Jersey Unreported Judgments

Strike-Out - reasons for granting plaintiff's application for further and better particulars and refusing application for an unless order.

[2016]JRC182

Royal Court

(Samedi)

10 October 2016

Before     :		Advocate Matthew John Thompson, Master of the Royal Court.
Between	Kuwait Oil Tanker Company SAK		Plaintiff
And	Ms Nouriya Al Mutawa		First Defendant
And	Matthew Chadwick		Second Defendant

Advocate K. L. Hooper for the Plaintiff.

Advocate J. M. Dann for the First Defendant.

CONTENTS OF THE JUDGMENT

		Paras
1.	Introduction	1
2.	Background	2-25
3.	Decision	26-36

judgment

the MASTER:

Introduction

1.        This judgment represents my detailed written reasons for granting the plaintiff's application for further and better particulars of the first defendant's answer but refusing the plaintiff's application for an unless order. 

Background

2.        This judgment follows on from my earlier decision in this matter reported at Kuwait Oil Tanker Company SAK v Al Mutawa & Chadwick [2016] JRC 074 where the general background is set out at paragraphs 2 to 6 which I adopt.  The procedural history up to the date of the last judgment is also set out at paragraphs 10 to 18 which I also adopt. 

3.        In respect of the directions given on 9^TH December, 2015, for reasons set out later in this judgment, it is pertinent to record that at paragraph 4, subject to the first defendant's strike out application not being successful, I gave directions for the parties to exchange expert evidence on the law of succession in the state of Kuwait and the Lebanese Republic. 

4.        Following the determination of the first defendant's strike out application which was dismissed by an act of court dated 1^ST March, 2016, with reasons to follow later, directions were agreed by consent recorded in an act of court dated 3^RD May, 2016.  Paragraph 1 of the consent order provided for the first defendant to file a further witness statement of fact "provided that any such statement so filed shall be confined to a response to the witness statement dated 19th February, 2016 of the plaintiff's witness of fact, Mr Alex Edward Davies, in relation to the first defendant's familial connections."

5.        The witness statement of Mr Davies related to who the relatives were of the first defendant's late brother Faiz Abdul Aziz Almutawa.  This statement was filed in support of the submission of the plaintiff in the previous judgment recorded at paragraph 28 (xiv) as follows:-

"(xiv)  The defence advanced on the basis that monies received from Mr Al-Essa represented re-payment of a debt inherited by the first defendant from Faiz did not sit with the evidence obtained by the plaintiff in respect of who would have been entitled to inherit from Faiz's estate.  By reference to the witness statement of Mr Davies, it is Faiz's children not the first defendant as his sister who would have inherited.  Absent any will, none having been produced, the first defendant would not have inherited.  The payment from Mr Al-Essa could not therefore be justified as being in respect of discharge of a debt which the first defendant had inherited."

6.        The first defendant, following on from the act of court of 3^rd May, 2016, filed a second witness statement.  At paragraph 12 of her second witness statement the first defendant deposed:-

"The beneficiaries to Faiz's estate agreed that the monies owed by Anwar to Faiz could be paid to me because Faiz owed me the money."

7.        It is this statement that has led to the present application. 

8.        I should also record for the sake of completeness that by a consent order recorded by the act of court dated 22^nd June, 2016, it was agreed that expert evidence in relation to the law of succession in Kuwait would be exchanged by Friday, 1^st July, 2016.  Such evidence was in due course exchanged.  I note that the experts appear to agree based on the reports provided to me that the first defendant is not an heir of Faiz. 

9.        Finally, I have extended the time limit for the plaintiff to issue an application for specific discovery until after determination of the present application. 

10.      The present application brought by the plaintiff was put on two alternative bases.  The plaintiff sought an unless order debarring the first defendant from arguing that she was a creditor of Faiz's estate as set out in paragraph 12 of the witness statement referred at paragraph 6, unless she either amended paragraph 7 and 16 of her answer or provided particulars in response to a request annexed to the summons.  Certain consequential directions were also sought as to the time limit within which any application to amend had to be made and what affidavit evidence should be filed. 

11.      The reason for the application arose out of paragraphs 7 and 16 of the first defendant's answer.  Paragraph 7 contains the following statement "the monies were paid by Mr Al-Essa in payment of a business debt owed by Mr Al-Essa to the First Defendant's Brother Mr Faiz Abdul Aziz Almutawa ("the First Defendant's Brother") and which debt passed to the First Defendant upon her Brother's death."  Paragraph 16 contains the following "....as stated at paragraph 7 above, it is averred that the funds were in fact provided by Mr Al-Essa to the First Defendant as part repayment for monies owed to the First Defendant's Brother (which interest passed to the First Defendant upon her Brother's death)."

