Ashraful Alam Khokan v Jawad Hossain Nirjhor

Under CPR 3.1(2)(a) the court has power to extend or shorten time for compliance with an order; and under CPR 3.1(7) the court has power to vary or revoke an order.

The Defendant places significant reliance on the judgment of Sir Richard Field, sitting as a Deputy Judge of the High Court, in Michael Wilson & Partners v Sinclair [2017] EWHC 2424 (Comm); [2017] 5 Costs LR 877.

At [23], the Deputy Judge referred to Crystal Decisions UK Limited v Vedatech Corp [2006] EWHC 3500 (Ch) as one of the authorities on the approach to be taken where cost orders are not paid by parties to ongoing litigation. In Crystal Decisions at [10], Patten J had observed that parties faced with opponents who are “not resident within the jurisdiction, and have no assets here” are “likely” to find the usual remedies to enforce a judgment for costs, such as seeking an order for payment and a charging order against any known assets or proceedings for contempt “to be of limited value”. At [16], Patten J had said as follows:

At [24], the Deputy Judge noted that in dismissing Vedatech’s application for permission to appeal the unless order granted by Patten J, Chadwick LJ, with whom Laws LJ agreed, said as follows:

At [25], he noted that in respect of [16] of Patten J’s judgment quoted above, Chadwick LJ said:

The Deputy Judge referred to further authorities on the approach the court should take when dealing with an application that a party to ongoing litigation should be debarred from continuing to participate in the litigation by reason of having failed to pay an order for costs made in the course of the proceedings. At [29], he distilled the relevant principles as follows:

CPR 3.9 provides:

As is well known, in Denton & Ors v TH White Ltd & Ors [2014]1 WLR 3926 the Court of Appeal set out a three-stage test applicable when determining an application for relief from sanctions. Mr Davies, on behalf of the Claimant, contended that he does not require relief from sanctions because the Senior Master’s order does not impose any such sanction. However, in my judgment, that is a distinction without a difference. This is because, although CPR 3.12A expressly confirms the court’s power to extend time limits even after they have expired, in such cases the court will decide what, if any, extension of time to allow in accordance with the Denton principles. That much is clear from the R and Hysaj & Ors (On the Application of) v Secretary of State for the Home Department [2015] 1 WLR 2472.

Even if it can be said that this principle only applies to mandatory orders, there is a good argument for treating the Senior Master’s order as such an order, especially given the context in which it was made and the indemnity basis on which it was made. Further, Aramco Trading Fujairah FZE v Gulf Petrochem FZC [2021] EWHC 2650 (Comm) at 22 suggests that it is prudent to consider the broad Denton principles in the alternative in this context in any event.

CPR 25.12(1) enables a defendant to any claim to apply for his costs of the proceedings. Under CPR 25.12(3) where the court makes an order for security for costs, it will (a) determine the amount of security; and (b) direct (i) the manner in which; and (ii) the time within which the security must be given.

CPR 25.13(1) provides that the court may make an order for security for costs under rule 25.12 if (a) it is satisfied, having regard to all the circumstances of the case, that it is just to make such an order; and (b) one or more of the conditions in paragraph (2) applies, or an enactment permits the court to require security for costs.

The Defendant here relies on the following two conditions from paragraph 2: (a) that the Claimant is “(i) resident out of the jurisdiction; but (ii) not resident in a State bound by the 2005 Hague Convention, as defined in section 1(3) of the Civil Jurisdiction and Judgments Act 1982”; and (g) that the Claimant has “taken steps in relation to his assets that would make it difficult to enforce an order for costs against him”.

Once satisfied that one or more of the relevant conditions in CPR 25.13(2) is met, the court must then determine whether or not, having regard to all of the circumstances of the case, it is just to order security, Infinity Distribution Ltd (in Administration) v Khan Partnership LLP [2021] EWCA Civ 565.

The White Book, para. 25.3.1 explains that if the effect of an order for security would be to prevent the respondent to an application from continuing with the claim, security should not be ordered. The burden lies on the respondent to show, on the balance of probabilities, that the claim would be stifled: Goldtrail Travel Ltd v Aydin [2017] UKSC 7; [2017] 1 WLR 3014 at [12], [15] and [23]. To discharge that burden the respondent will need to show that he cannot provide security and cannot obtain appropriate assistance to do so. The court will expect there to be full and frank disclosure.

