Mr Justice Blair:
- This is the application of the third respondent, Mr Wael Khoury, to strike out a committal application brought by the claimant, Mr Munib Masri, by notice dated 11 May 2010. The first two respondents, Consolidated Contractors International Company SAL ("CCIC"), and Consolidated Contractors (Oil and Gas) Company SAL ("CCOG"), which are Lebanese-incorporated companies, are also respondents to the committal application. They are not however seeking to strike it out. They are judgment debtors pursuant to a judgment on liability in Mr Masri's favour given by Gloster J on 28 July 2006, followed by a judgment on quantum given on 14 March 2007. I am told that the sum outstanding under the judgment now exceeds US$74 million. Following judgment, a number of orders were made in aid of execution. Mr Masri says that these orders have not been complied with, hence these proceedings which include an application to fine the judgment debtors and to commit Mr Wael Khoury to prison.
- In summary, and as argued at this hearing, it is Mr Wael Khoury's case that he was not a "registered director of either of the defendant companies at any material time (he was never a director of CCIC and resigned as a director of CCOG in June 2006 long before any of the Court Orders were made, and before the Judgment). He was not named in any of the Court Orders or their penal notices; on the contrary the Orders and penal notices identified and named other individuals as the directors of the companies. He has not been involved in the litigation and he has always been of the view that the Judgment should be settled, and resolutely opposed to any form of 'anti-enforcement strategy'". The committal proceedings should be struck out so far as he is concerned. To the contrary, Mr Masri's case, again as argued at this hearing, is that Mr Wael Khoury "was an officer of the Judgment Debtor companies (alternatively a de facto or shadow director of them) and failed to take steps to ensure compliance with the Court's orders (alternatively that he instigated or participated in the breaches). Those allegations, if proved, render him liable to be committed for contempt".
- A case management conference will be held before David Steel J on 5 and 6 October 2010, and the committal application itself is due to be heard in early 2011 listed (I am told) for 6 to 8 days. Mr Wael Khoury applies to strike the application out under the provisions of paragraph 5 of the Practice Direction to RSC O. 52 on the basis that (to take the order in his skeleton argument), (1) the case has been brought in disregard of the procedural rules for committal applications, (2) the application against Mr Wael Khoury is an attempt to abuse the court's process, and (3) there are in any event no reasonable grounds for the application against him. Even if he is successful, the hearing will (I am told) go ahead against the judgment debtors, despite the suggestion in the evidence (which is not I think seriously in dispute) that they are gradually being wound down.
- For the purposes of this judgment, it is not necessary to set out the background to the litigation between the parties in full. It is summarised in the judgment of Sir Anthony Clarke MR in the most recent of the various appeals to which the litigation has given rise: see Masri v Consolidated Contractors International (UK) Limited and Others (No4)  1 AC 90 at . That appeal concerned enforcement proceedings under CPR Pt 71 against Mr Wael Khoury's two older brothers. These ultimately failed so far as Mr Samer Khoury was concerned because the word "officer" in CPR Pt 71 cannot be construed so as to include an officer of a corporate director of the judgment debtor. The appeal of Mr Toufic Khoury was allowed (on further appeal to the House of Lords) because, although an officer, he was not resident in the English jurisdiction. I should say at this point that Mr Wael Khoury is resident in England. There has been a Pt 71 application against him as well which related to information regarding CCOG (on the basis that he was a former director who it was asserted remained connected with CCOG). I am told that this application was stayed by consent.
The relevant enforcement orders
- The orders made in aid of execution of Gloster J's judgment which are relevant for this committal application are (taking them as set out Mr Khoury's summary) as follows:
20 December 2007 Orders
(1) An order granted by Gloster J on 20 December 2007 appointing a receiver in respect of CCOG. Following the expiry of a stay for appeal, the CCOG Receivership Order became effective on 4 April 2008.
(2) A further order granted by Gloster J on 20 December 2007 against CCOG in relation to its rights in respect of the Masila Concession. This is an oil concession in Yemen which is at the heart of the dispute between the parties.
(3) An order granted by Gloster J on 20 December 2007 against each of CCOG and CCIC requiring the provision of information as to their respective assets. This required information on various dates between January and April 2008.
19 March 2008 Order
(4) An order granted by Flaux J on 19 March 2008 against each of CCOG and CCIC requiring the provision of further and better information as to their respective assets. It is alleged by Mr Masri that each of CCOG and CCIC acted in breach of the order by failing to provide information on various dates up to April 2008.
21 October 2008 Orders
(5) An order granted by Tomlinson J on 21 October 2008 against each of CCOG and CCIC freezing and requiring disclosure of information relating to various bank accounts by 28 October 2008.
(6) A further order granted by Tomlinson J on 21 October 2008 against CCOG only freezing and requiring disclosure of information relating to various shares which it owned by 4 November 2008.
(7) A further order granted by Tomlinson J on 21 October 2008 appointing a receiver in respect of CCIC. Mr Masri alleges that breaches of the CCIC Receivership Order occurred mainly by failure to provide information (or the provision of incomplete information) on 21 October 2008, 11 November 2008 and 15 April 2009.
The committal application
- The ultimate protagonists in this dispute are the Masri and the Khoury families, and it is plain that substantial efforts have been made to resolve the dispute between them, which unfortunately have come to nothing. After these efforts broke down, it is said that these committal proceedings dated 11 May 2010 were served (as Mr Ian Mill QC for Mr Khoury put it) out of the blue. The Application Notice alleges that the judgment debtors have "pursued an exceptional 'anti-enforcement strategy'" including a number of specific allegations set out over some four pages the gist of which I have summarised above. In the case of each allegation, the act of contempt is stated, together with the date. There then appears the following:
"The Judgment Creditor contends that Mr Wael S. Khoury has participated in, directed and/or instigated the abovementioned breaches of the court's Orders by the Judgment Debtor companies (for the reasons set out in the accompanying evidence) and should therefore be held responsible for such acts along with the Judgment Debtor companies."
- Mr Khoury remarks that this advances the allegation that he is liable on the basis of a criminal contempt (i.e. accessory liability). By letter of 21 May 2010 his solicitors wrote to Mr Masri's solicitors complaining that the application notice did not contain sufficient particulars and seeking clarification as to the nature of the allegations that were being made against him. In response Mr Masri's solicitors in a letter of 28 May 2010 drew attention to RSC 45 Rule 5, and on 2 June 2010 they applied to amend the application notice. Field J granted permission to amend on the papers on 18 June 2010.
- As amended, the Application Notice alleges the following:
"The Judgment Debtor contends that for the reasons set out in the accompanying evidence Mr Wael S. Khoury should be held responsible for such acts along with the Judgment Debtor companies on the basis that he is a de facto director or officer, or in the alternative a shadow director or officer, of the Judgment Debtor companies and in that capacity he has:
(A) participated in, directed and/or instigated the abovementioned breaches of the court's orders by the Judgment Debtor companies (for the reasons set out in the accompanying evidence) and/or
(B) wilfully failed to take such steps to ensure that the abovementioned Court Orders are complied with in circumstances where he cannot reasonably have believed that some other director or officer is taking steps to comply."
The issues the judge ordered to be tried on the strike-out application
- By Application Notice dated 28 June 2010, Mr Wael Khoury applied to strike out Mr Masri's committal application on the following basis. It is said that the evidence served in support of the contempt allegation against him did not disclose reasonable grounds for alleging that he was liable to be committed for contempt since he was not a director of the companies alleged to have acted in contempt of court. The companies being Lebanese companies, the question whether Mr Wael Khoury was a director is a matter of Lebanese law, and under Lebanese law only registered directors can be liable for the acts or omissions of a company (Lebanese law not recognising it is said the concept of shadow or de facto directors). In any case, Mr Masri has failed to adduce evidence to show that he acted in that capacity or was in contempt. Alternatively, it is said that the contempt application was an abuse of process on three grounds, being delay, multiplicity of proceedings and improper purpose. Alternatively it is said that Mr. Masri failed to comply with the applicable procedural requirements in that the allegations against Mr Wael Khoury in the application notice were insufficiently particularised. No other procedural defects were specifically identified at that stage in the application notice.
