Greig William Alexander Mitchell & Anor v Sheikh Mohamed Bin Issa Al Jaber & Ors

Further to my judgment following the trial of this matter (“the Main Judgment”), handed down on 24 February 2023 (neutral citation number [2023] EWHC 364 (Ch)), I must now deal with arguments made by the parties on the issues of costs and interest. For the purposes of this judgment, I shall use the same definitions used in the Main Judgment.

In the Main Judgment I found that the Sheikh and JJW Guernsey were liable to pay equitable compensation to the Liquidators in the sum of €67,123,403.36. I dismissed the Alleged 2009 Disposition claim against the Sheikh and I dismissed all claims against Ms Al Jaber and against JJW UK. I also dismissed the MBI Respondents’ Counterclaims. I shall assume that anyone reading this judgment will also have read the Main Judgment and that there is no need for me to go into any further background detail.

The following issues now arise for consideration:

In this judgment I shall deal with the first two of these issues. I have asked for further submissions on the third issue and so my determination on the question of interest must be postponed.

CPR 36.17 provides for the costs consequences of a Part 36 offer following judgment in the following terms:

“36.17(1) Subject to rule 36.21, this rule applies where upon judgment being entered-

(a)

a claimant fails to obtain a judgment more advantageous than a defendant’s Part 36 offer; or

(b)

judgment against the defendant is at least as advantageous to the claimant as the proposals contained in a claimant’s Part 36 offer.

…

(2)

For the purposes of paragraph (1), in relation to any money claim or money element of a claim, “more advantageous” means better in money terms by any amount, however small, and “at least as advantageous” shall be construed accordingly.

…

(3)

Subject to paragraph (7), where paragraph 1(b) applies, the court must, unless it considers it unjust to do so, order that the claimant is entitled to-

(a)

interest on the whole or part of any sum of money (excluding interest) awarded, at a rate not exceeding 10% above base rate for some or all of the period starting with the date on which the relevant period expired;

(b)

costs (including any recoverable pre-action costs) on the indemnity basis from the date on which the relevant period expired;

(c)

interest on those costs at a rate not exceeding 10% above base rate; and

(d)

provided that the case has been decided and there has not been a previous order under this sub-paragraph, an additional amount, which shall not exceed £75,000, calculated by applying the prescribed percentage set out below to an amount which is-

(i)

the sum awarded to the claimant by the court…

…

(5)

In considering whether it would be unjust to make the orders referred to in paragraphs…(4), the court must take into account all the circumstances of the case including-

(a)

the terms of any Part 36 offer;

(b)

the stage in the proceedings when any Part 36 offer was made, including in particular how long before the trial started the offer was made

(c)

the information available to the parties at the time when the Part 36 offer was made;

(d)

the conduct of the parties with regard to the giving of or refusal to give information for the purposes of enabling the offer to be made or evaluated; and

(e)

whether the offer was a genuine attempt to settle the proceedings.”

The Offer was made by Clyde & Co, the Liquidators’ solicitors, by way of a letter dated 16 July 2020. It is accepted by the Respondents that it was a valid Part 36 offer and it is common ground that it was made to the Respondents jointly. The terms of the Offer were set out in section 2 of the letter as follows:

“2.1

Our clients are willing to settle the entirety of the Claim as against your clients on the following terms:

2.1.1

Your clients pay to our clients, within 28 days of accepting the Offer, the sum of US$50,000,000 ("Settlement Sum") in cleared funds into our client account as detailed below.

2.1.2

The Settlement Sum does not include our clients' costs and, as mentioned above, your clients will be liable to pay our clients' costs on the standard basis, to be assessed if not agreed, up to the date of service of the Notice of Acceptance if the Offer is accepted within the Relevant Period.

2.1.3

Your clients would be liable for the costs set out above on a joint and several basis, as amongst themselves.

2.1.4

The Settlement Sum is inclusive of interest until the Relevant Period has expired”.

The Offer letter concluded with the following words:

“If you require clarification on the Offer, or you consider it to be in any way defective or non-compliant with Part 36, please let us know.”