As to condition (a), relating to Claimants resident out of the jurisdiction, the court will normally determine whether or not to exercise its discretion to order security for costs on grounds relating to obstacles to or the burden of enforcement of a subsequent order for costs in the context of the particular foreign claimant or country concerned: see the judgment of the Court of Appeal in Nasser v United Bank of Kuwait [2002] 1 WLR 1868 [61-63].

In Danilina v Chernukhin [2018] EWCA Civ 1802 Hamblen LJ at [51] gave detailed guidance as to security for costs in this context.

To make such an order the court must be satisfied that the claimant is resident (i) out of the jurisdiction and (ii) in a non-Convention state; and that having regard to all the circumstances of the case, it is just to make such an order.

In order for the court to be satisfied that it is just to make the order the court has to ensure that its discretion is being exercised in a non-discriminatory manner for the purposes of Articles 6 and 14 of the ECHR. This requires “objectively justified grounds relating to obstacles to or the burden of enforcement in the context of the particular foreign claimant or country concerned”. Such grounds exist where there is a “real risk” of “substantial obstacles to enforcement” or of an additional burden in terms of cost or delay. Danilina at [52](1) and [58] makes clear that the test is a “real risk” not a “likelihood” and thus, as Mr Wilcox rightly contended, something far less than a finding to the balance of probabilities.

The order for security should generally be tailored to cater for the relevant risk. Where the risk is of non-enforcement, security should usually be ordered by reference to the costs of the proceedings. Where the risk is limited to additional costs or delay, security should usually be ordered by reference to that extra burden of enforcement.

The White Book para. 25.13.1 makes clear that the merits of the underlying claim have limited relevance.

Further guidance in circumstances such as the present is to be drawn from the relevant paragraphs of Nasser as endorsed by Danilina.

Of particular relevance is the observation in Nasser at [62] that the justification for the discretion under Part 25.13(2)(a) and (b) and 25.15(1) in relation to individuals and companies ordinarily resident abroad is as follows: “….in some, it may well be many, cases there are likely to be substantial obstacles to or a substantial extra burden (e.g. of costs or delay) in enforcing an English judgment, significantly greater than there would be as regards a party resident in England or in a Brussels or Lugano state”.

In Nasser, consideration was given to a claimant resident in Milwaukee. At [66] it was held that although there was no express suggestion in the evidence that the defendants would face any extra burden in taking any such enforcement action against the claimant for costs, the court could “infer without more” that (i) the respondents would have to bring an action on any English judgment for costs, before proceeding to any enforcement steps that United States law or the law of Wisconsin permits; (ii) it was likely that the respondents would have to investigate whether the claimant’s impecuniosity was as real and great as she had asserted, a task which was likely to be more expensive to undertake abroad than it would be if she was resident in the United Kingdom or a Brussels/Lugano state; (iii) the course of the litigation to date suggested that the claimant was a determined litigant who could be relied upon by one means or another to take every conceivable step she could to defend what she asserted to be her rights, but whose very lack of means to fund the appropriate conduct of litigation appeared prone to add to the difficulty faced by the defendants; and (iv) there would be likely to be delay in enforcement, by reason of each of the first three points.

Viewing the matter both in the light of these factors and as a matter of general common-sense, the Court considered that it could “infer that steps taken to enforce any English judgment for costs in the United States would thus be likely to involve a significantly greater burden in terms of costs and delay than enforcement of a costs order made against an unsuccessful domestic or Brussels/Lugano claimant or appellant”.

At [67] the Court emphasised that the risk against which the defendants were entitled to protection was “not that the claimant will not have the assets to pay the costs, and not that the law of her state of residence will not recognise and enforce any judgment against her for costs”. Rather, it was that “the steps taken to enforce any such judgment in the United States will involve an extra burden in terms of costs and delay, compared with any equivalent steps that could be taken here or in any other Brussels/Lugano state”.

