Masri v Consolidated Contractors International Company Sal

This is a case management conference in the run-up to a committal application. It arises in the course of proceedings of some notoriety. Both that fact, and the scope of the applications advanced during the course of the CMC, justify a slightly more elaborate judgment than might be usual.

The claimant is the beneficiary of a judgment amounting to about US$75 million. Although the judgment has been outstanding for some four years and the defendants (by which I refer to the first and second respondents) have, on their own admission, resources of great magnitude, no part of the judgment has been paid. That outcome is scarcely a credit to the enforcement procedures of the Commercial Court.

As I observed in a recent judgment in the same proceedings, the circumstances furnish a stark example of Lord Bingham’s observations in Société Eram Shipping Co Ltd v Cie Internationale de Navigation [2004] 1 AC 260:

“It is one thing to recover a favourable judgment: it may prove quite another to enforce it against an unscrupulous defendant.”

The claimant’s frustration is matched by the defendants’ protestations that the claimant should never have won his action, let alone enhanced the quantum of his claim on appeal. This mutual antagonism has borne fruit in a wave of legal proceedings in this jurisdiction and elsewhere. In the result the parties have expended no less than £8 million on legal costs in the English enforcement proceedings alone.

The defendants continue to assert in argument that their position is “not to avoid paying the judgment debt at all costs but to ensure that Mr. Masri strictly complies with all enforcement procedures.” The history of the disputed enforcement process, the monies expended on it and the refusal by the defendants to pay any costs order made against them constitutes ample evidence that such a stance is entirely spurious. A somewhat franker explanation of their approach is to be found in the tenth affidavit of Mr. Andrew to the effect that the defendants were merely “seeking on advice to take more or less every legitimate point that was open to them, including appeals on procedural matters, to resist enforcement.” Indeed it is clear that a decision to that effect was a precursor to the proceedings in the Lebanon to appoint a judicial administrator, a development which looms large in the issues in the committal application

Unfortunately the mutual antagonism between the parties has led to a loss of realism on the part of the defendant’s legal representatives in contrast to the expectations expressed in paragraph 14.1.6 of the Admiralty and Commercial Court Guide. On the last permissible day in the run-up to the CMC, the defendants issued no less than nine application notices supported by nine witness statements with numerous exhibits, including an expert’s report on Lebanese law. These must have been in preparation for weeks. The immediate impact was the suggestion that the overall time estimate needed to be doubled from two to four days with the consequent suggestion of another fixture to complete case management matters to take place before the substantive hearing which is fixed to take place in early 2011.

In the event two of the applications, involving an application for a stay or strike out on the basis of abuse of process and/or non-justiciability, were left over for a later hearing or to the final hearing as the court might decide. Even then the parties’ estimate for the hearing of the remaining applications was about 11 hours. In fact the CMC hearing has lasted even longer than that and had to be extended into the following week.

Skeleton arguments were furnished on Thursday 30 September (the hearing due on Tuesday 5 October). The claimant’s skeleton ran to 100 paragraphs, over 28 pages. The defendant’s skeleton ran to a remarkable 373 paragraphs, over 70 pages. Bearing in mind the Guide’s encouragement to limit skeletons to 50 pages even for trials, this further reinforces the want of realism and proportionality in the presentation of this CMC by the defendants.

These points are not directly material to the merits of the issues that arose on the CMC. But it provides a clue to the motives behind the array of applications and the concurrent presentation of a vast mass of material (accompanied as it was by seven main bundles, three supplemental bundles, ten volumes of exhibits and six volumes of authorities, most of which material remained in virgin condition at the end of the hearing).

I hope that I do not exhibit a lack of courtesy at this state of affairs. But it struck me that there was a policy on the part of the defendants to submerge the claimant (and the court) in the late production of a mass of indigestible material. Their estimate for the physical task of simply reading the skeletons alone was three hours. Thrown in for good measure was an additional reading list with an estimate for another three and a half hours. This was by no means an overestimate and was in any event devoid of any “thinking” time. It was not helped by the reading list coming to my attention on the Friday afternoon after court and after reading for a full day in another matter fixed for the Monday. All this without any warning, explanation or apology.

