Koshy v Deg-Deutsche Investitions-Und Entwicklungsgesellschaft MBH & Anor

The parties to this appeal have been involved in litigation for many years. The principal issues of liability were resolved by a major judgment of this court, reported as Gwembe Valley Development Co Ltd (in receivership) v Koshy (No 3) [2004] 1 BCLC 131. These proceedings ("the new action") are a by-product of those proceedings. In the new action, Mr Koshy seeks an order of the court setting aside the order of Harman J made on 20 March 1998 in the original proceedings on the grounds that it was obtained by fraudulent misrepresentation or false evidence by the respondents, DEG-Deutsche Investititions-und Entwicklungsgesellschaft mbH (“DEG”) and Gwembe Valley Development Company Ltd (“GVDC”). By order dated 20 January 2006, Rimer J struck out the new action as an abuse of the process of the court. Mr Koshy appeals against that order. In my judgment, for the reasons given below, the judge made the right order, and accordingly this appeal fails.

GVDC was set up as a joint venture between Mr Koshy and his affiliated company, Lummus Agricultural Services Co Limited (“Lasco”) on the one hand, and DEG, on the other hand, to carry out farming operations in Gwembe Valley, Zambia. Lasco and DEG both invested capital in GVDC between 1986 and 1988, and it is the investment of capital by Lasco that gave rise to the litigation in which the order of Harman J was made. In the proceedings before Harman J, DEG alleged that Mr Koshy had made two fraudulent misrepresentations, first as to the cost of the funds which Lasco had invested in GVDC, and, secondly, as to the ownership of Lasco. DEG lost those proceedings at trial.

In brief, on the issue of the original proceedings, DEG made an application to Harman J for worldwide freezing orders on an interim basis. Mr Koshy and Lasco made an application to discharge those orders which was dismissed and they were ordered to pay the costs of that application in any event. It is that order for costs, which is at the heart of these proceedings. The costs were very substantial. They have not been assessed, but DEG has served a bill of costs in the sum of £359,415. The order made by Rimer J at trial meant that the freezing orders were then discharged, but that did not affect the order for costs. The principal object of the new action is to obtain a release from this liability for costs. We have not been shown any record of Harman J’s reasons for his order as to costs.

There is no doubt that if an order of the court is obtained by fraud it can be set aside. It would be a matter of concern if that were not so. In addition, if a freezing order is obtained by even innocent misrepresentation, the court can and often will set it aside and decline to make a new order. But that is not the question in this case. The question is whether Mr Koshy has lost his right to make an application to the court to set aside the order of Harman J dated 20 March 1998. Mr Koshy has already tried a number of ways of achieving his end. Importantly, he obtained permission to appeal the order of Harman J, not on the grounds that the exercise of the discretion to order costs was erroneous but on the grounds that the judge had been induced to make the order by misrepresentation by DEG. The misrepresentation alleged was as to the date when it discovered that (on its case) Mr Koshy and Lasco had deceived it as to the true cost of their investment in GVDC. But that appeal failed. I will need to examine in detail below some of the exchanges with counsel in the course of argument and the reasons which this court gave for its decision. Following the failure of his appeal, Mr Koshy brought the new action to set aside the costs order on the grounds of fraud. As I have explained, DEG persuaded Rimer J that Mr Koshy was precluded from bringing new proceedings and Mr Koshy now appeals from that decision.

The conflict between the parties arose from an agreement on mutual investment by Mr Koshy and DEG in GVDC. Mr Koshy’s associated company, Lasco, made a loan to GVDC as agreed between the parties. The amount of the loan was 56.4m Zambian kwacha (“K”). At the time, the dollar equivalent of this amount was approximately US $ 5.8 million. But Lasco had acquired the K56.4m for US $1.4 million using a system known as "pipeline dismantling", which was available in Zambia. It is described in detail by Rimer J in [14] to [18] of his judgment following the trial of the original proceedings (reported as DEG-Deutsche Investititions-und Entwicklungesselschaft mbH v Koshy [2002] 1 BCLC 478). This was an official method of obtaining domestic currency in return for foreign currency. As a result of using the system, Lasco increased the potential profit on its investment. GVDC's farming project, however, collapsed and GVDC went into receivership.

GVDC and DEG separately brought proceedings against Mr Koshy and Lasco. We are primarily concerned with the proceedings brought by DEG. These were issued on 8 November 1996, and they claimed, among other things, damages for deceit. DEG alleged that Mr Koshy had deceived it as to the cost of Lasco's investment in GVDC and that it had invested in GVDC in reliance on this false information. On the same day that the proceedings were issued, DEG made its without notice application to Harman J for interim worldwide freezing orders against Mr Koshy and Lasco. One of the issues was limitation. The application was supported by an affidavit dated 8 November 1996 from Mr David Kidd, then a partner in DEG's solicitors, Cameron Markby Hewitt. He said that the receivers of GVDC had on 8 June 1996 by chance discovered a telex dated 13 May 1986 which revealed the true cost of Lasco's investment in GVDC. This telex was said to have shown that Lasco had not made a loan of several million dollars and had contributed only a small proportion of the funds invested in GVDC. The affidavit stated that the receivers had discovered the telex by chance because it had been misfiled, and that it was the discovery of this telex which led to an investigation which, in turn, uncovered the true cost to Mr Koshy and Lasco of the funds invested in GVDC. (Subsequently, it was accepted that the document had not been misfiled.) It was also said that Mr Koshy had persistently and deliberately concealed the true cost of the funds from DEG. The affidavit went on to state that Mr Kidd did not believe that DEG could with reasonable diligence have discovered the true cost of the investment earlier and that DEG had no reason to disbelieve representations made by Mr Koshy as to the cost of the investment. Harman J raised the question of limitation with counsel for DEG, Mr Simon Browne-Wilkinson, who dealt with the point by saying that DEG remained misled until the telex was discovered.

On 15 November 1996, GVDC commenced proceedings in the Chancery Division against Mr Koshy and Lasco alleging breach of fiduciary duty and (in the case of Lasco) conspiracy. In due course, these proceedings were tried with DEG’s action.

Harman J made the freezing orders sought, and renewed them on 20 November 1996. On 4 December 1996 Mr Koshy and Lasco applied to have the orders set aside. Mr Kidd made a further affidavit dated 1 April 1997 for the purposes of this hearing, in which he said more specifically that a Mr Ward, one of GVDC’s receivers, had come across the telex. The principal ground for making the application for discharge was that DEG had failed to take steps to obtain the evidence of a former employee, Dr Polzer, who was DEG’s project manager at the relevant time, and who could give crucial evidence as to the amount of profit which it was expected that Lasco could make when it made its investment in GVDC. But DEG did locate him in the course of the hearing, and he confirmed that he did not know about the profit made on the investment in GVDC. The application was heard over twelve days. Judgment was given in February 1998. The application for discharge of the orders was dismissed with costs payable in any event, and the order was made on 20 March 1998.

These actions were tried by Rimer J. During the trial, Mr Kidd gave evidence that it was in fact he who had discovered the telex mentioned above. Rimer J dismissed DEG’s action against Mr Koshy on 26 October 2001. He held that DEG's claims against Mr Koshy and Lasco were statute-barred. In the action brought by GVDC, the judge ordered an account of profits against Mr Koshy, but made no further order. On appeal, this court dismissed an appeal by Mr Koshy in the action brought by GVDC and allowed an appeal in part in respect of the account of profits, but we are not concerned with that order.

In his judgment, Rimer J made some findings as to the chance discovery of the telex ([78]) and in effect rejected DEG's claim as to recent discovery of the exchange profit ([236]). Those crucial findings were as follows:

“78.

On 13 May 1986, IBM sent a telex to [Hoechst (Zambia) Limited] confirming the transaction. It is somewhat obscurely worded but conveyed that it was selling its K5.8m at a rate of K10.8 to $US1, or $US540,000. DEG’s evidence is that it first saw this in June 1996, from which it first discovered the cost to Lasco of the IBM debt. Mr David Kidd is a partner in [Camerons], DEG’s solicitors. He said he went to Zambia in June 1996 in order to review the state of play in connection with some then rather static litigation being pursued by the receivers of GVDC to recover a strip of land they claimed belonged to GVDC, but to which Lasco (Zambia) Ltd, another Koshy company, was asserting title. Mr Kidd said he was going through some files and found the telex. By what appears to be a remarkable coincidence, he said that Mr Ward, the receiver, had himself also unearthed a few minutes before a letter which Mr Ward said was one dated 1 July 1987. In that letter, GVDC referred to the takeover of the IBM debt and the Energo-Invest debt (to which I come next), and the receipt of K56.4m, and asked the [Central Bank of Zambia] to confirm that GVDC could recognise a liability of $US5.8m to Lasco. For reasons which are not obvious, since the documents had nothing to do with the ransom strip litigation – and inspired, apparently, by an element of telepathy – Mr Kidd and Mr Ward promptly exchanged this information; and the consequence was that DEG claims that in due course it realised, for the first time, that Lasco and Mr Koshy had in fact made a large profit on the pipeline transaction at GVDC’s expense. DEG’s case is that, down to that point, it had no idea that any profit had been made or intended…

236.