Finally, at [64], the Court confirmed that if security is granted on the grounds that enforcement will be burdensome, the amount ordered should be by reference to the extra burden of enforcement.

As to condition (g), relating to steps taken in relation to assets, the purpose of the condition is to prevent injustice to a defendant where the assets available to enforce any order for costs they obtain have been or are being put beyond the reach of enforcement: the White Book notes at 25.13.16.

The principles to be applied under this ground, drawn from various authorities, were summarised by Roth J in Ackerman v Ackerman [2011] EWHC 2183 (Ch) at [16]. This guidance has been cited with approval in a number of more recent cases: Kolyada v Yurov [2014] EWHC 2575 (Comm), [27], Al Jaber v Al Ibrahim [2019] EWHC 1136 (Comm) at [4] and Re Tonstate Group Ltd [2020] EWHC 328 (Ch) at [11].

The following aspects of Roth J’s guidance are particularly relied on by the Defendant here.

First, the requirement is that the claimant has taken in relation to his assets steps which, if he loses the case and a costs order is made against him, will make that order difficult to enforce. It is not sufficient that the claimant has engaged in other conduct that may be dishonest or reprehensible. The test in that regard is objective: it is not concerned with the claimant’s motivation but with the effect of steps which he has taken in relation to his assets.

Second, if it is reasonable to infer on all the evidence that a claimant has undisclosed assets, then his failure to disclose them could itself, although it might not necessarily, lead to the inference that he had put them out of reach of his creditors, including a potential creditor for costs.

Third, the burden is on the claimant to show that he is unable to provide security not only from his own resources but by way of raising the amount needed from others who could assist him in pursuing his claim, such as relatives and friends.

Fourth, when a party seeks to ensure that any security that may be required is within his resources, he must be full and candid as to his means: the court should scrutinise what it is told with a critical eye and may draw adverse inferences from any unexplained gaps in the evidence.

In Dubai Islamic Bank PJSC v PSI Energy Holding Co BSC [2011] EWCA Civ 761, an order under r.25.13(2)(g) was made in respect of an appeal where the appellant denied owning substantial assets and sought to explain his expensive lifestyle by saying that he was receiving loans from family, family affiliated companies and third parties: in the circumstances of the case the court felt able to draw a double inference, as to the existence of assets and also as to steps taken to hinder enforcement. At [29], the evidential requirements on an individual opposing an application for security for costs were reiterated.

Ms Sultana’s evidence, in particular paragraphs 19-30 of her 18 March 2024 statement, makes clear that she made significant efforts to chase the Claimant for payment of the monies owed under Senior Master Cook’s order, both before and after 7 March 2024. The Claimant, in response, again raised the issue of set-off. He was reminded that the detailed assessment and set-off issues had both been canvassed before the Senior Master and rejected.

It was not until 18 March 2024, and so after the deadline set by the Senior Master of 7 March 2024, that the Claimant proposed that there would be an extension of time for compliance with the order until 31 July 2024. That is some weeks after the listing of the trial. The Defendant, perhaps understandably, made clear that that would not be acceptable.

The Defendant had previously raised the possibility of applying for security for costs but had not made such an application. The Defendant now considered, with good reason, that there was evidence that the Claimant was willing to ignore court orders in relation to costs, and so made this application. As I have indicated, this application was made on 18 March 2024. Further details of the rationale for the decision are set out in Ms Sultana’s evidence. She also sets out in detail, in particular at pages 30, 162, 187 and 189 of the bundle, the additional burdens that would be faced if it was necessary to commence enforcement against the Claimant in the United States.

The Defendant sought to have the application heard by a Master, but it appears that that was not possible. It was placed before Steyn J, and on 22 April 2024, she ordered that if the Claimant wished to file evidence in response to the application, he do so by 10 May 2024. It was in the course of that process that the Claimant made the application that is before me today.

I agree with Mr Wilcox that it is noteworthy that notwithstanding the date for compliance specified in the order (7 March 2024), and the making and issuing of the Defendant’s application (18 and 31 March 2024), no action was taken by the Claimant until 8 May 2024 when the counter-application was issued. This was, in effect, the first time that there was any real acknowledgement that he was in breach of the order. It is right to note that the matter has not been able to be listed before a judge until today, but it does appear from the correspondence that part of the reason for that was a significant number of dates to avoid that were provided by the Claimant’s team.

