MR JUSTICE BURTON :
- Starlight Shipping Company ("Starlight") sued its insurers by proceedings in the Commercial Court, 2006 Folio No 815, issued on 15 August 2006 ("the original action"), arising out of the loss of the vessel Alexandros T on 3 May 2006. The first four Defendants are known as the Company Market Insurers ("CMI") and the Fifth to Seventh Defendants as the Lloyds Market Insurers ("LMI"). In each relevant policy, there was an exclusive jurisdiction clause providing for English law and the jurisdiction of the courts of England and Wales, which is why Starlight commenced and continued its claims here. Liability was denied, and vigorously contested. Overseas Marine Enterprises Inc ("OME") were identified in the policies as Managers. Ince & Co acted for Starlight in the proceedings, and Hill Dickinson LLP, then Hill Taylor Dickinson, (whom, together with their partners and employees, all being "Intended Defendants" in the original action, I shall call "HD") acted for the Defendant Insurers.
- The loss of the Alexandros T involved considerable loss of life, and the proceedings were made the more fraught both for that reason and because the denial of liability was based in substantial part upon allegations of unseaworthiness, to which Starlight and/or OME were alleged to be privy, and failure properly to report and repair damage to the vessel in accordance with Class Rules. In the course of the preparation for the proceedings, a number of specific allegations were made and pursued by Starlight, and Ince and Co on its behalf, falling into two general categories:
i) Serious allegations of misconduct by the Defendant Insurers and their underwriters involving alleged tampering with and bribing of witnesses, in particular the bosun, a Mr Miranda, to give false evidence, coupled with other allegations of spreading false and malicious rumours against Starlight in the course of purported investigation of its claims.
ii) Deliberate failure by the Defendant Insurers to pay up under the policy, said to have had substantial consequential financial impact upon Starlight, and to have led to substantial recoverable loss and damage.
- The allegations were made even before the issuing of the proceedings by the Claimant. They were referred to with some particularity in Ince & Co's letter to HD of 18 July 2006. Complaints were made about attempted covert contacts with the Claimant's crew, and, in particular, an unspecified "instance of serious misconduct by one of the underwriters". As for the malicious rumours (described as "malicious scuttlebutt"), this was described and complained of, together with its alleged effect on the market. Further reference was made in Ince & Co's letter of 20 October 2006 to the underwriters "behaving in a reckless and irresponsible fashion in making
an allegation when they have no evidence to substantiate what they allege". It appears that those representing Starlight obtained a sworn affidavit dated 8 January 2007 from Mr Miranda and another member of the crew, a Mr Paulino, alleging that they were given money and offered more, in return for the giving of what they regarded as untrue evidence. A Request for Further Information was served on 24 October 2007 by Starlight in the proceedings, asking probing questions about payments made, inter alia, to Mr Miranda, and as to the circumstances of approaches to the witnesses, which led to a response, dated 19 November 2007. The allegations came fully out into the open in a witness statement of Mr Nicholas Shepherd of Ince & Co, on Starlight's behalf, dated 7 December 2007, served just prior to a Pre-Trial Review on 14 December 2007. Mr Shepherd referred (in paragraph 6) to Mr Miranda as being the apparent source of the very serious allegations which the Defendant Insurers were making, as had now become clear after exchange of witness statements, and Mr Shepherd addresses this in terms "so that the Court has some idea of what the Claimant will in due course say with regard to the boson's veracity": he exhibits the joint affidavit of Mr Miranda and Mr Paulino of 9 January 2007, to which I have referred.
- He referred both to that affidavit and to other affidavits from crew members dealing with alleged approaches made to them by a Mr Bernardo, on the Defendants' behalf, and suggests that "Mr Bernardo appears effectively to have been attempting to solicit untruthful evidence from those to whom approaches were made to say that the Vessel was unseaworthy". Counsel for Starlight, Mr Brenton QC, specifically stated to Tomlinson J at the Pre-Trial Review on 14 December 2007, as recorded by the transcript (referring to Mr Shepherd's fifth witness statement, which the judge had read), that Mr Bernardo had "approached a number of survivors and sought to persuade them to give false evidence in return for financial inducements".
- This position is summarised by Mr Crampton of Lax & Co, the new solicitors acting for the purpose of these proceedings for Starlight, in his witness statement for the purposes of the applications before me, namely:
"5. In their defence to the claim, the Underwriters alleged that the vessel was unseaworthy, that Starlight knew that the vessel was unseaworthy and that Starlight had in place an illegal practice, by which they refused to notify Class and the flag state authority of the vessel about defects to their vessels. These allegations were based on false evidence, which the Underwriters had obtained from the bosun, Aljess Miranda
13. In their responses to the Request for Further Information, the Hull Insurers provide details of payments totalling US$25,100.00 and 14,864.39 made by them to Mr Miranda in connection with the provision of his evidence. Throughout the English Court proceedings, Starlight vehemently denied and disputed the allegations made by Mr Miranda in the witness statements and affidavit listed above. Starlight have always maintained that Mr Miranda's accusations relating to the condition of the Vessel and the conduct of the Starlight are completely untrue and a fabrication; and that the payments made by the Hull Insurers to Mr Miranda had the effect of motivating Mr Miranda to intentionally make
false accusations."
- As to the second series of matters by reference to consequential loss and damage, at the same PTR, Mr Shepherd put in his sixth witness statement to support an application to amend the pleadings, to add what were called the "Additional Sums Claims", which he describes. The proposed amendment alleged that "the Claimant has sustained and claims loss and damage over and beyond the measure of the indemnity to which it is entitled under the Policy". In what was described as the best information which Starlight was presently able to provide, it was pleaded that, had the Defendants complied with their obligations to indemnify in accordance with the terms of the policy, Starlight would have purchased a replacement vessel, and had thus lost between US$ 45m and US$ 47.7m by way of increased capital cost and chartering losses of US$ 31,373,800.
- Tomlinson J declined leave to introduce this further claim, concluding that he and the Court of Appeal were bound by the decision of Sprung v Royal Insurance UK Ltd [1992] 1 Lloyd's I & R Rep 111 CA (itself following an earlier decision of the Commercial Court by Hirst J in The Italia Express No 2 [1992] 2 Lloyd's Rep 281). Tomlinson J consequently refused permission on the basis that, in the light of English law, Starlight had no cause of action in respect of the additional claims which it sought to pursue. He also, as a matter of case management discretion, declined the amendment, but he was quite plain as to the law.
- In the event, the day before the hearing before Tomlinson J, LMI had entered into a Settlement Agreement with Starlight and OME dated 13 December 2007 in full and final settlement: I shall set out the terms of that agreement below. It was a term of the Settlement Agreement that Starlight would obtain a stay by way of a Tomlin Order, and a Tomlin Order by consent between the Claimant and the LMI Defendants was made on 20 December 2007, such that:
"UPON The Claimant and the Fifth, Sixth and Seventh Defendants agreeing terms and by consent IT IS ORDERED THAT
Save for the purposes of carrying into effect the terms agreed between the Claimant and the Fifth to Seventh Defendants, all further proceedings between the Claimant and the Fifth to Seventh Defendants shall be stayed with effect from 14 December 2007 or such earlier date as may be agreed between the parties or otherwise ordered hereafter. "
- A similar Settlement Agreement was then entered into in full and final settlement between Starlight and OME and the CMI Defendants, dated 3 January 2008, and pursuant to that agreement there was, by consent, a Tomlin Order entered, dated 7 January 2008, in materially the same terms, save that, whereas the other order was backdated to 14 December 2007 (the date of the hearing before Tomlinson J), this Tomlin Order had immediate effect.
