This Week's Caselaw
AK Investment v Krgyz Mobil & Ors
Privy Council ruling on service out of the jurisdiction/"necessary and proper party"
http://www.bailii.org/uk/cases/UKPC/2011/7.html
BITEL (a Kyrgyz company) sued the KFG (Isle of Man) companies in the Isle of Man. The KFG Companies counterclaimed against BITEL and obtained permission to join additional defendants to the counterclaim and to serve them out of the jurisdiction. Some of those additional defendants applied to have the order for service out set aside. The case therefore turns on an interpretation of a Manx procedural law provision but that provision closely resembles a ground for service out of the jurisdiction under the English CPR. PD 6B para 3.1(3) provides that a claimant can serve out of the jurisdiction if a claim form has already been served (or will be served) and "(a) there is between the claimant and the defendant a real issue which it is reasonable for the court to try; and (b) the claimant wishes to serve the claim form on another person who is a necessary or proper party to that claim". The Privy Council summarised prior caselaw on this provision and also held as follows:
- It has been accepted that para 3.1(3) can be relied on by a defendant who wishes to bring a counterclaim. The claimant has submitted to the jurisdiction and so has submitted to the risk of a counterclaim.
- The mere fact that a party ("D1") is sued only for the purpose of bringing in additional defendants ("D2") is not fatal to an application for permission to serve D2 out of the jurisdiction (although that can be a factor in the exercise of the court's discretion).
- However, the action is not properly brought against D1 if it is bound to fail. The Privy Council held that if the question is whether the action against D1 is bound to fail on a question of law, that should be decided on the application for permission to serve D2 "but not where there is an exceptionally difficult and doubtful point of law".
- The question whether D2 is a proper party is answered by asking: "Supposing both parties had been within the jurisdiction would they both have been proper parties to the action?". (See Massey v Heynes & Co (1888)). In other words, the claims against D1 and D2 involve one investigation.
- If a party asserts that justice will not be done in a foreign jurisdiction, the Privy Council held that it does not have to show that justice will not be done. Instead it must show that there is a "real risk" that justice will not be done. Furthermore, there is no rule that the English court will not examine the question whether the foreign court is endemically corrupt or lacks independence. However, considerations of international comity will militate against any such finding in the absence of cogent evidence.
Noble v Owens
Insurers fail to prove that claimant had dishonestly exaggerated his claim for damages/surveillance evidence
http://www.bailii.org/ew/cases/EWHC/QB/2011/534.html
It was reported in Weekly Update 10/10 that the Court of Appeal had refused to set aside a judgment in the claimant's favour after the defendant's insurers produced surveillance evidence suggesting that he had exaggerated his injuries. Instead, the Court of Appeal ordered that the trial judge should determine whether any significant part of the (over £3 million) damages had been fraudulently obtained by the claimant. At trial, the claimant had claimed that he could not walk unaided outside his house and, with crutches, he could only walk about 80 feet. After the insurers received confidential information, they retained investigators to undertake secret filmed surveillance of the claimant. Some of this evidence showed the claimant carrying on various activities (including eg carrying an aluminium bench) without the use of any aids. Field J held as follows:
- There were no grounds for excluding the surveillance evidence. It had not been filmed on land owned by the claimant and there was no evidence that the filming had been either edited or selective. Nor did the judge criticise the use of surveillance. (It may be recalled that in Walton v Kirk (see Weekly Update 14/09), Coulson J criticised the use of secret surveillance in personal injury cases).
- The insurers bore the burden of proof that the claimant had acted fraudulently. The judge acknowledged that the claimant had, in the past, cheated the Inland Revenue and had not used his damages to acquire the services and facilities for which they were awarded. The judge also agreed that the claimant had conferred with a witness but said that this did not necessarily mean that their evidence was knowingly false.
However, he held that the claimant was entitled to keep his damages. Field J said that although the footage showed a "significant" improvement in his condition, "it does not follow that [the claimant] was capable of doing what is seen in the DVDs every day or most days". He accepted that the claimant "has good days and often has bad days when he does not walk unaided". In reaching this conclusion, the judge relied, in particular, on the expert medical evidence adduced by the claimant.
