Case No: HC 99/04771
HC 01/00278
 
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

Royal Courts of Justice
Strand, London, WC2A 2LL

Date: 25th July 2002

Before :

THE VICE-CHANCELLOR
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Between :

	LATREEFERS INC AND OTHERS	Claimants	
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	HOBSON AND OTHERS	Defendants	

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Mr. William Trower QC and Ms Hilary Stonefrost (instructed by Messrs Simmons & Simmons) for the Claimants
Mr. Angus Glennie QC and Mr. Jeremy Goldring  (instructed by Messrs Lawrence Graham) for the 4th - 6th Defendants

Hearing dates : 9th, 10th and 11th July 2002
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Approved Judgment

I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.

.............................
The Vice Chancellor

The Vice-Chancellor  : 

Introduction
1.	The six applications before me are made in two actions between Latreefers Inc. (“Latreefers”) and, amongst others, Latmar Holdings Corporation (“Latmar”), Latmar Services Ltd (“Services”) and Latvian Shipping Company (“Latco”).   They  raise three basic issues, namely: (1) whether the orders made by Lightman J on 25th June 2001 extending until 24th December 2001 the time within which the two claim forms were to be served should be set aside, and if not (2) whether the court has and, if so, should exercise jurisdiction to try each of the claims made in such action, and if so (3) whether the particulars of claim in the first action should be amended and the two actions consolidated.
2.	Latco is a company incorporated under the laws of the Republic of Latvia.  Its President is Mr Avotins.   Latmar is a company incorporated under the laws of the Republic of Liberia.  It is a wholly owned subsidiary of Latco.  Services is a company incorporated in England and is a wholly owned subsidiary of Latmar.   Latreefers was incorporated under the laws of the Republic of Liberia on 9th September 1992 and was also a wholly owned subsidiary of Latmar.   The directors of Latreefers, Mr Hobson, Ms Potts and Mr Brickell, were employees of Capco Trust IOM Ltd, an Isle of Man company.
3.	On 11th September 1992 Latreefers entered into six contracts with Stocznia Gdanska SA (“SGSA”), a Polish shipyard, for the construction of six refrigerated vessels at prices varying from US$27.6m to US$29.2m payable by instalments.   The initial deposits for which such contracts provided were paid by Latreefers between 19th October 1992 and 4th March 1993.
4.	On 2nd December 1993 there was standing in the name of Latreefers with CFM Finance Ltd (“CFM”), a Bermudan deposit-taking company, a deposit of US$13.4m.    On that day Latreefers acknowledged in writing that it owed US$13.4m to Latmar and assigned the deposit with CFM to Latmar in purported repayment of such debt.  On the following day, 3rd December 1993 SGSA served on Latreefers a keel-laying notice under contract 1 thereby triggering a liability on Latreefers to pay 20% of the price to SGSA on or before 10th December 1993.   Latreefers failed to pay that instalment of the price.  
5.	On 7th January 1994 SGSA started proceedings in the Commercial Court in London seeking the recovery of all sums due under all six contracts and damages for their breach.  In addition claims were made against Latco for inducing the breach by Latreefers of the six contracts with SGSA.   On 5th December 1994 it obtained summary judgment for part of its claim amounting to US$11m with interest of US$4.8m.   The judgment was not satisfied.   (For completeness I should record that judgment on liability in respect of the balance of the claim of SGSA was given by Thomas J on 1st February 2001 and upheld by the Court of Appeal in June 2002.)   SGSA went bankrupt on 8th August 1996.  On 1st July 1998 following appeals by Latreefers to both the Court of Appeal and the House of Lords from the summary judgment against it, SGSA presented a petition to the Companies Court in England for the compulsory winding up of Latreefers. 
6.	On 21st December 1998 Lloyd J appointed Mr Cooper and Mr Freakly as provisional liquidators of Latreefers and directed them to carry out certain investigations into the affairs of Latreefers.   On 27th May 1999, having considered the report of the provisional liquidators, Lloyd J ordered the compulsory winding up of Latreefers.   An appeal from his order was dismissed by the Court of Appeal on 9th February 2000 and a petition for leave to appeal from that order was dismissed by the House of Lords on 22nd June 2000.
7.	In the meantime, on 11th November 1999, Latreefers, acting by its liquidators commenced the first action with which I am concerned (“The First Action”).  The first three defendants are the three directors to whom I have referred.  The fourth to seventh defendants are Latmar, Services, Latco and Mr Avotins.  The last defendant is Capco.  As indicated in the claim form issued on 11th November 1999 the claim against each defendant arises out of their acts or omissions in relation to the business, dealings, affairs or property of Latreefers, in particular the conclusion of the six contracts with SGSA on 11th September 1992, their performance or non-performance between September 1992 and January 1994 and dealings with the deposits with CFM held in the name of Latreefers.   The relief sought includes damages for breach of fiduciary, contractual or tortious duty and a declaration of liability to contribute to the assets of Latreefers under s.214 Insolvency Act 1986.
8.	As required by CPR Rule 7.5, the claim form in the First Action should have been served on those defendants who could be served within the jurisdiction on or before 10th March 2000 and those who could only be served outside the jurisdiction on or before 10th May 2000.   On 8th February 2000 the solicitors acting for Latmar, Services and Latco, Lawrence Graham, informed those acting for Latreefers, Simmons & Simmons, that they did not have instructions to accept service.   On 3rd April 2000 Master Bragge refused to extend the time for service of the claim form in the First Action until 14 days after the judgment of the Commercial Court on the balance of the claim of SGSA against Latreefers but he did extend the time for service of the particulars of claim until 11th April 2000.   Services was duly served therewith on that day.   On 17th April 2000 Master Weir granted Latreefers leave to serve the claim form in the First Action out of the jurisdiction on Latmar, Latco and Mr Avotins.   Latmar was duly served therewith on 2nd May 2000.
9.	The problems with regard to service arose in respect of Latco.   It is not necessary to go into all the details.   On 26th April 2000 the solicitors for Latreefers sent to a firm of lawyers in Latvia, Sorainen Law Offices (“Sorainen”), the documents which needed to be served.   On 8th May 2000 Sorainen served such documents on Latco in Riga.  Had such service been valid it would have been just in time.  Unfortunately for Latreefers, as is now conceded, it was not.  In summary the defects arose from the use of the wrong font on the translations of the documents to be served and the fact that service should have been effected in accordance with the Hague Convention, to which Latvia was a party, but it was not.   On 26th May 2000 Latco’s solicitors wrote to those for Latreefers pointing out that, in their view, there had not been proper service on Latco.   The latter did not agree and on 12th June 2000 an application was issued by Latco seeking, amongst other relief, a declaration that it had not been properly served.  On 8th May 2001 Latreefers accepted that there had not been proper service on Latco with the consequence that an order to that effect was made by Master Bragge on 14th June 2001, a year after the application therefor had been made by Latco.  In the meantime, on 3rd July 2000, Latreefers issued an application for an extension of time for service of the claim form in the First Action on Latco.  In due course this application came before Lightman J on 25th June 2001.