- I set out now the material parts of the two agreements. In each case the Assured was defined as being "[OME] and Starlight
as Managers and/or Owners and/or Associated and/or Affiliated Companies for their respective right and interest in the ship Alexandros T":
The CMI Agreement:
"1. Each Underwriter agrees to pay on or before 18 January 2008
their due proportions of the sum of US$ 16m
being 100% of their due proportions of the sum insured being 50% of the US$ 32m
without interest or costs.
2. The Assured and Claimant agree to accept the EURO equivalent of each Underwriter's due proportion of US$ 16m
in full and final settlement of all and any claims it may have under Policy No 302/CF 000220Z against the Underwriters in relation to the loss of "Alexandros T", including all claims for interest and costs (including in respect of all costs orders made to date in the proceedings) but without effect to any other insurance policy in which each Underwriter may be involved [this latter aspect does not arise and I shall leave it out in my recital of the rest of the agreement and of the LMI agreement].
3. The Assured and Claimant agree to Indemnify each Underwriter against any claim that might be brought against it by any of the Assured's or the Claimant's associated companies or organisations or any mortgagee in relation to the loss of "Alexandros T" or under Policy No 302/CF 00220Z
6. This agreement is subject to English law and the exclusive jurisdiction of the High Court in London."
2. The LMI Agreement:
"2. The underwriters
agree to pay on or before 24 December 2007
the sum of US$8M
being 100% of their due proportions of the sum insured being 25% of US$ 32m
without interest or costs
3. The Assured and Claimant agree to accept the EURO equivalent of US$8M
in full and final settlement of all and any claims it may have under Policy No
against the Underwriters signing below in relation to the loss of "Alexandros T"
4. The Assured and Claimant agree to indemnify the underwriters signing below against any claim that might be brought against them by any of the Assured's or the Claimant's associated companies or organisations or by any mortgagee in relation to the loss of "Alexandros T" or under policy No
5. This agreement is subject to English law and the jurisdiction of the High Court of London."
- In April 2011 (more than three years later) nine sets of Greek proceedings, in materially identical form, were issued by Starlight, by OME, by their co-Assureds and by individual officers of those companies, against the LMI and CMI Defendants, some of their employees or underwriters, and HD, and some of their partners or employees. The claims are for compensation for loss of hire and loss of opportunity by Starlight totalling approximately US$ 150m and for pecuniary compensation due to moral damage amounting to 1m, and similarly substantial claims by the other Claimants in respect of alleged acts, unlawful and in breach of good faith, all done for the alleged purpose of avoiding the performance by the Defendants of their legal obligations. The setting for all the claims is by reference to Articles of the Greek Civil and Criminal Code: however the factual allegations are entirely familiar and include:
i) At p33 of TC1 to Mr Crampton's witness statement, the allegation (which is adopted by Mr Crampton as his summary of the Greek claim in paragraph 21 of his witness statement) that all the Defendants were responsible for using false affidavits of witnesses (primarily Mr Miranda) with intention to harm the Claimants: "The underwriters pursued this criminal effect by intentionally fabricating false evidence with the purpose that the underwriters (who were responsible for the payment of insurance indemnity for the vessel)
avoid paying this insurance indemnity, contrary to their contractual obligations and their legal obligations and in particular contrary to the provisions of the insurance contract, providing for the timely payment of the insurance indemnity."
ii) At p48, the claim that the Defendants were asserting and disseminating false information to third parties, although they were aware of their falsity, damaging to the Claimant's reputation and credibility "with the purpose that the underwriters (who were responsible for the payments of the insurance indemnity for the vessel)
avoid paying the insurance indemnity, contrary to their contractual obligation and their legal obligation and in particular contrary to provisions of the insurance contract providing for the timely payment of the insurance indemnity."
iii) There then follows a whole section headed "Intentional fabrication of false evidence for defrauding the English court".
iv) There is a section headed "The moral instigation alternatively complicity of the underwriters to perjury and on the defrauding of the court by the underwriters", including allegations of breaches of the English CPR.
Mr Crampton himself frankly summarises it in this way in paragraph 20 of his witness statement before me:
"The essence of the complaint against the Defendants in the Greek proceedings concerns the allegation that the Defendants obtained false evidence in Greece from the bosun of the Alexandros T, Aljess Miranda
This evidence was then deployed in these proceedings in England and also in the
Greek proceedings:"
- There is then a substantial section of the Greek pleadings relating to the financial consequences of the failure by the Defendants to comply with their obligations under the policy and the way in which they allegedly handled the investigations. But what has been described before Tomlinson J as the loss of the opportunity to buy and charter one vessel has now become the loss of such opportunity in relation to three vessels: hence doubling the pecuniary loss now sought.
- In apparent recognition of the problem raised by the fact that such claims were ruled out as a matter of English law by Tomlinson J, Mr Crampton, in paragraph 27 of his witness statement, has explained that the claims made in respect of the three vessels are advanced in two ways in the Greek pleadings, the first being that, as a result of the underwriters' intention to avoid payment of the insurance indemnity, eventually resulting in late payment of the policy proceeds, the Claimant missed the opportunity to use the policy proceeds to invest in the three vessels, and, secondly, that, as an alleged result of the Defendants' actions in acquiring the false evidence of Mr Miranda, his clients were not able to insure the vessels and without insurance they would not have been able to trade them and could not purchase them. He states that his clients would "amend their pleadings prior to the hearing of the disputes in Greece so as to clarify this head of claim, such that no claim is made in respect of the late payment of the policy proceeds". The expert evidence from the Claimant is that it is not possible to amend the pleadings in the Greek courts, but, treating the proposed draft amendment, which he exhibits, as a clarification, it does not seem to me that it in any way cures the defect, if defect there was, and it is said that the insurance of the three potential new vessels was rendered impossible, since all the London insurers refused to quote for the vessels because of the refusal of the Defendant underwriters to quote for them and because of the defamatory accusations spread as to the unseaworthiness of the Alexandros T. All the allegations arise out of the alleged manner in which the Defendants handled the Claimant's claim in respect of the Alexandros T, and, even though the consequences and the consequential losses have expanded, and the claim for moral damages has been included, and although it seems that the Claimant now relies on an expanded affidavit of Mr Miranda, which is exhibited, the allegations, even though put into a context of Greek law, are materially identical to those made prior to the Settlement Agreement.