Claxton Engineering v TXM Olaj-Es
Whether English court can grant injunction restraining an arbitration in an EU state
http://www.bailii.org/ew/cases/EWHC/QB/2011/534.html
In the West Tankers decision (see Weekly Update 06/09), the ECJ held that an English court did not have jurisdiction to grant an anti-suit injunction restraining proceedings started in another EU member state (if that other EU member state was first seised), even if those proceedings were brought in breach of an arbitration clause.
In this case, Hamblen J held that the parties were bound by an English exclusive jurisdiction clause. However, the defendant had commenced arbitration in Hungary. It was argued by the defendant that the West Tankers decision meant that the English court had no jurisdiction to injunct arbitral proceedings taking place in another Member State, on the basis that the English court would be interfering with or usurping the supervisory functions of the Hungarian courts. Hamblen J held that that was a misinterpretation of West Tankers.
That case was based on Regulation 44/2001 and arbitration does not fall within the scope of that Regulation: "There is no objection to an order restraining proceedings which do not fall within the scope of the Regulation, of which arbitration is a paradigm example. Anti-suit injunctions are objectionable if they interfere with an EU court deciding on its own jurisdiction under the Regulation, but not if they do not".
Hamblen J recognised that the grant of an anti-arbitration injunction is a matter of debate and controversy in the international arbitration community. Nonetheless, he held that it was clear that he had jurisdiction to grant such an injunction. He did note that "the need for caution in the grant of such injunctions is all the greater in relation to arbitrations outside the jurisdiction because such matters are generally best left to the relevant supervisory courts being the courts of the country of the seat of the arbitration".
However, in this case the claimant had established the requisite "exceptional circumstances". It had established that the continuation of the arbitration would be a breach of its legal rights and that it would be vexatious and oppressive to allow the arbitration to continue. Furthermore, there was no issue here as to whether there was any (or any valid) arbitration agreement. Accordingly, Hamblen J granted the anti-arbitration injunction. However, he noted that the claimant here was in a stronger position than most applicants as it had the benefit of a binding decision that there was an exclusive jurisdiction clause and there was no arbitration agreement.
Rybak & Ors v Langbar International
No relief from sanctions where data was deliberately destroyed
The claimant failed to give full disclosure (claiming that various of his computers had crashed and data had been lost) and the defendant therefore applied for, and obtained, an order for delivery up of the defendant's computer equipment for inspection. The claimant continued to fail to cooperate and so a further order (this time an unless order) was made. When that order was also breached, the claim was struck out and the claimant applied for relief under CPR r3.9.
The claimant sought to argue that he had not breached the order because it required delivery up of the computers but not the data held on the computers. Unsurprisingly, that argument did not find favour with the Morgan J, who described it as a "quite senseless" interpretation of the order (which did, in any event, contain a reference to all documents contained on the delivered computers). (The judge accepted that the effect of the order was that data added between the order and the date of delivery up would also be captured by the order). The judge also rejected an argument that no deleted files were actually deleted by application of an Erase Data function by the claimant - there was a prima facie presumption of destruction which the claimant could not rebut.
The judge refused to grant relief under CPR r3.9. It was material that the breach here was not remedial. Even though it could not be known what material had been deleted, "one is tempted to say that, because [the claimant] deliberately destroyed it, as I have held, that it must have been judged by him to be adverse to his case and potentially beneficial to [the defendant]'s case". It was clear that the claimant wanted to "shut down the process of disclosure as far as he was able". The judge concluded: "I also say that I should send a very clear message to [the claimant] and anyone else who considers behaving as he has done. The court will not assist a litigant in destroying data and will not assist a litigant to fight a case on the limited material that that litigant chooses to make available, suppressing other material which would be material to the decision of the court."
Finally, although he did not decide the point, Morgan J referred to an alternative argument that (ignoring the unless order) the case should be struck out because of an abuse of the process of court which meant that there was a substantial risk that a fair trial was no longer possible. He noted the "inevitable difficulty" in predicting whether a fair trial could take place where one party has suppressed information which would have been needed to decide that issue.
