Commonwealth of Australia v Peacekeeper International FZC UAE & Anor [2008] EWHC 1220 (QB)

[2008] EWHC 1220 (QB)Case No HQ07X02113
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 04/06/2008
Before
THE HONOURABLE MR JUSTICE FOSKETT
Between
Commonwealth of AustraliaApplicantInterpleaderApplicantPeacekeeper International FZC UAEClaimant1st InterpleaderClaimantEnzo Services LimitedClaimant2nd InterpleaderClaimantCommonwealth of Australia Interpleader Applicant- and -Peacekeeper International FZC UAE-and-1st Interpleader Claimant Enzo Services Limited 2 nd Interpleader Claimant
Miss Laura John (instructed by DLA Piper Solicitors) for Interpleader ApplicantMr David Herbert (instructed by Maclay, Murray and Spens Solicitors) for 1 st Interpleader ClaimantMr Lawrence Power (instructed by Bevans Solicitors) for 2nd Interpleader ClaimantHearing Hearing date: 21 st May 2008 and 4 th June 2008
JudgmentMr Justice Foskett :Introduction
[1]I have before me a number of applications concerning various actual or proposed claims by certain of the parties against others in this matter. What started as relatively straightforward interpleader proceedings brought by the Commonwealth of Australia (“Australia”) are, primarily at the instigation of Enzo Services Limited (“Enzo”), becoming considerably wider in scope than that normally associated with proceedings of that nature. In a broad sense, therefore, I have to determine whether and, if so, to what extent this is either possible or permissible and, if possible or permissible, to what extent it is to be permitted in this case.[2]The starting point for present purposes is the factual background to the interpleader proceedings. Since there are issues to be determined within those proceedings, irrespective of whether I permit other claims to be incorporated within those proceedings or to be tried at the same time, I will confine myself to the bare essentials.