- Proceedings have been brought in this country as follows:
i) In the original action, the LMI Defendants and the CMI Defendants seek, pursuant to the Tomlin Orders (or if necessary after lifting the stay imposed by them) summary relief against Starlight, and the LMI Defendants, because permission was given to them to join OME as a Third Party, seek summary relief pursuant to Part 24 against OME (which filed an Acknowledgment of Service and a Defence) to enforce the Settlement Agreement, to which it also was a party.
ii) Fresh proceedings (2011 Folio 702) have been commenced by the LMI Defendants without prejudice to their case that sufficient relief can and will be obtained in the original action, against Starlight and OME, and, after Acknowledgment of Service and Defence filed, an application under Part 24 against them for similar relief.
iii) The LMI Defendants have also brought fresh proceedings (2011 Folio 1043) against Starlight's co-Assured and, again after Acknowledgments of Service and Defence filed, seek under Part 24 declaratory relief and damages for breach of the exclusive jurisdiction clause in their insurance policies, by virtue of the issue of the Greek proceedings by them.
iv) In fresh proceedings, 2011 Folio 894, the CMI Defendants have brought claims against OME and the same co-Assured in respect of similar claims of breach of the exclusive jurisdiction clause in the policy, and in respect of OME by reference to breach of the terms of the Settlement Agreement. Judgment in default has been entered by the CMI Defendants against all those Defendants on 26 October (amended on 14 November) 2011, and no application to set aside that judgment has been made and no issue arose in relation to those proceedings before me.
v) Finally, and by separate application, David Bailey QC, with Jocelin Gale, applied on behalf of HD to be joined to the original proceedings, pursuant to CPR Part 19, as additional Defendants, so that, in due course, they too may be able to claim relief, in their case by seeking declaratory relief within the original proceedings. The contested application by HD was dealt with discretely after the close of submissions on the main applications, and I shall deal with it separately at the close of this judgment.
- Although there are consequently a number of proceedings and a number of applications, the thrust of the argument before me has been as follows. Michael Swainston QC and Tony Singla, for the CMI Defendants, and Steven Gee QC and Tom Whitehead, for the LMI Defendants, contend that the bringing of the various Greek proceedings is in breach of the Settlement Agreements, and/or, insofar as brought by the co-Assured, who fall within the definition of associated companies or organisations, is covered by the indemnity in both Settlement Agreements; and further is in breach of the exclusive jurisdiction clauses in the insurance policies and in the Settlement Agreements. James Drake QC and Emma Hilliard, on behalf of Starlight and OME and the other co-Assured who are claimants in the Greek proceedings, both resist those contentions and, by a very late cross-application of their own, seek a stay of any further proceedings in the original action, and of the two fresh actions brought by LMI, by reference to Article 28 of EU Regulation 44/2001 ("the Judgment Regulation"). No injunction is sought by the CMI or LMI Defendants to restrain the Greek proceedings, so there is no contravention of the principle established by Turner v Grovit [2004] ECR I-3565 in that regard.
- I shall deal first with the issue which, it is common ground, falls to be considered at English law (being the governing law of the insurance policies and of the Settlement Agreements), namely whether, on a proper construction of the Settlement Agreements and the jurisdiction clauses, the claims now sought to be brought in the Greek proceedings
i) cannot be brought at all by reference to the Settlement Agreements (or are covered by the indemnity therein if pursued further), and/or
ii) if to be pursued at all (and not to amount to an abuse at English law within the principle in Henderson v Henderson [1844] 3 Hare 100 and Johnson v Gore Wood & Co (No 1) [2002] 2 AC 1), can only be pursued within this jurisdiction.
The Settlement Agreements
- The two Settlement Agreements are in materially identical terms, as set out in paragraph 10 above. Mr Drake submits that they are to be construed so as not to prevent the bringing of the Greek proceedings. He relies on the following:
i) Starlight submits that the Greek proceedings are not "in relation to the loss of Alexandros T" or "under" the Policies. He refers to Ashville Investments Ltd v Elmer Contractors Ltd [1989] 1 QB 488 CA in which (by reference to an arbitration clause) a dispute under an agreement was construed as less all-embracing than a dispute "arising out of" an agreement.
ii) The claims are for bad faith and asserted breaches of the Greek Criminal Code, perjury etc, tantamount to fraud, and thus should be construed as within what might, in the context of exemption clauses, be called the 'fraud exception'. He refers to the decision of the Court of Appeal in Satyam Computer Services Ltd v Upaid Systems Ltd [2008] EWCA Civ 487. Laurence Collins LJ, giving the judgment of the Court in Satyam, in relation to a clause which gave a very wide release from claims "arising out of or relating in any way directly or indirectly to" an agreement, addressed in section 4 of his judgment the question "Whether the settlement agreement prevented Upaid from bringing (a) unknown claims which arose after the date of the settlement agreement and/or (b) unknown claims involving an allegation of fraud against Satyam's employees". In paragraphs 79 to 87, he addresses that question, and concludes that express words would be necessary for a release from unknown claims. Mr Drake relies on the words of Laurence Collins LJ in paragraph 82 of his judgment:
"Where the claims in question were based on fraud or involved allegations of dishonesty, very clear and specific language in a settlement agreement was required to settle such claims or exclude their subsequent pursuit, a fortiori if they were unknown at the time that the settlement agreement was entered into."
This, Mr Drake submits, leaves open the route for claims in fraud which were known at the time of the Settlement Agreements, in the absence of express words excluding them.
iii) Although he does not pursue the suggestion made by Mr Crampton in his witness statement, and plainly wrong in law, that there can be reference to the negotiations at the time of the agreements being entered into, he nevertheless submits that, on a true and proper construction of the Agreements, they would not amount to a 'clean break' provision.
- I am wholly persuaded by the submissions of the Defendants to the contrary, which appear to me to be unanswerable:
i) I start, as did they, with the indemnity clause contained in Clause 4 of the LMI Agreement and Clause 3 of the CMI Agreement. It is plain that that clause cannot widen the effect of the Settlement Agreements, but must in fact contain its nub. It must both inform the construction of the earlier clause (respectively Clauses 3 and 2) and indeed put it into effect. It is part and parcel of the wide-ranging release that Starlight and OME do not only agree themselves not to make any claims, but also to indemnify the Defendants against any such claims brought by the identified other parties. Indeed, Mr Drake did not seek in his argument to contend for any difference between claims "in relation to the loss of Alexandros T" or claims under the policies.
ii) I am satisfied that all the claims now made were claims "in relation to the loss of Alexandros T". They relate to the investigations by the insurers (in bad faith or otherwise), and to the way in which those investigations and enquiries were carried out (with or without malicious scuttlebutt) and to the alleged delays in payment. Mr Gee refers, by way of analogy, to Steamship Mutual Underwriting Association (Bermuda) v Sulpico Lines Inc [2008] 2 Lloyd's Law Rep 269, where the complaint as to the way in which a P and I Club had handled the claims, including allegations of bad faith, fell within the arbitration clause in the Club Rules.
iii) In any event, I am satisfied that all the claims now made are covered by the release in respect of "any claims it may have under" the Policy. The approach followed by the Court of Appeal in Ashville has been firmly disapproved. In the Court of Appeal in Fiona Trust and Holding Corporation v Privalov [2007] EWCA Civ 20, Longmore LJ, giving the judgment of the Court, referred to Ashville at paragraph 13, and then stated (at paragraph 18):
"As it seems to us, any jurisdiction or arbitration clause in an international commercial contract should be liberally construed. The words "arising out of" should cover "every dispute except a dispute as to whether there was ever a contract at all
Although in the past the words "arising under the contract" have sometimes been given a narrower meaning, this should no longer continue to be so."
