Dsq Property Company Ltd (Appellant (Plaintiff) v Lotus Cars Ltd and Others (4) John Zachary Delorean (Respondent Ronald James Henderson and Others (Third Parties)
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE DILLON,LORD JUSTICE PARKER,LORD JUSTICE STOCKER |
| Judgment Date | 27 June 1990 |
| Judgment citation (vLex) | [1990] EWCA Civ J0627-1 |
| Court | Court of Appeal (Civil Division) |
| Date | 27 June 1990 |
| Docket Number | 90/0589 |
[1990] EWCA Civ J0627-1
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
(Mr. Justice Peter Gibson)
Royal Courts of Justice
Lord Justice Dillon
Lord Justice Parker
and
Lord Justice Stocker
90/0589
and
MR. M. STRACHAN, Q.C. and MR. HUW DAVIES (instructed by Messrs D.J. Freeman & Co.) appeared on behalf of the Appellants (Plaintiffs).
MR. M. BURTON, Q.C. and MR. STEPHEN SMITH (instructed by Messrs Wright Webb Syrett) appeared on behalf of the Respondent (Fourth Defendant).
Revised
This is an appeal by the plaintiffs from an order of Peter Gibson J. made on 19th October 1989. The respondent to the appeal is the fourth defendant in the action Mr.John Zachary DeLorean.
The case is concerned with Order 11. The substance of the judge's order was that, subject to Mr. DeLorean giving notice of intention to defend, for which the judge gave leave under Order 12, rule 6, the judge set aside the order of 21st July 1987 of Hoffmann J. which gave the plaintiffs leave to serve Mr. DeLorean out of the jurisdiction, and set aside also all subsequent orders in the action against Mr. DeLorean, including a judgment for damages to be assessed which was entered after Mr. DeLorean had been served under Order 11, and an award of damages on the assessment. The judge therefore dismissed the action against Mr. DeLorean. However he gave the plaintiffs leave to appeal and stayed his order pending this appeal.
The writ in the action was issued as long ago as 8th January 1986 against the first three defendants, Lotus Cars Limited, Mrs. Chapman and Mr. Bushell. Lotus is an English company incorporated here. Mrs. Chapman and Mr. Bushell are also resident and domiciled here.
The action arises out of matters which occurred before 1982.
Mrs. Chapman and Mr. Bushell are sued as the personal representatives of Colin Chapman, who died in December 1982, but Mr. Bushell is also sued personally. Colin Chapman was a British subject resident and domiciled here.
The plaintiff company was incorporated in Northern Ireland in 1978 as De Lorean Motor Cars Limited. It went into receivership in February 1982, and into liquidation in October 1982.
On 25th March 1987 the plaintiffs applied to the court for leave to add Mr. De Lorean as fourth defendant, to amend the writ and statement of claim to that end and to serve Mr. DeLorean out of the jurisdiction under Order 11, r.7(l)(c). It was submitted that Mr. DeLorean was a proper, albeit not a necessary, party to the action, being an action brought against the first three defendants, who had been duly served within the jurisdiction.
Leave to add Mr. DeLorean as a party, to make the amendment and to serve him out of the jurisdiction was granted by Hoffmann J. on 21st July 1987. Personal service on Mr. DeLorean was then effected in the United States by the Deputy Sheriff of the local United States Court. Subsequently orders were made, as I have mentioned, in the absence of any notice by Mr. DeLorean of any intention to defend. It was only on 10th July 1989 that Mr. DeLorean issued a summons seeking to set aside Hoffmann J's. Order and the subsequent orders. That was the application which came before Peter Gibson J. The plain inference is that that application only came about because the plaintiffs were then seeking to enforce against Mr. DeLorean in the United States the default judgment obtained against him in the action here.
Before Hoffmann J., the case put forward as warranting service out of the jurisdiction under Order 11 was founded on allegations of fraudulent conspiracy. Lotus, Colin Chapman, Mr. Bushell and Mr. DeLorean had fraudulently conspired together to despoil the plaintiffs of several million pounds of the plaintiffs' moneys by dishonestly transferring those moneys to the conspirators' own pockets. As always in large scale company fraud cases, the details are complex, but that is the essence of the case.