The factual background

[3]The proceedings relate to 4 armoured vehicles leased by Australia in relation to its role as part of the Coalition Forces in Iraq. The vehicles are in Australia’s compound in Baghdad. The vehicles were leased under two separate leasing agreements, each agreement relating to 2 vehicles and each agreement running for a fixed 6-month period from 20 August 2006 to 18 February 2007. The lessor of the vehicles under the two agreements was named as “Amoeba Group” and on 18 August 2006 an invoice was raised on Amoeba Group headed paper for the full leasing costs. At the foot of that headed paper the company name “Amoeba Group Limited” appeared, together with its address in Bristol.[4]I need not go into much further detail save to say that Australia endeavoured to make payment of the leasing charges in the manner apparently requested on behalf of Amoeba, which involved the use of the name “Enzo” as the “Vendor Business Name” within the electronic transfer system used by Australia, but the transfer was rejected by Amoeba’s bank. The sequence of events thereafter involved a suggestion on behalf of those apparently representing Amoeba at the time that Enzo was in the process of taking over Amoeba, the company known as Amoeba Group Limited having, as a matter of fact, gone into liquidation on 28 June 2006. Enzo Services Limited had, I understand, been incorporated about 2 months earlier and at least one person who had been associated with Amoeba, Ms Lindsey Hoggard, became a director of Enzo on 1 June. The fact that Amoeba had gone into liquidation did not become known to Australia until someone acting on behalf of PKI told Australia about this in an e-mail of 24 September 2006. PKI, the full name of which is Peace Keeper International FZC UAE, is a company incorporated in the United Arab Emirates and has, or at least at the material time had, a presence in Baghdad. It also emerged during this period that PKI had originally been the owner of the 4 vehicles and had, on Enzo’s case, entered into an agreement for the sale of the vehicles to Amoeba or to Enzo. In short, the circumstances surrounding that agreement of sale are the circumstances giving rise to the issue between PKI and Enzo as to the ownership and/or right to possession of the vehicles. PKI’s case, I understand, is that there was no sale (or no effective sale) of the vehicles to Enzo such that it (PKI) was entitled to immediate possession of the vehicles. Enzo’s case is that there was an effective sale and an effective lease of the vehicles to Australia such that it (Enzo) was entitled to the return of the vehicles at the end of the lease period. There are significant assertions and counter-assertions concerning the circumstances of the alleged sale, none of which involve Australia.[5]In circumstances which do not matter for present purposes, full payment under the lease agreements was made by Australia to Enzo in September 2006 before, it would seem, the full story of the dispute between Enzo and PKI emerged. All that needs to be recorded is that, not surprisingly in the circumstances that did unfold, Australia became uncertain as to what should happen to the 4 vehicles when the lease came to an end. A letter from PKI’s solicitors dated 23 October 2006 asked Australia to return the vehicles to PKI immediately. Correspondence then ensued with Australia’s lawyers in Canberra, DLA Phillips Fox. In due course, DLA Piper UK LLP gave advice to Australia’s lawyers and, given the unresolved dispute between Enzo and PKI, wrote to all potentially interested parties in these terms on 16 February 2007: “My client has in its possession four GMC B6 Suburban Armoured Vehicles (“The Vehicles”) which were leased to my client pursuant to two leasing agreements for the period from 20 August 2006 to 18 February 2007. Each of Amoeba Group Limited (in liquidation)…, Enzo Services Limited … and Peacekeeper International FZC (“The Claimants”) claim that they are the owners of the vehicles and that the vehicles must be returned to them upon expiry of the leases. The evidence of ownership provided by each of the claimants to date is inconclusive and my client is currently unable to determine into whose possession the vehicles should be released when the leases end. In the circumstances, unless this dispute is resolved prior to 18 February, by each of the claimants agreeing which of them is the true owner of the vehicles and jointly notifying my client in writing of the agreement, my client intends:• To retain possession of the vehicles until either each of the claimants agrees to whom the vehicles belong or a court order is made to determine the ownership of the vehicles; and• If thought appropriate, to issue interpleader proceedings in this country, naming each of the claimants as a party to such proceedings. My client proposes that there should be a meeting attended by all of the claimants and/or their legal representatives to be held at [our] offices as soon as possible. The objective of such a meeting is to reach a swift resolution of the dispute and to avoid the expense of litigation and any delay in returning the vehicles to the rightful owner. However, if any of the claimants are not willing to attend a meeting or an agreement is not concluded, interpleader proceedings may ensue.”• To retain possession of the vehicles until either each of the claimants agrees to whom the vehicles belong or a court order is made to determine the ownership of the vehicles; and• If thought appropriate, to issue interpleader proceedings in this country, naming each of the claimants as a party to such proceedings.[6]I should, perhaps, observe that Enzo had asserted its claim to the right to possession of the vehicles at the end of the lease period in an e-mail from its solicitors to DLA Phillips Fox dated 15 February 2007. It was in these terms:
“I …understand that you have advised my client that at the end of the six month contract, namely on 17 February 2007, the vehicles will be returned to Peacekeeper International (PKI), who were the original owners. These vehicles no longer belong to PKI as they were subsequently sold to Enzo Services Limited by PKI. My client has supplied you with documentary proof to this effect. I have advised my client that Enzo Services clearly has a legally binding contract with [Australia] for the lease of the four GMC vehicles in question, a fact which has been formally acknowledged in correspondence with [the financial adviser to the Australian Embassy] and that at the expiry of this contract [Australia] is legally bound to return the vehicles to Enzo Services, as their rightful owner. [Australia] has no legal contract with PKI and thus no authority to release vehicles to that entity. This email is intended to put both you and [Australia] on formal notice … that if the vehicles in question are not returned to Enzo Services on 17 February 2007, Enzo Services will hold [Australia] responsible for their loss and will not hesitate to issue legal proceedings without further notice.”
