Gallaher International Ltd v Tlais Enterprises Ltd (Rev 1)
| Jurisdiction | England & Wales |
| Judge | THE HONOURABLE MR JUSTICE AIKENS,MR JUSTICE CHRISTOPHER CLARKE,Mr Justice Aikens,C,R |
| Judgment Date | 18 April 2008 |
| Neutral Citation | [2007] EWHC 527 (Comm),[2008] EWHC 804 (Comm) |
| Docket Number | Case No: 2005/185,Case No: 2005 FOLIO 185 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 18 April 2008 |
[2007] EWHC 527 (Comm)
The Honourable Mr Justice Aikens
Case No: 2005/185
and 2005/986
IN THE HIGH COURT OF JUSTICE
QUEEN's BENCH DIVISION
COMMERCIAL COURT
Mr Laurence Rabinowitz QC, Mr Daniel Toledano and Mr Simon Colton (instructed by Slaughter & May, Solicitors, London) for the Claimant
Mr Richard Hill and Mr Alastair Thomson (instructed by Picton Howell, Solicitors, London) for the Defendant
Hearing dates: 14 th and 23 rd February 2007
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.
Mr Justice Aikens:
I Introduction
This Judgment deals with two out of four applications made by the parties at a Pre Trial Review in this case. Originally, the parties estimated the PTR for one day's hearing. Unfortunately both that estimate and the estimate of the pre-reading time needed were very over optimistic. Therefore the first part of the PTR was held on 14 th February 2007. On that day I heard argument on two of the four applications and made a decision in one. The balance of the PTR hearing took place, today, Friday 23 rd February. This judgment is being handed down at the renewed hearing.
There are two actions. At a previous CMC it has been ordered that they should be tried together. The trial is due to start on 17 th April 2007. Its current estimate is for 12 weeks. I regard that estimate as also being over optimistic.
The claimant in each action is Gallaher International Limited, which is a subsidiary of Gallaher Group PLC, the well known tobacco company. I will refer to the claimant as “GIL”. The defendant in action 2005 Folio 185 is Tlais Enterprises Limited. I will refer to the defendant in this action as “TEL”. This is a company incorporated under the laws of Cyprus. Under a distributorship agreement dated 24 th January 2003 which was effective from 1 st May 2002, GIL appointed TEL as its exclusive distributor of certain brands of cigarettes in a number of defined territories. Most of those territories were in the Middle East and Africa. The brands of cigarettes for which TEL was appointed exclusive distributor were “Dorchester”, “Sovereign” and “Stateline”.
In the second action, 2005 Folio 986, the defendant is Mr Ptolemeos Tlais. He is the controlling figure of TEL.
In Folio 185, GIL claims a declaration that its termination of the distributorship agreement, by letter dated 4 th March 2005, was valid. TEL has not only defended that claim but also made Counterclaims. I will have to characterise those more fully later on.
In Folio 986, GIL claims US$ 4 Million from Mr Tlais under a letter agreement dated 30 th April 2002, alternatively US$ 2 Million under letter agreements dated 29 th April and 8 th May 2002. In that action Mr Tlais also both defends the claim and asserts substantial Counterclaims.
I do not intend to set out in detail the facts which form the background to the claim and the Counterclaims in the two actions. These are set out in a Judgment of Gloster J, which was handed down on 20 th September 2006. In that judgment, Gloster J gave her reasons for ordering TEL to pay £550,000 by way of security for the costs of GIL in defending TEL's Counterclaim. (Subsequently further security for costs was ordered by Gloster J).
The four applications that I was asked to deal with are as follows:
i) TEL's application dated 29 th January 2007 for an order that “all issues of forensic accountancy be dealt with a separate hearing”, i.e. a separate hearing from the trial due to start on 17 th April 2007.
ii) TEL's application dated 7 th February 2007, for relief from sanctions pursuant to CPR Part 3.9(1). This application arises because TEL has failed to comply with an “unless” order made by David Steel J on 31 st January 2007, which provided that, unless TEL served its expert accountancy evidence by no later than 12 noon on 14 th February 2007, TEL would be debarred from adducing such evidence at trial. TEL now applies for an order permitting it to adduce expert accountancy evidence despite its failure to comply with this “unless” order. It seeks an order permitting it to adduce this evidence either at the separate hearing as proposed in the application of 29 th January 2007 or if that application is unsuccessful, at the main trial. In the latter event TEL seeks an order that it be permitted to serve its expert accountancy evidence by 4pm on 26 th March 2007. Originally the date sought was 16 th March 2007, but this was altered by Mr Hill on behalf of TEL, in the course of argument on 14 th February 2007.
