Miles Platt Ltd. v Townroe Ltd. & Anor

Townroe Ltd is a defendant in an action brought by Miles Platts Ltd in respect of electro-plating work that it allegedly carried out for Miles Platts (“the English proceedings”).

This appeal by Townroe is from the order of HHJ Graham Jones QC on 3 July 2002 allowing Miles Platts’ appeal from the Master and removing the stay of the English proceedings that the Master had imposed under Article 21 of the 1968 Brussels Convention on Jurisdiction and Enforcement of Judgments in Civil and Commercial Matters (“the 1968 Brussels Convention”).

Issues under the Brussels Convention had arisen because there has been litigation in France which touches upon the same subject matter as the English proceedings and substantive proceedings are currently pending there. Miles Platts wishes to litigate against Townroe in England. Townroe resists this and says that any litigation there is should be in France.

Townroe asserts that the Master was correct to hold that Article 21 of the 1968 Brussels Convention was applicable or alternatively that a stay should have been imposed under Article 22. Miles Platts seeks to uphold the decision of the Judge that neither Article 21 nor Article 22 applied.

The 1968 Brussels Convention applies to the litigation despite the new regime under Council Regulation (EC) 44/2001 (sometimes referred to as “the Brussels-I Regulation") which came into force on 1 March 2002. The Brussels-I provisions apply only to proceedings instituted after the entry into force of that Regulation.

Sagem SA is a French company. Amongst other things, it manufactures television sets. A number of the sets manufactured in 1997 overheated and caught fire. Sagem says that this resulted from defects in electrical coils which it built into the television sets. In particular, it is said that pins used in the manufacture of the coils were defectively electro-plated which meant that they could not be adequately soldered with the result that arcs of electricity occurred within the television sets causing overheating and fire. French consumers suffered damage from the fires and Sagem alleges it suffered loss and damage in a number of ways, including not only the cost of compensating the consumers and recalling or replacing the televisions but also loss of commercial reputation.

Sagem purchased the coils from Lecerf SARL, a French electrical wholesale company registered in Nanterre. It is asserted that the coils had been made by Miles Platts and Miles Platts says that the pins in the coils were electro-plated by Townroe which therefore bears responsibility for any defects in them.

On 17 April 1998, a writ of summons was served at the suit of Sagem on Lecerf to attend the Commercial Court in Nanterre for the appointment of a judicial expert (described in French as “une mesure d’expertise judiciaire” and termed in this judgment “the judicial expertise process”) to investigate and report on the cause of the problem with the television sets. In due course, M. Thuault was appointed.

The judicial expertise process thereafter expanded to include other parties. In September 1998, an order was made extending it to Miles Platts and in March 1999 Miles Platts applied for an extension to include Townroe which was granted. Townroe appealed against the order involving it but its appeal was dismissed by the Versailles Court of Appeal in June 2000 which ordered Townroe to pay the appeal costs.

M. Thuault’s terms of reference are set out clearly in the order appointing him and include investigating in a number of ways, providing “all technical and factual information apt to permit the competent court to rule on the liability possibly incurred” and quantifying “together the direct and indirect prejudice sustained by the Sagem Company, including the costs of various disbursements necessitated by the campaigns implemented by the Sagem Company to remedy or prevent such disorders”. He has produced a very detailed report.

In February 1999, during the currency of the judicial expertise process, Sagem issued substantive proceedings against Lecerf and Miles Platts in France. Very little information has been provided to this court or to the courts below about the substantive French proceedings. What there is derives from the Particulars of Claim in the English proceedings and a copy of the French writ.

The French writ asserts that it is established that the source of the trouble experienced with the television sets manufactured by Sagem is a defect in products supplied by Lecerf and seeks a ruling that Lecerf and Miles Platts are responsible for the damage thereby caused and jointly and severally liable to make good the entire loss suffered by Sagem and to pay Sagem the amounts it is liable to have to pay out to compensate third parties for loss and injury. Neither Miles Platts nor Lecerf has sought to make any claim against the other in the French proceedings. There has been no suggestion by Miles Platts that they will seek to do so.

