Trumann Investment Group Ltd v Societe Generale SA & Ors [2004] EWHC 1769 (Ch)

[2004] EWHC 1769 (Ch)Case No HC0201778
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 27 July 2004
Before
THE HONOURABLE MR JUSTICE PETER SMITH
Between
Trumann Investment Group LimitedClaimant1) Societe Generale SADefendants2) Cyport Communications International LimitedDefendant3) Hilmi KansuDefendant4) Canan KansuDefendant5) Cyport Communications LimitedDefendant
Robin Hollington QC (instructed by Withers) for ClaimantJoe Smouha QC (instructed by Addleshaw Goddard) for 5th DefendantHearing Hearing dates: Friday 2nd July 2004
JudgmentMr Justice Peter Smith :INTRODUCTION
[1]This is the hearing of the Fifth Defendant’s application to set aside service by the Claimant on it in the Turkish Republic of Northern Cyprus (“TRNC”) and/or to challenge the jurisdiction of the English Court in relation to the claims therein.[2]The requisite order was made by Master Moncaster on 9th February 2004 (although the order was only drawn up on 3rd March 2004).[3]The application to set aside was issued on 22nd April 2004 and was referred to be heard by a Judge of the High Court by him.[4]On 24th May 2004 I made directions setting a timetable for the further conduct of the action and the fixing of a hearing date of the first available date after October 2004.[5]There is a note of Master Moncaster’s judgment dated 13th February 2004.[6]At the conclusion of the hearing on Friday 2nd July 2004 I indicated that I would dismiss the Fifth Defendant’s application and give reasons for that dismissal at a later stage. This judgment sets out the reasons why I have dismissed the Fifth Defendant’s application.

NEXUS BETWEEN THE PARTIES

[7]The Second Defendant, Cyport Communications International Limited (“CCI”) is a company incorporated in England. The shares in CCI were initially held by nominees for the First Defendant Societe Generale SA (“SG”), which is a company incorporated in the Commonwealth of Dominica. The shares in SG are held by companies incorporated in the Turks and Caicos Islands, Picaron Investment Limited (“Picaron”) and the Claimant (“Trumann”). Pursuant to an order made by the Eastern Caribbean Supreme Court SG removed itself from the corporate structure and the shares in CCI thereafter were then held directly by Picaron and Trumann. Picaron holds 70% of the shares and Trumann 30% of the shares. Picaron is the investment vehicle of and is wholly owned by Mr and Mrs Kansu the Third and Fourth Defendants (respectively “Mr Kansu” and “Mrs Kansu”).[8]Trumann owns 30% of the shares in SG and is thus beneficially interested in that proportion of CCI. It is an investment vehicle of and is wholly owned by another citizen of TRNC, Tulin Sel (“Dr Sel”).[9]CCI’s directors were Mr and Mrs Kansu and Dr Sel.[10]Cyport Communications Limited (“CCL”) the Fifth Defendant pursuant to the order of Master Moncaster is a company incorporated in TRNC. Its issued share capital was at the commencement of the action held as to 70% by Mr and Mrs Kansu and as to 30% by Dr Sel. Its directors are Mr and Mrs Kansu and Dr Sel.[11]After the commencement of proceedings Mr and Mrs Kansu have procured the removal of Dr Sel as a director of CCL and have purportedly procured the dilution of her shareholding from 300 shares out of 1000 issued shares to 300 out of 495,180 issued shares.

THE BUSINESSES OF CCI AND CCL

[12]CCL at all material times carried on the business of telecommunications and related services. To enable it to obtain business from third parties who would not contract with a business based in TRNC CCI was established and at all material times carried on business in order to obtain clients who would use the services, which CCL could provide. It is alleged that CCI carried on such business as principal and not as agent.

