Bostani & Ors v Pieper & Anor

On behalf of the Claimants, Mr. Moeran submitted that no question of the application of any limitation period arose in this case.

First, the Limitation Act operates on the basis of when proceedings are issued. In this case, the proceedings were issued long ago, and the Tomlin Order is enforced by means of an application in these proceedings. Therefore no limitation period could apply. Rather than issuing proceedings, a party to a Tomlin Order who wishes to enforce its terms needs to apply to the court to give judicial force to the relevant provisions.

Mr. Moeran emphasised that the Claimants were not making a new claim. They were seeking judgment on the existing claim as set out in the amended Particulars of Claim which were referred to in the Tomlin Order dated 23 March 2011. Thus, no new action was being issued or needed to be issued: see The Bargain Pages Ltd. v Midland Independent Newspapers Ltd. [2003] EWHC 1887 and Starlight Shipping Company v Allianz Marine & Aviation and others [2011] EWHC 3381. The present application was therefore all about enforcement of the original proceedings. No amendment was required, and there was no enlargement of the claim. All that was being sought was the carrying into effect of Clause 3 of Schedule 2 to the Tomlin Order; namely the entry of judgment in respect of the amounts owed under the New

Accordingly, there was no new cause of action for the purposes of section 35 (3) of the Limitation Act. No pleadings required to be amended. No fresh action was required or indeed could sensibly be started in order to seek the entry of judgment within the present proceedings. Indeed, the settlement agreement contained an express provision which entitled the Claimants to enter judgment, and this must refer to judgment within the present proceedings.

Secondly, by way of analogy to the entry of judgment under an unless order, the sanction is already provided for and the Court is just making good on that sanction without any discretion being exercised. At worst, however, even if the Court retained some sort of discretion with respect to the application, including to apply the Limitation Act by way of analogy, it would not be appropriate to do so here. The last breach occurred on 7 December 2012, and this was (just) less than 6 years before the application to enter judgment was made to the court on 4 December 2018. The relevant date for assessing limitation, if relevant, was the date when the application was made to enforce Clause 3 of Schedule 2.

Thirdly and in any event, however, there was a clear acknowledgment of the debts owed under the settlement agreement in the signed agreement dated 29 May 2013, in which Mr. Pieper agreed that the “the Freezing Order and Consent Order shall remain in full force”. The effect of that acknowledgment was that the limitation period would re-start on 29 May 2013 so that the present application is well within time.

For Mr. Pieper, Mr. Midwinter put limitation at the forefront of his argument. He submitted that the Limitation Act must be applicable, because otherwise a claim arising from a breach of the settlement agreement would never become time-barred, and might be potentially enforced 50 years from now. It was procedurally convenient for the settlement agreement to provide that there could be an application within the existing proceedings rather than by commencing a new claim. But this did not mean that the Limitation Act was disapplied.

He submitted that, as a matter of substance, a new claim was being made. The application was a new claim for breach of the settlement agreement, which was said to give rise to a right to resurrect the original action. There was currently no such pleaded claim, and the Claimants must therefore apply for permission to amend their Particulars of Claim to allege a breach of the settlement agreement pursuant to CPR r17.1(2) and 17.3. These were new facts not covered by the original claim. An amendment was not permissible because more than 6 years have expired since the date when the settlement agreement was breached. The final breach occurred in December 2012, and this meant that it was too late for the court now to grant permission to amend, since the time-bar was to be applied as at the date when the application to amend was determined rather than the date when it was made: see Welsh Development Agency v Redpath Dorman Long Ltd. [1994] 1 WLR 1409. Furthermore, the relevant question, in the context of an amendment to raise a new claim is whether or not the limitation defence is arguable. If so, the relevant claim needed to be pursued in a separate action.

The need for amendment in a case such as the present could be tested by asking what would happen if there was a significant factual dispute as to whether there had been a breach of the relevant contract. That might be a relatively simple issue in the present case, where breach was admitted. But there may be settlement agreements or other contracts (e.g. for the supply of widgets of a particular specification) where the dispute would be more complex, and where the parties’ respective cases would need to be set out in amended pleadings.

