Shiblaq v Sadikoglu [QBD (Comm)]
| Jurisdiction | England & Wales |
| Judge | MR JUSTICE COLMAN |
| Judgment Date | 30 July 2004 |
| Neutral Citation | [2003] EWHC 2128 (Comm) |
| Court | Queen's Bench Division (Commercial Court) |
| Docket Number | Case No 2001 Folio 352 |
| Date | 30 July 2004 |
[2003] EWHC 2128 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Court No 22
Royal Courts of Justice
Strand, London, WC2A 2LL
The Honourable Mr Justice Colman
Case No 2001 Folio 352
Mr David Quest (instructed by Lawrence Jones) for the Defendant (Applicant)
Mr Joe Smouha QC (instructed by Addleshaw Goddard) for the Claimant (Respondent)
Hearing dates: 20 June 2003
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.
Colman J
INTRODUCTION
This is an application to set aside a judgment in default of acknowledgment of service dated 5 October 2001. The judgment was for US$1.035 million. The claim was under an oral agreement said to have been made in London in 1996 under which the defendant is said to have undertaken to repay to the claimant US$1.035 million which the claimant had invested in a failed joint venture in 1992. The alleged method of repayment was by the acquisition, rebuilding and fitting out of a yacht to that value by a boat yard in Turkey owned by a company controlled by the defendant, for delivery to the claimant by 3 August 1998. It is said that the defendant failed to repair and refit the boat and delivery was never made.
Permission to serve the claim form and particulars of claim on the defendant in Turkey was given on 27 June 2001. An acknowledgment of service was to be filed 21 days after service.
In the course of September 2001 service was attempted at the boat yard owned by the defendant's company. The claimant's lawyer and a notary public are told first that defendant was in a meeting and later that he was not at that address. Service was then attempted by post to that address but nobody would sign a proof of delivery. The chief of the district then allegedly effected service by placing a notice on the door of the boat yard. A notary public certified that this was effective service under Turkish law. This is disputed by the defendant.
The defendant failed to file an acknowledgment of service in 21 days from that allegedly effective service. He claims to have known nothing about such service. On 3 December 2001 the default judgment was served by mail at the boat yard address was signed by a Mrs Dereli, said by the defendant to be the "executive assistant" of the General Manager and of the in house lawyer of the company which owned the boat yard. It is said by the defendant that Mrs Dereli never passed on the documents to him.
The claimant in April 2003 commenced proceedings in Dubai to recognise and enforce the judgment against the defendant. It has been conceded by the defendant that he first came to know of the judgment in December 2002. He instructed his present English solicitors for the first time in May 2003. At a hearing on enforcement in Dubai on 17 May 2003 the defendant's representative told the court that he would be applying to the English court to set aside that judgment and an adjournment was obtained until 21 June 2003. Eventually, this application was issued on 18 June 2003 and the hearing took place on 20 June.
The defendant applies to set aside the judgment in default primarily under CPR 13.2 and alternatively under CPR 13.3.
As to CPR 13.2, Mr David Quest submits on behalf of the Defendant that CPR 13.2 (a) is engaged. This provides:
"The court must set aside a judgment entered under Part 12 if judgment was wrongly entered because –
(a) in the case of a judgment in default of an acknowledgment of service, any of the conditions in rule 12.3(1) and 12.3(3) was not satisfied;"
CPR 12.3 (1) provides:
"The claimant may obtain judgment in default of an acknowledgment of service only if –
(a) the defendant has not filed an acknowledgment of service or a defence to the claim (or any part of the claim); and
(b) the relevant time for doing so has expired;"
It is submitted that in this case the default judgment was obtained in circumstances where there had not been effective service and where therefore there could not be an acknowledgment of service and consequently the time for such acknowledgment never began to run. In accordance with CPR 6.24 the method of service had to be permitted by Turkish law. In the present case in early September 2001 a notary and lawyer, representatives of the claimant, attempted to deliver the claim form at the premises of a shipyard in Istanbul operated by a corporation in which the defendant was the major shareholder. The corporation's lawyer informed the notary that the defendant was not present and declined to accept service of the document, the nature of which, according to him, was not disclosed, as he had no authority to do so. On about 7 September 2001 the documents were sent by post to the shipyard, but on that date delivery was not accepted and they were returned by the Post Office. The documents were then passed to the "chief alderman of the district" and a "legal notice" was then placed on the door of the addressee, which I take to mean that of the shipyard.