ALLEGATIONS

[13]In the original Particulars of Claim served on 12th July 2002 Dr Sel effectively alleged that Mr and Mrs Kansu owed fiduciary duties to CCI and since March 2002 had acted in breach of such fiduciary duties in the manner set out in paragraph 15 of the Particulars of Claim. The allegations involved the transfer of assets from CCL or CCI. The main allegation appears to be the transfer of US$555,000.00 from CCI’s bank account with Lloyd’s TSB in London to CCL.[14]Those transactions were the subject of serious criticism by His Honour John Langan QC in his judgment of 29th November 2002.[15]Trumann’s solicitors had written on 24th May 2002 raising matters of dispute and requesting confirmation that no monies should be transferred from CCI to CCL and from CCL to Comtech Limited a company wholly owned by Mr and Mrs Kansu. That letter excited Mr and Mrs Kansu to the extent that the substantial transfers referred to above took place shortly thereafter. His Honour Judge Langan QC, in paragraph 32 of his judgment, described Mr and Mrs Kansu’s conduct as “a little short of disgraceful”.[16]Equally, Jacob J. in a judgment given on 9th May 2003, in making reference to a letter adduced by Mr and Mrs Kansu to justify the transfers, expressed the view that “it was difficult to find an honest explanation that the document was in fact produced. It was meant to be a notice of a meeting, and it already recorded people who were present and who were absent”.[17]Those funds were replaced pursuant to an order made by His Honour Judge Langan QC.[18]The Claimant, through Dr Sel, brings the present proceeding with the benefit of a standard Wallersteiner –v- Moir order (paragraph 1 of Jacob J’s order of 26th June 2003). Trumann therefore has an indemnity out of the assets of CCI. I was told by Mr Hollington QC, who appeared for Trumann, that without this indemnity provision there is no prospect of Trumann or Dr Sel being able to fund the litigation. That does not rest easily however, with the apparent decision she made to defend proceedings commenced by CCL against her in TRNC to which I shall make reference further in this judgment.

ABUSE OF PROCESS

[19]In his skeleton argument on behalf of Trumann, Mr Hollington QC submits that CCL’s application to set aside the order made in its absence is an abuse of process in accordance with the principle set out in Johnson –v- Gore Wood [2002] 2 AC 1.[20]At first sight that seems surprising as this is the first opportunity CCL has to review a decision made in its absence.[21]The submission stems from the hearing before Master Moncaster. Mr and Mrs Kansu, the directors and controllers of CCL objected to the amendments and the consequential order for service of CCL. They did so solely, so far as I can discern from the judgment of Master Moncaster, on the basis of grounds for opposition which CCL might raise. Those relate to jurisdiction of these courts to hear the issue and what is popularly called forum conveniens.[22]Those objections were dismissed in strong terms. In paragraph 2 of the judgment Master Moncaster drew attention to the fact that Mr and Mrs Kansu, who appeared through Miss Chappell (junior counsel for CCL, but who did not appear before me) instructed by Addleshaw Goddard the same solicitors to argue on behalf of Mr and Mrs Kansu, why CCL should not be joined as a defendant. Those objections related solely to the issues raised before me, namely based on the construction of CPR Rule 6.20 and the forum conveniens argument in the alternative. That argument appears to have been insisted upon by Miss Chappell. Master Moncaster in the paragraph acknowledged that he ought not to have heard her submissions, but he also acknowledged that it would be likely that the same submissions would be made a second time on the application (which he rightly perceived as inevitable) for CCL by the direction of Mr and Mrs Kansu in effect to re-litigate what he had already determined. He expressed the view that that seemed to be an abuse and that for CCL to re-attempt to re-argue the matter might have cost consequences.[23]He also described the submission that TRNC was the more suitable forum for the claim against CCL rather than England as being “almost preposterous” and observed that the interests of justice required that these issues should be decided in one forum and that the submission that Mr and Mrs Kansu to the English jurisdiction in the present claim necessarily results in the convenient forum being England. He indicated that if asked to give permission to appeal he would have refused it, because the point effects only CCL, but it would be entitled to apply to set aside the order anyway.[24]Mr Smouha QC, who appears for CCL, frankly conceded that the arguments that he was raising on behalf of it were the same arguments that Mr and Mrs Kansu had unsuccessfully sought to raise on its behalf in front of Master Moncaster. They never chose to appeal the order despite arguing against it. The difficulty of course is that it could have been argued they had not technical locus on the appeal to raise matters on behalf of CCL. It in turn would not need to appeal because it had not been a party to the substantive order granting permission. The proper cause for CCL was to apply to set it aside (which it has done).[25]It seems to me that Master Moncaster (quite understandably) fell between two stances. In my judgment he should have either refused to hear any argument by Mr and Mrs Kansu in effect on behalf of CCL so that the hearing would have been relatively short. Alternatively he should have heard the argument on the merits on behalf of CCL, but made it quite clear that in doing so he would not entertain an application by it subsequently to set it aside; an appeal would have to be necessary.[26]To attempt nakedly on behalf of CCL to re-litigate matters already run (and un-appealed) is in my judgment a classic abuse of the process identified in Johnson -v- Gore Wood. Faced with that argument Mr Smouha QC contended that I ought to grant permission to Mr and Mrs Kansu to seek permission to appeal out of time in order to appeal the order. He pointed out with force that as Master Moncaster had directed the application to set aside to be heard by a Judge, it was simply a different way of arriving at the same tribunal.[27]There is however, a fundamental difference. An appeal against Master Moncaster’s order could not have been made as of right. It could only have been made on the basis that his exercise of discretion was wrong in principle. Those are the main arguments put forward by Mr Smouha QC on the application before me, but I do not see, for example, it could have been said that the challenge to the forum (the second argument) could have been run the way it was before me, i.e. substantively on the merits again.[28]Nevertheless, I am faced with this difficulty. Master Moncaster had predicated a second application being made by CCL. Having predicated such an application being made, I do not see how it can be categorised an abuse, when it actually makes the application. Faced with this analysis Mr Hollington QC did not press the point and accepted that the application to set a side by CCL should be heard on its merits.