- Following various hearings, by an order stamped with the date 29 July 2010, David Steel J set out the issues to be determined on the strike out application as follows:
(1) Whether the contempt application should be struck out on the basis that the application and the evidence served in support of it disclose no reasonable grounds for alleging that the Third Respondent [Mr Wael Khoury] is guilty of a contempt of court;
(2) Whether the contempt application should be struck out as an abuse of process;
(3) Whether the committal applications notice should be struck out for failure to comply with the applicable Rules and procedural requirements (in particular those set out in RSC O 52.4 and RSC O 45); and
(4) Whether the Applicant has no real prospect of successfully contending that the law applicable to the issue of whether the Third Respondent is or was an officer of the Judgment Debtors for the purposes of RSC 45.5(1)(iii) is English (as opposed to Lebanese) law.
- For the avoidance of doubt, David Steel J ordered that no party had permission to adduce evidence of Lebanese law for the purpose of the strike-out application. On 5 August 2010, he refused Mr Wael Khoury's application for an order that the "applicable law issue" should be determined as a preliminary issue in any event.
The relevant provisions
- The key provisions for the purposes of this application are still to be found in the RSC, as scheduled to the CPR. RSC O.45, r.5 is derived from s. 33 of the Common Law Procedure Act 1860 (23 & 24 Vict. c.126) (now repealed) which contained a provision that writs of injunction against a corporation could be enforced by attachment against the directors or other officers thereof (AG of Tuvalu v Philatelic Distribution Corporation Ltd  1 WLR 926 at 937D). It provides for the enforcement of a judgment or order as follows:
Enforcement of judgment to do or abstain from doing any act
5.- (1) Where-
(a) a person required by a judgment or order to do an act within a time specified in the judgment or order refuses or neglects to do it within that time or, as the case may be, within that time as extended or abridged under a court order or CPR, rule 2.11; or
(b) a person disobeys a judgment or order requiring him to abstain from doing an act,
then, subject to the provisions of these rules, the judgment or order may be enforced by one or more of the following means, that is to say-
(i) with the permission of the court, a writ of sequestration against the property of that person;
(ii) where that person is a body corporate, with the permission of the court, a writ of sequestration against the property of any director or other officer of the body;
(iii) subject to the provision of the Debtors Act 1869 and 1878, an order of committal against that person or, where that person is a body corporate, against any such officer.
- Thus in principle, the orders made in this case against the defendant companies could be enforced by an order of committal against any director or other officer of the company. However RSC O. 45, r. 7 goes on to prescribe certain prerequisites to enforcement under r.5, subject to the court's power to dispense with such prerequisites. It provides as follows:
Service of copy of judgment, etc., prerequisite to enforcement under rule 5
7.-(1) In this rule references to an order shall be construed as including references to a judgment.
(2) Subject to paragraphs (6) and (7) of this rule, an order shall not be enforced under rule 5 unless-
(a) a copy of the order has been served personally on the person required to do or abstain from doing the act in question; and
(b) in the case of an order requiring a person to do an act, the copy has been so served before the expiration of the time within which he was required to do the act.
(3) Subject as aforesaid, an order requiring a body corporate to do or abstain from doing an act shall not be enforced as mentioned in rule 5(1)(b)(ii) or (iii) unless-
(a) a copy of the order has also been served personally on the officer against whose property permission is sought to issue a writ of sequestration or against whom an order of committal is sought; and
(b) in the case of an order requiring the body corporate to do an act, the copy has been so served before the expiration of the time within which the body was required to do the act.
(4) There must be prominently displayed on the front of the copy of an order served under this rule a warning to the person on whom the copy is served that disobedience to the order would be a contempt of court punishable by imprisonment, or (in the case of an order requiring a body corporate to do or abstain from doing an act) punishable by sequestration of the assets of the body corporate and by imprisonment of any individual responsible.
(6) An order requiring a person to abstain from doing an act may be enforced under rule 5 notwithstanding that service of a copy of the order has not been effected in accordance with this rule if the court is satisfied that pending such service, the person against whom or against whose property is sought to enforce the order has had notice thereof either-
(a) by being present when the order was made, or
(b) by being notified of the terms of the order, whether by telephone, telegram or otherwise.
(7) The court may dispense with service of a copy of an order under this rule if it thinks it just to do so.
- RSC O.52 deals with committal to prison for contempt of court. Paragraph 5 of the Practice Direction to RSC O.52 deals expressly with the striking out of a committal application in the following terms:
"The Court may, on application by the respondent or on its own initiative, strike out a committal application if it appears to the Court:
(1) that the committal application and the evidence served in support of it disclose no reasonable ground for alleging that the respondent is guilty of a contempt of Court,
(2) that the committal application is an abuse of the Court's process or, if made in existing proceedings, is otherwise likely to obstruct the just disposal of those proceedings, or
(3) that there has been failure to comply with a rule, practice direction or order of the Court."
- Each of these sub-paragraphs is relied upon by Mr Wael Khoury in his strike out application. Sub-paragraph (3) has to be read subject to paragraph 10 of the Practice Direction, by which "the Court may waive any procedural defect in the commencement or conduct of a committal application if satisfied that no injustice has been caused to the respondent by the defect".
The grounds relied on by Mr Wael Khoury in support of the strike out application
- As a matter of approach, the language of paragraph 5 of the Practice Direction to RSC O.52 tracks the language of CPR rule 3.4(2) in relation to striking out statements of case, and the principles to be applied are doubtless analogous. An application to commit a person to prison for contempt is a serious invocation of the powers of the court, and if it has no real prospect of success, or is abusive, or procedurally flawed in a way that cannot or should not be remedied or waived, then it should not be allowed to proceed further (see e.g. Three Rivers District Council v Bank of England (No. 3)  2 AC 1 at , Lord Hope). A large number of arguments were raised on behalf of Mr Wael Khoury in support of his strike out application. I should note that since skeleton arguments were exchanged rather than filed sequentially as required under the Commercial Court Guide, some issues raised by the applicant were not dealt with by the respondent in his skeleton argument.
(1) Director or officer
- A threshold submission is made to the effect that the application must fail since Mr Wael Khoury was not a director or officer of either of the judgment debtors. The submission is put in a number of ways, and its factual basis is as follows. Both CCIC and CCOG (the judgment debtor companies) are Lebanese companies which are part of the Consolidated Contractors Company (CCC) group of companies. The ultimate parent company within the CCC group is CC Holding, also a Lebanese company. It is a family business to the extent that just under 60% of the shares in CC Holding are held by the Khoury Company, and the shares in that company are held by the five children of Mr Said Khoury (including Mr Wael Khoury). Mr Said Khoury (who is Mr Wael Khoury's father) was one of the founders of the group which was established in the 1950s. The other family involved in the business is the Sabbagh family.
- Mr Wael Khoury was never a registered director of CCIC, but he was a registered director of the other judgment debtor, CCOG, until June 2006, when he resigned. This was after the trial on liability had taken place but shortly before judgment was handed down. It was of course before the making of any of the orders in respect of which the committal application is brought. As set out above, Mr Masri's amended Application Notice asserts that Mr Khoury should be held responsible for the contempt alleged against the judgment debtor companies (i.e. CCIC and CCOG) "on the basis that he is a de facto director or officer, or in the alternative a shadow director or officer, of the Judgment Debtor companies". In short, it is submitted on behalf of Mr Wael Khoury that the term "director or other officer" in RSC O.45, r.5 is limited to "directors" or "officers" under Lebanese law as the lex incorporationis. Lebanese law, it is stated in Mr Wael Khoury's Application Notice, does not recognise the concept of de facto or shadow directors. Hence, it is argued, under the governing law the committal application must fail.
- Whether this argument could or should be advanced at this stage was subject to argument. As I have explained, in giving directions for this hearing, David Steel J made it clear that no party had permission at this stage to adduce evidence of Lebanese law, and there is none before the court. The relevant question on the strike out is expressed to be "whether Mr. Masri has no real prospect of successfully contending that the law applicable to the issue of whether Mr Wael Khoury is or was an officer of the judgment debtors for the purposes of RSC O.45, r.5(1)(iii) is English (as opposed to Lebanese) law". On 5 August 2010, when refusing a further application by Mr Wael Khoury to have the applicable law question determined as a preliminary issue, David Steel J rejected the proposition that in the event that Mr Khoury was to win on that issue, the contempt application would have to be struck out. This was because the content of Lebanese law on the point has yet to be determined. In the light of that, it is common ground that a finding that Lebanese law governs the question will not lead to the application being struck out. Mr Wael Khoury nevertheless invites the court to answer the question put by concluding that it is plain and obvious that the law which is applicable to Mr Masri's case under RSC O.45, r.5 is Lebanese law. He submits that it is abundantly clear that the issue of who is a director or officer of a foreign company for the purpose of RSC O.45, r.5 is and can only be an issue for the lex incorporationis. From a private law perspective, it is inconceivable that English domestic law should determine this question in relation to a foreign company. There are extensive submissions of law to that effect prepared for an earlier hearing to which I was referred, but not taken.
