Michael Wilson & Partners Ltd v CJSC KazSubton & Ors

1. On the 12 th July 2013, I made an interim third party debt order in favour of the Claimant/Judgment Creditor against the Third Party, Solvay Solutions UK Limited [“Solvay”] then known as Rhodia UK Limited. Solvay applied to set aside that order. On the 2 nd August 2013, after a contested hearing, I granted Solvay’s application and set aside the interim third party debt order. I ordered the Claimant to pay Solvay’s costs which I summarily assessed in the sum of £18,141.94. Those costs have not been paid.

2. I am now concerned with two applications by the Claimant: [1] An application dated 31 st July 2018 to set aside or vary my 2013 order. That application was heard by me on the 23 rd October 2018 and 13 th November 2018. I reserved judgment. At those hearings the Claimant was represented by Mr. Paul Joseph, of counsel on a direct access basis. Mr. Craig Morrison, of counsel, appeared on behalf of Solvay. I am grateful for their submissions. [2] An application dated 21 st December 2018 for permission to adduce new evidence on the set aside application. I heard this application on 22 nd May 2019. At this hearing Mr. Wilson appeared in person on behalf of the Claimant and Mr. Morrison returned on behalf of Solvay. At the conclusion of that hearing, Mr. Wilson asked about providing yet further evidence. I stated that any further application to rely on additional evidence would have to be made by application notice. A hearing was listed on the 15 th March 2019. I vacated that hearing at the Claimant’s request given the sudden unavailability of the Claimant’s counsel. Some Background

3. Before I deal with these applications, I need to set out other matters in order to put the set aside application in context.

4. On the 11 th May 2018, the Claimant obtained a fresh interim third party debt order against Solvay. A short hearing to determine whether the interim order should be made final was listed on the 18 th July 2018. On the 12 th July 2018, Solvay issued an application for an order that unless the Claimant paid the £18,141.94 in costs which it had been ordered to pay in 2013, the application for the new final third party debt order be struck out and that the interim third party debt order be set aside.

5. The hearing listed on the 18 th July 2018 turned into a directions hearing. Inter alia, I listed Solvay’s unless order application for hearing on the 23 rd October 2018 with the hearing of the Claimant’s application for a final third party debt order to follow on 13 th November 2018.

6. It appears that Solvay’s application for an unless order relating to the payment of its costs prompted the Claimant to issue its application dated 31 st July 2018 to set aside my 2013 order. The hearing dates of the 23 rd October 2018 and 13 th November 2018 ended up being used to hear the Claimant’s set aside application.

7. By an application dated 8 th October 2018, the Claimant applied for an order that Kazphosphate LLP and Solvay do give disclosure and inspection of all contractual documents relating “to all and/or any of dealings with and the marketing and sale, and whether directly or indirectly, of its products to the Third Party Debtor and its affiliates” in 14 days. On the 23 rd October 2018 that application was adjourned generally with permission to restore.

8. By an application dated the 8 th November 2018, the Claimant sought to add Kazphosphate Limited – the parent company of Kazphospahte LLP, incorporated in England - as a party to the claim and to the interim third party debt order which had been made against Solvay. At a hearing on the 17 th December 2018, I dismissed that application. I gave a brief judgment. In short, I took the view that with the underlying proceedings having been issued in 2003, with judgment against the First Defendant in May 2004 and against Kazphosphate LLP on 4 th August 2004, it was not now possible or practicable to join Kazphosphate Limited, a separate legal entity, as a Defendant to the claim. I regarded that application as hopeless. Likewise, I took the view that it was not possible simply to add Kazphosphate Limited as a party to the interim third party debt order.

9. On the 7 th May 2019, I granted the Claimant’s application for an interim Third Party Debt Order against Kazphosphate Limited. The short hearing listed on the 12 th June 2019 for a final Third Party Debt Order was adjourned to be re-listed with a time estimate of 2 hours.

10. Both Solvay and Kazphosphate Limited deny that they are indebted to Kazphosphate LLP. The applications relating to the final third party debt orders remain to be dealt with. Solvay’s application for an unless order in relation to its costs remains outstanding. The 2 nd August 2013 Order

11. The transcript of the judgment leading to the 2 nd August 2013 order is available and must be read with this judgment. I do not propose to rehearse the judgment in full. In short, in contrast with Solvay’s current position – in which it denies any indebtedness to Kazphosphate LLP – Solvay then accepted that it did owe monies to Kazphosphate – although it was unclear whether that was to Kazphosphate LLP or to LLC. In evidence for the 2013 hearing, Mr. Wilson stated that he was responsible for setting up Kazphosphate LLP in Kazakhstan in October 1999 and that there was no such entity as Kazphosphate LLC. The Claimant’s case was that LLC and LLP had the same registration number. Against this, there was a financial statement and independent auditors report relating to Kazphosphate Limited. That report referred to trading activities carried out mainly through Kazphosphate LLP. Notes to financial statements dated 30 th December 2011 had separate references to Kazphosphate LLP and LLC. There were other discrete references to LLP and LLC. The LLP website referred to LLC. On one interpretation of the papers LLC was regarded as responsible for mining and chemical production and LLP was more concerned with trading activities.

