Clarke v Fennoscandia Ltd (No. 3)
| Jurisdiction | England & Wales |
| Judge | LORD BINGHAM OF CORNHILL,LORD HOPE OF CRAIGHEAD,LORD RODGER OF EARLSFERRY,LORD WALKER OF GESTINGTHORPE,LORD NEUBERGER OF ABBOTSBURY |
| Judgment Date | 12 December 2007 |
| Neutral Citation | [2007] UKHL 56 |
| Court | House of Lords |
| Docket Number | No 4 |
| Date | 12 December 2007 |
and others
[2007] UKHL 56
Appellate Committee
Lord Bingham of Cornhill
Lord Hope of Craighead
Lord Rodger of Earlsferry
Lord Walker of Gestingthorpe
Lord Neuberger of Abbotsbury
HOUSE OF LORDS
Appellants:
Iain Mitchell QC
Pino Di Emidio
(Instructed by Anderson Strathern)
Respondents:
Richard Keen QC
Andrew Young
(Instructed by Dundas & Wilson LLP)
My Lords,
I have had the advantage of reading in draft the opinion of my noble and learned friend Lord Rodger of Earlsferry and would, for the reasons he gives, dismiss this appeal.
My Lords,
I have had the advantage of reading the speech of my noble and learned friend Lord Rodger of Earlsferry in draft. I agree with it, and for the reasons he gives I would dismiss the appeal.
My Lords,
The history of the various proceedings between the appellant ("Mr Clarke") and the defenders ("Fennoscandia") in various jurisdictions is long and complex. Since I could not hope to improve on the account of the twists and turns given by the Lord Ordinary (Kingarth), 2004 SC 197, 199-202, paras 1-11, I am more than content to adopt, without repeating, the narrative in his judgment.
The core facts for present purposes can be stated quite shortly. The story began when Mr Clarke raised proceedings against Fennoscandia in the United States District Court for the District of Delaware. In those proceedings he sought to establish that there had been a conspiracy between Fennoscandia and certain businessmen with the aim of depriving him of the office of president of an American company, DRX Inc. On 1 February 1991 Judge Farnon rejected Mr Clarke's evidence, accepted evidence for Fennoscandia, and rejected Mr Clarke's claim. The judge also made an order against him for the costs. His appeal was rejected and an order for the costs of the appeal was made against him. An application for a rehearing of the appeal was denied, as was his certiorari petition to the United States Supreme Court.
Mr Clarke then raised a fresh action in the Federal Court to have the judgment in the first action set aside on the ground that it had been obtained by fraud in the shape of alleged perjury by two witnesses for Fennoscandia. Those proceedings were transferred to the Delaware District Court where, on 30 December 1994, Judge Farnan dismissed the action on the ground that Mr Clarke required to establish fraud on the court and that entailed showing that an officer of the court, such as an attorney, was involved in the alleged fraud. Neither of the two witnesses who Mr Clarke alleged had committed fraud was an attorney. Mr Clarke's appeal against this decision was dismissed, as was his certiorari petition to the Supreme Court.
In about 1994 Fennoscandia raised an action in the Court of Session to enforce against Mr Clarke the two orders for costs in the Delaware action. He was living in Scotland at the time. Mr Clarke defended the action on the basis that the costs orders related to proceedings in which judgment had been obtained by fraud practised on the court by witnesses for Fennoscandia.
In 1997, while that action by Fennoscandia was still running in the Court of Session, Mr Clarke raised the present action, seeking a declarator that the order of 1 February 1991 against him in the Delaware action "was obtained through fraud on the Court." He also sought interdict against Fennoscandia taking any steps to enforce another judgment which they had obtained against him in different proceedings involving essentially the same issues. That judgment, for a large sum in Canadian dollars, had been pronounced by the District Court of the City and County of Denver, Colorado, on 11 July 1996. Mr Clarke's appeal against the judgment had also been refused.
In May 1998 Fennoscandia abandoned their Court of Session action against Mr Clarke, "under the statute", thus leaving it open to them, if so advised, to raise fresh proceedings in the Court of Session to enforce the same two awards of costs in the Delaware action. Mr Clarke then amended his pleadings in the present action so that there are now four conclusions.
