BCS Corporate Acceptances v Terry

This is my decision on four applications:

The Claimants were represented by Professor Watson-Gandy and the Defendant by Mr Stafford-Michael and Mr Jarman. I thank counsel for their written and oral submissions. The hearing started somewhat after 2pm on 8 May and finished before lunch on 9 May 2017.

The Claimants claimed that the Defendant promised to get for them corporate financial guarantee bonds and a credit facility, that they paid him premia amounting to over a £1million for these, and that the bond and facility never materialised. The Defendant accepts that the Claimants have paid him some money, though I am not clear how much, and asserts that he was owed this money under a consultancy agreement (see paragraph 5 of the draft undated defence signed by Mr Campbell in tab 5 of the pleadings bundle). I infer that this draft was produced at the hearing on 21 June 2014 (see paragraph 6 of the judgment of Master Kay QC). In his witness statement of 18 November 2016, Mr Pullen, the Defendant’s solicitor, repeats this analysis.

The Defendant did not serve a defence and the Claimants obtained judgment in default of defence. The Defendant applied to Master Kay QC (‘the Master’) to set that aside. The Master dismissed that application. He held, in short, that the Defendant had delayed too long, and that he had not shown that he had a good prospect of defending the claim. The Defendant applied for permission to appeal. That application was refused by Andrews J on the papers and by Hickinbottom J (as he then was) after a hearing.

The Master then assessed damages. He did not hear oral evidence. He recorded in his judgment (dated 29 July 2015) that the parties were happy with that approach. Where there were conflicts between the evidence of the Claimant and of the Defendant, he preferred the evidence of the Claimant. He explained why he was not persuaded by the evidence of two other witnesses relied on by the Defendant. In assessing the Defendant’s written evidence, he took into account that the judgment in default operated as a finding of fraud against the Defendant, and material which suggested that the Defendant had been convicted of fraud in the Angoulême Magistrates’ Court for using a forged swift document which appeared to show he had a credit line of US $I billion guaranteed by the Central Bank of Venezuela, and for passing himself off as a banker. The Defendant had had since 3 February 2013 to respond to that allegation and had not done so. He found that the Defendant was liable to the Claimant for some £1.6 million and €400,000. The Defendant did not appeal that decision (see paragraph 22 of Mr Pullen’s witness statement of 18 November 2016).

In a letter dated 25 August 2015, the Defendant’s solicitors explained that his financial affairs were rather complicated and it would take time to understand them. He had or had had some properties in France, but, as a result of a tax investigation, ‘he does not have access to the equity in these properties’. Nonetheless, the Defendant believed ‘that he does have the ability to discharge the liability against him’ if given reasonable time; but that his realisable assets would not amount to much if he were made bankrupt immediately.

The Defendant was ordered at various stages in the proceedings (in 2014, 2015 and 2016) to pay costs to the Claimants. He did not do so. The total of these orders was some £267,000.

On 17 December 2015, Sweeney J granted the Claimants a freezing order against the Defendant and his wife. On 11 March 2016, May J set aside the order against the Defendant’s wife, but continued it against the Defendant. The domestic order was to continue in force until proceedings to set aside the transfers referred to in paragraph 18, below, were determined. The Defendant argued, among other things, that the freezing order should be set aside because the Claimants had not disclosed that the third Claimant was being prosecuted in France for advance fee fraud. May J rejected that argument.

Paragraph 5 of the freezing order restrained the Defendant from removing his assets from England and Wales, and from disposing or dealing with or diminishing the value of his assets in England and Wales or elsewhere. Paragraph 9 provided that the order did not prevent the Defendant from spending a limited amount on his ordinary living expenses, and a reasonable amount on legal advice and representation. Before spending any money, the Defendant was to tell the Claimants’ solicitors where the money was to come from.

It is plain from her judgment that May J envisaged that the Claimants would restore the application for a freezing order within three months. The initial return day was varied by consent. After that the Claimants took no steps to re-list the return day. The Defendant then applied, on 2 May 2017, for the freezing order to be discharged. The Claimants argue that they have taken steps to enforce the freezing order; but that these have been frustrated by the Defendant. The Defendant argues that the Claimants have sat on their hands, and that, in any event, there are no foreign assets to enforce against. They argue that, on the Claimants’ case, the domestic freezing order is unnecessary because the Claimants contend that the Defendant owns two houses in England. The Defendant’s case is that he does not own them: the beneficial interests in both belong to his wife.

