Laemthong International Lines Company Ltd v Artis and Others
| Jurisdiction | England & Wales |
| Judge | Colman J,The Hon Mr Justice Colman,MR. JUSTICE COOKE,Mr Justice Aikens,‘MR. JUSTICE COOKE’ |
| Judgment Date | 11 May 2005 |
| Neutral Citation | [2004] EWHC 2738 (Comm),[2005] EWHC 1595 (Comm),[2004] EWHC 2226 (Comm) |
| Court | Queen's Bench Division (Commercial Court) |
| Docket Number | No: 2004/441,Case No: 2004/441,Case No: 2004 FOLIO 441 |
| Date | 11 May 2005 |
[2004] EWHC 2226 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
The honourable Colman j.
Case No: 2004 FOLIO 441
Mr Stephen Males QC (instructed by Jackson Parton) for the Claimant
Hearing dates: 3, 5 and 6 August 2004
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.
This is an application by the second and third defendants to set aside a freezing injunction ordered by Morison J. on 12 July 2004. The circumstances in which it is made are distinctly unusual. However, they raise an issue of wider importance, namely, if an application is made without notice for a freezing injunction and the judge refuses it, are there any circumstances in which the claimant can mount a renewed application before another judge?
The facts in outline are as follows.
The claimant is the owner of the LAEMTHONG GLORY. That vessel was chartered to the first defendant (ARTIS) on an amended Sugar Charter Party 1999 Form dated 8 December 2003 for a voyage from Santos to Hodeidah or Aden carrying 14000 mt of bagged sugar.
The value of the cargo was between US$3 million and US$4.2 million.
Bills of lading were issued by the shipowners which named the second defendant as consignee. The sugar was sold by ARTIS, the first defendant, to the second defendant, on C & F terms.
Under that contract the second defendant was obliged to pay for the sugar through its bank before being entitled to take delivery of the sugar by presentation of the bills of lading to the ship at the port of discharge.
On 22 February 2004, four days before the expected arrival of the vessel at the nominated port of discharge (Aden), the second defendant asked ARTIS to issue a letter of indemnity to the shipowners and to request the shipowners to instruct the master/ship's agents to allow the vessel to commence discharge and deliver the cargo to the second defendant without production of the bills of lading which, it was stated, had not yet been received.
On 25 February 2004 the second defendants repeated their request to ARTIS and also enclosed their letter of indemnity in favour of ARTIS, their servants and agents against the consequences of releasing the cargo without presentation of the bills of lading. By that letter of indemnity the second defendants also undertook to provide bail if the vessel were arrested.
On 16 February the vessel arrived at Aden and commenced discharge of the sugar cargo. This was completed on 8 March. The second defendant thereby obtained possession of the entire cargo without producing the bills of lading. On 10 March 2004 the vessel was arrested at Aden by the Yemen and Kuwait Bank for Trade Investment of Sanaa ("the Bank") which claimed to be the indorsee of the bills of lading and which alleged wrongful delivery by the vessel. The third defendant effectively controls the second defendant in addition to being a substantial shareholder in it and to owning 17 per cent of the shares in the Bank.
On 8 April 2004 the claimant shipowners applied to Cooke J. for a worldwide freezing injunction against the second and third defendants. The Claimants were represented by their solicitor Mr. Nicholas Parton. The basis of the claim against the defendants was an implied contract between the parties or for breach of an arbitration agreement. Cooke J. refused to grant an injunction because there was not a sufficiently good arguable case.
On 29 April 2004 the Claimants, not having appealed the order of Cooke J., applied again for a worldwide freezing injunction, this time to David Steel J. They were again represented by Mr. Parton, but this time he relied on the argument that the shipowners were the agents of ARTIS within the meaning of the second defendants' letter of indemnity and that they were therefore within the class of those entitled to the benefit of the second defendant's letter of indemnity and by reason of the Contracts (Rights of Third Parties) Act 1999 were entitled to enforce it directly against the second defendants. An implied contract on the basis of Brandt v. Liverpool was also relied upon. David Steel J. refused the application, also on the grounds that there was no good arguable case. I shall refer to what passed at that hearing in more detail later in this judgment. However, according to a note of the hearing, David Steel J. did expressly warn the claimants against mounting yet a further renewed application unless they had fresh evidence to be relied upon.
