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England and Wales High Court (Commercial Court) Decisions


You are here: BAILII >> Databases >> England and Wales High Court (Commercial Court) Decisions >> Jones v Persons Unknown & Ors [2025] EWHC 977 (Comm) (29 April 2025)
URL: https://www.bailii.org/ew/cases/EWHC/Comm/2025/977.html
Cite as: [2025] EWHC 977 (Comm)

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Neutral Citation Number: [2025] EWHC 977 (Comm)
Case No: LM-2022-000125

IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
LONDON CIRCUIT COMMERCIAL COURT (KBD)

Royal Courts of Justice, Rolls Building
Fetter Lane, London, EC4A 1NL
29 April 2025

B e f o r e :

LOUISE HUTTON KC
____________________

Between:
GARY JONES
Claimant
- and -

(1) PERSONS UNKNOWN
(2) PERSONS UNKNOWN
(3) PERSONS UNKNOWN
(4) HUOBI GLOBAL LIMITED (a company registered in the Seychelles)
Defendants
- and -

KYRREX LIMITED (a company registered in St Vincent and the Grenadines)
Third Party / Applicant

____________________

Andrew Maguire (instructed by HCR Legal LLP) for Mr Jones)
Mark Lorrell (instructed by Healys) for Kyrrex Limited)

Hearing date: 16 April 2025
Draft judgment circulated to parties: 17 April 2025

____________________

HTML VERSION OF APPROVED JUDGMENT
____________________

Crown Copyright ©

    LOUISE HUTTON KC:

  1. By an application issued on 18 February 2025 ("the Security for Costs Application"), Mr Jones, the Claimant in these proceedings, applies for security for costs from Kyrrex Limited, which has made an application dated 15 November 2024 to set aside the order for summary judgment made in these proceedings by Nigel Cooper KC on 5 September 2022 ("the Summary Judgment Order").
  2. By the Summary Judgment Order, Nigel Cooper KC ordered summary judgment for Mr Jones on his claim against the First and Second Defendants for deceit and unjust enrichment in the sum of 89.61616088 Bitcoin and summary judgment against the Fourth Defendant, Huobi Global Limited ("Huobi"), "for holding the 89.61616088 Bitcoin ("BTC") as constructive trustee" and also ordered other consequential relief in favour of Mr Jones. The Summary Judgment Order recorded that a specific identified "Exchange Wallet" under the control of Huobi "has been used to store fraudulently obtained Bitcoin including those belonging to [Mr Jones]".
  3. In his evidence in support of the application to set aside the Summary Judgment Order ("the Set Aside Application"), Mr Plumpton, the CEO of Kyrrex, states that Huobi operates a third-party exchange platform and that the wallet identified in the Summary Judgment Order is "assigned for BTC customer deposits made by Kyrrex" but that it is "owned, controlled and managed by Huobi". Mr Plumpton says Mr Jones was therefore wrong, in advancing his claim, to say that that wallet was owned by Kyrrex. (Mr Jones says that it was not his case that the wallet was owned by Kyrrex, and that he did not know about Kyrrex until after the Summary Judgment Order and therefore could not have argued that Kyrrex owned the wallet.) In any event, Mr Plumpton says that following the Summary Judgment Application, Huobi removed over 98 BTC from Kyrrex's account "without any involvement or discussion with Kyrrex". By the Set Aside Application, Kyrrex seeks to have the Summary Judgment Order set aside, saying that Mr Jones' claim can then proceed to a trial which Mr Plumpton says Kyrrex will defend. In the meantime, Mr Plumpton says the 98 BTC should be returned to the relevant wallet at the Huobi exchange.
  4. Mr Maguire (who appeared for Mr Jones) and Mr Lorrell (who appeared for Kyrrex) agree that the new rules at CPR 25.26 to 25.28, substituted with effect from 6 April 2025, apply to this application. Reflecting that new numbering, the grounds of the Security for Costs Application are that:
  5. i) Kyrrex is resident out of the jurisdiction (being incorporated in St Vincent and the Grenadines): CPR 25.27(b)(i);

    ii) Kyrrex is a company and there is reason to believe that it will be unable to pay Mr Jones' costs if ordered to do so: CPR 25.27(b)(ii); and/or

    iii) Kyrrex failed to give its address on the Set Aside Application notice: CPR 25.27(b)(iv).