I have reviewed the Claimant’s evidence in response of the application and in support of his own application, in particular the documentation that is set out and appended to his witness statements, with care. I accept the Defendant’s submission that there are a number of concerning aspects to this evidence.

First, the Claimant has chosen to disclose very limited information in relation to his assets. Indeed, as is rightly highlighted, he does not positively assert that he has disclosed the full extent of his assets, nor has he given any justification for failing to do so.

Second, the bank statements he has provided from Webster Bank in relation to what is said to be his main bank account do not show evidence of ordinary income and expenditure. They are also limited to a period of three months when often one would expect to see a longer period of time evidenced by bank statements. It was only after being pressed by the Defendant that he acknowledged that there was another bank account, he said, jointly held with his wife. He said she did not grant permission to disclose the bank statements from that statement such that he could not disclose them. Putting aside the interesting legal question of whether the Claimant was correct to suggest that he would have no power to disclose statements of a bank account of which he is a joint owner, the point that is made persuasively by Mr Wilcox is that there is simply no evidence from the Claimant’s wife that she has refused to allow him to do so.

Third, the Claimant has referenced in his evidence outstanding liabilities to his solicitors. He has said in his witness statement, dated 29 May 2024 at paragraph 13, that he still owes his solicitors over £30,000 in unpaid legal fees, which he intends to settle as soon as possible. However, there is no evidence from his solicitor to corroborate that assertion.

Fourth, he has said that he is about to instruct counsel for the trial, but he does not currently have the funds to cover such an instruction. This suggests that he does have additional funds over and above those disclosed, but that he is prioritising instructing his own counsel over paying the costs owed to the Defendant. He has also instructed counsel for today’s hearing, having previously been represented by his solicitor, at not inconsiderable cost.

Fifth, the Claimant claims to have cash flow difficulties, but this assertion is rendered problematic given the evidence about his lavish lifestyle. I was taken to several documents showing the Claimant apparently in possession of a very expensive watch, trying on clothes in designer shops, regularly travelling first class and things of that nature. There has been no clear denial of those assertions: the Claimant has simply asserted that photographs of him wearing items such as the watch do not necessarily imply he owns them. The watch allegation had also been put to the Claimant by a news agency, but he did not respond to it.

Sixth, the Claimant has provided evidence of supposed assets, which he says he has an interest in and will become liquid at the end of July 2024 which, overall, do not assist him.

I was taken to the evidence that the Claimant has provided in the form of a letter dated 7 May 2024 purporting to be from the President of Yahan Property Incorporated. This suggests that the Claimant has been involved in a project, as a director, for what are described as “luxurious homes”. It is said in the letter that as a working partner in the project after selling the homes he will receive $30,000. “I hope I can sell those homes”, says the writer of the letter, “before August 2024, and you will get your total amount of committed money”.

However There is simply no clear evidence of the provenance of the letter and no detail given of the transactions to which it is said to relate. It is perhaps curious feature of the letter that the figure of $30,000 is just sufficient to set off the costs order. It is implicit in the letter that the Claimant has somehow been involved in what appears to be a luxurious real estate venture, which might suggest that he has significant amounts of disposable capital.

I was also taken to evidence in relation to some work that it is said that the Claimant has done while working for Property Inc and Channel i. This material, again, is in the form of a single letter dated 7 May 2024. This letter purports to be from the Head of Business Development at Channel i. It is said that he has been involved with that company as “advisor in the Creative Planning and Marketing Department”. The letter states that because of the pandemic, the company has over $200,000 “stuck” in the advertising market. It continues: “We are trying to recover these dues from the market gradually. We are almost close to the light. We hope you’ll get the rest of the current dues of $24,500 around 20 July”. Earlier in the letter it is said that “a confirmation has been given from our channel provider that we will get our dues on 15 July 2024”.