10.	The application by Latco issued on 12th June 2000 also sought relief under CPR Pt 11 on the grounds that this court did not have or should not exercise jurisdiction to entertain the claims made in the First Action.  This, as well as the doubt whether Latco had been properly served with the claim form in the First Action, gave rise to considerable activity on the part of both Latco and Latreefers in seeking and obtaining the advice of experts on the law of Liberia, being the place of Latreefers' incorporation.  This occupied the rest of 2000.
11.	On 19th January 2001 the claim form in the Second Action was issued against the same defendants and for the same relief as before.   The difference was that in this claim form it was stated that the claim was made under Liberian law if and to the extent that Liberian law governed any claim, issue or question in the proceedings.   This was not served or indeed brought to the attention of any of the defendants until 8th May 2001.  On that day Latreefers' solicitors informed those for Latmar, Services and Latco that they admitted that the claim form in the First Action had not been properly served on Latco, that they proposed to amend the particulars of claim in the First Action and that they had issued the claim form in the Second Action.   The solicitors for Latmar, Services and Latco refused to agree to the proposed amendments or to accept service in the Second Action.  Accordingly on 5th June 2001 Latreefers issued an application seeking leave to serve the claim form and particulars of claim in the Second Action out of the jurisdiction on Latmar in Liberia and Latco in Latvia and an extension of time within which to do so.
12.	The application issued by Latreefers in relation to the First Action on 3rd July 2000 and in relation to the Second Action on 5th June 2001 came before Lightman J on 25th June 2001.  Latco did not appear and was not represented at that hearing.    Lightman J extended the time for service of the claim form and particulars of claim on Latco in the First Action and of the claim form and particulars of claim on Lamar and Latco in the Second Action to 24th December 2001.   In addition he gave leave for service out of the jurisdiction of the claim form in the Second Action and the particulars of claim on Latmar in Liberia and Latco in Latvia.   Service of the claim form and particulars of claim in the Second Action was duly effected on Latmar in Liberia on 7th August 2001 and on Latco in Latvia on 13th September 2001.   On the latter date Latco was also served with the claim form and particulars of claim in the First Action.
13.	On 18th October 2001 Latco issued applications under CPR Pt 11 in both the First and the Second Actions challenging the jurisdiction of the court to entertain any of the claims made against it in either of them.  Latco also sought to have the order of Lightman J extending the time for service of the claim form in both actions set aside.   An application for similar relief in relation to the Second Action only was issued by Latmar on 21st December 2001.    On 12th February 2002 Latreefers issued its application for leave to amend the particulars of claim in the First Action.  On 10th May 2002 Latreefers issued an application for an order to consolidate both the First Action and the Second Action.
14.	In summary the applications before me are
(a) by Latco to set aside the order of Lightman J extending the validity of the claim form in the First Action;
(b) by Latco challenging the jurisdiction of the court to try any of the claims against it made by Latreefers in the First Action;
(c) by Latreefers for leave to amend its particulars of claim in the First Action; and 
(d) by Latco and Latmar challenging the jurisdiction of the court to try any of the claims against them made by Latreefers in the Second Action;
(e) by Latco and Latmar to set aside the order of Lightman J extending the validity of the claim form in the Second Action;
(f) by Latreefers for the consolidation of the First Action and the Second Action.
Extension of time for service of the claim forms in the First Action
15.	By virtue of CPR Rule 7.5 the claim form in the First Action should have been served on Latco on or before 10th May 2000.   It was not, nor was any application for an extension of time made before that date.   Accordingly CPR Rule 7.6(3) applied to Latreefers’ application for an extension of time.  That provides that 
 “..the court may make such an order only if
(a)...
(b) the claimant has taken all reasonable steps to serve the claim form but has been unable to do so; and 
(c) ....the claimant has acted promptly in making the application.”
16.	The provisions of CPR Rule 7.6(3) have been considered by the Court of Appeal in four recent cases, to which I should briefly refer.    In Vinos v Marks & Spencer plc [2001] 3 AER 784 the claimant’s solicitors issued the claim form at the end of the limitation period but due to an oversight did not serve it within the four months provided by CPR Rule 7.5(2).   The District Judge and, on appeal, the County Court judge held that the pre-condition prescribed by Rule 7.6(3)(b) was not satisfied with the consequence that they had no power to grant the extension sought.   In the Court of Appeal the claimant submitted that the provisions of CPR Rule 3.10 enabled the court to extend the time within which to serve the claim form.  This submission was rejected on the ground that the general words of Rule 3.10 could not override the specific prohibition contained in Rule 7.6(3).   In paragraph 20 May LJ, with whom Peter Gibson LJ agreed said
 “there is nothing unjust in a system which says that, if you leave issuing proceedings to the last moment and then do not comply with this particular time requirement and do not satisfy the conditions in rule 7.6(3), your claim is lost and a new claim will be statute-barred.  You have had three years and four months to get things in order.  Sensible negotiations are to be encouraged, but protracted negotiations generally are not.”
17.	In Kaur v CTP Coil Ltd (Court of Appeal 10th July 2000, unreported) the solicitor for claimants seeking damages for personal injuries was mistaken as to the date on which the claim form had been issued.  Having issued it he waited for the medical report before serving the claim form and particulars of claim as settled by counsel.   In addition he had difficulties preparing the schedule of special damage.  In the event he served all four documents five days after the expiration of the four month period within which the claim form should have been served.   The judge granted the extension sought on the ground that given the problems with obtaining the medical report and drafting the schedule of special damage it was reasonable not to serve the claim form earlier.   This argument was rejected by Waller LJ, with whom Simon Brown LJ and Gage J agreed.  At paragraph 13 he said
