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

I am concerned to determine two preliminary issues which arise in an application made by the first defendant (“Mr Koshy”). By his application notice dated 7^th June 2004, Mr Koshy seeks to set aside an order made by Harman J on 20^th March 1998. That order (“the Harman Order”) which, inter alia, dismissed an application by Mr Koshy to discharge an earlier interlocutory freezing order made against him in this action, and ordered him to pay the costs of that application. That action was in due course tried by Rimer J, who handed down a judgment on 26^th October 2001 (which is reported at [2002] 1 BCLC 478) dismissing the claimant’s claim. The freezing order accordingly ceased to have effect. Mr Koshy’s liability for costs under the Harman Order remained. It is a very substantial liability, asserted by the claimant (“Deg”) to amount to some £360,000.

A freezing order was first made against Mr Koshy by Harman J on 8^th November 1996 on Deg’s without notice application until a return date on 20^th November 1996. On that occasion the order was continued by consent until trial, but with specific right reserved to Mr Koshy to move to discharge it without showing any change of circumstance. On 4^th December 1996 Mr Koshy applied by notice of motion so to discharge the freezing order, and subsequently (on 18^th December 1996) applied to strike out the action. The latter application was not in the event proceeded with but the application to discharge the freezing order was heard by Harman J for 12 days in March and April 1997, and determined by him in a judgment dated 6^th February 1998. The Harman Order was then made on 20^th March 1998 dismissing the application and making the order for costs which Mr Koshy now seeks to set aside.

The application to discharge the freezing order had been made on the ground of an allegation of material non-disclosure by Deg on the original without notice application. Following his success at trial, Mr Koshy applied to the Court of Appeal for permission to appeal the Harman Order out of time. He did so on the basis that certain findings made by Rimer J in his judgment of 26^th October 2001 revealed that there had been material non-disclosure by Deg in connection with its original application for a freezing order. One of Deg’s arguments in opposition to the grant of permission was that application ought to have been made to the trial judge to discharge the relevant freezing order and any associated orders for costs. However, Chadwick LJ pointed out in a judgment dated 11^th March 2002 (with which Charles J agreed) that one of the problems with this submission was that:

“… Harman J’s order in March 1998 was not the order by which he granted the freezing order. It was an order made on an application to discharge the freezing order; and so Harman J thought it right to make an order for costs which can be described as an ‘in any event’ order; that is to say, his order for costs was not dependent upon the outcome of the litigation (as would normally be the case in relation to the costs of obtaining a freezing order). Nor is it an order which can be set aside by the trial judge. The only way of disturbing the order of March 1998 is on an appeal. ..” (see paragraph 29 of his judgment).

The Court of Appeal granted the permission sought.

The appeal was heard and argument concluded in July 2002. During the course of opening, exchanges took place between counsel for Mr Koshy and members of the Court of Appeal in the course of which, to put it as neutrally as I can at this stage, Mr Koshy by his counsel declined a suggestion made by the Court of Appeal that they should remit an appropriate issue as to material non-disclosure to a judge of the Chancery Division for determination after a proper forensic process. That invitation having been declined, the Court of Appeal proceeded to hear the appeal and in due course dismissed it on 24^th November 2003. Its approach to the matter appears from paragraphs 17 to 23 of the judgment of Mummery LJ (with whom Carnwath LJ and Hale LJ agreed):

“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 is [sic] 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.”

That is the background against which Rimer J ordered, on 15^th October 2004, that preliminary issues should be determined in relation to Mr Koshy’s present application, namely:

“(a)

The issue of whether the court has jurisdiction to make the Order sought on Mr Koshy’s application;

(b)

The issue of whether Mr Koshy is not entitled to the relief which he seeks on his application as a result of his election before the Court of Appeal in July 2002.”