Again, the criticisms advanced of the quality of this evidence by the Defendant were, in my judgment, merited. Most significantly in relation to this particular letter, the Defendant made contact with contacts at Channel i, in particular a Mr Shykh Seraj, Director and the Head of News of the channel. In a recorded conversation, which was been transcribed, he stated that the Claimant is simply not an advisor for the channel in the manner suggested. That documentation throws further doubt on the reliability of this letter.

The Defendant contended that this evidence clearly suggests that the Claimant is being evasive, possibly even untruthful, in relation to his assets and is taking or has taken steps to conceal the extent of his assets and at the very least, as I have said, is being evasive about them. Having scrutinised the evidence, for the reasons I have given, I consider that submission is entirely sound. Indeed, in submissions before me today, Mr Davies on the Claimant’s behalf accepted that there were difficulties with this evidence as to his means.

Mr Wilcox argued that an unless order should be made in relation to the Senior Master’s cost order in light of the following factors:

He took issue with several points made by the Claimant in his evidence, contending that:

Mr Wilcox placed substantial reliance on the passages from Michael Wilson to which I have referred. He reiterated the policy behind the imposition of immediate costs orders, as emphasised in Michael Wilson at [29](2). He argued that all three of the potentially relevant circumstances set out in [29](3) were relevant. In particular, there was limited availability of alternative means of enforcing the costs order through the different mechanisms of execution; and the court making the costs order (Senior Master Cook) did so notwithstanding a submission that it was inappropriate to make a costs order payable before the conclusion of the proceedings in question.

He emphasised the passages in the case law to the effect that unless there is an overwhelming consideration falling within Article 6, the normal consequence of a failure to comply with such an interlocutory costs order is that compliance with it is a condition of continuing with the litigation: see Crystal Decisions at [16] and Michael Wilson at [29](5) and [6].

As to the Defendant’s application for security for costs, Mr Wilcox argued that the conditions in both CPR 25.13(2)(a) and (g) were met and there was a clear case for the court to exercise its discretion to make a security for costs order.

As to (a), it was accepted that the Claimant is resident (i) out of the jurisdiction and (ii) in a non-Convention state. Mr Wilcox contended that having regard to all the circumstances of the case, it would be just to make such an order. There was persuasive and clear evidence of substantial obstacles or substantial extra burdens in enforcing the costs against the Claimant in the US. As to (g), it was reasonable to infer the Claimant has undisclosed assets; that he has not been candid or possibly more about the extent of his assets. There was no real evidence of impecuniosity and wholly inadequate evidence in support of his cash flow problems. He had failed to show that he is unable to provide the security sought, and again, he referred to the conduct of the Claimant and the suggestion that this claim bears some or all of the hallmarks of a SLAPP.

Mr Davies’ very clear and pragmatic submissions in response contended that the Defendant’s position is odd, at one stage saying that the Claimant appears to be a man of vast wealth, but then expressing concerns about recoverability or enforcement of any costs order. He contended that it is not the usual practice of the court to make an unless order unless there has been an attempt to enforce it, which plainly has not yet taken place in this case.

He argued that the Defendant should have asked Senior Master Cook for an order in the manner now sought. It was said in written submissions that it was wrong for Ms Sultana’s witness evidence to only provide details of the costs for which security for costs was sought in her 30 May 2024 statement. This did not provide the Claimant with sufficient opportunity to meet it. Mr Davies argued that the Defendant has not sought expedition of the application.

He placed particular reliance on the case of Vedatech Corporation v Crystal Decisions (UK) Ltd & Anor [2002] EWCA Civ 356, especially what was said by Ward LJ at [20], and Longmore LJ at [25] and [26]. In that case, it was held that an order for security for costs in the form made in that case was oppressive given the proximity of trial. There is a factual distinction between that case and this, in that here, the application for security for costs is put on the basis that the claim is stayed not struck out if the security for costs is not given. However, the unless order sought in relation to Senior Master Cook’s order is what is described as a self-executing order, in that if it is not paid then the claim will be struck out. On that basis Mr Davies contended that Vedatech was relevant to both the Defendant’s applications.