In the House of Lords, reported at [2008] 1 Lloyd's Law Rep 254, which, particularly in the seminal decision of Lord Hoffmann, ratified the anti-nitpicking approach of the courts to differences in such wordings in arbitration or jurisdiction (or, by analogy, settlement) clauses (at paragraphs 11 to 13 of his speech), the approach of the Court of Appeal was not only thus firmly confirmed and adopted, but there was express approval of the judgment of Longmore LJ by Lord Hoffmann (at paragraph 21), by Lord Hope at paragraph 26 and (by their agreement) by the rest of the House at page 261.
iv) The clean break principle is explained in Foskett: Law and Practice of Compromise (7th Ed) at 5-22-33. He refers to BCCI v Ali [2002] 1 AC 251 where, at paragraph 23, Lord Nicholls stated:
"The circumstances in which this general release was given are typical. General releases are often entered into when parties are settling a dispute which has arisen between them, or when a relationship between them, such as employment or partnership, has come to an end. They want to wipe the slate clean. Likewise, the problem which has arisen in this case is typical. The problem concerns a claim which subsequently came to light but whose existence was not known or suspected by either party at the time the release was given. The emergence of this unsuspected claim gives rise to a question which has confronted the courts on many occasions. The question is whether the context in which the general release was given is apt to cut down the apparently all-embracing scope of the words of the release."
Foskett further there refers to what Lord Bingham in Ali, at paragraph 17, describes as the "reluctance [of judges] to infer that a party intended to give up something which neither he, nor the other party, knew or could know that he had". But, subject to that, the overriding approach is the 'wiping clean of the slate', to which Lord Nicholls refers.
v) The Settlement Agreements brought the proceedings to a close, subject to the stay imposed by the Tomlin Orders. All the claims now made were made, or featured, in those proceedings. Insofar as the financial loss is now alleged to be greater (by reference to an alleged loss in relation to three vessels rather than one), such matters plainly were either known or capable of being known or appreciated by the time of the Settlement Agreements, and are, in any event, only an expansion or embellishment of the existing claims. Similarly, the fact that such losses were allegedly caused only in part by the late payment, but in part by the alleged malicious scuttlebutt, was also either known or capable of being known. The revival of such claims now would be, Mr Swainston and Mr Gee submit, an abuse of the process within the principle in Henderson v Henderson, as explained and/or put into effect in Johnson v Gore Wood and Stuart v Goldberg Linde [2008] 1 WLR 823. This simply serves to emphasise that such claims fall within the wide definition of the Settlement Agreements (see (ii) and (iii) above) and within the clean break/wiping the slate clean principle, referred to in (iv) above.
vi) The words of Laurence Collins LJ in Satyam do not assist Mr Drake, on the facts of this case, nor in any way take matters outside the general principle. It is first of all clear that Laurence Collins LJ was dealing, in section 4 of his judgment, with issues in relation to "unknown claims". What he addressed in his heading (quoted in paragraph 17(ii) above) was split into two: unknown claims generally, and unknown claims involving an allegation of fraud. He is not dealing at all with cases where, at the time of the settlement, the fraud was, or was reasonably capable of having been, known to the parties. As for the sentence upon which Mr Drake alighted in paragraph 82 of his judgment, it is therefore taken out of context, and, if it purports to extend beyond unknown claims of fraud, it must inevitably be obiter.
vii) The fact that the claims were not limited to monies recoverable pursuant to the policy in respect of the loss of Alexandros T is only emphasised by the inclusion in the settlement agreement of OME, which, although named as an assured under the policy, had no entitlement to recover under the policy, and of the other parties, against any claims by whom Starlight and OME agreed to indemnify the CMI and LMI Defendants.
The Jurisdiction Clauses
- It is common ground that there were exclusive jurisdiction clauses in the insurance policies. It is also not in dispute that the clause in the CMI Settlement Agreement is an exclusive jurisdiction clause. Although it is not determinative of these applications, for reasons that will appear, I need to deal with the issue as to whether the jurisdiction clause in the LMI Settlement Agreement should be construed similarly.
- On its face, as Mr Drake points out, the word "exclusive" is not used. However, Mr Gee submits that it nevertheless should be so construed. He refers to a number of authorities in which a jurisdiction clause not expressed to be exclusive has been so construed. He refers to Briggs & Rees: Civil Jurisdiction and Judgments (5th Ed) at 4.45:
"Where the agreement is to be construed according to English law [such as in this case], there has been a noticeable judicial tendency to resolve any ambiguity in the construction of the parties' agreement in favour of seeing it as one giving exclusive jurisdiction to the nominated court. It is unnecessary that the agreement actually contain the word "exclusive" in order to have this effect, but if the nominated court would have had jurisdiction in any event, without reference to the agreement, a court may wish to attribute some further effect to the agreement, which will tend to lead in turn to its being seen as exclusive."
- I have been referred by Mr Gee to Sohio Supply Co v Gatoil (USA) Inc [1989] 1 Lloyd's Law Rep 588 CA and to Svendborg v Wansa [1997] 2 Lloyd's Law Rep 183, the latter a case in which, despite an express mention of exclusive jurisdiction in the first part of the clause, it was unsuccessfully argued that there was therefore no implication that the second part of the clause also provided for exclusive jurisdiction. In Sohio, at 591, the Court of Appeal approved the then passage in Dicey & Morris, which still survives today at 12-092:
"Where the agreement is governed by English law, and in the absence of explanation to the contrary, the court may conclude that if a nominated court would have had jurisdiction by right in the absence of the agreement, the agreement would be idle unless it conferred exclusive jurisdiction on the nominated court."
- In Continental Bank NA v Aeakos Compania Naviera SA [1994] 1 Lloyd's Rep 505 CA, Steyn LJ, after referring to Sohio, said "it would be a surrender to formalism to require a jurisdiction claim to provide in express terms that the chosen Court is to be the exclusive forum". Article 23 of the Judgment Regulation itself (to which I refer below) provides that a jurisdiction clause "shall be exclusive unless the parties have agreed otherwise".
- I am satisfied that this which Dicey & Morris at 12-092 refers to as a "principle of interpretation" applies in this case. In the absence of any argument that the word exclusive was for some reason not explained or enunciated deliberately left out, I am satisfied that, both by reference to the context, and to the fact that the provision would otherwise be idle, that the parties did mean to and intend exclusive jurisdiction. I am influenced in particular by the fact that:
i) The insurance policy so provided. DSM Anti-Infectives BV v Smith Klein Beecham plc [2004] EWCA Civ 1199 would suggest that that provision would have applied to the settlement of a dispute about the policy even without further provision in the Settlement Agreement.
ii) The proceedings to which the Settlement Agreements were immediately referable were in this Court, and the Settlement Agreements were to be enforced, as a result of the English Tomlin Orders, by this Court, by reference to the express saving "for the purpose of carrying into effect the terms agreed" included in those Tomlin Orders.
The Tomlin Orders
- I now turn to the central question on the application, by reference to those Tomlin Orders, namely whether the CMI and LMI Defendants are, pursuant to their primary application before me, entitled to the relief they seek, by way of, as they assert, carrying into effect the terms agreed in the Settlement Agreements.