I am reminded of Lord Justice Toulson’s observations in Midgulf Int. Ltd v. Group Chimique Tunisien [2010] EWCA Civ 66:

“I am afraid that the case is a grotesque example of a tendency to burden the court with documents of grossly disproportionate quantity and length. It is a practice which must stop. Far from assisting the court, it makes the work of the court infinitely harder.”

I should record that the third respondent’s applications and skeleton were notably economical in comparison. They raised various matters which overlapped with part of the applications made by the defendants and I do not think it is necessary to deal with them separately save to record that appropriate directions will be given for the preparation of Lebanese law evidence.

There are two other matters which need mentioning by way of background:

Lastly by way of introduction I need to summarise the contempt allegations briefly so as to put the applications in context. The allegations against the defendants include:

The only substantive defence raised by the defendants to these allegations is that they were entitled to ensure compliance with local legal requirements in the various states of enforcement and, further, since Lebanese judicial administrators were appointed in December 2008, it has not been possible to comply with the orders of the English court since that date. In either case it is contended that any contempt is not contumacious. It is of some note that the vast range of applications made at this CMC have no bearing on those contentions.

It would be useful to deal with the future of applications 8 and 9 first. These raise the contention that the contempt application be struck out or stayed as an abuse of process and/or that the fact that the defendants are under judicial administration in the Lebanon renders the complaint of failure to comply with orders of the court which forms the basis of the committal application redundant or non-justiciable.

Quite apart from the late stage at which these matters were raised, there were two further impediments to dealing with these two applications at this hearing. First, the defendants produced a further expert’s report on Lebanese law as regards the nature and effect of judicial administration. The claimant was thus afforded no opportunity to respond to it. Second, as already indicated, some of the abuse arguments matched issues raised by the third respondent in his recent and unsuccessful application to strike out or stay the contempt application against him. Yet the defendant chose, despite the court’s invitation, not to participate in that application.

I have no doubt that the sensible course of action is that these applications be dealt with at the substantive hearing. The issues raised are highly fact sensitive and, as Blair J suggested in his recent judgment, questions of abuse of process must be left to the judge hearing the application who will have regard to the overall picture.

As regards the additional point raised by the defendants, namely the origin and impact of the judicial administration, the implications of such a development have already been reviewed to some extent by this court and are dealt with in the context of earlier Lebanese blocking orders in the judgment of Tomlinson J dated 21 October 2008: [2008] EWHC 2492 (Comm). This in turn was approved by the Court of Appeal: [2008] EWCA Civ 1367. This aspect, although on one view it might raise issues of jurisdiction, is best reviewed in the context of a proper exchange of expert evidence at the final hearing (for which purpose the claimant undertakes to take no point on any possible suggestion of a submission by the defendants to the jurisdiction).

I turn now to all the other applications in respect of which there is in effect a threshold issue between the parties as to the nature of committal proceedings. The defendants maintain that it is a criminal trial akin to a private prosecution. The claimant asserts that it is simply a civil application. In my judgment the claimant is correct:-

Indeed the practice direction goes on to make specific provision for:

It is right however that proceedings for civil contempt have a quasi criminal character. For instance, the criminal standard of proof applies. But the privilege against self incrimination is available under Section 14 of the Civil Evidence Act 1968 despite the fact that they are not criminal proceedings: Cobra Golf Inc. v. Rata [1998] Ch. 109. By the same token such proceedings are within scope of the Civil Evidence Act 1995 for the purpose of the admission of hearsay evidence: Daltel Europe Ltd. v. Makki [2006]1 WLR 2705.

I have not forgotten that the proceedings are subject (as the defendants repeatedly put it) to the full panoply of Article 6 of the ECHR. Indeed, the Convention rights of those involved must be “borne in mind”: RSC 52 PD 1.4. But this categorisation does not preclude the conclusion that such proceedings are civil in nature by virtue of domestic law for all procedural purposes. The question that arises is simply whether the proceedings, however categorised, respect a party’s Convention rights.