- The question which law determines the meaning of the term "director or other officer" is one which (if the contempt application goes forward) will have to be decided by the judge at the hearing. Given (as is common ground) that a decision now one way or another will not lead to the application being struck out, I cannot see that it would be helpful for me to express a view. I accept the submission of Ms Catharine Otton-Goulder QC (counsel for Mr Masri) that at this stage it is essentially an academic question. In so far as anything needs to be said, it is sufficient to refer to Latreefers Inc v Hobson  EWHC 1586 (Ch), which shows that the question can be one of some complexity. In that case, the court had to decide whether there was a serious issue to be tried in connection with a challenge to the court's jurisdiction. One of the claims was that the defendant was liable as de facto or shadow director of a Liberian company. It was objected that matters relating to the internal governance of the company, including the duties of directors whether de jure, de facto or shadow were governed exclusively by the law of Liberia, which did not recognise the concepts of de facto or shadow director. Referring to the need to characterise the particular issue the court had to decide, Sir Andrew Morritt V-C said at  that in the case of de facto and shadow directors, it was by no means clear that liability depended on Liberian law. In that case, as in the present case, the court was only concerned to identify whether an issue existed, rather than to resolve it. Taking the question as formulated, in my view, Mr. Masri does have a real prospect of successfully contending that the law applicable to the issue for the purposes of RSC O.45, r.5(1)(iii) is English (as opposed to Lebanese) law. That is no more than to say that at this stage, the point is arguable. It is plainly preferable for the issue to be decided in the light of evidence as to the content of Lebanese law.
- At the hearing, an alternative submission was made on the premise that English law applies. It was argued by Mr Ian Mill QC on Mr Wael Khoury's behalf that as a matter of construction the term "director" must be limited to registered directors. In oral submissions, he said that the term "officer" must be limited to a person with a contract of employment with the company. Mr Wael Khoury fell into neither category at the material time, and consequently even on the basis that English law governs, the claim against him is untenable. In support, reliance was placed on the fact that committal proceedings are to be regarded as criminal for the purpose of Article 6 of the European Convention on Human Rights. It was submitted that this required RSC O.45, r.5 to be read narrowly so as to exclude any ambiguity. It can therefore only apply to a de jure director or officer, a submission that Mr Mill QC described as conclusive. In any case, he submitted that RSC O.45, r.5 must be construed as a criminal statute and comply with basic principles of legal certainty. It should be construed as excluding inherently uncertain positions. On that basis, as a matter of English law, the term director or officer is not applicable to de facto or shadow directors, but only to de jure directors. It is further submitted that the allegation in the amended Application Notice that Mr Wael Khoury was a de facto or shadow officer of the companies under English law is inconsistent with the case previously advanced and is legally incoherent. Construing RSC O.45, r.5 in accordance with basic principles of legal certainty, it cannot include any such nebulous concept. This submission comes under the "no reasonable grounds" rubric in the skeleton argument, but in oral submissions it was made first, which is where I shall consider it in this judgment.
- In response on behalf of Mr Masri, it is pointed out (and this is common ground) that whether or not the word "director" is limited to a de jure director depends on the context in which the word is used: "… the word director is capable of including de facto directors but may not do so. The meaning of director varies according to the context in which it is to be found" (Re Lo-Line Electric Motors  1 Ch 477 at 489, Sir Nicholas Browne-Wilkinson V-C). The same applies, it is said, as regards shadow directors. In the present context, the purpose, it is submitted, is to catch decision makers, and not underlings. If a person could simply resign as a director but carry on in effect directing the company in question, the power to enforce the orders of the court would be undermined. The concept of shadow or de facto director is well defined in the case law. There is therefore, it is submitted, no ambiguity in the term, the issue whether Mr Wael Khoury falls within it being a factual one. Further, the rule includes "officers", and there must be people who do not have even unwritten contracts of employment who are nevertheless "officers". Again, the meaning of "officer" is defined in the case law, and the absence of a formal title is not conclusive. It is not that the word "officer" is ambiguous and needs to be read down, it is said, but that the judge hearing the contempt application will have to go into the facts to decide whether or not Mr Wael Khoury is an officer of either or both of the judgment debtor companies. In oral argument, the term "de facto or shadow officer" was, if not abandoned, then relegated to the back row in favour of "officer" simpliciter.
- I express my conclusions on this part of the case as follows. There is force in the submission made behalf of Mr Wael Khoury that a narrow construction of RSC O.45, r.5 which minimises uncertainty and limits the possibility of penalty is to be preferred. Some support for this approach is to be found in Lo-Line at p.489F. Nevertheless, the meaning of the terms "de facto" and "shadow director" have a meaning which has been elucidated extensively in the case law: see for example Re Mea Corporation Ltd  1 BCLC 618, where Lewison J reviews the earlier authorities at  to . The issue is one to be determined objectively on the facts (Secretary of State for Trade and Industry v Hollier  EWHC 1804 (Ch), Etherton J). There is in my view also force in the submission made on behalf of Mr Masri that the need for an enquiry as to the factual position does not imply that the provision construed in the way he contends is ambiguous. It merely shows that the facts must be ascertained to determine whether or not the alleged contemnor has the status alleged.
- Further, although it is common ground that an application for committal engages a respondent's human rights, particularly because the respondent's liberty is potentially at stake, Mr Mill QC accepted in argument that RSC O.45, r.5 is not itself ECHR non-compliant. A meaning must therefore be ascribed to the term "officer", and his suggestion that this is limited to someone who has a contract of employment with the company in question may be correct, but is not self-evidently so. Ms Otton-Goulder QC submits, I think correctly, that this question falls outside the scope of Masri (No4) (see above) which decides that an officer of a corporate director of the judgment debtor is not an officer of the judgment debtor within the meaning of CPR r.71.2. Nor is it within the scope of Vitol SA v Capri Marine Ltd  EWHC 378 (Comm), where Tomlinson J held that an order under CPR Pt 71.2 cannot be made against someone who is not at the time when the order is made an officer of the company, since on the facts it is alleged that Mr Wael Khoury was an officer at the material time. The case law suggests that the term may include a person "in a superior position in a company" (In re a Company  Ch 138 at 143G, Lord Denning MR), or someone in a "position of real authority" in the company (R. v Boal  QB 591 at 597H, Simon Brown J)). In other words, the emphasis may arguably be on the role played by the individual in the company, rather than his or her status as an employee. It was submitted on behalf of Mr Wael Khoury that the construction question is a point of law, which does not require consideration of the evidence. But unless the answer is clear, in my view the question is best decided in the context of findings of fact as to this particular case, rather than as an abstract point of law. I have come to the conclusion that Mr Masri's contentions as to the construction of the words "director" and "officer" in RSC O.45, r.5 are arguable, and that it would be wrong to strike the case out on this basis. Whether his construction is correct or not is another matter. That will be for the judge hearing the committal application to decide if the application proceeds.
(2) Disregard of procedural rules
- I have set out above details of the enforcement orders relevant to the committal application. It is Mr Masri's case that these orders have been breached in various ways, by the transfer of assets, by taking steps to prevent the payment of revenues from the oil concession and construction contracts to the receiver of the company in question, and by failing to provide proper information as to the companies' assets. The question on this strike out application is whether, assuming that such breaches can be demonstrated, Mr Wael Khoury is arguably liable to be committed for contempt of court. He contends that the case has been brought in complete disregard of the basic procedural rules for committal applications. The points taken by him are as follows:
(1) Failure by Mr Masri to plead particulars of the case in the committal notice;
(2) Failure to include Mr Wael Khoury in the penal notices contained in the various enforcement orders;
(3) Failure to serve orders on Mr Wael Khoury before the expiry of the time for compliance.
It is necessary to consider each of these grounds in turn.
