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	England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Pablo Star Ltd v Emirates Integrated Telecommunications Company [2009] EWCA Civ 616 (20 May 2009) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2009/616.html Cite as: [2009] EWCA Civ 616

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IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION, MERCANTILE COURT
(HIS HONOUR JUDGE SIMON BROWN QC)

		Royal Courts of Justice Strand, London, WC2A 2LL
		20th May 2009

Lord Justice Rix:

1. There are before me four interim applications brought by the respondents in appeal proceedings, Emirates Integrated Telecommunications Co PJSJ, trading as du, whom I shall refer to as EITC. I call them interim applications because there is a pending appeal in which Pablo Star Limited is the appellant and for which I gave permission on renewal application made by Pablo Star on 28 January 2009. I refer to my judgment on that occasion ([2009] EWCA Civ 128) and incorporate it in total in this judgment.
2. The four applications brought by EITC are as follows. First of all, application is made under CPR 52.9 to set aside in whole or part the permission given to Pablo Star to appeal, alternatively to impose a condition of security for costs. That application for security for costs of course does not have to be brought under Part 52.9, it can be brought in its own right so to speak under CPR Part 25 and/or by reason of Section 784 of the Companies Act 1985. It is common ground that Pablo Star, although hovering on the brink of being wound up and/or struck off the register, is hanging on by its fingertips but is nevertheless essentially an insolvent company. The second application is that I revoke the stay (which I granted on hearing Pablo Star without notice) staying the order of HHJ Brown QC below that Pablo Star pay the sum of the assessed costs of £10,000. The third application is that I grant security for costs in the matter of the appeal if it survives today's hearing in the sum of, I think £30,000 has been suggested. The fourth application is that I take steps to clarify the position relating to new evidence on the appeal.
3. I will seek to deal with those applications as quickly as I can.
4. In all these matters EITC has been represented by Mr David Holoway, who has presented his submissions with great charm and, if I may say so, ability, and I commend him. He has had to deal in brief and concise order with a large field and with what I intended to be some challenging questions, and he has as I have said done well but in my judgment has not succeeded.
5. So far as the application under CPR 52.9 is concerned, I refer in general to the notes contained in Civil Procedure Volume 1 at paragraph 52.92, headed Cautionary Note. I summarise briefly. The note refers to the fact that this tempting provision should not lure advocates into tactical skirmishing or into manoeuvres designed to wear down the opposition. In effect, jurisprudence such as Nathan v Smilovitch [2002] EWCA Civ 759 and Barings Bank (in liquidation) v Coopers & Lybrand [2002] EWCA Civ 1155 cited in the note makes it clear that only in very exceptional circumstances such as the court being misled or some "decisive authority or decisive statutory provision having been overlooked" should this jurisdiction be invoked.
6. Mr Holoway has not relied upon any cited authority or statutory provision. He has not suggested that I was misled in any way although he has raised an argument which I deal with briefly to the effect that, way back at the beginning of these proceedings, the learned district judge who was asked on paper to give without notice permission to serve these proceedings out of the jurisdiction on EITC in Dubai was misled.
7. In general Mr Holoway says that Pablo Star, through its, I think, sole director Mr Haydn Price, who appears as a litigant in person on behalf of his company today as he did at the renewal hearing back in January, has acted oppressively and deceitfully. I do not consider that that allegation has borne fruit with me today. The closest that Mr Holoway has come to making good any charge against Mr Haydn Price is in respect of one paragraph of voluminous material which he put before the court at the outset of these proceedings. In paragraph 45 of a witness statement that he produced to support his application to serve out, Mr Haydn Price said that:

"It should be noted that throughout our work, none of the defendant's purchase orders nor any other correspondence mentioned any country of jurisdiction or any other overriding terms. It is also noteworthy that all the purchase orders contained the wording 'Note, this purchase order will be considered acknowledged and accepted by the vendor, if we do not receive any written notice to the contrary from you within 5 days from the date we have sent this purchase order'. The sample purchase order is attached at Exhibit 31."