In summary, Mr. Midwinter submitted that in order to obtain the relief sought, the Claimants needed to amend their Particulars of Claim to plead a breach of the settlement agreement and could not do so because a relevant limitation period has, or has arguably, expired. The same result could be achieved by reference to the express provision in the recital to the Tomlin Order that the Claimants may raise the breach of the settlement agreement by way of application rather than new claim “unless the Court otherwise orders”. In the present case, the Court should otherwise order so as to avoid the Claimants circumventing the need to bring a claim within the limitation period.

In relation to the Claimants’ argument that the claim was in any event within time because the application was made on 4 December 2018, which was less than 6 years after the final breach (6 December 2012), Mr. Midwinter’s primary point was (see above) that limitation needed to be considered by reference to the date when the amendment application was determined, not when it was made. He also submitted, however, that the cause of action under Clause 3 was complete when any payment was not made. Here, there was a complete cause of action under Clause 3 as and when payment was not made in December 2011 or shortly thereafter.

As to the argument as to acknowledgment, Mr. Midwinter submitted that there was no acknowledgment of a debt. The reason for this was because of his primary submission as to the limited effect of the May 2013 agreement; namely that whilst the Tomlin Order did remain in full force, but only in relation to the alleged March 2012 oral agreement, and only operative if there was a breach of that agreement. Accordingly, the May 2013 agreement was only, to that extent, an agreement that Mr. Mann’s rights would not be prejudiced, but it did not contain an acknowledgment.

The initial question is whether the enforcement of obligations contained in a settlement agreement scheduled to a Tomlin Order is subject to the six year time period for “actions founded on simple contract” in s.5 of the Limitation Act 1980. There is no decisive authority on this point, but Sir Andrew Morritt VC in The Bargain Pages clearly considered that the Limitation Act was potentially applicable, although in the event he considered that the relevant obligation was a continuing obligation and therefore the remedy was not barred by limitation: see paragraph [22]. I consider that Sir Andrew Morritt was correct to regard the Limitation Act as potentially applicable to a settlement scheduled to a Tomlin Order. Such a settlement remains a ‘simple contract’ for the purposes of limitation. The court’s approach to the construction of that contract or the assessment of any damages claimed would be in accordance with usual contractual principles. I see no reason why the Limitation Act should not also be applicable. It is true that when an order is sought for the enforcement of terms contained in a Tomlin Order, that can be described as the enforcement of the court’s own orders: see Starlight paragraph [29 (i)]. In that sense, it could be said that proceedings to enforce the terms scheduled to a Tomlin Order is something different to an action “founded on a simple contract”. However, the substance of such an application is to enforce contractual rights, and it would be surprising if the consequence of scheduling those rights to a Tomlin Order was to insulate a claim for breach of contract from the statute of limitation.

If, in the present case, the Claimants had sought the enforcement of the obligation to pay the third instalment (originally due on 9 December 2011), it is difficult to see why they should be entitled to do so outside the 6-year limitation period. Indeed, the logic of the Claimants’ argument is that there would never be a limitation bar to the enforcement of such a claim; so that it could be enforced some 10 or 50 years later, subject only to the possible exercise of the court’s discretion not to enforce its own orders. This would be a very surprising conclusion.

In the light of these conclusions, it seems to me that the entitlement given to the Claimants, under Clause 3 of the settlement agreement, to enter judgment in consequence of a breach of contract is also subject to a 6 year limitation period. That entitlement is simply the consequence of breach, and I can see no reason why the limitation period should not apply to the exercise of that right arising in consequence of breach. To that extent, I agree with Mr. Midwinter’s submissions on limitation.

However, in my judgment Mr. Midwinter’s argument then breaks down. There is nothing in the authorities which suggests that the enforcement of the obligations in the agreement scheduled to a Tomlin Order requires either the commencement of fresh proceedings, or the amendment of existing pleadings. On the contrary, the basic idea of a Tomlin Order is that a party can move easily to the enforcement of those obligations, because that party is asking the court to enforce its own orders. In Starlight at [34] Burton J said:

“There is no doubt that this action continues in existence and to have effect notwithstanding the stay. The steps now taken to enforce the Tomlin Orders are not in any way enlarging the original action, but are taken in pursuance of it, and permitted by the Orders, as I have concluded”.