(i) Failure to plead particulars
- Paragraph 2.6(2) to the Practice Direction to RSC O.52 states that "the application notice must set out in full the grounds on which the committal application is made and must identify, separately and numerically, each alleged act of contempt, including, if known, the date of each alleged act". Paragraph 4.5 to the Practice Direction states that "In dealing with any committal application, the court will have regard to the need for the respondent to have details of the alleged acts of contempt and the opportunity to respond to the committal application". These requirements reflect the requirements laid down in authority. In Harmsworth v Harmsworth  1 WLR 1676 (CA), it was made clear that it is not permissible to refer to an affidavit for particulars which ought to be in the application notice. Nicholls LJ said at p. 1683:
"So the test is, does the notice give the person alleged to be in contempt enough information to meet the charge? In satisfying this test it is clear that in a suitable case if lengthy particulars are needed they may be included in a schedule or other addendum either at the foot of the notice or attached to the notice so as to form part of the notice rather than being set out in the body of the document. But a reference in the notice to a wholly separate document for particulars that ought to be in the notice seems to me to be quite different matter. I do not see how such a reference can cure what would otherwise be a deficiency in the notice. As I read the Rules and as I understand the decision in Chiltern District Council v Keane  1 WLR 619, the Rules require that the notice itself must contain certain basic information. That information is required to be available to the respondent within the four corners of the notice itself. From the notice itself the person alleged to be in contempt should know with sufficient particularity what are the breaches alleged. A fortiori, in my view, where the document referred to is an affidavit which does not yet set out particulars in an itemised form but which leaves the respondent to a committal application to extract and cull for himself from an historical narrative in an affidavit relevant dates and times and so forth and to work out for himself the precise number of breaches being alleged and the occasions on which they took place."
- I have described above the terms of the committal application in the present case, in which in the case of each allegation, the act of contempt is stated together with the date. I do not understand the adequacy of this aspect of the notice to be in issue, at least on the strike out. I have also set out above in full the passages in the original and amended application notices which deal with the position of Mr Wael Khoury. The criticisms made on his behalf are that there is a failure to provide particulars of the factual basis for either the allegation of de facto directorship or of shadow directorship, or of acts of personal participation, direction and instigation, or of a wilful failure to take reasonable steps to ensure the orders were complied with. These are simply asserted in bare form. Further it is submitted that the legal basis of the case advanced is wholly unclear.
- Mr Masri's response is that the application notice sets out with sufficient clarity and particularity the allegation that Mr Wael Khoury is a de facto or shadow director or officer of both judgment debtor companies. The evidence in support of that contention, i.e. that he is a member of a small group of individuals within the Khoury and Sabbagh families who in effect control the activities of the group as a whole, his particular role in running the group's oil and gas operations out of London, and the lack of any decision-making power on the part of the replacement directors, is all properly set out in Mr Bartlett's affidavits in support. Even if the evidence against Mr Wael Khoury ought to have been reflected in further particulars in the application notice, the failure to do so should still not lead to the striking out of the application notice. Reliance is also placed on paragraph 10 of the Practice Direction by which the court may waive any procedural defect in the commencement or conduct of a committal application if satisfied that no injustice has been caused to the respondent by the defect.
- It is, as I have said, a requirement that the application notice must identify, separately and numerically, each alleged act of contempt, including, if known, the date of each alleged act. This is far from being a formal requirement, since it is most important that the alleged contemnor should be clearly apprised of the nature of the case against him. The court should not (in my view) hesitate to strike out a committal application that does not comply. However, as with any statement of case, there is a distinction between particulars of an allegation, and evidence in support of it. In the present case, Mr Masri alleges that Mr Wael Khoury was an officer of the judgment debtor companies (alternatively a de facto or shadow director of them) and failed to take steps to ensure compliance with the court's orders. In such a case, it is arguable in my view that whereas the acts of contempt must be particularised in the application notice, the facts relied upon as regards the alleged contemnor's status as an officer or de facto or shadow director of the judgment debtor companies can properly be set out in the accompanying evidence. The allegation that he failed to take steps to ensure compliance with the court's orders flows from his alleged status with the companies.
- However it is correct to say that Mr Masri's case goes further than this, relying on commission as well as omission. In paragraph 86(i) of his skeleton argument (which Ms Otton-Goulder QC confirmed was a summary of his case) he maintains an alternative case that Mr Wael Khoury instigated or participated in the breaches. This appears in paragraph 4(A) of the amended application notice to the effect that Mr Wael Khoury participated in, directed and/or instigated of the alleged breaches of the enforcement orders. I have been in doubt as to whether this aspect of the application should be allowed to stand. No further particulars are given of such acts, other than "for reasons set out in the accompanying evidence": this was said not to be a permissible approach in the passage from Harmsworth quoted above.
- For Mr Masri, Ms Otton-Goulder QC submitted that the authorities show that when considering the adequacy of particulars, the context of an application for committal is important. For example, where the complainant has not personally witnessed the acts complained of and must rely on inference to establish that non-compliance with a court order was caused by the act or omission of the alleged contemnor, the onus on the complainant is to make clear the thrust of the case he will present to the court and that, she submits, has been done.
- This submission is based on AG of Tuvalu v Philatelic Distribution Corporation Ltd  1 WLR 926 (a case decided after Harmsworth), where Woolf LJ stated the principles at pp.934-5 as follows:
"The starting point is R.S.C., Ord. 52, r. 4(2) which requires a notice of motion seeking committal of an alleged contemnor to state the grounds of the application. The practical effect of this (and the corresponding county court) rule has been considered in a number of cases reviewed by the judge, most notably, Chiltern District Council v. Keane  1 W.L.R. 619 and Harmsworth v. Harmsworth  1 W.L.R. 1676 . The essential point which the cases establish is that an alleged contemnor should be told, with sufficient particularity to enable him to defend himself, what exactly he is said to have done or omitted to do which constitutes contempt of court. The cases make clear that compliance with this rule will be strictly insisted upon since the liberty of the subject is at stake, but they also show the nature or background of the case is important. Where, for example, a non-molestation order is said to have been breached the complainant will in all probability have witnessed the act complained of personally and in such a case it is not unreasonable to require a particularised summary of the act relied on. It would not, however, be reasonable and would stultify this branch of the law if the same degree of particularity were required in a case where the complainant has not personally witnessed the acts complained of and must rely on inference to establish that non-compliance with a court order was caused by the act or omission of the alleged contemnor. In such a case the complainant must make clear the thrust of the case he will present to the court. The alleged contemnor can then prepare to meet that case.
- The essential point therefore is that an alleged contemnor should be told, with sufficient particularity to enable him to defend himself, what exactly he is said to have done or omitted to do which constitutes contempt of court. An examination of the committal notice shows that the acts alleged against the judgment debtor companies are clearly stated: for example, receiving revenues from the sale of oil in breach of the receivership order, failing to disclose particular assets (for example a bank account in Greece), failing to provide copies of audited accounts, etc. The case Mr Masri advances essentially (to quote from a further note handed in at the hearing) is that, whatever the outward appearances may have been, Mr Wael Khoury was one of the directing minds of the judgment debtors and responsible for what he says is an anti-enforcement strategy carried out by the acts alleged in the committal application. The allegation is that he was a controlling mind in that regard. The question is whether he has been told with sufficient particularity to enable him to defend himself, what exactly he is said to have done or omitted to do which constitutes contempt of court. Given the context, in the light of the principle in the AG of Tuvalu case, the answer appears to me to be affirmative. Whether such allegation can be made good to the criminal standard of proof is an entirely different matter, but I have concluded that it would not be right to strike out any part of the application notice on grounds of lack of particularity.
- Similarly, I reject the contention that the claim should be struck out on the basis that the legal basis of the case advanced is unclear. The issues raised on behalf of Mr Wael Khoury in this regard have largely been discussed in relation to the threshold submission as to what is meant by the terms de facto director, shadow director, or officer which I dealt with above. The legal basis of the claim advanced is not sufficiently unclear in my view to warrant striking it out. The question is not one of lack of clarity, but of ascertaining the facts. The objection made in Mr Wael Khoury's skeleton argument that these concepts are alleged in the alternative is not a valid one. In Re Mea Corporation Ltd, ibid, at , Lewison J expressed the opinion (which I accept) that there is no conceptual difficulty in concluding that a person can be both a shadow director and a de facto director simultaneously. The same applies as regards an officer, a term which in this context includes a director.
