Ontulmus & Ors v Collett & Ors [2014] EWHC 294 (QB)

Case No HQ12D003628[2014] EWHC 294 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 18/02/2014
Before
THE HONOURABLE MR JUSTICE TUGENDHAT
Between
(1)MUSTAFA ONTULMUSClaimant(2) MTH YATCILIKClaimant(3) KAISERWERFT GMBHClaimant(1) SIR IAN COLLETTDefendant(2)WARD & MCKENZIE (YACHT CONSULTANTS) LIMITEDDefendant(3) PETER MOOREDefendant
Ian Helme (instructed by Olswang and Ford & Warren) for ClaimantsJames Price QC & Alexandra Marzec (instructed by Peters & Peters) for Third DefendantHearing Hearing dates: 5 and 6 February 2014
JudgmentMr Justice Tugendhat :
[1]This is a libel action in which the Claimants complain of words published by email on 10 January and 27 and 28 July 2012. By an Application Notice dated 29 November 2013 the 3rd Defendant (“Mr Moore”) applied for security for costs. The grounds of the application are as follows:
“(a) The First Claimant, Mr Mustafa Ontulmus, is resident out of the jurisdiction, but not resident in a Brussels Contracting State, a state bound by the Lugano Convention or a Regulation State, as defined by s.1(3) of the Civil Jurisdiction and Judgments Act 1982; and/or the First Claimant has changed his address since the claim was commenced with a view to evading the consequences of this litigation; and/or he has given an incorrect address on the Claim Form. The Third Defendant relies on CPR 25.13 (2)(a), 25.13(d) and 25.13(e). (b) The Second Claimant, MTH Yatcilik (“MTH”), is a Turkish company and there are good reasons to believe that it will be unable to pay Mr Moore’s costs of this action if ordered to do so. The Third Defendant relies on CPR 25.13(2)(c). (c) The Third Claimant, Kaiserwerft GmbH (“Kaiserwerft”), is a German company and there are good reasons to believe that it will be unable to pay Mr Moore’s costs if ordered to do so. The Third Defendant relies on CPR 25.13 (2)(c). (d) It is just, having regard to all the circumstances of the case, to make an order for security for costs.”
[2]In the Re-Amended Particulars of Claim the parties are described as follows. The First Claimant (“Mr Ontulmus”) is and was a shareholder in, and consultant to, MTH and consultant to the Third Claimant (“Kaiserwerft”) and is a point of contact for various of the clients of MTH and Kaiserwerft. MTH is and was a successful Turkish company carrying on business inter alia as a yacht builder, seller and charterer. Kaiserwerft is a German company engaged in the same business and similarly successful. MTH and Kaiserwerft sell yachts internationally.[3]The First Defendant is the Managing Director of the Second Defendant. The Second Defendant is an English company carrying on business inter alia as yacht consultants, surveyors and advisors. They were instructed by Mr Moore and Mrs Moore in connection with a dispute that arose between the Moore’s and the Claimants. Mr Moore is a client of MTH who had ordered a series of yachts. It is alleged that he has not paid for these and that he has wrongfully obtained one yacht called Blade.[4]It is not necessary to set out the words complained of. It is the Claimants’ case that in their natural and ordinary meaning they accused the Claimants of fraud and criminal activity. The most significant publication complained of is alleged to have been made to Mr Franck Muller, a businessman based in Switzerland, who had engaged the Claimants to build him a new yacht.[5]It is an unusual feature of this libel action that the Claimants claim to have suffered special damage. This is pleaded in paragraph 28 of the Amended Particulars of Claim as follows: i. “ On 12 May 2012, at a meeting attended by, amongst others, the First Claimant and Enrico Francavilla (Mr Muller’s consultant and representative) Mr Muller agreed with the Third Claimant that he would place an order with it for the construction of an approximately 45 metre motoryacht below 500 gross tonnage. He agreed to advance €400,000 within 7 days to be used for preliminary drawings and other matters. That sum was duly paid on 23 May 2012. ii. In late June further specifications were agreed for the yacht, and the price was agreed at €21m. A further down payment of €600,000 was paid by Mr Muller on 9 July 2012. iii. Following and as a direct result of the 28 July 2012 email, and despite attempts by the Claimants to persuade Mr Muller of the falsity of the allegations made against them, Mr Muller decided not proceed with the instruction to the Third Claimant to build the yacht. iv. As a result the following losses were incurred by the Claimants:(1) The First Claimant lost the commission of 3% which he was to have been due on the €21m purchase price of the yacht, namely €630,000.(2) The Second Claimant lost the sum of around €900,000 which it would have been due under a licence agreement with the Third Claimant.(3) The Third Claimant lost the profit of €4.5m which it would have made on the build of the yacht.