The Liquidators contend that they have obtained judgment against the Sheikh and JJW Guernsey which is “at least as advantageous” as the US$50,000,000 identified in the Offer. They rely upon an excel spreadsheet showing US$/Euro conversion rates over the period 16 July 2020 to 24 February 2023 which clearly shows that the sum of €67,123,403.36 was at all times higher than US$50,000,000. The Liquidators accept that, in circumstances where their claims against Ms Al Jaber and JJW UK did not succeed, they are not entitled to seek Part 36 consequences against them. However, they say that, as a matter of reality, it is obvious that the Sheikh was controlling the liquidation and that the other Respondents deferred to him. Accordingly, they contend that the Sheikh and JJW Guernsey could have accepted the Offer, alternatively, that if they had wanted to accept the Offer but were concerned at the fact it was made jointly to all Respondents, they could have approached the Liquidators and invited the Liquidators to make individual offers. In circumstances where this was not done, Mr Curl submits that Part 36.17 consequences must apply to the Sheikh and JJW Guernsey.

The Sheikh and JJW Guernsey reject this characterisation of events. They accept that the Offer was a valid offer, but they say that because it was made jointly to a number of Respondents, some of whom were successful in defending the claims, the Liquidators have not in fact beaten the Offer such that CPR 36.17 is not engaged. Alternatively they say that even if CPR 36.17 is engaged, it would be unjust in all the circumstances to visit its consequences on the Sheikh and JJW Guernsey.

Perhaps surprisingly, there appears to be little authority on the consequences of making joint Part 36 offers to a number of opposing parties. CPR 36.17(1)(b) refers to judgment “against the defendant”) but is silent as to what is intended to happen where a joint offer is made to more than one defendant and succeeds against one, or some, but not all.

The Liquidators drew my attention to Ali v Channel 5 Broadcast Ltd [2018] 2 Costs LR 373, in which a joint offer to settle was made by the defendant to individual claimants who were also a married couple. The claimants contended that the offer was not a valid offer pursuant to rule 36.5 because it had been made to them jointly. Arnold J (as he then was) determined (at [42]) that this objection was not open to the claimants because the offer had invited a prompt response in the event that it was thought to be “defective and non-compliant with Part 36” but the claimants had in fact treated the offer as being a valid Part 36 offer. Accordingly, he held that they were now estopped from challenging the validity of the Part 36 offer.

Although the concluding words of the Offer were similar to the words used in Ali, to my mind, the reasoning in that casedoes not assist the Liquidators. There is no suggestion here case that the Offer was invalid or defective by reason of it having been made jointly. On the contrary, it is accepted that the Offer was a valid offer. Accordingly I can see no basis for an estoppel and, ultimately, I understood Mr Curl effectively to concede this point - albeit continuing to contend that, by analogy with Ali, one or more of the Respondents could in this case have made clear to the Liquidators that they could not accept the joint Offer and could have invited the Liquidators to revise the Offer so as to enable acceptance by individual Respondents.

Both sides referred me to the decision of ICC Judge Barber in IT Protect Ltd (In Liquidation) [2020 EWHC 3001 (Ch), a case in which the applicants made a Part 36 offer to the respondents jointly. The offer was not accepted and ICC Judge Barber observed at [12] that in her judgment:

“it was entirely reasonable for them not to do so. It was an offer made to the respondents jointly. It gave no option for one to accept and the other to reject. The applicants’ case against the second respondent was extremely weak and very likely to fail, as indeed it did, and yet a consequence of accepting the offer would have been that both respondents were liable for the costs of the entire application up to the point of acceptance”.

At [23], ICC Judge Barber went on to observe that she was “far from convinced” that the provisions of CPR 36.17(4) were engaged in the case of an offer made jointly, but not severally, to two respondents which is beaten in respect of one respondent but not in respect of the other. However, she declined to decide the point, proceeding for the purposes of that hearing on the basis that CPR 36.17 was engaged but going on to determine that in all the circumstances it would be unjust for the consequences of CPR 36.17 to apply.