On 18 November 2016, the Defendant issued an application to strike out the Claimants’ claims for abuse of process. This application is said to be based on the decision of the Supreme Court in Summers v Fairclough Homes Limited [2012] UKSC 26. That application was supported by a witness statement of Mr Pullen, the Defendant’s solicitor. In short, the Claimants’ claim is said to be an abuse of process because it was ‘wholly fraudulent’ and made to deceive the French courts (witness statement, paragraph 2). The third Claimant has been prosecuted in France for an advance fee fraud, after a five-year investigation. The final hearing has not yet taken place. Mr Pullen complains that the Claimants did not disclose the French prosecution in their claim against the Defendant. Mr Pullen has considered 100 lever arch files of material. The material has been generated since his firm started investigating in January 2015, when the Defendant issued a cross-claim against the Claimants, which has now been settled.

The crux of the application is said to be that Europa, which was the vehicle for the fraud, was not created, as the Claimants allege, by the Defendant, who (on the Claimant’s case) then introduced the Claimants to Europa, but created by the third Claimant. It is said that ‘nothing material to the claim is true’ (Mr Pullen’s witness statement, paragraph 55). The ‘only real question’ is said to be who was behind Europa. The Defendant also relies on a fraud said to have been perpetrated by the third Claimant on a Mr Suyanto. Mr Stafford-Michael accepted in the course of argument that this was a distinct fraud from the fraud alleged by the Claimants in their claims against the Defendant.

The Claimants applied for orders that the Defendant’s strike-out application be stayed until the Defendant had discharged the costs orders already made against him in the proceedings and had given security for costs.

On 23 February 2017, Green J ordered the Defendant to pay into court a sum reflecting the total of the costs orders made against the Defendant to which I have referred as a condition of pursuing that strike-out application. The Defendant paid the money into court. Green J did not consider the Claimants’ application for security for costs.

On 20 February 2017, the Claimants issued an application for the committal of the Defendant on the ground that he had breached the worldwide freezing order made by May J. The Claimants have not yet succeeded in serving the Defendant personally. They do not appear to have asked for an order permitting substituted service on the Defendant’s solicitors, who appear to be in regular contact with the Defendant (see CPR 81.10(5)).

On 2 May 2017 the Defendant applied to strike out the freezing order and the Claimants’ committal application.

On 4 May 2017 the Claimants issued an application for the continuation of the worldwide freezing order against the Defendant.

A house called Paget was bought by the Defendant and his wife jointly for £900,000 on 23 January 2015. According to the Claimants’ evidence, she is a part-time teaching assistant earning £11,000 a year, and with no obvious other income. After the freezing order was made, the Defendant produced a declaration of trust which purported to make his wife sole owner of Paget. On 7 July 2015, the Defendant had made an application for planning permission to improve Paget which he signed as sole owner of Paget. Works have been done pursuant to that permission. The Defendant owned a house in Mile Oak Road which he transferred to his wife in 2015. The house was bought with a cash deposit of £250,000, after the default judgment, according to the Claimants’ evidence. When the tenants there were asked, shortly before the hearing before May J, they said that their landlord was the Defendant. The Claimants have begun proceedings under section 423 of the Insolvency Act 1986 to set aside those transfers. Those proceedings have been stayed pending the determination of the Defendant’s application to strike out the Claimants’ claims.

The Defendant was living in Switzerland when the freezing order was made. His Swiss bank accounts have since been closed. The evidence about this is from the Claimant’s Swiss lawyers, in May and June 2016. They say that the accounts have been closed by the Defendant. He asserts in his most recent witness statement that the accounts have been closed by the banks, but has produced no evidence from the banks to support that assertion. He says he has no bank account. He has left the flat he was living in. The Defendant’s current LinkedIn profile describes him as a corporate financier with Intacapital Swiss SA (“ISS”). It says ‘Afterwards purchasing a Swiss private bank in 2002, Daniel headed up operations in Geneva’. He accepts in his most recent witness statement that he did not buy the bank. He explains this as ‘corporate gloss’.

The Defendant said in paragraph 164 of his most recent witness statement that ‘I have already had to pay over £1m in legal fees’. As I have indicated, he also paid some £267,000 belatedly to satisfy the costs orders, after Green J made further pursuit of the strike-out application conditional on such payment.

In his most recent witness statement he said that he had been lent that money by ISS. An email dated 26 April 2016 from his solicitors to the Claimants’ solicitors explained that the person who has lent him the money is ‘his boss’ and that he ‘has agreed to fund whatever spending [the Defendant] needs over and above his income’. That email was prompted by an email from the Claimants’ solicitors asking for a ‘specific and unambiguous statement’ in compliance with the freezing order, addressing where the money the Defendant had been spending was coming from.