GROUNDS FOR SETTING ASIDE ORDER

[29]The arguments involve an analysis of the original Particulars of Claim and the Amended Particulars of Claim and with those matters to mind, the application of CPR 6.20.[30]The amendments to the Particulars of Claim fall into two categories. First, CCL is joined for the purposes of pursuing in effect a tracing and accounting claim in respect of assets received by CCL that belong to CCI. The transfer of those assets it is contended occurred by reason of the breach of fiduciary duty owed by Mr and Mrs Kansu to CCI. Mr Smouha QC observes that there is no claim against them alleging breach of duty owed to CCL. This he used as a platform for some of this submissions justifying hearings involving CCI taking place within this jurisdiction and those in respect of CCL taking place in TRNC.[31]I should clarify that. The present proceedings were commenced against the original four Defendants on 28th June 2002.[32]In November 2003 CCL commenced its own action against Trumann and Dr Sel, alleging breach of fiduciary duty owed to it. That action was within the UK Courts’ jurisdiction. Trumann and Dr Sel sought security for costs on the basis that CCL was resident in TRNC. TRNC is not recognised by any other jurisdiction as having a legal existence and no order made in a Court in TRNC can be enforced under any of the conventions, as it is not a party to any of them. Rather than provide security CCL discontinued those proceedings in January 2003. What is significant, however, is that Mr and Mrs Kansu had already submitted to the jurisdiction of the English Courts by reason of the existing proceedings and they caused CCL to submit to the jurisdiction of the English Courts in respect of the allegations it wished to bring against Trumann and/or Dr Sel.[33]Originally Trumann sought permission to amend and join CCL before Jacob J. on 2nd June 2003. Mr and Mrs Kansu opposed the application on the same grounds and the application was adjourned. Shortly before the application came on first to be heard by Master Moncaster on 17th November 2003 CCL commenced proceedings in TRNC against Dr Sel alleging the same or virtually the same breaches of fiduciary duty owed by her as Director to it.[34]Dr Sel, who is apparently a resident sometimes in TRNC, has not sought to challenge those proceedings on the basis that TRNC is not forum conveniens for the purpose of the dispute given the existence of the proceedings currently taking place in England. This enabled Mr Smouha QC to submit that there were parallel proceedings in place both TRNC and within this jurisdiction.[35]In my judgment it is an artificial argument. He was quite unable to give any convincing justifications for CCL, having commenced and discontinued proceedings within England, to have recommenced fresh proceedings shortly before the application to join it was to be heard by Master Moncaster. It could have served a Counterclaim in these proceedings. The only conclusion I can draw is that this was a classic forum shopping action designed to strengthen CCL’s position in respect of the application to join it within the English proceedings.[36]It is right as Mr Smouha QC maintained that CCL is entitled to exercise its right as a foreign corporation to seek to set aside an order for service on it at proceedings within this jurisdiction on the basis that it is more suitable for the dispute to be heard in its own jurisdiction.[37]However, merely because a party has a right to do so, it does not follow that it is right or sensible for it to exercise it. The present proceedings in England have been progressing for 16 months. Mr and Mrs Kansu actively participated in that. The proceedings involve allegations that they, in breach of their duty to CCI, transferred assets (some of which were within the jurisdiction) to CCL.[38]Mr and Mr Kansu then, as I have said, caused CCL to commence its abortive proceedings. Mr and Mrs Kansu therefore demonstrated that initially both they and CCL contemplated the correct place for all the litigation between the parties to take place within the jurisdiction of the English Courts.[39]No explanation has been provided for this apparent somersault, which is clearly required given the proximity of the decision to issue proceedings in TRNC, to the hearing of the proceedings formally to join CCL.[40]Logic dictates (as Master Moncaster indicated) that the factual disputes between the parties should be heard by one Court at one time. Given the stance Mr and Mrs Kansu took prior to their issue of the TRNC proceedings it is obvious that that Court would be the English Courts seised with the existing action and Mr and Mrs Kansu acknowledged that.[41]The issue of the TRNC proceedings creates an artificial situation of there being proceedings in parallel. Even if the present application is acceded to, there is no suggestion that Trumann would abandon the proceedings within this jurisdiction. Mr Hollington QC told me (as I have said) that there was no way Dr Sel would fund this litigation other than through the Wallersteiner –v- Moir order, which is only applicable to the present proceedings. He was unable to explain how she had managed to defend the proceedings in TRNC and there appears to be a lack of communication between her advisors in England and in TRNC. However, the plain fact is that Mr and Mrs Kansu have on the one hand submitted to the jurisdiction to consider some disputes and on the other caused CCL not to submit to the jurisdiction, despite the commonality of issues involving it.[42]It is said that Mr and Mrs Kansu cannot afford to litigate in England and that litigating in TRNC is cheaper. There are two factors why I can reject that. First they will have to litigate within this jurisdiction in any event, because they have been pursued and submitted to the jurisdiction. If they persist in litigating in TRNC as well, it is their decision to duplicate legal representation. Second, they have adduced no evidence as to difficulty or inability to pay. Absent such evidence I view assertions of lack of funds with scepticism.[43]The issue of the TRNC proceedings therefore is simply an artificial attempt in my view to delay matters and put back the clearly desirable early resolution of the dispute. That can be achieved within this jurisdiction far more readily than in TRNC. In those proceedings (which were only served in April this year), Dr Sel has not even served a defence. The English proceedings are well advanced and it is clear that the trial will take place well before any comparable proceedings in TRNU.

