Peak Hotels and Resorts Ltd v Tarek Investments Ltd & Ors

A party seeking release from a negotiated undertaking given to the court must show good cause. Usually this requires a significant change of circumstances or newly discovered facts which could not reasonably have been known when the undertaking was given. A later, more favourable assessment of circumstances known at the time is insufficient.

Where money is paid into court as fortification for cross-undertakings, the scope of the security depends on the order and its context. A party cannot withdraw the money merely because subsequent evidence supports an argument already advanced when the security was provided.

An interim payment under CPR 25.7(1)(c) requires judgment for a substantial sum against the defendant. A conditional order for counter-restitution following rescission does not satisfy that requirement.

Two applications arose in complex proceedings concerning the ownership and control of Aman Resorts. PHRL sought payment out of US$9 million of US$10 million paid into court to fortify its cross-undertakings in damages. The Sherway defendants sought an interim payment of approximately US$23.4 million under CPR 25.7.

The court first determined that the fortification covered all relevant cross-undertakings in the proceedings, including those relating to the reinstatement of Mr Zecha and restrictions on board meetings. It then considered whether circumstances had changed sufficiently to justify release of the money. The interim payment application raised whether counter-restitution following rescission amounted to judgment for a substantial sum against PHRL, and whether PHRL’s tortious cross-claims had to be taken into account.

1. Payment out. The US$10 million fortification covered all PHRL’s relevant cross-undertakings in the proceedings, not merely those connected with the capital-call injunctions. The broad wording of the Pelling Order, read with the earlier evidence and the Candey Undertaking, included the Newman and Englehart relief. The Sherway defendants were also entitled to its benefit.
2. Under Chanel Ltd v FW Woolworth & Co Ltd [1981] 1 WLR 485 and the related authorities, PHRL had to show good cause, ordinarily a significant change of circumstances or a previously unavailable fact, making it unjust to hold it to the undertaking. The subsequent opening of the Aman Tokyo hotel did not qualify. PHRL had already argued that the injunctions would cause no delay and had provided the security without reserving the right to revisit the amount.
3. The defendants’ alleged losses were sufficiently plausible that the court could not conclude at that stage that the cross-undertakings would not be called upon in significant amounts. It was therefore neither unjust nor oppressive to retain the US$10 million. The Payment Out Application was refused.
4. Interim payment. Following Deutsche Bank AG v Unitech Global Limited [2014] EWHC 3117 (Comm), a conditional order for rescission requiring counter-restitution was not judgment for money against the party seeking rescission within CPR 25.7(1)(c). The court was not satisfied that it had jurisdiction to order the interim payment.
5. Alternatively, PHRL’s tortious cross-claims were relevant under CPR 25.7(5)(b). Their connection with the Sherway claim was sufficiently close to satisfy the equitable set-off test, or at least required them to be taken into account. The evidence did not permit the court to conclude that Sherway would obtain substantial judgment after those claims were considered. The Interim Payment Application was therefore also refused.