The Defendant did not in his most recent witness statement disclose either his own address, or the identity of his employer, or any documents evidencing, either, the terms on which he was employed, or any loan agreement. He mentioned that his employer’s centre of operations is the Balkans. The researches of the Claimants’ Swiss lawyers show that ISS appears to be dormant, and unlikely to be able to pay any money to the Defendant. The Claimants’ Swiss lawyers said that ISS has ‘no real activity’. Its address is at a ‘Fiduciare’ and the Fiduciare ‘has never seen [the Defendant] and does not know him’. The private investigator instructed by the Swiss lawyers was not able to find an active bank account for ISS. The Swiss lawyers said that ‘It appears at least doubtful that [the Defendant] was able to obtain income through this company’. According to an official return, the Defendant is ISS’s only named official and signatory. ISS’s owner(s) is/are the holders of bearer shares and is/are not identified in the relevant document. The Defendant said he was not prepared to disclose the identity of his employer because he was afraid that the Claimants would try and damage his relationship with his employer if they knew his identity.

On the first day of the hearing, in the afternoon of 8 May, Mr Stafford-Michael wished to hand me some documents dealing with the identity of the Defendant’s employer, on condition that they were not disclosed to the Claimants. I refused to consider those documents on that basis. In the course of his reply on 9 May, he again handed the documents to me having (I think) just given them to Professor Watson-Gandy. The documents are not introduced by any witness statement from the Defendant or from his solicitors which explains how they were obtained by the Defendant or by his solicitors, so I know little about their provenance or the purpose(s) for which they were generated, although I note that in paragraph 166 of his most recent witness statement the Defendant says that he has taken steps to see that his solicitor knows the name of his employer ‘and he has done that and taken notarised statements to evidence his identity’.

I also think that Mr Stafford-Michael accepted that the documents did not amount to full disclosure. If I am mistaken about that, there is no material to show that they do. I have done my best to interpret those documents, without the benefit of any detailed submissions from counsel. I did not consider, given the way in which the documents were produced, that I should give the Defendant a further opportunity to remedy the apparent deficiencies and gaps in these documents.

The material is introduced by a covering letter dated 9 May 2017 from the Defendant’s solicitors to the Claimants’ solicitors. This letter refers to an attached schedule ‘prepared at short notice’ showing ‘all payments received by this firm either from [the Defendant] or on his behalf in the various matters for [the Defendant]’. The letter also says evidence is enclosed ‘confirming the source of the funds’. They have received ‘original notarised versions’ of the 2016 enclosure and the first four pages of the 2017 disclosure. ‘We are informed that the remaining pages of the 2017 disclosure (which were notarised separately) have been careered [sic] to us and should be with us very soon.’ The Defendant’s solicitors ‘confirm’ that ‘we naturally conducted all the client due diligence required’. This is not further explained. They say that they took independent advice ‘from an external firm of solicitors known to be experts in such matters’. Counsel had both reviewed ‘all of this and confirmed that we have discharged our obligations’. It is not clear what ‘obligations’ are referred to. I was handed two sheafs of unpaginated documents. It was not clear to me which had been disclosed to the Claimants.

The unpaginated documents consist of a schedule showing payments to the Defendant’s solicitors since 23 September 2013. The Defendant’s solicitors seem to have three ledger accounts in the Defendant’s name with three different numbers. This is not explained.

In the first account, there is an opening balance of some £23,000. The payments span 23 September 2013 to 12 April 2016, so some were made before the freezing order was imposed. One payment is from ‘Mr Terry Poa Through Intacapital Swiss’. One is from ‘Dhla Holdings’, one from ‘Dmr D Terry on account’, one ‘D TERRY’, others ‘Mr D Terry On Account’ (lower case and upper case) and one ‘D TERRY 0256413’. So some payments into the account seem to be from the Defendant personally. Some are from ‘Dun Laoghaire Co on account’. One is labelled ‘MR D TERRY SECOND PAYMENT1/FUN LAOGHAIRE CO ON ACCOUNT’. Some are labelled ‘Mr D TERRY INTERCAPITAL ON ACCOUNT’, some ‘D. TERRY/ON ACCOUNT Intacapital’, some ‘INTERCAPITA SWISS| ON ACCOUNT costs’, some ‘D TERRY INTACAPITA| ON ACCOUNT. Costs’; one ‘INTERCAPITAL SWISS| ON ACCOUNT costs’, some ‘SWISS INTERCAPITA| ON ACCOUNT. Costs’, some ‘SWISS INTERCAPITAL| ON ACCOUNT. Costs’, some ‘MR D TERRY INTERCAPITAL ON ACCOUNT’, one ‘D Terry Intacapita – On Account. Costs’.

