Case No: HC-2014-000497
Neutral Citation Number: [2015] EWHC 1997 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

Royal Courts of Justice
Strand, London, WC2A 2LL

Date: 17/07/2015

Before :

THE HON MR JUSTICE BARLING
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Between :

PEAK HOTELS AND RESORTS LIMITED

Claimant

	- and -

	(1)	TAREK INVESTMENTS LIMITED
(2)	PEAK HOTELS AND RESORTS GROUP
							     LIMITED
(3)	SHERWAY GROUP LIMITED
(4)	CARL JOHAN ELIASCH

and

(1)	PHRL HOLDINGS LIMITED

(2)	OMAR SHARIF AMANAT

(3)	LALIT MODI

Defendants

First Named Third Party

Second Named Third Party

Third Named Third Party	

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John Brisby QC and Alexander Cook (instructed by Candey Ltd) for the Claimant
Mark Howard QC and David Caplan and Richard Eschwege (instructed by Herbert Smith Freehills LLP) for the First Defendant
Michael Brindle QC and Paul Sinclair (instructed by Berwin Leighton Paisner LLP) for the Third and Fourth Defendants

Hearing dates: 20, 21 and 22 May 2015
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Judgment
MR JUSTICE BARLING: 
Introduction
1.	On 20, 21 and 22 May 2015 I heard two applications in these proceedings. One of the applications is by the third and fourth defendants, Sherway Group Ltd ("Sherway") and Mr Carl Johan Eliasch (together "the Sherway defendants") for an interim payment pursuant to CPR 25.7 of c.US$ 23 million against the claimant, Peak Hotels and Resorts Ltd ("PHRL") (“the Interim Payment Application”). The other application is by PHRL for payment out of court of US$ 9 million, being part of a sum of US$ 10 million which PHRL has paid into court as fortification of cross-undertakings as to damages given in support of injunctive relief granted to it (“the Payment Out Application”). This application is opposed by both the first defendant, Tarek Investments Ltd ("TIL") and the Sherway defendants.
2.	Mr John Brisby QC with Mr Alexander Cook appeared for PHRL, Mr Mark Howard QC with Mr David Caplan and Mr Richard Eschwege for TIL, and Mr Michael Brindle QC with Mr Paul Sinclair for the Sherway defendants.
Background
3.	Both applications arise in the course of a complicated and acrimonious dispute about the ownership and control of a group which owns and runs a chain of small luxury hotels and resorts in Asia, Europe and the Americas under the brand name Aman Resorts. The business was founded over twenty years ago by Mr Adriaan Zecha, who is a minority shareholder in PHRL. The pleadings are very lengthy, running to several hundred paragraphs, and raising numerous issues of fact and law. What follows is a very brief outline of how the present issues arise.
4.	A family trust connected with Mr Omar Sharif Amanat, the second-named third party, controls, directly or indirectly, PHRL. Mr Vladislav Doronin controls TIL, and Mr Eliasch, the fourth defendant, controls Sherway. In January 2014, Mr Amanat and Mr Doronin together acquired Aman Resorts for US$ 358 million through a joint venture company, Peak Hotels and Resorts Group Ltd ("the JVC"). Approximately 65% of the shares in the JVC, which is the second defendant, were held by Mr Doronin’s corporate vehicle, TIL, and the remainder of the shares were held by Mr Amanat’s company, PHRL.
5.	The relationship between the shareholders in the JVC is governed by a shareholders' agreement dated 31 January 2014 ("the SHA"). The SHA was structured so as to give TIL and PHRL equal management and control of the JVC, and each of them had the right to nominate two directors to the JVC’s board. 
6.	In April 2014, Mr Amanat and Mr Eliasch agreed that Sherway would lend US$ 50 million to PHRL (“the Loan Agreement”). A number of related agreements were entered into. These included provision for 53% of the loan to be converted into shares in a new intermediate holding company, PHRL Holdings Ltd ("Holdings"), to hold PHRL’s shares in the JVC. Holdings is the first-named third party. This arrangement would result in Mr Eliasch (through Sherway) acquiring an indirect stake of about 14% in the JVC itself. The Loan Agreement and the various other related agreements are collectively called “the Sherway Agreements”.
7.	The loan of US$ 50 million was drawn down in full on 2 April 2014. A few days later, Mr Eliasch replaced Mr Amanat as one of the two directors of the JVC nominated by PHRL. However, the envisaged new shareholding structure through Holdings was not implemented. 
8.	Almost as soon as the JVC was formed relations between Mr Amanat and Mr Doronin had begun to break down. According to Mr Amanat and PHRL, this was an important element of the context in which the agreement with Mr Eliasch was reached. Mr Amanat and PHRL allege that Mr Eliasch falsely represented to Mr Amanat that he was not a close friend or business associate of Mr Doronin, and would safeguard and promote the interests of PHRL in the conduct of the JVC's business, whereas in fact Mr Eliasch and Mr Doronin were good friends, and their intention from the outset had been to pursue a strategy designed (including by a dilution of PHRL’s shareholding) to exclude PHRL and those connected with it, including Mr Amanat and Mr Zecha, from the JVC, and to assume control of Aman Resorts. 
9.	Mr Doronin, Mr Eliasch, and their respective corporate vehicles deny these allegations. They contend that they have done their best to run the JVC and its business in the best interests of all the shareholders, but have been faced with a "greenmailing" strategy of disruption in the running and financing of the business. This, they contend, has been carried out by Mr Amanat (through PHRL and its nominated directors on the JVC board) in order to put pressure on Mr Doronin and TIL either to buy PHRL out of the JVC at a premium, or to sell TIL’s share in it to Mr Amanat or a third party at a discount.
The proceedings to date
10.	In order to deal with the present applications it is helpful to describe briefly some of the developments, including various applications for interim relief, which have taken place in this litigation to date.
11.	PHRL issued proceedings on 25 June 2014 against TIL, the JVC and Sherway, seeking declaratory and injunctive relief and damages for breach of contract. On 17 July 2014, PHRL issued a further claim against the Sherway defendants, claiming rescission of the Sherway Agreements for fraudulent (alternatively negligent) misrepresentation, damages for misrepresentation, and (in the further alternative) damages on the footing that the agreements had been terminated by PHRL's acceptance of repudiatory breaches of contract by the defendants. Later, in September 2014, the two claims were consolidated, and consolidated pleadings were served. The trial of the consolidated proceedings is due to begin in November 2015 with a time estimate of five weeks.
12.	Several judgments and orders for interim relief have been given. I refer, in particular, to the following:
•	A judgment and order of Ms Catherine Newman QC (sitting as a deputy judge of the High Court) on 14 July 2014, granting interim injunctive relief to PHRL ([2014] EWHC 2315 (Ch)) (“the Newman Judgment” and “the Newman Order”). 
•	A judgment and order of Mr Robert Englehart QC (sitting as a deputy judge of the High Court) on 18 July 2014, granting PHRL interim injunctive relief ([2014] EWHC 2693 (Ch)) (“the Englehart Judgment” and “the Englehart Order”). 
•	A judgment and order of Rose J on 31 July 2014, granting PHRL interim injunctive relief (“the Rose Judgment” and “the Rose Order”).
•	A judgment and order of His Honour Judge Pelling QC (sitting as a judge of the High Court) on 19-21 September 2014, the return day for the various interim injunctions referred to above, ([2014] EWHC 3066 (Ch)) (“the Pelling Judgment” and “the Pelling Order”).
•	A judgment and order of Henderson J on 20 February 2015, ordering PHRL to provide security for the costs of TIL and the Sherway defendants, and dismissing PHRL’s application for security for the costs of TIL’s counterclaim ([2015] EWHC 386 (Ch) ) (“the Henderson Judgment” and “the Henderson Order”).
13.	It is necessary to refer to some of these judgments and orders in a little more detail.
The Newman Order
14.	Two of the issues with which the Newman Order was concerned arose as follows. First, TIL alleged that at a board meeting on 22 April 2014 Mr Zecha had resigned as CEO of the JVC and that Mr Doronin had been appointed in his place. PHRL, however, denied that Mr Zecha had resigned, contending that Mr Doronin’s appointment was invalid. The second issue concerned calls for capital authorised by the board of the JVC including two calls on 6 June 2014 in the sums of US$ 50m and US$ 10m respectively, in respect of which notices demanding payment thereof by 3 July 2014 were subsequently sent out on 17 June 2014. PHRL contended that these calls were not validly made because the meeting was called at short notice and/or insufficient notice was given of the business proposed to be dealt with at the meeting.
15.	When PHRL commenced proceedings on 25 June 2014 it applied for interim injunctive relief as follows: (1) an injunction to prevent the said capital calls from proceeding; (2) an injunction against Sherway in relation to steps taken by the latter to enforce agreements between PHRL and Sherway (and related entities) relating to the loan facility; and (3) an injunction reinstating Mr Zecha as CEO of the JVC.
16.	Prior to the hearing before Ms Newman QC, which took place on 1 July 2014, TIL and Sherway offered undertakings on the applications relating to the capital calls and the Sherway enforcement action, to continue until the return date in September 2014. Thus, only the issue of Mr Zecha’s reinstatement as CEO fell to be determined by Ms Newman QC. The Newman Order restored Mr Zecha to the position of CEO of the JVC until 31 July 2014 (ie for a period of approximately 3 weeks), that being the date when his original appointment as CEO expired. 
17.	The recitals to the Newman Order referred to: (1) all three heads of interim injunctive relief claimed by PHRL, (2) PHRL’s cross-undertaking to pay “any damages which the Defendants sustain as a result of the injunctions sought”, and (3) the undertakings given by the relevant defendants in order to provide PHRL with relief in respect of the two matters which the parties had agreed to stand over until the return date (i.e. the capital calls issue and the Sherway enforcement issue). The body of the Order adjourned the further hearing of all three heads of injunctive relief to the return date, and restrained the second defendant, pending the return date or further order, from inter alia taking steps to remove Mr Zecha as CEO or interfering with his functions as such before 31 July 2014. 
The Englehart Order
18.	After the hearing before Ms Newman QC further issues arose between the parties in connection with the calling by TIL of board meetings of the JVC at short notice and the consent to such meetings by Mr Eliasch, as one of PHRL’s nominated directors. PHRL sought further interim injunctive relief which resulted in the Englehart Order of 18 July 2014. This was not shown to me but I am told that pending the September return date it required Mr Eliasch not to consent to short notice of meetings, and restrained the late submission of agenda additions. I assume that it contained the usual cross-undertaking as to damages.
The Rose Order
19.	On 25 July 2014 the Board of the JVC resolved to authorise a capital call of US$ 50m. PHRL challenged the validity of that resolution and issued an application the same day for an interim injunction to prevent any action being taken pursuant to that capital call. This came before Rose J on 31 July 2014, who ordered that pending the September return date the defendants should not take any steps (and the third defendant procure, so far as it was able, that Mr Eliasch took no steps) to implement the resolution. A cross-undertaking was given by PHRL ‘to pay any damages which the Defendants may sustain as a result of the injunctions sought which the Court considers [PHRL] should pay’. 
20.	Sherway and TIL had opposed the interim relief on the basis that the funding in question was required, in particular, for the JVC’s new hotel project in Tokyo. At the hearing they raised the issue whether, in view of the possibly substantial losses both to the Sherway defendants and TIL as a result of the injunction, PHRL’s cross-undertaking was adequately supported by assets available to PHRL. PHRL argued that the potential exposure did not approach US$ 50m, and indicated through counsel that it would put up a sum which was “appropriate”. The Rose Order, therefore, directed PHRL to serve evidence “in support of the cross-undertaking in damages….”.
21.	This resulted in the production of a witness statement from Mr Amanat dated 4 August 2014. In this he said:
“PHRL has given a cross-undertaking that if any of the injunctions granted by the Court cause loss to one or other of the Defendants and if the Court decides that any one or more of the Defendants should be compensated then PHRL will comply with any order made.” (Paragraph 4)
22.	Mr Amanat referred to discussions he had had with Mr Zecha and Mr Olivier Jolivet, the interim CEO of the JVC, about a proposal by PHRL for a shareholders’ loan of US$ 11.5m to the JVC. He stated that this was acceptable to them, and that, as the JVC would therefore receive the funding which it was alleged to need in the short term, there would be no material exposure to the defendants as a result of the injunctions granted.
23.	However, Mr Amanat stated that “in order to put the matter beyond any doubt” he had arranged to transfer US$ 10m to the client account of PHRL’s solicitors’ (Candey), and that they would give a solicitors’ undertaking that those funds would be held to the court’s order. He also referred to other assets at his or PHRL’s disposal which could if necessary also be used to fortify PHRL’s cross-undertakings.
24.	On 12 August 2014, Candey gave the written undertaking referred to by Mr Amanat (“the Candey Undertaking”). It is set out under a heading which refers to the various claims in the now consolidated proceedings and, so far as relevant, is in the following terms:
“We undertake to hold the sum of $10 million in our client account pursuant to our client’s cross undertakings in these proceedings and pursuant to further Order of the Court. We confirm that we shall not release the monies to our client without an Order of the Court or agreement of all the parties to whom the cross undertakings are given save for circumstances in which our client (i) fortifies the cross undertaking [by providing an equivalent security by other means and on 3 days notice to the other parties]”.
25.	On 19 August 2014, the JVC’s board passed a resolution authorising a capital call in the sum of US$ 11.5m with a due date of 3 September 2014. PHRL did not seek to prevent implementation of this call, having previously indicated that it would not raise an objection to it. Similarly, no application was made to prevent a further call for capital of US$ 38.5m authorised on 10 September 2014, and a call notice was sent out with a due date of 14 November 2014.
The Pelling Order 
26.	When these various injunctions came before His Honour Judge Pelling QC on the return date, 17-19 September 2014: 
•	The applications which were the subject of the Newman Order were dealt with by way of voluntary undertakings or injunctions to which the respondents consented, all of which were expressed to be until trial or further order. However, the order reinstating Mr Zecha was not mentioned expressly: it did not of course extend beyond the end of his appointment as CEO on 31 July 2014.
•	The relief granted by the Englehart Order (a) to PHRL in respect of board meetings of the JVC and (b) to the Sherway defendants restraining any steps to remove Mr Eliasch from the board, were continued pending trial or further order, and a more drastic injunction sought by PHRL to prevent Mr Eliasch attending board meetings was refused. 
•	The injunctive relief granted by Rose J in respect of the 25 July 2014 call for capital was continued pending trial or further order.
27.	Recitals (16), (18), (19) and (20) to the Pelling Order are as follows:
“AND UPON (16) Sherway’s and Mr Eliasch’s application for PHRL to fortify its cross undertakings in damages….
AND UPON (18) PHRL undertaking to the Court to pay any damages which TIL, Sherway and/or Mr Eliasch sustain as a result of the injunctions sought by it which the Court considers PHRL should pay
AND UPON (19) TIL and Sherway consenting to the variation of [Candey’s] written undertaking dated 18 August 2014 for [Candey] to transfer the sums secured therein into Court in accordance with recital (20) below
AND UPON (20) [Candey] undertaking to pay the sums referred to in its written undertaking…..into Court as soon as reasonably practicable, to stand as security for payment of any damages which the Court thinks PHRL ought to pay pursuant to its cross undertakings in damages (including as set out in recital (18) above) ”
28.	Recital (16) reflects a formal application for fortification of PHRL’s cross-undertakings issued by the Sherway defendants before the hearing. The issue of fortification was debated before Judge Pelling towards the end of the hearing, at which time the application by the Sherway defendants was in effect taken over by TIL; the Sherway defendants did not move it in view of Judge Pelling’s refusal of the injunction sought by PHRL to remove Mr Eliasch from the board, and his continuation of the Englehart Order restraining action to remove Mr Eliasch. The debate before Judge Pelling was in the context of the Rose Order, which was being continued. Mr Howard, then as now appearing for TIL, submitted that the losses caused to TIL and others were potentially very substantial, that PHRL was insolvent and that the US$ 10 million in the hands of Candey was not effective as fortification because as a matter of law it was vulnerable to the claims of other creditors. 
29.	In the event, the issue of fortification was resolved by PHRL accepting Mr Howard’s suggestion that the US$ 10m be paid into court, on the understanding that if the defendants were dissatisfied with that security, they could have a limited time in which to apply to the court. (Mr Howard was then of the view that even if paid into court the US$ 10m could still be vulnerable to other creditors. He now accepts that that view was wrong as a matter of law.) 
30.	In the course of the discussion before Judge Pelling, Mr Brisby submitted that, whereas at the time of the Rose Order there was “a real risk” that the defendants would suffer some damage as a result of the injunction impeding the call for capital, that was no longer the case as, given the unopposed passage of the subsequent capital calls, it was now clear that the JVC would have the money it claimed to require by November 2014, which was when the defendants said they required it (mainly for the establishment of the new hotel business in Tokyo). There was therefore no need for fortification at all. However, he stated that his client was “not seeking to withdraw the US$ 10m.”
31.	The witness statement provided for the purposes of the hearing before me by PHRL’s solicitor, Mr Dunn a partner in Candey, gave the impression that it was being argued by PHRL that the discussions with Judge Pelling referred to above contained a “proviso” by PHRL that, in the event that the defendants sought security for costs, PHRL would re-visit the amount of fortification and argue that US$ 10m was excessive. However, when one reads the transcript of that discussion, it is clear that no such proviso or reservation was made by PHRL, and that the discussion concerned only what PHRL might do if the defendants persisted in their concerns about the adequacy of the fortification provided, and in particular its vulnerability to other creditors’ claims. It is now common ground that this is the correct interpretation of what was being discussed. As I have said, Mr Howard was later satisfied that when in court the money was secure from other creditors of PHRL. No further application relating to fortification was made by the defendants. 
32.	I was told that, following the hearing, the Pelling Order was heavily negotiated by the parties. It was not settled until some 6 weeks later, on 28 October 2014.
The Henderson Judgment  
33.	In October 2014, TIL and the Sherway defendants issued applications for security for costs against PHRL, and in December 2014 PHRL applied for security for costs against TIL. The three applications came before Henderson J on 16 and 17 December 2014. In his judgment on 20 February 2015 the learned judge ordered PHRL to give security for costs of £1.746m and £1.392m in respect of TIL and the Sherway defendants respectively. PHRL’s application was dismissed.
34.	At the hearing before me reference was made to a number of findings of Henderson J, including the following:
(1)	PHRL was ultimately controlled by Mr Amanat;
(2)	there were “insistent” doubts about Mr Amanat’s personal integrity in the light of the evidence, including findings by courts of the State of New York that Mr Amanat and others had engaged in a pattern of wilful disregard for court orders amounting to bad faith, and that he was a  “blatant” fraudster;
(3)	this, together with the “thin and contradictory” evidence of PHRL’s assets, and the fact that even assurances given in good faith by solicitors acting for Mr Amanat or his companies could not necessarily be accepted at face value, rendered it “overwhelmingly clear” that there was reason to believe that PHRL would be unable to pay the defendants’ costs if ordered to do so;
(4)	PHRL had taken steps to strip itself of most of its liquid assets, which would make it difficult to enforce an order for costs against it;
(5)	According to his own evidence, Mr Amanat was a man of “very great wealth”, having given a non-exhaustive list of assets which he owned personally or through his associated companies worth well in excess of US$ 160 million. 
35.	The Payment Out application was issued on 20 February 2015, the day that the Henderson Judgment was handed down. In his witness statement in support of that application PHRL’s solicitor, Mr Dunn, stated that PHRL would be seeking to use part of the monies paid out if that application was successful to satisfy the security for costs ordered by Mr Justice Henderson. In March 2015 PHRL applied for an extension of time until the end of April 2015 in which to provide the security. However, an unless order was made by Hildyard J on 12 March 2015 requiring PHRL to provide it by 25 March 2015.
The Payment Out Application
Introduction
36.	PHRL seeks payment out of US$ 9 million (or such lesser sum as the court may think fit) on the ground that there is now clearly no need for US$ 10 million to remain in court as fortification for PHRL’s cross-undertaking in damages. It submits that TIL has failed to adduce evidence, whether from the JVC’s CEO or Chief Financial Officer or from any other source, to substantiate any loss or damage caused by the relevant interim injunctive relief, let alone loss and damage on anything approaching that scale. Although PHRL is content for US$ 1 million to remain in court, in its submission justice requires PHRL to be put in a position where it is able to use for its own purposes the majority of the funds now in court, including for paying its costs of these proceedings.
37.	In its skeleton argument PHRL contends that TIL and the Sherway defendants oppose the application, not because of a genuine concern about being exposed to loss, but rather because they wish to cut off a source of PHRL’s funding and thereby stifle PHRL’s claim. At the outset of the hearing I was told that a “stifling” argument was not being pursued by PHRL.
38.	In response, TIL (whose submissions were adopted by the Sherway defendants) contends that PHRL has not crossed the legal threshold to vary an undertaking given to the defendants and the court, on the basis of which a compromise was reached in the terms of the Pelling Order. PHRL is required to establish that there has been some significant change of circumstances since that Order was made or that it has become aware of facts which could not reasonably have been found out by that time. TIL also argues that, in any event, the balance of justice requires the court to hold PHRL to its undertaking.  
39.	The following preliminary issues also arise:
(1)	Whether, as PHRL contends, on the true construction of the Pelling Order the fortification consisting of the US$ 10m paid into court covers only the cross-undertakings in damages in the Pelling Order and the Rose Order relating to the July 2014 capital call for US$ 50m, or whether, as the defendants contend, it also covers the cross-undertakings in relation to other injunctive relief obtained by PHRL, including in particular the injunction in the Newman Order which reinstated Mr Zecha as CEO for a period of  2-3 weeks.
(2)	Whether the Sherway defendants are entitled to the benefit of the cross-undertaking and fortification referred to in the Pelling Order. 
Which cross-undertakings are fortified?
40.	In arguing that the only cross-undertakings benefiting from the fortification are those relating to the injunctions affecting the calls for capital, Mr Brisby for PHRL relied upon a number of contextual factors.
41.	First, he pointed to the fact that the original context in which the issue of fortification arose was the discussion with Rose J on 31 July 2014 immediately after her decision to restrain implementation of the capital call for US$ 50m. He states that the same was the case when the fortification issue was debated before Judge Pelling. It is, however, to be noted that the Sherway defendants’ original application for fortification related not to the relief claimed in respect of capital calls but to the injunction sought (but refused by Judge Pelling) in respect of Mr Eliasch’s attendance at board meetings. Mr Brisby further contends that possible loss caused by the delay in making the capital calls was the only justification for fortification put before Judge Pelling, and that fortification was not sought in respect of any other cross-undertaking.
42.	These points may well be factually correct, but how far they get PHRL is capable of being affected by other relevant factors, not least the actual terms of the Pelling Order and the Candey Undertaking.  
43.	Next, Mr Brisby relies upon the fact that the injunction in the Newman Order relating to Mr Zecha ceased to have effect on 31 July 2014, when his term as CEO expired. He submits that, even if technically the September hearing before Judge Pelling was the return date for that injunction, it could not have been continued, and only costs could be dealt with on that date. He submits that it would be very odd for a party to give a more extensive undertaking than it would ever be compelled by the court to give, and the court could or would not compel a party to fortify a cross-undertaking in respect of an injunction which had expired.
44.	I do not consider that this point has much if any force. The price of the Zecha injunction was a cross-undertaking in damages by PHRL, which may yet come into play if the court is ultimately satisfied that PHRL was not entitled to that injunction and that it caused relevant loss and damage. Since the potential application of the cross-undertaking did not expire on 31 July 2014, the fact that the injunction ceased to have effect then does not of itself mean that the fortification cannot cover the cross-undertaking. Nor can I see any reason in principle why PHRL may not have offered fortification in respect of all cross-undertakings in damages which it had given in the proceedings, including one which was still potentially operative although the injunction had run its course, if PHRL considered that that course would achieve its desired goal. TIL submits that the Candey Undertaking was put on the table in order to satisfy the court and the other parties on the issue of PHRL’s ability to honour its cross-undertakings without undergoing a close analysis of PHRL’s financial position. There is some force in this contention, given the findings of Henderson J (above).  