It was open to the Liquidators to make the Offer jointly and severally so as to distinguish between the five Respondents. Similarly it was open to the Liquidators to make individual offers to each Respondent. The claims against each Respondent were not exactly the same and their defences differed. Nevertheless the Liquidators elected to frame the Offer as a joint offer to all of the Respondents in respect of all of the claims. The practical consequences of this decision are not in doubt: it would not have been possible for one of the Respondents to accept the Offer without the other Respondents also doing so. But acceptance by all Respondents would have made them all liable to pay damages and costs for which (as it turns out) Ms Al Jaber and JJW UK are not liable. It would also have rendered JJW Guernsey liable for the costs of claims brought by the Liquidators which were not pursued against JJW Guernsey (for example the Alleged 2009 Disposition claim). Furthermore, as Mr Fennemore points out, JJW Guernsey went into liquidation 2 weeks after the Offer was made; from that point onwards, it was controlled by its liquidators and there is no question of them “deferring” to the Sheikh. The Sheikh could not have accepted the Offer in the face of dissent from JJW Guernsey’s liquidators even if he had wanted to do so.

Against that background, Mr Fennemore invites me to find that, on its true interpretation, CPR 36.17(1)(b) must be read as referring to all the defendants to whom a joint offer is made by a claimant, such that, where some of those defendants are successful in their defences, the judgment cannot be said to be “at least as advantageous” as the proposals in the Part 36 offer.

On reflection, I do not consider such a finding would be appropriate; it seems to me to stray far beyond the natural meaning of the words used in the rule. I am inclined to agree with Mr Curl that the words “the defendant” read in their context must mean “the defendant against whom Part 36 consequences are sought”. That will include a defendant who has been the subject of a joint offer (which is clearly capable of being a valid offer pursuant to CPR Part 36) and then the question for the court is only whether the judgment is “at least as advantageous” to the claimant (specifically identified in 36.17(2) as meaning “better in money terms”) than the proposals in the offer. The terms of the offer are of course of significance when it comes to considering the justice of making an order in accordance with CPR 36.17(4), but (always assuming that the offer is a valid Part 36 offer) I do not see that they are relevant to the initial question of whether CPR 36.17 is engaged.

Having said that, I have no doubt that the points raised by the Respondents render it unjust for the Liquidators to benefit from the provisions of CPR 36.17(4) as against the Sheikh and JJW Guernsey. I say that for the following reasons:

Miss Stanley submits that it is relevant to have regard to the information that was available at the time of the Offer and, in particular, that the Respondents were not facing a claim of dishonesty when the Offer was made (a claim which was included by way of amendment only about 6 weeks prior to the trial). Whilst I accept that this might be of significance in the context of deciding whether to accept an offer, I would not have regarded it as sufficient on its own in this case to influence my decision as to whether it would be unjust to permit the Liquidators to benefit from the consequences of CPR 36.17(4). However, in light of my analysis at paragraph 18 above, this point takes matters no further.

For the reasons I have given, I am not going to apply the provisions of CPR 36.17(4) and therefore I do not need to go on to consider the appropriate rate of interest to apply pursuant to those provisions. Instead, I must consider the appropriate orders for costs as against each Respondent having regard to the provisions of CPR 44.

The Liquidators referred me to TMO Renewables Ltd v Yeo [2021] EWHC 2773 (Ch) at [6]-[11] for the general approach to be taken to costs. I need not set those paragraphs out in full, but by way of summary:

I bear these principles firmly in mind in considering the submissions of the parties as more particularly set out in the following sections of this judgment. However, I first observe that:

I must now turn to consider the circumstances relevant to the exercise of my discretion in relation to each defendant, before determining the appropriate order as to costs (TMO at [18]).

It is accepted by the Sheikh that he must pay the Liquidators’ costs of the 2016 Void Disposition claim on an indemnity basis and that this could effectively be achieved either by an issue based or an appropriate percentage order, put at 50% of the Liquidators’ costs by Miss Stanley in her oral submissions. Although she did not make it clear, I understood that this assessment was intended to reflect not only the Sheikh’s successful defence of the Alleged 2009 Disposition claim, but also his successful defence of various other issues identified in the Main Judgment. The Sheikh contends that it would be wrong for him to pay the Liquidators’ costs of the whole proceedings, particularly of the Alleged 2009 Disposition claim, which they lost. Indeed, in her written submissions, Miss Stanley submitted that the Liquidators should pay the Sheikh’s costs of that claim (although not of any of the other issues in respect of which the Liquidators were unsuccessful).