FURTHER CONSIDERATION OF PLEADINGS

[44]The first category (“No1”) of claim originally involved a claim whereby Mr and Mrs Kansu were the subject of claims for an account of profits or assets received by them and for which they were accountable by reason of the breaches of fiduciary duty and an order for payment of all sums found due on taking the account.[45]CCL, as I have said, was the recipient of the assets allegedly. A plea for delivery up in particular can be resisted on the grounds that they cannot deliver the assets or account for them because they have not received them. I accept of course that an order was made by His Honour Judge Langan QC, requiring them to restore the monies transferred to CCL. That however is not a full answer, because as the pleadings show the Defendants, i.e. Mr and Mrs Kansu at this stage, put forward a positive case justifying the transfer of monies to CCL.[46]Given that it is inevitable that CCL has to be a party if an effective claim as to CCI’s assets wrongfully transferred can be made. Otherwise the only claim would be a personal one against Mr and Mrs Kansu for breach of fiduciary duty, which may well prove difficult to enforce. I do not see why CCI should be deprived of its right to seek to trace assets which belong to it and which it alleged were transferred to CCL in breach of fiduciary duty. Given that it is inevitably a necessary party to that action. Indeed I have already observed Mr and Mrs Kansu have (like the application to set a side) sought to raise matters of “defence” by relying upon CCL’s justification to receive assets that at first sight belong to CCI.[47]Thus the proposed amendment first simply makes CCL (see paragraph 16) liable to account for all profits made or benefits received by reason of Mr and Mrs Kansu’s alleged breaches. In paragraph 1 of the prayer for relief CCL is added to the accounting remedies and a tracing claim in respect of the assets as against Mr and Mrs Kansu and it is made together with an order for delivery up.[48]That in my judgment is plainly part and parcel of the existing action and claims brought in the English proceedings.[49]The second claim (“No. 2”) is that under paragraph 15 (a). This claim Mr Hollington QC acknowledges (as did Trumann’s solicitors) is a new claim against CCL. It is alleged that there were discussions between Dr Sel and Mr and Mrs Kansu concerning the restructuring of the companies and at that time an opportunity to take further licences which was coming CCI’s way was taken by CCL in an expectation that the parties would agree a restructuring so that their operations were conducted through CCL rather than CCI. The complaint is that the negotiations did not proceed to fruition so that CCL became under an obligation to transfer the contract to CCI, but it failed so to do. It is alleged (paragraph 15A(v)) that CCL holds the benefit of the contract as constructive trustee for CCL. A claim is made for account or delivery up on the basis of the amended paragraph (1) of the Prayer for Relief.[50]The essence of this claim flows from a disputed series of meetings that took place between Mr and Mrs Kansu and an English solicitor, Mr Alexis Maitland-Hudson, who may or may not have appeared to have taken part in the meeting on behalf of Dr Sel. This has already featured as part of the original claims (it is referred to for example in the Judgment of His Honour Judge Langan QC (paragraph 12 and following)). Nevertheless, it is a new cause of action not brought against Mr and Mrs Kansu.[51]The third claim (“No. 3”) is a claim in effect of an account of dealings as between CCI and CCL. This too is a new claim, but it follows logically from the allegations put forward in Mr and Mrs Kansu’s defence justifying transfers made by them on behalf of CCI to CCL.