The English Particulars of Claim say of the French proceedings that Miles Platts dispute liability, causation, loss and damage and also claim contributory fault on the part of Sagem. They allege that the cause of such damage as Sagem may prove was Sagem’s defective soldering of the pins and inadequate supervision of the manufacturing process.

The English proceedings began in September 2001.

Miles Platts’ claim against Townroe is in essence for damages for breach of contract and/or negligence in supplying defective electro-plated pins which Miles Platts allege were incorporated into Sagem’s television sets.

Against Lecerf, the claim as set out in the Particulars of Claim is for an indemnity, based on contract, against all Miles Platts’ liabilities in respect of the defective coils and arising from the French proceedings or alternatively, if Lecerf is not liable to indemnify Miles Platts, a declaration limiting the heads of damage in relation to which, in the event that Lecerf is liable to pay Sagem, Lecerf has a claim for an indemnity or contribution from Miles Platts.

The following provisions of the 1968 Brussels Convention are material to the appeal:

When a stay is sought under Article 21 and Article 22 as alternatives, it is logical to consider the application of Article 21 first. Article 21 is a mandatory provision by virtue of which, if the conditions set out in the article are satisfied, the court is obliged to order a stay. As the Master rightly held in this case, therefore, if it is established that the proceedings must be stayed under Article 21, there is no need to go on to consider Article 22 which is a provision incorporating a degree of discretion.

The Master held that Article 21 applied and stayed the English proceedings. The Judge overturned his finding. Townroe submits that the Judge was incorrect to do so. He should, they say, have taken the view that the judicial expertise process amounted to proceedings involving the same cause of action and between the same parties as the English proceedings and that a stay had to be imposed. Townroe did not, and could not, seek to argue that the substantive French proceedings were material for Article 21 because the parties were not the same, Townroe not being a party at all to those proceedings.

Townroe submits that the Judge had to look at the substance of the judicial expertise process and that if he had evaluated that properly, he would have found it to be a component of the substantive French proceedings. It points to the fact that the expert’s job was not only to gather evidence but also to reach conclusions and quantify loss and says that in pursuance of that he went into every aspect that was relevant to the final resolution of the dispute.

I cannot accept Townroe’s submission. The Judge’s conclusion that the existence of the expertise proceedings did not bring the case within Art 21 was correct.

It is common ground that the expert could not impose any final solution of the dispute upon the parties. If matters were not settled as a result of the report, there would have to be a separate substantive action where it appears that the expert’s report would probably carry very considerable weight but in which the court would have to arrive at an independent decision as to the merits of the case.

The role of the expert and the preliminary nature of the judicial expertise process can be seen clearly from the documents relating to that process, not least from the initial order appointing the expert which contains this preamble:

“Whereas legitimate grounds exist for preserving or establishing, prior to any court action, the proof on which the solution of the dispute may rely…”

before requiring the expert to provide “information apt to permit the competent court to rule on the liability possibly incurred”

Whilst it is, of course, the decision of the English court whether a particular foreign court process falls within the terms of Article 21, the English court is entitled to take into account, in forming its view, how the French court characterises its own procedure. The Judge therefore properly took account of way in which the Versailles Court of Appeal described the expertise process when it heard Townroe’s appeal against the extension of the process to it. It can be seen from the terms of that Court’s judgment that it did not see the expertise process as substantive proceedings but as interim proceedings in which there was an “investigative measure ordered, before any lawsuit, to protect evidence of facts on which might depend the resolution of a dispute” and that it classed the process as a protective or provisional measure within Article 24.

In the circumstances, the Judge was right to conclude that the French courts were never seised of a substantive dispute between Miles Platts and Townroe and that the expertise process was in fact within Article 24. Townroe accept that if proceedings are within Article 24 they cannot be relevant for Article 21. It therefore follows, as the Judge rightly found, that no stay fell to be imposed under Article 21 and the appeal against this ruling must fail.

It is helpful, in my view, to separate a consideration of Article 22 into two stages although in practice similar considerations may apply at both stages.

Consideration should first be given to whether the case falls within Article 22 at all. This depends upon there being related actions pending at first instance in the courts of different contracting states. There are undoubtedly first instance actions pending in France (the substantive French proceedings) and England. The relevant issue is therefore whether they are “related”.