I should add that the present significance of the question whether or not Mr Koshy is or should remain liable to pay costs under the Harman Order arises out of applications which have been made by the claimant (“GVDC”) in a related action (“the GVDC action”) which was tried at the same time as the present action and which resulted in orders for costs against Mr Koshy in respect of which GVDC is currently seeking an order for interim payment. Because it has been held that Mr Koshy is entitled to set off against those claims the net amount of DEG’s liability to Mr Koshy in the present action, GVDC’s application for an interim payment has been stood over pending a resolution of the issues raised by this application: see, for a more detailed account of the relationship between the two applications, the judgment of Rimer J dated 15^th October 2004 in the GVDC action.

Mr Koshy has been present but not represented before me on the hearing of these preliminary issues. For the reasons given in a short judgment which I gave on 8^th December 2004, I refused Mr Koshy’s application that this hearing should be adjourned until he was in funds to obtain legal representation. Mr Koshy recognised (as did I) that he was in no position to advance legal argument on the preliminary issues. However, it emerged on the second day of the hearing before me, that his counsel (Mr Hugo Page QC) had anticipated being briefed to the extent of having prepared a skeleton argument, with which Mr Koshy was then able to supply me. I have therefore had the benefit of the arguments addressed to me in that skeleton on the two issues.

I turn to the first of those issues.

Although the application notice itself suggests that the basis of the court’s jurisdiction to vary the order is to be found in CPR 3.1(7), Mr Page’s skeleton puts as the first point to be made in favour of Mr Koshy that the final sentence in paragraph 23 of the Court of Appeal’s judgment makes it clear that the Court of Appeal itself considered that Mr Koshy not only could have made, but could still make, an application at first instance, and that that sentence, being part of the ratio decidendi of the Court of Appeal’s decision, is binding both as an issue estoppel and as authority. Secondly, the submission is that the court (i.e. this court) has jurisdiction to set aside the order under its inherent jurisdiction to discharge an order which has been obtained as a result of a material non-disclosure. Thirdly, reliance is placed on the power of the court under CPR 3.1(7).

It is convenient to take the first two points together since, prior to the introduction of the CPR and Rule 3.1(7) it was well established that subject to a limited number of exceptions or apparent exceptions, a court of first instance had no power to review, revoke or vary an order made by another first instance court. The proposition is (almost) axiomatic, and was of course the proposition being expounded by Chadwick LJ in the passage quoted above from his judgment giving permission to appeal. By an irony it is starkly illustrated by an earlier application made in these proceedings in relation to the Harman Order itself. When the Harman Order was made Mr Koshy was in receipt of legal aid so that as a matter of course a proviso to the costs order was included to limit Deg’s ability to enforce it. However, soon after that, Mr Koshy’s legal aid certificate was revoked, with the consequence that he was deemed never to have had legal aid. DEG therefore made an application to vary the costs order made by the Harman Order by removing the legal aid proviso. That application was heard by Rimer J in November 1999. In a judgment dated 13^th December 1999 (reported at [2002] BCLC 705, pages 730 to 733) Rimer J refused to vary the Harman Order on the ground that he did not have jurisdiction to do so. As he observed, at page 731h:

“The problem which DEG faces, however, is whether I have any jurisdiction to vary Harman J’s order; or whether its only course is to seek help from the Court of Appeal. Ordinarily, once an order has been passed and entered by the court neither the judge who made it, nor the judge of co-ordinate jurisdiction, has any jurisdiction to vary it. There are of course exceptions to this. First, clerical mistakes and like slips and errors can be corrected, but this jurisdiction does not strictly involve any variation of the order: it is merely directed to ensuring that the order as drawn says what the court always intended it to say. It is not suggested that principle has any application in this case. Secondly, there is also a limited jurisdiction, illustrated by Ford-Hunt v Raghbir Singh [1973] 2 All ER 700, [1973] 1 WLR 738, under which a court can make an order which is supplemental to an existing order, but that jurisdiction does not extend to altering the order. Mr Browne-Wilkinson sought to invoke that principle, but I do not consider it can help him, since it appears to me that there is no escaping the conclusion that what DEG is asking for is a substantive alteration of Harman J’s order. Thirdly, the order may itself contain a power permitting an application to vary it, but that does not apply here. Fourthly, there are certain statutory powers which enable one judge to review and vary the orders of another, for example in the bankruptcy jurisdiction (see S 375 of the Insolvency Act 1986). Subject, however, to circumstances such as these (which I do not suggest are exhaustive), the basic principle is that, once an order made by a High Court judge is passed and entered, it can only be discharged or varied by an order of the Court of Appeal.”