His first conclusion has been expanded from its original form: the pursuer now asks for a declarator that both costs orders in the Delaware action are unenforceable, having been obtained by fraud. He also has a conclusion (number 4) for interdict against Fennoscandia taking any steps in Scotland to enforce those costs orders. The overall purpose of these conclusions was to prevent Fennoscandia from raising fresh proceedings against him in Scotland to enforce their awards of costs in the Delaware action.
The pursuer's second conclusion is for a declarator that the judgment against him in the Colorado action is not enforceable by Fennoscandia in Scotland, because it was obtained through fraud on the court. His original (second) conclusion for interdict against Fennoscandia taking any steps in Scotland to enforce the judgment in the Colorado action has been renumbered as conclusion number 3.
Eventually, in March 2000, Lord Johnston granted the parties a proof before answer of their respective averments. Fennoscandia reclaimed and, in February 2001, in the course of the proceedings in the Inner House, they lodged a minute (No 35 of Process) in which they gave "the following irrevocable undertaking to the pursuer and to the Court:
'That the Company and the Joint Liquidators thereof will not at any time seek to enforce, or take steps which would entitle others to seek to enforce, by action of decree conform in Scotland the orders and judgements referred to in Conclusions 1, 2, 3 and 4 of the present action.'"
In short, Fennoscandia irrevocably undertook not to seek to enforce in Scotland either the judgment in the proceedings in Colorado or the two orders for costs in the proceedings in Delaware – the only judgment and orders that are at issue in these proceedings. In due course Fennoscandia amended Answer 10 in their defences to refer to the undertaking.
In the hearing before this House Mr Mitchell QC acknowledged that any breach of their undertaking by Fennoscandia would attract essentially the same penal consequences as any breach of interdicts granted in terms of the third and fourth conclusions. That concession was sound. In Graham v Robert Younger Ltd 1955 JC 28 the complainer had breached the terms of an undertaking given in the course of proceedings for his sequestration at the instance of Robert Younger Ltd. The company lodged a minute seeking his apprehension for contempt of court. The sheriff ordered the apprehension of the complainer and subsequently held that he was in breach of the undertaking and sentenced him to a period of imprisonment. The complainer challenged his imprisonment in a bill of suspension and liberation, which came before the Justiciary Appeal Court. (The jurisdiction of that court was not challenged by the respondent company.) Although the Appeal Court remitted the remainder of his sentence, it held that, in an appropriate case, breach of an undertaking would constitute contempt of court. Lord Birnam noted, at p 33, that the minute for breach was, in effect, a petition and complaint for breach of interdict. In this House the law as so laid down was accepted as being correct in Beggs v Scottish Ministers 2007 SLT 235, 240-241, para 31.
In these circumstances Mr Mitchell conceded that the pursuer could not insist in the present proceedings simply in order to obtain decrees of interdict in terms of the third and fourth conclusions. Again, especially given the early stage in the proceedings at which the undertaking was given, I consider that the concession was correct. The interdicts would add nothing to the undertaking. Any further proceedings to obtain them would accordingly be an unnecessary waste of time, effort and money.
The significance of the change in the situation thus brought about by the minute of undertaking cannot be underestimated. The defenders are Fennoscandia, a company registered in England, and the liquidators of that company, with addresses in England. The only basis on which the Court of Session ever had jurisdiction over the defenders was therefore Mr Clarke's averment that the apprehended harm, in respect of which the interdicts in the third and fourth conclusions were sought, would occur in Scotland.
I pause to note that the House heard no argument on the appropriateness of the pursuer seeking to interdict Fennoscandia from taking steps to enforce the American judgment and orders, on the ground that they were obtained by fraud, rather than simply leaving the issue of fraud to be resolved, if and when Fennoscandia exercised their right to raise fresh proceedings for enforcement. In particular, the House heard no submissions on the nature of any alleged legal wrong that was apprehended. In his judgment of 22 December 1997, unreported, Lord Bonomy touched on the point. I therefore express no view on the competency of the interdicts that were sought or on the relevancy of the averments in support of the conclusions for interdict. The question is now academic in view of Mr Mitchell's concession that, because of the undertaking, the pursuer cannot now insist on those conclusions.
Mr Mitchell rather faintly suggested, however, that, despite the undertaking, there was still a risk – albeit remote – of Fennoscandia attempting to enforce the American orders and judgment in future. He was, however, himself unable to envisage any circumstances whatsoever in which the Court of Session, having acted on the irrevocable undertaking, would ever allow it to be withdrawn and the orders and judgment to be enforced...
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