8. However, to my mind the critical purchase order upon which Pablo Star has to rely -- at any rate on EITC's way of looking at the matter, I acknowledge that Pablo Star's way of looking at the matter is broader -- is purchase order 2127, which contained different language on it, not referring to any other jurisdiction, it must be emphasised, but at any rate referring to "attached EITC terms and conditions" -- see purchase order 2127 at page 329B of the appeal bundle.
9. That was the document upon which HHJ Brown below focussed closest attention and it is accepted -- for present purposes, not for the purposes of trial but for the purposes of interim proceedings regarding jurisdiction -- that there is a good arguable case that that document represents a contract according to its own terms. What its terms are is in dispute.
10. So what was said in paragraph 45 of that witness statement of Mr Price is not entirely accurate, but I have to say that when one takes into account the whole scope of Pablo Star's, that is to say, in effect Mr Price's documents drawn up for the purpose of informing defendant and court about these proceedings it is clear that Mr Price has given an unusually detailed account of the arguments addressed by the defendants in the run up to the litigation as to why they owed no liability. In that connection, it has to be emphasised that, for a long time after the outbreak of dispute between the parties, and still for several months after the commencement of this litigation, EITC did not rely upon its terms for the purposes of alleging UAE law or Dubai arbitration, which is its current position. That point was raised for the first time, as I said in my judgment of January, in May 2008.
11. So there was no point, at the time of the issue of proceedings and the application to serve out, that foreign law or foreign arbitration or arbitration at all was involved, and there was nothing on the face of any document exchanged between the parties to that effect. At this stage of the argument therefore I would acquit Mr Price of any deliberate attempt to mislead the court or obfuscate the matter. He made an absolutely clean breast of the fact that EITC was denying any contract whatsoever and gave detailed chapter and verse for that position.
12. The absence of any contract whatsoever is of course a fortiori any position that there being a contract involving some foreign law or arbitration.
13. Mr Holoway's submissions pursuant to CPR 52.9 have covered broad ground, but what is perhaps revealing about them is that -- at any rate in his oral submissions I think this is certainly true, and I also think to a very large extent in his written submissions -- there was no attempt to grapple with what it is clear from my judgment I considered to be Mr Price's best point on appeal, which is that the reference on purchase order 2127 to the attached EITC terms and conditions arguably failed because, as is common ground, no terms and conditions were attached. This is not a case where reference is made in general to terms and conditions which it may be have to be looked for in some other place. What purchase order 2127 says is:

"Note: this purchase order will be considered acknowledged and accepted by the vendor if it is not acknowledged within five days as per attached EITC terms and conditions."

14. So the particular point being made in the purchase order is a point as to when the purchase order is deemed to be binding as a contract between the parties, and there is a reference in that context to attached EITC terms and conditions but no terms were attached. That is in itself quite a short point. I do not know whether there is any specific jurisprudence on such a point. None has been brought to my attention, none was brought to the attention of the judge below and the judge did not decide the case below on that particular point. Mr Holoway tells me now that the point was taken below, but when one reads the judge's judgment it does not emerge from that. It is a general judgment to the general effect that any reference to EITC terms and conditions puts upon the person receiving the document the obligation to familiarise himself with such terms on the basis that they are incorporated.
15. Purchase order 2127 is an important document. It is called a "blanket"-type purchase order. It says: "Purchase order reference: Retail Multi Media -- Monthly production minimum fee". It refers to "Monthly production minimum fee of $30,000 per month". In an e-mail from Pablo Star in explanation of that purchase order dated the following day, 27 September 2006, it is said:

"PO for 30K is the minimum fee which for the next 11 months …

In other words you have just one PO for the entire 11 month period but the payment will be released periodically."