 “In my view that argument for the claimants would fail at two stages.  First, in my view the word “serve” means what it says.  Rule 7.6(3)(b) is concerned with the actual process of service and as to whether actual service has been reasonably attempted, and not with the preparation of documents.  But, secondly, and even if that were too narrow a view (and I do not accept that it is) the claimants have not established how it was reasonable for their solicitor to leave until the last moment preparation of the schedule of special damage.  Nor have they established that, even leaving it until the last minute, he could not have drafted these documents and prepared them prior to the expiry of the four month period.  The plain fact here is that [the solicitor] made a mistake in relation to the date by which he had to serve the claim form.”
18.	In Nanglegan v Royal Free Hampstead NHS Trust [2002] 1 WLR 1043 the claimant’s solicitors, having been told of the solicitor for the defendant’s insurers on whom proceedings should be served, issued the claim form on the last day of the limitation period but waited four days short of four months before seeking to serve it.  The claim form was then served on the Chief Executive of the NHS Trust not the named solicitors.  A month later, having discovered his mistake the claimant’s solicitor served the claim form on the named solicitors.   The defendant objected and six weeks after service on the named solicitors the claimant’s solicitor applied for an extension of time within which to serve the claim form.  The District Judge granted the extension but was reversed by the judge on appeal.  A further appeal to the Court of Appeal was dismissed.   In paragraph 16 Thorpe LJ, having set out the history of the case continued
 “Against that chronology, I do not see how it can possibly be said with any degree of conviction that the provisions of rule 7.6(3)(b) had been satisfied.  That rule is clearly intended to cover cases where the person endeavouring to effect service has taken all reasonable steps, but his reasonable efforts have been frustrated by some near insuperable difficulty or obstacle.  All we have here is a history of either incompetent or dilatory practice, a history which seems to have more than one chapter.”
19.	In agreeing with Thorpe LJ, Buxton LJ, at paragraph 24, added
 “...not only can it not be said that the claimant has taken all reasonable steps to serve the claim form, on the construction of the law adopted by this court he has taken no steps at all to serve the claim form, because service of the claim form in this case required service on the solicitors.  Even if that were not the case, it is manifest, as Thorpe LJ has said, that rule 7.6(3) is addressing those cases, familiar enough, where the claimant tries to find his defendant but cannot do so, either because the defendant is, unknown to him, out of the jurisdiction, or because he is evading service, or matters of that sort.  The terms of endeavour and lack of success that are set out in paragraph (3)(b) clearly address that situation.  They do not address a situation such as the present.”
20.	Finally I should refer to the judgment of the Court of Appeal in Anderton v Clwydd County Council [2002] EWCA Civ.933.   In paragraph 2 the Court pointed out that to delay service of a claim form until shortly before the expiry of the period allowed for its service is fraught with perils.
21.	The application for extension of the period for service of the claim form in the First Action came before Lightman J on 25th June 2001.  He granted an extension until 24th December 2001.  He was satisfied that the preconditions were satisfied.  He referred to the fact that the mistake occurred with Sorainen and said
“It seems to me that throughout the period that Sorainen were instructed the solicitors for the claimants acted entirely reasonably in acting as they did, verifying with Sorainen as best they could whether the advice they gave was correct, going to fresh solicitors for advice in this regard when they had reason to believe that perhaps Sorainen had got it wrong, and then acting promptly in conceding the inadequacy of service when this matter became clear to them.  I am quite satisfied that this is a case where the 7.6(3) conditions are fully satisfied, and therefore the necessary extension of time should be granted.”
22.	Later Lightman J commented on the absence of Latco from the hearing before him though they knew it was taking place.  He said
“It must be very much an open question whether...Latco should be permitted to challenge this decision, or seek to have the order set aside, on the basis that it was made without their attendance when they are really seeking, as it seems to me, two bites of the same cherry, and to adopt a course which is calculated to increase costs and waste time in these proceedings.”
23.	It was suggested by counsel for Latreefers, in reliance on the latter passage from the judgment of Lightman J, that I should not entertain the application of Latco to set aside the extension of time.   I do not agree.  Latco had ceased to be parties to the First Action on 14th June 2001 when, with the consent of the claimants, Master Bragge had declared that the court had no jurisdiction to try the claims against Latco in the First Action on the ground that the claim form had not been served on Latco and had by then expired.   For my part I see no reason why Latco should be expected to run any risk of a waiver of its objections or a liability to costs by appearing on an application in proceedings to which it was not a party.
24.	It follows that Latco is entitled to proceed on the footing that the order was made by Lightman J on 25th June 2001 on a without notice application so far as it is concerned.   It is not disputed that in those circumstances it is entitled to reopen the issues and require the court to exercise its powers and discretions anew.  In other words the question is not whether Lightman J was right or wrong but whether in the light of the circumstances as they now appear to me the period in which to serve the claim form in the First Action should be extended to 24th December 2001.
25.	Counsel for Latco submits that the answer to that question should be in the negative.   He relies on the cases to which I have referred as showing that “reasonable steps” for the purposes of rule 7.6(3)(b) require attempts to be made throughout the period for service permitted by rule 7.5 and that the claimant cannot shelter behind mistakes made by his solicitors or agents.   He relies on the facts that the claim form was issued on 11th November 1999, the solicitors for Latco informed those for Latreefers on 8th February 2000 that they did not have instructions to accept service, nothing was done to effect service within the jurisdiction until 11th April 2000 or to obtain an order for leave to serve out of the jurisdiction until 17th April 2000.   In those circumstances he submits that no steps were taken, reasonable or otherwise, to effect service on Latco until 8th May.  He contends that in any event Latreefers cannot justify an extension by reference to the mistake of Sorainen because Sorainen was the agent for Latreefers.
