time, if that turns out to be what the claimants are entitled to, which is payable immediately. In those circumstances, I would be prepared to give that short adjournment, but subject to strict conditions to protect Bonhams against what it does seem to me is the real possibility, although I put it no higher, that these proceedings are being abused and that the sheikh is manipulating them.

[19]The conditions which I impose are first that the sheikh must provide security in the sum of £2.5 million by payment into court, or otherwise to the reasonable satisfaction of the claimants’ solicitors, by noon on Friday, 7 December. I reach that figure on the basis that the total claim is about £4.5 million and I allow £2 million for the assets which Bonhams are holding. I do not make any deduction for the bronze at the Royal Academy because that, in the absence of some pledge, would not represent security for Bonhams. I was told at the very end of the hearing by Mr Chatterjee that the sheikh would be prepared to give a pledge over that asset so that it would constitute security. I will leave that to the parties to work out if they can. The condition which I impose is security in the sum of £2.5 million by payment into court, or otherwise as may be agreed. Secondly, I order that the bronze must not be removed from the jurisdiction of this court. Third, that there must be a payment to Bonhams of £25,000 on account of costs, to be made by noon on Friday, 7 December. The costs of today will be the claimants’ in any event. In addition a further £25,000 must be paid into court as security for any further costs orders which may be made.

[20]Next, I order that the case will be listed for next Monday, 10 December, reserved to me. If the conditions which I have mentioned are complied with, then I will give directions for a hearing with service of further evidence and so forth, which hearing will take place at a date to be fixed at the beginning of next term. If those conditions are not complied with, I will hear the claimants’ application for summary judgment next Monday. I record that if the conditions are not complied with and if the claimants’ application for summary judgment next Monday is successful, then I will exercise my power under CPR 40 to order payment immediately.