In the second account (2 February 2015-9 October 2015, so before the freezing order was imposed) there is also a variety of descriptions: ‘MR D TERRY INTERCAPITAL ON ACCOUNT’, ‘D.TERRY/ON ACCOUNT Intacapital’ ‘D TERRY INTACAPITA| ON ACCOUNT’, ‘Client Dan Terry Payment of Bill and Disbursements’, ‘Client /Intacapital/(His Employer)/Payment of Bill and Counsel’s Fee’, ‘Client’s Employer Intacapital/To Pay Bills…Plus A Small Surplus’, ‘D TERRY INTACAPITA|INTERCAPITAL ON ACCOUNT’.

The payments to the third account span 21 October 2015-17 March 2017. Again the description of the payer(s) varies: ‘D TERRY INTACAPITA|ON ACCOUNT’, ‘D TERRY INTACAPITA|ON ACCOUNT.Costs’, ‘D TERRY| INTERCAPITAL ON ACCOUNT’, ‘SWISS INTERCAPITAL|ON ACCOUNT’, ‘SWISS INTERCAPITAL|ON ACCOUNT. Costs’, ‘SWISS INTERCAPITAL|Payment on Account from Client’, and ‘ADVICE CONFIRMS|SWISS INTERCAPITAL/Payment on Account from Client’ (twice). Most of the payments after the freezing order are labelled with variants of ‘Swiss Intercapital on account’, including one for £474,549.12 made on 17 March 2017.

The letter of 9 May says that this schedule was produced at short notice. But since this is a schedule produced from solicitors’ client account records, I assume that it and the records it is derived from are accurate. None of the different descriptions of payer is explained. I do not consider that dyslexia or typographical errors alone can explain the many different entries. The upshot is that, in addition to the Defendant, the schedule includes many different apparent sources of funds, with similar, but not identical names. Since the names are similar, but not the same, I assume, in the absence of any evidence to the contrary, that the different names reflect distinct entities. Three of the entries on the third account suggest a close relationship, if not identity, between the Defendant and ‘SWISS INTERCAPITAL’. Those three entries in November and December 2016, which appear to post-date the freezing order, identify the Defendant as the payer. They appear to disclose a breach of the terms of the freezing order, since the Defendant has not (until these documents were produced in court on 9 May 2017) disclosed that SWISS INTERCAPITAL was the source of the money with which he paid those costs. SWISS INTERCAPITAL is the source of the largest payments to the Defendant’s solicitors. I am not prepared to assume that Swiss Intercapital is the same entity as ISS. I also note that while the payments from Swiss Intercapital are not linked to the Defendant’s name in the schedule, ‘Intacapita’ often is. Not one payment is said to have been made by ‘IntaCapital Swiss SA’. One entry refers to ‘Intacapital Swiss’.

The documents I was handed on 9 May include an English translation of a letter dated 15 January 2016 from a Mr A Vodanovic, who describes himself as a director of HandelsKredite Montenegro (‘HKM’) and writes from an address in Podgorica, Montenegro. The original letter is in Cyrillic script. He ‘confirms’ that the ‘ultimate beneficial joint-owner of this company [unidentified] is FatmirProdani [sic] (the other joint owners also being members of the Prodani family)’. In the next paragraph of the letter, he says that ‘IntaCapital Swiss SA’ is a subsidiary company of a sister company of HKM and the entire group of companies is owned by the Prodani family’. The letter says that ‘IntaCapital Swiss SA employs [the Defendant] as a nominee director – Swiss companies must have a Swiss resident director and Mr Terry has Swiss residency’. The letter continues that the Defendant has been a friend and colleague of FatmirProdani [sic] for many years, and that he has agreed to help the Defendant by ‘lending him money for any purpose [the Defendant] should choose. This is done by way of a loan, paid by IntaCapital Swiss SA, which is immediately repayable upon demand by Mr Prodani, but which, unless and until any such demand is made, is to be repaid from commissions earned by [the Defendant] in the course of his future work for IntaCapital. Subject to any prior demand, repayment will be by way of deduction from commission payments’. This letter is followed by a document from the Deputy Notary Public in Skopje attesting that the document (presumably the letter of 15 January) was signed in his presence and that he verified the identity of Mr Vodanovic from his Croatian passport, though he did not verify the contents of the document. Skopje is in Macedonia.