26.	Counsel for Latco also submits that rule 7.6(3)(c) was not satisfied because of the delay from 26th May 2000, when Latreefers was informed of the objection to the service apparently effected on 8th May 2000 and the application for an extension on 3rd July 2000.   It is contended that in the circumstances the application was not made promptly.
27.	These contentions are disputed by counsel for Latreefers.  He maintains that the preconditions contained in rule 7.6(3)(b) and (c) were satisfied.  He divides the period from the issue of the claim form on 11th November 1999 to the issue of the application on 3rd July 2000 into three periods, namely, 11th November 1999 to 3rd April 2000, 4th April to 11th May 2000 and 12th May to 3rd July 2000.
28.	With regard to the first period Latreefers relies on three matters, namely the uncertainty arising from the pending appeal from the winding up order made by Lloyd J on 27th May 1999, negotiations between the solicitors for Latreefers and Latco regarding a proposal for acceptance of service within the jurisdiction but without prejudice to the contention of Latco that the court has no jurisdiction to try the claims and the need to have regard to the course of the proceedings brought by SGSA in the Commercial Court.
29.	The problem with this submission is that the matters relied on were not attempts to effect service at all but explanations why no such steps were taken.   The decision of the Court of Appeal in Nanglegan v Royal Free Hampstead NHS Trust demonstrates why such explanations are irrelevant.   But, in any event, I would not regard any of them as adequate explanations.  First, there was no stay on the winding up order made by Lloyd J.   The liquidators were in office at all times.  Second, the negotiations relied on broke down in February 2000.  Third, the outcome of the pending Commercial Court proceedings was only relevant to a consideration by the creditors of Latreefers whether to proceed or not and was somewhat minimised by the fact that the immediately pending proceedings were on liability alone.   The fact is that in the first period no steps, reasonable or otherwise, were taken to serve the claim form on Latco or indeed on any of the other defendants whether within or without the jurisdiction.
30.	With regard to the second period Latreefers relies on the fact that leave to serve out on Latco was obtained on 17th April 2000.  Thereafter the solicitors for Latreefers took steps to ascertain who was a suitable Latvian lawyer to instruct and then to instruct Sorainen to serve Latco.   Had Sorainen not made a mistake as to the requisite mode of service then it would have been effected on 8th May 2000, three days before the period for service would expire.
31.	There is an issue whether the mistakes of Sorainen are to be attributed to Latreefers.   Counsel for Latco says that Sorainen should be regarded in the same way as the mistaken solicitors in Kaur v CTP Coil Ltd and Nanglegan v Royal Free Hampstead NHS Trust.   Counsel for Latreefers suggests that Latreefers, through its solicitors, having taken reasonable steps to ascertain that Sorainen were competent Latvian lawyers cannot be liable for their mistakes.
32.	In my view this issue is largely beside the point.  The question is whether Latreefers took all reasonable steps to effect service on Latco.  The only step actually taken for that purpose was taken by Sorainen on the instructions of the solicitors for Latreefers, but was ineffective.   Latreefers is bound to rely on that step because it was the only one.   The mistake of Sorainen explains why, in the words of rule 7.6(b), Latreefers was “unable” to serve the claim form.   The outstanding question is whether all reasonable steps were taken.   The status of Sorainen in relation to Latreefers is immaterial to that question.
33.	In my view, the conduct of Latreefers with regard to the service of the claim form in the First Action on Latco does not satisfy the requirement of rule 7.6(3)(b).   The period commenced on 11th November 1999.  No steps were taken until leave to serve out was obtained on 17th April 2000 and the abortive service was effected on 8th May 2000.  Thus over five of the available six months had elapsed before any step was taken.  As shown by the cases to which I have referred the regime of the Civil Procedure Rules requires parties to use the whole of a period allowed for a specific purpose.   If they do nothing until the last moment and what they then do is ineffective they cannot expect a second chance.
34.	The third period relied on by Latreefers goes to the requirement of rule 7.6(3)(c) that the claimant has acted promptly in making the application for an extension.  Latreefers contends that they did.  It is pointed out that the period for service expired on 10th May, the defect in the service effected on 8th May was pointed out on 26th May, Latco issued its application on 12th June, from 21st to 29th June correspondence between Latreefers’ and Latco’s  solicitors took place in which the former sought an extension by consent and the application was made on 3rd July.   In the circumstances it is claimed that the application was made “promptly”.
35.	In my view, Latreefers did make the application promptly.  Until 26th May they considered that what had occurred on 8th May constituted good service on Latco.  Thereafter they were entitled to some time to investigate the point and consider their position.  Given the nature of the problem I do not think that five weeks was excessive.
36.	Accordingly in relation to the application referred to in paragraph 14(a) above I would set aside the order of Lightman J made on 25th June 2001 insofar as it extended the time for service of the claim form in the First Action on Latco for failure to comply with the condition prescribed by rule 7.6(3)(b).  It follows that the application of Latco, referred to in paragraph 14(b) above, for a declaration that the court has no jurisdiction or should not exercise it to try the claims made against it in the First Action does not arise.   In argument counsel then considered the issues with regard to the extension of time for service of the claim form in the second action.   In my view it is preferable to deal with the other issue relating to the First Action, that is the application of Latreefers, referred to in paragraph 14(c) above, to amend the particulars of claim therein, before considering any issue relating to the Second Action.   
Amendment of the particulars of claim in the first action
37.	This issue affects Latmar and Services who are the only remaining effective defendants to the First Action.  Before describing the nature of the amendments for which leave is sought I should describe the unamended particulars of claim in the First Action dated 11th April 2000.  In doing so I omit reference to those parts which relate only to Latco or any of the other defendants.