45.	Mr Brisby then argues that in the exchanges with counsel at the end of the hearing, Judge Pelling was only considering what regime should be put in place pending an anticipated formal application by TIL for fortification (not for security for costs, as stated in PHRL’s solicitor’s evidence).
46.	I do not consider that this is an accurate interpretation of how the matter was left. I have already touched on this matter. When the exchanges between the parties and the learned Judge are read in full, it is to my mind quite clear that the matter was left on the basis that “if” Mr Howard and his clients, having considered the case law referred to by Mr Brisby, were still not satisfied that as a matter of law the US$ 10m was secure from third parties’ claims even though paid into court, and “if” they then applied for further or better fortification, PHRL reserved the right to argue that the US$ 10m was excessive. As I have said, no such formal application for further fortification was made, Mr Howard having concluded that Mr Brisby was right as a matter of law on the effect of a payment into court.
47.	Finally, Mr Brisby turned to the Pelling Order itself and made a number of points about the wording. (The Candey Undertaking and the Pelling Order are set out, so far as relevant, at paragraphs 24 and 27 above respectively.) He pointed to the fact that the cross-undertaking in recital (18) referred to damages caused by “the injunctions sought” rather than “the injunctions obtained”. He submitted that because the recitals precede the actual order, the injunctions referred to in the cross-undertaking must be those which follow in the operative part, which do not include the Zecha injunction.
48.	This is a very dubious point, not least because a cross-undertaking does not apply where an interim injunction is “sought” but the injunction (or an equivalent undertaking) is not obtained. 
49.	Further, no doubt mindful that whatever force the point might otherwise have is challenged by the fact that recital (20) records Candey’s undertaking to pay the US$ 10m into court as security for PHRL’s “cross-undertakings in damages (including as set out in recital (18) above)” (my underlining), Mr Brisby submitted that this wording could be given a meaning consistent with his argument by construing it as covering also the cross-undertaking in the Rose Order.
50.	I am unconvinced by these arguments. First of all, the terms of the recitals in the Pelling Order to which I have referred are expressed in wide and all-encompassing terms, which on a literal construction cover all the cross-undertakings given by PHRL in these proceedings. It would require a very powerful contextual factor to enable them to be construed as restricted to the capital calls injunctions in the Rose Order and the Pelling Order. I do not consider that the factors relied upon by Mr Brisby achieve this. 
51.	On the contrary, in my view the context points the other way. The witness statement of Mr Amanat dated 4 August 2014 (paragraph 21 above), produced in compliance with the Rose Order, commented on the potential for any of the injunctions granted in these proceedings to cause loss. In this context Mr Amanat was not restricting his remarks to the capital calls injunctive relief; he referred to “previous injunctions granted in these proceedings. For example, injunctions in respect of the resolutions dealing with the appointment of a CEO or restraining Mr Eliasch from consenting to short notice of meetings….” Although Mr Amanat expressed the view that only the capital call injunction had potential to cause material loss, in describing the arrangements for the US$ 10m fortification his references were to “injunctions” and “cross-undertakings” (eg paragraphs 11 and 13 of the witness statement). In my view he was describing arrangements which were intended to fortify all PHRL’s cross-undertakings, and not just those in respect of the capital calls relief.
52.	This is confirmed by the Candey Undertaking, given a few days later, which is in similarly broad terms, for example: “pursuant to our client’s cross undertakings in these proceedings”, and “agreement of all the parties to whom the cross undertakings are given” (see paragraph 24 above). 
53.	The Pelling Order records that the Candey Undertaking was varied by consent to the extent that Candey undertook to pay the US$ 10m into court. There is nothing in the Pelling Order or anywhere else to suggest that there was any variation in the scope of what the US$ 10m was intended to fortify. When the Pelling Order is construed in the light of what Mr Amanat said in his witness statement and of the Candey Undertaking, to which it refers, it is clear that the cross-undertaking in recital (18) and all previous cross-undertakings given by PHRL in these proceedings benefit from the US$ 10m fortification, and not just those given in respect of the capital calls injunctive relief. In particular the fortification also covers the Newman Order (including paragraph 5.3 thereof, at least in so far as damage is shown to have been caused by that injunction rather than any purely contractual undertaking which is said to have replaced it prior to the return date) and the Englehart Order. 
54.	Quite apart from the clear meaning of the Pelling Order, and the Candey Undertaking, it would be anomalous and undesirable if, in the same litigation, some but not other cross-undertakings in damages given by a particular party were to benefit from fortification. 
Are the Sherway defendants entitled to the benefit of the fortification? 
55.	Mr Brisby accepts that on the literal wording of the Pelling Order, in particular recitals (18) and (20), the Sherway defendants obtain the benefit of the fortification. He sought to argue that this was never intended, given that those defendants had not moved their application for fortification; he contends that reference to those defendants was inserted into the draft of the Order in the course of negotiations between the parties, was not picked up by those acting for PHRL, and was not specifically brought to their attention.
56.	Unsurprisingly, strong objections to this point were made by Mr Howard and Mr Brindle. I declined to entertain the submission. Throughout the proceedings the parties have all been represented by teams of experienced lawyers, well able to protect the interest of their respective clients. It is common ground that the Pellling Order was the subject of detailed negotiations over a period of about 6 weeks after the hearing. It is not in my view appropriate to raise such a point and seek to go behind the clear words of the Order at this late stage. If there was an oversight, then the matter should have been raised immediately with Judge Pelling. To entertain it now would probably require the exchange of evidence from the negotiators and drafters of the Pelling Order and a separate hearing, which would amount to wholly unacceptable satellite litigation.
Should PHRL be permitted to take any of the funds out of court?
57.	I now turn to the core of this application ie whether the court should permit PHRL to remove any of the US$ 10m from court.
Legal principles
58.	In relation to the legal principles, both sides referred to and relied upon the decision of the Court of Appeal in Chanel Ltd v FW Woolworth & Co Ltd [1981] 1 WLR 485, and the passage in the judgment of Buckley LJ at pp.492-493 where he stated:
“Even in interlocutory matters a party cannot fight over again a battle which has already been fought unless there has been some significant change of circumstances, or the party has become aware of facts which he could not reasonably have known, or found out, in time for the first encounter. The fact that he capitulated at the first encounter cannot improve a party’s position.”
59.	I was also taken to two decisions of Teare J. In Emailgen Systems Corpn v Exclaimer Ltd [2013] 1 WLR 2132 the learned Judge, having considered a number of authorities, including Chanel v Woolworth (above), said: 
“26. The effect of these authorities is, in my judgment, correctly summarised in Bean, Injunctions, 11th ed (2012), para 6-25.
“Care must be taken if a defendant consents to give undertakings but wishes to preserve his right to apply to be released from them at a later date. Where a defendant chooses not to seek an adjournment of an application for an interim injunction, but instead accepts that it should be dealt with there and then by his offering undertakings until trial or further order, there must be good grounds before he can apply to modify or change them.”
………
32. The phrase "good cause" was used in the Pet Plan case [Pet Plan Ltd v Protect-a-Pet Ltd [1988] FSR 34] by Nicholls LJ at p.41. Nicholls LJ said that what are "good grounds" will depend upon all the circumstances of the case: see p.40. Although Buckley LJ in Chanel v Woolworth had not put the matter as broadly as this, instead saying at pp.492-3 that there had to be a significant change of circumstances or the discovery of some new facts which could not reasonably have been known about when the undertaking was given, I accept, following the Pet Plan case, that what is "good cause" will depend upon all the circumstances of the case, though typically a change of circumstances or the discovery of some new fact will be required. In Secretary of State for Trade and Industry v Bell Davies Trading [2005] 1 All ER 324, para 104 the Court of Appeal put the matter this way: 
"The normal procedure would be for the party, who had given the undertaking, to apply to the court, to which he had given the undertaking, on a specific ground, usually changed circumstances making the continuation of the undertaking unnecessary, oppressive or unjust."
33. It is however clear from the authorities to which I have referred that where the application for the injunction has been disposed of the person who gave the undertaking cannot rely upon an argument to the effect that the freezing order should never have been granted to say that the continuation of the undertaking is unnecessary, oppressive or unjust.”
60.	More recently, in Todaysure Matthews Limited v Marketing Ways Services Limited [2015] EWHC 64 (Comm), Teare J referred to the principles set out in Chanel v Woolworth and Emailgen and said:
“26… That principle requires good cause to be shown for a person to be released from an undertaking. What is good cause will depend upon all the circumstances of the case though typically a change of circumstances or the discovery of some new fact will be required. A person will only be released from an undertaking if it would otherwise be unjust to hold him to his undertaking.
27. Although an order resulting from the court's exercise of a discretion and a consent order resulting from the parties' agreement are both orders of the court, a consent order has a feature which is lacking in an order which results from the court's exercise of a discretion, namely, it is the product of careful negotiation and agreement between the parties themselves. That additional factor is, it seems to me, relevant when considering whether it is just to set aside the order. It is a factor in favour of holding the parties to their agreement; for it is in the public interest that parties should seek to resolve their differences themselves and if they do so the court should seek to uphold their agreement. That is why, it seems to me, that before a party may be released from an undertaking good cause must be established.”
61.	I was also taken to some older cases dealing with payments into court. In WA Sherratt Ltd v John Bromley (Church Stretton) Ltd [1985] QB 1038 Sir John Donaldson MR at p.1058B-E cited with approval the statement of Goddard LJ in Cumper v Apothecary [1941] 2 KB 58, at p. 70:
“Apart from matters such as fraud or mistake affecting the original payment, [the court] should consider whether there is a sufficient change of circumstances since the money was paid in to make it just that the defendant should have an opportunity of withdrawing or reducing his payment.”
62.	Referring also to Peal Furniture Co. Ltd v Adrian Share (Interiors) Ltd [1977] 1 WLR 464, Sir John Donaldson went on to state that the fact that on the later occasion a party who had paid into court took a different view of circumstances which had been known to that party the first time around, did not amount a change of circumstances. He stated that if this were a sufficient ground for permitting a reduction in the amount of money in court, there could be applications whenever counsel reviewed the case and took a more favourable view than hitherto.
63.	Mr Brisby drew attention to the evolution of the Chanel v Woolworth test into a somewhat more broadly expressed condition of “good cause” assessed in the light of “all the circumstances of the case”. However, he accepted that, subject to his points on the construction of the Pelling Order, to succeed in this application PHRL must demonstrate a significant change of circumstances since that Order was made, such as to make it unjust to hold PHRL to its undertaking.
64.	Mr Brisby submitted that the Pelling Order is not a consent order, and that therefore the additional relevant factor identified by Teare J in Todaysure (above) is not present here. This does not appear to be a good point. The Pelling Order is to a considerable extent an agreed order: as I understand it, the only issues Judge Pelling was required to determine were PHRL’s application for an injunction to prevent the attendance of Mr Eliasch at JVC board meetings, and the mirror image injunction sought by the Sherway defendants. The fortification question was compromised in the way that I have described. There was then a 6 week period during which these and other agreed matters were distilled by negotiation and agreement between the parties to produce the Pelling Order. In substance this does not appear very different from the consent order discussed in Todaysure.    