Rimer J was unable to find the necessary jurisdiction either in Regulation 130 of the Legal Aid Regulations or in CPR 3.1(7).

On appeal from that decision of Rimer J, the Court of Appeal (Aldous and Robert Walker LJJ) took a different view of Regulation 130, finding that it did confer jurisdiction to vary the order, and ordering the costs to be the subject of immediate detailed assessment and to be paid as soon as they had been assessed: DEG-Deutsche Investitions-und Entwicklungsgesellschaft mbh v Koshy [2001] EWCA Civ 79, [2001] 3 All ER 878, at 884.

At paragraph 21 of his judgment Robert Walker LJ (as he then was) said:

“I understand that Aldous LJ concurs in this conclusion and it is not therefore necessary for this court to express any definite view on the issue of inherent jurisdiction. It is common ground that there is no general power for the court to vary an order after it has been passed and entered. Rimer J identified four real or apparent exceptions: first, the correction of obvious errors under the slip rule; second, supplementing (rather than varying) an order; third, cases where the order itself provides for its variation; and fourth, where there is a statutory right of review by a court of co-ordinate jurisdiction (for instance under s 375 of the Insolvency Act 1986). The judge did not suggest that his list was exhaustive and there appears to be a further exception where an order requires to be worked out, and material change of circumstances occurs before it has been worked out (see Jordan v Norfolk CC [1994] 4 All ER 218 at 223-224, [1994] 1 WLR 1353 at 1358-1359). If reg 130 did not apply here there would be fairly strong arguments for inherent jurisdiction either to make a supplemental order or to take account of the change of circumstances in working out the order. But it is better not to express any final view.”

Against that background of conventional law, it would be highly surprising if, by the relevant sentence in paragraph 23 of his judgment, Mummery LJ had been asserting the existence of a new exception to the general rule. It would be still more surprising given that neither party before the Court of Appeal had sought to argue that there was such an exception. Mr Koshy was justifying his appeal on the ground that appeal was the only route. DEG was by that stage no longer seeking to suggest that an application at first instance could have resulted in the discharge of the Harman Order, although it was continuing to maintain that the failure of Mr Koshy to apply at trial to have the freezing order discharged put it at the litigation disadvantage that the issue of whether or not there had been material non-disclosure had never been the subject of direct findings by the trial judge.

In my judgment, read in its context, and in particular in the context of the refusal by Mr Koshy of the Court of Appeal’s invitation to have the issue tried at first instance, the relevant passage in paragraph 23 of Mummery LJ’s judgment cannot fairly be read as a finding of law, or as a determination of an issue between the parties, that an application of the present kind was legally possible.

Apart from relying on that passage, the only way in which Mr Page’s skeleton sought to establish the existence of an inherent jurisdiction was by virtue of a doctrine that, wherever a duty of disclosure exists in relation to the obtaining of an order (be it an injunction or otherwise), it was open to the court which had made that order to discharge it if subsequently satisfied that there had been material non-disclosure. It was pointed out that in relation to an order which had been obtained on a without notice application, the duty of disclosure does not cease at the moment when the application ceases to be without notice: the applicant continues to be under a duty to correct misstatements (or non-disclosures) made in connection with the without notice application. Reliance for that proposition was placed on the decision of Rix J (as he then was) in Commercial Bank Of The Near East v A [1989] 2 Lloyds Reports 319 at 322-3, and on the text in Gee: Commercial Injunctions (Fifth Edition) 2004 page 260 paragraph 9.023. However, neither citation supports the proposition that material non-disclosure may be a ground upon which a court can vary or revoke an order which (like the Harman Order) has been made on an application which was made inter partes.