(ii) Failure to include Mr Wael Khoury in the penal notices
- Mr Wael Khoury was not a party to the litigation that gave rise to the enforcement orders in this case. The orders were made against the two judgment debtors, that is to say CCIC and CCOG. Each of the orders carried a penal notice, in other words a notice drawing attention to the possibility of imprisonment for contempt in the case of disobedience. The committal application asserts that he is responsible for their acts on the basis that he is a director (as explained above a de facto or shadow director) or officer of the companies, and in that capacity has participated in their alleged breaches of the court's orders and/or wilfully failed to take steps to ensure that the orders are complied with. However none of the orders named Mr Wael Khoury in the penal notice, though certain individuals who were, or had been, directors of the debtor companies were named.
- He argues that he was not a "registered director of either of the defendant companies at any material time (he was never a director of CCIC and resigned as a director of CCOG in June 2006 long before any of the Court Orders were made, and before the Judgment). He was not named in any of the Court Orders or their penal notices; on the contrary the Orders and penal notices identified and named other individuals as the directors of the companies. He has not been involved in the litigation and he has always been of the view that the Judgment should be settled, and resolutely opposed to any form of 'anti-enforcement strategy'".
- In oral submissions, this point has been placed at the forefront of Mr Wael Khoury's argument. The following factual matters in particular are asserted in support of this submission:
(1) On 21 February 2008, Mr Masri issued an application for the order subsequently made by Flaux J on 19 March 2008. In support of the application, Mr Masri's solicitors provided a witness statement dated 20 February 2008 in which it was contended that the former registered directors of CCIC, namely Mr Said Khoury, Mr Tawfic Khoury and Mr Samir Sabbagh remained in control and should be named in the penal notice on the front of the order "to ensure compliance". There was no mention of Mr Wael Khoury as having had any such role and no application to include him in the penal notice.
(2) This position was repeated in March 2008 in the skeleton argument served in respect of the application for the order. It was there contended for Mr Masri that (i) certain individuals who had been directors of the judgment debtors continued to be de facto directors with the consequence that they should be named in the penal notices attached to any order made, and (ii) it was important to name those persons because, if they were not named, they would claim in due course to be immune from any committal proceedings. The skeleton argument was served with a draft Order identifying these individuals as Mr Said Khoury, Mr Tawfic Khoury and Mr Samir Sabbagh. Again, there was no mention of Mr Wael Khoury as having had any such role.
(3) Counsel for Mr Masri repeated and supplemented these points orally in the hearing of the application before Flaux J on 19 March 2008 submitting that:
"…the substance of the matter is that we say that the individuals who we say are de facto directors should be named in the penal notice, making it clear that they will be liable if they are found to be acting as directors, so that the point can be taken and argued out later if necessary…if we are right about them being still in control of these companies and they are not named, they will undoubtedly take the point that they were not named in the penal notice and therefore cannot be proceeded against for contempt and …[the penal notice] is important for the reason I have just given…it is an arguable point. If you are not named in the penal notice you cannot be proceeded against".
(4) Accordingly, it is contended, each of the orders contained a penal notice which stated, amongst other things, that certain named individuals (who were identified as being or likely to be directors/officers of CCIC and/or CCOG and/or their corporate director, CC Holding) were liable be held to be in contempt of court and to be imprisoned in the event that CCIC and/or CCOG disobeyed their respective terms. These identified and named individuals including Mr Wael Khoury's brothers and his father, but they did not include him.
- Mr Wael Khoury submits as a matter of law that it is an essential procedural protection to name the director in the penal notice before any enforcement steps can be taken. The court does have power, in exceptional circumstances, to waive a failure to include a proper penal notice as required by RSC O. 45, r.7 in the case of a prohibitory order. However the discretion should be exercised sparingly and with caution. However in the case of a mandatory order, there is considerable authority to the effect that no waiver is possible. (Of the various orders said to have been broken, it is common ground that only the two that prohibit the receiving of monies in breach of the receivership orders are prohibitory, the others are mandatory.) In any case, such a step, it is submitted, would require truly exceptional circumstances (as for example where the respondent had been present in court when the order was made). Moreover it would be clearly inappropriate and unjust to hold him liable when he was served after the time for compliance with the order had expired. In any event, no application to dispense with service has been made by Mr Masri.
- In oral submissions for Mr Masri (on whose behalf it is said that it was not known in advance that this point was going to be taken), it is submitted that, first, RSC O.45, r.7(4) says that there must be a penal notice. However, second, because by r.7(7) the court can dispense with service altogether, that means that you can dispense with a penal notice because you do not need to serve at all. Third, nowhere does the rule say that you must name directors in the penal notice. Fourth, but it is good practice to do so. It follows, it is submitted, that there is no basis upon which to strike the application out on this ground. In so far as it is a requisite for the case to be an exceptional one, it is submitted that this case falls within that description. The question of the exercise of a discretion to dispense with the procedural requirements is not a matter for a strike out application, but is for the judge who deals with the contempt application, when he has heard all the evidence about the background and takes into account all the factors. (This point was made generally with respect to the dispensing power.)
- Distilled from the authorities which have been cited by the parties, it appears that the following principles apply as regards the committal of directors or other officers of companies in this situation.
(1) The basic provision is RSC O.45, r.5, which applies where a person required by an order to do an act within a specified time refuses or neglects to do it within that time, or disobeys an order requiring him to abstain from doing an act. Where that person is a body corporate, then the order may be enforced by an order of committal against any director or other officer of the body.
(2) However, an applicant for the committal of a company director who relies upon a breach by the company of an order must disclose in the committal application a case for the establishment of responsibility on the part of that director, either on the grounds of aiding and abetting or wilful failure to take reasonable steps to ensure that the order or undertaking is obeyed (AG of Tuvalu v Philatelic Distribution Corporation Ltd  1 WLR 926 at 936E-F, and 938A-B, Woolf LJ; Sectorguard plc v Dienne Plc  EWHC 2693 (Ch), at , Briggs J).
(3) Further, the party seeking the committal order must comply with the prerequisites set out in RSC O.45, r.7, which are there to afford proper protection to the person against whom such proceedings are taken.
(4) The first of these prerequisites relates to service. Subject to the power of dispensation, by r.7(3) an order requiring a body corporate to do or abstain from doing an act is not to be enforced by way of an order of committal against a director or other officer unless a copy of the order has been served personally on the officer against whom the order of committal is sought. Service on the officer has to be before the expiration of the time within which the body corporate was required to do the act.
(5) The second prerequisite relates to the penal notice. By r.7(4), in the case of an order requiring a body corporate to do or abstain from doing an act, there must be prominently displayed on the front of the copy of the order a warning to the person on whom the copy is served that disobedience to the order would be a contempt of court punishable by imprisonment of any individual responsible.
(6) Thus, the rule does not require an individual director to be named. However, although not required by the rule, there is authority that as a matter of practice the order served should, as a preliminary to enforcement against the directors, be indorsed with a penal notice including in it the name of the particular director served (Iberian Trust Ltd v Founder's Trust and Investment Co  2 KB 87, at 97-8, Luxmoore J; the case concerned an earlier version of the rule; and see the form of words in the current White Book at sc45.7.6).
(7) Rule 7(6) gives an express power of dispensation as to the service requirement where the person concerned in fact has notice of the order. The rule applies only to prohibitory orders. It provides that an order requiring a person to abstain from doing an act may be enforced under r.5 notwithstanding that service of a copy of the order has not been effected in accordance with r.7 if the court is satisfied that pending such service, the person against whom it is sought to enforce the order had notice of it either by being present when the order was made, or by being notified of the terms of the order, whether by telephone, telegram or otherwise. (The reference to "or otherwise" is apt to cover contemporary means of communication.)
(8) However the case law establishes that the power of dispensation is not limited to the circumstances dealt with in r.7(6). By r.7(7), the court may dispense with service of a copy of an order if it thinks it just to do so. This power is general and is exercisable as regards mandatory orders as well as prohibitory orders (Davy International Ltd v Tazzyman  1 WLR 1256, Morritt LJ).
(9) Since the court has power to dispense with service of the order, it has power to proceed to consider a proper notice of application to commit notwithstanding the absence of a penal notice (Jolly v Hull  2 FLR 69, CA, at p. 75C, Judge LJ, Knowlden v Tehrani  EWHC 3636 at , Lewison J).