65.	Mr Brisby also referred to notes in the 2015 edition of the White Book at pages 70 – 73. In particular he drew attention to the passage at page 73 stating that “laxer principles” may apply where the order in question contains an express “liberty to apply”, since the court does not lose seisin of the matter and it is foreseen that further applications are likely in the course of implementing the decision. However, the Pelling Order was in any event made “Pending the trial of the above actions or further order”, and in my view the addition of “liberty to apply” does not advance matters significantly in the present case. Mr Brisby was right to describe this as a “small point”. 
Change of circumstances
66.	PHRL’s case is that there has been a material change of circumstances since the Pelling Order. Mr Brisby submits that the only losses that could benefit from the fortified cross-undertaking are those which are shown to result from the capital call injunctions, and that the only potential source of such loss would be the c.20 days delay between the injunction granted by Rose J on 31 July 2014 and the 19 August 2014 board meeting, when a renewed capital call was made without objection from PHRL. In relation to that delay in the capital call, he submits that both before Rose J and Judge Pelling only one tangible head of loss has ever been said to require a fortified cross-undertaking, namely delay to the Tokyo hotel project. Mr Brisby submits that in the end there was no delay to that project, but that at the time the Pelling Order was perfected on 28 October 2014 the position in that regard was unclear. While PHRL had always believed there would be no delay, and had so argued, it was only when the hotel actually opened in December 2014 that all uncertainty was finally removed as to whether delay to the project might be caused by the c.20 days delay in capital call resulting from the Rose Order. He contends that a December opening was always anticipated and therefore there was no delay and no possible loss. 
67.	In this connection Mr Brisby relied in particular upon a letter dated 7 August 2014 from Mr Jolivet, the acting CEO of the JVC, in which the writer refers to “the highest priority capital needs of the company arising from either operating expenses or new projects, with a particular urgency for the Aman Tokyo property which is contemplated to open on 1st December 2014 and is the single largest capital commitment of the company at this time.”
68.	The actual opening in December, he submits, represents a material change of circumstances for the purposes of the Chanel v Woolworth principle.
69.	I do not accept that a material change of circumstances has been established by PHRL so as to justify allowing PHRL to withdraw part of the fortification they undertook to furnish in the Pelling Order.
70.	Before Judge Pelling in September 2014 PHRL argued that the capital call injunction had caused and would cause no loss because the Tokyo project had access to the funds needed by the time those funds were needed, and because neither the launch nor the opening of the project would be delayed. Mr Brisby made it clear that PHRL did not consider that the US$ 10m fortification was actually required.  Indeed, in his ninth witness statement dated 15 May 2015 prepared for the present application, Mr Dunn states that “PHRL did not select the figure of US$ 10 million as an estimation of the JVC’s likely loss. Rather, the sum was chosen in order to put the whole matter beyond any doubt and to remove any possible source of complaint by TIL. It is noteworthy that Mr Amanat says “any possible exposure to losses as a result of the injunctions are likely to be very limited indeed”…” Mr Dunn is there referring to Mr Amanat’s witness statement to which I have referred at paragraphs 21 to 23 above. 
71.	On that basis it is difficult to see how it is relevant now to consider whether the likely or potential quantum of any loss is affected by further evidence relating to the actual opening of the project, for in the light of PHRL’s approach any such change of circumstance would not be material. Despite its consistent contention that no delay in the project and therefore no loss would be caused, PHRL still put up the money, in Mr Dunn’s words “in order to put the whole matter beyond any doubt and to remove any possible source of complaint by TIL.” PHRL did succeed in forestalling the investigation of their asset position envisaged by Rose J, and TIL was in due course persuaded that its concern about the effectiveness of the security was unwarranted. At no stage did PHRL state that the US$ 10m fortification was subject to further evidence becoming available about loss or about the actual opening of the Tokyo project. Its only reservation was that if TIL asked for further or better fortification for the cross-undertakings, PHRL would argue that US$ 10m was already too much. The “liberty to apply” was at Judge Pelling’s suggestion, in case “there is a problem I haven’t anticipated”. He was clearly not there referring to further evidence becoming available about the opening of the Tokyo hotel.
72.	In his submissions in the present application Mr Brisby argued that it was on receipt of an email dated 14 October 2014 from Mr Jolivet to all the interested parties that the uncertainty about timely opening of the Tokyo project was removed. That email referred to various issues that had arisen, and the last sentence stated: “However, I am now confident that this project can go through….” It was pointed out by Mr Howard that that email did not really help PHRL because the Pelling Order was still being negotiated on 14 October and was not perfected until 28 October. 
73.	Mr Brisby also drew attention to the witness statement dated 24 November 2014 of Mr Kevin Kilgour, a solicitor for TIL, where he said that “uncertainty [about whether the Tokyo project would go ahead]…remained until the project was finally secured at the end of October”. 
74.	I note that both Mr Jolivet’s email of 14 October and Mr Kilgour’s statement are referring to uncertainty about whether the Tokyo hotel project would go ahead at all, rather than whether there would be delay in the opening of the hotel. Mr Kilgour himself draws that distinction, stating that “it still appears that PHRL’s actions contributed substantially to the delay to the project….the precise scope and nature of the losses suffered….as a result of the delay remain to be seen.”
75.	Thus, in the course of submissions Mr Brisby argued that three different events/dates represented a material change of circumstances for present purposes: the 14 October 2014 email from Mr Jolivet, the securing of the Tokyo project at the end of October referred to by Mr Kilgour, and the actual opening of the hotel in December 2014. Ultimately he plumped for the last of these, as dispelling all previous uncertainties about delay.
76.	I do not consider that any of these events amounts to a material change of circumstances. Mr Brisby himself discounted the first two as still leaving open the possibility of delay. Nor, in my view, is there any justification for regarding the actual opening as a material change. It has been PHRL’s vigorously maintained assertion throughout that the project’s opening would not be jeopardised or delayed by the interim relief. To regard as a material change of circumstance the fact (if such it be) that there is now better evidence to support that assertion, would be to fall into the kind of error identified in the case law discussed earlier. Further, PHRL must have anticipated at the time of the Pelling Order that evidence of the actual opening would become available at some point (unless the whole project was lost), yet it negotiated and agreed that Order without qualification. Therefore, for this reason too, that event cannot be a material change, or a circumstance then unknown to PHRL. There is no evidence (as opposed to submission by Mr Brisby) that PHRL ever regarded it as such. This is not surprising since in reality, in Mr Dunn’s words, “PHRL did not select the figure of US$ 10 million as an estimation of the JVC’s likely loss” but did so for different reasons (see above). 
77.	It follows that there has been no material change of circumstances since the Pelling Order, and PHRL has not succeeded in crossing the threshold for establishing that it can be relieved of any part of the burden of its undertaking in respect of the money placed in court. 
78.	In fact it is a matter of dispute whether or not there was a delay in the opening of the hotel. While the letter dated 7 August 2014 from Mr Jolivet and a letter dated 7 July 2014 from Mr Gregory Sirois which I was also shown, provide some support for PHRL’s argument that a December 2014 opening was then in contemplation, there is evidence from Mr Kilgour and Mr Doronin that the project was delayed as a result of the injunctions, that the December opening was only partial, and that full opening did not take place until March 2015. The evidence is not so clear and conclusive one way or the other that I could possibly resolve that dispute on the basis of material and submissions before me.
79.	In my view, no other “good cause” has been established which could justify relieving PHRL from the undertaking.
80.	In its evidence PHRL takes issue with the defendants’ assertion that the cross-undertakings in damages are likely to be called upon, at least to such an extent as to require as much as US$ 10m fortification. The short answer to that is: “So what!” As I have noted, that amount was chosen by PHRL for its own purposes and explicitly without reference to any estimate of the defendants’ potential losses.
81.	In any event, I am satisfied in the light of all the evidence that the heads of loss referred to by the defendants as having been (or as liable to be) caused by the injunctions in question are sufficiently plausible to render it impossible for me to say at this stage in the proceedings that the cross-undertakings will not be called upon in significant amounts. I do not consider that it is necessary or appropriate for me to deal with this evidence in any detail, given my conclusions on the issues of the scope of the fortification undertaking and material change in circumstances. I will refer briefly to the alleged heads of loss. 
82.	As far as the Zecha injunction in the Newman Order is concerned, Mr Brisby submits that, if (as I have found to be the case) he is wrong about the scope of the fortification undertaking and it covers the injunction reinstating Mr Zecha as CEO for less than 3 weeks, that relief cannot possibly have caused losses of such a magnitude as would require fortification of US$ 10m.
83.	Mr Doronin’s evidence is that the reinstatement of Mr Zecha caused chaos in the senior management of the JVC, damage to the Aman brand, and disruption to its operations. According to that evidence the Aman brand is central to its business model as a ‘top end’ luxury business, and places emphasis on intimacy, discretion, peace and privacy. Mr Doronin claims that the Zecha injunction brought about chaotic changes in leadership which presented an image of a business in turmoil, likely to have put off guests and potential purchasers of Aman villas, giving rise to reduced bookings and purchases, decreased staff morale, and increased staff turnover. These and other alleged effects of the reinstatement of Mr Zecha are said to be likely to have caused significant damage to the business.
84.	Although this evidence is largely disputed by PHRL including as to possible quantum of loss, it cannot be dismissed as so implausible that I can usefully take a view at this stage. Indeed, PHRL’s own evidence (Mr Dunn’s eighth witness statement, at paragraph 15.2) is to the effect that a change in CEO (replacement of Mr Zecha by Mr Doronin) “caused significant damage to the Aman Resorts business”.
85.	As to the injunctions (and equivalent undertakings) in respect of capital calls, it is alleged that these had the result that, instead of receiving a capital injection of at least TIL’s share of US$ 60m (c.US$ 39m) on 3 July 2014, or at least TIL’s share of US$ 50m (c.US$ 32.5m) on 8 August 2014, the JVC received on 3 September 2014 only US$ 7.47m (i.e. TIL’s share of the US$ 11.5m which was called on 19 August 2014 and was unopposed by PHRL).
86.	Mr Doronin’s evidence is that the Aman business is undercapitalised, a view which does not appear controversial. He states that the delay in funding resulted in a number of projects and upgrades being put on hold for lack of financing, and in Aman falling behind its competitors who, according to Mr Doronin, now have facilities superior to Aman’s. Mr Doronin states that the Tokyo hotel has been a key project for Aman, that it was supposed to open in October 2014, and that because of delays in getting funding the full opening only took place in March 2015, which has caused loss and damage, including loss of revenue because the hotel was not able to take full advantage of the important Christmas holiday period. As I have explained, the envisaged date of opening, together with the extent of opening envisaged, are matters of dispute which I am not in a position to resolve.
87.	Mr Doronin also states that lack of financing has prevented the business from capitalising on other opportunities, such as purchasing land for future hotels and the development of villas for sale, and has thereby frustrated its ability to grow and increase profitability.
88.	Apart from these heads, it is said that had funds been available they could at the very least have been used to reduce the business’s very significant debt burden, potentially saving interest of c.US$ 12m for the period July 2014-March 2016 (when this litigation might reasonably be concluded) if the US$ 60 million subject to the Newman Order had been used for this purpose, or alternatively saving c.US$ 4.8m if US$ 20m had been used.