38.	In paragraphs 1 to 6 the parties and their relationships are described.  By paragraphs 8 and 9 it is alleged that each and every director, including therein de facto and shadow directors, of Latreefers owed Latreefers duties to exercise their powers for proper purposes only, to act bona fide in the best interests of Latreefers including, if insolvent, its creditors and to exercise reasonable care and skill in the performance of their duties.  In paragraphs 10 to 56 are alleged the detailed facts as to the conclusion of the contracts with SGSA, the attempts to renegotiate them, the transfer of the deposit by Latreefers and the litigation with SGSA.  In paragraphs 59 to 65 it is alleged that Services was a shadow director or a de facto director.  In paragraphs 66 to 73 similar allegations are made against Latmar.   In paragraphs 105 to 107 it is alleged that Latreefers became insolvent as a result of the assignment of the deposit.  This allegation leads to that made in paragraphs 108 to 125 that Services and Latmar, as shadow or de facto directors, are liable for wrongful trading under s.214 Insolvency Act 1986.   Paragraphs 126 to 130 contain a claim against Latmar for repayment of the deposit as a transaction at an undervalue pursuant to s.423 Insolvency Act.  Paragraphs 152 to 158 contain claims against Latmar for the return of the deposit on the grounds of “knowing receipt” or a total failure of consideration.
39.	Nowhere in the unamended particulars of claim is there any allegation with regard to Liberian law.   In the defences of Latmar and Services dated 7th July 2000 it is averred that all matters relating to the corporate governance of Latreefers are to be determined in accordance with Liberian law as the law of the place of Latreefers’ incorporation, that the concepts of shadow and de facto director are unknown to Liberian law, that neither of them was a director of Latreefers under Liberian law and that any such liability is statute-barred under the law of Liberia.   These allegations were effectively put in issue by the replies of Latreefers served on 15th September 2000.
40.	The service of these defences and replies coincided with the discovery that the claim form in the First Action might not have been properly served on Latco.  For all these reasons the rest of 2000 was largely taken up with obtaining advice as to foreign law, whether Liberian or Latvian.   On 19th January 2001 the claim form in the Second Action was issued as a precaution against any defence of limitation if the claim form in the First Action had not been properly served or sufficient allegation as to liability under Liberian law had not been made.  In March 2001 Latreefers solicitors were advised by new Latvian lawyers that Sorainen had not effected proper service of the claim form in the First Action on Latco.  They then prepared amendments to the claim form in the First Action.   On 8th May 2001 the solicitors for Latmar, Latco and Services were informed by the solicitors for Latreefers that the latter conceded that the claim form in the First Action had not been properly served on Latco.  They revealed the issue of the claim form in the Second Action and sent a copy of the proposed amended particulars of claim in the First Action.   The solicitors for Latreefers invited the defendants to consent to the proposed amendments which they described as introducing appropriate references to Liberian law in the alternative.  It was intimated that the draft amended particulars of claim would serve as the particulars of claim in the Second Action if it was necessary to proceed with it.
41.	The description of the amended particulars of claim as introducing appropriate references to Liberian law in the alternative is accurate.  The root of all that follows is contained in paragraphs 9A to 9C which are in the following terms:
“9A.	Alternatively, in the event and to the extent that the law of Liberia governs any claim, issue or question in these proceedings:
9A.1	Each and every director of the Company owed to the Company a duty to act in good faith and with that degree of diligence, care and skill which ordinarily prudent men would exercise under similar circumstances, in like positions.
9A.2	Each and every controlling stockholder of the Company owed to the Company a duty of utmost fairness and good faith.
9A.3	Each and every affiliate company of the Company who exercised control over the Company, seeking to, and in fact controlling the de jure board of directors of the Company ("affiliate company"), owed to the Company a fiduciary duty.
9A.4	Each and every director and/or controlling stockholder and/or affiliate company of the Company was not entitled to implement instructions received from a third party without questioning or second-guessing those instructions.
9A.4	On the imminent and/or actual insolvency of the Company:
9A.4.1	Each and every director and/or controlling stockholder and/or affiliate company of the Company became a fiduciary of the assets of the Company for the benefit of its creditors;
9A.4.2	The fiduciary duties of each director and/or controlling stockholder and/or affiliate company were thereupon owed to the Company and to the creditors of the Company;
9A.4.3	The duties of each director and/or controlling stockholder and/or affiliate company as fiduciaries of the assets of the Company for the benefit of its creditors required each director and/or controlling stockholder and/or affiliate company to take all available steps to procure the distribution of those assets amongst those creditors pari passu.
9A4.4	Each director and/or controlling stockholder and/or affiliate company owed a duty to procure or agree to be subordinated all loans or advances by the dominant or controlling stockholder to the claims of the other creditors of the Company.
9A.4.5	Each and every director and/or controlling stockholder and/or affiliate company of the Company owed a duty not to permit or procure the Company to make any form of distribution of corporate assets to shareholders in their capacity as such; and/or to prefer as a creditor of the corporation any persons who was a sole, dominant or influential shareholder of the corporation.
9B	For the avoidance of doubt, any de facto director of the Company owed to the Company the same duties set out in paragraph 9A above.
9C	In paragraph 9A above, the word "controlling stockholder" includes a person in accordance with whose instructions the de jure directors were accustomed to act and acted.”
42.	In the subsequent paragraphs dealing with the position of Latmar or Services amendments are made to allege liability under Liberian law as an alternative to English law.   In addition in paragraphs 141A and 144A reliance is put on specific provisions of Liberian law, in the first case under s.212 Liberian Commercial and Bankruptcy Law and in the second under Title 7 Liberian Code of Law Revised, Fraudulent Conveyance Act s.89.   Thus the proposed amendments relate to the law of Liberia, not to what might be described as primary or even secondary facts.
43.	Permission to make these amendments is required under CPR rule 17.1(1) because the particulars of claim have been served.   Subject to the objections raised by Latmar and Services such amendments should be allowed in order that all the matters in dispute may be resolved.   In that connection it is to be observed that it was not contended that such amendments were objectionable on the ground that they did not raise triable issues.   The objections are that such amendments are precluded by s.35 Limitation Act 1980 and CPR rule 17.4 and should not be allowed because of the delay in proposing them.
44.	S.35 Limitation Act 1980 deals with the introduction of new claims in an existing action. So far as relevant a new claim is defined by s.35(2) as 
“any claim involving either – 
(a) the addition or substitution of a new cause of action; or
(b) the addition or substitution of a new party;”