The principal point advanced on the Claimant’s behalf was that if such a self-executing order was made in this case, it would achieve a strike out of his claim very proximate to trial and mean that it was not possible to have a trial of the merits. These are proceedings that involve very serious allegations about the Claimant that have been made by the Defendant. It was said that there is a risk that people who do not understand the English legal process in full would regard a striking out of the claim as a vindication of the Defendant’s position and that that would be most unfair.

Mr Davies cited passages from Spencer Bower and Handley, Res Judicata, suggesting that this court could revisit the costs orders that have already been made.

Finally, he pointed to the fact that the Defendant does have some measure of security for costs in the form of HHJ Lewis’s order.

In my judgment, the Defendant has made out a very clear case for the unless order sought, based on the principles summarised in Michael Wilson.

The central principle to be drawn from the authorities is to the effect that I would need to be satisfied that an overwhelming Article 6 consideration was present to compel me to take a different view from the normal consequence of a failure to comply with an immediate costs order, which is that compliance is a condition of being able to continue with the litigation. It is a fact that we are now some weeks from trial, but that does not, in my judgment, lead me to depart from that central principle. I say this bearing in mind the detailed criticisms I have made of the Claimant’s evidence as to his finances.

There are some similarities between the Vedatech case relied on by the Claimant and this case, but there are also some factual distinctions between the two, not least that in Vedatech some money had already been paid and much larger sums were an issue. Ultimately, however, each application of this nature is fact-sensitive. The balancing exercise in this case could well properly be tipped in a different direction and in my judgment it is.

There was an interesting debate between the parties as to the extent to which I could revisit the costs orders that have already been made. I have significant reservations about whether it would be proper to do so, not least because it is clear from the transcript of the hearing before HHJ Lewis that he did not feel able to summarily assess the costs, and that the Senior Master did feel able to do so. As a highly experienced Master, he heard argument as to whether to order immediate payment of those costs or not, and felt it appropriate to do so.

As to the argument that the Defendant should have asked Senior Master Cook for an order in the terms that are now sought, without any evidence that the Claimant was not going to pay this costs order, such an order would not have been likely to find favour.

The Claimant argued that the time for payment of the costs order made by Senior Master Cook has not long passed. It has, in the context of this litigation, clearly passed and there has been delay by the Claimant in addressing it.

The Claimant’s criticisms of the timing of the Defendant’s application and the hearing are not, in my judgment, fair. The application was made as soon as the Claimant’s lack of compliance was identified. There was clearly an attempt to place the matter before a Master and one of the reasons for delay has been difficulties with dates to avoid on the Claimant’s side.

For these reasons I consider it appropriate, despite the very skilful submissions from Mr Davies, to make the unless order sought by the Defendant. I therefore order that unless the Claimant pays £20,646.58 by a date in the very near future, his claim will be struck out, and in due course I will hear submissions as to what that date should be, but plainly given the proximity of trial, it will need to be soon.

As to the application for security for the costs, again I do not consider the criticisms of the Defendant’s conduct justified. It is clear that in Ms Sultana’s 18 March 2024 statement she gave a broad estimate of the figures needed for security for costs and they were corroborated by the evidence that was provided from a New York attorney in her later witness statement. The Claimant has therefore had since 18 March 2024 to obtain any evidence he wished to provide as to the level of costs of enforcement if it was to be his position that the figures given by the Defendant were wrong. He has not done so.

I am persuaded that the Claimant should provide security for the costs for the reasons given by the Defendant. The detailed submissions I have summarised entirely satisfy me that the relevant tests are met; that both conditions (a) and (g) are satisfied, and that in all the circumstances, it is just to make the order. Again I emphasise the deficiencies in the Claimant’s evidence as to his finances.

There was a lack of clarity in the paperwork as to exactly what figure was sought for security for costs. In summary, the higher figure was sought to cater for the possibility of a “repugnancy” argument in the American enforcement proceedings. There was an interesting legal dispute between the parties as what that this means and whether it applies here. In my judgment it is not sufficiently clear that the repugnancy issue does apply.

In in those circumstances it seems to me inappropriate to order the higher figure for security for costs that the Defendant sought. Rather, in my judgment, it is appropriate to limit this to lower figure sought, namely £26,000. Again I will hear submissions as to when that should be paid by.

That is my judgment on all of the applications before me.