12. Apart from this blurred distinction between LLP and LLC, Solvay put forward a matter of greater concern. Solvay contended that its contract, be it truly with LLP or LLC (Solvay said LLC), was governed by Dutch Law and that there was a risk -- a substantial risk -- that it would not be discharged by payment under the third party debt order, but would have to pay the debt twice over; i.e., once to the Claimant and once to Kazphosphate because the underlying judgment was not enforceable. Solvay produced expert evidence from Dutch lawyers to that effect. There were concerns about the status, for the purposes of enforcement abroad, of the order of Master Leslie of 4 th August 2004. If it was regarded as a default judgment, it might not be recognised. There were issues about service of applications on Kazphosphate LLP. I refer to my 2013 judgment for more detail.

13. Against this outline background, I set aside or discharged the 2013 interim third party debt order against Solvay. The Claimant applied for permission to appeal which was refused by Jay J. at an oral hearing on 7 th November 2013. The 2018 Application to Set Aside or Vary

14. I have a substantial volume of documents and witness statements before me. I do not propose to rehearse them.

15. It is surely now trite law that any application to set aside or vary an order must be made promptly. Mr. Joseph accepted that 5 years delay was a long time. However, he submitted that delay in itself was not decisive. He submitted that CPR r.3.1(7) could be used where there had been a material change in circumstances and where the court had been misled.

16. In my view, it is important to keep in mind the nature of the application before me in 2013. The rules relating to third party debt orders provide for a judgment creditor to obtain an order for the payment to him of money which a third party owes to the judgment debtor; see CPR r.71.1(1). It is self-evident that an application made for a third party debt order in about June 2013 is concerned with the state of the third party’s indebtedness at that time. Timing is very important given that those in a trading relationship move in and out of indebtedness with one another. A third party debt order cannot be imposed when there is no debt so as to operate as a general charge for such future debts as may arise from time to time. It is all the more essential, therefore, that an application to set aside an order setting aside an interim third party debt order - or an order refusing to make a third party debt order final - is made promptly.

17. In my view, the granting or refusal to make a final third party debt order (or setting aside an interim third party debt order) is in the nature of a “final” order as opposed to an “interim” order. Accordingly, it seems to me that it is Roult v North West Strategic Health Authority [2010] EWCA Civ 444 , which applies rather than Tibbles v. SIG plc which is referred to in the application notice and which was relied upon by Mr. Joseph in argument. [2012] EWCA Civ 518 In BCS Corporate Acceptances Ltd v Terry , [2018] EWCA Civ 2422 Roult and other cases were reviewed. Hamblen LJ, giving the judgment of the court, referred to the considerations applicable to the varying or revoking of an interim order (erroneous information and subsequent events) and stated: “General considerations such as these will not, however, justify varying or revoking a final order. The circumstances in which that will be done are likely to be very rare given the importance of finality .” [75]. (My emphasis). In that case it was held that no proper or sufficient grounds had been identified for taking “the wholly exceptional course of setting aside the court’s final judgment under r.3.1(7)”; see [78]. (My emphasis).

18. There has been no explanation for the 5 year delay in making the application to set aside. As stated above, it seems to me that the application was prompted by Solvay’s application for the unless order.

19. On behalf of the Claimant it was submitted that the concerns about the enforceability of the 4 th August 2004 order of Master Leslie where met when the order was amended by me on the 21 st August 2013. This, of course, post dated the hearing and my order. Mr. Wilson states in evidence that on the 24 th October 2013, the Dutch courts recognised the judgment order against the judgment debtor. I ask here, why the application to set aside – if it had to be made – was not made in August or October 2013?

20. The Claimant’s case is that I was deliberately misled by Solvay. I do not accept that. Mr. Wilson states that the judgment debtor is and always was an LLP under Kazakh law. His submissions on this point are substantially the same now as they were before me in 2013. Certainly, the confusion relating to LLP and LLC point arose from the judgment debtor’s own documentation. The main point, however, was not the LLP and LLC distinction but Solvay’s submission that it was at risk of having to pay the debt twice given the status of the judgment against the judgment debtor. It may well be that steps taken after the hearing before me removed that risk – in which case, if there was to be an application to set aside, it should have been made back then in 2013.

21. There is much material before me and there is the Claimant’s application dated 21 st December 2018 to rely on additional evidence. In my view, the evidence and proposed evidence upon which the Claimant wishes to rely upon to set aside my order does not assist the Claimant. First, as indicated above, it comes far too late. Second, much of the evidence goes to the nature of the trading relationship between Kazphosphate and Solvay and may or may not be more relevant to the Claimant’s 2018 application for a third party debt order against Solvay where there will be issues as to whether Solvay owes anything to Kazphosphate LLP.

