Bank of Baroda, GCC Operations and Others v Nawany Marine Shipping FZE and Others
| Jurisdiction | England & Wales |
| Judge | Ms Sara Cockerill |
| Judgment Date | 01 December 2016 |
| Neutral Citation | [2016] EWHC 3089 (Comm) |
| Docket Number | Case No: 2016-000117 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 01 December 2016 |
[2016] EWHC 3089 (Comm)
Ms Sara Cockerill QC
(Sitting as a Deputy Judge of the High Court)
Case No: 2016-000117
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice, Rolls Building
Fetter Lane, London, EC4A 1NL
James Watthey (instructed by TLT LLP) for the Claimants
Henry Byam-Cook (instructed by Holman Fenwick Willan LLP) for the Defendants
Hearing dates: 15 November 2016
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Ms Sara Cockerill QC sitting as a Deputy Judge of the High Court
Ms Sara Cockerill QC:
This is an application by the Defendants under CPR Part 11 for an order that the Court declines to exercise its jurisdiction to hear the claim or for an order that these proceedings be stayed.
The background to the case and to the application is set out in the witness statement of Mr Morriss served in support of the application. The First Claimant is a bank registered in the United Arab Emirates and the Second Claimant is the London branch of an Indian registered bank. They claim against the First, Second and Third Defendants under a Facility Agreement ("the Facility Agreement") dated 10 April 2008 which was amended and restated by an agreement dated 11 November 2009 ("the Amended Facility Agreement"). The Facility Agreement and the Amended Facility Agreement were both governed by English Law.
The First Defendant is a company incorporated in the United Arab Emirates and was the borrower under the Facility Agreement. The Second Defendant is a company incorporated in India and is the parent company of the First Defendant.
The loan encapsulated in the Facility Agreement and associated documents was for the purchasing of the vessel ADELEIDA, which was subsequently renamed DEVIGLORY I. The Third Defendant was the owner of the DEVIGLORY I.
The Fourth and Fifth Defendants are individuals resident in Mumbai, India, who are the directors of the First, Second and Third Defendants. On 11 April 2008, the Fourth and Fifth Defendants gave personal guarantees ("the Guarantees") guaranteeing the performance of the First Defendant's obligations under the Facility Agreement. The Guarantees were also governed by English Law.
The loan was drawn down on 14 April 2008. Payments commenced to be made under the Facility Agreement thereafter. However in 2010 the DEVIGLORY I was arrested following a collision in Bangladesh. That arrest, which proceeded under the Kolkata Admiralty jurisdiction, resulted in the judicial sale of the vessel later that same year. From 15 April 2011 the First Defendant ceased to make payments under the Amended Facility Agreement.
On 29 August 2012 the Claimants served an acceleration notice on the First Defendant demanding full payment of all outstanding sums under the Amended Facility Agreement.
In these present proceedings, which were commenced in February 2016, the following claims are advanced:
i) The First and Second Claimants claim as lenders against the First Defendant as borrower under the Amended Facility Agreement in the sum of US$15,640,000 plus accrued interest;
ii) The First and Second Claimants claim against the Second and Third Defendants as guarantors of the performance of the First Defendant under the Amended Facility Agreement;
iii) The Third Claimant claims against the Fourth and Fifth Defendants as Security Trustee under the Guarantees.
The Defendants' jurisdictional challenge falls into two parts. The first part relates to the service of the proceedings which was admittedly defective, and which the Defendants submit should result in a declaration that the Court does not have jurisdiction to hear the claim as set out in the Claim Form in these proceedings. The more complicated arguments relate to the existence of proceedings in India.
Defective service
Dealing first with the application based on defective service, the Amended Facility Agreement and the Guarantees both contained service provisions (clauses 37.2 and 24.3 respectively) providing that SH Process Agents Limited in London were appointed as the Defendants' agents for service in relation to any proceedings before the English Court. The current proceedings were purportedly served on them by a letter dated 29 February 2016 sent by special delivery to SH Process Agents. The letter appended one copy of the Claim Form and four original Response Packs. It is common ground that under CPR 6.3 each Defendant should have been served with a separate original Claim Form and Response pack.