  6. The first issue that arises is whether Kyrrex should be regarded as the claimant for the purposes of the Security for Costs Application. CPR 25.26(1) provides (emphasis added) that, "A defendant to any claim may apply for security for their costs of the proceedings". The issue is whether the relevant "claim" or "proceeding" is Mr Jones' underlying claim, in which case he is not a defendant and cannot apply for security for costs under CPR 25.26, or whether the relevant "claim" or "proceeding" is Kyrrex's Set Aside Application, in which case security for costs may be ordered if the conditions in CPR 25.27 are satisfied.
  7. The Judicial Committee of the Privy Council ("the JCPC") considered a similar question arising in an official liquidation in the Cayman Islands in GFN SA v Bancredit Cayman Ltd (in official liquidation) [2010] Bus LR 587. Three creditors each submitted a proof of debt which was rejected by the liquidators. Pursuant to the Insolvency Rules 1986 which then applied in the Cayman Islands, the creditors appealed to the Grand Court against the rejection of their proofs of debt and applied to expunge the liquidators' acceptance of the proofs of debt of two banks. The liquidators applied for security for costs in relation to the applications. The judge held that an appeal against a rejection of proof was not an action or other legal proceedings within the meaning of the Grand Court Rules and the Companies Law so as to allow the court to make an order for security for costs. The Cayman Islands Court of Appeal reversed that appeal, and the JCPC dismissed the appeal from the Court of Appeal.
  8. Lord Neuberger (with whom Lord Rodger, Baroness Hale and Sir Jonathan Parker agreed) said:
  9. 30. As Lord Scott so clearly demonstrates, the court has an inherent jurisdiction to order security for costs, and, while that jurisdiction is essentially discretionary, the discretion must be exercised not merely in a generally judicial manner, but in a manner which accords with the settled practice of the court, as circumscribed or extended by primary or secondary legislation.
    31. I am prepared to assume for the purpose of this appeal that, in order to justify an order for security for costs, it is necessary for the respondent liquidators to establish that the applications are within the ambit of section 74 or of GCR Ord 23, r 1 , although there is considerable force in the contention that those provisions extend, rather than limit, the court's inherent power to order security, as Lord Scott explains in paras 10 to 14. I also accept that it is the settled practice of the court not to order security for costs against a defendant in relation to any steps which are reasonably necessary to enable him to resist a claim brought against him. Additionally, I agree that, at least in general, a discrete order for security will not be made in relation to what is in substance an interlocutory application. It further seems to me that it must be right, at least as a general rule, that, when deciding whether a particular application is an "action, suit, or other … proceeding" or an "action or other proceedings", the court must look at the substance of the application as opposed to its strict form.
    32. In my judgment, viewed in the light of these principles, the applications in the present case were originating applications falling within the expressions I have just quoted. They brought before the court issues which were not previously before the court, and which would not otherwise have been before the court; and, although brought in the context of a winding up ordered by, and under the ultimate supervision of, the court, these applications were essentially free-standing. The applications arose because of Bancredit Cayman Ltd's insolvency and because of a dispute as to whether that company was genuinely indebted to the appellants (as they claimed and the liquidators denied) or to other claimants (as the liquidators claimed and the appellants denied). The winding up proceedings merely provided the forensic framework in which the applications were made, or the procedural launch pad from which the applications were issued. Indeed, in his engaging submissions, Mr Lowe QC realistically accepted that the applications were in substance originating proceedings. This concession must be right given that these applications would admittedly be originating proceedings if this was a voluntary or creditors' winding up and all the facts were otherwise identical.
  10. A similar question also arose in In re Dalnyaya Step llc [2017] 1 WLR 4246, a case involving an application to set aside an earlier order of the court, namely a recognition order made under the Cross-Border Insolvency Regulations 2006 declaring a liquidator appointed by a Russian court to carry out the liquidation of a Russian company to be the official receiver of the company, and ordering its liquidation. The liquidator also applied for an order under section 236 of the Insolvency Act 1986 that the managers of a Guernsey unit trust (referred to as "the Hermitage parties") which owned the Russian company produce company information and documents and attend court for questioning. The Hermitage parties applied to set aside the recognition order and resisted the section 236 application. They applied for an order for security for costs of the hearing of their set aside application and of the section 236 application made against them.