The decision of Hoffmann J. was in accordance with what was then generally thought to be the law as to the tort of fraudulent conspiracy. However, on 14th February 1989 another division of this court held in the case of Mettall and Rohstoff A.G. v. Donaldson Lufkin & Jenrette Inc. [1989] 3 WLR 563 that a claim in fraudulent conspiracy could not be maintained if the plaintiff could not assert and establish that the sole or predominant purpose of the defendant conspirators in making and carrying out their conspiracy was to injure the plaintiffs, and not to fill the conspirators' own pockets. This court held—possibly felt constrained to hold—that that conclusion followed from the decision of the House of Lords in Lonhro Limited v. Shell Petroleum Co. Ltd. [1982] A.C. 173.
In the present case it is accepted by the plaintiffs that that the conclusion of this court in Mettall & Rohstoff, whether right or wrong, binds us, as it bound Peter Gibson J. Therefore the leave to serve out, granted by Hoffmann J. cannot be justified on the basis of fraudulent conspiracy which was put before him.
This court, in Mettall & Rohstoff, granted the plaintiffs in that case leave to appeal to the House of Lords, but no appeal was pursued, possibly because the case was settled. However, we understand that the same point will, as matters presently stand, come before the House of Lords in October of this year in another case, Lonrho v. Fayed, in which this court was also bound by Mettall & Rohstoff. I would note, though it is irrelevant to the decision on the substantial points which we, being bound by Mettall & Rohstoff, have to consider, that there would be an obvious injustice to the plaintiffs if the present action stands dismissed against Mr. De Lorean because their favoured claim in fraudulent conspiracy against all four defendants cannot stand because of Mettall & Rohstoff, and then in a few months' time Mettall & Rohstoff is overruled by the House of Lords. On the facts, if Lotus, Colin Chapman and Mr. Bushell were parties to a fraudulent conspiracy, it is beyond a peradventure that Mr. DeLorean was also a party to that conspiracy.
Mettall & Rohstoff was also concerned with Order 11. In Mettall & Rohstoff the claim to serve out of the jurisdiction was put under Order 11(1) (f), which reads as follows:
"(f) the claim is founded on a tort and the damage was sustained, or resulted from an act committed, within the jurisdiction."
It was argued for the plaintiffs there that even if, contrary to their contentions, leave to serve out could not be supported on the ground of conspiracy, an alternative claim could be spelled out of the statement of claim in that case that the defendants were liable as constructive trustees for the sums claimed.
A similar claim is put forward by the plaintiffs in the present case.
In Mettall & Rohstoff Lord Justice Slade said this, in giving the judgment of the court on these submissions (at 580 to 581 of the report):
"Mr. Mark Waller, on behalf of M.& R., has, by way of amplification, explained to us the alternative ways in which they would seek to put their case, particularly in so far as it arises under the broad heads of 'Abuse of process of the court' and 'Accounting as constructive trustees.' In answer, it has been contended that some of these points are not open to M. & R. on their pleading, and, furthermore, have not been foreshadowed in the affidavit evidence sworn on their behalf. One of Mr. Waller's responses to this contention has been to refer us to the general observations made by Lord Denning M.R. in In re Vandervell's Trusts (No. 2) [1974] Ch.269, 321, as to the modern practice concerning pleadings:
'It is sufficient for the pleader to state the material facts. He need not state the legal result. If, for convenience, he does so, he is not bound by, or limited to, what he has stated.'
We respectfully agree with this statement as a general proposition. However, it was not made in the context of a pleading intended to be served out of the jurisdiction, to which we think rather different considerations apply. In our judgment, if the draftsman of a pleading intended to be served out of the jurisdiction under Ord. 11, r.l(l)(f) (or indeed under any other sub-paragraph) can be reasonably understood as presenting a particular head of claim on one specific legal basis only, the plaintiff cannot thereafter, for the purpose of justifying his application under Ord. 11, r. 1(1)(f) be permitted to contend that that head of claim can also be justified on another legal basis (unless, perhaps, the alternative basis has been specifically referred to in his affidavit evidence, which it was not in the present case). With this possible exception, if he specifically states in his pleading the legal result of what he has pleaded, he is in our judgment limited to what he has pleaded, for the purpose of an Order 11 application. To permit him to take a different course would be to encourage circumvention of the Order 11 procedure, which is designed to ensure that both the court is fully and clearly apprised as to the nature of the legal claim with which it is invited to deal on the ex parte application, and the defendant is likewise apprised as to the...
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