Orexim Trading Ltd v Mahavir Port and Terminal Private Ltd (formerly known as Fourcee Port and Terminal Private Ltd)
| Jurisdiction | England & Wales |
| Judge | Lord Justice Lewison,Lord Justice Leggatt,Lord Justice Gross |
| Judgment Date | 13 July 2018 |
| Neutral Citation | [2018] EWCA Civ 1660 |
| Docket Number | Case No: A3/2017/3297 |
| Court | Court of Appeal (Civil Division) |
| Date | 13 July 2018 |
[2018] EWCA Civ 1660
Lord Justice Gross
Lord Justice Lewison
and
Lord Justice Leggatt
Case No: A3/2017/3297
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION, COMMERCIAL COURT
HIS HONOUR JUDGE WAKSMAN QC, (sitting as a Judge of the High Court)
CL-2016-000527
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Stuart Adair (instructed by Druces LLP) for the Appellant
Mr Luke Pearce (instructed by Holman Fenwick Willan LLP) for the 1 st Respondent
Mr Jeffrey Gruder QC (instructed by Addleshaw Goddard LLP) for the 2 nd Respondent
Hearing date: 3rd July 2018
Introduction
The issues on this appeal are:
i) Whether the “gateway” in paragraph 3.1 (20) of PD 6B gives the court power to permit service outside England and Wales of a claim to set aside a transaction under section 423 of the Insolvency Act 1986; and
ii) If it has that power, whether it should exercise it on the facts of this case.
HHJ Waksman QC answered the first question “No” on the authority of the decision of this court in Re Harrods (Buenos Aires) Ltd [1992] Ch 72. In reaching that conclusion he held that Flaux J was wrong to have arrived at the contrary conclusion in Erste Group Bank AG (London) v JSC (VMZ Red October) [2013] EWHC 2926 (Comm), [2014] BPIR 81. However, he went on to hold that if he had had power, he would have exercised it in favour of the grant of permission. His judgment is at [2017] EWHC 2663 (Comm); [2018] Bus LR 470.
In view of the conflict of authority at first instance, I granted permission to appeal.
The facts
The claim is brought by Orexim Trading Ltd (“Orexim”), a Maltese company. The objective of the claim under section 423 is to set aside a sale of the vessel Bon Vent by Mahavir Port and Terminal Private Ltd (“MPT”) to Singmalloyd Marine (S) Pte Ltd (“Singmalloyd”) and a sale on by Singmalloyd to Zen Shipping and Ports India Private Ltd (“Zen”). MPT is an Indian company; Singmalloyd is a Singaporean company; and Zen is also an Indian company. The vessel is an Indian flagged vessel, having previously been Mongolian flagged.
The claim arises out of a dispute between Orexim and MPT. The background to that dispute is lucidly described by the judge from whose careful judgment I take the relevant facts. On or about 19 December 2013 Orexim agreed to sell and Atlantis ME FZE (“Atlantis”) agreed to buy approximately 10,000MT of Ukrainian sunflower seed oil at US$913 per metric ton plus freight. Atlantis required Orexim to charter a ship from MPT for this purpose. Orexim accordingly entered into a charterparty with MPT dated 19 December 2013 for the charter of the vessel “Bon Vent”. At that stage, the charterparty provided for the discharge port to be either Bandar Abbas or Bandar Imam Khomenei (“BIK”). Under the charterparty disputes were to be arbitrated in India.
There was in fact a sub-purchaser of the goods from Atlantis called Global International Imex Private Ltd (“Global”) pursuant to a contract dated 25 November 2013 (“the Atlantis-Global Sale Contract”). Another company, Zarrin Persia (“Zarrin”) was the sub—purchaser of the goods from Global.
On or about 31 January 2014 Atlantis provided revised instructions with the port of discharge now to be Bandar Abbas and new bills of lading were produced. The vessel sailed from Nikolaev in the Ukraine on 1 February 2014. When MPT raised an invoice against Orexim for US$573,300 in respect of freight, Orexim paid US$80,000 and the balance was paid later, on 12 March 2014.
On or about 3 February 2014, Orexim issued its invoice to Atlantis for the balance of the purchase price being some US$7,694,700 and this was presented for payment together with shipping documents on 10 February 2014. However, that invoice was not paid then or at any time later, save for a sum of US$466,364.80.
In the meantime, there were various disputes between Orexim and MPT. MPT said that Orexim was late in paying freight and load port demurrage and that it had not provided clear instructions as to the discharge port. For its part, Orexim said that it was clear that the vessel should discharge at Bandar Abbas and that MPT was not providing regular ETA messages. And because Orexim had still not been paid the balance owing on the goods, it told MPT not to discharge the goods at any port. Finally, the vessel anchored off Fujairah apparently on the instructions of Mr Yigit Caliskan, the finance director of Atlantis.