There is a further letter dated 24 March 2017 which has been translated into English, but not apparently from an original in Cyrillic script. The apparent original is in a language which is written in Roman script. This is also from Mr Vodanovic, and addressed to the Defendant’s solicitor. He says he is duly authorised by Mr Prodani to write it. The position is the same as it was in January 2016. Mr Prodani is ‘familiar with action HQ12X05102 and other cases between John Taylor and his companies and [the Defendant]’. The letter says that Mr Prodani has ‘now made available a further €500,000 by way of further loan to [the Defendant] so as to allow [the Defendant] to pay previous costs Orders into Court, as is required by the Order dated 23 February 2-17…and to make a payment into court for security for costs of the application if so required; and to pay the legal costs of the main application. Mr Prodani has also informed me and [the Defendant] that: this current loan is the full amount to which he is prepared to make available any further funds; that all of the loans to [the Defendant] are repayable on demand; that he has no interest in the litigation or its outcome’.

There is a letter dated 6 April 2017 on headed notepaper which is difficult to read. It seems to come from ‘PRODANI’, and an address in Tirana, which, I think, is in Albania. A copy of an extract from what appears to be Mr Prodani’s passport appears to show that he is citizen of Albania. The letter is addressed to the Defendant’s solicitors. It is from a ‘Mr F Prodani’. It says that he is ‘the ultimate beneficial owner of IntaCapital Swiss SA’. This differs from the account of Mr Vodanovic, who said that Mr Prodani is a beneficial joint owner of that company, with other members of his family. Mr Prodani says he employs the Defendant as a director of that ISS. He says that he encloses a letter from HKM. He says that he has been travelling and authorised Mr Vodanovic to write that letter. That letter refers to him and he confirms that it is correct. His English is reasonable, but he has had the letter translated for him by the notary who provides a notarial certificate that he understands the letter. He confirms that it is in accordance with his instructions. Mr Prodani does not identify the letter from Mr Vodanovic by any date. Several date-stamped certificates are in the clip of papers. They are in Cyrillic script do not help me to understand which, if either, of the two letters from Mr Vodanovic Mr Prodani is referring to, or which document is the notarial certificate to which Mr Prodani refers. It is interesting that the letter shown to Mr Prodani appears to have been in written in English.

I am not satisfied that these documents show that Mr Prodani is the source of the money which the Defendant has so far spent on these proceedings. Most significantly, there is no witness statement from the Defendant, or from anyone else, attested by a statement of truth, which explains these matters. Second, the schedule shows various different payers (or descriptions of payments), and a close identity between the Defendant and ‘SWISS INTERCAPITAL’. ‘Swiss Intercapital’ is not the name of the company referred to by Mr Vodanovic and Mr Prodani (which is IntaCapital Swiss SA). Third, Mr Vodanovic and Mr Prodani do not agree about whether Mr Prodani is the ‘ultimate’ owner of IntaCapital Swiss SA, or the ‘joint ultimate owner’, with others. Fourth, no document shows that Mr Prodani in fact owns any bearer shares in ISS. Fifth, Mr Prodani does not identify which letter from Mr Vodanovic he is ‘confirming’ is accurate, and it appears he is confirming an English document, not a document written in foreign language. Sixth, I am not satisfied that even if Mr Prodani is somehow involved with IntaCapital Swiss SA, and IntaCapital Swiss SA is the source of the money which the Defendant has spent so far on these proceedings, that he is not prepared to lend more money to the Defendant. I am not satisfied that Mr Prodani is referring to either of the letters from Mr Vodanovic which I have seen, and if even if he is, which. Seventh, there is no documentary evidence of the terms of the Defendant’s employment with IntaCapital Swiss SA, or of any loan by IntaCapital Swiss SA to him. Eighth, it is inherently improbable, in any event, that Mr Prodani would be prepared to lend such large sums of money to the Defendant, who is (on his own account) impecunious, simply against the Defendant’s possible future commission earnings. If the Defendant’s account is true, I observe, he must be earning, or about to earn, very large sums of money indeed (otherwise the repayment arrangement which Mr Prodani describes would not work, and, in any event, it would be irrational for Mr Prodani to lend the Defendant any money at all, let alone the large amounts which the Defendant asserts Mr Prodani has lent him). The Defendant said in paragraph 52 of his witness statement dated 14 January 2016 that he was being paid a regular salary in Switzerland and that he had assets there; his schedule of income and expenditure as at 24 August 2015 showed he earned about £165,000 in salary and commission.