12.      It is right to record that the plaintiff's case at present is not based on filing its own positive evidence in support of its assertion that the beneficial interest of a flat in London described in the previous judgment as the property and owned by Westport Limited is held by the first defendant on trust for the second defendant who had previously assigned his interest to the plaintiff.  The plaintiff's case at this stage is therefore put on the basis that it seeks to persuade the Royal Court not to believe evidence adduced by and behalf of the first defendant and to invite the Royal Court to draw inferences that funds in some manner must have come from Mr Al-Bader to purchase the property.  At paragraph 31 of the previous judgment in relation to this approach I stated as follows:-

"31.    That does not mean that the plaintiff does not face challenges.  At trial it will not only have to persuade the Royal Court not to accept the positive case advanced by the first defendant in her answer but will also have to persuade the Royal Court, which is a separate question, that the Royal Court should then draw inferences that the funds used to acquire the property came from Mr Al Bader.  For the plaintiff to succeed at trial, it must overcome the matters raised by the answer, the evidence adduced in support of the answer by the first defendant and must also persuade the Royal Court to draw inferences and to conclude that on a balance of probabilities the funds used to purchase the property did ultimately come from Mr Al Bader.  Success on the former basis may not mean that the plaintiff succeeds on the latter issue."

13.      I then went on to conclude that the dispute between the parties was a matter that had to be resolved at trial.  At paragraphs 32 to 33 in support of my decision I stated as follows:-

"32.    What is clear is that in relation to the different explanations advanced by the first defendant as to where monies came from, these are issues to be explored at trial.  Sufficient criticisms have been advanced by the plaintiff of these explanations set out above which mean that the plaintiff's case is not hopeless and is not bound to fail.  There is also direct evidence of contact between Mr Al Bader and Devonshires as set out above.  Whether these communications are no more than Devonshires exercising professional caution and judgment or whether they are indicative of Mr Al Bader pulling the strings are matters that can only be resolved at trial when all relevant evidence is before the Royal Court. 

33.      There is also an arguable case that the explanation that the first defendant inherited a debt due from Al-Essa to her late brother is one that is inconsistent with Kuwaiti inheritance law."

14.      Advocate Hooper's complaint in essence is that the first defendant has since changed her position.  Up until the provision of her second witness statement, her case was put on the basis that her entitlement to the debt from her late brother arose on the basis of inheritance.  That is why she was permitted to file a statement in response to the statement of Mr Davies and why directions were given last December for the filing of expert evidence. 

15.      The case now advanced by the first defendant was a change of position because the first defendant no longer appears to assert that she was entitled to inherit the debt but instead asserts that she was entitled to the debt as "Faiz owed me the money".

16.      Advocate Hooper argued in light of this change of position that the plaintiff was entitled to know where it stood.  While it could not make the first defendant amend her case, they were entitled to ask the court both to impose sanctions if the first defendant chose not to amend her case or alternatively were entitled to further and better particulars. 

17.      The application was particularly important because the first defendant had previously advanced five different explanations as to the source of funds she received to purchase the flat.  At paragraph 28 (xiii) of the previous judgment the plaintiff's criticism of these explanations were summarised as follows:-

"(xiii)  The first defendant had advanced five different explanations as to the source of funds.  There was no evidence from those involved in making some of these statements, to address why the relevant explanation given at the appropriate point in time was incorrect.  In particular there is no evidence from Mrs Al Bader about statements she made about the source of monies; also there is no evidence from another family member Fawzi Al Saleh who introduced the first defendant to Devonshires about statements he made to Devonshires about the source of funds; the first defendant herself has given two different explanations one to Sanne and the statement she now relies upon.  There is no evidence from Sanne that the explanation recorded by an employee of Sanne contemporaneously is not correct.  The first defendant's own evidence on this issue is limited because she simply says she cannot remember.  Mr Barden also does not address why an explanation given by him to Advocate James acting for Sanne in 2008 was not correct.  Of the explanations given as to source of funds, other than the present one relied upon, three of these were also given in 2008 after the plaintiff had asserted a claim to ownership of the property.  At the time the statements were therefore being made by both Mr Barden and the first defendant, both were on notice of the plaintiff's claim.  In these circumstances Advocate Lincoln contends it is surprising that no explanation is given as to why incorrect statements were made.  These were all matters ripe for cross-examination."