(4) The Third Claimant incurred costs of €2.35m in relation to the preliminary stages of the construction of the yacht. Having been paid €1m in advance payments it therefore incurred a loss of €1.3m. v. The Third Claimant and Mr Muller had agreed to market the proposed new yacht as the first example of a new product to be available for purchase from the Third Claimant. It was to be marketed as the “brand new Kaiserwerft model, designed by acclaimed watchmaker Franck Muller” and to be described as “a revolution in the megayacht sector”. Marketing material for the project was well advanced , and interest had been expressed by 3 potential customers, at the time when the 28 July 2012 email caused Mr Muller to withdraw from the project, thus causing the Claimants to lose there very substantial profits which were likely to have resulted.” (1) The First Claimant lost the commission of 3% which he was to have been due on the €21m purchase price of the yacht, namely €630,000. (2) The Second Claimant lost the sum of around €900,000 which it would have been due under a licence agreement with the Third Claimant. (3) The Third Claimant lost the profit of €4.5m which it would have made on the build of the yacht. (4) The Third Claimant incurred costs of €2.35m in relation to the preliminary stages of the construction of the yacht. Having been paid €1m in advance payments it therefore incurred a loss of €1.3m.[6]CPR 25.13(2) which provide as follows:
“(2) The conditions are – (a) the claimant is – i. resident out of the jurisdiction, but ii. not resident in a Brussels Contracting State, a State bound by the Lugano Convention or a Regulation State, as defined in section 1(3)of the Civil Jurisdiction and Judgments Act 1982; (b) [omitted] (c) the claimant is a company or other body (whether incorporated inside or outside Great Britain) and there is reason to believe that it will be unable to pay the defendant’s costs if ordered to do so; (d) the claimant has changed his address since the claim was commenced with a view to evading the consequences of the litigation; (e) the claimant failed to give his address in the claim form, or gave an incorrect address in that form; (f) the claimant is acting as a nominal claimant, other than as a representative claimant under Part 19, and there is reason to believe that he will be unable to pay the defendant’s costs if ordered to do so; (g) the claimant has taken steps in relation to his assets that would make it difficult to enforce an order for costs against him.” (a) the claimant is – i. resident out of the jurisdiction, but ii. not resident in a Brussels Contracting State, a State bound by the Lugano Convention or a Regulation State, as defined in section 1(3)of the Civil Jurisdiction and Judgments Act 1982; (b) [omitted] (c) the claimant is a company or other body (whether incorporated inside or outside Great Britain) and there is reason to believe that it will be unable to pay the defendant’s costs if ordered to do so; (d) the claimant has changed his address since the claim was commenced with a view to evading the consequences of the litigation; (e) the claimant failed to give his address in the claim form, or gave an incorrect address in that form; (f) the claimant is acting as a nominal claimant, other than as a representative claimant under Part 19, and there is reason to believe that he will be unable to pay the defendant’s costs if ordered to do so; (g) the claimant has taken steps in relation to his assets that would make it difficult to enforce an order for costs against him.”
[7]The grounds on which it is said that, having regard to all the circumstances of the case, it is just that the court should make an order can be summarised as follows. The cost of this libel action will be very large, on both sides. Mr Moore’s updated schedule of costs, set out in Schedule H, estimates costs up to an including trial, of about £1.5 million. Mr Moore is a private individual and should not be exposed to the risk of not being able to enforce costs orders of that size against the Claimants, all of whom are out of the jurisdiction. The Claimants cannot demonstrate that they have a high degree of probability of success in the action, and in particular they cannot do that in respect of the very large claim for special damages. The evidence given on Mr Moore’s behalf clearly demonstrates that Mr Ontulmus has, at the very least, been less that candid with the court as to residency; it is to be inferred that he has failed to be transparent on this issue because he wishes to avoid giving security and/or to evade costs orders against him. The evidence given on Mr Moore’s behalf demonstrates the difficulty, expense and risks of enforcement and execution of an English costs judgment in Turkey.[8]In his defence Mr Moore has pleaded justification (truth) and that the publications were on occasions of qualified privilege.[9]There is a related set of arbitration proceedings commenced by MTH against Mr Moore for damages for breach of contract said to be in excess of £10m. Mr Moore has counterclaimed in those proceedings. There is some degree of factual overlap between the two sets of proceedings.

