Saulawa & Anor v Abeyratne & Anor

CHIEF MASTER MARSH: This is my judgment on the hearing today of two applications. The first application is made by the claimants, by which they seek permission from the court to bring these proceedings. They either seek that permission retrospectively or, if the court is unable or unwilling to grant permission retrospectively, they seek permission to bring fresh proceedings in the same form as this claim. Of course, if retrospective permission is not granted, it naturally follows that this claim will be dismissed.

The second application is made by the defendants, under which they seek to strike out the claim pursuant to CPR 3.4(2)(a) and (b), or alternatively (c). However, the main thrust of the hearing today concerns not the application to strike out but whether permission should be granted on the claimants’ application.

The need for permission arises from CPR 38.7. It is common ground that the rule is in play. Put shortly, the rule requires a claimant who discontinues a claim to obtain permission to bring a fresh claim that arises out of the same facts or substantially the same facts as those in the earlier claim. It follows that the first matter I need to deal with is the earlier proceedings and to explain how they were disposed of, because that will provide the relevant context to today's applications.

The earlier proceedings were brought in 2015. They concerned the beneficial ownership of shares in the second defendant ("PGI"). The claimants' case in the 2015 claim was that the first defendant held beneficially for the first claimant the entire issued share capital of PGI. It is common ground that PGI was incorporated by the first defendant and that he is a director of that company. The claimants say it was always intended that the company PGI would be owned beneficially by the first claimant.

That claim was due to come on for trial before Barling J on 15 October 2015. The day before the trial the parties were able to agree terms in the form of a document entitled "Interim Settlement Agreement", and that agreement was signed by the parties to the claim. There was no suggestion at the time the settlement agreement was signed that the first defendant lacked authority to enter into the agreement on behalf of the second defendant.

The parties agreed the form of an order and on 15 October 2015,Barling J approved a consent order which, after reciting that the claimants and the defendants had reached terms of settlement, ordered by consent that the claim was discontinued with no order for costs. Thus it was an entirely conventional disposal of the claim that obviated the need for a trial to take place. The issues between the parties were not resolved by the court. Instead, the parties agreed terms which took the place of a resolution of disputed facts and legal issues.

The Interim Settlement Agreement is a document about which I have expressed views on a previous occasion. That is because the claimants applied to set aside the order dated 15 October 2015 at a hearing before me on 4 July 2018 on the basis that there was no consideration for the interim settlement agreement and thereby the order should fall away as there was no proper basis for it. I gave judgment on that occasion dismissing the application and concluded that the Interim Settlement Agreement was valid, as was the order dated 15 October 2015.

The Interim Settlement Agreement, as I have previously remarked, is a slightly unusual agreement. It concerns two vessels in which the parties were interested. The first, the Prime Queen, was a vessel that had been arrested in Nigeria and which remained under arrest at the time of the agreement. The second vessel, named the Prime Lady, was as part of the settlement agreement to be sold. From the proceeds, the sum of £500,000 was to be paid.

Clause 1.5 of the agreement made provision for payment of £500,000 in the event of the sale of the Prime Lady. That sale never took place and the payment was not made. Clause 1.6 provided as follows:

A point arises for the purposes of today, put forward by Mr Umezurike who appears for the claimants, that the second part of clause 1.6 is void. It is not, however, a submission which, to my mind, goes to the heart of the matters I have to resolve today. He makes the submission to support his case that the claimants are entitled to apply to the court today for permission to make this claim. That, however, is not in contention. It is common ground that the application can be made.

I would say, however, very much in passing, that the basis upon which he submits that the second part of the clause is invalid does not to my mind have any force whatever. He relies upon a decision in the case of Aribisala v St James' Homes (Grosvenor Dock) Ltd [2007] EWHC 1694 (Ch), which is a decision of Mr Steinfeld QC (sitting as a deputy High Court judge). That case concerned the interaction between contractual terms and the provisions of the Law of Property Act section 49(2). The deputy judge held that the terms of the contract had the effect of ousting the court's jurisdiction under the Act. However, that is not a point which is before the court today. There is no statutory provision that is in play in these proceedings and there is nothing that prevents the parties agreeing as a matter of contract that they will not bring further proceedings. Furthermore, it seems to me that the provisions of clause 1.6 operate perfectly satisfactorily without the second part of the agreement. They are two sides of the same coin. The first part of clause 1.6 amounted to an agreement between the parties that the 2015 claim was to be settled, all claims being waived, and therefore amounted to a final disposal. The second part went on to say that no further claims of a similar nature would be brought. But it follows from an agreement to waive all claims that there would be no entitlement to bring similar claims in the future.