16. It has always been EITC's formal case that that represents no contract whatsoever. It seems to me that there is a plainly good arguable case that it is a contract for 11 months -- quite how it works is a matter for argument -- but that it plainly is a contract for 11 months and refers to a minimum monthly fee. I have to say that, having had to reread all the material in this case a second time for the purposes of today's hearing, I consider that the good arguable case prospects of Pablo Star overall in showing a contract which goes forward for the 11 months following the first month (it is essentially a one-year contract) seemed to me to be if anything better than they seemed to be last time round, having had to concentrate again on these matters.
17. As I have said, my judgment of January will speak for itself. It is clear from that judgment that I consider that Pablo Star's primary point went to the question of the meaning of "as per attached EITC terms and conditions" and that in those circumstances if there was no incorporation of foreign law or arbitration, then Pablo Star had a good arguable case that the implied, if that is the right word, proper law of the contract for the purposes of the Rome Convention was English law, especially against the background of the negotiations.
18. There is a separate point by reference to those negotiations that Pablo Star makes that there was in any event an express agreement on English law. My judgment of January shows that I am somewhat sceptical about that, but with full knowledge of the material which gave rise to my scepticism, I was persuaded nevertheless in January, since I was in any event granting permission on other grounds, to include that ground. And that was made, I emphasise, in full light of the material and not, as has been suggested in this application, because Mr Haydn Price deceived me.
19. The other ground on which I primarily gave permission to appeal was the question of where any breach under such a contract occurred. The judge in effect accepted that, whether the claim was for payment or for breach of contract, the breach occurred in Dubai. It seemed to me that the judge was under the impression that such breaches must occur where the debtor resides. The general rule however in English law is that a debtor must seek out a creditor, and the breach in the case of a claim at any rate in debt is where the creditor resides, in this case in England, although Mr Holloway has a subsidiary argument that it turns out that all the factoring of Pablo Star's invoices or some of it at any rate was done in Scotland. The matter is complicated, however, because one way, and it seems to me a good arguable way, of reading the contract in question (I say "contract" for present purposes) is that it is a "take or pay" contract providing for a "minimum fee" (those are its words) of $30,000 a month. Therefore as each month passed under the contract, EITC became the debtor to the tune of $30,000.
20. That, however, is not the way in which the matter was pleaded in the particulars of claim. Those make an overall claim for damages for breach and in effect it is a claim only for profits, loss of profits or unnecessarily incurred expense. Mr Haydn Price says that he was anxious to be fair and to give to EITC the benefit of any possible mitigation. Of course, if the claim is in debt mitigation does not arise. However, Pablo Star has not pleaded its claim in debt. Nevertheless the fact remains that as each month was passing under what, it seems to me, was an on-going contract in respect of which the parties were disputing liability to provide further work or payment while Mr Price was constantly urging EITC to live up to what he said was its obligations, it is arguable that as each month passed EITC became the debtor for a further $30,000.
21. It may be that at some time during the year, though it seems not until possibly March or April at the earliest, EITC were making it clear that there would be no more work and no more payment and were repudiating the contract. If so it seems to me that that repudiation was not accepted. It is not clear to me quite in what circumstances the contract came to an end. It may be that it expired by effuxion in August or September 2007 without having been brought to an end by the acceptance of a repudiation.
22. So the position about where any of the breach or breaches of contract occurred may be quite a complex one and more complex than perhaps I appreciated at the time of giving permission to appeal. Perhaps it is convenient at this point to remark that one of the complaints that EITC has levelled against Mr Price was that he had brought on the renewal hearing without notice to EITC in an attempt to prevent them putting in their oar at the renewal hearing, and that this was part of his general oppressive and deceitful conduct. That submission has been pressed even in oral submissions today even though Mr Price has explained in his skeleton argument before the court that what happened was that he was bounced into a renewal application at almost 24 -- my recollection is less than 24 -- hours' notice, and had objected to it and that this was done at the behest of the court. That is correct.
23. Perhaps I should state in this judgment that what happened was that when the papers came before Stanley Burnton LJ on paper he refused permission. He was conscious of the fact that a petition to wind up Pablo Star was being heard in the Companies Court within a very few days, that petition to wind up being based, as I recollect, on the order for payment of £10,000 costs made by HHJ Brown.