On 18 May 2004 a paper application was made to Gross J. for permission to serve the claim form on the second and third defendants out of the jurisdiction. The affidavit made no mention of the failed applications to Cooke J. and to David Steel J. for freezing injunctions. Gross J. granted the application against both defendants.
Meanwhile, the vessel remained under arrest at Aden. No bail was put up by the shipowners or their Club. The Bank had not apparently been put in funds by the second defendants and therefore was asserting its security entitlement as holder of the bills of lading.
On 12 July 2004 the claimants applied to Morrison J. for a worldwide freezing injunction on substantially the same grounds as had been put before David Steel J. This time they were represented by leading counsel, Mr. Timothy Young Q.C. I shall have to refer to what passed at that hearing in more detail later in this judgment. However, having been informed of the previous hearings before Cooke J. and David Steel J., Morison J. decided to hear the renewed application and, having done so, granted the injunctions against both defendants.
The second and third defendants now apply to have these injunctions set aside on the following grounds in respect of both defendants:
"(a) the Claimants were not entitled to apply to Mr. Justice Morison for a freezing order in circumstances where their application had previously been refused by Mr. Justice David Steel on 29 th April 2004 and by Mr. Justice Cooke on 8 th April 2004;
(b) there is no good arguable case on the merits against either the Second Defendant or the Third Defendant;
(c) there was and is no evidence of a real risk that any judgment obtained by the Claimants will go unsatisfied;
(d) the Claimants and their legal advisers failed to disclose to Mr. Justice Morison on the application for a freezing order facts and matters that were material to be disclosed, principally;
(i) that Mr. Justice David Steel had expressly directed that the Claimants were not to apply to another Judge for a freezing order on the basis of the same material;
(ii) that, on the application to Mr. Justice Gross for permission to serve out, no disclosure had been given of the findings by Mr. Justice Cooke and Mr. Justice David Steel that there was no good arguable case against the Second and Third Defendants;
(iii) that the Second Defendant is a limited company and/or that there was little or no evidence to support the Claimant's assertion that the Second Defendant is a partnership;
(iv) the Second Defendant was founded in 1953 and is a very substantial organisation with a very large turnover and real assets in the Yemen;
(v) there was no unsatisfied arbitration award against the Second Defendant as alleged by the Claimants;
(e) the Claimants have failed to put up security in accordance with the undertaking required by Schedule B, para. (1) of Mr. Justice Morison's Order."
Further grounds relied on in respect of the third defendant were:
"(a) there is no pleaded cause of action against the Third Defendant;
(b) the Second Defendant is a limited company and not a partnership as alleged by the Claimants, and that accordingly there is no basis for the allegation that the Third Defendant is jointly and severally liable with the other partners for the liabilities of the Second Defendant."
The third defendant also applied for an order striking out the claim form and particulars of claim against him under CPR. 3.4 on the basis that they disclosed no reasonable grounds for bringing the claim against him. Both defendants have also applied to set aside the order of Gross J. giving permission to serve outside the jurisdiction.
In view of the considerable pressure on judicial time in the first week of August it was agreed that the hearing should be confined to the application to set aside the order of Morison J. freezing the assets of the second and third defendants.
The first question to be answered is whether Morison J. had jurisdiction to hear a renewed application following the refusal of a freezing order by David Steel J.
In Woodhouse v. Consignia plc. [2002] EWCA Civ.275 the Court of Appeal was concerned with the correct approach to be followed where a claimant whose claim had been automatically stayed following a failure to bring the proceedings before a judge throughout the period 26 April 1999 to 25 April 2000 applied for the automatic stay to be lifted. It held that the district judge could properly exercise his discretion to lift or refuse to lift the stay if he considered each of the matters specified in CPR. 3.9. In the second of the cases considered by the Court of Appeal the claimant's first application to lift the stay was refused, but he renewed his application to a district judge, the second time adducing highly relevant evidence which, although available, had not been placed before the district judge on the first occasion. The second district judge this time again refused the application...
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