Otkritie Capital International Ltd and Another v Threadneedle Asset Management Ltd and Another
| Jurisdiction | England & Wales |
| Judge | Mr Justice Knowles |
| Judgment Date | 07 August 2015 |
| Neutral Citation | [2015] EWHC 2329 (Comm) |
| Date | 07 August 2015 |
| Docket Number | Case No: 2014-1378 |
| Court | Queen's Bench Division (Commercial Court) |
[2015] EWHC 2329 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Rolls Building, Fetter Lane
London EC4A 1NL
Mr Justice Knowles CBE
Case No: 2014-1378
Nathan Pillow QC and Anton Dudnikov (instructed by Steptoe and Johnson LLP) for the Claimants
Ali Malek QC and Michael Lazarus (instructed by Brown Rudnick LLP) for the Defendants
Hearing dates: 10 and 11 June 2015
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.
Introduction
In Aldi Stores Ltd v WSP Group plc and others [2007] EWCA Civ 1260; [2008] 1 WLR 748 the Court of Appeal considered "the application of the principles set out in Johnson v Gore Wood & Co [2002] 2 AC 1 to an attempt to strike out a claim for abuse of process on the basis that the claim could and should have been brought in previous litigation" ( Aldi, at [1]).
The context there, as in the present case, was "complex commercial litigation" ( Aldi, at [1]). Thomas LJ (as he then was) concluded his judgment with these words, at [31]:
"… for the future, if a similar issue arises in complex commercial multi-party litigation, it must be referred to the court seized of the proceedings. It is plainly not only in the interest of the parties, but also in the public interest and in the interest of the efficient use of court resources that this is done. There can be no excuse for failure to do so in the future."
Longmore LJ and Wall LJ expressly associated themselves with these words ( Aldi, at [36] and [42]). I will refer to the words used by Thomas LJ as a "requirement". That is one of the terms used in Gladman Commercial Properties v Fisher Hargreaves Proctor & Others [2013] EWCA Civ 1466; [2014] PNLR 11 (CA) at [64] per Briggs LJ. It is of note that across the authorities the terms "rule", "guideline", "guidance", "advice" and "statement" are also to be found.
The 2011 Litigation and the 2014 Litigation
The judgments of the Court of Appeal in Aldi were handed down on 28 November 2007. Three years later, the Claimants and other members of the group of companies of which they were members sued (ultimately) 19 defendants in proceedings commenced in the Commercial Court ("the 2011 Litigation").
Mr Vladimir Gersamia ("Mr Gersamia"), a former employee of Threadneedle Management Services Limited, was the tenth defendant. He was added, with others, on 1 March 2012. Until that point the Claimants had focused their claims against former employees of their own group and related individuals and entities.
Leaving aside what has been termed a separate "Sign-On Fee Fraud" which is of little materiality to the present application, the alleged circumstances giving rise to this litigation may be summarised, in very broad outline, as follows.
The first Claimant had been caused to purchase Argentine government warrants for a multiple of their market value. The purchase followed false representations by employees within the Claimants' group that the purchase was genuine and at a discount to market value, was from the Threadneedle group, and was the first stage of a two stage transaction in which the Threadneedle group had agreed to buy the warrants back at the second stage at a price that would leave the first Claimant with a profit.
An execution of part of the second stage was attempted but was prevented by Threadneedle's systems. Mr Gersamia was behind that attempt, but had, it was alleged, in various other respects assisted or attempted to assist fraudulent behaviour on the part of the Claimants' employees. The parties, including Mr Gersamia, who were added in March 2012 to the 2011 Litigation were each said to have received a share of proceeds of the fraud on the Claimants.
At a case management conference on 18 July 2012, Walker J highlighted the fact that defendants in the litigation were subject to freezing orders. He expressed the view that it was not satisfactory to cause the claim against them "to wait rather longer than would otherwise have been the case" whilst on the Claimants' part "steps are taken both in this country and elsewhere to elicit further evidence, [and] the things that the claimants want to have determined and the people that they want to be parties may change". Hamblen J was at a later interim hearing on 9 November 2012 to refer to the "very real need to get on with the case".
The 2011 Litigation came to trial before Eder J in 2013. An observer was present on behalf of the Threadneedle group. The trial lasted more than 45 days and ended in November 2013. Judgment was handed down on 10 February 2014 ( Otkritie International Investment Management Ltd and Others v Georgy Urumov and Others [2014] EWHC 191 (Comm); [2014] 1 WLR 748). The judgment of Eder J exceeded 200 pages including schedules. The sums awarded "in principle" exceeded US$150 million, including against Mr Gersamia ( Otkritie v Urumov, at [555]–[557]).
