ED&F Man Sugar Ltd v T&L Sugars Ltd and Others
| Jurisdiction | England & Wales |
| Judge | Mr Justice Leggatt |
| Judgment Date | 10 February 2016 |
| Neutral Citation | [2016] EWHC 272 (Comm) |
| Docket Number | Case No: CL-2014-000789 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 10 February 2016 |
[2016] EWHC 272 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Justice Leggatt
Case No: CL-2014-000789
Mr T Young QC and Mr C Newman (instructed by Thomas Cooper LLP) for the Claimant
Mr R Howe QC and Ms L Powel (instructed by Hill Dickinson LLP) for the Defendants
Hearing dates: 8–10 February 2016
This is an application by the defendants to strike out claims pleaded in the particulars of claim, alternatively for summary judgment dismissing those claims.
The case concerns a shipment of 30,000 metric tonnes of raw sugar, which was made under a Sale Contract between the claimant as seller and a company which has been referred to as "SRB", as buyer, on 7 February 2012. Under the Sale Contract the claimant agreed to sell to SRB on cif terms a total quantity of between 100,000 and 120,000 metric tonnes of raw sugar in the claimant's option. The destination specified in the contract was the Port of Brindisi in Italy.
The relevant shipment was made on board the vessel "Antonia" at Maputo in Mozambique. Loading was completed and the vessel sailed from Maputo on 10 February 2014. On 21 February 2014, the vessel was diverted from Brindisi to a refinery at Silvertown in London belonging to the first defendant ("T&L"). The vessel berthed at Silvertown on 20 March 2014 and by 24 March had completed the discharge of the sugar. T&L took possession of the sugar and processed it for onward sale. No payment was made by SRB and the claimant has subsequently brought arbitration proceedings under the sale contract against SRB to seek to recover the sale price.
In this action the claimant is suing T&L and two of its directors, Mr. Bacon and Mr. Widmer, who are also directors of SRB. Three separate causes of action are pleaded. The first is a claim that all three defendants conspired with SRB to injure the claimant by unlawful means. A further party to the alleged conspiracy is said to have been a company referred to as "SFIR", which is a 50 per cent shareholder of SRB. This conspiracy claim is said in the particulars of claim to be the claimant's primary case. A secondary case is made against T&L alone, that it is liable for inducing a breach by SRB of the sale contract. The third claim, which is also made against T&L alone, is a claim for conversion of the sugar.
The defendants' application has four separate limbs. In the order in which the points were argued for them by Mr. Howe QC, the defendants seek an order to strike out or summarily dismiss:
i) the conversion claim;
ii) the entire conspiracy claim;
iii) the claim for inducing a breach of contract; and/or
iv) the conspiracy claim insofar as it is made against the two individual defendants.
I will consider each of these four limbs in turn.
Starting then with the conversion claim, the Sale Contract included a retention of title clause, which provided that title to the sugar was not to pass until the claimant had received payment for it. As I have mentioned, SRB did not pay the contract price. It is the claimant's case that in these circumstances title to the sugar did not pass to T&L. T&L accordingly converted the sugar when it processed the cargo at its refinery and co-mingled it with other stock for onward sale.
The defendants do not on this application suggest that the claimant has failed to allege facts which disclose a valid cause of action in law for conversion; nor is it argued that the claimant has no real prospect of proving the relevant facts. T&L has pleaded a number of defences to the claim, but it is not suggested that any of those defences is capable of delivering a knock-out blow such that the claim should be summarily dismissed. The argument that the conversion claim should be struck out or summarily dismissed is based, and based solely, on the position which the claimant has taken in the arbitration proceedings against SRB in which it has sought to recover the contract price. The defendants say that in order to maintain a claim for the price the claimant has to allege – and has indeed alleged in its submissions in the arbitration – that title to the sugar passed to SRB under the Sale Contract. It was necessary in law, the defendants say, for the claimant to make that allegation because under s.49 of the Sale of Goods Act a seller may only maintain an action for the price once property in the goods has passed to the buyer, subject to an exception in s.49(2) which the defendants say is not applicable. At all events, the defendants contend that it is clear from the claimant's submissions in the arbitration that the claimant has alleged that title passed to SRB. Furthermore, it appears that an award has been made in the claimant's favour, although the award is said to be subject to a request for clarification and no attempt has yet been made to enforce it. Mr. Howe submits that in these circumstances the claimant cannot assert in these proceedings that title did not pass to SRB under the Sale Contract. It follows that the claimant cannot maintain a claim in conversion.