22. For, example the Claimant challenges the evidence of Mr. Ellis of Solvay, in his witness statement of 5 th February 2019, that Solvay stopped taking a supply of P4 yellow phosphate from Kazphosphate in 2014. This issue is not relevant on an application to set aside my 2013 order. As stated above, in 2013 Solvay accepted that they were taking supplies from Kazphosphate be it LLP or LLC.

23. At the hearing on the 22 nd May 2019, Mr. Wilson provided me with spreadsheets of export data relating to trade in yellow phosphorous from 2012 to 2018. I am at a loss as to how this evidence, if one may call it that, is supportive of the application to set aside my 2013 order.

24. Mr. Wilson submits that in 2013 Solvay were saying that they only purchased yellow phosphate directly from Kazphosphate under a contract which was subject to Dutch law – whereas Solvay’s current position as set out in Mr. Ellis’ witness statement and exhibited spreadsheet showing Solvay’s purchases from January 2010 to September 2013, is that they obtained yellow phosphate from a number of other suppliers - buying not only directly but by other means. The evidence before me, and my finding, at the 2 nd August 2013 hearing was that Kazphosphate was a key supplier of phosphate. It was not Solvay’s evidence that Kazphosphate LLC was the only source of supply. Mr. Wilson is not right on this point. At the hearing in 2013, we did not descend to examining sales figures as that was not necessary given that Solvay admitted the debt owed to Kazphosphate (be it LLP or LLC) and indeed referred to the relevant contractual documentation, with Kazphosphate LLC, relating to the supply of phosphate.

25. The Claimant relied on a letter by Mr. Elder Suleimanov dated 22 nd October 2018 and sent to me (out of the blue) by email. Mr. Suleimanov is described as the Director of Law Department, Kazphosphate LLC (sic). He states that Kazphosphate LLC do not have and have never had “any direct contract relations on supply of our products” to Solvay. This statement is contrary to the contractual documents produced at the 2013 hearing. The statement is also contradicted by the evidence of Mr. Burdett of Clyde & Co, who acts for Kazphosphate Limited and Kazphosphate LLP, who states, on instructions, that Mr. Suleimanvov is honestly mistaken. There have been changes in the management personnel of Kazphosphate LLP over the years and the current management were unaware that Solvay had contracted when it was named Rhodia UK Limited and the contractual documentation had not been updated. In the circumstances, I do not think Mr. Suleimanov’s letter takes matters much further. Indeed, the letter is a two edged sword for the Claimant. Leaving aside the continuing reference to LLC, if Solvay had no contractual relationship with Kazphosphate LLP, the Claimant would not be entitled to a third party debt order at all.

26. Mr. Wilson’s fundamental point is that I should not have made the order of 2 nd August 2013. I do not agree and remind myself that, in any event, I am not the appeal court against my own orders. Conclusion

27. As far as the Claimant’s application for permission to rely on further evidence is concerned, there has been no explanation for the delay in providing the evidence. I have considered the evidence and the submissions relating to it. In my judgment, the additional evidence does not take matters any further in relation to the set aside application.

28. I should add that by an application notice dated 30 th June 2019, the Claimant applied for permission to adduce new evidence. However, it is plain that the application is for permission to rely on additional evidence in relation to the fresh application for a third party debt order against Solvay. I will consider that application after this judgment is handed down and after I have considered Solvay’s unless order application. If, and in so far as, the Claimant wishes to rely on the additional evidence in the present set aside application – I refuse permission to rely on the additional evidence as it comes far too late.

29. In my judgment, my order of 2 nd August 2013 must stand both as to setting aside the interim third party debt order and as to costs. Solvay was undoubtedly the successful party and was entitled to its costs. There is no evidence of misconduct by Solvay in the 2013 application which would justify a variation to the costs order. The application to set aside or vary my 2013 order comes far too late. There must be finality in this kind of dispute and Solvay were entitled to expect that the 2 At the hearing on the 13 th November 2018, Mr. Joseph accepted that the application was limited to setting aside the costs order. At the hearing on the 22 nd May 2019 (to adduce fresh evidence) Mr. Wilson reverted to the position that the application to vary extended to both the setti ng aside of the interim third party debt order and to the costs order . nd August 2013 order concluded matters on the 2013 application for a third party debt order. Furthermore, it is not practicable to set aside my order – and resurrect an interim third party debt order made in 2013. Finally, the evidence does not justify the setting aside or variation of my order.

30. In the circumstances, I shall dismiss both the Claimant’s application to set aside or vary my order of 2 nd August 2013 and its application dated 21 st December 2018 to rely on further evidence. Dated the 2 nd October 2019.