Mr Umezurike submits that the claimants are entitled to make this application, and he submits that the correct approach is that indicated by Briggs LJ in Hague Plant Ltd v Hague & Ors [2014] EWCA Civ. In that case Briggs LJ rejected the notion set out in the notes of the then-current edition of the White Book that it was necessary to demonstrate exceptional circumstances before the court would grant permission to bring a claim arising out of the same or substantially the same facts, where the previous claim had been discontinued. He went on to say that the applicant must show that if there is sufficient explanation for the reintroduction of the same claim that will overcome the court's natural disinclination to permit a party to reintroduce a claim which that party had decided to abandon. I accept that that is the proper approach for the court to apply today.

Mr Umezurike helpfully went on to suggest the way the court should consider the matter was to consider the relevant conduct of the parties, to consider prejudice and to consider whether there is any indication of harassment or other matters. In short, it seems to me that it is right that the court should look at the circumstances in which the discontinuance took place; but the court is also entitled to look at the position in the round, to have regard to the interests of justice and also to have regard to the not unimportant factor of the proper use of court resources.

Mr Umezurike has also submitted, and I accept, that the court may impose conditions on the claimant seeking to bring fresh proceedings. Indeed, he has helpfully (and I think realistically) put forward his application on the basis that the claimants would accept a condition imposed by the court that the claimants must pay the defendants' costs of the 2015 claim as a condition of permission being granted. He suggests that the court could direct that those costs are the subject of a detailed assessment if not agreed. He also said that there should be no bar to the defendants, if permission is granted, seeking security for costs. I did not understand him to suggest that security for costs was in fact being offered, merely that the court could consider on the usual principles whether security for costs should be ordered. In effect, that does not seem to me to be imposing any additional condition, merely leaving the position open for the defendant.

The principal submission put forward on behalf of the claimants, as it seems to me, is that it is said that it is important for a determination to be given about the beneficial ownership of PGI. No such determination has been given. It is said that it is in the interests of justice for that issue to be determined.

Mr Umezurike also sought to rely on Article 1 of Protocol 1 of the European Convention on Human Rights, but I am bound to say that that is not a submission which I found easy to follow and is not a matter which I propose to examine any further.

The defendants' position, put shortly, is as follows. First, the defendants say that, the court having determined that the consent order and, importantly, the underlying agreement are valid, there is simply no basis upon which it could be proper to permit these proceedings to be continued or prospective permission to be granted.

Secondly, the defendants say that there are very real and important issues of conduct that are important for the court to take into account. They point to the acceptance by the claimants that the real purpose that lies behind these proceedings is the desire to obtain control of PGI for the purposes of obtaining the benefit of an arbitration award made in favour of PGI against the second claimant, Aquashield. They submit that the plain purpose of this application is to undertake a collateral attack on the award of the LMAA arbitration tribunal where an award was made in favour of PGI against the second claimant. It was accepted by the arbitral tribunal that it could not make any determination concerning the beneficial ownership of PGI, but the Tribunal was cognisant of the issue and proceeded on the basis that the 2015 agreement and discontinuance was determinative of the issue.

The full background to today's proceedings is in fact a complex one. As the interim settlement agreement indicates, there are arrest proceedings in Nigeria concerning the Prime Queen. That vessel remains under arrest. The Interim Settlement Agreement itself did not lead to the Prime Lady being sold with payment to PGI, and it is right to record that under clause 1.7 of the Interim Settlement Agreement, it was expressly acknowledged that if payment of £500,000 was not made it was open to PGI to re-activate the then-existing arbitration claims. That is indeed what has happened. It is no coincidence that the final arbitration hearing took place on 25 January 2018, leading to an award in favour of PGI on 8 February 2018. The 2018 claim was of course itself issued on 25 January 2018, timed clearly to coincide with the arbitral hearing.

The defendants also invite the court to have regard to the claimants' failure to pay two costs orders. The first is a costs order dated 26 April 2018. This claim came before Deputy Master Cousins on that date for the hearing of the two applications I am dealing with today. The deputy master expressed the clear view that it was necessary for the claimants to apply to set aside the consent order as a precursor to the hearing of their application, and it was that application which came before me in early July. He adjourned the hearing of the applications and ordered the claimants to pay the costs and summarily assessed them at £36,115. That sum was payable within 14 days. No application for permission to appeal was made to the deputy master, but I understand that subsequently, and out of time, such an application has been made and, as part of the application for permission to appeal, there is an application for a stay of the order. As of today, there is no grant of permission and no stay, and therefore the order for costs stands.