I add this also. I accept that it was only in and following June 1996 that DEG unearthed documents which told them for the first time the approximate size of the hoped-for profit. But I do not accept that this discovery was a matter of complete chance whilst Mr Kidd and Mr Ward were diligently working away on the current (in fact then rather static) state of play in the ransom strip litigation. I find that it was always obvious to DEG that Lasco was intending to make a profit. I derived from Mr Flosbach’s evidence, although he was reluctant to say so in terms, that the making of such a profit was obvious to him and the GVDC receivers by the end of 1993; and I find that what DEG eventually found in June 1996 was something for which they had, by then, belatedly decided to search. This was by way of a preliminary to, as Mr Page [counsel for Mr Koshy] put it, the opening up of a second front against Mr Koshy in England.”

Although there was no appeal from the order of Harman J at the time, there have been no less than three attempts to set it aside since.

appeal to this court

As I have explained, Mr Koshy sought to appeal the order of Harman J and for this purpose made an application for permission out of time. On 11 March 2002, this court (Chadwick LJ and Charles J) gave him permission to appeal on terms that the only material on which he could rely were two paragraphs of the judge’s judgment, which I have already set out. On 16 and 17 July 2002, Mummery, Hale and Carnwath LJJ heard the appeal for which this limited permission had been given. On 24 November 2003, Mummery LJ, with whom Hale and Carnwath LJJ agreed, gave judgment dismissing that appeal.

As I have said, I will need to examine below in detail some of the exchanges in the course of argument on that appeal and the judgment of Mummery LJ. In essence, during the hearing of the appeal, this court indicated that the proper route for Mr Koshy to seek to review the order of Harman J was a fresh action, which would enable a trial to take place on the issue of whether there had been material non-disclosure in obtaining the freezing orders. Mr Koshy was given the choice between (a) continuing with the appeal, subject to its being limited to [78] and [236] of the judge’s judgment, and (b) having the case remitted to the Chancery Division for a trial. Mr Koshy proceeded on the former basis and contends that he was not thereby precluded from starting a new set of proceedings if this court did not decide the appeal on its merits and merely decided that it was procedurally inappropriate to seek to have the issue decided on an appeal.

application to set off the costs ordered by Harman J against Mr Koshy’s liability to GVDC in costs

Mr Koshy’s second attempt to overturn the Harman Order was in the form of an application made in the DEG action to have the order of Harman J set aside. The context for this was an application by GVDC for costs against Mr Koshy. Mr Koshy contended that if the costs order of Harman J was set aside he could set off against GVDC’s costs the net amount of DEG’s costs liability to him in the DEG action. He made an application in the action to set the costs order aside. Rimer J held that the costs of the DEG action should be taken into account in relation to the costs claimed by GVDC and refused an application for an interim payment of those costs pending the determination of Mr Koshy's application (see [2004] EWHC 2202 (Ch)). Mr Koshy’s application to set aside the order of Harman J in the DEG action came before Hart J, who dismissed it on the ground that he did not have jurisdiction to vary a perfected order of another High Court judge (subject to certain exceptions). He also held that Mr Koshy was precluded from making his application by the choice he had made before this court. On this issue, Hart J expressed himself in forthright terms:

“32.

Although Mr Thompson did not make this point in terms, it seems to me that the question of abuse can be quite simply tested. If the argument in Mr Page's skeleton is correct, then whichever election had been made by Mr Page should not have precluded this application. Thus, even if he had elected for a remission of the issue by the Court of Appeal and subsequently lost on the remitted issue, the logic of the submission would appear to be that Mr Koshy would, nevertheless, at no stage have given up his right to make the present application, and that this court would have a jurisdiction (which it should exercise) to entertain this application. That would be odd. Some, risking an affront to modern sensibility, might describe it as a reductio ad absurdum. Preferring myself to choose words which are, in the language of S 2(8) of the Civil Procedure Act 1997, “both simple and simply expressed", I think that the result is simply mad.”

the new action

Mr Koshy’s third recent challenge to the order made by Harman J is the new action. It is fair to point out that the new action appears to be wider than the previous challenges in its scope, and fraud has to be proved rather than reliance placed on the findings of Rimer J at trial. Thus the new action includes a claim for damages for deceit. It alleges that the order of Harman J dated 8 November 1996, and the judgments [sic] of Harman J dated 6 February 1998 and Rimer J dated 26 October 2001 were obtained by a false case known to be false or not believed to be true. It is said that DEG and GVDC knew that Mr Koshy had made a large profit on the Lasco loan for the first time prior to the discovery of the telex by Mr Kidd and Mr Ward in 1996, contrary to Mr Kidd’s evidence that it was a chance discovery; that the discovery of the telex had not been a chance discovery and that it had always been obvious to DEG and GVDC that Mr Koshy intended to make a profit on the investment in GVDC. Mr Koshy contends that fraud is to be inferred from certain materials including but not limited to [78] and [236] of the judgment of Rimer J set out above. Mr Koshy also relies on various statements made by Mr Kidd in his evidence before Harman J. He submits that if these representations had not been made, Mr Koshy and Lasco could have successfully argued that the freezing injunctions should be discharged on the basis that DEG's claim was subject to a clear limitation defence in the DEG action. Mr Koshy’s case is that the claims in the new action seek cumulative remedies in respect of the making of the order of Harman J, cumulative, that is, with the right of appeal against that order. No-one, however, has suggested that any part of the new action should be allowed to go ahead because it raises a wholly different claim not arising from the order of Harman J.

Since it is in issue whether Mr Koshy made a form of election in the course of the hearing of the appeal, it is necessary to look at what was said then and it is easiest to do that by reference to the narrative in the judge’s judgment:

“18.

The appeal came on for hearing (with other appeals against my orders made after the trial) before the Court of Appeal (Mummery, Hale and Carnwath L.JJ) on 16 July 2002. Mr Koshy was represented by Mr Hugo Page QC and DEG by Mr Andrew Thompson. The issue raised on the present application as to the nature of an election made by Mr Koshy at that hearing makes it necessary to refer extensively to the transcript of the proceedings. The transcript is not perfect, but it is the best record there is.

19.

The court dealt first with the appeal against the Harman Order, the transcript recording Mummery LJ as observing that it was “quite a useful, gentle introduction to the more complicated story.” Mr Page opened the background and referred to Chadwick LJ’s observations that the only way in which the Harman Order might be disturbed was on an appeal. Mummery LJ’s observation on that was that the normal way of challenging a judgment or order said to have been obtained by fraud was by bringing a new action to set the judgment or order aside. The court’s exchanges with Mr Page show that, just as I would expect, he was fully aware of the availability of that route, and he is recorded as saying that he had raised that point with Chadwick LJ when applying for permission to appeal and that:

“The answer I gave him, which I had been satisfied to [sic], was that the usual reasons for having a separate action to set aside a judgment for fraud is that it is desirable that a court of first instance should have the opportunity of looking at the facts and deciding whether there has been a fraud or not. In this case, Rimer J has already done that.”

20.

Mr Page’s point was, therefore, that my findings in paragraphs 78 and 236 had provided a basis of fact sufficient to enable Mr Koshy to contend that the Harman Order should be set aside, although he promptly agreed with remarks from the court to the effect that my findings had not amounted to a finding of fraud on the part of DEG. But he said that they showed that there had at least been a material non-disclosure to Harman J, which justified a reversal of the Harman Order. It then appeared that Mr Page’s “material non-disclosure” argument included the assertion that there had also been positive misleading of Harman J, which he recognised may be no different from fraud, in which case, so he asserted, fraud is what I had found. There is no doubt that an allegation of deliberate misleading was at the heart of the case being made by Mr Koshy.

21.

At this point in the argument, Mr Thompson made an application to adduce further evidence on the appeal against the Harman Order. DEG’s point was that, in paragraph 236, I had not been addressing myself to the specific question of whether Harman J had been misled in November 1996; and DEG wished to adduce evidence on the appeal going to that question. DEG’s first substantive point in answer to the appeal was related to this. It was that Mr Koshy had adopted the wrong procedure by simply appealing against the Harman Order. The submission was that what Mr Koshy could and should have done was to make an application to me after the delivery of my judgment on 26 October 2001 for an order discharging Harman J’s original ex parte freezing order dated 8 November 1996. Any success on that would not, by itself, have resulted in a reversal of the inter partes Harman Order, but if I had made a finding that the ex parte order ought to have been discharged for deliberate non-disclosure or misleading, that would have provided a proper factual basis for an appeal against the Harman Order. That way of putting DEG’s case reflected Mr Thompson’s recognition, in line with Chadwick LJ’s observations, that it would not have been open to me at the conclusion of the trial to entertain a direct challenge to the inter partes Harman Order, since one High Court judge cannot (save in various particular circumstances, none of which was applicable) review the inter partes decisions of another such judge. Mr Thompson made DEG’s position clear by saying, in response to some observations from Hale LJ, that:

“My Lady, what we would submit it is perfectly that [sic: is that it is perfectly obvious that?] there should have been by one route or another – leaving aside for the moment which would have been better – a proper trial process addressing the issue of whether Harman J was misled and, if so, how and by whom, inadvertently, dishonestly or whatever. For this purpose, in our submission, it does not really matter how best that ought to have been achieved but that clearly has not been achieved.”