As the time such a new claim is brought for the purposes of the Limitation Act is the time the relevant action or third party proceeding was commenced (s.35(1)) it is necessary to make some provision for preserving existing limitation defences.   Thus s.35(3) forbids the introduction of new claims after the expiry of any time limit except as provided for by rules of court.   Subsection (4) authorises Rules of Court to make provision for allowing a new claim to be introduced by way of amendment only if the conditions specified in subsection (5) are satisfied and subject to any further restrictions they may impose.  Subsection (5) provides

“The conditions referred to in subsection (4) above are the following – 
(a) in the case of a claim involving a new cause of action, if the new cause of action arises out of the same facts or substantially the same facts as are already in issue on any claim previously made in the action; and
(b)...]”
45.	The relevant rule of court is CPR rule 17.4(2).  It provides that 
“The court may allow an amendment whose effect will be to add or substitute a new claim, but only if the new claim arises out of the same facts or substantially the same facts as a claim in respect of which the party applying for permission has already claimed a remedy in the proceedings.”
In Goode v Martin [2002] 1 AER 620 the Court of Appeal interpreted the phrase “same facts as a claim” as “the same facts as are in issue on a claim” so as to bring in the facts raised in the defence to the claim.   Such an interpretation brings the rule into line with s.35(5)(a).
46.	Thus the proposed amendments must be considered from three separate points of view, namely, (a) do they raise a new cause of action, if so (b) has the time limit in respect of an action to enforce that cause of action expired, and if so (c) does the new cause of action arise out of the same or substantially the same facts as are in issue on a claim in the action.
47.	Counsel for Latreefers contends that the proposed amendments do not introduce a new cause of action.   He relies on Letang v Cooper [1965] 1 QB 232, 242 in which Diplock LJ described a cause of action as “simply a factual situation the existence of which entitles one person to obtain from the court a remedy against another person”.   Similarly in Paragon Finance v Thakerar & Co. [1999] 1 AER 400, 405 Millett LJ, after referring to Diplock LJ’s  description, said
“However it is formulated, only those facts which are material to be proved are to be taken into account.  The pleading of unnecessary allegations or the addition of further instances or better particulars do not amount to a distinct cause of action.  The selection of the material facts to define the cause of action must be made at the highest level of abstraction.”
In SIB v Fincken [2001] EWCA Civ 1639 Peter Gibson LJ, with whom Robert Walker and Keene LJJ agreed, pointed out at paragraph 30 that the highest level of abstraction required there to be left out of account “mere instances or particulars of essential facts”.
48.	This is disputed by counsel for Latmar and Services.  He points out, correctly, that the proposed amendments allege different duties in that they are claimed to arise under Liberian rather than English law and in some cases, primarily paragraphs 9A.4.2, .3 and .4, go further than the duties of a director under English law.   He relies on the need to plead any proposition of foreign law relied on and the statement of Sir Iain Glidewell in Darlington v O’Rourke [1999] Lloyds Reps (PN) 33 at page 36 that where a proposed amendment pleads a new duty it will, at least usually, raise a new cause of action. 
49.	In my judgment the proposed amendments do raise new claims for the purposes of s.35 Limitation Act 1980 and CPR Rule 17.4(2).  In none of the cases to which I was referred was there any question as to the application of principles of foreign law.   Thus the statements of Diplock LJ in Letang v Cooper and Millett LJ in Paragon Finance v Thakerar & Co. were made in a context in which English law defined what were the material facts to be proved so as to entitle the claimant to a remedy from the court.   There can be no claim or cause of action without an underlying system of law to prescribe the remedy and the circumstances in which it is available.   In my view it is self-evident that a claim made under the law of one state is a different cause of action to a claim made under the law of a different state. 
50.	This is confirmed by the provisions of the Foreign Limitation Periods Act 1984.  S.1(1)(a) applies a foreign limitation period to a claim in England based on the principles of that system of foreign law.  By s.1(3) it is provided that s.35 Limitation Act 1980 applies in relation to those time limits imposed by foreign law.   It is for this reason that CPR Rule 17.4(1)(b)(ii) refers to the expiration of periods of limitation under Foreign Limitation Periods Act 1984.    Thus, s.35 applies separately to claims made under English law and those made under some foreign system of law applicable to a claim in England.
51.	It is true that for the purposes of pleading a claim or defence principles of foreign law have been treated as analogous to allegations of fact.  This is to avoid the other side being taken by surprise.  I do not think that any pleading requirement in that regard should be elevated into a test of whether or not a new claim is being introduced.   Apart from anything else, as counsel for Latmar and Services pointed out, s.35(5) itself recognises that there may be a new cause of action arising out of the same facts as are already in issue. 
52.	There was no suggestion in the unamended particulars of claim in the First Action that the claims were being pursued under Liberian law as well as English law.   In the amended particulars of claim the claim under Liberian law is put as an alternative, thereby recognising that it is different.   In my view this alternative claim is a new one within the meaning for s.35(2) Limitation Act 1980 and CPR Rule 17.4(2).
53.	The next question is whether any period of limitation applicable in accordance with the Foreign Limitation Periods Act 1984 has expired or would expire before the amendment was effected.   Initially there was some dispute whether and if so what limitation period under Liberian law might apply.  But in the light of the arguments it became common ground that it was arguable that there were both primary and secondary periods of limitation arising under ss 2.17 and 2.18(4) Liberian Code of Laws Revised, Civil Procedure Laws which have not expired.
54.	Accordingly the permissibility of the proposed amendments depends on the third question whether the new claim or cause of action arises out of the same or substantially the same facts as are already in issue.   In my view it does.  The difference between the unamended and amended versions of the particulars of claim is the reliance in the latter, in particular paragraphs 9A-9C, on the principles of Liberian law.  Any requirement to treat them for pleading purposes as allegations of fact does not, in my view, make them facts for the purposes of s.35(5) Limitation Act 1980 or Rule 17.4.   The same facts, strictly so-called, are relied on as grounding the causes of action under both English and Liberian law.   Even in paragraphs 141A and 144A the facts relied on in support of the claims under specific provisions of Liberian law are the same as before.   In that respect there is no difference between the two versions of the particulars of claim.
55.	Even if it be accepted that the principles of Liberian law are facts for this purpose then they were put in issue by the defences of Latmar and Services.   As Goode v Martin shows that is enough to entitle Latreefers to rely on them in pleading a new cause of action against Latmar and Services.   For all these reasons I conclude that the proposed amendments are permitted by Rule 17.4(2).  
