The Law Debenture Trust Corporation Plc v Elektrim SA & Anor

I now deal with the claimant's application for expedition of this action, with the court to give appropriate directions in support of the requested expedition. The case that is put forward in favour of expedition arises out of the fact that Elektrim, a Polish company, is presently in the process of bankruptcy proceedings in Poland and the particular type of bankruptcy proceedings in question, involve the company, through its administrator, proposing to creditors a composition under which they will be paid less than the full amount of the debt and there will be a period of postponement before they are paid that percentage of their debt.

The way in which matters are to be arranged in Poland, as has been explained to me, is that there will be a vote of the creditors, whose names have been put upon a list of creditors, and there has to be a certain percentage in terms of number of voting creditors, and a certain percentage in terms of value of the debts admitted on to the list of creditors.

The significance so far as this claimant is concerned is that, if the present proceedings are not determined by the time of the creditors' meeting at which the vote will be taken, then it seems very likely indeed that the claimant will not be able to vote at that meeting. I have had explained to me in some detail the procedures whereby the list of creditors is settled and the decisions which are made by the administrator, by a judicial commissioner and by the bankruptcy court. There appears to be some degree of consensus that, if these proceedings in England remain undetermined by the time of the meeting, the chances are that the claimant will not be eligible to vote. The consequence for the claimant will be that the vote will be taken and the result will be binding on the claimant, although the claimant has not been able to participate in that process. I should say that the amount of the claim is a very substantial one, and if it were to succeed and if the claimant were to be a creditor for the amount of the claim, then its vote may have very considerable weight in counting votes for and against any proposal.

The claimants say the disadvantage to them in these proceedings being delayed or a determination being delayed is even more grave if they are not on the list of creditors and if the composition of creditors is approved at the meeting of creditors, then the assets of the company can be distributed to creditors on the list to the exclusion of the claimant, and so, if at a later date, the claimant succeeds in these proceedings and obtains a substantial judgment, that will be a judgment against a company with little or no assets and therefore a judgment which is not worthwhile.

Against that background, the claimant has identified various dates in the bankruptcy procedures and has submitted to me that there could very well be a vote taken by creditors as early as March 2009, and it is therefore suggested it would be highly desirable that the trial of these proceedings should lead to a determination at first instance in good time. What is proposed is there be a trial in December, which would be likely to lead to a judgment before the date in March 2009.

This application for expedition is not supported by the first defendant. Indeed, it is strenuously opposed. The first defendant makes a number of points. The first is to question the claimant's timetable as to the operation of the bankruptcy procedures in Poland. I have had a rival timetable put forward and that leads to a possible date for a creditors' meeting in a period which begins with October 2009 and ends in April 2010. It is right to say that what one is attempting to do is to predict future events, future events which involve third parties, furthermore events which are not under the control of the court and future events in a foreign jurisdiction where the court does not have any experience of its own to bring to bear. I think what one might say is that the period of risk seems to begin in around March 2009 and the degree or scale of risk increases the further past March 2009 that one goes, without a determination of the issues in this case.

The second point made by the first defendant is that this application for expedition is a remarkable one, given the procedural history of this litigation to date. The action itself began as long ago as December 2005. The first defendant points out the different ways in which the claimant has put its case. It is only today when I gave permission to amend that a significant allegation has entered or re-entered the case, and it is only from today onwards that in these English proceedings the first defendant has to gear up to meet a far-reaching, significant case, one involving a serious allegation and about a large sum of money.

It is also pointed out by the first defendant that this question of the effect of the timetable in the Polish bankruptcy proceedings really dates from August 2007, that is some eleven months ago, but it was only on 18th July 2008 that it seemed to have occurred to the claimant that the case was one of some urgency, indeed, one which justified them seeking an order for expedition from the court.

I have to say that there is a great deal of force in those submissions on behalf of the first defendant. Of course, whether the claimants deserve expedition is something which affects the court and it affects all other litigants in the queue for their cases to be heard. It only particularly affects the first defendant if the order which I were to make caused prejudice to the first defendant. If the order which I were to make did not cause any prejudice to the first defendant, then the first defendant has no particular locus to oppose expedition and to draw my attention to and emphasise the claimant's earlier different attitude to the timing of these proceedings. So I turn to the third matter which the first defendant relies upon, and that is to say that expedition with a trial in December and directions in support, would cause very considerable prejudice, indeed injustice, to the first defendant in meeting these claims.