While it was initially contended by Mr Curling of TLT in his witness statement that the proceedings were properly served, it was accepted by the date of the hearing that service was defective. Even if it might have been argued that the service provisions dispensed with the need for a separate copy of the Claim Form for each Defendant, it must be the case that this could only dispense with the need for anything over one copy per claim; and there are at least three claims under separate documents.
Three points were therefore deployed by the Claimants against the defective service point. First it was argued that a challenge to service was not one under CPR Part 11, and therefore the Part 11 challenge was not apt to question service. Secondly it was contended that the Acknowledgment of Service put in by the Defendants' solicitors operated as a waiver of any argument on service. Thirdly it was contended that if the defect could be challenged in this application, the defect was one which could be cured under CPR 3.10.
On the first two points it seems to me that the Defendants are correct. Although it was suggested for the Claimants that service could and should have been disputed by way of correspondence, that is clearly not practical, given the spectre of default judgments. The means which CPR offers to dispute service is via Part 11. This is reflected in paragraph 5.01 of Briggs, "Civil Jurisdiction and Judgments" (6th ed.) to which both parties referred for their different points:
"If it may be shown that service has not been properly made, it will be open to the defendant to dispute the jurisdiction and to ask the court to declare that it has no jurisdiction; it may be open to the claimant to ask the court to cure or overlook any shortcoming which may be regarded as an irregularity."
It also reflects both the structure of the CPR and the notes to Part 11 which indicate that any challenge to jurisdiction (including service) should proceed by way of Part 11 challenge. This position was recently confirmed by Popplewell J in IMS SA and others v Capital Oil and Gas [2016] EWHC 1956 (Comm).
That finding, it seems to me, effectively disposes of the Claimants' second point, waiver. While the Claimants relied on the decision of Mr Stephen Hofmeyr QC (sitting as a Deputy Judge of the High Court) in " The Conti Cartagena" [2014] 2 Lloyd's Rep 162 as supporting the proposition that an acknowledgment of service can operate as a waiver of service, there is an important distinction between that case and the present. That case was one where the acknowledgment was made before service had ever been effected and there therefore could be no dispute as to the effectiveness of service. Here there was a purported service and the acknowledgment of service filed plainly states that it is an acknowledgment for the purposes of contesting jurisdiction only. In those circumstances the acknowledgment cannot sensibly be read to operate as a waiver of defects in service which fall to be raised by way of the very jurisdictional challenge asserted.
This leaves only CPR 3.10, as Mr Watthey for the Claimants fairly acknowledged that this was not a case where CPR 6.16 could be prayed in aid. In support of the Claimants' submissions I was referred to the judgment of His Honour Judge Graham Wood QC in ( United Utilities Group PLC v Hart Liverpool County Court, unreported, 24 September 2015). That case concerned a question of whether purported defective service of a copy of the sealed version of the claim form can be cured by the court exercising discretion under any part of the CPR and where the defective service was held capable of being cured under CPR 3.10.
This case, as the Defendants correctly pointed out, was not on all fours with the current case. However it includes a very useful summary of the principles and recent authorities in the area, highlighting in particular Lord Brown's obiter dictum in Philips v Symes (No 3) [2008] 1 WLR 180 at [31] where in the context of a missing English language version of a claim form, he stated:
"It seems to me at least arguable that even without resort to rule 6.9 the court could simply order under paragraph (b) of rule 3.10 that the second and third defendants are to be regarded as properly served, certainly for the purposes of seisin. The "error of procedure" here was, of course, the omission of the English language claim form from the package of documents served: there was in this regard "a failure to comply with the rule" (rule 7.5). But that, says paragraph (a) of rule 3.10, "does not invalidate any step taken in the proceedings unless the court so orders"."
Judge Graham Wood QC also highlighted the careful analysis of the significance of that dictum by Popplewell J in Integral Petroleum SA v SCU Finanz AG [2014] EWHC 702 (Comm). Together these cases indicate the following:
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