The submission that the claimant cannot say, or cannot be heard to say, in these proceedings that title did not pass to SRB prompts the question, "Why not?" On what principle of law is it argued that the claimant cannot say, or cannot be heard to say, this? The defendants' skeleton argument provided no answer to that question. Nor does the defence, which does not refer to the arbitration claim and takes no point based upon it in answer to the claim for conversion. Although I invited Mr. Howe in oral argument to identify a principle of law on which he relies, he did not identify any applicable legal principle.
Two principles were mentioned on which Mr. Howe confirmed that he does not rely. One is the principle or doctrine of election of remedy that appeared to be relied on in the witness statement of Mr. Mukhi, which set out the grounds for the defendants' summary judgment application. Mr. Young pointed out in one of the more useful parts of his skeleton argument, by reference to the advice of the Privy Council in Tang Man Sit v Capacious Investments Ltd [1996] AC 514, why that principle does not assist the defendants. Mr. Howe did not seek to argue the contrary.
Another legal principle on which the defendants do not rely is that of issue estoppel. That principle also does not assist them, because it is well-established that a finding in arbitration or court proceedings between A and B is not binding on A in arbitration or court proceedings between A and C: see e.g. Lincoln National Life Insurance Co v Sun Life Assurance Co of Canada [2005] 1 Lloyd's Rep 606. That being so, it seems to me that a fortiori A can not be bound in proceedings against C by assertions of fact or law which A has made in arbitration proceedings against B. Thus, the claimant is not bound in the present court proceedings against T&L by assertions made in the arbitration proceedings against SRB. That conclusion is reinforced by the consideration that arbitration is a private and confidential process – which militates against the notion that assertions made in arbitration proceedings may be taken to have a wider public significance.
The closest that Mr. Howe came to putting forward anything in the way of legal reasoning in support of this limb of the application was to point out that the particulars of claim, as with any statement of case, are supported by a statement of truth attesting to the claimant's belief that the facts stated in them are true. Mr. Howe argued that such a statement of truth could not honestly have been made in circumstances where the claimant was asserting in the arbitration against SRB that title to the sugar had passed to SRB.
Mr. Howe did not spell out what the legal consequence would be if the statement of truth was in fact false. I shall assume in his favour, although no attempt was made to demonstrate this, that it could have the consequence of rendering the statement of case, or a relevant part of it, liable to be struck out. Even on that assumption, however, I cannot see how reference to the statement of truth advances the defendants' case. That is so for at least two reasons. First, a statement of truth is confined to the party's belief in the truth of facts stated in the pleading. An assertion that title to the cargo of sugar did not pass to SRB is not a statement of fact. It is a conclusion of law arrived at by applying rules of law to the facts alleged. The defendants have not identified any underlying fact averred in the particulars of claim, which is denied in the claimant's arbitration submissions (or vice-versa).
Second, even if the assertion that title to the sugar did not pass to SRB were to be regarded as a statement of fact, it cannot be inferred from the fact that an inconsistent assertion has been made in the arbitration proceedings that the claimant did not, or does not, believe the statement made in these proceedings to be true. Inconsistency – assuming, as I do, for this purpose that there is an inconsistency – can always operate in either of two directions. It could perfectly well be that the statement of truth accurately reflects the claimant's belief and that what was stated in the arbitration proceedings did not. That would be a matter for SRB to complain about.
After Mr. Howe had completed his submissions, when the court adjourned overnight during Mr. Young's submissions in response, Mr. Howe and Ms. Powell produced a further written note citing four further authorities in a belated attempt to come up with some legal basis for this limb of the defendant's application. It was said in this note that:
"The defendants...
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