Accordingly, apart from the potential effect of Rule 3.1(7) of the CPR I do not consider that the court has any jurisdiction to entertain the present application.

CPR Rule 3.1(7) appears in the context of a rule providing for general powers of case management under the CPR and provides:

“A power of the court under these Rules to make an order includes a power to vary or revoke the order.”

The argument before me has focused on the issue (identified by Mr Page’s skeleton) whether the Rule applies to orders made before the CPR came into effect. I limit myself in this judgment to that issue, and refrain from comment on the wider question of whether Rule 3.1(7) has the plenary effect which the argument otherwise assumes.

I have considered the transitional provisions contained in CPR 51 and its accompanying Practice Direction, and do not find anything there which indicates that Rule 3.1(7) is intended to have the retrospective effect contended for. Mr Page’s skeleton pointed to the example of CPR 40.12 (the CPR version of the old “slip” rule), saying that an application to amend the Harman Order under the slip rule would clearly fall to made under CPR 40.12. That is undoubtedly correct, but in my judgment proves nothing. CPR 40.12 applies to “any judgment or order”, which words are undoubtedly wide enough (as is indeed the spirit of the slip rule) to cover a pre-CPR order. However, as a matter of the ordinary meaning of words, “the order” in CPR 3.1(7) must mean an order which the court has power to make “under these Rules”. It does not say “an order of a type which might have been made under these Rules”.

There is a conflict of authority on the point at first instance. In his earlier decision, referred to at paragraph 10 above, in this action, Rimer J held that CPR 3.1(7) could not apply to the Harman Order, it having been made more than a year before the CPR came into force (see [2000] 2 BCLC at 733c-d). In Paragon Finance v Pender [2003] EWHC 2834 Chancery, 25^th November 2003, Peter Smith J appears to have expressed a contrary view. That was an application for permission to appeal from the Barnet County Court, where the County Court Judge had decided that she did not have jurisdiction under CCR Order 37 (applications for rehearing) to review a final order for possession in a mortgagee’s possession action that had been made in 1995. At paragraph 74 of his judgment Peter Smith J held that she had been wrong to conclude that she did not have jurisdiction under CCR Order 37 but then said:

“I suspect that this does not actually matter, because it seems to me that the court had a power to revoke the order under CPR 3.1(7)…In my judgment this gives the court an exceptional power to revoke an order. It is not limited as to the type of particular orders and it is strongly analogous to judgments of the Court of Appeal in Re RS & M Engineering to which I have already made reference above. It should not generally be used as a back door appeal. However, it does confer on the court a power in appropriate circumstances to revoke an order.

“75.

I conclude therefore that Her Honour Judge Mayer had a power under CCR Order 37 and CPR 3.1(7) to consider revoking the possession order of 5^th January 1995.”

It does not appear that Peter Smith J made these observations with the benefit of any argument on the question of whether CPR Rule 3.1(7) provided jurisdiction in relation to orders made prior to the introduction of the CPR. It is clear that he said what he did without his attention having been drawn to Rimer J’s decision to the contrary.

In my judgment, CPR 3.1(7) cannot be construed so as to apply to the order for costs made in the Harman Order. I reach that conclusion as a matter of straightforward construction of the language used in the sub-rule. I would add, however, that I am somewhat fortified in that conclusion by the fact that the Court of Appeal did not seek to rely on that sub-rule when it varied the Harman Order, and no one appears then to have suggested that it could.

Accordingly, in answer to the first of the preliminary issues, I hold that the court does not have jurisdiction to make the order sought on Mr Koshy’s application.

I turn to the second of the issues. I have already set out the way in which the Court of Appeal described the invitation which it had made to Mr Page to have the matter remitted to the Chancery Division. That description was contained in a judgment handed down in November 2003, and was of exchanges which had taken place in the course of argument during July 2002. I have the benefit of transcripts (albeit not perfect transcripts) of those exchanges. There are several passages to which reference needs to be made. The excerpts which I will quote begin during passages in the argument where Mr Thompson was opening his application to produce further evidence. The following passages are material:

“Lord Justice Mummery: Why is not the answer that Mr Page has sufficient material to enable us to direct an issue to the trial, not by us 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. ..