Summers v Fairclough Homes Limited [2012] UKSC 26; [2012] 1 WLR 2004 was an appeal from an assessment of damages in a personal injuries claim. The defendant had admitted liability. By the time of the assessment, the defendant had surveillance evidence which showed that the claimant was grossly exaggerating his claim. The defendant argued at the hearing for the assessment of damages that the judge should strike out the claim, and award the claimant nothing, on the ground that he had abused the process of the court by exaggerating the effect of his injuries. The judge refused to strike out the claim but awarded the claimant much lower damages than he had claimed. The judge was satisfied that the claimant had suffered a genuine injury and some loss. The judge held that he was bound by decisions of the Court of Appeal to hold that he had no power to strike out the claim at that stage of the proceedings. He also held (in paragraph 59 of his judgment, reproduced in paragraph 6 of the judgment of the Supreme Court) that the evidence he had heard was cogent enough to establish fraud by the claimant to the civil and to the criminal standards.

The defendant appealed. The Supreme Court decided that, in principle, it was open to a judge, at trial, to strike out a claim and award a claimant nothing, but that he should only do so in a ‘very exceptional case’ (judgment, paragraph 49). Lord Clarke, giving the judgment of the Court, held that the court has, either under its inherent jurisdiction, or under the CPR, a power to strike out a claim at any stage, but will only do so ‘at the end of the trial’ in very exceptional circumstances’ (judgment, paragraph 33; and see the similar formulation in paragraph 36). It is clear from that passage and from several passages in the judgment that the Supreme Court envisaged the strike out of a claim at the end of a trial, not after judgment had been given (whether on the merits or in default): see paragraph 24, where the claimant’s submissions are summarised, paragraphs 30 and 31, where Ul-Haq v Shah [2010] 1 WLR 616 is summarised, paragraph 32, where the Supreme Court state the issue for decision, the citation in paragraph 35(iv), and paragraphs 40 and 43.

The principle in Fairclough cannot be applied after judgment has been given, because after judgment has been given, there is no longer a claim to be struck out; the relevant cause of action (and thus the claim) has merged in the judgment (see Halsbury’ Laws of England, Vol. 12, paragraphs 1594 and 1622). Mr Stafford-Michael tried to persuade me that the general statements in paragraph 41 are wide enough to show that such an application may be made after judgment. I am not persuaded by that submission. First, paragraph 41 recites common ground between the parties. Second, it does no more than to summarise the terms of CPR 3. Third, it does not grapple with the difficulty that there is no longer any claim to strike out once judgment has been given. When I asked him, Mr Stafford-Michael was not able to point me to any authority which decides that a court may strike out a claim after judgment is given.

It is common ground that a claimant who obtains a freezing order must not sit on the injunction, but act expeditiously: see Lloyds Bowmaker Limited v Britannia Arrow Holdings Plc [1983] 3 All ER 178; Daisystar Limited v Town & Country Building Society The Times, 16 October 1989 and Svendborg v Awada [1992] 2 Lloyd’s Rep 244. Svendborg shows that even where there has been delay in prosecuting the underlying action, a freezing order will not necessarily be discharged; whether it should be depends, among other things, on the reasons for the delay, the conduct of the parties and the balance of prejudice.

It is common ground that the court may order security for costs to be given in the exercise of the powers in CPR 3 (see Olatawura v Abiloye [2002] EWCA Civ 998). In making such an order the court should be sensitive to the risk that such an order may deny access to the court. Such an order could be made if there was a history of repeated breaches of orders, or if there is something in the conduct of a party which makes the court suspect that they may not be acting bona fide, or that may have access to some financial protection or security.

I raised with counsel on 8 May whether an application to strike out a claim could be made after judgment. This seemed to take both sides by surprise. Neither had a copy of Summers in court. I referred Mr Stafford-Michael to the reasoning of the Supreme Court in Summers. I said that if he was not prepared to deal with the issue he could revisit it in his reply on 9 May. In fairness to him, I record that he told me on 9 May that he was still not fully prepared to deal with this point. He reminded me that the Chief Master had referred the strike-out application to a Judge and that Green J had not taken any point on the Summers decision at the hearing in February this year.

I do not consider that the court can strike out a ‘claim’ after judgment has been given and any cause of action, and thus the claim, has merged in the judgment. Nothing in the reasoning in Summers begins to suggest that the court has such a power. This application is misconceived. This conclusion is consistent with the principle of finality. If the Defendant’s submission is correct, a dissatisfied litigant can require the court to re-open any judgment, without any permission, or other filter, and the court would be required to conduct (as is envisaged here) a new trial of matters which have been settled in a judgment (albeit in this case, a judgment which was a consequence of the Defendant’s failure to file a defence). The Defendant suggested that the application could be heard decided without any oral evidence. I regard that as a fanciful suggestion, since the wide-ranging allegations against the third Claimant which the Defendant wishes to ventilate would require the cross-examination of the Defendant, of his witnesses, and of the Claimant. If oral evidence were given, the application could, it was agreed, take 12 days. I note that the Defendant has already spent over £1 million preparing it.