24. Therefore Stanley Burnton LJ recognised that the question of whether there should be permission to appeal, which he had dealt with provisionally on paper, needed to be urgently addressed for the sake of both parties. The papers were therefore brought urgently to me that same day to determine what should happen. My recollection is that it was I who directed that the renewal hearing, which had been intimated already, should be heard the very next day, so that the matter would be settled before the winding-up petition came before the Companies Court.
25. My recollection, again, is that it was reported to me that Mr Haydn Price objected that, as a litigant in person in a complex case, he was being unfairly treated; but nevertheless I persevered in my direction, feeling that I would be able to hold the scales of justice. That is why the matter came on urgently, and there is no question whatsoever of Mr Price trying to steal a march on EITC in this respect. On the contrary Mr Haydn Price, as a litigant in person, was being put in a very difficult position and he accepted that gamely.
26. I therefore dismiss EITC's primary application to set aside permission to appeal in whole or in part. I say that even though some of the grounds of appeal are, as I am sure everyone including Mr Price recognises, mere makeweights. For instance his ground of appeal (if it is in truth a separate ground of appeal rather than as it were just something that he says by the way) that he would not receive a fair hearing outside England seems to me to be very probably unsustainable. It may be, although the judge did not reach it and therefore in this sense there is no need to appeal from this point as a separate point, that Mr Haydn Price is in difficulties in his submission that EITC debarred itself from challenging jurisdiction by beginning with an application under CPR Part 23 rather than with an application under CPR Part 11. I am not sure about the ramifications of that. I am satisfied that the separate point, although perhaps closely tied-in point, of whether there was room to extend time for the purposes of making a CPR Part 11 application, was conceded at the hearing before HHJ Brown. I would accept that, but at the moment I do not consider that that concession goes as wide as conceding that a Part 23 application made prior to a Part 11 application cannot be a submission to the jurisdiction. Whether that is in any event a good point is not something that I have given specific consideration to.
27. However, I did not limit my permission to appeal in January. I made clear the real points upon which I gave it, and I do not feel it would be right, although I make the comments that I am making, to limit or withdraw my general permission to appeal today. So for all those reasons CPR 52.9 is out of the window. The court has not been misled and it has not overlooked anything decisive.
28. I turn to the question of stay on the payment of costs and the question of security for costs. It is common ground that Pablo Star is not worth powder or shot. It is not entirely common ground that other companies with which Mr Haydn Price is involved may be in exactly the same position but the fact of the matter is that no-one can find any money anywhere. Whether Mr Price himself can raise any money is perhaps not well attested in the evidence, although, late in the day, Mr Price has addressed that matter with the help of some documentary support, but he has only put it forward today in court. It does seem, however, that Mr Price and his companies have fallen on ill days in the last few years. His companies are worthless; they are close to being wound up or struck from the register; he has lost his home; he has no money in his account; he has tried to borrow from friends as he has shown in some material that he has put before the court and has failed. He accepts that if it was a matter of raising a few thousand pounds to save this appeal it may be he could scrabble it together, but Mr Holloway himself accepts that such sums are insignificant and beside the point. So the fact is that unless this court pitched it very, very carefully I would accept that, at any rate in terms of the sums requested by EITC of some £30,000, an order for security for costs would derail the appeal.
29. In those circumstances I have to consider carefully my discretion, which I undoubtedly have, to order security for costs. In this connection Mr Price submits that, far from it being he who has been oppressive or deceitful, it is EITC who has sought to stifle his claim. It seems to me from the material I have before me that there is force in that submission. EITC is an extremely wealthy company based in Dubai. Obviously it is interested in conducting this litigation in its home country. I appreciate that; any litigant is concerned to do that if it can. Obviously, for that reason, it may have a point of principle about agreeing foreign law or jurisdiction. I quite understand that. Nevertheless it seems to me that it has conducted this litigation in an oppressive way which (possibly because, in its own self interest, it sees this as a point of principle which it must deal with and squash or for whatever reason) it has brought to bear in an attempt to stifle Pablo Star's small claim -- limited expressly to £50,000 so as to bring it within the county court jurisdiction and within that part of the county court jurisdiction in which costs are less than they would be if the claim was for £50,001. Yet small as it is, it is a claim on which EITC has already expended great sums of money. Its claim for costs to be assessed before HHJ Brown below was in excess of £50,000. He was unwilling to grant them anything like that and assessed their costs summarily at only £10,000. That speaks for itself. It was not because he was making a deduction in respect of any points upon which they had lost. That emerged in my discussion with Mr Holloway today. So the judge himself thought that EITC although winning before him were expending sums which were out of all proportion to the litigation concerned.