For that purpose both sides have taken me to the amended pleading. I have been given some idea of what is involved in the issues that have arisen and may arise. The difficulty in forming a view about that is that we have not yet had a Defence to the new allegations, and so the court is in the dark and is guessing or is speculating, when trying to predict what might emerge, what might be said and what might arise for trial. Certain it is that one can paint a very, very bleak picture indeed in terms of the burdensome character of defending these proceedings, of the huge amount of work that needs to be done in terms of disclosure, witness statements and expert evidence, and of the very protracted trial that will ensue. In the end I have decided that the fair thing is to settle on directions, which do not take the bleakest and most pessimistic view as to what might be involved in these proceedings, but equally identify periods for things to be done which could, reasonably, be regarded as realistic and workable. I cannot, by any choice of periods for directions, provide for a trial in December. If I were to impose directions which led to a trial in December, I am certain that I would impose impossible working conditions on the parties to this litigation. I can foresee without difficulty that those sorts of directions would not work in practice, would not be complied with and one would end up with an application to move the trial, which would inevitably succeed.

I think it is also right to say that, whereas the court dislikes delay and favours expedition, and whereas the court does see there is an element of risk for the claimant in a lengthy delay in a determination in this case, that has to be put against the requirements of other litigants and the history of this litigation, which is not unduly impressive, judged from the point of view of earlier speed.

In those circumstances, I have settled on a timetable starting from the delivery of a Re-amended Particulars of Claim and leading to a trial. I will now identify what that timetable is. The order which I make will not be made today as such, it will be made in the course of next week when the precise final version of the Re-amended Particulars of Claim is approved and an order made giving permission for that re-amendment. That order will provide for the Re-amended Particulars of Claim to be served not later than 11th August 2008, that is a Monday. The dates I am going to pick, as I will say in a moment, are all Fridays, giving the full week in each case.

When I specify a date and say that something should be done, I am requiring that thing to be done by 4.30pm on the specified date. So Amended Particulars of Claim 11th August 2008, the Defence, 12th September 2008. I will direct that the Defence should plead the first defendant's case as to those assets which were owned by the first defendant at the relevant valuation date. If anyone has a better form of words for my phrase "the relevant valuation date", I will gratefully adopt it. That direction about stating the defendant's case as to assets owned, does not include a requirement that the defendants say anything about the value of the assets. They may or may not, but they are not specifically being required to do so at that date, at any rate.

Following such a Defence on 12th September 2008, the Rely is to be served by 26th September 2008. Also by 26th September 2008, I will require the defendant to serve a further document which identifies its case in relation to the values of the assets which are accepted by the defendant to be the assets of the first defendant at the valuation date.

Following those pleadings, I will require disclosure in the ordinary way by 7th November 2008, with inspection in the ordinary way by 14th November 2008. Witness statements are to follow by 12th December 2008, and expert evidence, allowing for the Christmas vacation, I require that to be exchanged by 6th February 2009. There should be a case management conference arranged, if this can be fitted in by the court, in the week commencing 13th February 2009 and I will say that the trial should take place in the term which begins on 21st April 2009. It can not begin before that date, but it can begin on that day or in the term so soon as it can be arranged. A trial estimate is only of the most general and vague kind at this stage, but to help listing, I would indicate that the trial could be anything between ten and twenty days.

One further matter and that is an indication from the first defendant that it may wish to apply for a stay on the grounds that there are related actions in another jurisdiction, namely Poland. If there are such related actions, then the court has a discretion as to whether to grant a stay of these proceedings. It has been agreed that, if an application for such a stay is to be made, it should be made by a date in the middle of September. The parties had agreed 15th September. As I am indicating that the Defence is to be served by 12th September, unless I hear to the contrary, I will indicate that the application for the stay should similarly come by 4.30pm on Friday, 12th September 2008.

I am not today providing for the consequences of such an application being made within that timeline. In particular, I am not today suspending the directions in the possible event of such an application being made. There has been discussion between the parties in court as to what the appropriate response might be at that time, but I need not say anything about that. The parties understand each other in that respect.

I think I have now dealt with the question of principle as to how this matter should go forward, and the detail as to the time limits the parties are to comply with. I recognise that neither side has got what it wants. That is often the case. I think that there are quite strong competing arguments and I have attempted to resolve them in a way that is the least unjust to all the interests concerned. That is the decision I have reached.