The second order for costs relates to the hearing on 14 July 2018, when the claimants were ordered to pay the sum of £24,000 within 14 days. That period has expired without the costs being paid. I am told by Mr Umezurike today that although no application for permission to appeal was made at the time, and no application for permission has yet been made, it is intended that an application for permission will be made.

My conclusions on the hearing of these applications can be stated quite briefly. First, I have, as I have indicated, already determined (and there is no appeal against this decision) that the interim settlement agreement and the order are both valid. In those circumstances it is difficult to see why the court would contemplate permitting the claimants to reopen the very matters that were before the court in 2015 when they reached an agreement that amounted to a final resolution of those claims.

It is, I think, of real significance that the settlement was reached the day before a trial was due to take place. The parties, with the benefit of proper advice from counsel and solicitors, entered into that agreement. It had the effect of preventing the trial going ahead. The parties made the decision to settle in order to avoid the risks of litigation which are well understood. It is very unattractive indeed that some three years later a party should seek to re-litigate matters which were resolved by agreement on that earlier occasion.

The second matter which is to my mind of considerable importance is that the parties have behaved since 14 October 2015 in a manner which is entirely inconsistent with the case that the claimants now wish to bring. The settlement agreement itself was premised on the issue as to ownership having been resolved by, had the Prime Lady been sold, PGI receiving £500,000, or alternatively (as in fact has happened) PGI being permitted to continue the arbitration proceedings.

It is completely contrary to the agreement reached between the parties that upon an arbitral award being obtained, the claimants should be entitled to reinstate their claim and assert that they are entitled to the benefit of the award. Indeed, from October 2015 and up to 25 January 2018, there has been no attempt to reinstate the proceedings, and the parties have continued on the basis that the agreement is a valid one. No formal estoppel is sought to be relied upon, but it is entirely contrary to the passage of the last nearly three years that the issue of ownership of PGI should now be reinstated.

The third matter which is in my mind is that I am in no doubt that these proceedings are intended to be and indeed are a collateral attack on the arbitration award. They are therefore entirely plainly an abuse of this court's process. That provides a cogent ground for refusing the application in itself, and of course, as a mirror image of that point, provides a cogent reason for striking out these proceedings.

The abusive nature of these proceedings can be seen from the timing of their issue, without the need to refer to other matters. There is no, in my judgment, proper basis upon which permission should be granted. I accept the defendants' submissions that, even with payment of their costs of the 2015 proceedings, the reinstitution of the issues of ownership would be highly prejudicial to them.

I make one final point which is of, I think, lesser significance. It does seem to me that the terms of CPR 38.7 do not permit the court to grant permission to bring proceedings retrospectively. It seems to me that the language of CPR 38.7 is itself prospective. Reference is made to making another claim, and it seems to me the intention is that the application must be made prior to such a claim being issued. There was certainly some support for that view in the notes to ‘Civil Procedure 2018’ (the White Book), where it is said the rule is silent about how the claimant seeks permission and therefore the general rules in Part 23 apply. It is said the application should be made on notice with evidence. I infer from the note that the application would be made before the fresh proceedings were issued by application notice.

I will therefore dismiss the claimants' application. I will also make an order under the defendants' application that the claim is struck out on the basis that it is an abuse of the court's process.

I am now dealing with the costs of the hearing today. It is right to bear in mind that a costs order has already been made. That is the order of Deputy Master Cousins made on 26 April 2018. The order for costs today must not duplicate the previous order.

The first point to deal with is whether there should be a costs order in favour of the defendants. Such an order is not opposed.

The second consideration is whether costs should be on the standard basis or the indemnity basis. I am persuaded that this is an appropriate case to award costs on the indemnity basis. The threshold criterion is whether it can be said that the circumstances take the case out of the norm. I have concluded that the attempt to resurrect these proceedings was a conscious abuse of the court's process, and it seems to me that is sufficient on its own to take matters outside the norm.

The third consideration is as to the summary assessment. I accept the certificate that is on the statement of costs and that these costs do not duplicate. It is right that the hearing has been shorter than had been budgeted for, and some adjustment is needed for that. It is entirely proper, as I indicated on the previous occasion, that Mr Deane attends personally, albeit that involves a trip from Edinburgh.

Overall, I consider that a relatively small adjustment is needed, bearing in mind that costs assessed on the indemnity basis involve doubts being resolve in favour of the receiving party. I will therefore summarily assess the costs at a figure of £14,500 plus VAT, which is £14,500 plus £2,900, totalling £17,400.

I am unwilling to grant permission to appeal either in relation to the orders today or the order on 4 July 2018. In both cases I consider that there is no real prospect of an appeal succeeding and no other compelling reason why permission should be granted. There is, in my judgment, no reason to stay the costs orders, and therefore I refuse the three applications that are made.