- Mr Drake submits that the Defendants are not entitled to proceed summarily, and without issuing fresh proceedings, in respect of the relief they now seek. He relies wholly on the decision of the Court of Appeal, reported, it seems, in The Independent on 21 December 1987, in Hollingsworth v Humphrey [1987] CAT 1244. An application to enforce a compromise contained in the schedule to a Tomlin order made in 1978 was brought in 1985, by a motion seeking an order that the stay of proceedings be lifted and the claimant be at liberty to proceed to trial; alternatively that the terms of the compromise, being in respect of a binding contract for the sale of a house, be carried into effect, with an enquiry as to the loss or damage which the claimant would have suffered by reason of the defendant's failure to effect the sale of the property. Mervyn Davies J refused to lift the stay, by reference to the principle in Cooper v Williams [1963] 2 QB 567, requiring good grounds to be shown. It was apparent that there had been what was described as "extraordinary inertia on Mrs Hollingsworth's side. For more than 6½ years no step was taken to enforce the terms of compromise."
- The basis of the claim for lifting the stay appears to have been that the claimant wished to regard the contract as repudiated. However, Mervyn Davies J did make an order for an assessment of damages for breach of contract. The Court of Appeal dismissed the appeal against the refusal to lift the stay. However, so far as the claim for damages for breach of contract is concerned, Fox LJ, giving the only substantive decision of the Court, allowed the appeal, concluding (on page 5):
"The position, it seems to me, was that [the claimant] asserted a cause of action and gave that up in consideration of the provisions of the Tomlin order. Included in the provisions was that the agreement that the action should be stayed except for the purpose of enforcement of the term. If [the claimant] alleges a breach of the terms and subsequent damage to her, it seems to me that her proper course is to sue for damages in a separate action
[I]t was not open to the judge to make an award of damages upon an application to enforce the terms of compromise. It seems to me that, under the terms of the Tomlin order, the only jurisdiction which he had in this action was to make an order for the purpose of carrying into effect the terms of compromise. An award of damages is not carrying the terms into effect. It is granting a remedy for breach of contract. In my view, any claim by [the claimant] for breach of contract must be pursued in a separate action."
- Mr Swainston and Mr Gee criticise such conclusion by the Court of Appeal, but, in any event, contend that they are in a position to distinguish it, upon a number of grounds, to which I will refer. So far as their criticism is concerned, they note the subsequent decision of Morritt VC, which Mr Drake submits to be wrong, such that I should not follow it if I were tempted to do so, in Bargain Pages v Midland Independent Newspapers [2003] EWHC 1887 Ch In that case, Morritt VC concluded that the CPR, and the Overriding Objective enshrined in and underlying the CPR, entitled him to conclude that Fox LJ's judgment was given against the background of the RSC, not the CPR, and was inconsistent with the regime introduced by the CPR (paragraph 43) such that (paragraph 44) he did not consider that Hollingsworth "would preclude an order for an enquiry as to damages sustained
in consequence of a breach of the terms of the" settlement agreement contained in the Tomlin order before him.
- I am again firmly persuaded by the submissions of Counsel for the Defendants. I approach the question first on the basis that Hollingsworth is correct and I am bound by it, notwithstanding Bargain Pages:
i) Hollingsworth does not address such a clause as there is here, namely a claim for an indemnity. It is wholly clear that enforcing the indemnity is "carrying into effect the terms agreed".
ii) Again, part of the relief sought by the Defendant is a claim for a declaration. That too is neither even arguably caught by Hollingsworth nor anything other than a carrying into effect of the Settlement Agreements.
iii) The same applies to the remedy of specific performance.
iv) Even if Hollingsworth is binding as to damages for breach of contract, it is plainly not binding so far as concerns damages by reference to what used to be Lord Cairns' Act 1858, but which is now s50 of the Senior Courts Act 1981. This not only permits damages to be given in lieu of, or substitution for, an injunction or specific performance, but damages in addition to such remedies. Insofar as damages are sought before me, they can be, and are, put as well by reference to this jurisdiction as to the straightforward claim for damages for breach of contract, and the measure would be the same.
- If necessary, I would accept the fallback submissions of Mr Swainston and Mr Gee as follows:
i) I would follow Morritt VC's decision and conclude, as he did, that the CPR requires a less restrictive approach than the RSC to the court's jurisdiction to enforce its own orders.
ii) Mr Gee puts forward further or in the alternative the attractive submission that the parties must be taken to have contracted on the basis that Morritt VC was right as to the interpretation of the Tomlin Orders to which they were agreeing in the Settlement Agreements. He refers to the words of Hobhouse LJ in Toomey v Eagle Star Insurance Co Ltd [1994] 1 Lloyd's Law Rep 516 at 520, and repeated in The Nukila [1997] 2 Lloyd's Law Rep 146 at 152, whereby:
"The principle has been stated on a number of occasions in the field of commercial law where it is recognised that the parties enter into contracts on the basis of the law as it has been stated in the applicable authorities. For a Court, in deciding a dispute under a commercial court, later to depart from those authorities risks a failure to give effect to a contractual intention of those parties, as evidenced by their contract entered into on a certain understanding of the law."
iii) If necessary, Mr Swainston submits that I should conclude that the decision in the Court of Appeal in Hollingsworth was per incuriam, because it did not consider, no doubt because it was not argued, that the claim for damages is in fact an enforcement of the secondary obligation of the parties under a contract, and was thus contrary to the binding analysis of the law by the House of Lords per Lord Diplock in Photo Production Ltd v Securicor Transport Ltd [1980] AC 827 at 849. It is plain that Fox LJ did not address this question in his short assumption that a claim for damages could not be said to be a carrying into effect of the contract, although it may be that, in Hollingsworth, the attention of the court was side-tracked by the very substantial delay and, in particular, the assertion that the contract had been repudiated and the repudiation accepted, which formed the basis of the primary claim for a lifting of the stay. In this case, there is no doubt that the Defendants would be seeking to enforce the secondary obligation under the contract of "paying compensation (damages) for non-performance of primary obligations" (per Lord Diplock at 849C). Mr Drake submits that there is a difference between performance of the obligation and carrying into effect the terms, but I do not accept that. It could be said if necessary also that there was no argument before the Court of Appeal in Hollingsworth, and hence no appreciation of the consequences of their judgment, by reference to the conclusion I have reached at paragraph 28(iv) above, that there is no distinction between damages under Lord Cairns' Act and damages for breach of contract, and, if the former is plainly included, it makes no sense to conclude that the latter is excluded.
- In those circumstances, I do not need to consider the alternative and fallback case for Mr Swainston that I should lift the stay in order to allow the relief claimed by way of enforcement of the Settlement Agreement to achieve the result sought. By reference to Cooper v Williams, there has to be good reason to lift a stay. On the face of it, if I were really prevented by Hollingsworth from permitting the Tomlin Orders to be enforced upon one or other of the grounds set out above, I would have wished to conclude that there were good reasons to lift the stay, but, on the other hand, it seems to me, that I would then be bound, if I had concluded I was bound, by Hollingsworth, in which, as referred to in paragraph 26 above, such an alternative proposition was rejected by the Court of Appeal on the facts of that case. I see no need to lift the stay when the availability of enforcement of the terms of the Tomlin Orders without doing so is so plain.
Remedies
- In those circumstances I am entirely satisfied that, subject to the question of any stay sought by Mr Drake, I can and should determine the issues summarily.
