Punjab National Bank (International) Ltd v Boris Shipping Ltd & Ors

There are before me a number of applications, as follows:

The applications as against the 5^th, 6^th and 7^th Defendants have been referred to as the first summary judgment applications, whilst the applications against the other Defendants have been referred to as the second summary judgment applications. I will refer to the two sets of applications in this way in this judgment.

The First Defendant (“Boris”) is a company registered in the Marshall Islands and the Second Defendant (“Jarc”) is a company registered in St Vincent and the Grenadines. To the best of PNB’s knowledge and belief, Boris and Jarc carried on business purchasing vessels to be broken up in shipyards in India and sold as scrap metal. In 2012 and 2013 they both approached PNB in order to obtain overdraft facilities for working capital requirements, supported by personal guarantees by the third to eighth Defendants, all of whom are connected to Boris and/or Jarc and related to each other: the third and sixth defendants are brothers, the eighth and seventh defendants are their respective wives, and the fourth and fifth Defendants are the respective sons of the two couples.

By a Facility Letter dated 15 August 2012 and a facility contract dated 6 March 2013 (“the Boris Contract”) (as subsequently renewed by Facility Letters dated 27 March

By a Facility Letter dated 27 June 2013 and a written facility contract dated 28 June

The relevant terms, in summary, of the Boris Facility Agreement and of the Jarc Facility Agreement are set out in paragraphs 8 and 21 respectively of the Particulars of Claim. Paragraph 8 of the Particulars of Claim states as follows:

“Pursuant to the Boris Facility Agreement, PNB and Boris agreed (inter alia) that:

a.

An overdraft facility for working capital requirements of USD$10,000,000 would be made available to Boris, subsequently increased to US$15,000,000 and then revised back to US$10,000,000 (“the Boris Overdraft Facility”);

b.

The Boris Overdraft Facility was repayable in full in demand or on the last day of the renewal period (clause 6.1 of the Boris

Contract);

c.

Interest on unpaid sums borrowed under the Boris Overdraft Facility was to accrue daily and be payable quarterly at a rate of 3 months LIBOR plus 6%, subsequently revised to 3 months LIBOR plus 5.5% (clauses 8.1 of the Boris Contract and the

Paragraph 21 is in exactly similar terms, save that the references to Boris were instead to Jarc.

In summary, therefore:

As confirmed by Mr Gandhi at paragraphs 9 to 12 and 19 to 22 of his first witness statement and evidenced by the account statements exhibited thereto:

By separate guarantees contained in deeds dated 20 May 2013, the third, fourth, fifth and sixth Defendants (“the Boris Guarantors”) each separately indemnified and guaranteed PNB in respect of the Boris Facility Agreement to ensure that PNB continued to make the Boris Overdraft available (“the Boris Guarantees”).

Likewise, by separate guarantees contained in deeds dated 28 June 2013, the sixth, seventh and eighth Defendants (“the Jarc Guarantors”) each separately indemnified and guaranteed PNB in respect of the Jarc Facility Agreement to ensure that PNB continued to make the Jarc Overdraft available (“the Jarc Guarantees”).

The Boris and Jarc Guarantees are all governed by English law (clause 20.1 of all guarantees) and they contain the following identical provisions regarding the “Guaranteed Obligations” (defined in clause 1.1 as all monies, debts, and liabilities of any nature from time to time due, owing or incurred by Boris/Jarc to PNB on any current or other account under or in connection with any present or future banking or credit facilities provided by PNB to Boris/Jarc):

As Boris and Jarc Guarantors the third to the eighth Defendants all irrevocably appointed Mr Steven Wilkinson as their agent in the UK to receive service of any proceedings in England (clause 20.3 of the Boris and Jarc Guarantees).

The final signature page of each of the Boris and Jarc Guarantees contains a signed statement by a solicitor confirming that the relevant guarantor has been provided with independent legal advice as to the meaning and effect of the contents of the guarantee. The statement also confirms the belief that the document has been executed voluntarily and with understanding of its meaning.

The Boris and the Jarc Facility Agreements were subject to the jurisdiction of the English Court (clause 17.8 (2) of the Boris and Jarc Contract) and the Boris and Jarc Guarantees are subject to the exclusive jurisdiction of the English Court (clause 20.2 of each of the Boris and Jarc Guarantees).

Notices demanding repayment of the outstanding balances under the Boris and Jarc

Letters demanding repayment were also sent to each of Boris Guarantors and the Jarc Guarantors on 30 January 2017 by post to their last known address in India; by email to their last known email address; and to Mr Steven Wilkinson by post and by email. No response or repayment was received and Letters before Action were therefore sent to both the Boris and Jarc Guarantors on 6 February 2017.