This is the clear effect of the present Tomlin Order. Its express terms provide that any party can apply to the court to enforce the terms of settlement “without the need to bring a new claim”. This is what the Claimants are doing by virtue of the present application. The additional paragraph in the body of the order (“AND IT IS RECORDED THAT … without the need to start a new claim”) seems to me to be directed at making clear that matters such as an enquiry into damages can be dealt with by way of an application in the existing proceedings, and therefore to resolve any potential issue along the lines of that considered in paragraphs [24] – [30] of Starlight. This additional paragraph does serve to confirm, however, that an application is all that is required, and I see no reason in the context of the present case, which involves the simple enforcement of the terms of settlement, to “order otherwise”.

Thus, the Claimants are simply inviting the Court to implement Clause 3 of the settlement agreement, which expressly entitles them to enter judgment in “the full amount of the Claimant’s claim against [Mr. Pieper] as set out in the Amended Claim Form and Amended Particulars of Claim”, and to which Mr. Pieper’s deemed consent was expressly given. There is no enlargement of the original action, which was for the full amount of the New York Judgment. There is no new claim which is being advanced: the judgment which is now sought is for the sum claimed in the proceedings in which a settlement agreement was made, scheduled to a Tomlin Order,

I therefore reject Mr. Midwinter’s submission which was to the effect that whenever a party sought enforcement of the terms scheduled to a Tomlin Order by reason of a breach of those terms, a party is bringing a new claim which should in principle be pleaded; but that the point is never usually taken because, unless limitation arises, it is a point which goes nowhere. The true position is that the enforcement of a Tomlin Order does not require a fresh action, or fresh pleadings or anything of that kind, because the court is simply being asked to enforce an existing order in an action which remains extant, but where proceedings have been stayed. It may be that if there were a case of some complexity as to whether or not there was a breach, the court might require the parties to set out their respective cases in writing. But this is not the same as requiring amendments of the pleadings. And in any event, there is no dispute that, in the present case, the relevant payments were not made.

The question which then arises is whether, given that I consider that the Limitation Act is potentially applicable, the present application to enforce the terms of the Tomlin Order is nevertheless time-barred. It seems to me that this must depend upon whether the application to enforce Clause 3 of the settlement agreement was made within time. In order to enforce Clause 3, the Claimants were not required to issue new proceedings. Indeed, I agree with Mr. Moeran’s submission that it would be difficult to see how it would be appropriate to issue new proceedings in order to ask for judgment within the existing proceedings. Nor were the Claimants required to amend their pleadings, or to seek leave to do so. As I have said, no new claim was being advanced, and the Claimants were simply asking for judgment on an existing claim where proceedings were commenced well within time. Given that the initiating process for enforcement of the terms scheduled to a Tomlin Order is simply the making of an application, I consider that the relevant date for determining the timebar issue is the date when the application was made.

In the present case, the application was made on 4 December 2018. That application was in my view in time, because the right under Clause 3 arose if the Defendants failed to make “any of the payments on the dates set out in paragraph 1”. It is true that a right under Clause 3 arose when there was a failure to pay on 9 December 2011 or shortly thereafter, and that the present application was made more than 6 years after this right arose. However, further rights arose on each of the subsequent days when payments were not made, including 7 December 2012 when the final payment should have been made. The application to enforce was made within 6 years of the date when the right under Clause 3 in respect of that final default arose.

In the light of that conclusion, I can deal briefly with the argument on acknowledgment. Clause 4 of the May 2013 written agreement states that the “Consent Order” remains in full force. By that time, Mr. Pieper had failed to pay the 3rd – 6th instalments, the due dates for which had passed. The obligation to pay those instalments, which were debts, form part of the “Consent Order” which remained “in full force”. The only sensible construction of that provision is that Mr. Pieper was acknowledging that those debts remained due and owing.

I have already rejected the First Defendant’s argument that the May 2013 agreement was of limited effect. But even if that argument were to be accepted, I see no reason

Accordingly, for this additional reason, namely acknowledgment, the present application is not time-barred.