22.

By this point in the argument it is apparent that the court was disenchanted by the prospect of hearing an appeal against the Harman Order at which further evidence – which would be subject to cross-examination - was to be adduced. Mummery LJ suggested that the way forward might be to regard Mr Page as having identified sufficient material:

“… to enable us to direct an issue to the trial [sic: to be tried?], not by us [but?] by people who try issues? That is the issue of non-disclosure to impact on the correctness of the order for costs. The last thing I am going to allow is this court to be turned into conducting a trial by admitting evidence and then having cross-examination, having discovery. That is an inappropriate procedure.”

23.

Shortly after that Mummery LJ said that Mr Koshy “may not have to start a fresh action” and that “we can make any order that the court below have not made [sic: could have made?].” He then asked why the court could not direct the matter to be resolved on an issue remitted to the Chancery Division, adding a little later that he was not sure it really mattered to Mr Page where the issue was decided, so long as it was decided somewhere: Mummery LJ was, however, firm that the “somewhere” was not the Court of Appeal. After further discussion with Mr Thompson, the following exchanges took place, which I have abbreviated in part to what is material. For ease of subsequent reference, I have numbered the exchanges:

“1.

Lord Justice Mummery: Let us just see where we are then, Mr Thompson. Would you object to us remitting an issue to be tried to Rimer J along the lines of (1) whether there was material nondisclosure to Harman J, (2) if there was, what impact that has on the order for costs? Would you object to that as a way of disposing of this appeal?

2.

Mr Thompson: My Lord, I cannot object to that.

3.

Lord Justice Mummery: You would not object to that. Mr Page, why does that not meet your concerns? You are boxed in on this appeal by the two paragraphs of Rimer J’s judgment.

4.

Mr Page: My Lord, so far as I am concerned, I would like your Lordships to decide this on the basis of Rimer J’s findings. … I am not asking for this appeal to be turned into a first instance trial. It is only this late application to adduce further evidence that is having that effect.

5.

Lord Justice Mummery: What happens if you fail in that appeal?

6.

Mr Page: Sorry, my Lord.

7.

Lord Justice Mummery: What happens if you fail in your attempt to persuade us to decide it in your favour on the basis of Rimer J’s findings?

8.

Mr Page: Well, then I lose.

9.

Lord Justice Mummery: That is an end to the whole matter?

10.

Mr Page: Yes.

11.

Lord Justice Mummery: You cannot then reopen it before anybody else?

12.

Mr Page: I suppose your Lordships might say ---

13.

Lord Justice Mummery: I am just trying to see where we are going.

14.

Mr Page: My Lord, perhaps if I am able to make an election I ought to take instructions before I do because ---

15.

Lord Justice Mummery: It would mean doing that, you see.

16.

Mr Page: This is not an issue that has come up before, but the third point I was going to make is that either the result that we want follows from Rimer J’s judgment or it does not. If it does not follow from it, then I have obviously got my back to the wall.

17.

Lord Justice Mummery: Let us just see where we are. Mr Thompson is not opposing that; as I understand it you are, you would want to go on and have a decision of this court on the basis of Rimer J’s findings. If you win, fine for you. If you lose, I would have thought that precludes you from seeking to reopen that costs order in any other way. You have elected for that way of being ---

18.

Mr Page: My Lord, before formally making an election, I think I owe it to my client to take instructions. I can do that ---

19.

Lord Justice Mummery: You can if you like (inaudible) whether to start thinking at the moment. Our thinking at the moment, I think – we discussed this before we came in being aware of what the issues were on this appeal – is really not to allow this new evidence in that Mr Thompson wants, all these statements because where do we get to? You then want cross-examination, you then want discovery and we get the Appeal Court drawn into a trial process, which is not appropriate. We are left then, as I see it, unless Mr Thompson wants to make further arguments about his further evidence, with hearing your appeal without this new evidence. But on your appeal, you are limited to some arguments based on Rimer J. If you win that, you are happy. If you lose that, as I see it at the moment that is the end. You have elected to have that issue decided in that way and you have precluded the possible procedure that I have suggested of directing this to be tried as an issue.

20.

Mr Page: If your Lordships need me to make a choice, and your Lordships could not have put it in a clearer way, if I may say so, would it be possible for me to take instructions.

21.

Lord Justice Mummery: Certainly.

22.

Mr Page: Because it is not a choice that I have discussed with my client.”

24.

The court then adjourned to enable Mr Page to take instructions from Mr Koshy. When the hearing resumed, Mr Page made this statement:

“23.

Mr Page: My Lord, upon instructions, I would like to elect to have this matter decided here on the basis of those two paragraphs in Rimer J’s judgment, and either we win or lose and, as your Lordships have very clearly pointed out, if we lose then that is it. My client says this is a very costly litigation and he just does not have the resources to have another hearing before Mr Justice Rimer, or whichever judge it may be. He would rather it was just dealt with here and now.”

25.

The court then gave Mr Thompson the opportunity to make further representations on the application to adduce further evidence, but he had been sensitive to the way the wind was blowing on that topic and so did not press it. The court then proceeded to hear the substance of Mr Koshy’s appeal against the Harman order. When it came to his submissions, Mr Thompson repeated his argument that, by proceeding straight to an appeal against the Harman J order instead of first instituting a fact-finding inquiry before me on a post-judgment application for the discharge for non-disclosure of the ex parte freezing order, Mr Koshy had adopted the wrong procedure, which should itself be a ground for a dismissal of the appeal. At the end of proceedings on 16 July 2002, the appeal was adjourned part heard to the following day.

26.

Overnight, and in light of the way in which Mr Thompson was arguing the appeal, Mr Page provided the court with a note about the election that Mr Koshy had made. It read as follows:

“Mr Koshy’s election to proceed with the appeal rather than trial of an issue before a Chancery Judge

This election was made on the basis that the Court of Appeal would be deciding the substantive issue (ie whether the Judgment of Rimer J, insofar as his findings could not be successfully challenged, established that there had been a material non-disclosure if so the effect of that).

I noted that Mr Thompson continued to submit that the Appeal was not the appropriate route for Mr Koshy to challenge the decision of Harman J.

I assume, and would like to be corrected if I am wrong, that if the Court decides that Mr Thompson is correct on the procedural issue and so the Court does not decide the substantive issue, the other route will not be closed to Mr Koshy.”

27.

The hearing resumed on 17 July 2002. The court had read Mr Page’s note, and the proceedings opened with the following exchanges (I have corrected the transcript’s error that it was Carnwath LJ rather than Mummery LJ who was the main judicial spokesman):

“24.

Mr Page: I think Miss Dobson [sic: should be Mr Thompson] and I would just like your Lordships to say what you thought I was electing today [sic: yesterday?]. I am not asking to withdraw my election, simply that it should be clarified what happens if your Lordships accede to his submission that this is not the appropriate moment for the substance of the appeal to go into, whether I have in those circumstances elected that it will never be gone into or whether in those circumstances it can still go back to the Chancery Division.

25.

Lord Justice Mummery: You have elected that this decision will be the decision.

26.

Mr Page: Right.

27.

Lord Justice Mummery: That is what I thought when you said, when I explained it to you yesterday, I had made it crystal clear.

28.

Mr Page: I thought it was clear, my Lord. What I thought I was electing was either that this court would hear a substantive appeal.

29.

Lord Justice Mummery: The court is going to hear the substantive appeal, yes, but it may decide that you fail on procedural grounds, but you have elected against any other procedure.

30.

Mr Page: Right, I understand, my Lord.

31.

Lord Justice Mummery: You turned down the suggestion, which Mr Thompson did not object to, that the matter should be remitted to the Chancery Division as an issue to be tried.

32.

Mr Page: Yes.

33.

Lord Justice Mummery: I thought I put it to you that if you pursued this appeal, having turned down that offer, you were putting all your eggs into this basket.

34.

Mr Page: As I say, I am not asking to withdraw my election and I am grateful to your Lordship for having clarified it.

35.

Lord Justice Mummery: Yes.

36.

Mr Thompson: My Lord, we are grateful for that clarification.”

28.

The court then heard the remainder of the argument on Mr Koshy’s appeal against the Harman Order. At its conclusion, the court reserved its judgment. It then embarked on the other appeals, the hearing of which was not completed in the four allotted days, and so they were adjourned to 12 and 13 December 2002 when the argument was completed, following which the court also reserved its judgment.”

Judgment on the appeal from Harman J was not delivered until 24 November 2003 (see [2003] EWCA Civ 1718). The appeal had been heard contemporaneously with another appeal in which argument was not concluded until November 2002 and on which judgment was given first. As I have said this court dismissed the appeal. The leading judgment was that of Mummery LJ, with whom Hale and Carnwath L.JJ agreed. I shall have to examine the holdings of this court in more detail below. This court held:

“15.

DEG comprehensively opposed the appeal. An initial procedural point was taken. An appeal from the order of Harman J. was not, in all the circumstances, the appropriate procedure for setting aside the order for costs. An application should have been made to Rimer J, as the trial judge, when the action was dismissed and the freezing order expired. No reason was given for failing to make the application then. Such an application, rather than an appeal, was the normal procedure for setting aside an order on the grounds of material non-disclosure. The usual trial process involved the giving of evidence on such applications. The court of first instance would have to make findings of fact about non-disclosure and the circumstances in which it had occurred. That was not the function of the appellate court.