Application 1 is a general application for disclosure of “all documents which might reasonably be considered capable of undermining the case for the claimant… or of assisting the case for the first and second defendants.” This application was pursued on the basis that the committal application was a criminal trial and that disclosure (in the broadest sense) was accordingly to be conducted in accord with the Attorney General’s Guidelines.

This, for the reasons explained above, is based on a misconception. It is not a criminal trial. Furthermore, no such direct obligation arises from Article 6, subject to the overall requirement for a fair trial. That said, even in the context of a criminal trial it is worth quoting paragraph 5 of the guidelines:

“5.

Disclosure must not be an open ended trawl of unused material. A critical element to fair and proper disclosure is that the defence play their role to ensure that the prosecution are directed to material which might reasonably be considered capable of undermining the prosecution case or assisting the case for the accused. This process is key to ensuring prosecutors make informed determinations about disclosure of unused material.”

As the defendants’ skeleton argument puts it “the broad defence of the companies is that as foreign entities subject to foreign laws they are simply insisting that the applicant complies with all enforcement procedures…” As already observed this includes reliance on the appointment of a judicial administrator in the Lebanon. Thus it is submitted that any refusal or failure to comply with the court’s orders, whilst deliberate, is not contumacious. On the face of it is it is not easy to see how the disclosure sought can arise in the context of such a defence.

Similar considerations would arise in the event that the provisions of CPR Part 31 as regards standard disclosure by list in a multi-track case were applicable. But, as already explained, the committal proceedings constitute an application within the existing proceedings and no general (let alone mutual) obligation of disclosure arises. Indeed it is of some note that no example in the authorities was produced by the defendants of any order for disclosure in the run-up to a committal order.

Nonetheless, the court has the discretion to order disclosure at any stage of the proceedings including for the purpose of interlocutory matters:

“25.

It is of course open to the court to order disclosure at any stage of the proceedings, including for the purpose of interlocutory proceedings. But it is well established under the previous procedural rules that such a power should be exercised sparingly and only for such documents as can be shown to be necessary for the fair disposal of the application; see Rome v. Punjab National Park [1989] 2 All England Reports 136. There are no reasons for concluding that any different approach is appropriate under the provisions of CPR: see Disclosure, Matthews and Malek 2^nd Edition Para2.68.”: Fiona Trust Holding Corp. v. Privalov [2007] EWHC 39.

Notably this was a case in which disclosure as regards the activities of inquiry agents sought in the context of resisting a freezing order was refused despite the fact that the activities of the inquiry agents concerned were admittedly unlawful. Against that background, I refuse the application for general disclosure, let alone as might be appropriate in a criminal trial.

This in effect leads to application 2. But before considering what disclosure might be necessary for the purposes of the committal application it is appropriate to say something about the primary bone of contention between the parties. This centres on the claimant’s engagement of inquiry agents some time ago to conduct a search for documents as might assist in the enforcement process. The defendants maintain that they acted in an unlawful manner. Indeed this factor represents a common theme across the board. For instance the abuse of process application is put forward in the following way:

“Your client’s contempt application is the continuation of a plot hatched by your client, with the assistance of others including his son Mr Mazen Masri, to force the companies to pay the judgment debt under the threat of disclosure to the courts and the media of confidential documents secretly and unlawfully obtained by private investigators and/or stolen from the companies by one or more people in breach of fiduciary duty.”

The process is described in an affidavit of Mr. Bartlett of Messrs. Simmons & Simmons, the claimant’s solicitors as follows:

“10.

My affidavits are supported by extensive documentary evidence. A number of the documents exhibited to my affidavits are in the public domain, but a significant number have been obtained (through lawful means) via the use of inquiry agents.

11.

