Consolidated Contractors International Company SAL v Mr. Munib Masri
| Jurisdiction | UK Non-devolved |
| Judge | LORD MANCE |
| Judgment Date | 09 August 2011 |
| Neutral Citation | [2011] UKPC 29 |
| Court | Privy Council |
| Docket Number | Appeal No 0077 of 2010 |
| Date | 09 August 2011 |
[2011] UKPC 29
Privy Council
Lord Walker
Lord Mance
Lord Collins
Appellant
Charles Hollander QC
Adrian Briggs
(Instructed by S C Andrew LLP)
Respondent
Simon Salzedo QC
Colin West
(Instructed by Simmons & Simmons LLP)
Introduction
By judgment dated 28 July 2006 in English proceedings, Gloster J [2006] EWHC 1931 (Comm) held that the appellant, Consolidated Contractors International Company SAL ("CCIC") a Lebanese company domiciled in Greece, was, together with Consolidated Contractors (Oil and Gas) Company SAL ("CCOG") a company incorporated in the Lebanon as an offshore company, party to and jointly and severally liable on a subsisting agreement dated 6 November 1992 with the respondent, Mr Munib Masri. Following that judgment, Gloster J issued a series of final judgments on quantum: on 15 June 2007 for US$38,689,761, on 5 October 2007 for US$13,428,479 and on 11 February 2008 for US$3,861,645. On 18 April 2008, all these judgments were (without objection by CCIC) certified by the English High Court under section 10 of the Administration of Justice Act 1920 for the purposes of enforcement abroad.
Mr Masri registered the judgments in Bermuda on 13 June 2008. After service (which had to be effected in Greece) CCIC on 25 November 2008 applied to set aside the registration. The principal ground was that the English judgments were "obtained by fraud", within the meaning of section 4(1) of the Judgments (Reciprocal Enforcement) Act 1958. The allegation of fraud was of an unusual nature. It related not to any aspect of the substantive judgments issued by Gloster J on liability or quantum. Rather it related to the basis upon which the English High Court came to assume jurisdiction to determine the claim against CCIC. The Committee will assume, without deciding, that a fraud leading to the wrongful acceptance by a court of jurisdiction is capable in principle of being relevant fraud under section 4(1). A supplementary ground was that "it is not just or convenient that the judgment should be enforced in Bermuda or that there is other sufficient reason [the judge] may order that registration be set aside" within rule 12 of the Judgments (Reciprocal Enforcement) Rules 1976.
The application to set aside the registration came before Kawaley J, who dismissed it in a full and careful judgment dated 11 February 2009. It came then before the Court of Appeal, which dismissed the appeal in a judgment given by Evans J describing it at the outset as "an unmeritorious appeal" and focusing on an absence of any evidence of fraud, coupled with the absence of any other ground for setting aside the registration. The present appeal comes to the Board as of right, formal leave being given by the Court of Appeal on 18 March 2010. After considering the papers, a Committee of the Board on 15 December 2010 ordered that the appeal be struck out as an abuse, unless CCIC showed cause to the contrary. Upon CCIC seeking to show cause, the Committee directed a hearing which took place on 26 May 2011. At the hearing, Mr Masri submitted that CCIC's case on fraud had no properly arguable basis, and was an abuse on that ground. He also submitted that the appeal should be struck out as an abuse of process, on the further ground that CCIC had no intention of complying with any judgment, whether or not the registration was set aside. The Committee's power to strike out an abusive appeal is not challenged.
Obtained by fraud
The Committee starts with the allegation of fraud. CCIC being a Greek company could only be sued in England under one of the special heads of jurisdiction set out in Council Regulation (EC) No 44/2001 (the Brussels Regulation on civil jurisdiction and judgments). Mr Masri relied upon two special heads to justify suit against CCIC in England. They were article 5(1), providing that a person domiciled in a Member State may, in another Member State, be sued: (a) in matters relating to a contract, in the courts for the place of performance of the obligation in question", and article 6(1), providing that a person domiciled in a Member State "may also be sued …. where he is one of a number of defendants, in the courts for the place where any one of them is domiciled, provided the claims are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgements resulting from separate proceedings". Mr Masri's case on article 6(1) depended upon proceedings brought against an English associate company of CCIC, Consolidated Contractors International (UK) Ltd ("CCUK").
