POINTS TAKEN ON APPLICATION WERE “ALL BAD”: PARTIES TO LITIGATION ARE NOT BOUND TO TAKE BAD OR HOPELESS POINTS

The judgment of Master Davison in Vale SA v BSG Resources Ltd & Anor [2020] EWHC 2021 (Comm) contains some interesting observations on the “state of litigation”.

 

“The points taken on Mr Cramer’s behalf were not a mixture of good and bad; they were all bad … All I will say is that parties to litigation and their professional advisers are not bound to take bad or hopeless points; they are not bound to adopt a needlessly antagonistic stance to their opponents, and both things are likely in the end to operate directly contrary to their interests.”

THE CASE

The claimant is owed US$2 billion by the defendant company. It issued an application under CPR 71 that a director of the defendant company attend.  That application was made without notice.  The director sought to set aside the order.

THE MASTER’S JUDGMENT

The Master rejected every one of the grounds put forward on behalf of the director.

 

  1. It was perfectly appropriate for the order to be obtained without notice, this is expressly allowed in the rules.
  2. There had not been material non-disclosure.
  3. The application was not “oppressive”.
  4. The fact that the director offered to co-operate  was not a good reason to set aside the order.
“Quite apart from the above, Vale is fully entitled to pursue parallel remedies or routes of enforcement; see the remarks of Cooke J in the Deutsche Bank case at paragraphs 32 and 45. It is not for Mr Cramer to dictate how he would prefer Vale to go about it. His suggestion that Vale should, as a prior step, list out the documents it already holds would be to turn the Part 71 procedure on its head and would, anyway, result in no saving to him in cost or inconvenience. He would still have to review and, where appropriate, disclose the documents within his control.”

Finally the Master dismissed the director’s “fall back positions”.

  1. It remains to deal with Mr Weekes’ fallback arguments. I can do so with similar brevity. Mr Cramer is not entitled to be given a list of the questions that Vale propose to ask him in advance of the hearing. That would likely result in carefully pre-scripted answers. I am not confident that in those circumstances the answers would advance the purpose of the examination. The same goes for a list of topics for the examination – though the categories of documents sought already stand as a kind of agenda. Lastly, Mr Cramer is not entitled to a modification of the order such that he is only obliged to comply on payment of his costs by Vale. Such an order would be unprecedented and wrong in principle. His obligation to comply rests on his status as an officer of a company that is a judgment debtor. It is absurd to suggest that the unpaid judgment creditor should have to pay the judgment debtor’s costs of the enforcement process, or those of the judgment debtor’s officers. If Mr Cramer is entitled to look to anyone for payment of costs that fall on him as an incident of his office of director, that person is the judgment debtor, i.e. BSGR.

CONCLUSION

    1. All the objections to the Order fail and I will dismiss Mr Cramer’s Set Aside Application.
    2. In Navigator Equities Ltd & Ors v Deripaska [2020] EWHC 1798 (Comm) Andrew Baker J made the following remarks (see paragraph 161):-
“In the working generation of 30 years or so during which I have been engaged in commercial dispute resolution in this jurisdiction, principally in this court and in London arbitrations, there has been a significant general increase in hostility and aggressiveness in the conduct of disputes. The taking of any and every point, good or bad, and other failures to display proper independence from the litigating client is treated too often as if it were a normal or appropriate adjunct of well-funded, hard fought, business disputes, particularly if there are issues of dishonesty involved.”
  1. Those remarks have a certain resonance in this case. The points taken on Mr Cramer’s behalf were not a mixture of good and bad; they were all bad. Further, the language of the correspondence and submissions was inappropriate to Mr Cramer’s situation. He is an officer of a company which owes the claimant a sum in excess of US$2 billion, none of which has been paid. He has been made the subject of a routine procedure which the claimant was entitled to follow and to which he could not reasonably object. Some recognition of that would have been preferable to the tones of outrage and indignation which were employed. The expenditure of £254,465 on this application was inappropriate and disproportionate both in amount and object. Whilst in form offering cooperation, the substance and reality of Mr Cramer’s approach has been quite the opposite. Where the precise responsibility for these matters lies is not something that I can or need determine. All I will say is that parties to litigation and their professional advisers are not bound to take bad or hopeless points; they are not bound to adopt a needlessly antagonistic stance to their opponents, and both things are likely in the end to operate directly contrary to their interests.