MPT brought a claim against Orexim in the Bombay High Court for unpaid freight and demurrage and obtained an order permitting it to discharge the sunflower oil into tanks at BIK together with a lien over the goods for the sums due, and it appointed Mr Raj Nachania as sole arbitrator on its claim.
For its part, Orexim gave Atlantis a notice of arbitration in London and appointed an arbitrator. Much later, on 17 March 2015 the arbitrator awarded to Orexim the balance of the purchase price of the goods in the sum of US$7.228m as against Atlantis. It remains largely unpaid.
Although Orexim had instructed MPT not to discharge at BIK it did so on the basis of the order from the Bombay High Court. On 30 April 2014 Orexim commenced the first of three different sets of proceedings against MPT in Ukraine after the vessel had sailed to the port of Yuzhny. On each occasion Orexim procured the arrest of the vessel only for the arrest to be subsequently discharged by the Court. The final discharge was on 11 June 2014.
Meanwhile, on 8 May 2014 bills of lading had been produced to the agents Pars Parine (“PP”) at BIK with instructions to deliver the goods from the discharge tanks to Zarrin. MPT accepts that they were forged. Zarrin duly obtained the goods and subsequently paid Global for them but Global never paid Atlantis. Accordingly, by this stage, Orexim no longer had the goods and had not been paid for them.
Orexim, Atlantis and MPT entered into a written settlement agreement dated 15 May 2014 (“the settlement agreement”). By paragraph 2(i), it was agreed that MPT “shall cause Global… to deposit on behalf of Atlantis as part of monies payable by Global to Atlantis, an amount of US$7,391,600… with the Bombay High Court within… 10 business days from the date of the signing date of this Settlement Agreement”. By paragraph 2(v), on the deposit of those monies Orexim would release the vessel from arrest and withdraw all criminal proceedings against MPT. Paragraph 2(vi) then entitled Orexim to withdraw the total amount deposited. Paragraph 7 provided that the settlement agreement was subject to English law and that any dispute “arising out of or in connection with” the settlement agreement would be referred to the High Court in England and Wales.
Global subsequently paid US$466,364.80 to Orexim but no more. Accordingly, MPT did not cause the balance of the US$7.39m to be paid into the Bombay High Court and so the provisions of the Settlement Agreement remain unfulfilled.
Orexim learned that MPT had purported to transfer the vessel to Singmalloyd and Singmalloyd transferred it to Zen, along with another vessel the MT Bon Chem. This gave rise to a concern that MPT had at the same time been disposing of its, or some of its, assets, so as to prejudice claims made against it by, among others, Orexim. By a memorandum of sale dated 4 June 2013 MPT agreed to sell it to Singmalloyd for US$6m with delivery by 30 September 2013. This was later extended to 25 February 2014. Then by another memorandum of sale Singmalloyd agreed to sell it to Zen for US$7.4m with delivery by no later than 30 April 2014. By a further agreement effective 5 December 2013, Singmalloyd agreed to pay to MPT a further US$3.47m at that point in addition to the initial deposit of US$1.225m making a total payment of around US$4.7m. Zen's purchase of the vessel was financed by Srei Infrastructure Finance Limited (“Srei”), an Indian finance company which lent US$7.4m to Zen secured by a mortgage over the vessel. It is these transactions that Orexim wishes to impugn.
It will be noted that the memorandum of sale between MPT and Singmalloyd was entered into on 4 June 2013, more than six months before the charterparty between Orexim and MPT; and nearly a year before the settlement agreement. All the other impugned transactions also took place before the settlement agreement.
Section 423
Section 423 of the Insolvency Act 1986 relates to “transactions entered into at an undervalue.” These are defined to include gifts or transactions where the other party provides no consideration or where the consideration is significantly less than the value of the consideration provided by the transferor. If the Court is satisfied that such a transaction was entered into by the transferor for the purpose of putting assets beyond the reach of a person who is claiming against him or otherwise prejudicing the interests of such a person in relation to the claim which he is making or may make, then the court has wide powers under section 425 to undo the transaction. However, section 425 (2) provides that an order must not prejudice any interest in property which was acquired from a person other than the debtor and was acquired in good faith, for value and without notice of the relevant circumstances.
An application for an order under section 423 may be made either by a relevant office holder, or by a victim of the transaction: section 424 (1).
Jurisdiction
The word “jurisdiction” is a slippery one. The first of the issues I have identified above could be more conventionally formulated as asking “whether the court has jurisdiction...
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