89.	Again, this evidence and these arguments are not accepted by PHRL, although it does not appear to be in dispute that the business’s finance costs are very considerable.  Nevertheless, as with the losses alleged to arise from the Zecha injunction, Mr Doronin’s evidence cannot be dismissed as so implausible that I am in a position to determine at this stage, even on a provisional basis, the validity or quantum of such losses as it is suggested may arise. In its own evidence in response to the Interim Payment application, PHRL recognises the difficulty of engaging in a quantification of loss exercise at this stage, on the basis of the evidence now available (see Mr Dunn’s eighth witness statement, paragraphs 14-16). 
90.	The upshot is that I am not in a position to exclude as unrealistic or implausible the prospect that significant losses might have arisen and/or might arise as a result of the interim relief obtained by PHRL which benefits from the fortified cross-undertakings, and that such losses might be in the order of US$ 10m. 
Unjust or oppressive
91.	In the light of all the evidence, and the considerations already discussed in relation to material change of circumstances/good cause, it is not unjust or oppressive to hold PHRL to its undertaking to maintain US$ 10m in court as fortification in respect of its various cross-undertakings in damages. Although PHRL has expressed a wish to use that money to defray its costs of these proceedings, it has not argued that tying up the funds creates any hardship or prejudices the company. As seen, PHRL is not pursuing any “stifling” argument. 
Conclusion on Payment Out Application
92.	For these reasons the Payment Out Application is refused.
The Interim Payment Application
93.	The Interim Payment Application by the Sherway defendants, seeking an interim payment from PHRL of c.US$ 23,426,041 pursuant to CPR 25.7, arises from the Sherway Agreements. The Sherway defendants submit that that sum, together with interest, is the “irreducible minimum” that they can expect to receive at trial.
Relevant contractual provisions
94.	The Loan Agreement, to which I have already referred at paragraphs 6 and 7 above, contains the following provisions:
•	By clause 2.1 Sherway agreed to make available to PHRL a loan facility of US$ 50 million in two tranches, defined as ‘Tranche A’ (US$ 26,573,959) and ‘Tranche B’ (US$ 23,426,041).
•	By clause 13.1.3 PHRL undertook to make certain share transfers. In particular, PHRL undertook, on receipt of consent from Pontwelly Holding Company Ltd (“Pontwelly”) (a company partly owned by Mr Doronin), to transfer all its shares in the JVC to Holdings, and then to transfer 38.71% of the issued shares in Holdings to Sherway. This would give Sherway (indirectly) a nearly 14% shareholding in the JVC.
•	Clause 14.2.2 provided that if there was an “Event of Default” in the obligation to transfer the shares under clause 13.1.3, then Sherway would have the right to acquire the shares owned by PHRL in the JVC at 80% of the “Fair Value”.
•	Clause 7.1.2 stated that “Upon [PHRL] fulfilling all of its obligations under clause 13.1.1 of this Agreement in accordance with clause 13.1.1, it shall be deemed to have repaid Tranche A of the Loan and the amount outstanding in respect of Tranche A shall be deemed to be zero.”
•	Clause 7.1.1 dealt with the timing of the obligation to repay the loan. The default position under that clause is that both Tranches A & B of the Loan are repayable on demand. However clause 7.1.1(c) provides that if PHRL has fulfilled its obligations under clause 13.1.1 then the loan ceases to be repayable on demand and (by clause 7.1.2) Tranche A is deemed paid and Tranche B becomes repayable on “the Final Repayment Date” i.e. 2 January 2015.
The events
95.	The US$ 50 million was advanced to PHRL and drawn down in full on 2 April 2014. The same day, pursuant to clause 13.1.3, PHRL sent a request for consent to Pontwelly in the form provided for in the Loan Agreement. Pontwelly responded by letter dated 27 May 2014. There is a dispute between the parties, which I am told that I do not need to consider or resolve, as to whether that letter and/or a further letter dated 2 June 2014 amounted to consent within the meaning of the relevant provision of the Loan Agreement. PHRL maintains it was not a valid consent; the Sherway defendants assert that it was.
96.	In any event, it is common ground that the transfer of shares in Holdings to Sherway under clause 13.1.3 has not taken place. Sherway claims that accordingly, by virtue of clause 7.1, both tranches of the US$ 50m loan remain payable on demand. 
97.	By letter dated 17 July 2014, PHRL gave notice of rescission of the Sherway Agreements on grounds of alleged fraudulent, alternatively negligent, misrepresentation by Mr Eliasch, acting for himself and on behalf of Sherway. On 2 October 2014, Sherway demanded repayment of Tranche B of the loan (together with interest accrued up to that time in approximately the sum of US$ 1.3m) pursuant to the terms of the Loan Agreement. I am told that Tranche A was not demanded as Sherway argues that Pontwelly has duly consented and therefore PHRL is bound to make the share transfers.
Sherway’s case
98.	The basis for the application is very simple. Sherway submits that although the court cannot, at this stage of the proceedings, determine whether or not PHRL is entitled to rescind the Sherway Agreements on grounds of misrepresentation, one of two possible outcomes at trial is bound to occur: either PHRL’s claim for rescission will succeed or it will fail.   
99.	If it succeeds, then PHRL will be granted a declaration that the Loan Agreement has been rescinded. PHRL will be relieved of the obligation to transfer the JVC shares to Sherway, but it will be ordered to repay the US$ 50 million to Sherway by way of “counter restitution”, subject to the issue of PHRL’s claim for a set-off in respect of any damages which it may recover.
100.	If, on the other hand, PHRL’s claim for rescission fails, then Sherway submits that the position will be as follows: Sherway will be entitled either to receive PHRL’s JVC shares at 80% of Fair Value (if the Pontwelly consent was valid) or to repayment of Tranche A with interest. In either case Sherway will be entitled to repayment of Tranche B with interest.
101.	Since, according to Sherway, one of these two scenarios must occur, it is bound to recover at least US$ 23.4 million (plus interest) at trial.
102.	Sherway relies upon a number of statements by PHRL or its representatives as indicating PHRL’s acknowledgment that if rescission is granted Sherway will be entitled to the return of the US$ 50 million loan, subject to any set off. These statements include the 17 July 2014 letter already referred to, in which PHRL’s solicitors state:
“Our client is willing and able to arrange for the repayment of the sum of USD50 million loaned to it, together with any other sums to which Sherway may be entitled, less any damages it is awarded against Sherway in respect of its breaches of contract or its misrepresentations”
103.	Sherway points to similar statements in PHRL’s written pleadings, and again more recently by leading counsel for PHRL at the hearing before Judge Pelling.
PHRL’s case
104.	PHRL contends:
(1) that there is no jurisdiction to award an interim payment in this case because the conditions of CPR Part 25 are not satisfied; and
(2) that in any event, an order for interim payment is precluded by the set off of damages to which PHRL is entitled. 
105.	A further possible objection foreshadowed in PHRL’s evidence (based on the alleged “stifling” effect of the application, if granted) was not pursued before me.
(1) Objection based on jurisdiction 
106.	Of the various alternative conditions for the making of an interim payment set out in CPR 25.7, it is common ground that the only one relevant for present purposes is CPR 25.7(1)(c), which provides:
“(1) The court may only make an order for an interim payment where any of the following conditions are satisfied –
... 
(c) it is satisfied that, if the claim went to trial, the claimant would obtain judgment for a substantial amount of money (other than costs) against the defendant from whom he is seeking an order for an interim payment.”
107.	PHRL submits that if the claim for rescission succeeds, whilst PHRL will obtain a declaration or order for rescission only on terms that it must repay Sherway the US$ 50m (less set off of any damages etc), nevertheless Sherway will not obtain “judgment for” that amount “against” PHRL, within the meaning of CPR 25.7(1)(c).
108.	PHRL relies upon the decision of Teare J in Deutsche Bank AG v Unitech Global Limited [2014] EWHC 3117 (Comm) (“Deutsche Bank (2)”). In that case, the claimant bank sought payment of US$ 177 million allegedly due under a loan agreement. By way of defence, the defendants claimed a right to rescind the loan agreement on grounds of misrepresentation. It was common ground before the learned Judge that if rescission was granted, it would be on terms that the defendants provide counter-restitution of the unpaid principal and interest of about US$ 120 million. As in the present case, the issue was whether in that event there would be a “judgment for” the latter sum “against” the defendants within the meaning of CPR 25.7(1)(c), so as to found jurisdiction to make an interim payment. 
109.	Teare J answered that question in the negative. His reasoning is set out in the following two paragraphs of his judgment:
“16. Section 32 of the Senior Courts Act 1981 contains a definition of an interim payment. "Interim payment, in relation to a party to any proceedings, means a payment on account of any damages, debt or other sum (excluding costs) which that party may be held liable to pay to or for the benefit of another party to the proceedings if a final judgment or order of the court in the proceedings is given or made in favour of that other party." The same, or essentially the same, definition is found in CPR 25.1(k). Mr. Handyside said that this definition was wide enough to cover an order for counter-restitution because although such sum may not be damages or a debt it was some "other sum". That is true but the question remains whether it can properly be said, for the purposes of CPR 25.7, that the bank "would obtain judgment for a substantial amount of money (other than costs) against" the borrowers. In one, somewhat loose sense, that could be said. The bank has commenced proceedings seeking payment of a large sum and, it is to be assumed, proceeds to trial. At that trial the court gives judgment in which it grants rescission on terms that US$120m. be paid to the bank. Thus the bank would have obtained judgment for a substantial sum of money. However, I do not consider that it can properly be said that, if the bank's claim to sums due under the loan agreement is dismissed because the defence of rescission succeeds on terms that the borrower pays US$120m. to the bank, the bank has "obtained judgment" for US$120m. When one speaks of a claimant obtaining judgment, at any rate in the context of the CPR, that ordinarily means that the judgment gives effect to the cause of action alleged by the claimant. The bank's cause of action is for sums due under the loan agreement which it assesses in the sum of US$177m. It does not advance a cause of action based upon the requirement that a defendant who establishes a defence of rescission must give counter-restitution. Rather, the bank denies that the defence of rescission is available to the borrowers. A judgment that the bank's claim fails and that the defence succeeds on terms that US$120m. be paid to the bank would not ordinarily be regarded as the bank obtaining judgment for that sum. I have therefore concluded that I cannot order an interim payment pursuant to Part 25.7. 
17. As with Mr. Handyside's other arguments I recognise that this result can be said to be unsatisfactory because the borrower cannot achieve a better result than having to pay the bank a minimum of US$120m. But I cannot give Part 25.7 (any more than I can give Part 24 or Part 3) an interpretation which it cannot properly bear simply to give effect to that reality.”
110.	I am told that this decision is subject to an appeal to the Court of Appeal, which is currently expected to hear it in February 2016.
111.	Sherway’s primary argument is that Deutsche Bank (2) does not assist PHRL because it is distinguishable from the present case. Only if that argument fails does Mr Brindle submit that Deutsche Bank (2) was wrongly decided.
112.	Is Deutsche Bank (2) distinguishable? Mr Brindle refers to Teare J’s statement, in the passage cited above, that the claimant bank had not advanced “a cause of action based upon the requirement that the defendant give counter-restitution.” Mr Brindle points to the fact that in the present case Sherway is expressly advancing such a cause of action in its counterclaim, albeit as an alternative to Sherway’s primary case that PHRL is not entitled to rescind, and without prejudice to Sherway’s contractual counterclaims. In that regard Mr Brindle refers to paragraph 270 of Sherway’s pleading, which alleges that “rescission is available only if PHRL gives counter-restitution of the sum of US$ 50 million plus interest”. That sum is then counterclaimed “as money had and received by PHRL to Sherway’s use”. 
113.	Mr Brindle argues that if PHRL’s rescission claim were to succeed, Sherway would seek an order for payment of the appropriate amount of counter-restitution, and the court’s judgment together with its order would reflect this. Accordingly, the problem identified by Teare J in Deutsche Bank (2) does not exist here, because a cause of action for the amount of counter-restitution is pleaded. It follows that the court has jurisdiction to make the interim order sought under CPR 25.7.
114.	The problem with this argument is that, as Mr Brindle accepted, in the event of one party seeking rescission the other party does not need to plead any cause of action in order to obtain the counter-restitution to which he is entitled as the price of the contract being rescinded – that entitlement will simply become a term of the order for rescission, since a party obtaining rescission must make “restitutio in integrum”. In my view that was what Teare J was saying at paragraph 16 of his judgment. I do not understand him to have decided the application on a pleading point, and to have been implying that, if the claimant bank had been prudent enough to make a separate claim for that to which he would in any event be entitled on rescission, this would have affected his decision on jurisdiction.