PRINCIPLES AS TO JOINDER AND SERVICE OUT OF THE JURISDICTION

[52]CPR 6.20 (3) and (5) are prayed in aid by Trumann as the basis for joinder of CCL. Those provisions provide as follows:- “6.20 In any proceedings to which rule 6.19 does not apply, a claim form may be served out of the jurisdiction with the permission of the court if- General grounds … (3) a claim is made against someone on whom the claim form has been or will be served and –(a) there is between the claimant and that person a real issue which it is reasonable for the court to try; and(b) the claimant wishes to serve the claim form on another person who is a necessary or proper party to that claim. (3A) a claim is a Part 20 claim and the person to be served is a necessary or proper party to the claim against the Part 20 claimant. … Claims in relation to contracts (5) a claim is made in respect of a contract where the contract – (a) was made within the jurisdiction; (b) was made by or through an agent trading or residing within the jurisdiction;(c) is governed by English law; or(d) contains a term to the effect that the court shall have jurisdiction to determine any claim in respect of the contract.” General grounds … (3) a claim is made against someone on whom the claim form has been or will be served and – (a) there is between the claimant and that person a real issue which it is reasonable for the court to try; and (b) the claimant wishes to serve the claim form on another person who is a necessary or proper party to that claim. (3A) a claim is a Part 20 claim and the person to be served is a necessary or proper party to the claim against the Part 20 claimant. … Claims in relation to contracts (5) a claim is made in respect of a contract where the contract – (a) was made within the jurisdiction; (b) was made by or through an agent trading or residing within the jurisdiction; (c) is governed by English law; or (d) contains a term to the effect that the court shall have jurisdiction to determine any claim in respect of the contract.”[53]The power to join under CPR 19.2(2) is exercisable by the court:- “(a) if it is desirable to add the new party so that the court can resolve all the matters in dispute in the proceedings; or (b) there is an issue involving the new party and an existing party which is connected to the matters in dispute in the proceedings, and it is desirable to add the new party so that the court can resolve that issue”. It will be seen that the wording under the two rules is very different.[54]It seems to me clear that either of those requirements would be satisfied if CCL was an English company within the jurisdiction. I find it impossible (or adopting Master Moncaster’s judgment preposterous) that an argument can be made that the three causes of action raised by the amendments, including the addition of CCL do not satisfy those requirements. It is self evident to my mind that it cannot be realistically argued.[55]Mr Smouha QC (as one would expect) does not put his arguments on that basis. He rightly points out that whilst that is the wording for adding of parties who are to be found within the jurisdiction, the wording under 6.20 (3) is very different. First he points out that subparagraph (3) does not express alternatives, but two cumulative requirements. First under subparagraph (a) there must be in existence a claim between the claimant and the existing person, which is reasonable for the court to try and (b) the claimant wishes to serve the claim form on another person who is a necessary or proper party to that claim.[56]The wording “on whom the claim form has been or will be served” is simply to deal with the situation whereby a claim form might have been issued but not served.[57]Thus to come within the ambit of 6.20 (3), there must be an existing claim against an existing party and the joinder of the additional party must be necessary. He submits that it is not possible to add claims against CCL, which are additional. Claims (2) and (3) referred to earlier in this Judgment are admittedly new claims against CCL and are no part of the existing proceedings against Mr and Mrs Kansu. That is correct and Mr Hollington QC conceded that if Mr Smouha QC’s construction was correct the joinder of claims (2) and (3) would not be made.[58]He submits however, in any event claim (1) (namely the addition of proprietary claims against CCL) is not a new cause of action and is necessary for working out the claims and the relief brought against Mr and Mrs Kansu for breach of their fiduciary duty. I agree with that analysis. It follows therefore that the joinder issue in respect of those claims is not capable of being challenged in my judgment by CCL based on the construction of CPR 6.20 (3), even as contended by Mr Smouha QC.

