Hotel Portfolio II UK Limited (in Liquidation) & Anor v Andrew Joseph Ruhan & Anor

Declaratory relief is discretionary and should be granted only where it serves a useful purpose, is just in all the circumstances and is expressed with sufficient precision. Post-judgment joinder is possible under Civil Procedure Rules 1998 r 19.2, but binding a non-party to completed findings without an opportunity to be heard is exceptional and generally inappropriate. Compound interest may be awarded against a dishonest assistant ordered to pay equitable compensation. The jurisdiction is not limited to cases where the beneficiary would have used the money commercially. A claimant need not enforce first against one of several liable defendants. Costs may be joint and several where the defendants conducted a common defence, and investigation applications may be costs incidental to the litigation.

This was a consequential hearing following the merits judgment in which Hotel Portfolio II UK Limited and its liquidator succeeded against Andrew Ruhan and Anthony Stevens in claims arising from breaches of fiduciary duty and dishonest assistance. The court was asked to determine the form of declarations, whether Grenda Investments Ltd should be joined after judgment, principal sums, payment dates, compound interest, costs, permission to appeal and related conditions, and Ms Richardson’s costs. The earlier judgment was [2022] EWHC 383 (Comm). The central issues were whether the court should record selected findings by declaration, bind a non-party to evidentiary findings made without hearing it, and award compound interest and consequential costs relief.

1. Declarations. Applying the discretionary principles summarised in Office Depot International (UK) Ltd v UBS Asset Management (UK) Ltd [2018] EWHC 1494 (TCC) and the requirement for precision stated in Oxfordshire County Council v Oxford City Council [2006] UKHL 25, the court refused declarations which added no useful purpose or went beyond the findings necessary for the merits decision. It granted precise declarations that Cambulo Madeira and, in relation to the Geneva Settlement, Mr Stevens and Phoenix acted as Mr Ruhan’s nominees, and that the relevant beneficial interests were subject to a constructive trust for HPII.
2. Joinder. Rule 19.2 of the Civil Procedure Rules 1998 may be used after judgment, but the authorities concerned forward-looking joinder. The present application was backward-looking and sought to bind Grenda to evidentiary findings made when it was neither a party nor heard. That would conflict with the basic fairness principle identified in Seven Arts Entertainments Ltd v Content Media Corp plc [2013] EWHC 588 (Ch). Joinder was refused.
3. Quantum and interest. Judgment was entered for £7.76 million and £94.5 million against Mr Ruhan by way of account and against Mr Stevens by way of equitable compensation. Both defendants were given 28 days to pay. Following the authorities, including FM Capital Partners Ltd v Marino & Ors [2019] EWHC 725 (Comm), compound interest was available against a dishonest assistant. It was not confined to commercial use by the beneficiary. Interest was awarded at 2.5% above Bank of England base rates with six-monthly rests.
4. Costs and appeal. Costs were ordered on an indemnity basis and generally jointly and severally, with separate treatment for the deeds of indemnity. A £2 million payment on account was ordered, and qualifying section 236 investigation costs were capable of being incidental costs. Permission to appeal was granted on grounds 1, 2 and 5 but refused on grounds 3 and 4. A stay and payment conditions were refused absent a compelling reason, although £150,000 security for appeal costs was required.

First-instance consequential judgment following the merits judgment of 23 February 2022, [2022] EWHC 383 (Comm). No appeal stage is described for the present decision.