- For the reasons set out above, I conclude that, at English law, which, it is common ground, is the law which I must apply, the bringing of the Greek claims is a breach of the Settlement Agreements. It is also a breach of the jurisdiction clauses contained in the Settlement Agreements (and for that matter in the insurance policies): the jurisdiction clauses are plainly wide enough to cover the disputes in the English and the Greek proceedings: see e.g. Continental Bank referred to in paragraph 22 above and DSM in paragraph 23(i) above.
- As I have stated in paragraph 15 above, the Defendants do not seek, and would not be entitled, to enjoin the Greek proceedings. The Greek court will now need to proceed to consider those Greek proceedings, but, on the face of it, and at English law, this Court is plainly first seised of the matters in issue, both in that they were raised in these proceedings prior to the Settlement Agreements, and now by virtue of their falling within the ambit of the Settlement Agreements, and consequently within the Tomlin Orders, made in these proceedings.
- There is no doubt that this action continues in existence and to have effect notwithstanding the stay (see Rofa Sport Management AG v DHL International (UK) Ltd [1989] 1 WLR 902 and Briggs & Rees at 2.236). The steps now taken to enforce the Tomlin Orders are not in any way enlarging the original action, but are taken in pursuance of it, and permitted by the Orders, as I have concluded. Even if it were enlarging the proceedings, that would plainly not be, as is contended by Mr Drake, a subversion of the effect of the Convention, as was concluded in a very different situation in Knauf UK GmbH v British Gypsum Ltd [2002] 1 Lloyd's Law Rep 199, but would rather be consistent with the principle that all issues should be tried in one court, being the court first seised of the dispute, as recommended by the Advocate General in The Tatry [1999] 2 WLR 181 at 186G-H and 188G-H, exemplified in Masri v Consolidated Contractors International (UK) Ltd (No 3) [2009] QB 503 CA, where steps were taken after judgment in the original action, and as explained by Rix LJ in Stribog Ltd v FKI Engineering Ltd [2011] 2 Lloyds Law Rep 387, at paragraphs 115 and 128.
- The damages sought are in effect in respect of the loss and damage which the CMI and LMI Defendants have already incurred in dealing with and defending the Greek proceedings, and of course the indemnity sought is for the sums incurred in respect of such proceedings brought by others than Starlight and OME, but falling within the category covered by the indemnity. There is, I am satisfied, no jurisdictional restriction upon the making of an order for such damages or for such indemnity: see Ellerman Lines Ltd v Read [1928] 2 KB 144 CA, Union Discount Co v Zoller [2002] 1 WLR 1517 CA, CMA CGM SA v Hyundai Mipo Dockyard Co Ltd [2009] 1 Lloyd's Law Rep 213, and Briggs & Rees at 5.59 and Briggs: Agreements on Jurisdiction and Choice of Law at pp301-302.
- The draft orders that were put before the Court by the CMI and LMI Defendants were considered in some detail. I am satisfied that the English court is entitled to pronounce its conclusions and grant remedies as sought, provided that none of them prevents access to the Greek court by way of injunction. It will be a matter for the Greek court to address, in the light of the conclusion of this Court, whether the English courts do indeed have exclusive jurisdiction in respect of the matters before me, pursuant to Article 23 of the Judgments Regulation ("Prorogation of Jurisdiction"), and whether it has jurisdiction; and further whether it can and should recognise declaratory and other relief granted by this Court, which I have concluded to be the court first seised, just as the English court recognised declaratory relief given by the Spanish court as the court first seised in The Wadi Sudr [2010] 1 Lloyd's Law Rep 193 CA. In the light of my conclusions above, and subject always to Mr Drake's application for a stay pursuant to Article 28, to which I will come below, there was, in fact, little dispute as to the terms of the relief sought. I deal with only two specific matters.
Indemnity
- Mr Drake did not contest Mr Gee's case that I could, if I so decided, 'fortify' the indemnity. The relevant indemnity clauses are, as Mr Gee persuasively argued in his skeleton argument, examples of an indemnity which is in part in respect of loss already incurred, but in part quia timet. Rix LJ made plain, in Rowland v Gulfpac Ltd [1999] Lloyd's Law Rep (Banking) 86 at 97-98, that the court has an equitable jurisdiction to grant quia timet relief to a party with the benefit of an indemnity before loss has occurred, and that there is an equitable right to create and preserve a fund to protect the party to be indemnified. Because no injunction can be sought, it is possible that the Greek proceedings will be continued, at least until a decision by the Greek court, and, in the absence of mandatory relief to prevent the proceedings (such as would have been justifiable by reference to Ascherson v Tredegar Dry Dock & Wharf Co Ltd [1909] 2 Ch 401, Re Anderson-Berry [1928] Ch 290 and The Messiniaki Tolmi (No 2) [1982] QB 1248 CA), the mandatory injunction to require a fund to be set up, from which indemnification can be made, is still plainly similarly justifiable.
- As Mr Gee puts it, the constitution of such a fund within the jurisdiction, in London, will ensure that the LMI Defendants are held harmless, and are not required to use their own funds to discharge liabilities falling within the ambit of the contract of indemnity. He refers to the "cloud" hanging over the Defendants, referred to by HHJ Chambers QC in Papamichaels v National Westminster Bank plc [2002] 1 Lloyd's Law Rep 332, where an injunction was considered to be justified "in order to prevent the jurisdiction of the court from being stultified" (para 88). The creation of a fund is simply a modern exemplar of the court's jurisdiction to make any interlocutory order reasonably asked as ancillary to the administration of justice, which long antedated the invention of the freezing order, as illustrated in Smith v Peters [1875] LR 20 Eq 511. Mr Swainston associated himself with Mr Gee's arguments, and I agree that it is appropriate that there should be such an order, in respect of both sets of Defendants, with liberty to restore before me to consider the issues both of damages to date and of indemnities for the future, including the establishment of an appropriate fund.
Tomlinson J's Order
- The other item of relief sought with which I must deal specifically is in respect of the application by both sets of Defendants that I should declare that, by order of Tomlinson J, dated 14 December 2007, "it was determined that, under English law as the governing law of the policy, the claimant has no claim against the [respective] defendants for damages for late payment of the claim made by the claimant under the policy in respect of the loss of the Alexandros T".
- I have already recited, in paragraph 7 above, that Tomlinson J made such a decision. It is obviously important, in that a very substantial part of the claims made for actual financial losses in the Greek proceedings is said to arise (or, as a result of the proposed 'clarification' of the pleadings, arise in part) by reference to the alleged failure by the Defendants to make payment in accordance with their obligations (until payment in accordance with the Settlement Agreements). Mr Drake made a point that the decision of Tomlinson J was made, so far as the LMI Defendants are concerned, one day after the LMI settlement agreement, but (i) the proceedings were still in effect at that stage, the Tomlin Order not imposing a stay until six days later and (ii) when the Tomlin Order was imposed, it was backdated, but backdated not to 13 December, the date of the settlement, but to 14 December, the date of Tomlinson J's decision.
- In any event, the decision by Tomlinson J was made at a hearing when Starlight was represented by leading Counsel, put forward the arguments, and they failed.