THE APPLICATION AGAINST MR ONTULMUS

[10]Much turns on the meaning of “residence” in CPR 25.13(2)(a). The meaning of “residence” arises in different contexts in the law. Mr Helme invited me to adopt the summary of relevant considerations given by Lewison J and repeated by Lloyd LJ in Grace v. HMRC [2009] EWCA Civ 1082 at para 6 as follows (with the references omitted):
“(i) The word “reside” is a familiar English word which means “to dwell permanently or for a considerable time, to have one's settled or usual abode, to live in or at a particular place”: .. This is the definition taken from the Oxford English Dictionary in 1928, and is still the definition in the current on-line edition; (ii) Physical presence in a particular place does not necessarily amount to residence in that place where, for example, a person's physical presence there is no more than a stop gap measure: ..; (iii) In considering whether a person's presence in a particular place amounts to residence there, one must consider the amount of time that he spends in that place, the nature of his presence there and his connection with that place: …; (iv) Residence in a place connotes some degree of permanence, some degree of continuity or some expectation of continuity: ..; (v) However, short but regular periods of physical presence may amount to residence, especially if they stem from performance of a continuous obligation (such as business obligations) and the sequence of visits excludes the elements of chance and of occasion: …; (vi) Although a person can have only one domicile at a time, he may simultaneously reside in more than one place, or in more than one country: … which he has adopted voluntarily and for settled purposes as part of the regular order of his life, whether of short or long duration: …; (viii) Just as a person may be resident in two countries at the same time, he may be ordinarily resident in two countries at the same time: …; (ix) It is wrong to conduct a search for the place where a person has his permanent base or centre adopted for general purposes; or, in other words to look for his “real home”…; (x) There are only two respects in which a person's state of mind is relevant in determining ordinary residence. First, the residence must be voluntarily adopted; and second, there must be a degree of settled purpose: …; (xi) Although residence must be voluntarily adopted, a residence dictated by the exigencies of business will count as voluntary residence: …; (xii) The purpose, while settled, may be for a limited period; and the relevant purposes may include education, business or profession as well as a love of a place: …; (xiii) Where a person has had his sole residence in the United Kingdom he is unlikely to be held to have ceased to reside in the United Kingdom (or to have “left” the United Kingdom) unless there has been a definite break in his pattern of life: …”
[11]The evidence before the court on this issue is all in the form of written documents, including witness statements. Mr Ontulmus was in court throughout the hearing but no application was made to cross examine him, and he made no application to cross-examine the makers of witness statements adduced for Mr Moore.[12]It is common ground that Mr Ontulmus is resident outside England and Wales. So the condition which Mr Moore must satisfy for the purposes of CPR 25.13 (2)(a)(ii) is that Mr Ontulmus is not resident in a Brussels Contracting State. Mr Ontulmus does not claim to be resident in any such state other than Germany. So the issue I have to decide is whether I am satisfied that he is not resident in Germany. Alternatively, if he is, then I must decide whether he has changed his address since the claim was commenced with a view to evading the consequences of the litigation or whether he failed to give his address in the claim form or gave an incorrect address in that form.[13]The requirement to give an address in a claim form is set out in Practice Direction 16 para 2.2 which reads as follows:
“The claim form must include an address at which the claimant resides or carries on business.”