(10) The modern approach is that such discretion must be exercised in a way which in all the circumstances best reflects the requirements of justice (Nicholls v Nicholls  1 WLR 314 at 326, Lord Woolf MR, Bell v Tuohy  1 WLR 2703 at , Neuberger J). This is reflected in paragraph 10 of the Practice Direction to RSC O.52, by which "the Court may waive any procedural defect in the commencement or conduct of a committal application if satisfied that no injustice has been caused to the respondent by the defect".
(11) In principle however the jurisdiction should not be exercised too readily, lest what should be a dispensing power for use in exceptional cases may gradually undermine the express requirements of the rule (Jolly v Hull, ibid, p.75D, Judge LJ).
- Turning to the present case, as I made clear to the parties in the course of argument, I have been concerned by the fact that Mr Wael Khoury was not named in the penal notice, particularly in the light of the point strongly emphasised on his behalf by Mr Mill QC that other individuals were named. The purpose of the penal notice, as the authorities show, is to bring home to an individual director or officer, and in due time, that if the company breaks the terms of the order, he or she may be held to be in contempt of court and liable to imprisonment. The question is as to the effect of the omission, bearing in mind that this is a strike out application.
- In that regard, in respect of CCOG, the CPR Pt 71 application served on him on 23 October 2007 alleged that, "Despite the fact that Mr. Wael Khoury is no longer listed as a director or the Chairman of the Judgment Debtor, the following evidence suggests that, in practice, his position at the company has not changed and that he remains closely connected with the management and operation of the Judgment Debtor". It is further to be noted that albeit not named in the penal notices, the orders were served on Mr Wael Khoury, so far as the three orders granted by Gloster J on 20 December 2007 are concerned, by solicitors' letter dated 15 January 2008 on 18 January 2008, and so far as the other orders are concerned, by solicitors' letter dated 2 December 2008 on 5 December 2008. The first of these letters was sent "in view of your involvement with the Judgment Debtor companies". The second (which I refer to further below) was written to him in his "capacity as director or officer of CCIC and/or CCOG". Although not currently a registered director, " … we understand that you (along with others) exercise control, whether directly or indirectly, over CCIC and/or CCOG and that you would be considered to be a 'de facto' director or a 'shadow' director under English law. We acknowledge that you may dispute this; however, you should be aware that in the event that CCIC or CCOG breaches the terms of the enclosed Orders and the English court determines that you are in fact a director or officer of the companies, you may be held to be in contempt of court and liable to imprisonment". There is an issue between the parties as to whether in the case of obligations contained in the later orders the time for compliance had expired at the time of service which I shall deal with next. It is however Mr Masri's case (which is a disputed factual question) that it is inconceivable that Mr Wael Khoury was unaware of the relevant orders, or the potential consequences to him.
- Further, although failure to name Mr Wael Khoury may be very material, it is not in fact a stated prerequisite in RSC O.45, r.7, being described (as I have said) as good practice in Iberian Trust. To the extent that it is required (which was advanced in argument by reference to the notes in the White Book at sc45.7.6) it follows from the decisions in Davy International Ltd v Tazzyman, Jolly v Hull, and Knowlden v Tehrani (all cited above) that the court may dispense with service of a copy of an order under r.7(7) if it thinks it just to do so, and may proceed to consider the application to commit notwithstanding the omission. I have referred above to authority to the effect that the dispensing power is for use in exceptional cases, but despite submissions to the contrary, I consider that it is arguable (as Mr Masri submits) that this is such a case. In that regard, I am conscious of the very unusual nature of these proceedings generally. In the most recent appeal, namely Masri (No4)  1 AC 90 at 131 (see above), Lord Mance said at  that "CCIC and CCOG have manifested their intention to avoid payment of this judgment debt at all costs". There are other judicial statements in earlier judgments to the same effect. Against that background, it seems to me that, without in any way prejudging the arguments that have been raised, all these points are best considered by the judge hearing the contempt application and determined in the light of the evidence. That judge will be in the best position to determine the effect of the omission, and whether or not this is a case for the exercise of the court's dispensing power. I have concluded that it would be wrong to strike the committal application out on this ground.
(iii) Failure to serve orders before expiry of the time for compliance
- I need not set out again the governing principles as to time for service, which are set out under the previous heading above. It is accepted by Mr Wael Khoury that the three Orders made by Gloster J on 20 December 2007 were served on him before the times specified in the orders expired. However he says that the other four orders made in March and October 2008 were not served until 5 December 2008 long after the times set out for the provision of information expired. This means, it is said, that allegations 2A, allegations 2B to 2G (insofar as they allege breaches of the order of 19 March 2008), allegation 3, allegation 4, and allegation 5A (insofar as it alleges failure to provide information) as against Mr Wael Khoury must be struck out for this reason alone.
- The timing issue was dealt with in a table handed in at the hearing on behalf of Mr Masri. In summary, he contends that so far as concerns the order of 19 March 2008, with one exception the allegations of breach merely repeat the allegations of breach already made in relation to the order made by Gloster J (e.g. failure to disclose particular assets). The exception, failure to disclose company accounts, had a deadline of 14 days from signature. Since the accounts have never been provided, Mr. Masri does not know if or when they were signed. It follows that it is not possible to say when this deadline expired (and therefore whether it was before or after service). As regards orders for the provision of information by a date prior to service on 5 December 2008, it is contended in general terms that these created continuing obligations on an on-going basis, and that it cannot therefore be said that the last time for compliance had expired prior to the date of service upon Mr Wael Khoury.
- I am satisfied that these questions of timing, potentially important though they may be, are not matters suitable for a strike out, even on the partial basis advocated on behalf of Mr Wael Khoury at the hearing. Further, I accept the contention on behalf of Mr Masri that a failure to make timely service might in principle be dispensed with in whole or in part under RSC O.45, r.7(6) or (7), the effect of which I have explained above. These are matters in my view for the judge at the committal hearing.
(3) Abuse of process
- It is submitted on behalf of Mr Wael Khoury that there are three aspects of the Mr Masri's conduct which he submits demonstrate an abuse of process in this case: (1) delay in bringing the committal proceedings; (2) collateral purpose, and (3) multiplicity of proceedings.
- As regards delay, he says that most of the breaches date from 2008, and given the date of affidavit evidence, a decision to pursue the committal application against him must have been taken prior to October 2009. Yet the proceedings were not issued until May 2010, which has caused prejudice to him, in that he was induced quite understandably to believe that compliance was no longer sought from him. As a result he took no steps to monitor compliance or conduct factual investigations in preparation for a dispute. He says that for most of the period of delay, from May 2009 to May 2010, Mr Masri stopped pressing for compliance and instead focused on pursuing settlement negotiations with the judgment debtors. This is not, it is submitted, an acceptable reason to delay bringing committal proceedings against him if Mr Masri really thought that there had been non-compliance by him and that such proceedings were appropriate.
- In response, Mr Masri submits that while some of the individual contempt allegations go back as far as 2008, Mr. Masri did not bring this application sooner because: (i) He has been pursuing other forms of enforcement in numerous foreign jurisdictions (this is not therefore a case in which the matter has simply fallen dormant for a lengthy period of time); (ii) It has taken significant time to obtain the evidence necessary for the application against (not least he says due to the strenuous efforts of the judgment debtor companies and related parties to prevent any information becoming available about their business); (iii) There have been periods of time when it appeared likely that the case would settle, which would have rendered all further enforcement proceedings, including by way of committal, unnecessary; and (iv) what he calls the judgment debtors' anti-enforcement strategy has been "constantly developing which has given rise to more allegations of contempt and new issues to be addressed". In any event, he says that the passage of time has caused no real, or no relevant, prejudice to Mr Wael Khoury.
- As regards collateral purpose, Mr Wael Khoury submits that the inference to be drawn from the facts is that the true purpose of the committal proceedings was not to bring about compliance with court orders in circumstances where all other measures had been tried and failed, but was an attempt to bring commercial pressure to bear following failed settlement discussions. Mr Masri denies that such is his purpose. The legitimate purpose of the proceedings, he says, is to prevent the judgment creditors from disregarding orders of the English Court aimed at assisting enforcement of the judgment debts. He says that when the parties appeared close to reaching a settlement in the past, the enforcement proceedings were put on hold and that this was wholly unexceptionable. The parties did not reach a settlement, but it does not follow that it then becomes abusive for enforcement proceedings to be taken up again.