- Accordingly, it is material both to the contention that the claims now made in the Greek proceedings were already made in the original proceedings in this court and consequently were, as I have concluded, covered by the Settlement Agreements, but it is also relevant to the fact that those claims were, in such proceedings, made and resolved by a decision of the English court that, at English law, they could not be brought. Consequently, as to the relief sought by the Defendants before me, it is correct that Tomlinson J so determined, and if the Greek court wishes to know the answer to the question as to whether the claims are sustainable at English law, it can see the decision of Tomlinson J, as further explained in this judgment. I do not however see any point in making a declaration as to what Tomlinson J decided. It is supererogatory to declare what has already been declared.
The Stay Application by Starlight
- Such application was very late. Applications were issued by Starlight, OME and the co-Assured on 24 and 28 November, the latter being the very date on which the hearing before me commenced. As set out in paragraph 14(i) above, OME, having been joined as a Part 20 Defendant in the original action, had actually put in both an Acknowledgment of Service and a Defence (in terms to which I will refer below), which Mr Gee submits prevents OME, in any event, from challenging the jurisdiction by way of Article 28. He refers to Midland Resources Ltd v Gonvarri Industrial SA [2002] I.L.Pr 8, Montrose Investments v Orion Nominees [2002] I.L.Pr 21, The Burns-Anderson Independent Network plc v Wheeler [2005] I.L.Pr 38 and Briggs & Rees at pp567-8.
- However this is all the more significant in relation to the stay application made in relation to actions 702 and 1043, to which I shall refer below. As to the original action, 815, where I have concluded that the Defendants are entitled, without lifting the stay, to enforce the terms of the Tomlin Order, it is quite plain that this Court is first seised (indeed I would also have been so satisfied had I considered it appropriate to lift the stay). There is thus no jurisdiction in this Court, as the court first seised, to grant a stay in respect of the relief sought in the original action, since Article 28 expressly provides that "Where related actions are pending in the courts of different Member States, any court other than the court first seised may stay its proceedings", this Court, being the court first seised, cannot stay its proceedings. I am therefore satisfied that there is nothing to prevent my making the order sought in the original action in respect of these Settlement Agreements, upon the basis of my conclusion that those Settlement Agreements both preclude the bringing of the claims now sought to be brought in the Greek court and trigger the enforcement of the Indemnity. The decision falls to be made both by this Court and at English law, and I so make it, within the original action. In any event, Article 23 provides that:
"If the parties, one or more of whom is domiciled in a Member State, have agreed that
the courts of a Member State are to have jurisdiction to settle any disputes which have arisen or which may arise in connection with a particular legal relationship [so that] those courts have jurisdiction. Such jurisdiction shall be exclusive unless the parties have agreed otherwise."
- As to Actions 702 and 1043, referred to in paragraphs 14(ii) and (iii) above, the Defendants to those actions, Starlight, OME and the co-Assured, have put in Acknowledgments of Service. Not only have they not made, until just prior to this hearing, any application for a stay pursuant to Article 28, but they are out of time to do so Mr Gee refers to the authorities set out in paragraph 43 above and, in any event, have submitted to the jurisdiction by serving Defences which do not contain a challenge to the jurisdiction of the English court to determine the two actions. There is, rather, a substantive defence on the merits contained in the Defences (identical to that of OME as Part 20 Defendant in the original action as referred to in paragraph 43 above), by way of an assertion that:
"The claims in the Greek Proceedings fall outside the jurisdiction clause in the policy and the jurisdiction clause in the Settlement Agreement. It is respectfully denied therefore that the High Court of Justice of England and Wales has jurisdiction to determine the claims in the Greek Proceedings."
This is not a challenge to the jurisdiction of the English court, but a substantive defence to the claim of breach of the exclusive jurisdiction clause.
- Action 1043 in fact only addresses the exclusive jurisdiction clauses, because the co-Assured are not parties to the Settlement Agreements, and I am satisfied, for the reasons set out above, and on a summary basis, that:
i) the Greek claims brought by the co-Assured do fall within the jurisdiction clauses in the Policies.
ii) their claims can only be brought in this country.
iii) if pursued, they would fall within the indemnities given by Starlight and OME.
- I am satisfied that, although in the case of these two actions the English court is not first seised, the stay applications must fail. First, they are out of time and inconsistent with the submission to the jurisdiction that has already occurred by virtue of the Acknowledgments of Service and the Defences. Further and in any event, I would refuse a stay by reference to the provisions of Article 23, and the prorogation of English jurisdiction by virtue of the exclusive jurisdiction clauses (in the case of Action 702) in the Policies and in the LMI Settlement Agreement, and (in the case of 1043) in the Policies.
- For the same reason, in Action 702, I grant summary relief under Part 24 to what is in fact the same effect as the relief sought and granted in the original action, and in the case of Action 1043, I grant, pursuant to Part 24, because I am satisfied there is no defence, the declaratory and other relief to the effect that the co-Assured is in breach of the relevant policy and the exclusive jurisdiction clause contained in it, by commencing and continuing with the Greek claims.
Conclusion on the Main Applications
- Accordingly, I find for the LMI and CMI Defendants in respect of all the relief they seek against Starlight, OME and the co-Assured, save in respect of their applications in respect of the Order of Tomlinson J (discussed in paragraphs 39 to 42 above), and reject the cross-applications.
The intervention in the original action by HD (referred to in paragraph 14(v) above).
- HD, the Intended Defendants, wish to be joined to the original action as defendants pursuant to CPR 19.2(2)(b), which reads:
"The court may order a person to be added as a new party if
(b) there is an issue involving the new party and an existing party which is connected to the matters in dispute in the proceedings, and it is desirable to add the new party so that the court can resolve that issue."
- If joined, HD will in due course wish to assert that they are entitled to the benefit of the Settlement Agreements and/or that it is an abuse at English law for Starlight and OME to have brought or to bring proceedings against them. The original action led to the Settlement Agreements, which caused the proceedings to be stayed, and I have already concluded above that those Settlement Agreements are subject to English law and the exclusive jurisdiction of the English courts. HD wish to submit, within the original action, that the effect of the Settlement Agreements, and of the Tomlin Orders staying the proceedings save for the purpose of putting the Settlement Agreements into effect, is that Starlight and OME cannot now pursue them, at any rate in Greece.
- Mr Drake submits that this is an overt attempt by HD to subvert the Judgment Regulation, by seeking to inveigle themselves into the original action after its effective termination, so that they are then able to assert in the Greek proceedings that the Greek court is second seised, whereas, if they were to issue fresh proceedings in this Court, it would be apparent that the Greek court was first seised and the English court second seised, which they submit is the reality.
- Mr Bailey submits that:
i) As will appear, the English court is the best and only court to conclude what is the effect of the Settlement Agreements and whether fresh proceedings would be an abuse.
ii) Far from offending against the spirit of the Judgment Regulation, the Court, if it acceded to their Part 19 application, would be acting in accord with the principles set out in paragraph 34 above. The Advocate General in The Tatry stated, at 188H, that "if it were not possible, under the rules applicable in the jurisdiction where the first action is pending, to extend its subject matter by making further claims or raising new grounds of defence, there would be no opportunity to deal with all aspects of the dispute in all cases where an action of more limited scope was commenced first." Although this was only the opinion of the Advocate General, the court did not expressly dissent from it; and the principle was endorsed by Rix LJ in the Court of Appeal in Stribog, whereby, while allowing for the possibility (at paragraph 128) that "the introduction of entirely new causes of action or parties is to be recognised as the bringing of entirely new proceedings, so that the timing of seisin
has to be looked at from that point of view", he otherwise concluded that the expansion of an originally unrelated first action to include new claims or defences connected with it could and should, in rendering the two actions related, result in the court in which the first action, thus altered, had been brought being (or becoming) the court first seised.