iii) GIL's application dated 22 nd January 2007 for additional security for costs in relation to TEL's Counterclaim. GIL has already been awarded security of costs up to the time of exchange of experts' reports in the sum of £1,050,000. GIL seeks further security of £1.3 Million. TEL has made a cross application for payment out of a proportion of the security that has already been paid by it into Court.
iv) TEL's application dated 6th February 2007 to debar GIL's expert on tobacco industry and market practice from giving evidence as an expert at the trial. The expert, Mr Rajiv Goel, is an employee of Gallaher Limited. TEL says that Mr Goel should be debarred from giving evidence because he lacks independence.
There are also other matters which have to be discussed at the PTR but are not the subject of this judgment.
II Procedural History
GIL issued proceedings in 2005 Folio 185 on 4 th March 2005, the same day it gave notice of immediate determination of the TEL distributorship agreement. The particulars of claim were served on 20 th April 2005. TEL served its Defence and Counterclaim on 30 th June 2005. A Reply and Defence to Counterclaim was served by GIL on 30 th December 2005.
The first CMC in Folio 185 was held before Colman J on 21 st October 2005. He made orders for the timetable leading up to the trial, which was then estimated to last eight to ten weeks. In the timetable, it provided for a PTR in the first two weeks of February 2007 and a trial date from April 2007.
Under the heading of “Expert evidence”, paragraph 9 of Colman J's order states:
“The parties do have liberty to apply at the restored CMC for permission to call expert evidence in the field of forensic accountancy”.
At that stage, it was anticipated that experts' reports would be exchanged simultaneously and the exchange of experts' reports would be completed by 22 nd January 2007.
The second CMC was held before Gloster J on 26 th and 27 th July 2006. As a result of a consent order made by me on 23 rd May 2006, GIL's application for security for costs was also dealt with at the same hearing. At the CMC, TEL applied for a split trial of the claim and the Counterclaim, the effect of which would have been that large parts of the Counterclaim would have been held over to a separate trial. That application was opposed by GIL, on the basis that there was a significant overlap between the issues for trial and the issues that would be determined at the second trial. Gloster J ordered that TEL's request for the trial to be split between liability and quantum be “dismissed at this stage”. However, the Judge also ordered that further consideration was to be given to this request after the service of statements of fact and expert reports. (See paragraph 15 of the order of 27 th July 2006).
At the hearing on 26 – 27 July 2006, Gloster J ordered TEL to put up £550,000 as security for costs of the counterclaim. Subsequently, GIL made a further application for further security for costs of defending TEL's Counterclaim. The application was for a further sum of £1,120,018 on top of the £550,000 already ordered. Gloster J heard the second application on 22 nd September 2006 and ordered an additional sum of £500,000 as further security for GIL's costs of defending the Counterclaim up to and including experts' reports.
TEL did not provide any of the security for costs as ordered. TEL also failed to exchange its statements of witnesses of fact by 20 th October 2006, as had been ordered by Gloster J at paragraph 11 of the order of 27 th July 2006.
On 8 th December 2006, GIL sought “unless” orders in respect of both the security for costs and the exchange of witness statements. Gloster J ordered that TEL would not be permitted to call any witnesses of fact whose statement had not been served by 5pm on Friday, 29 th December 2006. The Judge also ordered that unless the security for costs that had been ordered was provided by 12noon on 11 th January 2007, TEL's Counterclaim would be struck out without further order.
At the same hearing on 8 December 2006, Gloster J made adjustments to the timetable leading to the trial. In particular, the Judge ordered that: (i) TEL must serve its experts' reports in the fields of market and forensic accountancy on or before 19 th January 2007; (ii) the claimants were to respond with their corresponding experts' reports by 23 rd February 2007; (iii) TEL would serve Reply reports before 9 th March 2007; and (iv) after meetings and joint Memoranda by the experts, supplementary reports were to be exchanged no later than 5 th April 2007.
On 8 th January 2007, TEL paid into court the sum of £1,050,000 by way of security for costs, pursuant to Gloster J's order of 8 December 2006. On 29 th December 2006, TEL had exchanged witness...
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