If the Defendant considers that he has fresh, credible evidence, which could not have been obtained with reasonable diligence for use at the application to set aside the judgment in default, and the evidence, if given, would probably have had an important influence on the result, it is open to him to apply to the Master for permission to appeal out of time, invoking Ladd v Marshall [1954] 1 WLR 1459. The Master would have to be persuaded that the material which the Defendant relies on arguably satisfies the Ladd v Marshall criteria. Mr Stafford-Michael accepted that this ‘alternative’ was open to the Defendant, but preferred to rely on the strike-out application, no doubt because (on his case) it could be made as of right, and was not conditional on the court’s permission. He referred to ‘certain tactical reasons to do with the evidential filter in Ladd v Marshall, if one applies Ladd v Marshall ruthlessly’. I record that his case, however, is that none of the material on which he relies would be shut out by the decision in Ladd v Marshall.

In the light of that conclusion of principle, I will say little about the merits of the application. Some of the material on which the Defendant sought to rely at the hearing (the French prosecution and the allegations made by Mr Suyanto) were allegations which cast doubt on the probity or credibility of the third Claimant. They were not relevant to the facts on which the claim depended, as I think Mr Stafford-Michael accepted. I also found it hard to understand how Mr Tanev’s evidence about Europa cast any real doubt on the Claimants’ claim. The central issue, it seems to me, was not who set up Europa. The real issues were whether the Claimants paid the amounts they said they did to the Defendant and, if so, for what. I do not understand how Mr Tanev’s evidence sheds any light on those questions. I note Mr Stafford-Michael’s oral submission that ‘It requires full argument to see how the fraud worked in minutiae’.

In the light of my conclusion on the application to strike out the Claimants’ claim, the question of security for costs does not arise. I will deal with this issue briefly, nonetheless, in case that conclusion is wrong. The first question is whether such an order should be made. The Defendant has breached the costs orders made by the court on various occasions. He only paid those costs when Green J made such payment a condition of his further pursuit of his application to strike out the claim.

Mr Stafford-Michael submitted that sufficient security had already been given, because the Defendant has paid some £267,000 into court, reflecting the costs orders already made against him. I reject that submission. That money in court reflects costs liabilities already incurred by the Defendant. It cannot at the same time represent any kind of security for costs yet to be incurred by the Claimants. He was disposed to accept that if the Defendant was right and the Defendant had no interest in Paget and Mile Oak Road, then there was no security. He was right to accept that, although inclined, nonetheless, to argue that there was security if the Claimants were right, and the Defendant did have an interest in those houses.

I am satisfied on the basis of the history so far (the Defendant says he has spent over £1million in costs so far, and paid the outstanding costs when Green J ordered him to), the costs schedule and the associated materials that he has not fully disclosed his assets, and that he would be able to find more money if necessary. An order for security for costs would not stifle the Defendant’s application. I also consider that the Claimants currently have no security and that this is a case (if the application to strike out the claim were permitted to proceed) in which I should make an order for security for costs.

The Claimants have provided an estimate, albeit not a very detailed estimate, of their anticipated costs. The estimated figure is some £388,000. I consider that if the application to strike out the claim were to be made, the Claimants would have to make investigations abroad, both in relation to Mr Suyanto’s allegations and in relation to Mr Tanev’s. The underlying documents, on the Defendant’s own case, extend to 100 lever arch files, and the application would take some 12 days to hear. £275,000, especially when compared with the extravagant amounts spent so far by the Defendant, is a reasonable estimate of the Claimants’ likely future costs. As I understood his answers to my questions, Mr Stafford-Michael told me that most, if not all, of the fees for the hearing of the application have already been paid to his solicitors, and to him to Mr Jarman. He had no estimate of the likely costs of the hearing. Had I needed to decide the application for security for costs, therefore, I would have ordered the Defendant to pay £275,000 into court on account of the Claimants’ costs.