- As regards multiplicity of proceedings, Mr Wael Khoury refers first to the Part 71 proceedings against him that I mentioned earlier in this judgment. He says secondly that in April 2010, Mr Masri issued proceedings in Greece against him and CC Holding, and other members of the Khoury and Sabbagh families. (There is a dispute about dates, Mr Masri saying that the proceedings were first served in 2009.) In these proceedings, it is alleged in respect of CCIC that those defendants are liable as a "de facto partnership" under Greek Commercial law and as such are jointly and severally liable for the amounts awarded against CCIC pursuant to the English court orders. This claim raises issues as to the extent of Mr Wael Khoury's relationship with and authority in respect of CCIC and there is therefore a substantial overlap with the issues raised by the amended committal application. Lastly, on 23 April 2010, Mr Masri issued a new claim in the English Commercial Court against Mr Wael Khoury and members of his family, CC Holding, and the two judgment debtors. This alleges, amongst other things, that the defendants have conspired with intent to injure Mr Masri by various acts including the alleged breaches of the English enforcement orders (and by implication the application orders). Again there is said to be a substantial overlap between this new claim and the committal proceedings (in which Mr Masri also makes allegations about the anti-enforcement strategy that has been employed). The fact that Mr Masri brought but did not pursue Pt 71 proceedings is a clear demonstration, it is submitted, that he is not genuinely interested in securing information about the judgment debtors. The Greek and English proceedings appear to have been coordinated so as to be pursued at the same time as the committal so that Mr Wael Khoury is forced to defend three overlapping claims at once, which has all the hallmarks of deliberate oppression. It also means that Mr Masri is seeking to use committal proceedings matters to assist him with other substantive cases. This too is a wholly inappropriate use of the committal process.
- Mr Masri responds that it is correct that in 2007 Mr. Masri brought an application under CPR Pt 71 against Mr Wael Khoury (subsequently stayed by consent), and further proceedings in Greece and in England, arising out of what he calls the judgment debtors' campaign of evasion, in which Mr Wael Khoury is named as defendant/respondent. However, he says that this multiplicity has been brought about by the judgment debtors' own conduct in evading the judgments and requiring Mr. Masri to commence proceedings in numerous jurisdictions in order to recover what is due to him, either by proceedings against the judgment debtors themselves or related parties such as Mr Wael Khoury. In those circumstances, he says that Mr Wael Khoury can have no legitimate complaint about multiplicity, not least where it is Mr. Masri's case that he is one of the controlling minds behind both judgment debtor companies. The stayed CPR Pt 71 application (which seeks the provision of information) cannot be relevant. Nor can the prospective English proceedings alleging conspiracy be relevant. In any event, multiplicity of proceedings is not itself a category of abuse, at least not in the absence of evidence that such multiplicity is oppressive or prevents there being a fair trial. Mr Wael Khoury has produced no evidence of any such oppression. He has not contended that, for example, he lacks the means to defend himself on more than one front. In those circumstances, the allegation goes nowhere. Each of the proceedings, it is said, has an independent and legitimate purpose.
- Though it was dealt with only briefly in oral argument, it was said on Mr Wael Khoury's behalf that the abuse point requires deciding at this stage. The court was referred to his skeleton argument, which I have endeavoured to summarise above. (It was dealt with even more briefly in oral argument on behalf of Mr Masri.) It is accepted on behalf of Mr Wael Khoury that the court is not in a position on a strike out application to resolve disputed questions of fact. In that regard, an important aspect as to the effect of delay is whether there is any resultant prejudice. In this respect, reliance was placed by Mr Wael Khoury on a passage from the second affidavit sworn by his solicitor in these proceedings—he himself has not filed evidence—in which his solicitor says that the fact that Mr Masri stopped pressing for compliance has caused prejudice to him, in that he was induced quite understandably to believe that compliance was no longer sought from him. As a result, it is said, he took no steps to monitor compliance or conduct factual investigations in preparation for a dispute.
- In principle, this may be highly relevant on the contempt issue, but it is in dispute. In his response to the allegation of prejudice, Mr Masri refers to the letters of 15 January and 2 December 2008 that I have referred to above serving the orders on Mr Wael Khoury. The latter states that:
"We are writing to you in your capacity as director or officer of CCIC and/or CCOG, under English law. Although we understand that you are not currently a registered director of CCIC or CCOG, we understand that you (along with others) exercise control, whether directly or indirectly, over CCIC and/or CCOG and that you would be considered to be a 'de facto' director or a 'shadow' director under English law. We acknowledge that you may dispute this; however, you should be aware that in the event that CCIC or CCOG breaches the terms of the enclosed Orders and the English court determines that you are in fact a director or officer of the companies, you may be held to be in contempt of court and liable to imprisonment."
There is no evidence, it is said, that Mr Wael Khoury took steps at that stage to ensure compliance, or that he has taken such steps to ensure compliance following the date of the present committal application. Such a suggestion would (it is said) be inconsistent with his case that he is not an officer of either company and has no authority to mandate compliance.
- So as regards the effect of delay the factual case as to prejudice is in issue. As regards collateral purpose, it is correct to say that on 20 January 2009, Mr Wael Khoury's solicitors wrote saying that, "The potential settlement of the proceedings between your client, CCIC and CCOG does not concern our client". But given the background of this dispute, in particular the allegation that despite appearances, Mr Wael Khoury is one of the controlling minds behind both judgment debtor companies, I do not consider that inactivity due to settlement discussions means that the subsequent pursuit of committal application against him is necessarily abusive. (I would add that it is much to be regretted that a settlement of this dispute between these two families did not ensue.) The fact that other proceedings have been begun in this jurisdiction and in Greece is notable, and may require further investigation in this, or some other, jurisdiction, but for present purposes it is in my view arguable (as has been submitted) that this has been brought about by the judgment debtors' own conduct in evading the judgments. The question which David Steel J ordered to be determined on the strike out application is whether the contempt application should be struck out as an abuse of process. The onus is on Mr Wael Khoury to make that proposition good, and in my judgment it has not been made good. That is not to say that some (or all) of the factual matters raised by him may not be relevant on the committal application if they can be established. But that will be for the judge hearing the application to determine having regard to the overall picture.
(4) No reasonable grounds
- The final submission made on behalf of Mr Wael Khoury is that there are no reasonable grounds for the committal application against him. In summary, he submits that the allegation that he was a "de facto director" of either company under RSC O.45, r.5 is hopeless. Even if English law applies (and as explained above his case is that Lebanese law applies) there is no evidence to show that either the companies or he held out to the public that he was a director or that he personally ever acted in such a capacity. Similarly, even if English law applies, the alternative allegation that he was a "shadow director" of either company under RSC O.45, r.5 is unsustainable: "when one excludes the extraneous from the morass of material provided by the Claimant, there is in fact no evidence which could support such a case as a matter of English law". At most, the evidence shows that CC Holding rather than Mr Wael Khoury personally was a shadow/de facto director of the companies. In any event, it is submitted, there is no evidence of any "participation, direction or instigation" or "wilful default" by Mr Wael Khoury with respect to any of the alleged breaches such as to make him liable for committal.
- It is correct that there was a considerable volume of evidence before the court on this application (running to fifteen volumes). Some of it has apparently been gathered by enquiry agents employed by Mr Masri to sift through the company's refuse bags. It is submitted by Mr Masri that key pieces of evidence demonstrate that the case against Mr Wael Khoury has at the very least a real prospect of success. Insofar as Mr Wael Khoury is seeking to argue the substance of the contempt application at this strike-out hearing, it is submitted that such an approach is impermissible and should not be allowed.
- The corporate picture painted in the evidence is one of considerable complexity. It is submitted by Mr Masri that the evidence establishes that:
(1) The CCC group is owned and controlled by the Sabbagh and Khoury families, including Mr Wael Khoury. The members of that small group are properly to be regarded as the individuals having decision-making power and control over the activities of the group as a whole.
(2) Those members run the group as a whole, and are properly to be regarded as the Board or high level decision makers for the Group as a whole (with Mr Said Khoury being equivalent to the CEO or managing director) and are also its ultimate owners, through their ownership of the shares in CC Holding.