56.	The remaining objection on which Latmar and Services rely is the delay in making the application for permission to amend.  Latmar and Services rely on the fact that as long ago as May 2000 Latco challenged the jurisdiction of the court in England on the specific ground that English law did not apply to the relationship between persons alleged to be directors of Latreefers, whether de jure, de facto or shadow.   The same point was taken by the solicitors for the de jure directors in June 2000.   On 21st June 2000 the solicitors for Latreefers responded to the effect that they did not propose to amend unless, until and to the extent that the court determined that Liberian law applied.   The applicability of Liberian law was referred to in the defences of Latmar and Services served in July 2000 and put in issue in the replies of Latreefers served in September 2000.  After further correspondence in December 2000 the solicitors for Latreefers repeated what they had written on 21st June 2000.  Though advice was being obtained on Liberian law by the solicitors for Latreefers in March and April 2001 it was not until 8th May 2001 that the proposed amended particulars of claim were sent to the solicitors for Latmar and Services.  Even then the application for permission to amend was not issued until 12th February 2002.
57.	It is submitted for Latmar and Services that, in these circumstances, it would be unjust to permit Latreefers to amend its particulars of claim in the First Action with the effect that the claim under Liberian law will be treated as made when the claim form was issued in that action on 11th November 1999.   It is contended that having prevaricated for a year between May 2000 and May 2001 and then done nothing to obtain permission to amend for another nine months until February 2002 Latreefers should be left with its claim in the Second Action commenced on 19th January 2001.
58.	I do not agree.   The objection is to the effect that Latreefers claim under Liberian law should be treated for Liberian limitation purposes as made on 19th January 2001.   If, as I have held, the proposed amendments are permitted by Rule 17.4(2) then why should Latreefers be prevented from taking advantage of the earlier date of the commencement of the First Action?   It is not as though any other prejudice to Latreefers is said to have been sustained because of the delay.
59.	For all these reasons I accede to the application of Latreefers for permission to amend the particulars of claim in the First Action referred to in paragraph 14(c) above.  It follows from this conclusion that all issues between Latmar and Services on the one hand and Latreefers on the other have been raised in the First Action.  It follows that the applications to which I have referred in paragraph 14(d) and (e) above are academic in so far as they are made by Latmar.
Jurisdiction to try the claims against Latco in the Second Action
60.	Permission to serve the claim form in the Second Action on Latco in Latvia was granted by Lightman J on 25th June 2001.  By its application issued on 18th October 2001 Latco seeks to have that order set aside.   It applies for a declaration that the court has no jurisdiction, or should not exercise any jurisdiction it has, to try the claims in respect of breaches of duty as a de facto or shadow director of Latreefers or otherwise or for a declaration of liability to contribute to the assets of Latreefers pursuant to s.214 Insolvency Act 1986.  The former are described as the “general law claims” and the latter as the “wrongful trading claims”.   I will use the same terminology.
61.	Service out of the jurisdiction on Latco requires the permission of the court in relation to the general law claims under CPR Rule 6.20 and under Insolvency Rule 12.12 in relation to the wrongful trading claims.   In the case of the former it is incumbent on the claimant to demonstrate that in respect of each claim included in the claim form “there is a serious issue to be tried”.  Seaconsar Ltd v Bank Markazi [1994] AC 438, 456 per Lord Goff of Chieveley.   The formulation of this test adopted in the CPR Rule 6.20(3)(a) is “a real issue which it is reasonable for the court to try”.    It is not suggested that there is any material difference between the two.  In the case of the wrongful trading claims Sir Donald Nicholls V-C in Re Paramount Airways Ltd [1993] Ch 223, 241 anticipated the provisions of CPR Rule 6.20(3)(a) by formulating the same test for service out of the jurisdiction pursuant to Insolvency Rule 12.12.
62.	Counsel for Latco submits that there is no real issue which it is reasonable for the court to try with regard to the claims made against it by Latreefers in the Second Action.   I start by considering what those issues are.
63.	The general law issues in relation to Latco in paragraphs 75 to 80 of the particulars of claim are the same as those for Latmar and Services to which I have referred in paragraphs 38, 41 and 42 above supported by a host of further particulars specific to Latco set out in paragraph 80.   In addition it is claimed in paragraph 81 that Latco acted as a de facto or shadow director through other officers or agents of the Latco group, namely Services (paras 82-84), Latmar (paras 85 and 86), Mr Avotins (paras 87-89), Mr Henriksen, a director of CFM (paras 90-91) and Mr Degtiarev and Mr Blincow, directors of Services (paras 92-93 and 96-97A) and Mr Kisselev, a director of Latmar (paras 94-95).
64.	Counsel contends that there is no real issue which it is reasonable for the court to try in relation to any of these claims under either English Law of Liberian law.   With regard to the former it is contended that English law does not apply.   The broad submission is that made in the defences of Latmar and Services in the First Action to the effect that matters relating to the internal governance of Latreefers, including therein the duties of directors whether de jure, de facto or shadow are governed exclusively by the law of Liberia.   That contention is not disputed with regard to de jure directors.
65.	In the case of de facto and shadow directors it is by no means clear that liability depends on Liberian law.   As pointed out by Staughton LJ in Macmillan Inc v Bishopsgate Investment Trust plc [1996] 1 WLR 387, 391 it is necessary to characterise the issue before the court, select the rule of conflict of laws which lays down a connecting factor for the issue so characterised and identify the system of law tied to the issue by that connecting factor.   The issue as  characterised by counsel for Latco is whether it owes a duty to Latreefers, and if so what, arising out of its role in its management as director, shareholder or otherwise.  The issue as characterised by counsel for Latreefers is whether Latco, doing what is alleged and in its position relative to Latreefers is liable to Latreefers for the consequences.   To my mind these alternative formulations demonstrate the existence of a real issue which it is reasonable for the court to try for while the former characterisation may point to Liberian law the latter suggests the rules applicable to claims in tort.   And if the search is for a connecting factor which recognises that the claims are, in substance, restitutionary then it is by no means clear that English law is to be excluded.  See the discussion in Dicey & Morris 13th Edition para 34-032.
66.	With regard to Liberian law counsel for Latco claims that there is no real issue which it is reasonable for the court to try because it is clear that Liberian law does not recognise the concept of a shadow director.  He contends that in so far as it is arguable that the Liberian courts might introduce the concept of a de facto director liability would depend on some holding out by the person alleged to be a de facto director that he is a director of the company in question, which is not alleged in this case.