MR SMOUHA QC’S CONTENTIONS

[59]He supports his contention by the following example. A claimant could (as in the present case) seek permission to join CCL solely on claim 1 and then subsequently after it has secured the joinder add claims (2) and (3) because it was already an existing party, and thereby circumvent the wording of CPR 6.20 (3). Mr Smouha referred me to Youell –v- Kara Mara Shipping [2000] 2 Lloyd’s Reports 102, a decision of Aikens J., which makes that point. In paragraph 80 of that judgment Aikens J. indicated that under RSC Order 11 (the predecessor provision in the RSC) where an application to amend was made in those circumstances, permission to serve out of the jurisdiction would not be required, but the decision to amend would be made under the same criteria.[60]He derives support for this from the wording of 6.20, which refers to a claim as opposed to proceedings. Thus there is a requirement that the party is necessary for the existing claim as opposed to the existing proceedings. I am not convinced that this is the correct analysis. It seems to me that the use of the word “claim” is a substitute for proceedings like the commencement of an action is by way of a claim, with a claim form under the CPR.[61]He referred me to the notes at 6.21.10 of the White Book which reinforced the requirement that no causes of action other than those which have permission can be served.[62]These seem to me to be impressive arguments.[63]Unfortunately for Mr Smouha QC there is a Court of Appeal decision against him. In United Film –v- Chabria [2001] 2 All E R (Comm) 865 the Court of Appeal construed 6.20(3) as being identical in effect to that to be found in CPR 19.2(2). Mr Hollington QC pointed out that Mr Smouha QC’s argument as to the more restricted construction of 6.20(3) was expressly abandoned by the Defendants during the course of the hearing; see paragraph [34] of Blackburne J’s judgment. He gave the leading judgment and Laws LJ and Aldous LJ agreed with it.[64]The Court of Appeal decided that a party for the purpose of 6.20(3) could be joined if the person would be a party and satisfy the criteria in effect under CPR 19.2(2). Blackburne J. set out his reasons as follow:- “[34] Mr Page initially submitted that para (c) only applies where the party to be served is a necessary or proper party to the very cause of action against a person who has been duly served. He later accepted that this was too narrow but submitted that it was not sufficient merely that there was a close connection between the claims against the person already duly served and the claims against the person to be served if the claims—ie the facts giving rise to the claims—were not the same. He submitted that the claims by UPIE against the father and Fairdeal failed to meet this requirement. [35] I consider that Mr Page stated the position too narrowly. [36] The meaning of the expression ‘proper party’ in the phrase ‘necessary or proper party’ appearing in para (c) of Ord 11, r 1(1) was explained by Lord Esher MR in Massey v Heynes & Co (1888) 21 QBD 330 at 338, [1886–90] All ER Rep 996 at 1000:
‘The question, whether a person out of the jurisdiction is a proper party to an action against a person who has been served within the jurisdiction, must depend on this, supposing both parties had been within the jurisdiction would they have been proper parties to the action? If they would, and only one of them is in this country, then the rule says that the other may be served, just as if he had been within the jurisdiction.’
In the same case Lindley LJ said:
‘Where the liability of several persons depends upon one investigation, I think they are all “proper parties” to the same action and, if one of them is a foreigner residing out of the jurisdiction, rule 1(g) of Order XI applies.’
That was said in reference to r 1(g) of Ord XI which was the then equivalent of what later became para (c) of Ord 11, r 1(1) and what is now CPR 6.20(3). I am not aware that any doubt has ever been cast on the accuracy of that approach to the meaning of ‘proper party’ as used in Ord 11, r 1(1)(c). [37] In Barings plc (in administration) v Coopers and Lybrand (1996) 140 SJ LB 210, Chadwick J (as he then was) pointed out that whether a person is a ‘proper party’ to an action in which he has been, or is to be, joined as co-defendant with another must depend on the relevant rules of procedure and the practice under such rules. Order 15, r 4(1) permitted joinder of two or more persons as defendants with the leave of the court or where:
‘(a) if separate actions were brought º against each of them º some common questions of law or fact would arise in all of the actions and (b) all rights to relief claimed in the action (whether they are joint, several or alternative) are in respect of or arise out of the same transaction or series of transactions.’