[14]There is no dispute that a person may reside at more than one place and indeed in more than one jurisdiction. The address that Mr Ontulmus gave in the claim form is an address in Turkey namely PK 33, 35930 Cesme, Izmir.[15]It might be thought that if Mr Ontulmus was going to say that he resided in Germany, as he does, that it would have been a simple thing to state where in Germany he resides, and to be consistent about that. However, the basis of the present application is that he has been anything but clear on the point.[16]On 16 August 2013 following the service of the Defence, Mr Moore’s solicitors wrote to the Claimant’s then solicitors Ford & Warren setting out the grounds for an application for security to costs. They stated that they understood that Mr Ontulmus was resident in Turkey, a country which is neither a Brussels Contracting State nor bound by the Lugano Convention. After correspondence dealing with other matters Ford & Warren replied on 17 October 2013: “…We attach a German residence card which establishes that [Mr Ontulmus] is resident in Germany”.[17]The card is a permit. It does not establish, or prove, that the permission is actually exercised by Mr Ontulmus. However, I accept that permission to reside in Germany is a valuable right, and one which Mr Ontulmus might be expected to wish to retain. So the permit is relevant to the question I have to decide and provides some support to the case for Mr Ontulmus.[18]On 24 October 2013 Ford & Warren wrote sending a further copy of that document and other documents as follows: “- Letters from the Furth foreign department; - A letter from Dr Beck, a German lawyer; - Land registry documents and a letter from the German Government confirming that Mr Ontulmus presently owns two properties in Germany, one of which is his principle place of residence. Taken together these documents establish that Mr Ontulmus has been a continuous German resident since 1991. His surviving parent, brother and sister all live in Germany, and (for the avoidance of doubt) he does not maintain a family home in any other country”.[19]On 13 November solicitors for Mr Moore asked for further information as to which of the two addresses in Germany was the one at which Mr Ontulmus had been resident. In reply, on 19 November 2013 Ford & Warren referred to one of these, and to a third address, which had not previously been mentioned.[20]They wrote that Mr Ontulmus’s residential address is the property at Kleemanngasse 7, in Furth, which is in Bavaria. They stated that he has owned this property in Furth since 1997. His time is spent both here and at Lohr Am Main where his mother, brothers and sisters are living. He is separated from his wife, and his children are in full time education in Turkey. He spends some of his summer holidays with his children on his yacht in Turkey. The address on the claim form is an “administrative” address in Turkey. They wrote that an amended claim form would be served in due course. None has been served.[21]It was in that state of affairs that Mr Moore issued application notice on 29 November 2013.[22]Mr Moore instructed an enquiry agent to investigate the address in Furth given by Ford and Warren. The enquiry agent’s name is Mr Dossow. He made a witness statement dated 28 January 2014 describing visits to that town, the first being on 13 November 2013. He said the house in question is a large two storey detached house on a corner plot. When he attended the property was in darkness, there were no lights or other signs of occupation, and the mailbox (fixed to the garden fence) was full and overflowing with commercial mail. He returned the next morning. He then recounted how he had spoken to a person who he named as Mr Husuyen Bulut who ran a fruit stall directly opposite. He then stated the following: “I enquired whether Kleemanngasse 7 was for sale and Mr Bulut told me that his Turkish friend was the owner and that he had access to the house and could show me around if I was interested. Mr Bulut stated that the house was available for a monthly rent of €2450 and if his friend (he did not name anybody) could arrange a private sale he would not need to pay commission of 3.8% to local estate agents. Mr Bulut said that the house had been unoccupied since the last tenant and his three children moved out in 2013 and that his friend had not lived at the address for at least 6 years and only visited occasionally. … Mr Bulut stated that his friend lived in Turkey with his wife and two children, that his mother and brother lived in Germany and that he believed his friend would be visiting Germany in the next few days. Later that same day Mr Bulut showed me around the outside of the property. I could see clearly through the windows that there was no furniture in any of the ground floor rooms and that the house appeared unoccupied”.[23]Mr Dossow then referred to documents he had obtained from the Town Hall. He went on to recount a visit he had made in January 2014 as follows: “On 22 January 2014 I returned to Kleemanngasse 7. As in November 2013, the house appeared unoccupied and the mail box was overflowing. However, on this occasion, there were some boxes and items of furniture in the house. That same day I made enquiries with two neighbours. Both neighbours confirmed that Kleemanngasse 7 was vacant. The neighbour at Kleemangasse 9 stated that nobody had been seen at the house for months”.[24]The documents obtained by Mr Dossow from the Town Hall are extracts from a register of the residents of the town. There is no evidence before the court as to the purpose or effect of these documents, which appear to be administrative documents presumably kept pursuant to German law.