Woodland v Stopford & Ors
Withdrawal of pre-action admission of liability
http://www.bailii.org/ew/cases/EWCA/Civ/2011/266.html
CPR r14.1A provides that a party may apply to court to withdraw a pre-action admission after the start of proceedings with the permission of the court (or the consent of the other parties). This case involved such an application to the court. PD 14 para 7.2 sets out the circumstances which the court must take into account when deciding whether to give permission. One of those circumstances includes whether or not new evidence has come to light which was not available at the time the admission was made. In this case, the appellant argued that the judge had erred in failing to give proper weight to the fact that no new evidence had prompted the withdrawal of the admission - it was, instead, prompted by a re-appraisal of the facts of the case. The Court of Appeal held that the judge had not been plainly wrong in his approach. The factors listed in PD 14 para 7.2 are not listed in any hierarchical order and no one factor has any greater weight than another. The judge must instead weigh each factor and all the other circumstances of the case. The case of American Reliable Insurance Company v Willis [2008] (see Weekly Update 44/08) is not authority for the proposition that a lack of new evidence presents "a formidable threshold difficulty" for a defendant.
Medical Justice, R v Secretary of State for the Home Dept
Whether a party can appeal against terms imposed on permission to appeal
http://www.bailii.org/ew/cases/EWCA/Civ/2011/269.html
A party was granted permission to appeal against a judge's decision but the judge imposed certain conditions. The party sought to appeal against those conditions. Section 54(4) of the Access to Justice Act 1999 provides that no appeal may be made against a decision of the court to give or refuse permission (although further applications for permission can be made). CPR r52.9 provides that an appeal court can impose conditions upon which an appeal may be brought. CPR r52.9(3) provides that "where a party was present at the hearing where permission was given he may not subsequently apply for an order that the court exercise its powers" to set aside permission to appeal or to vary the conditions upon which an appeal may be brought. The Court of Appeal held as follows:
- If a judge grants a party permission to appeal on terms and the party is unhappy with those terms it has three options: (a) abandon the appeal; (b) accept the terms; or (c) elect to treat the conditional appeal as a refusal of permission to appeal and make a fresh application for permission to the appellate court. The party cannot, however, appeal against some or all of the terms alone.
- The Court of Appeal was less certain about what the position would be if the party had not been present at the hearing. Rimer LJ suggested that CPR r52.9(3) might be ultra vires because of section 54(4) of the 1999 Act. The Master of the Rolls suggested that it would be possible, instead, to find that the application would not be treated as an appeal. In any event, the Court of Appeal was not required to decide the point in this case.
- What if the appeal court refuses permission to appeal or imposes more onerous terms than the judge? Although the point was left open, the Master of the Rolls said that he was inclined to treat the prospective appellant as having irrevocably elected to treat treat the first instance decision as a refusal of permission, at the latest by the time the renewed application is disposed of by the appeal court.
MVF3 APS & Ors v Bestnet & Ors
Power of Court of Appeal to remit issue to lower court and to adduce additional evidence
http://www.bailii.org/ew/cases/EWHC/Ch/2011/477.html
In the main judgment, the defendants were held liable. They were refused permission to appeal by the trial judge but applied for permission to appeal from the Court of Appeal. They obtained permission to adduce further evidence and the Court of Appeal remitted certain questions for determination by the trial judge (pursuant to CPR r52.10). Arnold J considered three recent cases where the Court of Appeal remitted an issue to the lower court. In the first case, the Court of Appeal had confirmed that it could exercise the power under CPR r52.10 even before the substantive appeal was heard. However, the Court of Appeal did not set aside or overturn the trial judge's original judgment. In the second case, the Court of Appeal allowed new evidence to be admitted and for a factual issue to be remitted. However, unlike in the present case, the lower court had not yet determined the factual issue. In the third case, new evidence was allowed to decide a new issue (arising out of that evidence) (and if that new issue was proven, the trial judge was ordered to retry the issue he had already decided).
Arnold J concluded that: "It is not immediately obvious from the three cases discussed above that r. 52.10(2)(b) empowers the Court of Appeal to direct the lower court to reconsider an issue it has already decided prior to the substantive hearing of an appeal. In the present case, the Court of Appeal has not ordered a re-trial, nor has it set aside my order dated 2 July 2009, nor has it disturbed any of the findings upon which that order was based. Prima facie, therefore, the order dated 2 July 2009 is res judicata, and the Defendants are precluded by issue estoppel from challenging my conclusions on all the material issues which led to the making of that order unless and until their appeal is successful. In this regard, it should be noted that the fact the main judgment is presently under appeal does not mean that it is not "final" for the purposes of res judicata:"
Nevertheless, the judge assumed (without deciding) that the defendants were correct to submit that it should be implied that the Court of Appeal order should be taken to have set aside the issue estoppel which would otherwise have arisen.
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