115.	This is enough to deal with Sherway’s submission that Deutsche Bank (2) can be distinguished from the present case, since Mr Brindle accepts that there is no other basis for distinguishing it. It follows, in accordance with well-established principles, that I ought to follow Deutsche Bank (2) unless I am convinced that it is wrong (see, for example, Huddersfield Police Authority v Watson [1947] KB 842). 
116.	Mr Brindle submits that the decision is wrong to the extent that the reference to “judgment” in CPR 25.7(1)(c) is interpreted as a judgment on a cause of action which the party seeking an interim payment has put forward. That, he submits, is too narrow a construction. When the rule is properly construed, either no “judgment” is required, or, if it is required, an order for counter-restitution represents a “judgment” for this purpose. In the course of the argument these two points became conflated, and they are undoubtedly very closely related, if not the same point.
117.	Mr Brindle took me through the following history and evolution of what is now CPR 25.7. The power to order an interim payment was first created by s.20 Administration of Justice Act 1969, and was originally reflected in RSC Order 29, which at the beginning was limited to personal injury claims. In view of that limitation, and the absence of any inherent jurisdiction to make such an order, the Court of Appeal held in Moore v Assignment Courier Ltd [1977] 1 WLR 638, that there was no power to grant an interim payment to a landlord claiming possession and mesne profits, even though he would be entitled either to mesne profits (if he won on forfeiture of the lease) or to rent (if he lost).
118.	This lacuna was filled by an amendment to RSC Order 29 introducing a specific power to order interim payment in such a case.  The equivalent power is now to be found in CPR Part 25.7(1)(d) which provides that in claims for possession of land, the claimant is entitled to an interim payment where the court is satisfied that even if the claim for possession fails the defendant “would be held liable” to pay for occupation. 
119.	Mr Brindle pointed out that neither s.20 of the Administration of Justice Act nor s.32 of the Senior Courts Act imposes an obligation for a party to “obtain judgment”. They refer to a sum which a “party may be held liable to pay to or for the benefit of another party to the proceedings if a final judgment or order of the court in the proceedings is given or made in favour of that other party.” (My emphasis.) He submitted that an order for counter-restitution would be within the scope of that provision.
120.	Mr Brindle next submitted that there was clearly jurisdiction to make an order for interim payment where payment will be received by the applicant under one or other of alternative scenarios, without it being necessary to determine which of them will be realised. Nor did it matter that, on one of these alternative bases, the claimant’s primary claim failed, as, for example, in the claim for possession and mesne profits versus rent in the Moore case (above). 
121.	For these propositions Mr Brindle also referred to the following observations of the court in Schott Kem v Bentley [1991] 1 QB 61:
“where a plaintiff makes alternative claims against a defendant, for example, for rent with an alternative claim for mesne profits, or for the price of goods with an alternative claim for damages, the court can order an interim payment without reaching a conclusion at that stage as to which of the alternative claims against the defendant will succeed at the trial, provided it is satisfied that the plaintiff will recover a substantial sum under one head or the other: see the Shearson Lehman case [1987] 1 W.L.R. 480. Indeed, as Nicholls L.J. pointed out in Shearson Lehman, at p. 493: 
“it is apparent from the express terms of rule 12 that it is not intended that, as a prerequisite to making an interim payment order, the court must be satisfied in every case on the precise legal label to be attached to the sum in question."
122.	Mr Brindle submitted that it is commonplace for a litigant to pursue a claim on several different bases, perhaps inconsistent with each other, and succeed on one or more at trial. He argued that in such cases there is a “judgment”, and it cannot matter that the payment is received by the claimant pursuant to one cause of action (e.g. restitution) rather than another (e.g. breach of contract).
123.	Further, in Mr Brindle’s submission it was clear that the purpose of the expansion in the scope of the interim payment rules, pursuant to the enabling provision now contained in s.32 Senior Courts Act 1981, was to allow an order to be made in that kind of situation, which includes the present case. CPR 25.7(1)(c) should be construed purposively. In that regard he referred to the approach to the interpretation of the CPR, set out in the White Book (see Volume 2, at 12-38): 
“The new rules have been deliberately framed so that the approach of those constructing them can be more purposive and less technical. It is the responsibility of the judiciary to make the new system work.”
124.	In the light of these considerations, it was submitted that Teare J was wrong to hold that he had no jurisdiction to make an interim payment order in that case, given that the bank would receive a payment either on its claim under the loan, or by way of counter-restitution if the borrower succeeded on its defence of rescission. 
125.	In the same way, it was submitted that in the present case, if PHRL’s case on rescission were to be successful the court’s order would include a declaration that the Loan Agreement was rescinded, together with an order that PHRL pay US$ 50 million to Sherway. That latter order would be enforceable, and it was therefore difficult to see how this could be characterised as anything other than Sherway “obtaining judgment” against PHRL. Mr Brindle also relied upon what he submitted were unintended consequences of the Judge’s interpretation for other parts of the CPR, including Part 36. 
126.	Mr Brisby disputed this analysis. His essential argument was as follows: assuming PHRL succeeds in its claim for rescission of the relevant agreements in equity for non-fraudulent misrepresentation, the court will grant a decree of rescission, a condition of which will be that PHRL makes restitutio in integrum, or counter-restitution. Mr Brisby submits that the effect of such “conditional relief” is that, although the claimant gains no right to the relief unless and until the terms imposed are met, he has a choice whether or not to meet them and thus secure rescission. It is a necessary corollary of this that the party against whom rescission is sought (Sherway in the present case) has no independent right to have the terms satisfied, and no independent cause of action in respect of the counter-restitution. Mr Brisby supported these submissions by reference to passages in O’Sullivan, Elliott and Zakrzewski: “The Law of Rescission” (2nd Ed.) at 15.48-15.52, and the case law referred to in those passages.
127.	Mr Brisby then submitted that Sherway is not in a position to satisfy the court at this stage that, if rescission is granted on terms that counter-restitution is made by PHRL, the condition of payment will not be discharged by PHRL. In those circumstances the court cannot at this stage be sure that there will be any “judgment” against PHRL, since an order for rescission on terms of counter-restitution will not be such a “judgment” for the reasons given by Teare J in Deutsche Bank (2).
128.	Mr Brindle took issue with the argument that the relief of rescission here would be “conditional” and that PHRL would have a choice whether to take it up and pay the counter-restitution which would be ordered by the court. He accepted that that form of relief is possible, but submits that it was more common in earlier times than now. He also accepted that in the absence of rescission by PHRL Sherway has no independent claim to counter-restitution. However, he emphasised that in the present case PHRL have unequivocally elected to rescind the agreements in question and have asserted on several occasions that they are willing and able to pay whatever is due by way of counter-restitution. Mr Brindle said that it is wholly unrealistic to suggest that in the circumstances of this case the court would countenance an order which gave PHRL the option not to provide counter-restitution and thereby to decline rescission. His argument is that if there is rescission then Sherway will obtain an enforceable right to counter-restitution.
129.	However, this argument assumes that which Sherway seeks to demonstrate, namely that the court has the power to impose counter-restitution, in effect as a debt to be paid by the applicant for rescission, rather than merely as a condition of declaring the contract in question rescinded.
130.	Mr Brindle relied upon a number of passages in Chitty on Contracts (31st ed) as authority for the following propositions: The right to rescind for fraudulent misrepresentation is unimpaired by the Misrepresentation Act 1967, but there is no longer any absolute right to rescind for negligent or innocent misrepresentation, as the court has a discretion to award damages in lieu (6.112); the remedy of rescission is not necessarily a judicial one – a representee is entitled to rescind for misrepresentation without invoking the assistance of the court at all, subject to the court’s statutory discretion to refuse rescission in certain cases – the process of rescission is essentially the act of the party rescinding, although as a practical matter that party is often likely to require the court’s help (6.116). Mr Brindle then referred to further passages dealing with the requirement for restitutio in integrum, and pointed to the absence of any reference to such consequential relief as being conditional or optional. He also prayed in aid on this point paragraph 21 of Teare J’s judgment in Deutsche Bank (2). However, I do not consider that this takes the matter further, as Teare J was there dealing with what he regarded as a pure pleading point.
131.	It seems to me that one of the difficulties in considering the cases and discussions about restitutio in integrum is that they are often dealing with the requirement for restitutio to be made by the party who is resisting rescission, rather than by the rescinding party. In other words, they are not always concerned with counter-restitution. In the former case there is obviously compulsion in the court’s consequential order since part of the relief sought by the rescinding party is likely to be restitutio, whereas on any view this is not necessarily so in relation to counter-restitution, as Mr Brindle accepts. Further, a debate still seems to rage about whether, at least in the case of innocent and negligent misrepresentation, rescission is essentially by act of a party or act of the court, and also about the existence and nature of the court’s power to impose terms on the grant of the remedy (see Misrepresentation, Mistake and Non-Disclosure (3rd ed) by Professor John Cartwright, particularly pages 121-3 and the authorities and texts cited at footnotes 83-88). There are passages and cases there which provide comfort to both Mr Brindle and Mr Brisby.  
132.	On the question whether rescission and counter-restitution are by their nature conditional/optional, there are some helpful indications in the judgments of the Court of Appeal in Dunbar Bank PLC v  Nadeem and anor [1998] EWCA Civ 1027. There is no need to recite the facts, save that Mrs Nadeem was seeking to rescind a legal charge on property said to have been obtained by undue influence. Millett LJ (as he then was) stated:
“2. The remedy of rescission is an equitable remedy. It is well established that it is a condition of relief that the party obtaining rescission should make restitutio in integrum or, in modern terminology, counter restitution to the other party. If counter restitution cannot be made the claim to rescission fails: see Erlanger v New Sombrero Phosphate Co (1878) 3 App Cas 1218. I reject Mr Price's submission that, had the cross-appeal not succeeded, Mrs Nadeem would have had an unqualified, unconditional right to rescission. She never had any such right. Her right to rescission was conditional on her making a counter restitution.” 
133.	Morritt LJ (as he then was) said:
“The applicant for an order for a transaction to be set aside on the ground of undue influence or for any other invalidating tendency, as they were described by Lord Browne-Wilkinson in Barclays Bank Plc v O'Brien (ibid) 190, must as a condition for relief give back all he obtained from the transaction. See Erlanger v New Sombrero Phosphate Co (1878) 3 App Cas 1218 at pp 1278-1279…. 
It seems to me to follow from this analysis that the obligation of the Wife to make restitution as a condition for the setting aside of the legal charge is to restore to the Husband, if she can, the beneficial interest in the lease she acquired in consequence of the transactions as a whole. It is, in my view, plain that the Wife cannot retain the beneficial interest in the lease if she is to escape from liability under the facility letter and legal charge.
134.	Potter LJ, too, used conditional language similar to that which I have emboldened in the above passages. That language, although not by any means conclusive of the nature of an order for rescission on terms that counter-restitution is made, appears to carry an implication which supports Mr Brisby’s submission that it is essentially conditional. 