[7]There was, therefore, a general threat of proceedings for losses sustained if the vehicles were not returned to Enzo although, as a matter of fact, a specific claim for continued lease payments as a contractual claim under the lease was not asserted as such.[8]No agreement was reached following the suggestion made in the letter from DLA Piper referred to in paragraph 5 above and on 19 June 2007 Australia issued interpleader proceedings naming PKI and Enzo as the two parties contesting ownership and/or the right to possession of the vehicles. I should record that Amoeba’s liquidator had decided not to pursue any interest that Amoeba might arguably have had in respect of the vehicles.[9]On 9 July 2007, following return by PKI and Enzo of their respective Acknowledgments of Service in the interpleader proceedings, the court ordered that a case management conference should take place before Master Fontaine on 21 September 2007. However, a few days before the court made that order Enzo had issued an application for directions returnable before the Interim Applications judge. The application was heard on 30 July 2007 by McCombe J.[10]The application suggested that a dispute between PKI and Enzo about two other armoured vehicles (a BMW and a Mercedes), neither of which had anything to do with Australia, should be dealt with in, or at the same time as, the interpleader proceedings. Australia and PKI resisted this application and McCombe J rejected the suggestion. He did suggest that if a properly formulated claim in the usual way was put together then Enzo would not be precluded from asking the court to direct that it should be heard at the same time as the interpleader proceedings, but in the event this suggestion has not been taken up and I say nothing more about it save as appears in paragraph 19 below.[11]Mr Lawrence Power, who represented Enzo before McCombe J and before me, has suggested that McCombe J was invited to, and did, consider wider issues than those relating solely to the question of whether the other two vehicles could be considered as part of the interpleader proceedings. I will say a little more about this shortly, but having read the Notice of Application that led to the hearing before McCombe J and having read an unapproved transcript of his ruling, it seems to me absolutely plain that the primary focus on his part, and indeed that of everyone before him, was upon whether those two vehicles could properly be incorporated within the interpleader proceedings and, having decided that they could not, upon the directions that were appropriate to progress those proceedings such that the dispute between Enzo and PKI about the original four vehicles could be resolved. Indeed, given the nature of interpleader proceedings generally, that is precisely what one would have expected to have ensued from the result of such an application even though, in the normal course of events, the relevant directions would have been likely to have been given by Master Fontaine at the planned case management conference. It is clear from the transcript that McCombe J questioned whether it would be necessary for that case management conference to take place given what would have appeared to him to have been the substantial measure of agreement as to how those proceedings should be structured.[12]The Notice of Application to which I referred in paragraph 11 sought a general order that “the claim” (the only claim at that stage, of course, being the interpleader claim) should “now proceed as a part 7 claim”, the grounds being that Enzo and PKI “have claims against each other that arise out of the same evidence albeit different subject matter, (not the four armoured vehicles), these disputes can be practically and expediently litigated at the same time.” Mr Patrick Selley, the solicitor acting on behalf of Enzo, supported this application with a statement that included the following paragraphs:
“8.The CPR Part 8 procedure is not suitable to resolve all theclaims between Enzo and PKI as disclosure is required prior to settling the witness statement. Furthermore we expect there will be substantial disputes on facts and a trial on the evidence will be required to resolve the issues between the parties (my emphasis). 9.Accordingly it is suggested that prior to settling witness statements as required under CPR Part 8, that the court is moved to hear submissions on suitable directions to transfer the case to CPR Part 7 and provide directions.”
The only additional claims identified in that witness statement over and above the existing claims for ownership of the four vehicles was in respect of the BMW and the Mercedes.[13]It is, in my view, plain that anyone preparing for the hearing of that application (whether by way of a response to it or as the judge pre-reading the papers) would have seen the issue as merely the question of whether claims between Enzo and PKI relating to the BMW and the Mercedes vehicles were to be effectively incorporated into the existing proceedings. Given that the allegation made by Enzo against PKI in relation to those two vehicles was one of fraud it is, looked at objectively, easy to see why Part 7 was suggested and approved as the appropriate procedural structure within the CPR for the resolution of that dispute rather than Part 8. Indeed, given the nature of the issues between Enzo and PKI relating to the original four vehicles, again it is easy to see why Part 7 was more appropriate than Part 8.[14]It is accepted by Mr Power that during the hearing before Mr Justice McCombe no reference was made by any party either to a potential claim by Enzo against Australia for continuing payments under the lease after February 2007 or to a potential claim by Enzo against PKI for unlawful interference with its business “with Australia” as the result of certain things said, or alleged to have been said, by PKI representatives between September 2006 and January 2007. There is, I should add, no suggestion either that any reference was made on PKI’s behalf to any claim that it may have against Australia beyond, of course, participating in the interpleader proceedings that Australia had instituted. Since Enzo now asserts that it is entitled by virtue of the order made by McCombe J to bring claims of the nature identified above, I need to examine the basis for that assertion.