As the sums due under the Boris and Jarc Facility Agreements remained unpaid, this claim was issued on 2 March 2017.

Although both Jarc and Boris filed Acknowledgments of Service indicating that they wished to contest the jurisdiction of the Court, no such application was subsequently made nor was any defence forthcoming and default judgment was granted against both on 25 May 2017. As confirmed by Mr Kapadia at paragraph 39 of his first witness statement, although steps were subsequently taken to enforce the judgment debt these have been to no avail and no money has been recovered to date.

A letter was received from Boris and Jarc on 13 November 2017, which recognises that sums are indeed outstanding and seeks to explain why these have not been repaid.

A claim form was issued against all the Defendants on 2 March 2017. I understand from paragraph 50 of the first witness statement of Mr Kapadia that a copy of the claim documents was sent to the process agent named in the guarantees, and I have seen a copy of the proof of delivery from the Royal Mail evidencing delivery of those documents. As I have noted, judgment in default was obtained against Boris and Jarc on 25 May 2017.

Steps were then taken to serve the claim form on the various guarantors pursuant to the provisions of the Hague Convention on the Service Abroad of Judicial and Extra Judicial documents in Civil and Commercial Matters 1965 (“the Hague Convention”). It will be necessary for me to make further reference to this Convention in due course but, for ease of reference, the most relevant provisions of the Convention for present purposes are the following:

India has entered an objection under Article 10, with the result that documents must be served in India via the central authority. The UK, for its part, has made a declaration within Article 15.

The claim forms and supporting documentation were delivered to the FPS office at the High Court on 7 March 2017. On 23 March 2017 the requisite N224 forms were submitted to the FPS. The FPS acknowledged service of these documents on 27 March 2017.

An application was made to the Commercial Court on 4 August 2017 to extend the validity of the various claim forms, and an order granting an extension up to 1 March 2018 was made on 10 August 2017.

The Claimant began receiving notifications as to service towards the end of December 2017.

As regards the first summary judgment application, therefore, the evidence, in my judgment, quite clearly establishes that service was effected, in accordance with the provisions of the Hague Convention, on the 5^th, 6^th and 7^th Defendants, on 6 July 2017.

The period for acknowledgment of service expired 37 days after the service of the Claim form. Thus, in relation to these Defendants, the time expired 37 days after 6 July 2017. This means that time expired on about 15 August 2017.

At that point, it was open to the Claimants to apply for default judgment. However, the Claimants did not wish to do so, since they wished, responsibly, to obtain a judgment on the merits, involving a judicial determination. Accordingly, they issued an application for summary judgment against the Defendants who had been validly served pursuant to the Hague Convention (ie the 5^th, 6^th and 7^th Defendants) on the dates set out above.

The Claimants then had to meet two requirements.

CPR 24.4(1) provides as follows:

“(1)

A claimant may not apply for summary judgment until the defendant against whom the application is made has filed – (a) an acknowledgment of service; or (b) a defence, unless – (i) the court gives permission; or (ii) a practice direction provides otherwise.”

As confirmed by Andrew Baker QC, as he then was, in F BN Bank (UK) Ltd v Leaf Tobacco A Michailides SA [2017] EWHC 3017 (Comm) at [17] and again by Bryan J in The European Union v The Syrian Arab Republic [2018] EWHC 1712 (Comm) at [62], there is no requirement for a party to have obtained permission under CPR 24.4(1) before issuing a summary judgment application, rather the two applications may be made in the same notice.

As to the principles relevant to the exercise of the Court’s discretion, the guidance which can be derived from recent authorities is helpfully listed at paragraph 61 of the judgment of Bryan J in The EU v The Syrian Arab Republic, and is as follows:

It was accepted, in my view rightly, by the Claimants that the application notice was a judicial document to which the Hague Convention applies. Accordingly, on the face of things, the application notice had again to be served in accordance with the provisions of the Hague Convention.

The Claimants, however, chose at this stage, in the light of their previous experience with service of the claim form, to apply to the Court for an order for service by alternative means, under CPR Part 6.15. That application was made on paper and without notice to the Court. The judge, Knowles J CBE, granted the application and made the order sought. However, the judge did not have his attention drawn to a line of authority dealing with the interplay between orders for substituted service and the Hague Convention.

This interplay was considered by Popplewell J in the case of Societe Generale v Goldas & Ors [2017] EWHC 667 (Comm), at paragraph 49(9). That summary was affirmed on appeal [2019] 1 WLR 346 and is set out below:

Cases involving service abroad under the Hague Convention or a bilateral treaty:

The question therefore arises of whether the judge would have made the order that he did had he had his attention drawn to these authorities, and whether, as the Claimants

In my judgment, none of these matters amounts to exceptional circumstances within the meaning of the authorities to which I have been referred. Dealing with each in turn, and concentrating at this stage on the position of the relevant Defendants (ie the 5^th, 6^th and 7^th Defendants):

Accordingly, I conclude that the order for service by alternative means should not have been made, and I set it aside. I am quite satisfied that, had the judge been directed to the relevant authorities, he would not have made the order. That in turn means that the service in fact effected in reliance on that order is not valid.