[25]These documents record that Mr Ontulmus moved into the address at Kleemanngasse 7 on 1st April 1998 and moved out again on 31 March 2006. The document records that he moved in and out again for two days on 10-12 May 2012, and for three weeks on and between 29 July 2013 and 20 August 2013. The documents record that he moved in again on 21 October 2013 which, Mr Price asked me to note, was after the request for security for costs had been made. The Town Hall documents also include a record for another resident of the same address, a Mr Johann. It is recorded that he moved in on 30 July 2007 and moved out on 15 August 2013.[26]In a witness statement dated 28 January 2014 Ms Amy Nash exhibited a printout from the internet of an advertisement showing the address in question to be available for rental. She also stated that Mr Ontulmus had written to a Mr Kufner, another person with whom he is in a legal dispute, informing Mr Kufner that he (Mr Ontulmus) had moved to Turkey “for health reasons” and that he had sold all his business interests in Germany. He had asked Mr Kufner to address post to him at his “private address in Cesme”. Ms Nash states that he had also given his address in Cesme to the German police in connection with that dispute.[27]In his second witness statement dated 17 January 2014 Mr Ontulmus gives his address as both Kleemanngasse 7 and the address in Cesme which appears on the claim form. He states this in relation to his residence:
“12. … I have two homes one in Turkey and one in Germany. I spend several times in Germany and several times in Turkey depending upon where my business interests are and at that particular time. At the time the claim form was signed I was at my Turkish residence. My other residence where I stay more than 180 days ½ year was and is Germany. Please check letter of Dr Beck stating that I would loose my German resident permit if I would be longer than 180 days per year outside Germany resident. …”
[28]He then stated that his brother has an interest in one of the properties identified as his, but he says any rights on the land and to build on that land belong to himself. He then went on to state: “16… I confirm that I was born 01.06.1067 [sic] in Germany and I went to school in Germany. I have lived and worked in Germany all my life. I was owner of more than four big companies and was awarded several times in Germany as business of the year. I attach several German newspaper and several German magazine reports. I met my wife in Germany. Although we married in Turkey due to Turkish Law. We had our family home in Furth in Germany at the same house as where I still live today. My children were also born in Germany and they went to school in Furth in Germany and our family home was always in Germany. My wife and I separated in 2006 and my wife moved to Turkey. Both of my children are presently at Universities outside home”.[29]In his third witness statement dated 4 February 2014 Mr Ontulmus stated as follows: “Firstly, I did not state (and it is not correct) that I have lived in the house in Furth continuously since 1991. I have already referred to another property in Lohr near Frankfurt airport, where I spend time with my family and stay if I have to fly outside Germany, for example to visit boat shows around the world. I did not understand this to be disputed, and if the court requires I can ask all my neighbours to produce a witness statement to confirm. The Register of Register in Furth relied upon is only a regional document, not a national one, and will not say anything about my German residency. I attach a letter from Stadt Furth together with a translation, confirming this... Secondly, this Register of Residents is entirely a matter of administration rather than substance. Mr Moore relies on it to say that I ‘stayed’ in Furth in two days in May 2012. But the reason I am registered on those days is because it was necessary for me to register in Furth in order to renew my passport. It has nothing to do with where I in fact stayed on those two days. It is not correct that an individual with a German resident’s permit is required to provide regional authorities with details of where they are at any particular time I repeat that I spend and have to spend more than 180 days per year residing in Germany. If I reside for less than this amount, I would lose my German resident permit. It is true that after I was divorced from my wife in 2006-2008, because of health reasons, I spent more of my time in Turkey. But I now work for a German yacht builder whose main headquarters are in Germany and I have done since 2012. I have real, tangible assets and have provided ample information to evidence where I reside. I do not understand why Mr Moore continues to assert that I have misled the Court in any way”.[30]There was also a witness statement made in the German language made on 29 January 2014 by Mr Hassan Tanyildiz. In its English translation he stated that he was the owner of the greengrocers opposite Kleemanngasse 7 which he had taken over from Mr Husuyin Bulut. That name he said is still inscribed on the outside of the shop, but he himself has never introduced himself to anybody by that name, and there is nobody of that name now at the shop. He stated that he has known Mr Ontulmus since he moved into the house opposite in the mid nineteen nineties. He said that in October 2013 Mr Ontulmus began renovating the house and asked him to keep and eye on the renovation work whilst he was away. The renovation is still in progress. The last time he saw Mr Ontulmus was mid December 2013. All furnishings and personal belongings of Mr Ontulmus were being stored either in the basement or attic owing to the continuing renovation work. Mr Ontulmus planned to rent the property. He added: “I know that between 2006 and 2008 Mr Ontulmus temporarily moved to Turkey with his family. Since 2008 I have regularly seen Mr Ontulmus, albeit without his wife or children… Since 2008 Mr Ontulmus has regularly purchased fruit and vegetables from my shop. I know that he is often abroad on business and frequently stays with his mother and brother in Lohr Am Main. Approximately in November 2013 I was visited by two men who asked me about Mr Ontulmus. I gave the men no personal information about Mr Ontulmus or his family. Should anyone claim differently, then he or she is lying”.