Then, on 14 November 2014, the Claimants commenced the present proceedings ("the 2014 Litigation") against Threadneedle Asset Management Limited and Threadneedle Management Services Limited (together "Threadneedle").
The claim was for US$120 million as damages or equitable compensation. The first paragraph of the brief details of claim endorsed on the Claim Form referred to the 2011 Litigation and stated that Eder J had held Mr Gersamia liable to the Claimants "in conspiracy, dishonest assistance and knowing receipt arising from a fraud perpetrated by Mr Gersamia and his co-conspirators in March 2011". Full Particulars of Claim accompanied the Claim Form. These added a claim that Mr Gersamia had made representations to the Claimants that "for reasons set out in the Judgment" of Eder J, he knew were false.
The basis of the claim against Threadneedle Management Services Limited was that it had been Mr Gersamia's employer. As regards Threadneedle Asset Management Limited the allegation was that it "exercised control over Mr Gersamia and/or the relationship between them was akin to employment." The Claimants alleged that Mr Gersamia's acts or omissions were within the scope of his actual or apparent authority for Threadneedle, or that his conduct was "so closely connected with his employment that it is fair and just to hold [Threadneedle] vicariously liable to the Claimants."
The application
It is obvious that the Claimants could have chosen to seek to make Threadneedle defendants in the 2011 Litigation, making 21 defendants in all.
Instead they chose to wait until they had the result of the trial in the 2011 Litigation. Then, having succeeded against Mr Gersamia at that trial, they commenced a second set of proceedings — the 2014 Litigation — in order to sue Threadneedle.
At no point during the 2011 Litigation had the Claimants referred to the Commercial Court, as the court seized of those proceedings, the question whether the course they preferred was an acceptable course.
After acknowledging service of the 2014 Litigation, Threadneedle issued the application notice now before the court, seeking an order striking out the Claim Form and Particulars of Claim, and dismissing the claim, on the grounds that the 2014 Litigation is an abuse of the process of the court.
The principles
As Thomas LJ made clear in Aldi (at [5]) the principles that are engaged by an application to strike out a claim, made on the basis that it is an abuse of process to bring a claim that could and should have been brought in previous proceedings, are set out in the speech of Lord Bingham of Cornhill in Johnson v Gore Wood.
Lord Bingham's summary of the main principles, included the following, at page 31:
"The[re] is [an] underlying public interest … that there should be finality in litigation and that a party should not be twice vexed in the same matter. This public interest is reinforced by the current emphasis on efficiency and economy in the conduct of litigation, in the interests of the parties and the public as a whole. The bringing of a claim or the raising of a defence in later proceedings may, without more, amount to abuse if the court is satisfied (the onus being on the party alleging abuse) that the claim or defence should have been raised in the earlier proceedings if it was to be raised at all. I would not accept that it is necessary, before abuse may be found, to identify any additional element such as a collateral attack on a previous decision or some dishonesty, but where those elements are present the later proceedings will be much more obviously abusive, and there will rarely be a finding of abuse unless the later proceeding involves what the court regards as unjust harassment of a party. It is, however, wrong to hold that because a matter could have been raised in earlier proceedings it should have been, so as to render the raising of it in later proceedings necessarily abusive. That is to adopt too dogmatic an approach to what should in my opinion be a broad, merits-based judgment which takes account of the public and private interests involved and also takes account of all the facts of the case, focusing attention on the crucial question whether, in all the circumstances, a party is misusing or abusing the process of the court by seeking to raise before it the issue which could have been raised before. As one cannot comprehensively list all possible forms of abuse, so one cannot formulate any hard and fast rule to determine whether, on given facts, abuse is to be found or not. … [I]t is in my...
To continue reading
Request your trial
-
Otkritie Capital International Ltd and Another (Respondents/Appellants) v Threadneedle Asset Management Ltd and Another
...IN THE COURT OF APPEAL (CIVIL DIVISION) ON APPEAL FROM High Court, Queen's Bench Division, Commercial Court Mr Justice Knowles [2015] EWHC 2329 (Comm) Royal Courts of Justice Strand, London, WC2A 2LL Ali Malek QC and Michael Lazarus (instructed by Brown Rudnick LLP) for the Appellants/Respo......
-
Chamonix Private Equity Llp v Caledonia Investments Plc
...proceedings, but was not (see Aldi Stores Ltd v WSP Group plc [2007] EWCA Civ 1260; [2008] 1 WLR 748, and Otkritie Capital International Ltd v Threadneedle Asset Management Ltd [2015] EWHC 2329 (Comm)). 18 In the result the Order will be in the form provided to the parties with this Judgme......