Masri v Consolidated Contractors International Company SAL and Others (No.4)

JurisdictionUK Non-devolved
JudgeLORD SCOTT OF FOSCOTE,LORD RODGER OF EARLSFERRY,LORD WALKER OF GESTINGTHORPE,LORD BROWN OF EATON-UNDER-HEYWOOD,LORD MANCE
Judgment Date30 July 2009
Neutral Citation[2009] UKHL 43
Date30 July 2009
CourtHouse of Lords
Masri
(Respondent)
and
Consolidated Contractors International Company SAL

and others and another

(Appellant)

and another

[2009] UKHL 43

Appellate Committee

Lord Scott of Foscote

Lord Rodger of Earlsferry

Lord Walker of Gestingthorpe

Lord Brown of Eaton-under-Heywood

Lord Mance

HOUSE OF LORDS

Appellants:

Alexander Layton QC

Thomas Raphael

(Instructed by Olswang)

Respondents:

Laurence Rabinowitz QC

Simon Salzedo

Colin West

(Instructed by Simmons & Simmons)

LORD SCOTT OF FOSCOTE

My Lords,

1

I have had the advantage of reading in draft the opinion of my noble and learned friend Lord Mance. I agree with it, and for the reasons given by Lord Mance I would allow this appeal and restore the order of Master Miller.

LORD RODGER OF EARLSFERRY

My Lords,

2

I have had the advantage of reading in draft the speech which is to be delivered by my noble and learned friend, Lord Mance. I agree with it and, for the reasons which he gives, I too would allow the appeal and make the order which he proposes.

LORD WALKER OF GESTINGTHORPE

My Lords,

3

I have had the advantage of reading in draft the opinion of my noble and learned friend Lord Mance. I agree with it, and for the reasons given by Lord Mance I would allow this appeal and restore the order of Master Miller.

LORD BROWN OF EATON-UNDER-HEYWOOD

My Lords,

4

I have had the advantage of reading in draft the opinion of my noble and learned friend Lord Mance. I agree with it, and for the reasons given by Lord Mance I would allow this appeal and restore the order of Master Miller.

Introduction

LORD MANCE

My Lords,

5

Mr Masri, the respondent, is owed a judgment debt of US$ 64m by Consolidated Contractors International Company SAL ("CCIC") and Consolidated Contractors (Oil and Gas) Company SAL ("CCOG"), both Lebanese companies. The debt arises from judgments on liability and quantum of Gloster J in the Commercial Court on 28 July 2006 and 4 May 2007. CCIC and CCOG have manifested their intention to avoid payment of this judgment debt at all costs. Permissions to appeal to the House of Lords on jurisdictional and other issues in the proceedings were discharged for failure to comply with conditions requiring payment of all or most of the judgment debt. Lord Bingham of Cornhill observed too truly in Société Eram Shipping Co. Ltd. v Cie Internationale de Navigation [2003] UKHL 30; [2004] 1 AC 260, para. 10:

"As many a claimant has learned to his cost, it is one thing to recover a favourable judgment; it may prove quite another to enforce it against an unscrupulous defendant. But an unenforceable judgment is at best valueless, at worst a source of additional loss."

He added that this was a problem that our Victorian forebears had addressed with characteristic energy and pragmatism. That applies in this case. CPR 71 on which the appeal turns reflects the provisions of s.60 of the Common Law Procedure Act 1854, as extended by the Rules of the Supreme Court 1883 to redress the effect of the decision in Dickson v Neath and Brecon Railway Co (1869) LR 4 Ex 87.

6

The issues now before your Lordships arise not between Mr Masri and CCIC or CCOG, but between Mr Masri and Mr Toufic Khoury. Mr Khoury was the chairman, general manager and a director of CCIC. He has at all times been habitually resident in Greece. On 6 July 2007, Mr Masri obtained without notice an order for his examination as an officer of CCIC in respect of CCIC's means under CPR 71. The order, granted without notice and on paper by Master Miller, provided for service on the London solicitors then acting for CCIC. It is common ground that this was not appropriate. Subsequent steps were taken to serve Mr Khoury personally in Greece.