[31]The contradictions between the evidence of Mr Dossow and Tanyildiz cannot be resolved on paper. But not everything that Mr Dossow stated is disputed.[32]On this evidence I find that Mr Ontulmus certainly was resident in Germany for much of his life. I also find that it is unlikely that he ceased to reside in the Germany, albeit that he has spent more time in Turkey than in Germany. He resides in both countries. The sequence of his visits excludes the elements of chance and of occasion which might lead to the opposite conclusion. There is no dispute that he still owns a house in Furth where his family used to live with him. That is a strong connection with Germany, even though it appears to be on the market. His visits to Germany, for business and family purposes, have been voluntary, and are sufficient in the circumstances for me to find that he has retained his residency in Germany.[33]The address that Mr Ontulmus gave on the claim form is not a false address, in that I accept that it is an address at which a document sent to him will reach him. It may be incorrect in the sense that it may not be an address (as required by the CPR) where he resides or carries on business. I take that to be what was meant when his solicitors called it an “administrative” address. But I do not have to decide that point, because even if Mr Moore were right about it, that point alone would not suffice to make it just for me to make an order for security for costs.[34]I reject the submission that Mr Ontulmus has changed his address since the claim was commenced with a view to evading the consequences of the litigation. It would not be fair for me to reach so adverse a conclusion in circumstances where Mr Price had the opportunity of putting the allegation to Mr Ontulmus, but chose not to do so. I do find that Mr Ontulmus has been inconsistent and evasive in his statements about where in Germany he has been residing, and that does not reflect well upon him. But it is not necessary for the purposes of CPR r.25 for a claimant to prove that he has been residing a particular address.[35]In so far as Mr Ontulmus has been inconsistent and evasive, I think that what he has had in view may well be a concern not to disclose anything that might cast doubt on whether he has complied with the 180 day requirement under German law if he is to be entitled to retain his residence permit. But residence for 180 days is not a requirement of CPR r.25. And it would not be appropriate for this court to attempt to make findings as to whether Mr Ontulmus has complied with the requirements of a German residence permit, even if there were before the court the evidence of relevant German law (which is not the case).

THE SECOND AND THIRD CLAIMANT

[36]There is no dispute as to what is meant in CPR r.25(2)(c) by “there is reason to believe that it will be unable to pay the defendant’s costs if ordered to do so”. In Jirehouse Capital v Beller [2009] 1 WLR 751 the Court of Appeal noted that what has to be established is something that will occur only after the order for security is made and which can therefore only be a matter of evaluation (paras [29], [33]).[37]Nor is there any dispute that a claimant’s ability to pay costs refers to an ability to do so within the normal timescale within which costs are ordered to be payable, usually 14 days: Longstaff International Ltd v Baker & McKenzie [2004] 1 WLR 2917.[38]It is not submitted by the companies that their claim may be stifled if ordered to give security for costs. MTH[39]Mr Price based his submissions primarily upon the Corporate Tax Return of MTH for the year 2012, a four page document exhibited to the witness statement of Ms Nash dated 29 November 2013. That shows “a trade balance loss” of 286,555 Turkish Lire (£1 is the equivalent of about 3.5 TL) and an overall “current loss carried over to the next year” of 97,275 TL. This also shows “Shareholders’ equity” at 736,038 TL (about £200,000). Cash and bank deposits are shown as 455,679 TL. The largest asset shown is buildings. But according to the evidence of Dr Leiber, MTH sold a shipyard to Kaiserwerft during 2013, so these figures are likely to be out of date, and no more recent figures are available. The figure shown on that documents for stocks is nil.[40]Mr Helme refers to evidence that there have been a number of developments since 2012, including the sale of the shipyard, contracts of which details cannot be given for reasons of confidentiality and holdings in Delaware companies.[41]There is much discussion of these figures in the evidence, as there was in submissions. But I do not find it necessary to go in to the details. The information is clearly out of date, but it is the only information before the court. That that is so is what MTH has chosen. There must be more recent information available to MTH which it has not chosen to put before the court. It cannot complain if the court declines to speculate upon evidence that it has not chosen to adduce.[42]On the basis of the information before the court I have no hesitation in finding that there is reason to believe that MTH will be unable to pay Mr Mooret’s costs if ordered to do so.