The Liquidators contend that the Sheikh should pay the costs of the whole proceedings, including the Alleged 2009 Disposition claim, on the indemnity basis. In summary they say that the Sheikh controlled the defence of the proceedings, that the defence was conducted for his benefit and that he was effectively “the controlling mind” of the litigation on behalf of the MBI Respondents. Whilst they accept that the Alleged 2009 Disposition claim did not succeed, they say that if the Sheikh had provided appropriate cooperation to the Liquidators from the outset, that claim would never have been brought. They point to the Sheikh’s “pretence” that the Company Accounts were not genuine documents and they say that the Sheikh is the only person who could conceivably have had access to documents, which would have established that the Alleged 2009 Disposition claim was misconceived. The Liquidators also remind me that the Offer is a relevant consideration pursuant to CPR 44.2(4)(c).

The Main Judgment addressed the Liquidators’ claims pre and post Liquidation separately. The pre-Liquidation claim (summarised at [133]-[135] of the Main Judgment) concerned the Alleged 2009 Disposition and was wholly unsuccessful. The post-Liquidation claim concerned various issues (summarised at [136]-[142] of the Main Judgment). The main issue in the post-Liquidation period was the Void 2016 Disposition, in respect of which the Liquidators succeeded, together with the claim in knowing receipt. The Liquidators also succeeded in establishing that the Sheikh was dishonest in relation to these issues. The Liquidators failed on the Surrender/Delivery Up and Failure to Disclose claims, which, as I pointed out at [429] of the Main Judgment, appeared to be little more than alternative ways of putting the Liquidators’ case as to the Void 2016 Disposition and, in the event, took up little time at trial or in the Main Judgment (approximately 20 paragraphs). I do not consider that these should be treated separately from the Void 2016 Disposition – they are merely examples of the winning party losing on some relatively minor issues in the context of the overall Void 2016 Disposition claim.

Focussing on the alleged 2009 Disposition claim, I observe that this was relatively self-contained. Although it was a claim for US$ 3.6 billion, it involved few documents, no direct live evidence and comparatively little time at trial. It is well established that, perhaps the best yardstick of the time spent on, and the significance of, each issue in a large and complex case is the Main Judgment (see TMO at [23]). The Main Judgment, which runs to some 595 paragraphs, spends only 5 paragraphs identifying the Sheikh’s duties prior to Liquidation (which, for the most part, were in any event common ground between the parties) and some 27 paragraphs dealing with the claim itself (at [318]-[344]). Beyond that, the key issue was whether the Company Accounts were “proved”, which the judgment addresses in some detail over approximately four pages at [276]).

Standing back, I consider that it is not in the interests of justice for the Sheikh to pay the costs of the Alleged 2009 Disposition claim. On its face it was a claim for an enormous sum of money with very little evidence in support. It was heavily reliant upon inference and, as I found at [325] of the Main Judgment, the court plainly had insufficient material on which to draw that inference. Indeed, it had contemporaneous evidence which gave the lie to the underlying factual premise, together with a concession from Mr Krys recorded at [331] of the Main Judgment which suggested that the Liquidators had never had any real confidence in the claim. There was no question of drawing inferences against the Sheikh on the grounds of a failure to produce the books and records (paragraph [326]) and, as I found at [327], the Liquidators were simply unable to satisfy the burden of proof. Furthermore, the dishonesty on the part of the Sheikh identified in the Main Judgment, did not relate to this aspect of the claim against him.

I also consider that the Sheikh should not pay the costs of preparation of Mr Krys’ first statement, for all the reasons set out in the Main Judgment at [187]-[191], and that he should obviously not pay the costs of the claim against Mr Salfiti (which was settled) or the costs of the claim against Ms Al Jaber and JJW UK (which the Liquidators lost).