There is also evidence before me (in the form of witness statements of Mr Kapadia, a senior associate at the Claimant’s solicitor and Mr Gandhi, a banker employed by the Claimant) that proves that the Claim documents were served in England personally on the third Defendant. However, as I understand it, the application notice was not in the documents so served; and the fifth Defendant, although at the meeting, was not served, although he will have thereby received notice of the claim documents with which he had already been served in India.

I have also considered whether I should make an order now for service of the application notice by alternative means in the future. That involves consideration of the question of whether there are now shown to be exceptional grounds, viewed as at today’s date, which justify an order for such alternative service. The further grounds, as at today’s date, which might be said to be exceptional in relation to these Defendants are the fact that the sixth Defendant has now responded to the document; and the fact that the fifth Defendant has taken part in settlement discussions.

Again, I do not think that these points amount to exceptional circumstances justifying service other than in accordance with the Hague Convention in India on these two Defendants. Each might be relied upon in support of the submission that service is not necessary, but no such application is made.

To summarise, therefore, in relation to the first summary judgment application:

Accordingly, it is open to the Claimant to continue its application for summary judgment but it must serve that application. It may choose to do so in the jurisdiction, in reliance on the contractual agreement in relation to service; or outside the jurisdiction, pursuant to the Hague Convention. It will be a matter for the Claimant as to which course to take.

I turn to the second summary judgment applications.

The start point here is the fact that, unlike the claim forms in relation to the 5^th, 6^th and 7^th Defendants, the claim forms in this regard were not successfully served in accordance with the Hague Convention. In this regard:

Efforts to serve in accordance with the Hague Convention continued, despite this, but in addition an application for service by alternative means was made by Knowles J along with the application to serve the application notice against the 3^rd, 4^th and 8^th Defendants which I have considered above. As at the date of that application, there were, in my judgment, no exceptional circumstances which would justify the making of an order for service of the Claim Documents by alternative means. In this regard, I would reiterate what I have said above. The only difference between the position of the Defendants who have been served with the claim form and those who have not is that service of that document has not yet been successful. It was argued before me that these Defendants are evading service, based on the second Affidavit of Service. I am not convinced that this, at least at present, amounts to an exceptional circumstance, although it may become so.

Returning to the position under the Hague Convention, then the following further events occurred:

This leads to the necessity to consider Article 15 of the Hague Convention, as set out above. In this regard, the Claimant submits that:

I will deal with each of these submissions in turn.

As to the first limb of Article 15, in my judgment the following needs to be shown:

Overall, I would be prepared to hold that, despite the fact that the service here was not effected by the Indian central authorities, it suffices to satisfy the provisions of Article 15 of the Hague Convention. However, I do not base my decision on this. Instead, I turn to the second part of Article 15.

Under this heading, the following must be established:

In my judgment, the requirements set out above are here clearly satisfied. The documents have been sent to the FPS; a period of about 12 months has elapsed since then; and no certificate has been obtained, despite reasonable efforts to obtain such.

It would be open therefore to me to give judgment. However, it is also open to me to conclude that the claim documents have indeed been served, and thus that it is now open to the Claimant to seek summary judgment. I do so conclude.

Since the hearing of this matter, and whilst I was finalising this judgment, I am informed that the Claimant’s solicitors received (on 30 April 2019) a notice from the FPS dated 29 April 2019, confirming that the 3^rd Defendant had been served in accordance with the Hague Convention on 12 December 2018. The period for acknowledgment of service, which was 37 days, expired on 18 January 2019.

Whilst this reinforces my view that the 3^rd Defendant has been validly served, it does not detract from my conclusion as set out above, namely that as at the date of the hearing, I was entitled to conclude, pursuant to Article 15 of the Hague Convention, that the 3^rd, 4^th and 8^th Defendants had been validly served.

Again, I conclude that this is clearly a proper case in which to give permission to apply for summary judgment and I do so, for the same reasons as I have set out in relation to the first summary judgment application.

In the same way as I have indicated in relation to the application notice as regards the first summary judgment application, it is necessary for the Claimants to serve the application notice in relation to the second summary judgment application.

As I have already noted, this may be served pursuant to the Hague Convention or by service on the process agent within the jurisdiction. This is a matter for the Claimant.

In view of my decisions above, this point does not arise.

My conclusions are as follows:

I would be grateful if Counsel would draw up an order reflecting my decision.