18.      This led to my observation at paragraph 32 which I have already referred to. 

19.      Advocate Hooper argued it was therefore important for the plaintiff to know where it stood.  The plaintiff contended that a change of position had occurred because paragraphs 7 and 16 of the answer could only be construed as the first defendant inheriting the debt.  In the alternative, the parties and the court had at least proceeded on the assumption that the first defendant had inherited the debt and that was why expert evidence of Kuwait and Lebanese succession law had been provided for.  There was no need for such evidence if in fact the first defendant's case was that she was only a creditor. 

20.      It was important to know what the first defendant's case was so that the plaintiff could consider whether or not any factual evidence was now needed in relation to it, whether a specific discovery application was needed, whether any further expert evidence was needed and also to enable the plaintiff to prepare for trial in particular its cross examination of the first defendant and her witnesses. 

21.      Finally, if the parties had proceeded on the basis of an assumption which the first defendant knew was not right and was not corrected by her, the plaintiff was entitled to seek wasted costs. 

22.      An unless order was sought because discipline being imposed by the court was necessary to compel the first defendant to be clear as to what her case was.  Advocate Hooper quite properly referred me to the Court of Appeal decision in Alhamrani & Ors v Alhamrani [2008] JCA 187A where the Court of Appeal at paragraph 84 cited with approval observations of Lord Justice Ward in the Court of Appeal case Hytec Information Systems Limited v Coventry City Council [1997] 1 WLR 1666.  The relevant quotation from Hytec is as follows:-

"(1) An unless order is an order of last resort. It is not made unless there is a history of failure to comply with other orders. It is the party's last chance to put his case in order. (2) Because that was his last chance, a failure to comply will ordinarily result in the sanction being imposed. (3) This sanction is a necessary forensic weapon which the broader interests of the administration of justice require to be deployed unless the most compelling reason is advanced to exempt his failure. (4) It seems axiomatic that if a party intentionally or deliberately (if the synonym is *1675 preferred) flouts the order then he can expect no mercy. (5) A sufficient exoneration will almost inevitably require that he satisfies the court that something beyond his control has caused his failure to comply with the order. (6) The judge exercises his judicial discretion in deciding whether or not to excuse. A discretion judicially exercised on the facts and circumstances of each case on its own merits depends on the circumstances of that case; at the core is service to justice. (7) The interests of justice require that justice be shown to the injured party for the procedural inefficiencies caused by the twin scourges of delay and wasted costs. The public interest in the administration of justice to contain those two blights upon it also weighs very heavily. Any injustice to the defaulting party, though never to be ignored, comes a long way behind the other two. "

23.      Ultimately it was contended I had discretion to compel the first defendant to make her case clear. 

24.      Advocate Dann in response contended that his client's case was clear.  What the plaintiff was seeking to do was to use the application to obtain matters of evidence which were matters to be explored at trial.  These requests were ultimately attacks on the credibility of the first defendant.  He also reminded me that this case was one where the plaintiff was adducing no evidence and the plaintiff had to persuade the Royal Court to make findings in its favour by drawing inferences only.  He indicated his client's case was clear and that a wasted costs order was not justified. 

25.      If I was against him on whether or not the case required clarification, there was no basis to make any form of unless order. 

Decision

26.      In my judgment, I consider that clarity of the first defendant's case is required.  While I do not agree with Advocate Hooper that the first defendant's second witness statement is necessarily inconsistent with the first defendant's answer at paragraphs 7 and 16, paragraph 12 of the first defendant's second witness statement has thrown a different perspective on how the first defendant has pleaded her case at paragraphs 7 and 16. 

27.      I say this because I am satisfied that the plaintiff and the court had proceeded on the assumption that what was meant by paragraphs 7 and 16 was that the first defendant was entitled to inherit the benefit of the debt from Faiz.  Having now revisited paragraphs 7 and 16 in light of paragraph 12 of the second defendant's witness statement, I accept that the first defendant's pleaded case does not state expressly that the benefit of the debt was inherited.  Rather it simply says that the debt "passed" to the first defendant. 

28.      What the pleaded case does not say however is how the benefit of the debt passed.  It is therefore ambiguous.  In my view either it passed by way of succession or it passed because the first defendant was a creditor.  The two positions are also mutually exclusive.  The first defendant can be an heir or a creditor but she cannot be both.  In my judgment this is therefore not just an issue of evidence to be explored at trial.  It is a material fact relating to the positive case pleaded by the first defendant.  I have therefore reached the conclusion that the plaintiff is entitled to know what the first defendant's case is as to how the benefit of the debt passed to her.  Ultimately and fundamentally she must make it clear whether it passed by way of succession or by virtue of the first defendant being a creditor. 