There has been significant delay by the Claimants. The Claimants should have applied for a return day for the freezing order within a reasonable time of the consent order vacating the return date fixed by the court. There was a long period when the Claimants appeared to be doing little, if anything, to enforce their judgment in Switzerland. Professor Watson-Gandy accepted in his oral submissions that the Claimants’ representatives had ‘taken their eye off the ball’, and I think, that they should have taken active steps to re-list a further return day for the worldwide freezing order much sooner than May 2017. The Claimants appear to have done not much more than to apply for a certificate under the Lugano Convention which was granted by the Master on 18 May 2016. The Claimants also instructed Swiss lawyers who instructed inquiry agents, but the Claimants do not seem to have had any information from them after June 2016. I was not persuaded that any relevant settlement negotiations had been a material cause of the delay.

Nonetheless, I consider that there was little the Claimants could do, given that the Defendant seems to have taken effective steps to cover his tracks in Switzerland and any traces of his assets. If the Defendant is right, and the Claimants decided in July 2016 not to take steps to enforce the judgment in Switzerland, there is an obvious explanation for that: at that stage, there were no assets in Switzerland, which they knew about, and against which they could enforce the judgment. I accept the Claimants’ submission that lack of progress with enforcing the judgment in Switzerland can be laid at the Defendant’s door. He is, on the Claimants’ evidence, not registered with the Swiss authorities, according to the Claimants’ researches, even though he claims to be a Swiss resident (he disputes that he needs to be registered in that way). He claims to have no bank account, which is an inherently implausible claim, but one which the Claimants have not been able to disprove. It seems that he closed the Swiss bank accounts which the Claimants knew about after the freezing order was made. He disappeared from his known Swiss address. He does not disclose his address in his latest witness statement. Despite having no bank account, and no declared income, he has been able to pay for improvements to Paget, the mortgage on Paget and Mile Oak Road, and has spent over £1 million on this litigation. I have rejected his account that the money has been lent to him by Mr Prodani. The evidence does not support that account, and it is inherently implausible, for the reasons I have given. If the money did not come from Mr Prodani, it must have come from the Defendant. The Defendant is resident in Switzerland, and it is a reasonable inference that he has undisclosed assets there, or elsewhere abroad (cf the Court of Appeal’s analysis of the facts in Société Générale SA v Saad [2012] EWCA Civ 695, a case about whether the Court of Appeal should order the judgment debt or part of it to be paid into court as a condition of the appeal and about security for costs for an appeal).

For those reasons, I dismiss the Defendant’s application to discharge the worldwide freezing order. Mr Stafford-Michael argued that I should discharge the freezing order in so far as it affected assets in England and Wales because, on the Claimants’ case, they had adequate security in Paget and Mile Oak Road. I reject that submission: the Defendant’s case is that he is not the beneficial owner of those houses. That question whether he is or not has yet to be decided. In that situation, the two houses do not constitute adequate security, as May J’s order recognises. That is why that it provides for the order in England and Wales to continue until the question of the ownership of the houses has been resolved.

Mr Stafford-Michael argued, first, that if his application to discharge the freezing order succeeded, it should be discharged with effect from July 2016, and the Defendant could not be committed for any ‘breaches’ done after July 2016. This argument does not arise, because I have not discharged the order. But I make clear that had the question arisen, I would have rejected that submission. The Defendant was bound by the terms of the order as it stood, unless and until it was discharged. Any discharge of the order could only operate prospectively. It could not operate retrospectively so as to excuse any breaches of the order done before the date the order was discharged.

Mr Stafford-Michael’s second argument was that, on the true construction of the exception in paragraph 9 of the freezing order, the Defendant’s conduct was not a breach of the freezing order. I have rejected the Defendant’s evidence that his employer has lent him money. The reasonable inference from the material I have seen is that the Defendant has undisclosed assets which he is using to pay his living and other expenses, including his legal expenses. The sum he has spent on legal expenses is not, in any event, a ‘reasonable’ sum. I consider that in that state of affairs, it is at least arguable that the Defendant has broken paragraph 9 of the freezing order and that it would be wrong to strike out the committal application. If I am wrong about that, I consider, in any event, that it is arguable that the disclosure given by the Defendant’s solicitors in their email of 26 April 2016 did not comply with paragraph 9 of the freezing order as it did not reveal who the Defendant’s ‘boss’ was. Even if the source of the money is Mr Prodani, Mr Prodani was not identified until 9 May 2017.

For the reasons I have just given, I dismiss the Defendant’s applications. Had I not dismissed the Defendant’s application to strike out the Claimants’ claim, I would have made an order requiring the Defendant to give security for costs in the sum of £275,000. I invite counsel to agree a draft order which gives effect to my conclusions. I will resolve any disputes about the order on the basis of the parties’ written submissions.