67.	This is disputed by counsel for Latreefers.  He submits that it is wrong to concentrate on the label, shadow or de facto director, to the exclusion of the underlying facts.  He contends that it is certainly arguable that if those facts are proved Liberian law will impose liability on Latco whether it is described as a shadow or de facto director.
68.	Again I prefer the submission of counsel for Latreefers.   It is not in dispute that under the Reception Statute of Liberia, except as modified by Liberian Statute or Common Law there is considered to be part of Liberian law
“the common law and usages of the courts of England and of the United States of America, as set forth in case law and in Blackstone’s and Kent’s Commentaries and in other authoritative treatises and digests.”
There is no suggestion that Liberian law will not recognise and give effect to those circumstances which in England lead to fiduciary duties or claims for restitution.   None of the experts on Liberian law excludes that possibility.   In my view there is a real issue, which it is reasonable for this court to try, that the facts alleged against Latco in the particulars of claim in the Second Action give rise to a general law remedy whether or not the relationship between Latreefers and Latco is to be labelled as a de facto or shadow directorship.
69.	I pass then to the wrongful trading claims.   These arise under s.214 Insolvency Act 1986.  It is not suggested that any such claim arises under Liberian law and the statute law of England is not incorporated into Liberian law by the Reception Statute.  The facts if proved will enable the court to make a declaration of liability to contribute to the assets of Latreefers if it thinks fit.  The contention of Latco relies on the dictum of Chadwick J in Re Howard Holdings Ltd [1998] BCC 549, 554:
“I accept that when deciding whether or not to make a declaration under s.214 of the Act, the court will take into account what the obligations of the director to his company were at the time when he had the opportunity to minimise the potential loss to the company’s creditors.  And I accept that it might well be that, in circumstances where the relevant governing law imposed no obligation on directors to have any regard to the interests of the company or its creditors in the course of their management of its affairs, the English court would decide that a declaration was not appropriate.”
It is suggested by counsel for Latco that the particulars of claim contain no averments sufficient to show that it would be a proper exercise of the court’s discretion to make a declaration of liability to contribute.
70.	In my view if the facts alleged are proved then those facts are quite sufficient to justify the making of a declaration.  It may be, as Chadwick J envisaged in Re Howard Holdings Ltd, that the court might be persuaded otherwise.   But that does not mean that there is not a real issue which it is reasonable for the court to try.
71.	At one stage it was submitted that the claims under Liberian law in the First Action were statute-barred.  After considering the counter argument from counsel for Latreefers counsel of Latco helpfully agreed that the point was arguable.  Those grounds namely fraudulent concealment, equitable estoppel and power to enlarge the period under s.1.7 of the Liberian Civil Procedure Law are, in my view, equally arguable in relation to the claims in the second action.   They are matters of defence and are not sufficient to exclude the real issues I have identified.
72.	For all these reasons I refuse the application I have referred to in paragraph 14(d) above.   Thus the Second Action should proceed if but only if an extension of time for service of the claim form should be granted.
Extension of time for service of the claim form in the Second Action
73.	The claim form was issued on 19th January 2001.  The application for an extension of time within which to serve it was issued on 5th June 2001.  It was granted by Lightman J on 25th June 2001.   Accordingly the application to extend was made during the period allowed for its service so that CPR rule 7.6(3) does not apply.  It is not disputed that the court has a discretion to extend the time as asked to be exercised in accordance with the over-riding objective.
74.	The application is opposed by Latmar as well as Latco though given that I have allowed the amendment to the claim form in the First Action the point is academic.   The ground of the opposition of Latco is delay.   Counsel for Latco relied on two periods of delay.   The first was from the time when the issue of the propriety of the service of the claim form in the First Action surfaced in May 2000 until the claim form was issued in the Second Action in January 2001.   The second was from the date the claim form was issued in the Second Action through 8th May 2001 when Latco was told of its issue to 5th June 2001 when the application to extend was ultimately made.   Counsel for Latco contends that the regime of CPR does not entitle a claimant to issue and sit on a claim form and that it is incumbent on Latreefers to demonstrate some good reason why the discretion should be exercised in their favour.
75.	It is quite true that the regime of CPR does not entitle claimants to issue and retain without serving protective claim forms.   If for any reason the claimant runs out of time then, as the cases to which I have already referred make clear, he may have difficulty persuading the court to grant an extension.   Even so the over-riding objective requires the court to exercise its powers so as deal with a claim justly.   The first period of delay is capable of benefiting Latco by increasing its prospects of establishing a limitation defence under Liberian law.  The second period of delay has given rise to no prejudice.  By contrast if I set aside the order of Lightman J extending the time for service of the claim form in the Second Action I will deny to Latreefers any possibility of obtaining redress from Latco.   I have no doubt where the balance of justice lies.   I refuse to set aside the order of Lightman J extending the time for service of the claim form in the Second Action and dismiss the application referred to in paragraph 14(e) above.  It follows that the service of that claim form and the particulars of claim in the Second Action effected on Latco on 13th September 2001 was good service.
Consolidation
76.	It was agreed that this application by Latreefers, referred to in paragraph 14(f) above, should be left over until I had given my decision on the other five.   The consequence of those decisions is that the First Action will proceed against Latmar and Services on the basis of the amended particulars of claim and the second will proceed against Latco on the basis of the particulars of claim in the Second Action which are the same as the amended particulars of claim in the first.  Thus both actions must be maintained although the issues are the same in each except with regard to any defence of limitation.  I invite counsel to consider a form of order which will ensure that both actions are maintained but with the least possible duplication.
Summary
77.	In summary, for the reasons I have given
a) the order of Lightman J made on 25th June 2001 extending the time for service of the claim form on Latco in the First Action is set aside;
b) permission to amend the particulars of claim in the First Action is granted;
c) the application of Latco to set aside the order of Lightman J made on 25th June 2001 in relation to service of the claim form and the jurisdiction of the court in the Second Action is dismissed.

I will hear further argument on any other issues which arise from my judgment and on the form of order.