29.      Furthermore, if the first defendant's case is that she was a creditor of Faiz's estate, then the plaintiff is entitled to know the basis upon which the first defendant asserts that she was such a creditor. 

30.      I also consider what has occurred here is an act of omission.  In other words to date the first defendant has not pleaded all material facts as required by Rule 6/8(1) of the Royal Court Rules 2004, as amended, in support of her case.  The judgment I have reached is that it is a material fact as to whether or not the benefit of Faiz's loan passed to her as a creditor or as an heir.  I do not consider this to be a matter of evidence.  Without the first defendant making it clear whether she is a creditor or an heir the plaintiff does not know what case it has to meet.  The answer at present is ambiguous.  This ambiguity should be clarified to permit the plaintiff to consider whether or not to seek to file evidence, whether or not discovery has been provided or whether or not it needs any further expert evidence, and to prepare for trial in particular cross -examination.  At present it cannot make such decisions or carry out such preparations until the first defendant's case is clarified. 

31.      Accordingly, I was satisfied that the first defendant should make her case clear and to the extent she contends that she was a creditor, she should provide answers to the requests formulated by the plaintiff.  I should add that in relation to these requests, the final form of the requests approved by me was slightly narrower than that formulated by the plaintiff because the latter part of requests 2 and 4 crossed the line and became requests for evidence which I was not prepared to approve.  These minor modifications however do not detract from my principal finding and ruling that the first defendant has to clarify her case. 

32.      I was not however prepared to order an unless order at this stage.  This is because an unless order is an option of last resort as set out in Hytec and Alhamrani.  The trial of this matter is not due to take place until May of next year.  The first defendant has also not previously been asked to clarify paragraphs 7 and 16 until the present issue arose.  At this stage an unless order is premature. 

33.      I was also not prepared to order sanctions should the first defendant fail to amend her answer.  Ultimately this approach was compelling the first defendant to amend her pleading.  Although in the case of Channel Islands Marine Limited v Whipp [2014] JRC 106A, I required the first defendant to file an amended answer to make its pleaded case consistent with what had been referred to in affidavits, the circumstances of that case are very different.  The defendant in Whipp was also willing to make his case clear in his pleading.  However, where a defendant does not wish to make its case clear in its pleading, I consider the better route is to require a defendant to provide further and better particulars or a further and better statement of its case, rather than providing for a sanction of an unless order if a defendant does not amend its case.  This is the approach I have adopted in this case. 

34.      The question of any sanction should the first defendant not answer the particulars I have ordered to be provided is also a matter for another day.  Likewise it is also a matter for another day what wasted costs might follow once the first defendant has clarified her case as ordered.  Again it is premature to determine whether or not wasted costs have been incurred until the first defendant has clarified her case.  However, it is right to record that during argument, I expressed the view that if the first defendant's case is that she is a creditor and not an heir of Faiz, wasted costs do appear to have been incurred in relation to the instruction of Kuwaiti law experts by the plaintiff which were not necessary.  An explanation on any such wasted costs application will therefore be required as to why the first defendant did not make her case clear earlier, should she contend that she is now a creditor and not an heir.  In making these observations I make no criticism of Advocate Dann who has only recently taken over the conduct of this matter. 

35.      In relation to the question of costs I should also record that I left over the question of costs until delivery of these written reasons and delivery of any answers by the first defendant to the particulars I have ordered to be provided.  This is because the schedule of costs provided in relation to the present application is a sum in excess of £100,000.  I was extremely concerned about the level of these costs for a half day hearing before me.  While the plaintiff in this matter has been successful, before making any costs order, I made it clear that I wanted to be addressed specifically on the proportionality of the costs incurred for a relatively straightforward application and to permit the plaintiff and their advisers an opportunity to explain why costs of this magnitude have been incurred.  The rationale for expressing this view is the decision of W. J. Bailhache, Bailiff in Pearce v Treasurer of the States [2016] JRC 100. 

36.      Any other directions in relation to the filing of any further witness evidence, specific discovery applications and whether any further expert evidence is necessary should also await the first defendant's response to the particulars to be provided. 

Kuwait Oil Tanker Company SAK v Al Mutawa & Chadwick [2016] JRC 074.

Alhamrani & Ors v Alhamrani [2008] JCA 187A.

Hytec Information Systems Limited v Coventry City Council [1997] 1 WLR 1666.

Royal Court Rules 2004, as amended.

Channel Islands Marine Limited v Whipp [2014] JRC 106A.

Pearce v Treasurer of the States [2016] JRC 100.