  11. Rose J (as she then was) held that the recognition application was a proceeding within the meaning of what was then the relevant rule, CPR 25.12, and that the Hermitage parties could properly be described as defendants to that application. Rose J reached that conclusion on the basis that if the background to the recognition application had been disclosed to the Registrar hearing the recognition application, she may well have adjourned that hearing and directed notice of it be served on the managers, concluding at [70] that, "[i]f that had occurred, there can be little doubt that in substance the Hermitage parties would have been the defendants to that application and that they would have been entitled to seek security for their costs of resisting the making of the recognition order." She held that the liquidator "should therefore be deprived of the advantage of having obtained the recognition order ex parte obliging the Hermitage parties to bring an application to set it aside". Rose J then referred to the fact that the grounds on which the Hermitage parties relied in both the set aside application and the section 236 application were identical and decided that, in both respects, the liquidator was the claimant and the Hermitage parties the defendants, and on that basis also ordered the liquidator to provide security for the Hermitage parties' costs of the hearing of both those applications.
  12. Both Mr Maguire and Mr Lorrell rely on the Dalnyaya Step decision. Mr Lorrell says that it shows that applying to set aside an order does not make an applicant a claimant for the purpose of security for costs. Mr Maguire refers to Rose J's reference at [50] to the example given by Lord Scott in the GFN case of an application to set aside a compromise on the ground of misrepresentation or concealment of material facts. Lord Scott said that if that application were made by way of fresh proceedings, then they would clearly be "proceedings" for the purpose of security for costs, and that if the application were made by application in the existing action, the ability of the court to entertain an application for security for costs "could surely not be denied on the ground that the application was not in form an originating process and do did not constitute 'proceedings' for [security for costs] purposes".
  13. I am aware that I am not hearing the Set Aside Application but considering the application of the principles identified in the authorities above to this case requires consideration of the nature of the Set Aside Application.
  14. The Set Aside Application notice does not identify any particular rule or other basis on which Kyrrex relies in asking the Court to set aside the Summary Judgment Order. In his skeleton argument and in making the application orally, Mr Maguire (appearing for Mr Jones) made submissions to the effect that the Set Aside Application should properly be made by way of a fresh claim because it seeks to set aside the Summary Judgment Order on the basis it was obtained by fraud, relying on Terry v BCS & Ors [2018] EWCA Civ 2422. However, in answer to my question asking whether the Set Aside Application was made on the basis that the judgment was obtained by fraud, Mr Lorrell expressly disavowed that the basis of the Set Aside Application was that the judgment had been obtained by fraud. He said that the application was made on the basis of CPR 40.9.
  15. CPR 40.9 provides that, "A person who is not a party but who is directly affected by a judgment or order may apply to have the judgment or order set aside or varied." Mr Lorrell referred to Shell UK & Ors v Persons Unknown [2023] EWHC 1229 (KB) in which Hill J considered an application under CPR 40.9 by Ms Branch, a member of Extinction Rebellion, to make submissions at the hearing of an application by the Claimants to extend injunctions which sought to restrain unlawful protests by environmental activists for a further year. At [65], Hill J decided that it was appropriate to follow the approach of Ritchie J in Esso Petroleum Company Limited v Breen and Persons Unknown [2022] EWHC 2600 (KB) as being specific to the context of Persons Unknown injunctions, namely that (as Hill J set out at [62]) "affording someone the right to be heard under CPR 40.9 required them to pass through a 'gateway' requiring them to satisfy the court that they were (i) 'directly affected' by the injunction; and (ii) had a 'good point' to raise". Mr Lorrell submitted that this showed there was a low bar for an application under CPR 40.9 to succeed.
  16. I was not shown any other authorities on CPR 40.9 but simply by reference to the Shell case, Mr Lorrell's submission does not seem to me to be correct. That case shows that the rule is, as appears from its terms, concerned with the circumstances in which a person who is not a party to a particular set of proceedings may, despite not being a party, make an application to have a judgment or order in those proceedings set aside or varied. That is the "gateway" applied in the Shell case. That is also borne out by the passage from the first instance judgment in Mohamed & Ors v Abdelmamoud [2015] EWHC 1013 (Ch) (upheld by the Court of Appeal at [2018] EWCA Civ 879 and cited in Shell at [58]) where the Deputy Judge said at [59], "Since the 'directly affected' test is for the purpose of establishing locus standi, it is sufficient that the relevant judgment or order would prima facie be capable of materially and adversely affecting a legal interest. It is not necessary to show that it would, in fact, do so, for that would be the subject of the application itself."
  17. There is therefore a further hurdle for the Set Aside Application to overcome, even if it can satisfy the requirements of CPR 40.9. The commentary in the White Book at 40.9.1 observes, "By stating that a 'directly affected' non-party may apply to have a judgment set aside or varied, r.40.9 gives no clue as to when such an application may succeed."
  18. The basis on which Kyrrex seeks to have the Summary Judgment Order set aside is set out in its evidence in support of that application and summarised in Mr Lorrell's skeleton argument. Paraphrasing that summary of Kyrrex's case, it says:
  19. i) It was unaware of the proceedings and of the Summary Judgment Order until after it was made, and wishes to have that order set aside and be joined to permit it to defend the claim.