Mr Thompson: My Lord in light of that observation what it really comes down to is our first point about whether this is the appropriate procedure.

Lord Justice Mummery: It is the procedure. You may not have to start a fresh action. We can make any order that the Court below have not made. Why can we not direct this matter to be resolved on an issue remitted to the Chancery Division? I wonder whether we are going to get any further than that, if we get that far.”

And then after further exchanges:

“Lord Justice Mummery: I am not sure it really matters to Mr Page where this matter is decided as long as it is decided somewhere. I am saying I do not think this is the correct place to decide this question.

And later (page 40):

“Lord Justice Mummery: This issue has not been decided. I know Mr Page is relying on findings of fact which he would rely on in Rimer J’s judgment and I think his argument that the order for costs should not stand. I do not know how serious he is that we should decide this question on that limited basis. I do not know how serious you are in trying to persuade us, if we let in this new evidence, to decide it. The scenario, I see for the purpose is (1) there was enough material to justify an issue being directed to be tried (2) we are not going to try it, and (3) we will direct this to be tried in the Chancery Division with all the usual directions about pleadings and discovery and witness statements directed to that issue. As I see it at the moment, this issue has not been decided. You agree with that.”

Then after further exchanges, at page 43:

“Lord Justice Mummery: That is why I was asking whether it is too late to do it. If it can still be done – to be honest, it is very unsatisfactory, if orders had been made apparently on one view of the evidence at an interlocutory stage when it has all been complete and it later turns out that is not the correct basis in fact, should that order stand, and it is a substantial order, as Mr Page says, for £350,000. I do not know whether it matters to Mr Page whether this matter is decided on, as I have suggested, directing an issue to be tried or whether he wants to hang on and try and persuade us to decide this issue on the limited basis of the two paragraphs in Rimer J’s judgment. Obviously if we are back subject to defining what the issue is, it will be a rather larger inquiry than what is the effect of two paragraphs of Rimer J’s judgment. What do you say is the issue about the order for costs? …

Mr Thompson: Whether, to put it as broadly as possible, there was a material non-disclosure …

Lord Justice Mummery (at p. 44): 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 non-disclosure 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?

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

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.

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. My Lord could I just read through this. The first is that if a month after Harman J gave judgment we discovered some killer piece of evidence and had come to the Court of Appeal on appeal and asked for his judgment to be reversed, including the costs order, that would have been a perfectly normal way to proceed and the Court of Appeal would not have objected to it, would not have asked for an issue to be tried. Secondly that, apart from the time, is a situation that we in today. Thirdly, 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.

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

Mr Page: Sorry My Lord.

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?

Mr Page: Well, then I lose.

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

Mr Page: Yes.

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

Mr Page: I suppose your Lordships might say -

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

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

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

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.

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-

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

Lord Justice Mummery: …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. [emphasis supplied]

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

Lord Justice Mummery: Certainly.”

Then, after a short adjournment, Mr Page returned and said:

“Mr Page: My Lord, upon instructions, I would like to elect to have the matter decided here on the basis of those two paragraphs in Rimer J’s judgment, and either we win or we 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 which ever judge it may be. He would rather it was just dealt with here and now.”

Those exchanges took place on 16^th July 2002. On the evening of that day Mr Page produced a note which the Court of Appeal received before it sat the following morning. It read as follows:

“NOTE TO LJJ HALE, MUMMERY, CARNWATH

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 (i.e. whether the Judgment of Rimer J, insofar as his findings could not be successfully challenged, established that there had been a material non-disclosure and 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.

HUGO PAGE QC ”

The following exchanges then took place:

“Mr Page: My Lords and my Lady, did your Lordships receive a note from me about my election?

Lord Justice Mummery: I did, but I do not know whether the others have. I got the skeleton.

Mr Page: It should have been on the front of that.