Mr Masri's claim to establish jurisdiction over CCIC in England was challenged by CCIC at the outset of the English proceedings. At the same time, CCUK applied for summary judgment in respect of the claim against it, on the ground that there was no basis for asserting that it was party to the November 1992 agreement. Success by CCUK in that application would have undermined the basis for any reliance by Mr Masri against CCIC on article 6(1). By judgment dated 17 May 2005, Cresswell J dismissed CCUK's application [2005] EWHC 944 (Comm). He went on to reject CCIC's challenge, holding that Mr Masri had met the requirements of both article 5(1) and article 6(1). On 15 September 2005 Moore-Bick LJ [2005] EWCA Civ 1270 dismissed CCUK's application for permission to appeal against the dismissal of its application for summary judgment. On 24 October 2005 the Court of Appeal [2005] EWCA Civ 1436; [2006] 1 WLR 830 determined an appeal by CCIC against the dismissal of its challenge to the proceedings against it. In holding that article 6(1) justified such proceedings, the Court of Appeal proceeded on the basis (which followed from Cresswell J's judgment and Moore-Bick LJ's dismissal of CCUK's application for permission to appeal) that Mr Masri had a serious case to be tried as to whether CCUK was party to the November 1992 agreement: see paras 20 and 40. The claim against CCIC was regarded as a legitimate additional or alternative claim, primarily to cover the possibility that the case against CCUK might fail. The Court of Appeal saw significant problems as arising under article 5(1), but, having formed no final conclusions on them, found it unnecessary to say more about that possible head ofjurisdiction.
The fraud alleged by CCIC against Mr Masri in the Bermudian proceedings relates to the basis upon which, it is said, Mr Masri persuaded the English court to accept that Mr Masri had a sufficient case to be tried against CCUK, to justify the pursuit in England of his further or alternative case that CCIC was liable. The November 1992 agreement was written on CCUK notepaper, with CCUK's name at its top and "A member of Consolidated Contractors Group of companies" underneath this. The agreement gave Mr Masri a 10% participation in "CCC's 10% interest", or a 1% overall interest, in rights in the Masila oil concession in Yemen. CCIC's case was that the agreement was with it as owner of the interest in the concession, and that CCUK's notepaper had been used because the agreement happened to be made between Mr Khoury acting for it and Mr Masri in the CCC group's London office. Mr Masri in his witness statements stated in contrast that he believed that CCUK was a party to the contract. Further, as Cresswell J recited, CCIC did "not say that Mr Masri either knew or should have known which company owned the interest, and in fact he did not" (para 63) and Mr Masri's evidence was "that he had no idea which company owned it" (para 71(3)).
The fraud alleged against Mr Masri relates to his statements that he believed that CCUK was party to the November 1992 agreement. In alleging fraud, CCIC relies upon later evidence which he gave before Gloster J. As recited by Kawaley J (para 60), Mr Masri said, in answer to a question when he first knew "that the original contracting party on the CCC side was CCIC", that:
"A….. I know I signed the thing on CCUK, but I did not know, at the time, really the structure of the CC group of companies. I was not aware.
Q. Yes, it is not so much the structure of the group companies I am asking you about. It is your knowledge of which company within that structure was the original contracting party to the concession.
A. I did not know. It was - to me it was the CCC so far as I am concerned.
Q. May I put a more specific question? Did you know that CCIC was the original contracting party as at 6 th November 1992?
A. Definitely not."
CCIC further relies upon findings made by Gloster J in her judgment in the liability trial:
"72. In my judgment the suggestion that Mr. Khoury was contracting on behalf of CCUK, an English company with a limited role within CCC, merely because its writing paper was used for the purpose of setting out the terms of the 1992 Agreement, has an air of total unreality about it. Although I consider, on the basis of Mr. Brawley's evidence that Mr. Khoury would have had actual authority to contract on CCUK's behalf (and not merely ostensible authority), it was not the legal or beneficial owner of any interest in the Concession and an identification of it as the contracting party would have been wholly inconsistent with the express terms of the 1992 Agreement, as Mr. Aldous submitted, and indeed with the factual matrix which I have set out above. Not only was Mr. Masri aware that the entity that held the legal interest in the Concession was CCIC and that it was the contracting party under the PSA, but he had never suggested at any time, prior to serving his proceedings in June 2004, that CCUK, the English company, was in any way involved or liable to him. Nor is there any basis for suggesting that Mr. Khoury, in his personal,...
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