16.

On the substantive grounds it was contended that the findings of fact by Rimer J in paragraphs 78 and 236, were the only "fresh evidence" relied on, were in themselves insufficient to support Mr Koshy's case for setting aside the Harman Order, including the costs order; alternatively, and more ambitiously, the findings of fact made by Rimer J. in those circumstances should be overturned. It was on the last part of the case that DEG initially sought permission to adduce further evidence, but at the hearing in July 2002 DEG indicated that it did not wish to pursue the application.

17.

During the hearing of the appeal Mr Thompson appearing for DEG indicated that DEG would agree to the suggestion that the application to set aside the Harman Order should be remitted to Rimer J. Mr Koshy indicated, however, that he would not agree to that course. He wished to pursue the appeal. It was made clear that he would rather take the risk that the appeal might be dismissed than have the matter of costs in the Harman Order referred back to the judge at first instance. In those circumstances DEG contended that, as he had not taken that course, his appeal should be dismissed as misconceived and he should be ordered to pay the costs of the appeal.

18.

I have reached the conclusion that the appeal should be dismissed, though with some hesitation, as I do not regard the result as entirely fair or satisfactory.

19.

I start from the position that this is in substance an attempt, after the trial is over and in the light of the result of the trial and the findings made at it, to re-litigate an interlocutory costs order. No court, whether on an application to set aside at first instance or by way of an appeal, is receptive to such an application. It is bound to be a difficult exercise for the court to review the exercise of a discretion made at an early stage when not all the evidence is available or all the facts known or even all the issues identified. As for the parties, more time will be taken up and additional costs incurred.

20.

After a 12 day hearing of the applications to discharge the freezing orders, Harman J had exercised his discretion to make an order that the costs of the application should be paid by Mr Koshy and by Lasco in any event. So far as the costs were concerned it was a final order in the action. Neither his substantive decisions on the applications nor his orders as to costs were appealed at the time.

21.

On this appeal it is important, as Carnwath LJ observed during the hearing, to focus on what precisely the Court of Appeal is now being asked to do. Harman J had exercised his discretion on the costs of the hearing to set aside the freezing orders by taking into account all the circumstances of the applications. The court would not normally interfere with his discretion on costs unless it could be demonstrated that he had taken a wrong approach to the exercise of his discretion or had made an order which was plainly wrong.

22.

This court is being asked to interfere with the exercise of his discretion on a very different basis. It is not being asked to look at all the circumstances in which he exercised his discretion or at his approach or at the result at the time of the order, but at one circumstance only: namely a comparison between (a) the affidavit evidence placed before Harman J on the ex parte application for the freezing orders and the applications to set them aside on the issue of DEG obtaining knowledge about the profits made by Lasco and Mr Koshy; and (b) the findings of Rimer J on that issue at the trial. No other material is relied on either as to the course of the proceedings before Harman J or by way of other evidence from Mr Koshy or anyone else. The point is argued on the sole basis that Mr Koshy is entitled as of right to have the freezing orders set aside on the ground of material non-disclosure and that it necessarily follows from that that the order for costs should also be set aside.

23.

In my judgment, Mr Page's approach to this appeal oversimplifies the situation. Without doubting for a moment the power of the court to set aside an ex parte order on the ground of material non disclosure, I do not think that it necessarily follows that the ultimate liability for all the costs incurred on the application to set the order aside should follow that event. What this court is being asked to do is to cancel an order for costs, which was made in the exercise of a discretion by having regard to all the circumstances at that time, solely on the basis of what has transpired at the trial on an issue of disputed fact. When Rimer J made his findings of fact the issue of non-disclosure by DEG to Harman J was not before him. He was not addressing that issue. I do not think that it is satisfactory simply to lift findings of material fact out of his judgment and use them without more to set aside the Harman Order. In my judgment, it would be wrong and potentially unfair to DEG in these circumstances for the court to set aside the costs order made by Harman J. If the exercise of discretion is to be reviewed in circumstances of alleged material non-disclosure with a view to making a different order for costs, it can only be fairly and satisfactorily done in this case by an application at first instance, in which the issues of fact are defined and on which evidence can be adduced by both sides about the circumstances in which the orders were made, including the orders for costs.

24.

As to the costs of DEG's application for permission to adduce fresh evidence. DEG contended that the costs of the application should be costs in the appeal. Its position was that further evidence was inevitable. It would have been allowed on an application to the trial judge to make the application to set aside the costs order. Non-disclosure to the court on the ex parte application was not an issue before the trial judge. It was a reasonable response to Mr Koshy's appeal, which was procedurally misconceived, for DEG to apply for permission to place before the court evidence, which was not before Rimer J in support of its contention that, on the material before him, Rimer J should not have found that Mr Kidd and Mr Ward had lied and to demonstrate that Harman J had not been misled.

25.

In my judgment Mr Koshy should be entitled to his costs of that application. It was made and it was withdrawn. It proved to be an unnecessary exercise for which DEG should pay the costs.”

The judge saw the crucial issue on the application as primarily one as to whether Mr Koshy had effectively agreed not to pursue a fresh action. He found that in his judgment Mr Koshy had clearly agreed that if this court heard his appeal he would not be able to start a fresh action. The judge concluded that, while technically what he had agreed was not an election, it was an abuse for him to start a fresh action.

The judge rejected the submission that in [17] of his judgment Mummery LJ was indicating that the right procedure for Mr Koshy to adopt in order to ventilate his complaint about the alleged non-disclosure to Harman J was an application at first instance at which the relevant facts could be explored and findings made. In his judgment, the point that Mummery LJ was making was that that was the procedure that Mr Koshy should have adopted in the first place, whereas instead he took the mistaken course of proceeding straight to an appeal against the order of Harman J.

The judge noted that Mummery LJ described Mr Koshy’s decision to pursue the appeal as embracing a willingness to incur “the risk that the appeal might be dismissed [rather] than have the matter of costs in the Harman Order referred back to the judge at first instance.” The judge held that if, despite the decision he so made, Mr Koshy remained (i) entitled to issue an application in the DEG action for a trial of the same issue as that against which he had elected, or (ii) to issue his 2005 claim, which also (in substance) seeks a trial of that issue, it was difficult to identify the nature of the “risk” that Mummery LJ understood him to have incurred: Mummery LJ cannot have been referring simply to the risk of an adverse costs order on the dismissal of the appeal. Mr Koshy has, however, successively asserted that both alternatives remained open to him despite his election to pursue the appeal against the Harman Order.

The judge gave his conclusions on the question whether Mr Koshy had in the course of the appeal in this court made an election to proceed with the appeal in lieu of any action that he might bring:

“57.

In my judgment, it is plain that, taking the exchanges between Mummery LJ and Mr Page as a whole, their formal essence was that Mr Koshy was being offered a choice between (i) pursuing his appeal based on the two paragraphs of my judgment, or (ii) the remission to me or another judge of an issue directed at the trial of the factual question of whether the Harman Order had been induced by deliberate non-disclosure. It is therefore obvious that if Mr Koshy elected for alternative (i), and his appeal failed, he was irreversibly precluding the remission of an issue under alternative (ii). That much is agreed.

58.

I consider, however, that it would be wrong to interpret Mr Koshy’s election for alternative (i) as merely precluding the particular procedural route offered by alternative (ii) whilst still leaving open any other alternative procedural route that would achieve the same substantive result as alternative (ii). That would be to allow the particular form of the election to triumph over its intended substance. It is in my judgment apparent from the transcript that Mummery LJ was not focusing on the direction of an issue as the limit of what Mr Koshy would be electing against if he chose to pursue the appeal. He had already expressly adverted to the commencement of a new claim as being the usual route by means of which a litigant can seek to set aside a prior order on the grounds of alleged fraud; and, before suggesting that the court might direct an issue, he had said that it may not be necessary for Mr Koshy to start such a new action. In my judgment, it is plain, therefore, that Mummery LJ was simply proposing, and then focusing on, the direction of an issue as the most convenient and economical way of achieving a trial of the factual issues to which Mr Koshy’s complaint about the Harman Order gave rise, although he had also had in mind the conventional alternative route that was in principle also open to Mr Koshy.

59.

It is in my view also plain, and wholly consistent with that, that Mummery LJ regarded an election to pursue the appeal as not just (as was obvious) precluding the direction of an issue, but as also precluding any alternative procedural route directed at achieving a like trial of the factual issues. I regard this as apparent from Mummery LJ’s choice of language in paras. 9, 11, 15, 17, 25, 29 and 33. I regard it as also apparent that Mr Page was agreeing with all that Mummery LJ there said. For reasons given, I also regard it as implicit in Mr Page’s own question at para. 24 that this is how he had understood the election, and the subsequent exchanges confirmed that.

60.