Enquiry agents were instructed on behalf of Mr. Masri. The enquiry agents were instructed to search for documents which might assist Mr. Masri in enforcing the judgment debt, using only legitimate means. As part of this search, the enquiry agents searched for documents which had been discarded by CCC and which might assist Mr. Masri in enforcing the judgment debt. In particular, they searched for documents discarded as rubbish on the pavement outside the London offices of CCC. I understand where they identified documents which might be relevant, they made copies of those documents and returned the originals to the refuse sacks outside CCC’s offices. The enquiry agents have confirmed to me that they have used these methods of obtaining documents for use in court proceedings on several other occasions before and that their conduct has not been criticised by the court when the means of obtaining the documents have been disclosed. I say this on the basis of information provided to me by the relevant enquiry agents which I believe to be true.

12.

The documents held by my firm have not been used for any purpose other than the ongoing enforcement proceedings between the Judgment Creditor and the Judgment Debtors.”

This process involves, so the defendants assert, a degree of illegality or at least impropriety which would justify excluding the evidence thus obtained, even though relevant and admissible. The thrust of the defendant’s case is that the description furnished by the claimant gives rise even at this stage to a prima facie case of theft, trespass and breach of confidence. Upon that foundation the defendants mount a range of applications referable to the instructions given to the inquiry agents, their reports and the fruits of their labours not already disclosed.

Is there such prima facie case so as to justify an order for disclosure on the present material absent any evidence from the defendants? So far as theft is concerned, the claimant contends that since the documents were extracted from the rubbish, copied and then returned, no question of theft arose. The counter from the defendants as I understood it is that the documents were not returned but retained and disposed of elsewhere. In my judgment this, while obviously conceivable, is wholly speculative.

As regards trespass, it is suggested that, given the local authority schedule for rubbish collection, the relevant refuse sacks may have been sited on the property of CCUK and not on the street. Again this is wholly speculative.

As regards alleged breach of confidence, it is right that some of the documents are marked as confidential. But is has to be borne in mind that the documents were of some antiquity and much of the remaining content of the sacks had been shredded, presumably because of their continuing confidential status.

In the result I doubt whether any prima facie case is made out on the present material. But even assuming that the defendants’ complaint of unlawful and improper conduct is sufficiently made out, the prospects of excluding such evidence must even then be wholly remote. I have been reminded of the decisions in Jones v. University of Warwick [2003] EWCA Civ 151 and R v. P [2002] 1 AC 146. It is of note in the present proceedings that:

It follows that, as presently advised, any complaint that the defendants face a difficulty in obtaining a fair trial is not readily sustainable. Indeed, no such suggestion is made. The fact that the third respondent does not seek any order to exclude the evidence is a further pointer in this regard (even allowing for his position as having only secondary liability). I do not go so far as to say that any application in the form of application 7 is bound to fail. But I do not think it “necessary” to require disclosure on the topic. Any rehearsal of the point can be properly and sensibly raised at the hearing in the light of all the evidence then available.

Leaving those points aside, let me deal first with the principal application for disclosure said to be necessary for the fair disposal of the committal. This relates to what might be termed the unused or retained material obtained by the inquiry agents. The first point taken by the defendants is that these documents have been “mentioned” within the meaning of CPR Part 31.14. I reject that submission. While the overall class of documents is referred to in the affidavits, there is no direct or specific identification of any actual document: see Rubin v. Expandable Ltd [2008] EWCA Civ 59.

Second it is submitted that the retained material should be disclosed to ensure a fair trial by analogy with the Attorney General’s guidelines. In particular, it is submitted that it is necessary to see the balance of the documents to give “context” to those produced. It is difficult to imagine a broader compass for the disclosure of documents.

I am certainly not persuaded that it is necessary for the retained documents to be produced:

The inference I draw is that the exercise is primarily directed at an unfocussed inquiry into the role of the inquiry agents and the resulting activities of the claimant’s solicitors and not to any issue in the application itself. In short the whole purpose from the defendants’ point of view seems to boil down to research into the question whether the claimant’s solicitors have cherry picked the documents so as to mislead the court. In short it is a fishing expedition into entirely collateral territory.

I must next deal with a range of requests from both the defendants and the third respondent that the sources of information referred to by the claimant’s witnesses in their affidavits be disclosed. Insofar as it needs to be repeated in the context of application 6, I conclude that the claimant is entitled to adduce hearsay evidence. The absence of the maker of the statements or the source of the information may have an impact on the weight to be accorded to it but does not render it inadmissible.