- There appears to me to be no doubt as to the jurisdiction to grant, and the appropriateness in this case of granting, an application under Part 19.2(2)(b), so far as English procedural law is concerned, on the facts of this case. Mr Bailey refers to Dunlop Haywards (DHL) Ltd v Erinaceous Insurance Services Ltd [2008] EWHC 520, where Field J said (at paragraph 44) that it was not necessary to show that any existing party was able to bring a claim against the party sought to be joined. This was approved in the Court of Appeal at [2009] EWCA Civ 354, and followed in Shetty v Al Rushaid Petroleum Investment Co [2011] EWHC 1640. What was necessary was simply to satisfy the requirements of Part 19.2 above, namely that (i) there was an issue involving the new party and an existing party (ii) connected to the matters in dispute in the proceedings and (iii) it is desirable to add the new party so that the court can resolve that issue. There is clear authority, in The Selby Paradigm [2004] 2 Lloyd's Law Rep 714 and Prescott v Dunwoody Sports Marketing [2007] EWCA Civ 461 (particularly at paragraph 23) that the court has power under CPR 19.2 in relation to joinder even after judgment: a fortiori after a stay which, as I have concluded above, permits the bringing and determination of proceedings to carry a settlement agreement into effect see similarly in Rofa Sport, referred to in paragraph 33 above, where the court had jurisdiction to add a party under RSC 15(6)(2) to an action which had been stayed.
- Mr Bailey relies upon a number of factors in respect of the issues of connectedness and desirability:
i) He wishes to submit (and it appears clear from the cases put forward by CMI and LMI not least in relation to their own employees that they do also) that the Settlement Agreements on their true and proper construction extend to claims against, and/or losses incurred as a result of claims against, the parties or their privies. This question will be decided at English law, but, so far as the Judgment Regulation is concerned, and the applicability of Articles 27 and/or 28, Mr Bailey points out that there is authority in respect of parallel proceedings for treating different parties as in effect the same: an insurance company and its insured in Drouot Assurances SA v Consolidated Metallurgical Industries [1998] ECR I-3075 and a liquidator and the company in liquidation in Re Cover Europe Ltd [2002] 2 BCLC 61.
ii) English law will need to decide whether it is, as Mr Bailey asserts, an abuse of the process for Starlight and its associates to sue HD in respect of the same matters as were covered in the original action and settled by the Tomlin Orders: Mr Bailey refers to the significant Court of Appeal decision of Aldi Stores Ltd v WSP Group plc [2008] 1 WLR 748, in which the Court concluded (per Thomas LJ at paragraph 10) that the fact that the defendants to the original action and the proposed new action were different does not operate as a bar to the application of the principle of abuse of the process.
iii) Mr Bailey points out the importance of the impact of the decision of Tomlinson J in the original action, which would constitute at English law res judicata as against the Claimant, but in any event constitute a statement of binding English precedent in relation to a claim which constitutes substantially the greatest financial element of the Greek claims.
iv) Mr Bailey also refers to the frequency with which the Greek pleadings direct attention to the handling of, and procedures in, the original action, including the allegations of breaches of the CPR.
- I would find it difficult to contest these submissions, and in his skeleton argument Mr Drake put forward the following submissions, which do not amount to a satisfactory answer.
i) He points out that the action is stayed, such that no further steps may be taken. Insofar as this is a submission that there cannot be a Part 19 joinder after a stay or a judgment, I reject that submission for the reasons referred to by Mr Bailey, by reference to authority (paragraph 54 above).
ii) He further submitted that the Court did not have the power to grant the relief, because its powers are limited by the Tomlin Orders. Insofar as this is a repetition of his submissions made during the main application, by reference to Hollingsworth, I have already rejected those contentions. Insofar as he is submitting that there are not issues raised in connection with the putting into effect of the Settlement Agreements (or relating to their breach), I do not accept those submissions, since the issues summarised above are plainly interconnected with the Settlement Agreements and their effects and consequences.
iii) He addresses CPR 19.2(2)(a), but that is not relied upon by Mr Bailey. Contrary to his submissions, I am satisfied that there are, notwithstanding the stay, and in the light of my judgment, not least because the questions of damages and indemnity remain to be adjudicated, issues involving HD and Starlight, OME and the LMI and CMI Defendants, connected to the matters in dispute in the original action, and it is desirable to add HD for the purpose of resolution of those issues.
- The fundamental objection which Mr Drake puts forward is however not by reference to what might otherwise be appropriate by way of a domestic applicability of Part 19, it is his case that, as in Knauf, the overt purpose of HD is to subvert the Judgment Regulation, and anticipate the result in Greece, by converting HD's claim into proceedings of which the English Court, instead of being second seised if brought by fresh action, would now be first seised.
- Mr Bailey, while relying upon the contentions which I have already summarised in paragraph 55 above, sought to meet this allegation as to motivation. He drew my attention to Alan Barton v Golden Sun Holidays [2007] EWHC B6 QB, in which, in relation to a Part 20 application, Wyn Williams J pointed (in paragraphs 25-26) to a decision of the European Court relating to Article 6(2) of the Convention (GIE Reunion Europιnne v The Zurich Espania [2005] ECR I-40), in which the European Court stated (at paragraph 33) that "Article 6(2) of the Convention does not require the existence of any connection other than that which is sufficient to establish that the choice of forum does not amount to an abuse". However insofar as such is relevant, Mr Bailey submitted that it could not possibly be said that the choice of an English forum in this case could be an abuse, when it was, as he submitted, the most natural forum for the resolution of the issues between the parties. But, more relevantly, he drew my attention to Shetty (referred to in paragraph 54 above), in which the learned Judge, Mr Pymont QC, concluded that the application under Part 19.2(2)(b) was not flawed, if otherwise justified, by reference to the motive for its application. He said (at paragraph 23):
"If (as I have decided) the joinder of ARPD is desirable to enable the court to resolve the issue in the Employment Action against Mr Shetty, the fact that joinder will also enable ARPD to bring claims against Mr Caplis and Mr Wight cannot make joinder undesirable or otherwise disentitle the Applicants from having recourse to CPR r 19.2(2)(b)."
- I found the arguments evenly balanced, but I was finally convinced by the submission of Mr Bailey in reply. He pointed out that, but for the breach of the exclusive jurisdiction clauses, which I have found to be established, any further claims against the CMI and LMI Defendants (and, if HD be right, their privies) by Starlight, OME and the co-Assured would and should have been (if permissible at all) in this jurisdiction. The assertion of subversion by HD of the Regulation is in fact to turn the Regulation on its head, in the light of Article 23. In those circumstances I am and remain simply of the view that the provisions of CPR Part 19.2(2)(b) have been made out, and that permission should be given to HD to be added as new parties to the original action.
