Castanho v Brown & Root (U.K.) Ltd

JurisdictionEngland & Wales
CourtHouse of Lords
JudgeLord Wilberforce,Lord Diplock,Lord Keith of Kinkel,Lord Scarman,Lord Bridge of Harwich
Judgment Date04 December 1980
Judgment citation (vLex)[1980] UKHL J1204-1
Date04 December 1980

[1980] UKHL J1204-1

House of Lords

Lord Wilberforce

Lord Diplock

Lord Keith of Kinkel

Lord Scarman

Lord Bridge of Harwich

Castanho
(Respondent)
and
Brown and Root (U.K.) Limited and Others
(Appellants)
Lord Wilberforce

My Lords,

1

I have had the benefit of reading in advance a draft of the speech to be delivered by my noble and learned friend, Lord Scarman. I agree with it and with the order which he proposes for dismissing the appeal.

Lord Diplock

My Lords,

2

I have had the advantage of reading in draft the speech of my noble and learned friend, Lord Scarman, with which I agree. For the reasons he has given I too would dismiss the appeal.

Lord Keith of Kinkel

My Lords,

3

I have had the benefit of reading in advance the speech to be delivered by my noble and learned friend, Lord Scarman. I agree that for the reasons which he gives the appeal should be dismissed and an order made in the terms which he proposes.

Lord Scarman

My Lords,

4

This is an appeal by defendants from an order of the Court of Appeal, with the leave of that court, whereby, allowing the plaintiff's appeal from the judge, the court restored the plaintiff's notice of discontinuance of his action in England and discharged an injunction which the judge had granted restraining the plaintiff from proceeding with his claim in America. Put shortly, the judge required the plaintiff to proceed in England; the Court of Appeal allowed him to proceed in America.

5

The respondent, plaintiff in the suit, is a citizen of Portugal, and resides in that country. The first-named appellant is a British company: the second named is a Panamanian company: the two companies are the defendants in suit. It will assist clarity if I refer to the respondent as the plaintiff and to the two appellants as the first and second defendants.

6

On the 11th February 1977 the plaintiff in the course of his employment by the second defendant sustained very serious injuries in an accident on board the American Moon while that ship lay in the harbour of Great Yarmouth. The ship was owned by the Jackson Marine Corporation, a company incorporated in Texas, U.S.A. The Corporation ("J.M.C.") carried on a world-wide business, using for the purpose a group of companies which it owns and controls. The group includes the two defendants as well as many other companies, some of which feature in the story of the case.

7

As a result of the accident the plaintiff was paralysed from the neck downwards. On the 29th September 1977 he brought suit in England by issuing a writ claiming damages for personal injuries. The appeal arises out of that suit, in which the plaintiff has, so far, obtained two interim payments totalling £27,250 and an admission of liability by the second defendant. On the 14th May 1979 the plaintiff gave notice to discontinue the suit. He did so without seeking the leave of the court, in reliance upon R.S.C. Order 21 r.2 which allows notice to be given without leave at any time up to the expiry of fourteen days after service of defence. He discontinued because he had decided, on advice, to sue for damages in the United States of America. The reason for his decision was the prospect of a very much greater recovery there than here.

8

Before he discontinued his English suit, the plaintiff had begun proceedings in Texas. He was approached by U.S. attorneys during the summer of 1978. His English solicitors had learnt of the approach and knew that American proceedings were likely before they issued the summons which led to the order for the second interim payment, one of £20,000. The defendants became aware of the plaintiff's intention on, or before, the 7th February 1979 when an action was begun on his behalf in a Texan state court in which he claimed damages for the injuries he had sustained in the accident. On the following day, the 8th February 1979, it would appear final agreement was reached between the appellant, his American and British advisers. His strategy was now clear. He would prosecute his American action, leaving the English action in being in case he should fail in America.

9

The defendants' reaction to his decision to sue in America was understandable and predictable, bearing in mind how much more they stood to lose if he proceeded there. They moved to set aside, or stay, the American proceedings, and did all they could to move along the English proceedings. On the 30th April they delivered a defence in the English action; and on the 1st May they issued two summonses, one for directions and the other for an injunction to restrain the plaintiff from prosecuting or continuing proceedings in the U.S.A.

