COURT MADE PEREMPTORY ORDER THAT CLAIMANT PAY COSTS: ARTICLE 6 RIGHTS NOT INFRINGED
In Khokan v Nirjhor [2024] EWHC 1872 (KB) Mrs Justice Hill granted the defendant’s application for a peremptory order following the claimant’s failure to pay costs ordered against him at an interlocutory hearing. The judge refused the claimant’s application for a stay of payment of those costs. The judge rejected the claimant’s submissions that a peremptory order would represent a breach of his article 6 rights. The judge was somewhat sceptical of the claimant’s evidence in relation to his ability to pay the sums due.
“The central principle to be drawn from the authorities is to the effect that I would need to be satisfied that an overwhelming Article 6 consideration was present to compel me to take a different view from the normal consequence of a failure to comply with an immediate costs order, which is that compliance is a condition of being able to continue with the litigation.”
THE CASE
The claimant, during the course of civil proceedings, had been ordered to pay the defendant £20,646.58 in costs.
THE APPLICATIONS
The defendant sought:
- A peremptory order that unless the claimant pay the sum due the action be struck out.
- Security for costs.
The claimant
- Initially sought an extension of time and relief from sanctions.
- He then sought to amend the application to seek a stay of execution of the costs order.
The claimant’s argument that the defendant’s conduct amounted to a breach of Article 6 rights.
THE EVIDENCE PRESENTED BY THE CLAIMANT
The evidence provided by the claimant was found to be problematic.
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- I have reviewed the Claimant’s evidence in response of the application and in support of his own application, in particular the documentation that is set out and appended to his witness statements, with care. I accept the Defendant’s submission that there are a number of concerning aspects to this evidence.
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- Second, the bank statements he has provided from Webster Bank in relation to what is said to be his main bank account do not show evidence of ordinary income and expenditure. They are also limited to a period of three months when often one would expect to see a longer period of time evidenced by bank statements. It was only after being pressed by the Defendant that he acknowledged that there was another bank account, he said, jointly held with his wife. He said she did not grant permission to disclose the bank statements from that statement such that he could not disclose them. Putting aside the interesting legal question of whether the Claimant was correct to suggest that he would have no power to disclose statements of a bank account of which he is a joint owner, the point that is made persuasively by Mr Wilcox is that there is simply no evidence from the Claimant’s wife that she has refused to allow him to do so.
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- Third, the Claimant has referenced in his evidence outstanding liabilities to his solicitors. He has said in his witness statement, dated 29 May 2024 at paragraph 13, that he still owes his solicitors over £30,000 in unpaid legal fees, which he intends to settle as soon as possible. However, there is no evidence from his solicitor to corroborate that assertion.
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- Fourth, he has said that he is about to instruct counsel for the trial, but he does not currently have the funds to cover such an instruction. This suggests that he does have additional funds over and above those disclosed, but that he is prioritising instructing his own counsel over paying the costs owed to the Defendant. He has also instructed counsel for today’s hearing, having previously been represented by his solicitor, at not inconsiderable cost.
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- Fifth, the Claimant claims to have cash flow difficulties, but this assertion is rendered problematic given the evidence about his lavish lifestyle. I was taken to several documents showing the Claimant apparently in possession of a very expensive watch, trying on clothes in designer shops, regularly travelling first class and things of that nature. There has been no clear denial of those assertions: the Claimant has simply asserted that photographs of him wearing items such as the watch do not necessarily imply he owns them. The watch allegation had also been put to the Claimant by a news agency, but he did not respond to it.
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- I was taken to the evidence that the Claimant has provided in the form of a letter dated 7 May 2024 purporting to be from the President of Yahan Property Incorporated. This suggests that the Claimant has been involved in a project, as a director, for what are described as “luxurious homes”. It is said in the letter that as a working partner in the project after selling the homes he will receive $30,000. “I hope I can sell those homes”, says the writer of the letter, “before August 2024, and you will get your total amount of committed money”.
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- However There is simply no clear evidence of the provenance of the letter and no detail given of the transactions to which it is said to relate. It is perhaps curious feature of the letter that the figure of $30,000 is just sufficient to set off the costs order. It is implicit in the letter that the Claimant has somehow been involved in what appears to be a luxurious real estate venture, which might suggest that he has significant amounts of disposable capital.