Kaiserwerft

[43]Mr Price based his submissions primarily upon the Annual Financial Statement for the year 2012, an eight page document exhibited to the same witness statement of Ms Nash. It is signed by Dr Leiber above the description “Auditor/Tax Consultant”. Mr Price submits that it is remarkable, in that “Gross profit” is given for 2012 at 5,998,353 €, compared with 339,632 € for 2011. But the operating and other costs for 2012 appear to be extremely modest, leaving an annual profit of 5,529,806 € for 2012 compared with 13,841 € for 2011. The Asset position is similarly striking. For 2012 the assets are shown as totalling 6,727,721 € for 2012 compared with 593,023 for 2011. For 2012 the major asset is described as “Receivables and other assets 4,843,760€”. But there is no liability recorded to correspond with the receivables. Mr Price submits that the liability that is to be expected, given that Kaiserwerft is said to sub-contract all building works to associated companies in the UAE and Turkey, is a liability to the sub-contractor, alternatively to the customers from who they receivables are said to be due, but to whom, apparently, no yacht had yet been delivered. The second largest figure for assets is 1,776,561 € said to be “Tangible assets”.[44]Dr Leiber has made a witness statement dated 17 January 2014. He states that it was Kaiserwerft that purchased the shipyard from MTH. His witness statement contains no more than the following by way of explanation: “12. … In the annual financial statement 2012 the position C, Liquid Assets, No I. shows the amount for 4,843,760€. 1,500,00€ out of this amount can be turned in liquid funds within max 6 months. Tangible Assets with the amount of 1,776,561€ includes investments in stock boats which can be turned in liquid funds at short notice.13. … [Kaiserwerft] is subcontracting the works for building the vessels to Kaiserwerft Yatcilik Turkey or to Kaiserwerft JTL UAE. The clients sign the contracts with [Kaiserwerft] and the payments are also made [Kaiserwerft]. For this reason [Kaiserwerft] had an annual net profit of more than 5 Mio. € in 2012 with ‘just’ 45,000€ costs for staff. In the balance sheet of Kaiserwerft Yatcilik Turkey the position labour costs is accounted with the amount of 1,600,000 TL for the year 2012. Further more [Kaiserwerft] had running costs of 408,431€. Only the participations of [Kaiserwerft] at 6 Boat Shows worldwide in 2012 are accounted with an amount of 113,933€ and advertising expenses with 23,668€.14. … the amount of 1,776,561.81€ consists of investments in yachts under construction and other tangible assets.15. The company obtained the net profit by selling yachts”.[45]Mr Price submits that this evidence offers no explanation of how sums of the order of those likely to be incurred by way of costs (if the Claimants are ordered to pay them to Mr Moore) will be available within the time period within which costs orders must be normally be paid, or indeed at all.[46]Mr Helme submits that Kaiserwerft is supported by Kaiserwerft Yatcilik Turkey, as is demonstrated by the fact that the latter company on 4 February 2014 signed a guarantee in favour of Mr Moore, by which it guaranteed any costs order that might be made against Kaiserwerft in these proceedings up to a maximum of £1m. But in any event, submits Mr Helme, the net profit of 5m€ and the assets of 1,500,000€ which Dr Leiber states can be turned into liquid assets within 6 months demonstrate that the condition to be satisfied before an order for security for costs can be made has not been satisfied.[47]In my judgment the threshold conditions are made out for the reasons submitted by Mr Price. Assuming that Dr Leiber were right to say that 1,500,000€ can be turned into liquid assets within 6 months (and he gives no indication as to how that might be done), six months is not the relevant period for this enquiry. It is 14 days that is the relevant period. However, the figures appear to me give reason to believe that Kaiserwerft will be unable to pay Mr Moore’s costs if ordered to do so, since no information is given as to the persons from whom the receivables are receivable, and no indication is given as to the consideration for those large sums, which must be a liability, but which is a liability which appears not to be recognised in the figures. THE JUSTICE OF ANY ORDER[48]Both sides addressed me on the merits of the claims. For Mr Moore Mr Price submits that claims for special damages in libel are very rare, for the good reason that they are very difficult to establish. If the customer has not acted in breach of the contract of purchase, then no special damage will have been suffered. And even if he has, then the claimant cannot simply claim the lost profit. He must mitigate his loss, for example by suing the contract breaking customer, or explain why he has not been able to do so. Mr Price also took me to the documents which, he submitted, showed that the alleged contracts relied on by MTH and Kaiserwerft would be difficult to prove at trial.