7

On an application by Mr Khoury on 20 December 2007, Master Miller set aside the order, primarily on the grounds of lack of jurisdiction under both European Community and domestic law, and without finding it necessary to determine whether valid personal service had been effected in Greece. He gave permission for a "leap-frog" appeal to the Court of Appeal on all but one presently immaterial issue. On 28 July 2008 the Court of Appeal allowed Mr Masri's appeal, and remitted the matter for further consideration of the issue relating to the validity of the service effected in Greece. The House gave leave to appeal on 14 January 2009, indicating that it would hear first the issues of English law, and that, if the appeal failed on those points, it would refer the points of European law concerning in particular the application of the Evidence Regulation (EC) No 1206/2001 of 28 May 2001 and the Brussels Regulation (EC) No 44/2001 to the Court of Justice. In the meanwhile in January 2008 Mr Khoury resigned from his offices with CCIC, while continuing to enjoy the benefit of the same legal team as represents CCIC. In December 2008 CCIC entered into judicial administration in Lebanon, but the appeal proceeds on the basis of the facts before Master Miller in December 2007. The Court of Appeal ordered on 19 February 2009 that no examination of Mr Khoury should take place until after the House's determination of the English law issues.

8

CPR 71 provides:

"71.2 Order to attend court

(1) A judgment creditor may apply for an order requiring -

(a) a judgment debtor; or

(b) if a judgment debtor is a company or other corporation, an officer of that body,

to attend court to provide information about -

(i) the judgment debtor's means; or

(ii) any other matter about which information is needed to enforce a judgment or order.

(2) An application under paragraph (1) -

(a) may be made without notice; and

(b) (i) must be issued in the court which made the judgment or order which it is sought to enforce, except that

(ii) if the proceedings have since been transferred to a different court, it must be issued in that court.

(3) The application notice must -

(a) be in the form; and

(b) contain the information

required by the relevant practice direction.

(4) An application under paragraph (1) may be dealt with by a court officer without a hearing.

(5) If the application notice complies with paragraph (3), an order to attend court will be issued in the terms of paragraph (6).

(6) A person served with an order issued under this rule must -

(a) attend court at the time and place specified in the order;

(b) when he does so, produce at court documents in his control which are described in the order; and

(c) answer on oath such questions as the court may require.

(7) An order under this rule will contain a notice in the following terms -

'You must obey this order. If you do not, you may be sent to prison for contempt of court.'

The issues

9

The issues now before the House are short, although the argument was long. They are (1) whether the language of CPR 71.2 purports to confer power to order examination of a foreign director of a foreign company, (2) whether it purports to confer power to order such examination in respect of foreign assets, (3) whether, if it does, it is ultra vires the rule-making power, (4) whether, if it does, there is any basis under CPR 6 for service upon Mr Khoury out of the jurisdiction in Greece, and (5) whether, if there is, the English courts should nonetheless give "primacy" or priority to use of the Evidence Regulation (EC) No 1206/2001, before contemplating such domestic means. Mr Khoury submits that the last contention, were it thought to have any force at all and to be potentially decisive, should be referred along with the other European issues to the Court of Justice.

Scope of rule-making power

10

It is convenient to start with the third issue. This depends upon the width of the rule-making power contained in s.1 of the Civil Procedure Act 1997. The first and second issues arise only if the first issue is answered in Mr Masri's favour and they depend upon the proper construction of CPR 71 and CPR 6. A conclusion about what would be within or outside the rule-maker's power may itself affect the construction to be put on the rules. At the heart of Mr Alexander Layton QC's submissions on behalf of Mr Khoury on all three issues is however a single theme, that the court lacks extra-territorial power - over Mr Khoury because he is abroad, and over CCIC's assets (about which Mr Masri wishes to question Mr Khoury) because they are also abroad. The principle relied upon is one of construction, under-pinned by considerations of international comity and law. It is that "Unless the contrary intention appears ….. an enactment applies to all persons and matters within the territory to which it extends, but not to any other persons and matters": Bennion, Statutory Interpretation, 4th ed. (2002), p 282, s.106, cited with approval, along with the considerable case-law, by Lord Bingham of Cornhill in R (Al-Skeini) v Secretary of State for Defence (The Redress Trust intervening) [2007] UKHL 26, [2008] AC 153, para.11. The principle may not apply, at any rate with the same force, to English subjects (see e.g. The Zollverein (1856) Swab. 96, 98, per Dr Lushington and Ex p. Blain, Ex p Sawers (1879) 12 Ch D 522, 526, per James LJ, cited with approval by Lord Scarman in Clark v Oceanic Contractors Inc. [1983] 2 AC 130, 144E-H), but that is presently irrelevant. Whether and to what extent it applies in relation to foreigners outside the jurisdiction depends ultimately as Lord Wilberforce said in Clark v Oceanic Contractors Inc. (p 152C) upon who is "within the legislative grasp, or intendment" of the relevant provision. To this a nuanced answer may be given, as in that case where United Kingdom PAYE legislation was held to apply to a foreign company employing workers to work in North Sea operations and as in Holmes v Bangladesh Biman Corp. [1989] AC 1112 where apparently general wording of a United Kingdom carriage by air Order was...

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