(3) Mr Wael Khoury participates as a member of that small group in the collective decision-making process, and thus falls within the definition of de facto director and/or officer.
(4) CCIC and CCOG are wholly-owned subsidiaries within the group and they are (or were) two of the most important companies in the group, being the principal operating company within the group and the company with responsibility for its oil and gas operations (including the group's single most profitable project, the Masila Concession in Yemen). As such those companies fall (and fell) under the direct control of the Khoury and Sabbagh families.
(5) Mr Wael Khoury has and had particular responsibility within that small group for CCC's oil and gas operations, including CCOG as the oil and gas company within the group, and CCC's interest in the Masila Concession.
(6) CCC's oil and gas operations are operated out of London, where Mr Wael Khoury is based (although some administrative support for such operations is provided from Athens in terms of day-to-day accounting and the like). Mr Wael Khoury's particular involvement in this part of the business was reflected in his appointment as Chairman and director of CCOG (rather than, for example, CCIC, which was concerned more with construction business, and which was operated out of Athens).
(7) Mr Wael Khoury's role within the CCOG did not change after his resignation as de jure director in 2006, except that from then on that role was to a greater or lesser extent concealed. The de jure members of the Board were thus accustomed to act on the instructions of the Khoury and Sabbagh families, within the test set out in the cases on shadow directorship.
(8) Mr Wael Khoury also has a high level role in the affairs of CCIC which includes entering into contracts on its behalf, dealing with strategic issues and high level troubleshooting
- Mr Masri emphasises the general structure and business of the CCC group, and changes made to that structure. This includes the appointment of judicial administrators in respect of both judgment debtor companies by the Lebanese Court at the suit of the resigning directors in December 2008, which he claims has been prompted by the desire to avoid effective enforcement of the judgment debt. It is said that the replacements for CCOG are two companies called CC Energy SAL and CC Energy Development SAL which were incorporated on 20 June 2006 (shortly after Mr Wael Khoury's resignation from the Board of CCOG and from his position as Chairman). It is claimed that business which, absent Mr. Masri's attempts to enforce his judgments, would have been carried out by CCIC is, instead, being carried out by CCC Offshore, another wholly-owned subsidiary of CC Holding, using CCIC's employees and at CCIC's premises.
- Particular evidence relied on by Mr Masri in his skeleton argument includes an affidavit sworn by Ms Jihad Anis Abbas, who was a long-standing employee of the CCC group said to have an intimate knowledge of its oil and gas operations, particularly in Yemen, and who has subsequently fallen out with the Khoury family. It is said by Mr Wael Khoury that her evidence is mere assertion, but Mr Masri submits that it shows that Mr Wael Khoury was involved in both CCIC and CCOG, and that it is of itself fatal to the application to strike out the application for lack of evidence. It is enough to say that the matter is in dispute.
- In CCC's Annual Report for 2005, Mr Wael Khoury was held out as a director of CC Holding. He says however that this was in error. An email dated 8 November 2007 has been found which Mr Masri says not only states in terms that Mr Wael Khoury participates in the decision-making process for the group, but is quite inconsistent with his case that there is some difference between the authority his brothers have and his own role, which he says is advisory only. It was said in response that this is a mistake, and the name of the writer is not one which has been come across. As regards evidence of involvement in CCC's oil and gas business, it is said that this shows no more than presence at meetings, and does not go to show a de facto or shadow directorship of the judgment debtor companies. As regards evidence said to show Mr Wael Khoury concealing his role as director, it is said that this is entirely consistent with his case that he had a role in the strategic development of the group, but goes no further than that.
- A further Note by way of schedule to the skeleton argument was handed in at the hearing, which includes a reference to evidence said to show that Mr Wael Khoury was held out in private as part of the senior management of the group, and what is said to be evidence of Mr Wael Khoury's involvement in the alleged anti-enforcement strategy. Further evidence was referred to by Ms Otton-Goulder QC in oral argument, to show that companies were all treated indifferently as part of CCC, depending on convenience. She also referred to a document allegedly showing the role of Mr Wael Khoury as Executive Vice-President, Strategic Development of CCIC, apparently dating from 2008. There is further evidence, it is said, that shows him making decisions.
- Two substantial affidavits were sworn on behalf of Mr Wael Khoury by his solicitor on 9 July 2010 and 18 August 2010 respectively. His case is summarised in some relatively simple propositions, to the effect that the case against him is baseless. It is said that:
(1) Mr Wael Khoury has never been involved in the executive management of, or exercised any directorship control over, CCIC (whether before or after the liability judgment) and has never sought to influence the registered directors of CCIC in the implementation of their board functions;
(2) Before June 2006, Mr Wael Khoury had only a nominal role as a director of CCOG (confined to approving Board minutes in formal company matters). Since June 2006, he has not been involved at all in the executive management of, and has not exercised directorship control over, CCOG or sought to influence the registered directors of CCOG in the implementation of their board functions;
(3) Since their appointment in December 2008, Mr Wael Khoury has never met or spoken to any of the judicial administrators appointed by the Lebanese Court of either CCIC or CCOG (whether in relation to the orders which are now the subject of the Committal Application or otherwise); and
(4) Mr Wael Khoury has never made any decision or exercised any authority or sought to influence the registered directors of either CCIC or CCOG in connection with its compliance with its obligations under the relevant English court orders (including but not limited to each and all of the specific obligations which are said to have been breached and which are now the subject of the Committal Application).
- In his skeleton argument, Mr Wael Khoury also dealt with some of the claimant's evidence that might be thought to be negative for his case, and explanations were given as to it. I do not think that it is appropriate for me to comment on those explanations other than identifying them. There are two MOUs signed by him dating from 2006 and 2007 relating to certain projects. He signed the MOUs pursuant to two express Powers of Attorney granted by Mr Said Khoury on behalf of CCIC, and maintains that the fact that he had to seek such authority demonstrates that he did not act as a director of CCIC. He says that he will very occasionally write using the letterhead of the relevant operating company which has been corresponding, but this does not show him giving instructions to the directors of CCIC which are followed by those directors. An old CCIC business card in his name is not, it is said, evidence of him instructing the directors of CCIC how to act.
- I have concentrated on the points emphasised by the parties in argument, but to paraphrase Mr Masri's skeleton argument, the evidence referred to represents only a small fraction of the totality of the evidence. It does not of course follow from an abundance of evidence that the court should allow a committal application to go forward if the evidence does not support it, if that can readily be shown. Nevertheless, the passage in Three Rivers District Council (ibid) at  in which Lord Hope says that the more complex cases are unlikely to be capable of being resolved summarily without conducting a mini-trial on the documents, seems to me to be entirely apt in the present case. Mr Wael Khoury has highlighted what is said to be an absence of evidence as to the elements necessary to show a shadow or de facto directorship by references to authority such as Re Hydrodam (Corby) Ltd  2 BCLC 180. But as I have said, Mr Masri puts the case in the alternative, relying also on the allegation that Mr Wael Khoury is or was an officer of the judgment debtor companies.
- The question ordered to be determined is whether the contempt application should be struck out on the basis that the application and the evidence served in support of it discloses no reasonable grounds for alleging the Mr Wael Khoury is guilty of a contempt of court. Specifically, the issue on this part of the case is whether on the evidence submitted, it has no real prospect of success. I accept the approach in Sectorguard, ibid, to the effect that the court should lose no time in putting an end to a groundless committal application. In Sectorguard, the facts could be readily ascertained. At , Briggs J made "it clear that my conclusion that the application stands no real prospect of success does not involve any weighing of competing evidence on the same factual issue. That would not be an appropriate task at this stage, any more than it would at the hearing of a summary judgment application". But, he went on to say, "… the evidence is all one way and Sectorguard's hopes of rebutting [it] … rest upon cross-examination … The conclusion that the application has no real prospect of success therefore involves no weighing of conflicting evidence in relation to any factual issue". Conversely, the facts in the present case are is in dispute, and the court cannot properly assess the evidence at this stage. In my judgment, the case is not one for striking out, and I do not think it would be right for me to say anything more about the evidence. Whether or not Mr Masri can prove the case to the criminal standard will be for the judge hearing the committal application to decide.
- The application is accordingly dismissed. I am grateful to the parties for their assistance, and will hear them as to any consequential matters.