30. The matter does not stop there because we have today's applications. EITC has persevered in its Part 52.9 application, which is the greatest meat of the matter before me today, because it raises all the merits in the case and in the appeal, and has done so despite my own interim direction that interlocutory outings of this kind were not to be encouraged. Its statement of costs for today's outing is a further £30,000 or so. It does seem to me that these are exceptional matters -- applications under Section 52.9 are extremely rare -- which entitle me to say, against the background of these proceedings as a whole, that EITC has been acting oppressively. I have already pointed to the single most important document -- Mr Price would say there are many important documents -- but at any rate the single most important document, which is Purchase Order 2127, which in effect, it is common ground, is a document between the parties which both parties have given their mind to. It seems to me that there is a very fair argument on that document, whatever be the relevant proper law and whatever might be any agreement relating to arbitration, where and whatever, that there is a 11-month or one-year contract with a monthly take or pay minimum fee of $30,000. So if, as the security for costs jurisdiction requires me to do and indeed Mr Holloway's submission urges me to do, I take as it were an overall view of the prospects of this litigation, it seems to me that, albeit the issue directly before the court at the moment is one of jurisdiction and not the ultimate merits, nevertheless, I have to take cognizance, in a case where I am urged to take prospects into account and I have a submission that EITC has been acting oppressively, that on the overall merits of the matter Pablo Star has a very fair point to make: that it has made a contract for 11 or 12 months with a take or pay provision in it, and has been let down by its contractor. That has happened without any real explanation in the voluminous material before me as to why EITC denies liability and indeed EITC has threatened, but has not carried out its threat (for instance by commencing arbitration in Dubai) that it has a counter-claim for the return of the $100,000 that it has paid to Pablo Star in respect of the first three months of that one-year contract.
31. So I have to take all those matters into account, and taking them into account as I do, it seems to me that although this is plainly a case in which I have discretion to order security for costs; it is plainly a case in which EITC if it is successful on the appeal will be out of pocket and I am sorry about that; it is also, may I say, plainly a case in which Pablo Star and Mr Price have not put their best foot forward in providing proper evidence to the court as to their means, in the general sense in which that is spoken of in the security for costs jurisdiction, where the court looks wider than the litigant itself to see whether an appeal would or would not be stifled; nevertheless, when I take into account EITC's oppressive conduct and the general merits before me and my cautiousness about not making a condition for security of costs which Mr Price simply cannot withstand, and the acceptance that a few thousand pounds here and there really makes no difference to EITC; my conclusion is that I reject and dismiss the application for security for costs. And it seems to me that along with that should go a continuation of the stay upon the costs below. It is perfectly true that permission to appeal is not an automatic stay, but nevertheless it is extremely common, at any rate where insubstantial litigants are concerned, that the court will quite generally stay a costs order in order to prevent an appeal for which it thinks there are reasonable prospects from being overcome and stifled. Therefore I refuse both the request to undo the stay and the application for security for costs.
32. Finally I deal with EITC's fourth application, which is to clarify the matter of real evidence on appeal. One of the points that Pablo Star wants to run on appeal and it is a new point, Mr Price accepts this, is that, at any rate under new UAE law, a Dubai arbitration clause could not be incorporated by any general reference, whatever be the worth of that reference, to EITC terms and conditions. Mr Price has put forward a witness statement in recent days in support of an email which was already before me in January to support a credible -- it seems to me -- case, that UAE law differs materially from English law in this respect.