All that appears to me not only obvious from the transcript, I take the view that any other interpretation is an improbable one. If at the end of the relevant exchanges on 17 July 2002, Mr Page had asked for the court’s guidance as to whether, were Mr Koshy’s appeal to be dismissed, it would still be open to him either to (i) make an application before a Chancery judge asking for the direction of an issue as to the alleged non-disclosure, or (ii) start a new claim for the setting aside of the Harman Order on the grounds of non-disclosure, I apprehend that he would have received the shortest of answers in negative terms: because Mummery LJ had already made it clear that Mr Koshy had elected against any such alternative procedures. I hold, therefore, that Mr Koshy’s election was in the wider form contended for by Mr Thompson and that it precluded him from making the application dated 7 June 2004 upon which Hart J ruled and also from starting his new February 2005 claim against DEG. I add that, for reasons earlier given, that conclusion is also apparently in line with what Mummery LJ said in paragraph 23 of his judgment delivered on 24 November 2003.

61.

I should, however, record that I am not wholly confident that the choice that Mr Koshy made before the Court of Appeal was strictly an “election” in the sense in which that word is ordinarily used. A party is usually only regarded as being put to, or as making, an election when he has to choose between alternative and inconsistent rights or remedies: for example, whether to accept the repudiation of a contract or to affirm the contract (see, for example, Motor Oil Hellas (Corinth) Refineries SA v. Shipping Corporation of India (the “Kanchenjunga”) [1990] 1 Lloyd’s Rep. 391, at 398, per Lord Goff of Chieveley); or whether, at the point of judgment, to opt for an account of profits made in breach of fiduciary duty or for damages for the loss suffered by that breach (see Personal Representatives of Tang Man Sit v. Capacious Investments Ltd [1996] AC 514, at 521, per Lord Nicholls of Birkenhead).

62.

In this case, it is not obvious to me that Mr Koshy was being required to choose between alternative or inconsistent rights or remedies. The Court of Appeal (Chadwick LJ and Charles J) had given him an unconditional permission to appeal against the Harman Order in reliance upon the two paragraphs of my judgment. On one view, therefore, it might be thought both that he was entitled to pursue that appeal without being subjected to further conditions and that the Court of Appeal was under a duty to hear it. The appeal was either going to succeed or fail, but if (as it did) it failed on the ground that my findings in paragraphs 78 and 236 of my judgment were insufficient to provide the requisite basis for success, it is also not obvious to me why it would then have been inconsistent for Mr Koshy to start a new claim directed at overturning the Harman Order, being one in which he sought to prove facts that were sufficient to overturn it. It does not appear to me that the adoption of that course of action would be any different in substance from that in which a claimant seeks an early victory by way of a summary judgment application under CPR Part 24 and, upon failure, proceeds to trial. The only formal difference is that that particular course is recognised by the CPR. It is possible that DEG might have argued that, given the failed appeal, any such new claim was an abuse of the process, and Mr Thompson submitted that it would have been. But, absent the making by Mr Koshy of any such “election” as he made in this case, I am not convinced that any such argument would or ought to have succeeded.

63.

As to the last point, I recognise, however, that it would probably have made all the difference to the success of such an argument if the hearing of the appeal had not been confined to Mr Koshy’s arguments on paragraphs 78 and 236 but had extended to the adducing of fresh evidence from DEG upon which there had been cross-examination. If that had been how events had turned out, then it can readily be seen that there would in effect have been a trial of the relevant issue before the Court of Appeal, so that for Mr Koshy then to start again by way of a new claim probably would have been an abuse of the process.

64.

That, however, is not what happened. By the time that Mummery LJ was putting Mr Koshy to his election, it appears that the court had all but formally decided not to let in the fresh evidence that DEG wanted to call (see para. 19 of the transcript); and I infer that Mr Koshy’s election was made on the basis that such evidence was (or was probably) not going to be admitted. That being so, the effect of the election to which Mr Koshy was put was, if he chose to pursue his appeal, to subject himself to a further condition as to the future course which might otherwise have been open to him (namely, starting a new claim), not being one which (at least arguably) would be either inconsistent with the pursuit of his failed appeal or an abuse of the process of the court.

65.

The outcome was, therefore, somewhat unsatisfactory from Mr Koshy’s viewpoint. By making the choice he did, he had agreed to confine himself to a case built exclusively on two paragraphs in my judgment, when it must have been obvious to him that the Court of Appeal’s view was that the fair disposal of the point he wanted to make required a wider factual inquiry than was reflected in those paragraphs. One might think it would also have been obvious to him that, given that expression of view, his appeal was far from gilt-edged, yet he still chose to put all his eggs into the appellate basket. In paragraph 18 of his judgment dismissing the appeal, Mummery LJ said he did not regard the result “as entirely fair or satisfactory”. I do not wholly understand that observation. If, as the court held, the appeal did not deserve to succeed, its dismissal was neither unfair nor unsatisfactory. Whether Mummery LJ also had in mind that Mr Koshy’s election meant that a legitimate issue as to the alleged misleading of Harman J could and would never be investigated is not clear.

66.

In the circumstances I have outlined, I therefore have reservations as to whether Mr Koshy’s decision to pursue his appeal was in the nature of a true election. But even if it was not, I do not regard that as making any material difference to the outcome of the present application. The Court of Appeal’s view was that the just disposal of the issue that Mr Koshy’s appeal had raised was either (i) the pursuit of the appeal, or (ii) a first instance trial of the factual questions it raised. But it was plainly of the view that both options should not be open to Mr Koshy and it gave him a choice as to which he wanted to pursue. If he chose the former, and failed, he was to understand that he could not re-open the matter in any other way, including (in my judgment) by a claim such as his new claim. Mr Koshy chose to pursue the appeal and must therefore be taken to have accepted that the price of doing so was the abandonment of all alternative procedural routes in the event of failure. He was therefore agreeing that he would not take any other procedural routes, and the Court of Appeal heard his appeal on that basis. In my view, in those circumstances the issue by Mr Koshy of his new 2005 claim was and is an abuse of the process of the court, since he was thereby taking a course which the Court of Appeal had made plain was not to be open to him and which he had agreed he would not take. I propose, therefore, to make an order striking the 2005 claim out. This must, in my judgment, extend also to the claim for damages for the allegedly fraudulent obtaining of the Harman Order: if it is not open to Mr Koshy to challenge the making of that order on the ground of Mr Kidd’s alleged misleading of Harman J, nor can it be open to him to claim damages for such alleged misleading.

67.

If, contrary to my view, Mr Koshy’s election was of the narrow nature for which Mr McDonnell contended, then I think it would logically follow that, despite the language of the transcript apparently pointing in a different direction, the substance of the election was understood on both sides as going no wider than an election against the remission of an issue to a Chancery judge. But even in that circumstance, I am in respectful agreement with the approach adopted by Hart J in paragraphs 30 to 32 of his judgment of 13 December 2005. In my view, for the reasons he gave, Mr Koshy’s 2005 claim is as much an abuse of the process as was his application of 7 June 2005.”

Argument on this appeal was effectively focused on Mr Koshy’s challenge to the correctness of the judge’s conclusion that there had been an election (in a non-technical sense of the word) and on the appellant’s challenge to the judge’s conclusion on abuse of process. Because of shortage of time, this court did not hear argument on the issues as to materiality, whether a case of perjury could be made out and as to the jurisdiction to set aside an interim order. All these points are raised in the respondent’s notice. The court stated at the conclusion of the oral argument that it would give directions on the issues in the respondent’s notice when it handed down its judgments on the appeal.

Mr John McDonnell QC, for Mr Koshy, prefaced his opening by submitting that, if Harman J had known the position as Rimer J found it to be in [78] and [236] of his judgment, he would have discharged the freezing injunctions on the grounds of non-disclosure and he would not have re-imposed them. He submits that it follows from the authorities, such as Behbehani v Salem [1989] 1 WLR 723, that where, on his application without notice for a freezing injunction, the claimant has been guilty of deliberate non-disclosure or misrepresentation of facts which (if known) would have the defeated his application, the court is precluded from continuing or re-granting a freezing injunction and that this is so even if the claimant files additional evidence on the defendant’s application to discharge the injunction and that additional evidence would otherwise justify the grant of a freezing injunction in the claimant’s favour.

I turn, then, to the major issue of election (by which I mean an election in the sense of a making an informed choice between two procedural routes). It has been vigorously debated in this court whether the choice which Mr Koshy made was, as the judge found, a “wide” election, which would amount to a bar on all further proceedings to set the order for costs made by Harman J aside, or whether it was a “narrow” election only, namely an election that, if Mr Koshy chose to go on with the appeal, the court would decline to order a remittal of an issue to the Chancery Division if he was unsuccessful in the appeal. Mr McDonnell submits that, if there was an election before this court on the earlier appeal, it was on the narrow basis only. It was clear, he submits, that what Mr Koshy wanted to do on that appeal was to rely simply on the proposition that the freezing orders made by Harman J would have been set aside on the grounds of the material non-innocent non-disclosure. That was the basis on which the appeal had been argued. In any new action, Mr Koshy would have to allege and prove perjury and would have a much higher hurdle. He submits that Mr Koshy was not asked unequivocally to elect for or against any procedure and that accordingly there was no election. In any event, submits Mr McDonnell, it would not have been open to the court to require Mr Koshy to abandon the prospect of a fresh action. It was his right to bring such an action: see Lissenden v CAV Bosch Ltd [1940] AC 412; United Australia Ltd v Barclays Ltd [1941] AC 1. The court cannot put a litigant on terms as to the exercise of his right of access to court.