As Chadwick J observed, it would be beyond argument that any person who has or could have been joined as a party without leave under Ord 15, r 4(1) must be a ‘proper party’ for the purposes of the rules and, in particular, that such a person must be a ‘proper party’ for the proposes of Ord 11, r 1(1)(c). He did not find it necessary to decide whether any person whom the court itself could join under r 6(2)(b)(ii) of Ord 15 must be treated as a ‘proper party’ for the purpose of Ord 11, r 1(1)(c) but saw no reason in principle why the court should not, in appropriate circumstances, give leave to serve out of the jurisdiction in circumstances in which it could order the person to be added as a party to existing proceedings. [38] Although the Rules of the Supreme Court have been replaced by the Civil Procedure Rules, it is not suggested that the power of the court to give permission for service out under r 6.20(3) is narrower than under Ord 11, r 1(1)(c) or that the circumstances in which a person may properly be joined as a defendant to a claim are narrower under CPR 19.2(2) than under its relevant predecessors, namely Ord 15, rr 4(1) and 6(2)(b) of the Rules of the Supreme Court. CPR 19.1(2) provides that the court may order a person to be added as a new party if (a) it is desirable to add the new party so that the court can resolve all the matters in dispute in the proceedings or (b) there is an issue involving the new party and an existing party which is connected to the matters in dispute in the proceedings, and it is desirable to add the new party so that the court can resolve that issue. The court’s power to add or substitute a party is wide. Although the expression ‘necessary or proper party’ to the claim does not appear in that rule it can scarcely be supposed that the court would order a person to be added or substituted as a party on the ground that it is ‘desirable’ to do so if that person were not either a necessary or a proper party to the claim in question. In my judgment the court’s power to permit service out under what is now r 6.20(3) (formerly Ord 11, r 1(1)(c)) is not less wide than the court’s wide power to add or substitute a party under r 19.1(2). [39] It is not suggested that the claims by the two claimants against the other defendants do not give rise to real issues which it is reasonable for the court to try. The sole question therefore is whether, in the sense explained above, the father and Fairdeal are ‘proper parties’ to some or all of UPIE’s claims (and UFD’s other claims). [40] It is manifest, in my view, that UPIE’s claims against the father and Fairdeal on the one hand and against the son and other defendants on the other give rise to common questions of fact. Notable among those are the terms of and circumstances in which the joint venture agreement, as varied from time to time, was made and whether, in particular, as the claimants assert, it was agreed that the father and Fairdeal should act as agents. If they were to act as agents of UFD, it is not less likely that they were also to act as agents of UPIE assuming that the claimants can make good their contention in paras 14 and 15 of the particulars of claim that the parties to the joint venture agreed that UPIE would function effectively as a subsidiary of UFD. [41] Equally clearly, in my view, UPIE’s claims against the father and Fairdeal arise out of the same series of transactions as are the subject of UPIE’s (and UFD’s) claims against the son and UFD’s claims against the father and Fairdeal. The underlying substance of the various claims is that Mr Bhatia, Mr Thakrar and the father and son were together engaged in the acquisition and exploitation outside India of the distribution rights to a number of Indian films. Their vehicles for doing so were the claimants. As the courts below recognised, it would be quite unreal to suggest that UFD should be free to litigate its claims against the various defendants in this jurisdiction but that UPIE, although it functioned at all material times effectively as UFD’s subsidiary and is able to pursue its claims against the son and his companies in this jurisdiction, should be compelled to pursue its claims against the father and Fairdeal in India” ‘The question, whether a person out of the jurisdiction is a proper party to an action against a person who has been served within the jurisdiction, must depend on this, supposing both parties had been within the jurisdiction would they have been proper parties to the action? If they would, and only one of them is in this country, then the rule says that the other may be served, just as if he had been within the jurisdiction.’ ‘Where the liability of several persons depends upon one investigation, I think they are all “proper parties” to the same action and, if one of them is a foreigner residing out of the jurisdiction, rule 1(g) of Order XI applies.’ ‘(a) if separate actions were brought º against each of them º some common questions of law or fact would arise in all of the actions and (b) all rights to relief claimed in the action (whether they are joint, several or alternative) are in respect of or arise out of the same transaction or series of transactions.’[65]It will be seen in particular that in paragraph [39] Blackburne J. considered that it was not suggested that the claims did not give rise to the real issues which it was reasonable for the court to try.[66]As appears from paragraph [36] the starting point is Massey –v- Heynes & Co (1888) 21 QBD 330 at 338 where Lord Esher MR said that in a test of service out of the jurisdiction depended on whether the person had been within the jurisdiction he would have been joined. Blackburne J. in paragraph [36] stated that he was unaware of any authority which cast doubt on the accuracy of that proposal.[67]Mr Smouha QC boldly submitted that the United Film Distribution case was per incuriam in that there was not cited to the court the contrary authorities, which are covered by the Youell case and those referred to in paragraph 6.21.10 of the White Book.[68]There is much force in his submissions. One would have thought that if it was intended that the test under 6.20(3) was to be the same as that under CPR 19.2(2), the wording could usefully have been identical. Alternatively, there could have been some linkage. There is neither.[69]Nevertheless, one has to bear in mind that the CPR is a new code. Whether or not reliance should be made upon decisions made under the former RSC has been a matter of debate. It seems to me plain that the Court of Appeal have come to a conclusion on the wording which is binding on me. It seems to me that 6.20(3) has been equated to 19.2(2) in effect by the Court of Appeal leads to the inevitable conclusion that all the causes of action contemplated by the amendments fall within that broadly construed rule.[70]I have already observed that even if the rule is narrowly construed as Mr Smouha QC contends, I do not accept that the breach of trust claims fall out with it.[71]That makes it unnecessary for me strictly to determine whether or not a justification can be made under 6.20(5).[72]In respect of this alternative basis for service out of the jurisdiction, Mr Hollington QC drew to my attention the fact that the relationships between CCI and CCL when one looked at draft documents, suggested that they were governed through an agent trading within the jurisdiction i.e. CCI, or were governed by English law or contained a term to that effect. He also reminded me that these were all arguments put forward by the other Defendants as set out in paragraph 14.4 and paragraph 16.5 of the Defence. Those paragraphs clearly to my mind show that there is a case that the relationship between the parties was governed by an agency agreement with provisions, which applied English law and had an arbitration clause allowing for an arbitration according to the London Rules. That defence of course is not served on behalf of CCL, but it is served by Mr and Mrs Kansu who are the controllers of CCL.[73]It seems to me therefore that the additional claims involve an examination of contractual provisions between CCI and CCL, which satisfy the criteria of 6.20(5) in any event. The best Mr Smouha QC could say is that 6.20(3) is regarded as a court of last resort and it seems odd that that should be to the forefront of Trumann’s arguments rather than 6.20.(5). That might be correct, but the provisions are not to be construed cumulatively and it seems to me that even if Mr Smouha QC’s ingenious arguments under 6.20(3) are made out they will not assist claims (2) and (3) based on a contract falling within 6.20(5).

FORUM CONVENIENS

[74]Even if those grounds are made out, CPR 6.21(2A) requires the Court to be satisfied that England and Wales is the proper place in which to bring the claim. Master Moncaster was so satisfied and I for the reasons set out earlier in this Judgment, am equally satisfied. Given the state of the existing proceedings and the existing submission of Mr and Mrs Kansu to the jurisdiction and their earlier willingness to submit CCL to the jurisdiction, the case is overwhelmingly in favour of this being the correct forum for the litigation of the issues between the parties. It is not cost effective for there to be two courts resolving factual issues in parallel.[75]I accept the consequence of this decision might make the TRNC proceedings commenced by CCL redundant. That is a correct consequence in my view for the reasons that I have set out in this Judgment. The commencement of those proceedings was not justified and was purely tactical in an attempt to better CCL’s position when challenging the outstanding application to join it to these proceedings.[76]Despite therefore Mr Smouha QC’s compelling submissions, I reject them and consequently dismiss the application.[77]I will deal with the consequential orders arising out of this Judgment on a date to be fixed by my clerk with counsel, to be heard this term.