Société Générale v Goldas Kuyumculuk Sanayi Ithalat Ihracat A.S.

JurisdictionEngland & Wales
CourtCourt of Appeal (Civil Division)
JudgeLady Justice Macur,Lord Justice Simon,Lord Justice Longmore
Judgment Date25 July 2018
Neutral Citation[2018] EWCA Civ 1093
Docket NumberCase No: A3/2017/1147, A3/2017/1147(B) & A3/2017/1147(C)
Date25 July 2018

[2018] EWCA Civ 1093

IN THE COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE HIGH COURT

QUEEN'S BENCH DIVISION

COMMERCIAL COURT

THE HONOURABLE MR JUSTICE POPPLEWELL

[2017] EWHC 667 (Comm)

Royal Courts of Justice

Strand, London, WC2A 2LL

Before:

THE RIGHT HONOURABLE Lord Justice Longmore

THE RIGHT HONOURABLE Lady Justice Macur DBE

and

THE RIGHT HONOURABLE Lord Justice Simon

Case No: A3/2017/1147, A3/2017/1147(B) & A3/2017/1147(C)

Between:
Société Générale
Claimant/Appellant
and
1) Goldas Kuyumculuk Sanayi Ithalat Ihracat A.S.
2) Granat Madencilik Ve Ticaret A.S. (Formerly Goldas Kiymetli Madenler Ticareti A.S)
3) Jakana Tekstil Konfeksiyon Uretim Ve Ticaret A.S. (Formerly Meydan Doviz Kiymetli Maden Ticaret A.S)
4) Goldas LLC
Defendants/Respondents
And Between
Société Générale
Claimant/Appellant
and
1) Goldas Kuyumculuk Sanayi Ithalat Ihracat A.S.
2) Goldart Holding A.S.
Defendants/Respondents

Mr Laurence Rabinowitz QC & Mr Niranjan Venkatesan (instructed by Mayer Brown International LLP) for the Claimant/Appellant

Mr Stephen Moverley Smith QC & Mr Hugh Miall (instructed by Morgan Rose Solicitors Ltd) for the Defendants/Respondents

Hearing dates: 1 st & 2 nd May 2018

Judgment Approved

Lord Justice Longmore

Introduction

1

This appeal from Popplewell J raises, once again, questions about alternative service under CPR 6.15.

2

As long ago as 18 th March 2008 Société Générale (“Soc Gen”) the well-known French bank issued proceedings (Folio 267) in relation to 15.725 metric tonnes of gold bullion delivered to three Turkish companies and one Dubai company in the Goldas group of companies. Those proceedings were issued 3 days after Kitchin J had, on Saturday 15 th March 2008, made freezing orders in substantial sums against the four defendants on the basis of an undertaking that proceedings would be issued and served “as soon as practicable”. The claim was for an order for delivery up of gold delivered or (in respect of 4.425 mt) for money due in respect of priced purchase contracts, or damages. There was also a claim for repayment of loans made to the first defendant.

3

On 4 th April 2008 Soc. Gen. issued further proceedings (Folio 329) against the first defendant to the Folio 267 proceedings and another Turkish Goldas company as guarantors of certain of the liabilities of the other Goldas companies in respect of the bullion the subject of Folio 267. These proceedings were issued 2 days after Burton J had continued the freezing orders made by Kitchin J and had himself issued a further freezing order in respect of the guarantee claims on the basis of the same undertaking that proceedings would be issued and served “as soon as practicable”.

4

Burton J was informed that service had taken place in Turkey and that service through diplomatic channels in Dubai would take up to 6 months. The statement that service had taken place in Turkey was based on erroneous advice from a firm of Turkish lawyers (“Pekin”) who had not appreciated that service had to take place in accordance with the Hague Convention on the Service Abroad of Judicial and Extra-territorial Documents in Civil and Commercial matters (“the Hague Convention”) and that, therefore, the only valid method of service was through the Turkish Ministry of Justice.

5

Attempts at service through diplomatic channels in Dubai were held by the judge to be ineffective so that there was no valid service in Dubai either.

6

It may safely be inferred that the Turkish defendants to Folio 267 knew of the contents of the claim form and of the attempts to serve them since, on 27 th March 2008, they wrote to Soc. Gen. saying that they could only be served pursuant to the Hague Convention. On 7 th April 2008 the Turkish Notary Public made the same point to Soc. Gen. on the prompting of the Turkish companies' lawyer, Postacioglu, who made the same point on 1 st May 2008 in relation to attempted service of Folio 329.