Mr Andrew Thompson, for DEG, equally forcefully submits that the election must have been a wide one. He submits that it is a knock out point. He submits that this court used language that was all-embracing and that there had been an express reference to the possibility of pursuing a fresh action. He submits that, if the court had intended to leave open the possibility of a fresh action, it would surely have said so. The letter written by Mr Page was consistent only with a wider election. The court should look at the objective meaning and not at any perception. In his written submissions, Mr Thompson submits that this court dismissed the appeal on its merits. Mr Thompson further submits that no issue arises as to whether the court had power to impose on Mr Koshy a choice as to the way he exercised his right of appeal. The court was not exercising any such power. The court had power to regulate its own proceedings.

As an alternative to his primary case, Mr McDonnell submits that there was no election as to rights: there was at most only an election as to remedies. Mr McDonnell submits that it is clearly established that any election as between the remedies does not operate until judgment, and, if the judgment is not satisfied, the claimant can exercise another remedy: Personal Representatives of Tang Man-sit v Capacious Investments Ltd [1996] AC 514. The judge relied on the Kanchenjunga case, which is about inconsistent rights and not inconsistent remedies. The remedies here were in any event cumulative, not inconsistent. The position might have been different if the Court of Appeal had remitted an issue to a judge of the Chancery Division.

For his part, Mr Thompson submits that Lissenden has no bearing on this appeal. That case was about equitable election and it is not analogous as submitted by Mr McDonnell. Likewise, he submits the United Australia case does not help. He submits that there was technically an election between different routes and this was not therefore a case of election between remedies as in the Capacious case.

On the judge’s conclusion on abuse of process, Mr McDonnell submits that the judge was wrong to hold that the inception of the present proceedings constituted an abuse. The test is whether Mr Koshy's action was not unreasonable. Mr McDonnell submits that it was not unreasonable for Mr Koshy to start a new action because he has been prevented from having a full hearing of his case so far. Mr McDonnell submits that the judge failed to perform a “broad, merits-based judgment” as required by Johnson v Gore Wood (referred to below). The judge failed to take into account the seriousness of the allegations.

Mr Koshy acted reasonably in making the application which was heard by Hart J since, at that point, there was first instance authority in support of this application. Furthermore, on Mr McDonnell’s submission, the judge’s conclusion on abuse violates Mr Koshy's right of access to the court guaranteed by art 6 of the European Convention on Human Rights (“the Convention”).

Mr Thompson on the other hand submits that the judge did adopt a merits- based approach as far as he could. Normally a litigant is not allowed two bites at the cherry, because it would lead to a waste of court resources and a waste of the other party’s costs. If the appeal is allowed, there will be a delay and additional costs to DEG which it may not be able to recover.

Mr McDonnell submits that the second sentence of [32] of the judgment of Hart J was wrong (see [14] above) and thus that Rimer J was wrong to rely on it (cf [67]). Hart J was in error because it was clear that he was envisaging that the other choice had been made by Mr Koshy, and there had been a trial before a Chancery judge on the remission of an issue, which he lost. Hart J went on to hold that Mr Koshy could nonetheless have still started an independent action on Mr Page’s case. Mr McDonnell submits that this was not so because, in that event, the issue would have been decided on its merits. Mr Koshy could not then start a second action because it would be res judicata. I can deal with this point now. All the judge did was express agreement with the approach adopted by Hart J. It was not a cornerstone of his judgment and, although I accept Mr McDonnell’s criticism here of the judgment of Hart J, it adds little to the resolution of this appeal.

Mr Thompson resists the suggestion that the order for costs made by Harman J resulted in any serious injustice to Mr Koshy. Mr Koshy had chosen to make an application to discharge and the judge had thought it right to make an order for costs in any event. Mr Thompson refutes any allegation of perjury. It is not necessary for this court to go further than to put this matter on the record.

If Mr Koshy's allegations in the new action have substance, they clearly raise an important matter. Firstly, he alleges that a High Court judge was misled on a basic point that led the court into making an order for costs. In other words, he makes allegations about the integrity of the justice system and there cannot be any doubt but that it is of the utmost importance that the administration of justice should not be undermined by misinformation provided by one party. Secondly, the costs order made by Harman J on 20 March 1998 was in respect of a twelve-day hearing involving several parties. Inevitably, the amount of costs which Mr Koshy has been ordered to pay is very substantial. It can readily be assumed that the liability has a significant impact upon him.

On the other hand, the issue is not now simply whether the allegations in the new action have substance but whether Mr Koshy has already had ample opportunity to have those allegations made the subject of judicial determination. Even though the allegations which Mr Koshy raises are of such seriousness and importance, nonetheless the justice system is not bound to provide more than one opportunity to run these issues. That is because the courts have to strike a fair balance between the interests of Mr Koshy on the one hand and of the other parties and the general interest on the other hand. That fair balance in my judgment is struck once Mr Koshy has had one effective opportunity to put his case.

The judge in this case has had unrivalled experience of the litigation between the parties and has comprehensive knowledge of the underlying facts and of the litigation. The judge, understandably, dealt with the application made by DEG on the primary basis that it was put, namely that Mr Koshy was precluded from bringing the new action. Accordingly, the judge did not deal with the separate question whether the allegations had already been made the subject of determination.

In my judgment, the appeal falls to be dismissed on the following three grounds: (1) Mr Koshy had voluntarily accepted that, if this court determined his case on the limited basis on which he then chose to put it, he would not bring any further proceedings and (in the light of (2) and (3) below) it is too late for Mr Koshy to go back on that acceptance and (2) in any event, this court dealt with the case put by Mr Koshy on appeal on its merits and he cannot therefore bring another claim to set aside the costs order of Harman J and (3) even if I am wrong on (2), it is an abuse of process to start a new action. That is an end of the matter. I now turn to amplify those grounds.

I should first clarify what is meant by election in this appeal. It is not said that there was a waiver on which DEG relied. It is said that having gone down the appeal route Mr Koshy had chosen one of two inconsistent remedies and in addition it is thus too late for him now to pursue another. The judge doubted whether this was an election in law. If there had been an election in law, it would have been unnecessary to consider the additional point whether it is now too late for him to pursue another route: that question would not arise because that alternative route would have been lost by election.

The making of an election in law requires more than mere words of choice: it also requires the choice to be between inconsistent courses of action and that one of those routes is abandoned by words or conduct (see the doctrine of election as authoritatively explained by Lord Goff in the Kanchenjunga case at 397 to 399). The judge did not consider that in this case there would be a choice between inconsistent rights. I agree: if (subsequently to the relevant exchanges) the court had held that the appeal should be dismissed for failure to comply with some requirement about filing documents or if Mr Koshy withdrew his appeal before judgment it is difficult to see that he would have been prevented from bringing new proceedings by virtue only of what had been said in argument. The point, however, is not whether he made an election in the technical sense. The point is that what he then accepted, which may for convenience be called an election (in the non-technical sense of the word), is relevant because it paves the way for an argument based on abuse of process. In these circumstances I do not consider that it is necessary to analyse further the cases which Mr McDonnell has cited on the doctrine of election.

The next question is: did any election (in the non-technical sense) occur? I will work simply on the basis of the exchanges quoted by the judge. I will refer to each exchange using the numbering in the judge’s judgment as set out above. Clearly no election could have occurred before exchange 22 because Mr Page told the court that he did not have instructions to make an election and the court accepted that.

The election, if any, occurs at exchange 23. At exchange 23, Mr Page, for Mr Koshy, makes a choice. He says: "I would like to have this matter decided here on the basis of those two paragraphs in Rimer J’s judgment, and either we win or lose, and as your Lordships have very clearly pointed out, if we lose then that is it". That passage clearly demonstrates that Mr Koshy is giving up the right to bring further proceedings. The judge said that the choice which Mr Koshy made when he used the words “and either we win or lose and, as your Lordships have very clearly pointed out, if we lose then that is it” had to be read in the light of exchanges 9, 11, 15 and 17 and that, accordingly, Mr Koshy was giving up the right to bring any further proceedings ([52]). In my judgment, exchange 23 has to be read as a whole. In particular, the opening words, making clear that what was said about winning or losing was said in the context of making an election to have the matter decided on the basis of the two paragraphs in the judge’s judgment. Accordingly, in my judgment, exchange 23 taken on its own is not the manifestation of a clear choice that if he loses on some procedural ground, and the matter is not decided on its merits, he will not be free to bring a separate action, if that course is open to him.

Overnight Mr Page wrote his letter. The judge initially inclined to the view that Mr Page having made the election on 16 July 2002, the exchanges of 17 July 2002 were strictly irrelevant ([54]) but accepts that it is appropriate to examine the exchanges on the second day. If Mr Page had made a clear election on 16 July 2002, it was one made at the court's request, and the court could allow it to be modified, and thus even on the interpretation of exchange 23 applied by the judge, the exchanges which occur on 17 July 2002 and which touch on the election are relevant and admissible and need to be examined.