As to whether the Sheikh should recover his costs of the Alleged 2009 Disposition claim, I consider on balance that he should not. I remind myself that I must give real weight to the overall success of the winning party and that in almost every case the winning party will lose in relation to some of the issues. Although this claim was for an enormous sum of money, it took up very little time at trial and some of the time spent was necessitated by the Sheikh’s decision to put the Liquidators to proof in respect of the Company Accounts (an issue which the Liquidators succeeded on). I also bear in mind that the Offer made by the Liquidators appears to have represented a genuine attempt to open up a discussion around settlement, including the real value of the claim, even though it was directed at the Respondents jointly.

The next question is whether I should make an issue based order, as the Respondents invited me to do, or whether this is an appropriate case for a percentage order. Having regard to the justice of the case and the wording of CPR 44.2(7), I consider that a percentage order would be practicable. Bearing in mind the limited amount of time spent dealing with the Alleged 2009 Disposition in the Main Judgment and taking a relatively broad brush approach, which also has regard to my impression of the time spent dealing with that issue at trial together with the time spent on Mr Krys’ first statement and any discrete and separate time spent dealing with the claims against Mr Salfiti, Ms Al Jaber and JJW UK, I consider that the Sheikh should pay 80% of the Liquidators’ costs of the proceedings. In my judgment, the Liquidators’ time in dealing with (i) the Alleged 2009 Disposition; (ii) Mr Krys’ first statement; (iii) the claim against Mr Salfiti (which settled well in advance of trial and was dependent upon and connected with the way in which the Sheikh advanced his case); and (iv) the claims against Ms Al Jaber and JJW UK (each of which took up very little time at trial), will together have taken up no more than 20% of the Liquidators’ time.

Furthermore, I consider that this payment of costs should be on the indemnity basis in circumstances where the Sheikh’s own conduct of the proceedings was plainly “out of the norm”. This appears to be accepted by Miss Stanley, but in case there is a need for me to spell it out, the following main factors justify the award of indemnity costs:

Mr Fennemore submits that JJW Guernsey should be treated differently from the Sheikh, notwithstanding that the Liquidators were successful in their claim against it in knowing receipt. Whilst he accepts that a constituent part of the knowing receipt claim was the need to establish the Void 2016 Disposition claim against the Sheikh, he contends that there were various other issues in respect of which the Liquidators incurred costs throughout the course of the litigation which did not form part of their case against JJW Guernsey. He does not suggest that JJW Guernsey should recover any costs from the Liquidators (and indeed JJW Guernsey was not, in any event, represented at trial) but he does say that a fair order against JJW Guernsey would be an issue-based cost order on the standard basis, alternatively an order that JJW Guernsey should pay 30% of the Liquidators’ costs on the standard basis. In arriving at 30%, Mr Fennemore very fairly accepts that he was not involved in the trial and so does not have any real feel for the extent of time spent on any particular issues (beyond an analysis of the number and outcome of the issues).

I reject Mr Fennemore’s submissions. In the Main Judgment (at [508]), I observed that the knowing receipt claim was consequential upon the Void 2016 Disposition claim. At [510] I found that the Sheikh was the controlling mind of JJW Guernsey such that his dishonesty was to be attributed to that company. I agree with Mr Curl that the liquidators of JJW Guernsey appear to have been content to “piggy back” on the Sheikh’s defence for the purposes of the litigation and that they cannot now seek to avoid the costs consequences of so doing. The Sheikh’s defence, upon which JJW Guernsey was content to rely, was a dishonest defence and JJW Guernsey is to be viewed in the same light as the Sheikh, certainly until the point at which it went into liquidation on 31 July 2020. While the Liquidators should not recover their costs of the Alleged 2009 Disposition claim against JJW Guernsey (that not being a claim that was advanced against it) or of Mr Krys’ first statement, the claim against Mr Salfiti, Ms Al Jaber or the claim against JJW UK, nevertheless I consider the Liquidators should recover the remainder of their costs against JJW Guernsey. They were “the winners” in respect of the remainder of the action and I cannot see that there is any real distinction to be drawn between the Sheikh and JJW Guernsey in terms of the issues.