7

By that time Soc. Gen. had decided not to progress the English proceedings but rather to pursue bankruptcy proceedings in Turkey against the Turkish defendants. These proceedings have been protracted and have so far got nowhere, on the basis (at least partly) that, since the contractual arrangements between the parties provided for the application of English law and submissions by Goldas to the jurisdiction of the High Court in England, there was as yet no debt that could be the foundation of any bankruptcy proceedings in Turkey.

8

So it has come about that, by application notices issued on 9 th February 2016, the defendants have sought orders that:-

1) the claim forms be struck out and/or dismissed, on the grounds that:-

a) the claim forms have not been served and the time for doing so under CPR 7.5 has expired;

b) alternatively the failure to progress the claims amounts to an abuse of process;

2) the freezing orders be discharged on the grounds that:-

a) the claim forms are struck out and/or dismissed; alternatively

b) there were misrepresentations and/or failure to make full and frank disclosure in obtaining them;

3) there be an inquiry as to damages under the cross-undertaking given in support of the freezing orders.

9

By application notices issued on 12 th May 2016, Soc. Gen. has itself sought orders:

1) to overcome invalid service in Turkey and Dubai by either:

a) an order for deemed service by an alternative method with retrospective effect pursuant to CPR 6.15; or

b) an order dispensing with service pursuant to CPR 6.16.

2) for summary judgment under CPR Part 24, including permission to apply for summary judgment prior to the filing of an acknowledgement of service under CPR 24.4(1)(i).

10

Popplewell J has declined to order deemed service by an alternative method or to dispense with service altogether. He therefore dismissed the claims, discharged the freezing injunctions and ordered an inquiry into damages pursuant to the cross-undertaking as to damages. This court has granted permission to appeal.

The Judgment

11

The judge first set out the relevant facts and procedural history in detail. The above description distils the essence of them but reference can be made to the judgment for a full recitation. The judge then set out the relevant law, as he saw it, in nine propositions, three of which are challenged on this appeal. He applied those principles to the facts, correctly saying that the starting point was that all the defendants had notice of the content of the claim forms and that the Turkish defendants also knew that Soc. Gen. had purported to effect service. That could not, however, be “a good reason” on its own for alternative service. He held that failure to effect service within the validity of the claim form was culpable on Soc. Gen.'s part because the advice that service had been validly effected in Turkey was negligent (or at the very least erroneous) in the light of the application of the Hague Convention and Soc. Gen had ignored the effect of the evidence of the process server in Dubai to the effect that service had not been effected in that jurisdiction; it was further relevant that Soc. Gen.'s claims had become time-barred in mid 2014; although Soc. Gen. could have sought an order for alternative service at a time before the claim became time-barred, the reason it did not do so was that it had decided to warehouse the English proceedings in favour of Turkish proceedings which was its own decision. That meant there was a delay of some 8 years which was only brought to an end when the defendants made their applications that the claim forms be struck out or dismissed.

12

In these circumstances there was no good reason to make a retrospective order for alternative service. For good measure, he added that Soc. Gen.'s conduct of the proceedings had been abusive in three separate respects:-

1) Soc. Gen., having obtained the draconian remedy of a freezing order, had failed to progress the proceedings expeditiously, when it was incumbent on it to do so;

2) it had put the English proceedings on hold to await the outcome of litigation abroad without the sanction of the court; and

3) it had broken undertakings given to both Kitchin J and Burton J to issue and serve the claim forms as soon as practicable.

13

He said further that to grant relief would be to circumvent the treaties made with both Turkey and Dubai about arrangements for service and summarised the position reached so far:-

“66. In summary, therefore, SocGen chose to pursue proceedings in Turkey to recover the price or value of the gold in place of pursuit of the claim in these proceedings which were put on hold for about 8 years until after the validity of the claim forms had expired and after the limitation period had expired, abusively warehousing the English proceedings and improperly maintaining freezing orders in place, in circumstances where it knew that the validity of service in Turkey was disputed, ought to have known that the claim forms had not been served in Turkey and did not believe that the claim form had been served in Dubai. None of those features suggest there is good reason for validating defective service, still less by a method which was contrary to the Hague Convention and Dubai Bilateral Treaty, nor exceptional circumstances justifying dispensing with service. On the contrary they provide good reasons for not doing so.”

14

He then considered ten separate factors advanced by counsel then appearing for Soc. Gen. as amounting to good reason for ordering alternative service pursuant to CPR 6.15 (and, indeed, exceptional circumstances justifying an order dispensing with service pursuant to CPR 6.16) and rejected them. Nothing could be plainer than that this was an evaluative judgment in relation to a complex case, in respect of which this court should not interfere unless the judge made an error of principle or the judge was plainly wrong, see Barton v Wright...

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