SC DG Petrol SRL v Vitol Broking Ltd & Ors [2013] EWHC 2176 (Comm)

[2013] EWHC 2176 (Comm)

Case No 2012 Folio 1517

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

COMMERCIAL COURT

Venue Royal Courts of Justice, Rolls Building, Fetter Lane, London, EC4A 1NL

Date 25 July 2013

Before

MR JUSTICE EDER

Between

SC DG PETROL SRLClaimant

(1) VITOL BROKING LTDDefendants

(2) VITOL S.A.Defendant

(3) BOGDAN PAICUDefendant

MR DAVID SCOREY (instructed by Hill Dickinson LLP) for Claimant

MR CHRISTOPHER SMITH (instructed by Clyde & Co) for First and Second Defendants

MR JAMES MATHER (instructed by Reed Smith LLP) for Third Defendant

Hearing Hearing date: 7 June 2013

Judgment

[1]On Friday 7 June, I heard an application under CPR 24 by the third defendant, Bogdan Paicu (“Mr Paicu”), for summary judgment against the claimant in effect seeking an order to dismiss the claim. In the event, I did not dismiss the claim but rather dismissed that application. This judgment sets out the reasons for that decision.

[2]As I say, the application for summary judgment was, at least initially, made by Mr Paicu. It was supported by his witness statement dated 10 May 2013. The first and second defendants’ position was that if Mr Paicu’s application for summary judgment succeeded, then they equally should be entitled to summary judgment in similar terms. The application was opposed by the claimant on whose behalf there was served a witness statement of Dan Igniska dated 28 May 2013.

Applicable principles

[3]The applicable principles to such application were not in dispute and, as set out in the claimant’s skeleton, may be summarised as follows: i) In order to succeed, the defendant must show that the claim is, in effect, hopeless. To defeat the application, the claimant merely needs to show that the claim has some prospect of success which is real, or realistic, in the sense of not being false, fanciful or imaginary. Alternatively, the claimant’s claim must be better than merely arguable: see ED&F Man Liquid Products Ltd v Patel

[2003] EWCA Civ 472

, at [7] – [11], per Potter LJ. ii) Crucially, the claimant is not required to show that its case will probably succeed at trial:

“[t]he criterion which the judge has to apply under CPR Pt 24 is not one of probability: it is absence of reality”: see Three Rivers DC v Bank of England (No. 3) [2003] 2 AC 1 (HL), at [158], per Lord Hobhouse. iii) In this regard, the burden rests firmly with the defendant to establish, if it can, the negative proposition that the claimant’s claim has no real prospect of success. The burden on the claimant is, at most, an evidential one: see, for example, Apvodedo NV v Collins [2008] EWHC 775 (Ch), at [32], per Henderson J. iv) It is equally well-established that the proper disposal of an issue under CPR Part 24 must not involve the Court conducting a mini-trial on the documents: see, for example, Swain v Hillman [2001] 1 All ER 91 (CA), at 95, per Lord Woolf MR. Indeed, an application for summary judgment is simply not apposite to resolve complex questions of fact, the determination of which necessitates: (i) disclosure; (ii) oral evidence; and (iii) a trial of the issues having regard to all of the evidence. As Lord Hope said in Three Rivers District Council v Bank of England (No. 3) [2003] 2 AC 1 (HL), at [95], the object of the rule is only to deal with cases that are “not fit for trial at all”. v) Moreover, it does not follow from the fact that, on its face, a claim does not appear to be overly complex, that it should be decided without fuller investigation into the facts at trial than is possible or permissible on a summary judgment application (see, for example, Easyair Ltd v Opal Telecom Ltd [2009] EWHC 339 (Ch), at [15(vi)], per Lewison J; approved by the Court of Appeal in A C Ward & Son v Catlin (Five) Ltd [2009] EWCA Civ 1098, at [24], per Etherton LJ). vi) In this context, Mummery LJ’s words of caution in Doncaster Pharmaceuticals Group Ltd v The Bolton Pharmaceutical Co 100 Ltd [2006] EWCA Civ 661, at [4]-[18], bear repetition. He stated: “Although the test [for summary judgment] can be stated simply, its application in practice can be difficult … The decision-maker at trial will usually have a better grasp of the case as a whole, because of the added benefits of hearing the evidence tested, of receiving more developed submissions and of having more time in which to digest and reflect on the materials … In handling all applications for summary judgment the court’s duty is to keep considerations of procedural justice in proper perspective. Appropriate procedures must be used for the disposal of cases. Otherwise there is a serious risk of injustice … As explained later, the case may turn out at trial not to be really “complicated”, but it does not follow it should be decided without a fuller investigation into the facts at trial than is possible or permissible on summary judgment … It is well settled by the authorities that the court should exercise caution in granting summary judgment in certain kinds of case. The classic instance is where there are conflicts of fact on relevant issues, which have to be resolved before a judgment can be given. A mini-trial on the facts conducted under CPR Pt 24 without having gone through normal pre-trial procedures must be avoided, as it runs a real risk of producing summary injustice. In my judgment, the court should also hesitate about making a final decision without a trial where, even though there is no obvious conflict of fact at the time of the application, reasonable grounds exist for believing that a fuller investigation into the facts of the case would add to or alter the evidence available to a trial judge and so affect the outcome of the case.”