135.	I was not shown any authority that the court has power to make a compulsory order for counter-restitution. Although the matter is by no means free from doubt, I am not satisfied that it can be done, and I prefer Mr Brisby’s submissions on this point. In any event, the court admittedly can and often does make an order for rescission conditional on counter-restitution being provided, which renders it difficult to assume that it would not take that course in this case.
136.	The fact that, on the contingency that its resistance to rescission may fail, Sherway has included in its counterclaim an (admittedly otiose) claim for counter-restitution on the basis of unjust enrichment and money had and received does not, in my view, materially change the position from that which confronted Teare J. Nor does it result in a situation equivalent to the cases discussed earlier, where a claimant makes inconsistent claims in the alternative (eg a claim for possession and mesne profits, alternatively for rent). In those cases the claimant clearly had an independent cause of action in each of the two alternative scenarios. 
137.	This still leaves the question whether the conditions for an interim payment under CPR 25.7(1)(c) are capable of being satisfied by an order for rescission which is merely conditional on counter-restitution. On that question, I accept that there is force in Mr Brindle’s arguments about the wider scope of the enabling provision in the Senior Courts Act 1981 as compared with the apparently more limited terms in which CPR 25.7(1)(c) is expressed. It is also no doubt correct that the framers of the CPR intended the rules to be susceptible to a more purposive approach to interpretation. Further, it is unsatisfactory that, in a case where on each of two alternative scenarios a party will in fact recover a substantial amount of money from the other side, there is no jurisdiction to order an interim payment.
138.	Nevertheless, like Teare J I find it very difficult to treat a declaration of rescission, given on terms that counter-restitution is made by the applicant for rescission, as “judgment for” a sum of money “against” the applicant. On balance I prefer Mr Brisby’s arguments. I am certainly not in a position to find that Deutsche Bank (2) is plainly wrong. 
139.	It follows that I do not consider that I have jurisdiction to order an interim payment against PHRL.
(2) Is interim payment precluded by PHRL cross-claims for damages?
(i) Introduction 
140.	In case I am wrong about jurisdiction I will consider the other objection raised by PHRL to the interim payment order sought.
141.	In addition to the conditions discussed above, CPR 25.7 also provides that:
“(4) The court must not order an interim payment of more than a reasonable proportion of the likely amount of the final judgment.
(5) The court must take into account—
...
(b) any relevant set-off or counterclaim.” 
142.	In these proceedings, as well as seeking a declaration that it is entitled to rescind the various contractual arrangements as a result of the fraudulent or negligent misrepresentations, PHRL also claims damages from the Sherway defendants for those alleged misrepresentations at common law and/or under s.2 of the Misrepresentation Act 1967. These essentially concern assurances said to have been given by Mr Eliasch that he was not a good friend of Mr Doronin and would act in Mr Amanat’s/PHRL’s best interests and not in Mr Doronin’s interests in the running of the JVC. In the alternative, PHRL alleges that Mr Eliasch and/or Sherway are in repudiatory breach of the agreements and claims a declaration that it has accepted the breaches and thereby terminated them, claiming damages for the breaches, including any diminution in value of its shareholding in the JVC. In its pleading PHRL reserves the right to provide further particulars of loss or damage and states that it will seek to rely at trial on the report of an expert accountant. Further causes of action against the Sherway defendants are pleaded, including inducing or procuring a breach of contract, causing loss by unlawful means, and conspiracy (“the Economic Torts”). In these it is claimed that the Sherway defendants induced or procured or assisted TIL’s and JVC’s breaches of the SHA, causing PHRL loss and damage which also amounted to causing loss by unlawful means. It is further alleged that the Sherway defendants conspired with Mr Doronin and TIL to cause loss to PHRL by agreeing inter alia to breach the SHA and the Sherway Agreements, and to interfere with PHRL’s contractual relations with a third party investor called Jinpeng Group Limited, in an effort to have PHRL wound up, causing loss and damage to PHRL.  
143.	In PHRL’s defence to counterclaim PHRL pleads that it will set-off the sums claimed from Sherway against any liability which it has to Sherway.
144.	The Sherway defendants contend that the alleged set-off does not assist PHRL because: 
(a) it is barred by the “no set-off” clause in the Loan Agreement;
(b) the allegations do not establish an equitable set-off, as distinct from a free-standing counterclaim;
(c) some of the counterclaims are contractual and therefore inconsistent with rescission;
(d) in any event, there is no evidence to support the alleged set-off and counterclaims.
(ii) The “no set-off” clause 
145.	The Loan Agreement provides by clause 9.1 that “All payments made by [PHRL] …. shall be…. in full, without any deduction set-off or counterclaim”.
146.	It appeared to be common ground that this clause would in principle be effective to prevent set-off or counterclaim reducing payments due to Sherway under the agreements to which it applies. The effectiveness of such clauses where a counterclaim is based upon deceit, and even where the contract of which it forms part was induced by fraud, was discussed and endorsed by Teare J in Deutsche Bank AG and others v Unitech Global Limited and another [2013] EWHC 2793 (Comm) (“Deutsche Bank (1)”). The learned Judge relied upon the decisions of Mance J (as he then was) in Skipskreditt v Emperor Navigation [1998] 1 Lloyd's Reports 66 (at pp.76-77), and Hamblen J. in Deutsche Bank (Suisse) SA v Gulzar Ahmed Khan and others [2013] EWHC 482 (Comm) (at paragraphs 323-329), for the following conclusions:
“77. Accordingly I consider that it is now well-established that the no set-off clause in the present case will disable the Defendants from setting off a counterclaim based upon fraud in defence of the Claimants' claims. The Defendants have no real prospect of establishing the contrary.
78. I have noted from issue 8.1 and 8.2 of the Defendants' list of issues that the Defendants draw a distinction between the application of a no set-off clause where the agreement of which it forms part has been induced by fraud and where the counterclaim relates to fraud. However, the reasoning of Mance J. in Skipskreditt v Emperor Navigation applies to both cases. In both cases the allegations of fraud by the lender would be highly contentious and would require to be sorted out separately in a manner which did not impinge on the performance of the loan in the meantime.”
147.	However, the parties differed as to whether clause 9.1 could still apply in the event that the Loan Agreement was rescinded. Mr Brisby did not dispute that the clause would be effective in barring set-off in the event that rescission did not take place, but submitted that it could not survive rescission of the agreement of which it formed part. Mr Brindle argued the contrary, in reliance upon what he submitted was Teare J’s implied approval of counsel’s argument to that effect in paragraph 5 of his judgment Deutsche Bank (2). There the Judge appears to be recording counsel’s reference back to the Judge’s discussion in Deutsche Bank (1) of  the effect of “no set-off” clauses in cases of fraud. 
148.	In my judgment Mr Brindle’s argument reads too much into a passage which is accepted to be a recitation of counsels’ argument without any express conclusion by the Judge. Moreover, counsel’s reference back to Deutsche Bank (1) does not assist Sherway, as the discussion of “no set-off” clauses in that case did not touch specifically on the question of rescission. In the absence of authority to that effect, I do not see how clause 9.1 of the Loan Agreement can remain operative in the event that the whole contract is held to be rescinded.
(iii) What damages claims are relevant?   
149.	Mr Brisby accepts that the only relevant cross-claims are those which sound in tort, and he does not rely upon any of PHRL’s contractual claims, as these are vulnerable to PHRL’s claim for rescission. This measure of consensus appears to deal with Mr Brindle’s objection (c) at paragraph 144 above.
150.	In relation to objection (b), Mr Brindle submitted that none of PHRL’s tortious cross-claims identified by PHRL in the Particulars of Claim gave rise to an equitable set-off, the test for which is whether the cross-claims are “so closely connected with [the claimant’s] demands that it would be manifestly unjust to allow him to enforce payment without taking into account the cross-claim” (see per Rix LJ in Geldof Metaalconstructie NV v Simon Carves Ltd [2010] EWCA Civ 667, at paragraph 43(vi)). In his submission, none of PHRL’s cross-claims against Sherway had a sufficiently close connection to Sherway’s right to repayment under the Loan Agreement that it would be manifestly unjust for Sherway to receive repayment without those cross-claims being set-off. Further, he submitted that there was no cross-claim short of an equitable set-off which was “relevant” and therefore eligible to be taken into account for the purposes of CPR 25.7(5)(b).
151.	Mr Brisby took issue with these submissions. He submitted that here all the tortious claims and cross-claims arise out of the Sherway Agreements, and that these comprise (as well as certain other related agreements) the two principal agreements ie the Loan Agreement and what has been called “the Holdings SHA”, which were negotiated at the same time and entered into on the same day. The Sherway Agreements reflected the terms on which Sherway would become a partner with PHRL in relation to the latter's stake in the JVC, through the medium of Holdings. PHRL has submitted that the Sherway Agreements should be regarded as one overarching agreement, which include the terms of the individual agreements and certain additional provisions. Mr Brisby contends that PHRL’s claims for misrepresentation go to both the principal agreements, each of which was entered into in reliance on the truth of the same two misrepresentations. 
152.	By way of example of the close connection between the Loan Agreement and the Holdings SHA, Mr Brisby referred to clause 14 of the former, relating to “events of default”. One such event is “a material breach in the performance of any obligation of a Relevant Party in any Transaction Document to which it is a party…..”. “Transaction Documents” are defined as including “….(b) the Shareholders' Agreement; and any other agreement designated as such in writing by the Lender and the Borrower.” The “Shareholders Agreement” is the Holdings SHA. Mr Brisby stated that there were other such examples, in the light of which it was fanciful to suggest the various agreements and claims are not entirely interconnected.
153.	Mr Brisby also relied on the findings of Judge Pelling, where, in rejecting PHRL’s attempt to have Mr Eliasch removed from the board of the JVC, he said in the Pelling Judgment:
“…Mr Eliasch is fully entitled to say, as he does, that this was an arrangement he insisted upon for the purpose of protecting what was in effect his investment in JVC of US$50 million. Mr Brisby submitted that this was unlikely to be so given the terms of the Sherway loan and it was made to PHRL not JVC. Whilst I cannot and do not say this point is completely without substance, I conclude the point is one that is at best arguable. PHRL was a special purpose vehicle and its only or main purpose was to invest in JVC. The sole purpose of Mr Eliasch making the loan and entering into the structure I have described is because he wished to participate in JVC not PHRL. The money, or a substantial part of it, was going to JVC and it was the activities of JVC that Mr Eliasch would have had to have been involved in if he was to see a reward in his investment or prevent his investment being lost or severely reduced."
154.	Mr Brisby pointed, too, to the fact that the Holdings SHA made express provision for the way in which PHRL’s stake in the JVC (and therefore the relationship with PHRL’s co-joint venturer, TIL) would be managed in the context of the business of the JVC, and the way in which the nominated directors of the JVC would conduct themselves. In that regard he drew attention, by way of example, to clause 4 of the Holdings SHA.
155.	While not conceding the point, Mr Brindle did not strongly argue that these various agreements are not closely interwoven. They clearly are. His argument was rather that the tortious claims upon which PHRL must rely were not sufficiently connected with Sherway’s claim under the Loan Agreement to render them eligible as equitable set-off against that claim, given in particular that the Economic Torts alleged relate to procuring, inducing etc breaches of an agreement to which the Sherway defendants were not party, namely the SHA.
156.	 I do not agree. In so far as it would be necessary for the court to find an equitable set-off in order to take account of a cross-claim for the purposes of CPR 25.7(5)(b), then I would hold that the Geldof  test is satisfied here and that PHRL’s cross-claims for misrepresentation and for the Economic Torts are sufficiently connected with the Sherway claim that it would be manifestly unjust to allow the latter to be enforced without taking into account the cross-claims. However, even if the closeness of the connections was not such as to give rise to an equitable set-off, I consider that the circumstances in which those cross-claims are said to arise are such that, in principle, I would still have to regard them as “relevant” under CPR 25.7(5)(b), and to take them into account when determining the amount of an interim payment. I do not see how it could be right to do otherwise, given the concatenation of all aspects of this litigation.