33. Thus it is said that under UAE law it is difficult to incorporate a binding arbitration clause without there being firm agreement between the parties either in the form of a written agreement signed by both parties or by showing that the parties in writing had clearly addressed their minds consensually to the question of arbitration. I know that English law is looser in this respect, as is the law of many countries, but the published material before me in support of a transcript of a telephone conversation with the executive head of the Dubai Arbitration Institute is all consistent in suggesting that UAE law is much tougher in this respect.
34. Now it is not clear to me that the appeal court will ever reach the question of arbitration as distinct from proper law, and therefore it would be a shame if monies were spent on expert evidence on this issue unnecessarily. Moreover, Pablo Star is in difficulty in that it would have to pass the Ladd v Marshall ([1954] 1 WLR 1489) tests for introducing new material at this stage. The judge did not reach this point, he felt that he did not need to reach it, but it seems to me that it is still probably true that Pablo Star would have to pass through the Ladd v Marshall tests. I have already said that it seems to me that it passes one of the tests in that it is credible evidence. Whether it will make a material difference of course all depends upon the way in which the cookie might crumble at the appeal. It is hard to anticipate that. Whether Pablo Star has got good reason for saying that it should not be barred from putting forward this evidence now, having failed to do so before, is another question which has hardly been addressed today. Normally it is not possible for an interlocutory court ultimately to decide these questions. Ultimately these matters usually have to be left to the court of trial or appeal, and that is what I fear will have to be done on this occasion. I merely emphasise that Mr Price will have to meet the Ladd v Marshall tests. I hope he knows or will find out what I mean by that -- those are the standard tests for new evidence -- and that the parties will try and see if in this respect they can avoid any unnecessary costs in a matter which may never be reached. I do not think I can really help the parties more than that.
35. Therefore I think in this judgment I have covered all the points made before me, and in the light of these remarks it is plain that the appeal will go ahead on its merits such as they turn out to be.
36. I would, however, conclude this judgment by saying this. I know from the pre-proceedings correspondence that Mr Price was anxious to seek, if he could, some solution or settlement of his claim; that is plain. He was met with the answer that, yes, we will settle but only on the basis that we will drop our counterclaim for the return of $100,000 which we have already paid you, and so matters foundered there. It seems to me that although the position here is the unusual one of dealing with what is still a jurisdictional question, the parties should nevertheless, even at this late stage in that preliminary point, address the question of mediation. On the one hand, I understand that on EITC's side there is a point of principle. It considers that it does not want to be drawn into foreign litigation and only wants to conduct its litigation in Dubai, and it is worried about the principle. Well that may be its general position as it would at any rate wish it to be, but nevertheless it may have landed itself in this case with documents which do not assist it as much it would prefer to be the case. The issues are beginning to be clarified. On the other hand, Mr Price has got a claim -- not a big claim, it is one which he has reduced to £50,000, although he could put it forward in larger amounts as his claim form itself makes clear, and as one explanation of the meaning of purchase order 2127 makes clear -- so there is room between the parties possibly for some settlement which would avoid, on the one hand, EITC having to litigate a question which it would like to litigate if it wins and which it no doubt would not like to litigate if it loses. On the other hand, Mr Price has shown that he is not there for the last cent but is wiling to compromise. He makes that clear from his claim form itself. So there is room for manoeuvre, and whether it is in these parties' interests against the background of Pablo Star's impecuniosity for this litigation to be conducted as though it were what the Americans would call a federal case is very questionable.
37. Now the parties no doubt may be able to mediate this matter for themselves, perhaps simply by coming to an agreement. But if the parties need help in mediation, the Court of Appeal mediation scheme is there able to help them. It is a scheme which the Civil Appeals Office would be only too willing to inform the parties about, and indeed I will direct that they should write the usual letter to the parties about it. In sum, it is a scheme under which, for a very nominal amount -- I think it is £800 per party but I may be a little out of date -- the Court of Appeal will arrange for an absolutely top flight mediator to be appointed from the mediators who are registered with CEDR, a well-known mediation outfit, to assist the parties to reach agreement. So if the parties do need assistance, they can get it for what is a vastly cheaper price than the cost of this litigation.
38. I have said enough. That is my judgment.

Order: Application refused