The judge found that Mr Page wrote the letter because Mr Thompson continued to argue that the appeal should be dismissed on procedural grounds ([53]). Mr Page said in his letter that the election had been made on behalf of Mr Koshy on the basis that this court was deciding the substantive appeal. He sought clarification (exchange 24). In response, this court gave clarification. Thus, Mummery LJ confirmed at exchange 29 that this court was going to hear the substantive appeal. He goes on to state that Mr Koshy may fail on procedural grounds but that Mr Koshy had elected against any other procedure. That statement can be read as clarification in favour of an election against any form of further procedure. The judge recognised that it was arguable that exchange 29 had to be read in the light of exchange 31. Exchange 31 records: "You turned down the suggestion, which Mr Thompson did not object to, that the matter should be remitted to the Chancery Division as an issue to be tried." Mummery LJ was here referring to the remission of an issue to a Chancery judge. It is arguable that exchange 33 ("I thought I put it to you that if you pursue this appeal, having turned down that offer, you're putting all your eggs into this basket") has to be read in the context of exchange 31.

The judge rejected this argument. He essentially held in favour of the wide form of election argued for by Mr Thompson for three reasons. Firstly, he took the view that when Mummery LJ referred to the remission of an issue to a Chancery judge he was referring to a specific instance of a process of adjudication which could also be achieved by way of a new action ([58]). Secondly, the judge took the view that Mr Page must have understood Mummery LJ in this sense, and that, since he agreed with what Mummery LJ said, that was the scope of the election. Thirdly, the judge referred to the fact that in [23] of his judgment, Mummery LJ referred to the determination of issues of fact "by an application at first instance". This formula would be apt to include either the remission of an issue to a Chancery judge by this court, or an entirely fresh action.

The point is undoubtedly a difficult one, but on balance, I consider the judge came to the right conclusion as between a narrow and wide “election” for at least the first and third reasons that he gave. However, two points remain. First, that the scope of the election requires a good deal of thought and could hardly be described as clear. I return to that point below. Secondly, a decision as to whether the election was in the wide or narrow form may answer only part of the problem. It does not address the point that, according to exchange 23 at least, the election was being made on the basis that the appeal would be decided as a substantive matter. Moreover, as we have seen, at exchange 29, Mummery LJ confirmed that the court would hear the substantive appeal. Accordingly, to hold that the election is in the wide form is not necessarily the end of the road. There is an issue, which does not form part of the judge’s judgment, as to whether it was an integral part of the election that there should be a determination of the appeal. Mr Thompson submits that the appeal was determined on its merits. I consider that he is correct in this, and so it is unnecessary to decide under this issue whether the election had this further limitation.

In my judgment, Mr Koshy received a full and fair hearing of his case that the order of Harman J dated 20 March 1998 should be set aside. He chose to challenge the order on the basis of two specific paragraphs in the judgment of Rimer J. This court made it clear that they did not consider it appropriate to try any question of fact as to whether the court had been misled: it is trite law that if a person seeks to show that a judgment has been obtained by fraud, he can proceed by way of an appeal or alternatively by way of a fresh action but that he must proceed in the latter way if there are disputed questions of fact. In this instance, this court proposed a third way to obviate the need for a fresh action to resolve disputed issues of fact. That third way was the remission by this court of an issue to the Chancery Division. CPR 52.10(2)(b) provides that this court can remit any claim or issue for determination by the lower court. After Mr Koshy had obtained permission to appeal, DEG had made an application for permission to file fresh evidence thus demonstrating that there were disputed issues of fact. This court therefore proposed the idea of the remission by this court of an issue to the Chancery Division. This court was not bound to do this, especially if no such relief had been claimed in the notice of appeal, but no doubt felt that it would be appropriate to do so since DEG consented to this course at that stage. But what the court was also entitled to do was to prevent the time of the court being wasted by hearing and determining an appeal on a very limited basis only to be faced at the end of the hearing with an application for the remission of an issue to the Chancery Division. Accordingly, as a matter of case management, this court was entitled to offer the option at that stage. If the offer was refused, the appeal would have to be argued on the basis that Mr Koshy would have to convince this court that this court could grant the relief without hearing fresh evidence that DEG sought to produce.

It is this exercise that Mummery LJ in his judgment concludes that Mr Koshy has failed to achieve. It will be recalled that the key allegation on which the application for freezing injunctions was based was that Mr Koshy or Lasco had failed to disclose to DEG the amount of the profit that he or it was going to make on the investment in GVDC. By the end of the hearing before Harman J, DEG had in fact located their former project manager, Dr Polzer, who confirmed on affidavit that he did not know the amount of this profit. At the trial, the judge did not accept this evidence, and held that Dr Polzer had known all along that Mr Koshy was going to make a profit on his investment and that DEG was not interested in the actual amount of the profit: see [2002] 1 BCLC 478 at [242]. When this court was asked to set aside the order of Harman J on the basis of the misrepresentation to him about the chance discovery of the telex, revealing the profit on the investment in GVDC, this court had to decide whether that misrepresentation was material to his refusal to discharge the freezing orders. To do this, this court had to proceed on the basis that Harman J would not have known that the court would not in due course accept Dr Polzer’s evidence.

We do not have a full transcript of the hearing before this court on the earlier appeal. But that part which we have shows that Mr Thompson argued before this court that the misrepresentation was not material because of Dr Polzer's affidavit. On this basis, it is at least possible that the appeal could not succeed unless this court was satisfied that this argument was wrong. The point on which Rimer J disbelieved the evidence was merely as to whether the discovery of the telex was by “complete chance”; there was no finding that Mr Kidd, whose affidavit had been relied on before Harman J, was dishonest and it is common ground that that had not been suggested in the course of the trial. The judge accepted that DEG did not know the actual size of the exchange profit made by Lasco until it discovered the telex in June 1996. I further note that, when giving permission to appeal, Chadwick LJ also contemplated the possibility that, even if Mr Koshy could show misrepresentation, the costs order would not be set aside. He held at the end of [30] of his judgment:

“It may well be that the costs ordered in March 1998 were caused by the independent decision of Mr Koshy and his advisers to challenge the November 1996 order in circumstances in which they did not then have the material which they needed for a successful challenge on the facts. ”

I have already set out above the relevant passages from the judgment of Mummery LJ, with whom Hale and Carnwath LJJ agreed. At [15], Mummery LJ refers to the procedural point taken by Mr Thompson. He then goes on to deal with the substantive grounds on which DEG had opposed the appeal ([16]). It is to be noted that the first of those grounds is that [78] and [236] of the judgment of the judge at trial were insufficient to support the case for setting aside the order of Harman J. At [22], Mummery LJ observes that the court was being asked to set aside the order of Harman J on the basis of the difference between (1) the affidavit evidence placed before him, and (2) the findings of the trial judge. Importantly, he summarises Mr Koshy's case as follows: "The point is argued on the sole basis that Mr Koshy is entitled as of right to have the freezing orders set aside on the grounds of material non-disclosure and that it necessarily follows from that that the order for costs should be set aside." Mummery LJ then that deals with this case on a substantive basis and on its merits. He describes Mr Page’s approach as oversimplistic ([23]). In his judgment, it did not necessarily follow that all the costs incurred on an application to discharge an interim order should be payable to the party who subsequently succeeds in showing that the order should be set aside for material non-disclosure. So he has dealt with the way the case was put, which was for automatic setting aside of the costs order if there had been material non-disclosure. As I understand it, the point that Mummery LJ is making is that, if the court was satisfied that an order refusing to discharge the interim orders would have been set aside for non-disclosure, it would, nonetheless, have to consider whether the costs incurred on the application were properly ordered to be borne by the party which lost the application or by the party responsible for the non-disclosure. Where a party applies for discharge of an interim order and fails, but subsequently shows that the interim order should be set aside because of non-disclosure by the claimant, the applicant may remain liable for all the costs of that failed application, and accordingly may remain so liable even if he is successful at trial. The reasons why the order for costs was made may be independent of the reasons for subsequent discharge of the freezing order.

Mummery LJ had earlier stated in his judgment that the setting aside of the order of Harman J was of practical significance in this case. What happens in the succeeding parts of his judgment is that he considers how the costs order could have been challenged. Thus he then went on to hold that what this court was being asked to do was to cancel an order for costs solely by reference to what had transpired at trial when the issue of non-disclosure was not before the trial judge. Mummery LJ held that, in those circumstances, it was not satisfactory simply to lift findings of material fact out of the judgment of the trial judge and use them without more to set aside an interim order. He held that "if the exercise of discretion is to be reviewed in circumstances of alleged material non-disclosure with a view to making a different order for costs, it can only be fairly and satisfactorily done in this case by an application at first instance at which the issues of fact are defined and on which evidence can be adduced by both sides about the circumstances in which the orders were made.” ([23]). In the remaining paragraphs ([24] and [25]) Mummery LJ deals with the question of the incidence of the costs of the application to adduce further evidence on appeal. In [24], Mummery LJ in passing refers to Mr Koshy's appeal as "procedurally misconceived". I do not consider that anything turns on this as, at that point, Mummery LJ was merely summarising the contention of DEG, which had indeed submitted that Mr Koshy’s appeal was procedurally misconceived.