10

Meanwhile there were certain developments in the American courts. The defendants to the action in the Texan state court were five J.M.C. companies—amongst them J.M.C. itself and the two defendants. In the face of strenuous efforts made by the defence to stay or set aside these proceedings, the plaintiff's advisers decided to switch from the state to the federal court. They believed (apparently) that the federal court was less likely to decline jurisdiction or stay proceedings. Accordingly, the state proceedings were abandoned by entering a non-suit; and on the 18th July 1979 they began an action on behalf of the plaintiff in the District Court for Eastern Texas, to which three J.M.C. companies were made defendants. This number included J.M.C. itself and the second defendant, but not the first defendant. The defendants applied to stay this action in the district court but no decision on their application had been reached when in October 1979 the two summonses in the English action reached Parker J. in chambers.

11

The judge in chambers had before him two applications, one (on the summons for directions) to strike out the notice of discontinuance and the other for the injunction. He made the two orders sought, delivering a judgment in open court, which is reported in [1980] 1 W.L.R. 833. He held that the notice of discontinuance was in the circumstances an abuse of the process of the court and struck it out. Having so held, he had no difficulty in deciding—indeed, it was conceded—that he had jurisdiction to grant the injunction: and, in the exercise of his discretion, he granted it.

12

The Court of Appeal by a majority (Shaw and Brandon L.JJ., Lord Denning M.R. dissenting) allowed an appeal against both orders. They also acceded to an application by the defendants to stay proceedings on a second protective writ which the plaintiff had issued on the 8th February 1980, to which the defendants were the same as in the U.S. federal suit. The purpose of this writ was to take care of the possibility of failure in the American courts.

13

This second writ was a wise precaution. On the 14th February 1980 the U.S. District Court did dismiss the application by the defence to dismiss the federal action. But your Lordships have been told that on the 7th November 1980 the U.S. Court of Appeals for the Fifth Circuit ordered a stay "until further order" of the federal action in response to a petition by the defendants for a writ of mandamus directed to the District Court to stay the action. The respondents to the petition were given 20 days to reply.

14

My Lords, no necessity arises to consider this further step by the defendants in the American litigation. The question for the House is not whether the U.S. action should be stayed but whether the plaintiff should be restrained by an order of the English court from proceeding in America. If the U.S. court does impose a stay, the plaintiff will, of course, have the right to apply, in the changed circumstances, to the English court for removal of the stay on his "protective writ". The defendants could not successfully resist such an application, if they had themselves succeeded in staying the U.S. action—on the ground, no doubt, that the proper forum is the English court.

15

The question in the appeal is, therefore, whether the plaintiff should be restrained by the English court from pursuing his claim for damages in the American courts. It is a question of great importance to the parties. In the American courts the plaintiff claims punitive as well as compensatory damages ($5m. compensation, and "at least" $10m. punitive or exemplary). In England he has no claim for punitive damages: and the scale of compensatory damages is much less. It is conceded that, had he begun in Texas in the first place, the English courts would not grant an injunction to restrain him from continuing there. The defendants base their case upon the fact that he started in England, upon the advantages he has won from them in the litigation which ensued here, and upon the disadvantages, in the circumstances which have arisen, of their being sued in America.

16

The first issue is whether the notice of discontinuance can be struck out, and, if it can, whether it should be. It is accepted that under the rules of the Supreme Court as they were in 1979 (for they have now been amended to take care of the situation which arises when interim payments have been made: see R.S.C. (Amendment No. 2) 1980, r.4), the plaintiff, notwithstanding the two interim payments and the admission of liability, could discontinue without leave, if he did so not later than fourteen days after service of defence. The Master of the Rolls was, however, prepared to hold that our courts can, by the device of statutory interpretation, repair the omission in the unamended R.S.C. Order 21, r.2 to provide for the case in which interim payments had been ordered and made before the expiry of the time limit. "I fear", he said, "that the draftsmen of interim payments forgot all about notices of discontinuance. Interim payments are quite inconsistent with a right to discontinue without leave": [1980] 1 W.L.R. at p.854H. Interim payments were made possible by the Administration of Justice Act 1969 section 20, and...

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