The parties

[4]The claimant is a Romanian company, its principal activity being trading in petroleum products, more particularly the import of products into Romania.

[5]The first defendant is a company incorporated under the laws of England and Wales which acts as a broker for other members of an international group of companies referred to as the Vitol Group.

[6]The second defendant is a Swiss company and a member of the Vitol Group.

[7]Mr Paicu is an individual who is managing director of Paicu & Sons Consulting SRL, a company duly organised under Romanian law. The precise roles of Mr Paicu and that company are matters in issue in these proceedings. However, according to paragraph 8b of Mr Paicu’s Defence, that company provides independent consultancy services in relation to the trading of oil and coal petroleum products, carbon emissions and other energy related matters in Romania to multiple clients in Romania including the second defendant.

Nature of the claimant’s case

[8]As summarised in the claimant’s skeleton, the nature of the claimant’s claim is as follows: i) Mr Paicu sought to inflict damage on the claimant’s business by making a false “denunciation” to the Romanian authorities, the gist of which was to accuse, inter alios, the claimant of multiple criminal offences relating to the alleged failure to pay duty and/or other taxes owed in respect of shipments of oil imported into Romania (the “Denunciation”). ii) Specifically, the Denunciation accused the claimant (in collusion with other companies and individuals) of fraudulently selling oil products held in a bonded storage facility on the Romanian domestic market without paying the applicable excise duty. iii) The Denunciation was sent by Mr Paicu on or prior to 20 May 2009 to the General Inspector of Romanian Police (the “GIRP”). iv) The claimant was in competition with the first and second defendants and Mr Paicu acted as the general factotum for Vitol in Romania. In those circumstances, it is to be inferred that Mr Paicu did not act alone in sending the Denunciation but did so under the direction or authority of the first and/or the second defendants. v) As a result of the Denunciation, the claimant was investigated by the Romanian authorities (the “Investigation”). In addition, from April 2010, the Romanian authorities:(i) levied substantial tax assessments against the claimant; and

(ii) seized and/or froze many of its assets (together, the “Sanctions”). vi) Although the Sanctions were subsequently lifted, the claimant’s business suffered loss and damage – as was presumably the aim of the Denunciation. vii) The defendants are responsible for that loss and damage.

Mr Paicu’s case on this application

[9]Mr Paicu denies the claim in its entirety. In summary, his case is as follows: i) He did not sign the Denunciation and he had no part in creating or sending it. ii) It is inherently unlikely that any such document was the cause of a very high-value tax assessment levied nearly a year later after an intervening investigation by the Romanian tax authorities. It is obvious that the true cause of the assessments was the (independent) decision taken by the tax authority to impose them on the basis of its own investigations.

[10]However, for present purposes, Mr Paicu accepts that the issue of the authenticity of the Denunciation cannot be determined summarily. Further, there is no challenge based upon the nature of the claimant’s cause of action as a matter of Romanian law. Similarly there is no challenge as to causation between the Denunciation and the subsequent loss and damage suffered as a result of the Investigation/Sanctions. Specifically the defendants have served no evidence as to Romanian law on causation.

[11]In summary, Mr Paicu’s present application focuses on two main points which it is said are fatal to the claimant’s claim and justify summary judgment in his favour (and also the other defendants). In essence, these two points are as follows: i) First, it is said that the claimant is and will be unable to establish that the Denunciation was received prior to commencement of the investigation by the GIRP; and it must therefore follow that the claimant will be unable to demonstrate any factual causation between the Denunciation and the Investigation/Sanctions. This has been referred to as the “Receipt of Denunciation Issue”. ii) Second, Mr Paicu says that the claimant cannot obtain the original Denunciation and it must follow that it will be impossible to prove that it was authored by Mr Paicu with the result that the claim is similarly doomed for that reason. This has been referred to as the ”Original Documentation Issue”.

[12]I deal with each of these issues in turn.