The issue which Mr Koshy wanted this court to decide was whether, purely on the basis of [78] and [236] of the judgment of Rimer J at trial, the costs order of Harman J was wrongly made. This court answered that question by saying that that approach was oversimplistic. It followed that, merely by adducing those two paragraphs of the judgment of Rimer J, Mr Koshy had not discharged the burden of showing that the order of Harman J had been wrongly made. If the order of Harman J were set aside for misrepresentation, this court was not bound to make an order that the costs of the failed discharge application should be different from that ordered by Harman J. Indeed, Harman J had made an order that the costs should follow the event of the interim applications and not the ultimate trial: such an order could only have been made on the basis of the circumstances of the interim applications. There needed to be findings of fact about what were the circumstances on the basis of which Harman J had made his orders and this question had not been an issue before the trial judge.

Since, as I have said, the issue which this court had been asked to determine is whether [78] and [236] of the judgment of Rimer J showed of themselves that the order of Harman J had been obtained by misrepresentation and should be set aside, and since this court had rejected that contention, Mr Koshy's case had in my judgment been dealt with on its merits. He had not asked this court to take into account the circumstances of the case when it was before Harman J, and the fact that, had he done so, he would have needed to start a fresh action (and by appealing had chosen the wrong procedure), is merely consequential on that point.

Mr Koshy wanted this court to adjudicate on his claim that the costs order of Harman J should be set aside. This court held that the claim failed for lack of evidence. The judgment was final and on the merits of the claim. The court did not, for example, hold that it had no jurisdiction. The significance of a judgment on a cause of action on its merits is that the cause of action merges in the judgment of the court and ceases to exist (see generally Halsbury’s Laws of England, volume 16(2) (Reissue) paras 978 and 993. It cannot therefore be made the subject of a new action. Accordingly, once the question whether the costs order of Harman J could be set aside because of the misinformation about the discovery of the claim in June 1996 had been decided by this court on its merits, it is not open to Mr Koshy to seek to raise the same claim in new proceedings on the same or a wider basis.

This arises if this court did not deal with the merits of Mr Koshy's contention that the order as to costs made by Harman J should be set aside.

The court can stay or dismiss proceedings if it is satisfied that they involve an abuse of process, even though the claim being brought is not the same as one on which there has already been adjudication. The relevant principle is known as Henderson v Henderson abuse of process and it is explained in the speech of Lord Bingham in Johnson v Gore Wood & Co [2002] 1 AC 1 at 31:

“But Henderson v. Henderson abuse of process, as now understood, although separate and distinct from cause of action estoppel and issue estoppel, has much in common with them. The underlying public interest is the same: that there should be finality in litigation and that a party should not be twice vexed in the same matter. This public interest is reinforced by the current emphasis on efficiency and economy in the conduct of litigation, in the interests of the parties and the public as a whole. The bringing of a claim or the raising of a defence in later proceedings may, without more, amount to abuse if the court is satisfied (the onus being on the party alleging abuse) that the claim or defence should have been raised in the earlier proceedings if it was to be raised at all. I would not accept that it is necessary, before abuse may be found, to identify any additional element such as a collateral attack on a previous decision or some dishonesty, but where those elements are present the later proceedings will be much more obviously abusive, and there will rarely be a finding of abuse unless the later proceeding involves what the court regards as unjust harassment of a party. It is, however, wrong to hold that because a matter could have been raised in early proceedings it should have been, so as to render the raising of it in later proceedings necessarily abusive. That is to adopt too dogmatic an approach to what should in my opinion be a broad, merits-based judgment which takes account of the public and private interests involved and also takes account of all the facts of the case, focusing attention on the crucial question whether, in all the circumstances, a party is misusing or abusing the process of the court by seeking to raise before it the issue which could have been raised before. As one cannot comprehensively list all possible forms of abuse, so one cannot formulate any hard and fast rule to determine whether, on given facts, abuse is to be found or not. Thus while I would accept that lack of funds would not ordinarily excuse a failure to raise in earlier proceedings an issue which could and should have been raised then, I would not regard it as necessarily irrelevant, particularly if it appears that the lack of funds has been caused by the party against whom it is sought to claim. While the result may often be the same, it is in my view preferable to ask whether in all the circumstances a party's conduct is an abuse than to ask whether the conduct is an abuse and then, if it is, to ask whether the abuse is excused or justified by special circumstances. Properly applied, and whatever the legitimacy of its descent, the rule has in my view a valuable part to play in protecting the interests of justice.”

In some circumstances, where a person brings one claim but that claim is dismissed on procedural grounds, he is not prevented from bringing a second claim merely because the first is dismissed; still less a claim which was not brought in those proceedings but which could have been brought. But there are cases where he will not be able to bring a second claim: see generally Securum Finance Ltd v Ashton [2001] Ch 291. He will also be precluded from bringing a second action if he has validly given up or waived his right to do so, but I am proceeding on the basis that an election has not been shown. DEG contends that Mr Koshy in fact waived his right to bring the new action in a binding manner that was equivalent to a true election. It is unnecessary to determine this submission as I will make the assumption in Mr Koshy’s favour that there was no such waiver.

I do not consider that there was any doubt but that Mr Koshy made a fully informed and free decision to go on with the appeal. He was advised by experienced counsel and the court gave counsel time to take instructions. Mr Koshy’s rejection of the remission of questions of fact to trial by a Chancery judge is attributed to his parlous financial circumstances at the time, but it would not be right for this court to assume without evidence that his financial situation posed insurmountable obstacles such as to deny an effective choice. He has after all found the funds to start these new proceedings. In principle this court should respect the autonomous decision which he took to go on with the appeal rather than submit to a trial before a Chancery judge, despite being offered the opportunity of using an appropriate procedure. I do not consider that Mr Koshy would be in a position to establish any violation of art 6 of the Convention if he has no access to court because of a fully informed and free decision in these circumstances.

Had the judge directed himself to the need to form a “broad, merits-based judgment”, he would have needed to take into account all the public and private interests involved and the relevant facts as to whether Mr Koshy was abusing the process of the court by seeking to raise before it the very issue which could have been remitted to a judge of the Chancery Division. I accept the submission that there were a number of material points that the judge did not consider. Firstly, the judge makes no mention of the clear public interest in a claim that misrepresentation was made to the court being investigated. Secondly, he does not refer to the consideration, to which Mummery LJ drew attention, that it could not be said that the setting aside of the order of Harman J as to costs was without practical significance in view of the very considerable amount of costs that have been incurred. Thirdly, the judge held that the scope of the election was clear. As I see it, the exchanges need interpretation and explication and that very fact was, in my judgment, a factor to be taken into account at the stage of considering whether starting a fresh action was an abuse of process. Fourthly, it is also material to the question of abuse of process that the exchanges were not held to be binding in law on Mr Koshy. Fifthly, on the basis on which I am proceeding on this issue, the decision of this court on the earlier appeal was not a decision on the merits of his claim.

When the question whether to strike out the new action on the grounds of abuse of process is considered, the factors identified in the last paragraph of this judgment weigh in favour of Mr Koshy. As against those factors, however, there are number of countervailing considerations. I have already concluded that Mr Koshy had the benefit of experienced legal advice and was able to take a fully informed and autonomous decision. I have rejected the suggestion that this court should proceed on the footing that his financial position posed an insurmountable obstacle to proceeding to trial. There is, moreover, no evidence that Mr Koshy was advised in terms that the election was only in the narrow form or that, if the appeal was dismissed on procedural grounds, he would be free to start a new action. In those circumstances, there is little evidential support for Mr McDonnell’s submission that Mr Koshy did not act unreasonably in starting the new action. More fundamentally, Mr Koshy has already had at least one opportunity to have his claim fully ventilated in a court of law. He chose to have an adjudication of his claim on a limited basis. I will assume in his favour that he made his choice on the basis that this court would determine his claim on its merits (see exchange 23). However, on his request for clarification, this court made it clear that it might determine the matter against him on procedural grounds (exchange 29). The procedural grounds were that he had failed to substantiate his claim and should have used some other procedure. Mr Koshy had been alerted to the potential difficulties in his appeal. There is a well-recognised public interest in the finality of litigation. It would moreover be unfair on DEG to allow him to have another opportunity or to make assumptions in Mr Koshy’s favour which are not supported by evidence: a new action would subject DEG to a loss of management time and the expenditure in costs which it might not recoup even if it were fully successful.

Accordingly, in my judgment, if as I have held Mr Koshy made a wide form of election but (contrary to my conclusion) the appeal was dismissed on procedural grounds, the court has to form a “broad, merits-based judgment”. The judge failed to take into account all the material considerations and accordingly this court must consider the matter. For the reasons given, I would hold that it was an abuse of process for Mr Koshy to commence the new action and to seek to have another opportunity to bring a claim to have the order of Harman J as to costs set aside. In my judgment, the factors mentioned in the preceding paragraph, and in particular the factor that Mr Koshy has already had the opportunity to have an adjudication of the issues in the new action, which he rejected despite the clear warnings given by this court, outweigh the factors which weigh in his favour.

The question whether there would have been an abuse of process if Mr Koshy made a narrow election only is more difficult, and it is unnecessary to me to express a view on it. Contrary, however, to the judge’s view, I doubt whether in those circumstances it would have been an abuse of process for him to start a new action.

For the reasons given above I consider that this appeal should be dismissed. In the light of my conclusions, no further argument on the respondent’s notice is required and accordingly I would make no order thereon.

I agree.

I also agree.