The defendant relies on a legal opinion prepared by Dr Ilhan Helvaci, Professor of Law at Istanbul University. The substance of that opinion is that the only available method of service of English proceedings on a Turkish citizen in Turkey is by diplomatic channels, through the Turkish Ministry of Foreign Affairs in accordance with Article 26 of Notification Law No 7201 and Article 44 of the Notification Regulation of 11.9.1959. This method of service on Turkish citizens is also prescribed by the Anglo-Turkish Convention 1932.
It is submitted in the alternative that the court should exercise its discretion to set aside the judgment under CPR 13.3. This provides:
"13.3(1) In any other case, the court may set aside or vary a judgment entered under Part 12 if –
(a) the defendant has a real prospect of successfully defending the claim; or
(b) it appears to the court that there is some other good reason why –
(i) the judgment should be set aside or varied; or
(ii) the defendant should be allowed to defend the claim.
(2) In considering whether to set aside or vary a judgment entered under Part 12, the matters to which the court must have regard include whether the person seeking to set aside the judgment made an application to do so promptly."
Mr Quest submits that there is a genuine issue between the parties as to whether any agreement was made between them, as alleged in the particulars of claim and which provided that the defendant was to repair and refit a yacht to the value of US$1.035 million or to pay to the claimant the net difference between the value of the yacht in May 2001 and that sum. He relies on paragraphs 19 to 24 of his witness statement in which he gives an account of his dealings with the claimant during 1996 to 2001 which is quite inconsistent with any such agreement. Indeed, he expressly denies the existence of such an agreement.
As to the delay in mounting this application, the defendant relies on delays in co-ordinating lawyers in England, Turkey and Dubai. The claimant has instituted proceedings in Dubai to enforce the English default judgment. At a hearing on 17 May 2003, the Dubai court was told that he would be applying to set aside that default judgment and the court was asked to adjourn the proceedings to enable an application to discharge to be made to the English court. On that basis, the Dubai court granted an adjournment until 21 June 2003. The defendant says that he has had to spend substantial amounts of time in Iraq "assisting in shipping problems" after the war and that communications are very poor. Mr Quest further submits that in the circumstances the defendant was entitled to delay proceeding with an application to discharge until he saw whether the enforcement proceedings in Dubai were going to be pursued. In the event the application to set aside was not issued until 18 June 2003, but three days before the date for the adjourned Dubai proceedings.
On behalf of the claimant, Mr Joe Smouha QC primarily submits that the defendant cannot rely on defective service to bring himself within CPR 13.2. He submits that a defendant who wishes to raise an issue as to the validity of service or whether service has been effected at all can do so only by making an application under CPR 11. This provides:
"(1) A defendant who wishes to –
(a) dispute the court's jurisdiction to try the claim; or
(b) argue that the court should not exercise its jurisdiction,
may apply to the court for an order declaring that it has no such jurisdiction or should not exercise any jurisdiction which it may have.
(2) A defendant who wishes to make such an application must first file an acknowledgment of service in accordance with Part 10.
(3) A defendant who files an acknowledgment of service does not, by doing so, lose any right that he may have to dispute the court's jurisdiction.
(4) An application under this rule must –
(a) be made within 14 days after filing an acknowledgment of service; and
(b) be supported by evidence.
(5) If the defendant –
(a) files an acknowledgment of service; and
(b) does not make such an application within the period specified in paragraph (4),
he is to be treated as having accepted that the court has jurisdiction to try the claim."
Mr Smouha submits that a defendant who asserts that he has not been duly served and that accordingly a default judgment against him on the grounds of failure to file an acknowledgment of service should be set aside, wishes to "dispute the court's jurisdiction to try the claim or argue that the court should not exercise its jurisdiction" within CPR 11(1).
It is further submitted in the alternative...
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