Receipt of Denunciation Issue

[13]Paragraph 5(1) of the claimant’s Reply states:

“The Denunciation was received by GIRP in or about May 2009. In this respect, the claimant relies upon the fact that the Denunciation bears the date of 20 May 2009, indicating the date when the said Denunciation was entered in GIRP’s registry as having been filed with them”

. Despite the fact that this pleading was signed by Counsel and countersigned with a statement of truth by the claimant’s solicitor, Mr Scorey accepted that this statement was incorrect. In particular, Mr Scorey accepted that the copy of the Denunciation produced by the claimant is undated. He also accepted that there is no direct evidence as to the date that the Denunciation was received by the GIRP; in particular, there is no direct evidence that it was received prior to the commencement of the Investigation ie on or prior to 20 May 2009.

[14]However, I do not consider that these matters of themselves lead to the conclusion that the claimant has no real prospect of success so as to justify the summary dismissal of the claim at this stage. This is broadly for the reasons advanced by Mr Scorey in light, in particular, of the evidence of Mr Igniska which were, as set out in his skeleton, as follows: i) It does not appear to be in doubt that the GIRP instigated the Investigation into the Claimant, with criminal investigation file no. 1476/P/2009. This file was opened on 20 May 2009. ii) The Investigation, pursued by various other fiscal agencies in Romania, was prompted by this same criminal investigation file no. 1476/P/2009. According to the evidence of Mr Igniska, copies of the Denunciation bear stamps of the following fiscal authorities, indicating that they were sent a copy of the Denunciation after the opening of criminal investigation file no. 1476/P/2009 viz(i) The Agentia Nationala de Administrare Fiscala (“ANAF”), which received the document on 3 June 2009. The ANAF is the National Agency for Fiscal Administration (“NAFA”);

(ii) The President of the NAFA, Mr Sorin Blejnar;

(iii) The Bucharest General Division (“BGD”), which received the Denunciation on 4 June 2009. iii) Although the claimant does not know if the Denunciation itself, or a copy thereof, was sent to any other Romanian authorities, nonetheless, a considerable amount of correspondence inevitably passed between the various authorities involved in the Investigation including: a) a letter dated 12 June 2009 from the GIRP to the National Customs Authority (“NCA” or “ANV”) which is part of NAFA and has specific responsibilities for imports and excise duties/taxes. The GIRP requested documentation in relation to the Investigation. This letter cites file no. 1476/P/2009, and makes express reference to the same three companies identified in the Denunciation, namely the Claimant, Master Chem Oil SRL and M&D Farers Invest SRL. The NCA is part of the NAFA, and controls and/or is responsible for the Regional Division for Excise and Customs Operations (“RDECO”). b) On 26 June 2009 (received on 29 June 2009), the NCA wrote to the RDECO in Bucharest and Constanta. In so doing, it made specific reference to file no. 1476/P/2009, the Claimant, Master Chem Oil SRL and M&D Farers Invest SRL. The NCA requested that the RDECO provide any documentation requested by the GIRP, and thereby participate in the Investigation. c) A further letter from the NCA to REDECO Bucharest was sent on 10 July 2009. iv) This correspondence illustrates that the authorities concerned: (i) took part in the same Investigations; (ii) acted on the instructions of the GIRP; and (iii) as a result, also acted on the basis of the allegations in the Denunciation.

[15]I accept that the claimant’s case is based in large part on “inference”. However, that does not necessarily mean that the case can properly be said to be one which is not real, or realistic, in the sense of it being false, fanciful or imaginary; and I am therefore not persuaded that the claim should be dismissed on this basis.

[16]I should mention that in the course of the hearing, Mr Mather advanced a number of arguments as to the overall merits of the claim. However, given my conclusion, it seems to me inappropriate to say anything about such arguments at this stage. They are matters which will, if necessary, have to be explored at trial.

Original Documentation Issue

[17]I am prepared to accept that the absence of an original copy of the Denunciation may well persuade the court at the end of the day that the claimant cannot succeed. However, for present purposes, it is, in my view, sufficient to say that that is not necessarily so. Further, as submitted by Mr Scorey, it is apparently the claimant’s intention to apply for letters rogatory under CPR Part 34 to request that(i) certain persons employed by the Romanian authorities at the material times be examined; and

(ii) either the original Denunciation or a copy thereof be released to the claimant. If such application(s) are successful (and I have no reason to suppose that they would not be so), then a copy of the Denunciation may yet appear; or, at least, there may be evidence to fill any “gap”.

[18]For these reasons, it is, in my judgment, quite impossible to say that the claim is necessarily doomed to fail such that I ought to dismiss it on a summary basis at this stage.

Conclusion

[19]It is for these brief reasons that I decided to refuse the application by Mr Paicu and the other defendants’ contingent applications for summary judgment in their favour.