[49]The documents relied on by MTH include a documents which, as Mr Helme accepts, is not what it purports to be. Although the name of MTH appears in its heading, the text of the document has obviously nothing whatever to do with MTH. It is appears to be a form of contract of a kind quite different from that which would be relevant to the claim of MTH, and to be derived from a contract to which the parties were in the USA. Mr Helme submitted that it was created to be produced to the Turkish authorities. Whether or not that is so, I find it very difficult to imagine a legitimate purpose for which this document could have been created or for which it could be produced, whether to the Turkish authorities or to this court. The fact that this document appears in the bundles without anything in a witness statement approaching an explanation of how it comes to be in that form is a strong factor which, at this stage of the proceedings, casts doubt upon the claims of all the Claimants. But since Mr Ontulmus has not been asked about the document in cross-examination, I make no concluded findings about it.[50]Mr Price relied on evidence from a Turkish lawyer. He explained the Turkish law on enforcement of foreign judgments, making clear that this could be a lengthy process, and one during which the judgment creditor would have no means of securing the assets of a judgment debtor against which he might wish to enforce the judgment. There is a late witness statement from another Turkish lawyer adduced for the Claimants. I find it unconvincing.[51]Mr Helme submitted that Mr Moore had already gone a long way towards admitting liability for libel, so that the real issue in the case was likely to be damages only. He criticised the submissions of Mr Price, arguing that the case had not yet reached the stage of disclosure, and when it did the points made for Mr Moore would be seen to be based on erroneous assumptions and incomplete information.[52]At this stage of the proceedings I do not find it necessary to express views on the merits of the Defence, and think it better not to do so. It is sufficient that I find, as I do, that the strength of the claims is certainly not such as to make it unjust that I should make an order for security for costs.

THE AMOUNT OF ANY ORDER

[53]The amount of costs for which the Defendant seeks security is based on Costs Budgets in the form of Precedent H sent to the Court and to the Claimants by the Defendants’ solicitors on 29 January 2014. They have not yet been considered by the court.[54]Broadly the costs up to the end of disclosure and exchange of witness statements are given at about £500,000 (not including the costs of this application, put at about £76,000) and the total costs to the end of the trial (including the costs of this application) are given at about £1.5m. The costs of the Trial itself, including preparation are about half the total figure. These figures exclude the success fee to which the Claimants’ solicitors will claim to be entitled under the CFA agreements which they have entered into with the Claimants. The Claimant has entered into no policy of insurance to cover the Defendants’ costs in the event that the claims should fail.[55]The parties invited me to decide in this judgment issues of principle, and to give them an opportunity of attempting to agree any figure if that was required as a result of the conclusions I reached.[56]In my judgment Mr Moore has satisfied me that I ought to order security for costs in a form reasonably acceptable to him.[57]I consider that the proper order is that security be given in stages. I would order that the first stage represent security for half of Mr Moore’s costs, leaving it open to him to apply for security in respect of the costs of the trial at a later stage.

Cited in 6 later judgments