Lord Justice Carnwath: I have read it, yes.

Mr Page: I think Mr Thompson and I would just like your Lordships to say what you thought I was electing today. 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.

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

Mr Page: Right.

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

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.

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.

Mr Page: Right, I understand, my Lord.

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.

Mr Page: Yes.

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

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

The argument on behalf of Mr Koshy, as advanced in Mr Page’s skeleton, accepts that what took place in the Court of Appeal did amount to an election, but maintains that the election was as to what he was asking the Court of Appeal to do on the appeal, i.e. either (a) to remit an issue to be tried in the Chancery Division or (b) to continue to hear the appeal and itself to decide all questions raised by the appeal on such evidence as was before it: the question of whether it would be open to Mr Koshy thereafter to invoke a free-standing jurisdiction of the Chancery Division (which for this purpose must be assumed to have existed, albeit not then present in the minds either of the Court of Appeal or of Mr Koshy’s advisers) was not before the Court of Appeal. Reliance was in particular placed on the passage in the transcript which I have italicised. The “other route” referred to in Mr Page’s note to the Court of Appeal was a reference to referral of the issue by the Court of Appeal and to nothing else.

On behalf of DEG, Mr Thompson submitted that the italicised passage had to be read in the context of other passages in the argument in which it had been made clear that Mr Page was “putting all [his] eggs into this basket” and was electing “against any other procedure”. Accordingly, he submitted, even though the possibility of a free-standing application such as the present had been in no-one’s mind at the date of the election, it was obvious that such an application was precluded by it. Moreover, he pointed out that it was not the case that the only routes present to the mind of the Court of Appeal were the two possibilities identified in Mr Page’s skeleton. Earlier passages in the exchanges between counsel and the Court of Appeal had Mummery LJ suggesting that the typical route by which to overturn a judgment obtained by fraud (which was what the allegation of material non-disclosure amounted to) was by an action to set it aside on that ground. That therefore was one possible route intended to be precluded by the election. Moreover, the Court of Appeal also had before it DEG’s submission that Mr Koshy had, and should have availed himself at trial of the option of applying to set aside the freezing order itself, thereby (if successful) laying the necessary groundwork for an application to the Court of Appeal to appeal the Harman Order itself.

Mr Thompson further submitted to me that, even if upon a true construction of the election it had only the narrow effect contended for by Mr Page’s skeleton, the fact that it had been made at all rendered the present application an abuse of the process of the court: the present application raised precisely the same substantive issues and invited precisely the same procedural consequences as would have obtained had Mr Koshy accepted the Court of Appeal’s suggestion that the case be remitted to this Division for the trial of an issue. Accordingly, it was submitted, the present application fell squarely within the principle, elaborated by the judgment of the House of Lords in Johnson v. Gore Wood [2002] 2 AC 1, particularly by Lord Bingham at pages 22C to 31G, whereby the court has jurisdiction to control its own process to ensure that it is not abused by a party seeking to use the court’s procedures to re-open a matter which either has, or should have been, litigated on an earlier occasion.

In my judgment there is no answer to the latter submission in this case. Before the Court of Appeal Mr Koshy was offered the opportunity to litigate the exact issue which he now seeks to raise by this application in a manner which was not discernibly different from the manner in which (if it is permitted to proceed) it will now be determined. He chose not to avail himself of that opportunity. I would only add that, insofar as it may be said that the precise procedural mode of trial of the issue mooted by the Court of Appeal had not been laid down, the same can be said of this application. What can be said is that it is clear that the Court of Appeal had in mind that it would involve a fact-finding process with all the usual attendant safeguards which such a process usually involves. Nothing less is now sought.

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 a modern sensibility, might describe it as a reductio ad absurdum. Preferring myself to choose words which are, in the language of section 2(8) of the Civil Procedure Act 1997, “both simple and simply expressed”, I think that the result is simply mad.

Accordingly, I decide the second preliminary issue against Mr Koshy.

It follows that Mr Koshy’s application must be dismissed, and I shall so order.