The First Defendant submits that the application should be dismissed as constituting an abuse of process. He referred to the decision of Barling J. in Wearn v HNH International Holdings Ltd. [2014] EWHC 3542 (Ch), paragraphs [65] – [72]. In summary, delay by itself does not constitute an abuse of process, and it is necessary for there to be some additional factor. This can include, for example, the fact that a claimant is ‘warehousing’ proceedings to pursue at his own convenience, or appears to have lost interest in the pursuing the litigation to judgment, or that the delay has caused prejudice to the defendant or that delay could prejudice a fair trial of the action. The duty on a claimant to pursue a claim expeditiously was all the more important when the claimant had already received a significant benefit at the expense of the defendant from the action, for example an interlocutory injunction to the defendant’s disadvantage.

In the present case, the First Defendant submitted that the Claimants had done nothing to prosecute the action between the date of initial breach of the settlement agreement in late December 2011/ early January 2012 and late 2018. In the meantime, Mr. Pieper had worked without pay to assist Mr. Mann in his business ventures and was subject to the WFO. The underlying debt was accruing interest at an astonishing rate, so that the judgment sum is now over US$ 17 million. There was no indication that Mr. Mann had any intention of pursuing a claim for breach of the settlement agreement during his lifetime, or that the Claimants had any such intention until December 2018. Mr. Mann had died in the meantime, meaning that he could not give corroborative evidence to support Mr. Pieper’s account.

I agree with the Claimants’ submissions, however, that there is nothing on the facts of the present case which amounts to an abuse of process. The starting point is to recognise that this is a case where the original underlying claim was pursued to judgment in the New York proceedings, and was then pursued close to judgment in the subsequent English proceedings, when it was then settled by a compromise agreement contained in the Tomlin Order. That compromise agreement was then breached by the Defendants, as indeed is admitted by the First Defendant. In May 2012 and May 2013, Mr. Pieper entered into agreements which recognised the continuing force of both the WFO and the Tomlin Order. There was, as I have already concluded, no oral agreement which was made in March 2012 which negated the effect the WFO and Tomlin Order.

Any work that Mr. Pieper may have carried out to assist Mr. Mann’s business ventures was therefore carried out against the background where Mr. Pieper had agreed initially to the terms of a Tomlin Order, and then subsequently confirmed his agreement that both the Tomlin Order and WFO should remain in place. Similarly,

However, there are further facts that are also relevant. In the 22 December 2014 email (quoted above), Mr. Pieper was told that unless value was created in any Chinese deal, there would be “no agreement for change in the obligations for assets as currently established”. This was reiterated in the email correspondence later that day, including from Mr. Howes. The context of the email traffic on that day was litigation in France, which Mr. Pieper wanted to end because “we are wasting time and money”. Mr. Mann was not willing to end that litigation in 2014, and the evidence before me is that there has been continuing litigation in France, with various hearings and submissions from 2014 to the present time. Accordingly, notwithstanding inaction in the English proceedings, there have been continuing efforts in France to recover monies in satisfaction of those owed by the Defendants.

There has also to my mind been a satisfactory explanation of the absence of steps taken in the English proceedings. Within around 6 months from the time of the correspondence in December 2014, Mr. Mann’s health began to fail and he was no longer able to maintain his former intensive work schedule. He was admitted to hospital in late 2015 and died in February 2016. His trustees then needed to get to grips with the large number of business ventures with which he had been involved, and were administering various parts of his estate. The trustees turned their attention to the French litigation in 2016. At that time the only assets of value, owned by Mr. Pieper and of which the Trust was aware, were the subject of steps to enforce in France and the Netherlands. The Trust had by that time spent a considerable amount of time and money on pursuing Mr. Pieper with limited recoveries. It is therefore not surprising that steps were not actively being taken in the English proceedings.

In around September 2017, investigations into Mr. Pieper’s assets were recommenced, and (after obtaining litigation funding) the Trust obtained what they considered to be good evidence that Mr. Pieper is the beneficial owner of a large number of previously undisclosed entities and assets. The decision was then taken to take further action against Mr. Pieper in order to recover the sums owed to it.

In summary, this is a case in which the Claimants have already established that the Defendants owe significant amounts of money; there has never been any agreement by the Claimants to waive their rights of recovery; there have been continuing attempts to obtain recovery, in particular the French litigation which has been continuing; and where the discovery of undisclosed assets (which of course should have been disclosed pursuant to the terms of the WFO) has led to reignition of the

I shall therefore accede to the application to lift the stay and enter judgment. I shall hear counsel as to the appropriate further orders in the light of this judgment.