    ii) The grounds of its defence will be that the premise of Mr Jones' claim was that his stolen 89.616 BTC were traceable into the relevant Huobi *tHEL wallet, but that Kyrrex's expert evidence (it says) demonstrates that none of Mr Jones' BTC can be tracked into the *tHel wallet.

    iii) On the contrary, Kyrrex says that its evidence shows that the *tHel assets are legitimately owned by Kyrrex and its customers, with no illicit provenance.

  20. In addition to the summary of Kyrrex's expert evidence prepared for this hearing, Mr Lorrell showed me extracts from the expert report on which Kyrrex relies and also the decision in D'Aloia v Persons Unknown [2025] 1 WLR 821, in which Richard Farnhill, sitting as a Deputy Judge, considered whether it was possible to trace or follow cryptocurrency, and the correct approach to such tracing or following. Kyrrex will rely on that authority for the purposes of the Set Aside Application as showing what it says are the fundamental errors in the tracing exercise carried out on behalf of Mr Jones and the expert evidence relied on by Mr Jones in obtaining the Summary Judgment Order.
  21. Turning back to apply these matters to the Security for Costs Application before me, the GFN and Dalnyaya Step cases referred to above make it clear that the question whether security for costs is available in relation to a particular claim or application is one of substance rather than form. It seems to me that that means there is an argument of some merit that the Set Aside Application, issued over 2 years after the Summary Judgment Order was made (in a case where Kyrrex was informed of the order on 19 September 2022, again over 2 years before the Set Aside Application was made) is, in substance, a new claim or proceeding rather than an application in the existing proceedings. I have concluded however that, as advanced, it is in fact properly characterised for the purposes of the Security for Costs Application as an application in existing proceedings. Kyrrex relies on CPR 40.9 which permits a person who is not a party to apply to set aside a judgment or order, a provision which necessarily contemplates the non-party becoming involved in underlying proceedings rather than issuing a new claim. It seems to me that such an application may well face substantial hurdles (including but not limited to the issue of delay, and whether it is relevant who bears responsibility for the failure to notify Kyrrex of the proceedings before judgment, and whether that is Mr Jones or Huobi), but the Set Aside Application has been listed for hearing at the end of this month and that hearing, not the hearing of this Security for Costs Application which Mr Jones has had listed separately and beforehand, is the appropriate place for a decision on the merits of the Set Aside Application. I am not in a position to decide those merits at this hearing.
  22. I have concluded therefore that the Set Aside Application being pursued by Kyrrex (in the form before me, and addressed by Mr Lorrell in his submissions) does not provide a basis on which I can order security for costs. In the terms used in the GFN case, it is in substance an interlocutory application rather than an originating proceeding.
  23. I will therefore dismiss the Security for Costs Application.


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