Accordingly, I intend to order that JJW Guernsey pays 80% of the Liquidators’ costs of the action on the indemnity basis to 31 July 2020, when JJW Guernsey went into liquidation. I accept that the liquidators of JJW Guernsey were not involved in any of the litigation conduct of the Sheikh to which I have referred above after that date and that they did not seek to advance a positive case in support of the Sheikh at trial. Accordingly, a fair order, consistent with the overriding objective, would be that JJW Guernsey pays 80% of the Liquidators’ costs from 31 July 2020 on the standard basis.

The Liquidators accept that they cannot recover their costs from Ms Al Jaber, but they contend that an appropriate order in all the circumstances would be that there should be no order as to costs, essentially because Ms Al Jaber “joined in” the Sheikh’s conduct of the proceedings and signed a statement of truth on a dishonest defence together with a statement of truth on a disclosure statement which ultimately proved to be incomplete and/or inaccurate.

I reject this submission. Ms Al Jaber succeeded in her defence in its entirety. Although ultimately she “did not admit” that she owed a duty to the Company qua director prior to its Liquidation, thereby requiring the court to address that issue (Main Judgment at [303]-[317]), that was the only issue in respect of which she did not “win” in the context of her defence and it made no difference to her overall success. I note that although Ms Al Jaber did sign the Defence with a statement of truth, it was also made clear at paragraph 2(8) that she:

“was not involved in the transactions and events pleaded by the Liquidators and has no direct knowledge of them. Accordingly, nothing in these Re-Amended Points of Defence should be construed as a positive averment or denial by her of such matters”.

In the circumstances (although it is doubtful that she should have signed a statement of truth in the terms that she did) I consider it to be plain that she was not thereby intending to join in, or provide positive support to, the dishonest Defence. She did not put in a witness statement at trial and she did not appear to give evidence.

Furthermore, I have some sympathy with the submission made on behalf of Ms Al Jaber that her joinder to the proceedings was largely opportunistic. There was not a shred of evidence against her in connection with the 2016 Void Disposition claim and the only available evidence as to her involvement in the Company (provided in the context of the section 236 Examination) was that she deferred at all times to the Sheikh (see in particular the findings at [312] of the Main Judgment).

In the circumstances, the fair order, consistent with the provisions of CPR 44.2 and the overriding objective would be for Ms Al Jaber to recover her costs of the litigation. There is no good reason to depart from the general rule that, as the successful party, she should recover her costs. Although it was submitted on behalf of the Liquidators that any costs she had incurred were likely to be de minimis owing to the fact that she did not provide a witness statement or attend trial, I do not see that this affects her overall entitlement to an order for her costs. Equally I am not persuaded that her signature on a disclosure statement should affect the position.

JJW UK was also a winning party in the sense that it successfully defended the claim of conspiracy against it. An original claim of knowing receipt was abandoned by the Liquidators.

Again, the Liquidators contend that an appropriate order would be no order as to costs as between them and JJW UK and, unlike the position of Ms Al Jaber, I am persuaded that that is a fair and just order. A representative of JJW UK signed a statement of truth on the Defence and did nothing to disabuse the court in the lead up to trial of the impression gained from the Sheikh’s evidence that all of the shares in JJW Inc had been transferred to JJW UK. As it turned out, and as the Sheikh ultimately acknowledged by his List of Corrections, this was incorrect. In my judgment, any costs that JJW UK incurred in its successful defence of the conspiracy claim at trial are offset by the wasted costs that it caused in the lead up to trial by reason of its failure to distance itself from the evidence of the Sheikh. Having regard to the “overall justice” of the case, this is sufficient for me to depart from the general rule that the winning party should recover its costs.

I now invite the parties to prepare an Order which reflects the decisions I have made in this judgment, together with any other decisions made at the Consequentials hearing.

In circumstances where I have given permission to appeal on the Main Judgment and having regard to the requirements of CPR 52.22, the parties are invited to consider whether steps need to be taken to ensure that the part of this costs judgment dealing with the Part 36 Offer is redacted upon hand down and, if so, whether a form of order is needed to ensure that it is made public once the appeal is resolved.