These applications are made under CPR Part 32 PD 4 pursuant to which an affidavit must “indicate” the source of any matters of information and belief. In a long schedule prepared by the third respondent, over 40 examples of an alleged failure by Ms. Abbas and Mr. Bartlett (who both provided affidavits in support of the committal application) to indicate their sources are set out at length. Many of them are not examples of any such thing. Others are simply examples of inferences drawn from the existing materials. Yet others are expressly or inferentially for the protection of sources within the defendant group.

I reject the application. By way of introduction, this whole exercise is of a piece with the strategy of the defendants’ camp to bombard the claimant (and the court) with technical, unmeritorious and disproportionate requests. Many of the concerns as to Mr Bartlett’s sources have been overtaken by a further statement. As regards Ms Abbas I am not persuaded that any further material to “indicate” her sources is required in the pursuit of a fair trial.

The principal focus of the complaint as to sources is the identity of the inquiry agents. The claimants say that the source has been properly “indicated” and that there is no requirement to identify them by name. The defendants complain that without a name they cannot undertake inquiries into the credit and reputation of the agents let alone seek to obtain statements from employees.

Despite the offer of an undertaking not to institute proceedings against the inquiry agents, it seems to me that the purpose behind the requests is to further the very same side issue as to the mode of retrieving documents from the rubbish sacks absent any substantive grounds for being concerned as to the use of unlawful means (or, even if there was, any justified expectation of excluding the evidence).

In my judgment there is a world of difference between determining the identity of someone (“to identify”) and bringing indirect attention to someone (“to indicate”). I conclude that the source of the information as regards the work undertaken by the inquiry agents has been “indicated” with sufficient precision given the absence of any challenge to the authenticity of the documents and the absence of any reliance on material emanating from the agents other than the documents themselves.

In addition to the application for disclosure of the retained documents, there is a specific application for disclosure of documents received by the receivers appointed by the court. This is application 3. The receiver courteously gave notice to the court that he was not minded to attend. As he put it “The majority of my correspondence has been copied to the Companies’ legal advisors which fully informs them of the actions I have taken since my appointment as receiver.”

This, in my judgment demonstrates that the request for a report from the receiver of what steps he has taken from the dates of appointment (and the production of the underlying documents) is quite unnecessary. The further request for a report on “what further steps” he intends to take in any jurisdiction is wholly inappropriate.

Next there is an application 4 to cross-examine Ms. Abbas and Mr. Bartlett. Whilst it was entirely proper to support the committal application with affidavit evidence, the defendants were fully entitled to apply to cross-examine the deponents pursuant to CPR Part 32.7. In the event the claimant acceded to this application and I need say little about it.

However, I detected an intention on the part of the defendants and the third respondent to seek to pursue cross-examination beyond its proper boundaries and into the realm of submission and argument. This is a matter for the judge hearing the committal application. But, particularly as regards Mr. Bartlett, the defendants must resist embarking on cross-examination other than on issues of fact germane to the committal application.

Next I deal with the application to exclude material from the defendant’s affidavits (application 5) relating to:

The extent of such material in Mr. Bartlett’s affidavits is relatively modest. Indeed in comparison with the fifteen or so witness statements filed by Mr. Andrew for the defendants, they can be categorised as almost devoid of such material. The position as I see it is that any proposition or contention not later advanced by the claimant in submissions can be safely disregarded. The cost of the editing exercise is not merited.

There are no doubt some matters that I have not covered in this short judgment. Bearing in mind that I am concerned simply with issues of case management it is important that the outcome is not excessively long or unduly delayed. As regard some points raised about the absence of a header to an e-mail from Stephen Byers MP within the material obtained by the inquiry agents I see no basis for the suggestion that it has been tampered with (or any conceivable motive for doing so). As regards the source of a press release produced by the claimant, this has apparently been redacted by the removal of privileged material and I see no reason not to accept that claim.

There remain a number of matters for discussion on the handing down of this judgment with a view to economical and disciplined case management up to the substantive hearing. I will need assistance on these matters.