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- I was also taken to evidence in relation to some work that it is said that the Claimant has done while working for Property Inc and Channel i. This material, again, is in the form of a single letter dated 7 May 2024. This letter purports to be from the Head of Business Development at Channel i. It is said that he has been involved with that company as “advisor in the Creative Planning and Marketing Department”. The letter states that because of the pandemic, the company has over $200,000 “stuck” in the advertising market. It continues: “We are trying to recover these dues from the market gradually. We are almost close to the light. We hope you’ll get the rest of the current dues of $24,500 around 20 July”. Earlier in the letter it is said that “a confirmation has been given from our channel provider that we will get our dues on 15 July 2024”.
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- Again, the criticisms advanced of the quality of this evidence by the Defendant were, in my judgment, merited. Most significantly in relation to this particular letter, the Defendant made contact with contacts at Channel i, in particular a Mr Shykh Seraj, Director and the Head of News of the channel. In a recorded conversation, which was been transcribed, he stated that the Claimant is simply not an advisor for the channel in the manner suggested. That documentation throws further doubt on the reliability of this letter.
- The Defendant contended that this evidence clearly suggests that the Claimant is being evasive, possibly even untruthful, in relation to his assets and is taking or has taken steps to conceal the extent of his assets and at the very least, as I have said, is being evasive about them. Having scrutinised the evidence, for the reasons I have given, I consider that submission is entirely sound. Indeed, in submissions before me today, Mr Davies on the Claimant’s behalf accepted that there were difficulties with this evidence as to his means.
THE RESULT
The judge carried out a detailed review of the law and principles relating to peremptory orders, stays of execution and relief from sanctions. She determined that there was a clear case for the unless order.
THE JUDGMENT
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- The central principle to be drawn from the authorities is to the effect that I would need to be satisfied that an overwhelming Article 6 consideration was present to compel me to take a different view from the normal consequence of a failure to comply with an immediate costs order, which is that compliance is a condition of being able to continue with the litigation. It is a fact that we are now some weeks from trial, but that does not, in my judgment, lead me to depart from that central principle. I say this bearing in mind the detailed criticisms I have made of the Claimant’s evidence as to his finances.
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- There are some similarities between the Vedatech case relied on by the Claimant and this case, but there are also some factual distinctions between the two, not least that in Vedatech some money had already been paid and much larger sums were an issue. Ultimately, however, each application of this nature is fact-sensitive. The balancing exercise in this case could well properly be tipped in a different direction and in my judgment it is.
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- There was an interesting debate between the parties as to the extent to which I could revisit the costs orders that have already been made. I have significant reservations about whether it would be proper to do so, not least because it is clear from the transcript of the hearing before HHJ Lewis that he did not feel able to summarily assess the costs, and that the Senior Master did feel able to do so. As a highly experienced Master, he heard argument as to whether to order immediate payment of those costs or not, and felt it appropriate to do so.
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- The Claimant’s criticisms of the timing of the Defendant’s application and the hearing are not, in my judgment, fair. The application was made as soon as the Claimant’s lack of compliance was identified. There was clearly an attempt to place the matter before a Master and one of the reasons for delay has been difficulties with dates to avoid on the Claimant’s side.
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- For these reasons I consider it appropriate, despite the very skilful submissions from Mr Davies, to make the unless order sought by the Defendant. I therefore order that unless the Claimant pays £20,646.58 by a date in the very near future, his claim will be struck out, and in due course I will hear submissions as to what that date should be, but plainly given the proximity of trial, it will need to be soon.
SECURITY FOR COSTS
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- As to the application for security for the costs, again I do not consider the criticisms of the Defendant’s conduct justified. It is clear that in Ms Sultana’s 18 March 2024 statement she gave a broad estimate of the figures needed for security for costs and they were corroborated by the evidence that was provided from a New York attorney in her later witness statement. The Claimant has therefore had since 18 March 2024 to obtain any evidence he wished to provide as to the level of costs of enforcement if it was to be his position that the figures given by the Defendant were wrong. He has not done so.
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- I am persuaded that the Claimant should provide security for the costs for the reasons given by the Defendant. The detailed submissions I have summarised entirely satisfy me that the relevant tests are met; that both conditions (a) and (g) are satisfied, and that in all the circumstances, it is just to make the order. Again I emphasise the deficiencies in the Claimant’s evidence as to his finances.
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- There was a lack of clarity in the paperwork as to exactly what figure was sought for security for costs. In summary, the higher figure was sought to cater for the possibility of a “repugnancy” argument in the American enforcement proceedings. There was an interesting legal dispute between the parties as what that this means and whether it applies here. In my judgment it is not sufficiently clear that the repugnancy issue does apply.
Second sentence I think should say “Claimant””