Article 22 provides that actions are deemed to be related where they are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings. Townroe argues that the French and English proceedings fall within this description.

Miles Platts submits that there will be little duplication of issues in the two sets of proceedings. In the French proceedings, the only issue will be whether the pins are defective and what damages are payable. In the English proceedings, the issue will be whether Townroe defectively carried out the electro-plating of the pins concerned and what, if any, damages are payable. It suggests that the only overlap between the proceedings will be that the damages payable by Miles Platts in the French proceedings will effectively cap the damages claimable in the English proceedings.

Townroe does not agree with this analysis. It points out the similarities in the parties to the two sets of proceedings (although, of course, Sagem is not a party to the English proceedings and Townroe is not a party to the French proceedings). It submits that all or most of the relevant factual history on which the Court must rule is common to both proceedings and it is said that there is considerable scope for inconsistent rulings as to the underlying facts if the dispute is to be subject to litigation in both France and England. It is Townroe’s submission that the French court will have to identify the entire nature of any defects in the pins in order to rule on whether they are defective. It is submitted that this will necessarily bring into issue Townroe’s workmanship, if these were in fact pins they supplied.

Townroe went so far as to submit that if Miles Platts were to win its action in England, there would inevitably be irreconcilable judgments in England and France. This argument has its foundation in the forecast that the French court is very likely to adopt the expert’s report which it is said exonerates Townroe from blame with regard to the pins whereas success against Townroe in the English court would mean blame did attach to Townroe. In evaluating that argument, it is important, however, to note precisely what the expert says about Townroe which is that on the evidence he had received about Miles Platts’ arrangements for having pins plated, the defective pins did not come from Townroe in the recent past so, the expert concluded, the product supplied by Miles Platts to Lecerf either incorporated Townroe pins which were beyond their guarantee period and for which Townroe could not therefore be held responsible or the pins had come from somewhere else.

In my view, Article 22 is not concerned with the technicalities of litigation and the issues which theoretically may arise but with the likely reality of the proceedings which are pending. In this respect, I accept (as did the Judge) the submission of Miles Platts that the issue in the French proceedings is not likely to go further than whether, as a matter of fact, the pins supplied to Sagem by Lecerf (and to Lecerf by Miles Platts) were defective. It will not be necessary to examine how they came to be defective, whether as a result, for example, of the plating process or overlong storage on the shelves of Miles Platts or Lecerf. It is apparent that there may be a further argument between Sagem on the one hand and the other parties on the other in respect of Sagem’s contribution to the problem, for example by failure of their quality control, and one can see that there may possibly also be argument about the extent of Sagem’s resulting damage and the liability of Miles Platts and Lecerf for that.

I observe that in relation to the broad issue of whether the pins were defective and, if so, the role that played in the television fires and the amount of Sagem’s resulting loss, Miles Platts, Lecerf and Townroe have a complete unity of purpose. It is in the interests of all three companies that liability to Sagem is restricted as far as possible and that will be the focus of the French proceedings. Where their interests divide is when it comes to the attribution of blame as between Miles Platts, Lecerf and Townroe. This argument appears likely to focus upon whether the defective pins were handled by Townroe at all and, if so, the condition they were in on leaving Townroe and what happened to them between that point and being supplied to Sagem as well as involving, no doubt, an examination of the contractual arrangements between Townroe and Miles Platts. Those are the matters raised by the English proceedings.

In the circumstances, the Judge was right in my view to conclude that an Article 22 stay should not be imposed. Analysed closely, the reason for this is that the proceedings are not so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments and so discretionary issues never arose. The Judge appears to have reached his conclusion on a broader basis in which he evaluated together the issue of whether the proceedings were “related” and the factors relevant if the court went on to consider a stay as a matter of discretion. I can see that in some cases this may lead the court into error but in this case, in my view, it did not invalidate the conclusion the Judge reached. He did not need to consider the question of discretion at all but, having done so, it is not surprising that it led him to conclude that a stay should be refused given that the factors relevant to the issue (which is not, I emphasise, tantamount to an exercise in considering which is the convenient forum for this litigation) included the following:

It follows that the appeal against the Judge’s refusal of a stay under Article 22 must also be refused.

For these reasons, I would dismiss Townroe’s appeal in its entirety.