(iv) Evidence on PHRL’s cross-claims   
157.	As noted earlier, Sherway seeks an interim payment order in the sum of US$ 23 million, on the basis that it is bound to recover at least that amount (plus interest) at trial. However, Mr Brindle contended that in order to make any inroad at all on that figure, PHRL’s cross-claims would need to exceed c.US$ 26 million. That was on the basis that PHRL’s cross-claims only arise if it succeeds on its misrepresentation argument, and in that event Sherway will be entitled to the US$ 50 million on rescission. He then submits that there is no set-off available to PHRL which will get anywhere near US$ 26 million, and therefore Sherway should get its interim payment of US$ 23 (or whatever lesser sum the court considers appropriate).
158.	In her fifth witness statement Ms Sharon Kennedy, a solicitor for the Sherway defendants, takes issue with the lack of particularisation of PHRL’s damages claims as pleaded. She states that the only exception is the particularised loss claimed to have arisen as a result of the Sherway defendants conspiring to interfere with PHRL’s contractual relations with Jinpeng Group Limited. There PHRL claims for the loss which it alleges may be suffered “in the event that PHRL is forced to abandon its case that Jinpeng’s loan has been converted into equity and to repay Jinpeng c.US$ 35 million in order to avoid liquidation”. Ms Kennedy states that it is unclear how any decision which PHRL voluntarily decides to take in its litigation with Jinpeng could be visited on Sherway, and that in any event, PHRL was not forced to abandon its case and therefore the anticipated loss has not materialised. 
159.	PHRL’s position is that its cross-claims against the Sherway defendants are likely to be very substantial. In his eighth witness statement Mr Dunn responds to Ms Kennedy’s assertions, challenging them generally.
160.	As far as the current position on the Jinpeng loan is concerned, Mr Dunn exhibits a freezing order over PHRL’s assets made in February 2015 in the proceedings in the BVI brought by Jinpeng, to which he says PHRL was obliged to accede as the price of obtaining temporary respite from Jinpeng’s claims pending the outcome of a Hong Kong arbitration. Mr Dunn accepts that the anticipated loss has not materialised but states that it may still occur. He further alleges that Sherway and TIL continue to encourage Jinpeng to pursue PHRL in the BVI courts, where the litigation has so far caused PHRL to incur around £1.1 million of costs and expenses, and further costs are likely.
161.	Mr Dunn also states that another of the components of loss and damage claimed to have been suffered by PHRL as a result of inter alia the Sherway defendants’ tortious acts has been identified by PHRL as the diminution of the value of PHRL’s shareholding in the JVC. Mr Dunn states that this is a head of loss which none of the parties can hope to quantify at this stage, and that it will require expert evidence. In support of the plausibility of this head of loss he prays in aid Mr Eliasch’s own evidence to the effect that PHRL’s shareholding in the JVC was only worth US$ 60 million as at September 2014. Mr Dunn points out that the JVC was acquired in February 2014 for US$ 358 million, and PHRL acquired a 35.2% stake in it corresponding to US$ 126 million. On that basis he states that Mr Eliasch must himself be of the view that the value of PHRL’s shareholding has diminished. PHRL’s case is that any fall in value is as a result of the Defendants’ conduct. However, Mr Brindle pointed to other pasages of Mr Eliasch’s evidence which attributed the current value of PHRL’s shareholding to discrete factors, including the outstanding loan to Pontwelly.
162.	Mr Dunn refers to other specific aspects of the damage said to have been suffered by PHRL, including: loss caused by owning shares in a company run solely by Mr Doronin; loss said to have arisen from the “unlawful forcing out of Mr Zecha as CEO of the JVC”; loss as a result of the alleged unlawful reduction in PHRL’s rights under Schedule 7 of the SHA by reason of Mr Eliasch abstention from voting in a board meeting of the JVC; loss caused by the alleged blocking of refinancing of the Pontwelly loan, an allegation laid at the Sherway defendants’ door on the basis that Mr Eliasch has been made aware of PHRL’s position on refinancing and must at the very least have acquiesced in TIL’s and the JVC’s breaches of the SHA, thus also giving rise to breaches of the Sherway Agreements and to elements of the Economic Torts; and loss as a result of what Mr Dunn describes as a “disastrous marketing and branding plan which is turning Aman Resorts into a mass-market hotel chain.” 
163.	In their submissions the Sherway defendants trenchantly challenge these heads of alleged loss on several grounds. They submit that they are largely unquantified; that any impact on PHRL’s shareholding as a result of Mr Doronin’s participation in the JVC is likely to be resolved one way or another by the litigation and so will have no on-going impact on the value of the shares, which impact is in any event unparticularised, save by reference to the evidence provided by Mr Eliasch in a wholly different context; that any loss from the alleged exclusion of Mr Zecha would be suffered by the JVC, not by PHRL; that the allegation relating to damage to Schedule 7 rights is of the vaguest kind, and cannot realistically give rise to a cause of action against Sherway, as Mr Eliasch abstained from voting in his capacity as a director of the JVC; that the main relief sought for the alleged blocking of the refinancing of the Pontwelly loan is a declaration against TIL, and the claim pleaded against the Sherway defendants is wholly inadequate as a basis for any claim to a set-off; and that the allegation about a disastrous marketing and branding plan is unpleaded and in any event would be a loss to the JVC rather than PHRL.
164.	In summary, the Sherway defendants submit that Mr Dunn has been unable to correct the deficiencies in the pleading and has not put forward a credible claim for damages. Therefore there is no relevant set-off or cross-claim sufficient to impact on the interim payment application.
165.	As to the correct approach in an application of this kind, I was helpfully referred by Mr Brindle to the dictum of Aikens LJ in Revenue and Customs Commissioners v GKN Group [2012] EWCA Civ 57 (at [36]):
“it seems to me that the first thing the judge considering the interim payment application under paragraph (c) has to do is to put himself in the hypothetical position of being the trial judge and then pose the question: would I be satisfied (to the civil standard) on the material before me that this claimant would obtain judgment for a substantial amount of money from this defendant?”
166.	In so doing I must of course take into account “any relevant set-off or counterclaim”. 
167.	I have already found that PHRL’s cross-claims in tort are “relevant” for this purpose, and therefore I must ask myself whether, taking them into account, on the material before me I am satisfied on the balance of probabilities that Sherway would at trial obtain final judgment for a substantial amount of money from PHRL. I am not so satisfied. The simple reason is that the material before me does not enable me to discount, to the extent necessary for me to be so satisfied, that PHRL will recover damages of a magnitude sufficient to make substantial inroads into Sherway’s entitlement to counter-restitution on rescission. My summary above of PHRL’s cross-claims and of the parties’ rival positions in relation to them is, I hope, enough to indicate the difficulty a court has in dealing with an application for an interim payment in litigation as multi-faceted and complex as this. The claim for diminution in PHRL’s shareholding in the JVC, to take but one example, cannot sensibly be assessed or quantified in advance of a trial with expert evidence, and its scale could, depending on the evidence then available, be in the same ball park as the counter-restitution to which Sherway appears in principle to be entitled on rescission.
(v) Conclusion on interim payment on assumption that jurisdiction exists
168.	It follows that if, contrary to my conclusion on the jurisdiction point, the court has power to make an interim payment order in this case, I would not have done so.
Conclusions
169.	For the reasons given above, the Payment Out Application and the Interim Payment Application fail.
170.	The parties are invited to agree and submit to the court for approval an order or orders reflecting these conclusions, together with any consequential matters.