BL-2021-000228 - [2025] EWHC 2222 (Ch)

The first and second claimants are companies incorporated in Cyprus. The second defendant is a company registered in Riyadh in the Kingdom of Saudi Arabia (KSA) (Commercial Registration Number 1010348413). The first defendant is Mohammed Jawa; he was, but is no longer, a director and shareholder of the second defendant.

The claimants’ claims arise from franchise agreements entered into between the second claimant and the defendants relating to restaurants operated under the “Nozomi” brand in KSA and elsewhere. The franchise agreements provided that the governing law was English law and that the English courts would have exclusive jurisdiction.

In summary the claimants say that:

The claimants seek against the defendants:

On 29 June 2018 the claimants brought a claim against the defendants (the First Proceedings). Permission to serve out was granted on 4 July 2018. The claimants purported to serve the proceedings in KSA and went on to apply for judgment in default on 14 August 2018. Judgment was granted on 10 October 2018.

On 16 November 2018, LK Law (LK) agreed to accept service on behalf of the defendants after that date. The claimants refused to agree to set aside judgment. The defendants applied to set aside the judgment. In a reserved judgment dated 12 December 2019 following an inter partes hearing Deputy Master Bowles concluded that the claimants had failed properly to serve the First Proceedings under the laws of KSA. He ordered that the default judgment be set aside, and dismissed the First Proceedings.

As to costs:

On 17 January 2020 the claimants started a second claim (the Second Proceedings). The claimants purported to serve on LK, but were told that LK was not authorised to accept service. The Second Proceedings were never validly served.

On 11 February 2021 the claimants issued the present proceedings (the Present Proceedings). An application for service out and for service by alternative means was made on 10 March 2021. The application was supported by the witness statement of Timothy Ashdown dated 9 March 2021 (Ashdown 1), which referred to having been told by the FPS that service in KSA would take 12 months or more. That evidence in support did not refer directly to the unpaid costs from the first proceedings.

At a hearing of the application on 1 April 2021, Master Teverson asked about the costs position and was told £90,000 was outstanding. The Master required the claimants to undertake to pay £90,000 as a condition of serving the claim out. Shortly after the hearing the claimants’ counsel emailed the Master drawing attention to the fact that (unknown to him at the hearing) the £90,000 figure had been superseded by the default costs certificate in the amount of £210,036.61. At a further hearing on 27 April 2021, Master Teverson made an order permitting service out without any payment condition, apparently on the basis that the claim might otherwise be stifled (the Teverson Order).

Upon becoming aware of the Teverson Order, on 18 June 2021, the defendants applied to challenge jurisdiction and, amongst other things, for an order reinstating the claimants’ obligation to pay the outstanding costs as a precondition of serving the claim.

That application was listed to be heard by Deputy Master Arkush on 26 August 2021. With encouragement from the Deputy Master the parties agreed the substantive terms of an order but the Deputy Master ruled on costs. At [18] of his judgment, he expressed himself to be “perturbed” that the position as to outstanding costs was not fairly disclosed to Master Teverson at the 1 April 2021 hearing and at [20] stated that he hoped such conduct would not be repeated. The defendants’ costs were ordered to be paid by the claimants and were summarily assessed at £55,000.

The Order following that hearing was dated 20 September and sealed on 23 September 2021 (the Arkush Order). Pursuant to the Arkush Order the Teverson Order was set aside; permission to serve out in accordance with CPR6.40(3)(a) and/or (c) was granted and the time for service was extended to 1 September 2022. The claimants were required to pay previous costs liabilities totalling £236,871.64 and the assessed costs of £55,000 (together the Outstanding Costs) by 25 September 2021, failing which the claim would be struck out automatically on 9 October 2021. The proceedings were stayed until the Outstanding Costs were paid.

On 24 September 2021 DMH sought guidance from the FPS and were told on 27 September 2021 that the length of time for service in KSA could be 12 months or more from when documents arrive in KSA and were given guidance about the translation and assembly of documents and how they must be listed in form N224.

On 24 September 2021 the claimants applied to extend time for payment by two days until 27 September 2021. That was followed by a second application on 27 September 2021 for an extension until 8 October 2021. By 9 October 2021, the Outstanding Costs had still not been paid. On 23 November 2021, the claimants sought to amend their earlier application alternatively to seek relief from sanction.

All three applications came before Deputy Master Francis. In his judgment dated 13 December 2021 he:

Before any order was drawn up a further application was made on 21 December 2021 seeking an extension of time to pay until 14 January 2022. At an inter partes hearing on 7 January 2022, the Deputy Master made an order which extended time to pay the Outstanding Costs to 14 January 2022 and provided that the claim be struck out on 17 January 2022 without further order in the event of non-payment.

Deputy Master Francis also ordered the claimants to pay the defendants’ costs in respect of the various extension applications in a total sum of £48,675 (the Additional Costs) by 21 January 2022. The Outstanding Costs, but not the Additional Costs, were paid on 13 January 2022.

DMH commissioned translations of the service documents on 11 January 2022 and received them on 8 March 2022. On 26 April 2022 the service documents and Form N224 were sent to the FPS. They were returned as defective on 6 July 2022. DMH requested a new translation certificate, which was received on 27 July 2022. DMH sent the service documents, new certificate and revised form N224 to the FPS the same day. On 2 August 2022 the FPS wrote to DMH confirming the service documents had been dispatched and on the same day confirmed by telephone and email that it would take at least 12 months for service to take place.

On 16 August 2022, the claimants applied without notice for an order extending time for service of the claim form for a further fifteen-month period to 1 December 2023 (the First Extension Application). The evidence in support was the witness statement of Timothy Ashdown of DMH dated 16 August 2022 (Ashdown 4). That statement:

On 17 August 2022 Deputy Master Bowles made the First Extension Order on the papers extending time for service to 1 December 2023.

On 30 November 2023, the claimants applied for an extension to 1 July 2024 (the Second Extension Application).

No witness statement was filed in support of the Second Extension Application. The Claimants instead relied on Ashdown 4 and referred in the application notice to:

The application was determined on the papers as requested by the claimants and I made the Second Extension Order on 1 December 2023 extending time to 1 July 2024.

On 19 June 2024, the Claimants applied for an extension to 1 March 2025 (the Third Extension Application).

No witness statement was filed in support of the Third Extension Application. The application notice:

I made the Third Extension Order on the papers extending time to 1 March 2025.

Murray 1 and 2 set out the sequence of events since the Arkush Order with a little more detail than had been included in the three Extension Applications. These Witness Statements did not provide an explanation for the time gap between obtaining translations of the service documents and submitting them to the FPS in early 2022 or explain why the claimants were not to blame for the errors in the paperwork as originally submitted. In addition it explained that on 23 August 2024 the claimants instructed a KSA law firm, Al-Fallaj Law (Al-Fallaj), to assist with service in KSA (in fact the letter of instruction requested that Al-Fallaj serve the defendants by a method permitted by the laws of KSA). No explanation was given of what Al-Fallaj actually did or of why it could not have been done sooner. Service on the first defendant was effected in KSA by Al-Fallaj on 18 November 2024 (and pursuant to s.1140 of the Companies Act 2006 on 11 March 2025). Unknown to the claimants at the time, service on the second defendant was effected by the KSA authorities on 26 November 2024, after Al-Fallaj had liaised with the KSA authorities. The certificate of service was only received by the claimants on 19 March 2025. Murray 2 said that “the time that the British and Saudi Authorities took to serve the Second Defendant was out of the Claimants’ control”.

Murray 2 also stated that the Additional Costs would be paid before the May hearing. Murray 2 apologised for the late payment of the Additional Costs and for the failure to draw the matter of those costs to the attention of the court earlier. Murray 2 sought to blame non-payment of the Additional Costs on a failure of the defendants to take enforcement steps and on the claimants being distracted by other matters.

The Additional Costs remained unpaid until on or around 7 May 2025. The judgment rate interest due on those costs was paid only very shortly before the May hearing.

Following the hearing on 7 January 2022, the next the second defendant heard about the Present Proceedings was on 26 November 2024 when documents as described in Phipps 1 (the KSA Documents) were delivered by a KSA official to its offices in KSA. The second defendant says that the KSA Documents are deficient in a number of respects However, for the purposes of the May hearing the second defendant was prepared to assume that, had the service of the KSA Documents been within the period of validity of the Claim Form, it would have been effective.

Phipps 1 explains that there are a number of steps that the claimants might have taken to hasten serving the claim form in KSA:

Phipps 1 also explains that, in the author’s experience, translations of service documents may be obtained within a week and possibly more quickly at greater cost.

The evidence in Phipps 1 about instructing an agent in KSA to assist with service was not challenged. Nor was any evidence adduced to contradict the evidence about the speed of obtaining translations.

It is notable that the claimants did instruct KSA counsel in connection with service of the First Proceedings. It is apparent also from the terms of the Alternative Service Application and Murray 1 that, when KSA Counsel was instructed in August 2024, they served the first defendant and liaised with the KSA Ministry of Justice and assisted with service on the second defendant.