Why Enzo claims an entitlement to bring the additional claims

[15]Mr Power says that, although nothing was said about the claim against Australia in the Notice of Application or the supporting witness statement or indeed before McCombe J, the issue had been flagged up in the manner I shall describe shortly and that the representative for Australia at the hearing before McCombe J, Mr Glyn Rees, a solicitor then employed by DLA Piper, made an agreement or concession that has had the effect of permitting the claim to be advanced.[16]Mr Power draws attention to the following in relation to this aspect of the matter: i) the e-mail to which I referred in paragraph 6 above; ii) the fact that the draft order served with, or at about the same time as, the Notice of Application to which I referred in paragraph 12 above contained, at paragraph 5, a provision that “[Australia] … file and serve any defence by [a date to be specified]” after PKI and Enzo had exchanged the pleadings proposed in paragraphs 1-4 of the draft order; iii) the skeleton argument that he produced shortly before the hearing before Mr

Justice McCombe where, at paragraph 14, the following appears:

“[Australia] remains a party because under the lease there is a clause for continuing hire payments if the vehicles are not returned, as was the case in this dispute …. This potential claim was notified to [Australia] by correspondence dated 17 February 2007.”
[17]Leaving aside for present purposes (iii) above, Mr Power’s argument, supported by a recent witness statement from Mr Selley, is that for those reasons Australia “knew or should have known that Enzo proposed to claim against [it] almost 4 weeks in advance (Mr Selley’s emphasis) of the hearing … before McCombe J”. I should say that the same argument is advanced against PKI in relation to the proposed claim against it, but I will deal with that separately below.[18]I should say immediately that, even if matters had simply stopped there, I would have regarded (i) and (ii) as a wholly inadequate basis for suggesting that Australia should have been put on notice that Enzo proposed to make a claim for continued lease payments in the interpleader proceedings. Had Mr Selley’s statement of 2 July 2007 mentioned it specifically that might have afforded the basis for an argument of this kind, but there was not even an oblique reference to it. However, matters did not end there.[19]The short judgment given by McCombe J dealing with the substance of the application before him concluded in this way:
“In short … I think the present claim in relation to the four vehicles should steam ahead, and directions should be given appropriately, but if, in the course of that, Enzo can bring forward a properly formulated claim in relation to the additional two vehicles, with proper jurisdiction, then the field would be open to this court to consider whether or not there should be further orders for consolidation or joint trial of the two claims.”
[20]Following those concluding words there was a discussion about costs and the way forward. Mr David Herbert, who represented PKI then (and indeed before me), asked for costs against Enzo on the basis that the hearing had been about “the ambit of the claim and whether the BMW and Mercedes should be included in that” and that his clients had been successful in resisting that suggestion. Mr Rees was asked by McCombe J whether he wanted to say anything on costs, the judge observing that he (Mr Rees) had “attended, but not taken a very active part”, no doubt being there “out of interest”. Mr Rees responded by saying that Australia believed that it should attend and asked that Enzo pay Australia’s costs. McCombe J ruled that, as between PKI and Enzo, the costs should “in the case between them” and that, so far as Australia’s costs were concerned, they should be reserved to be dealt with “at the end of the proceedings between Enzo and PKI.”[21]McCombe J then invited the parties to “get some directions sorted out now in the proceedings as presently constituted about the four [vehicles]” using the draft order as a basis for discussion. He told the parties, as is usual, not to come back before him if they agreed everything, but to submit a freshly typed agreed version of the draft order if it was agreed and, provided that he was satisfied with it, he would approve it.[22]I should, perhaps, record that during his ruling on the main issue, McCombe J had said this of the draft[23]Those who were present, including Mr Rees, did as they were asked by McCombe J and went outside to discuss the directions. PKI and Enzo agreed the order in which the pleadings as between them were to be exchanged and the dates for those exchanges to be achieved. At some stage during the discussions it was suggested that the language of the draft order should be in terms of Part 20 Claims. This was indeed done as the handwritten amendments to the draft order show. There is an issue, however, about whether Mr Rees agreed to the suggestion that a Part 20 Claim against Australia might be incorporated in the proceedings. The draft agreed by Mr Power and Mr Herbert (doubtless with the agreement of their respective solicitors) contain the following paragraph (which was a variation of the proposed paragraph 5 which I referred in paragraph 16(ii) above):
“[Australia] to file and serve a Defence to any claim or any Part 20 claim by [a specified date].”
[24]Mr Rees has put in a witness statement which says this in relation to those discussions:
“The first time I was made aware of any potential Part 20 claim against [Australia] was only after the hearing, when Enzo’s legal team raised the issue. I was not in a position to consent to the suggestion (as I had no instructions) and I therefore only provisionally agreed the directions at that time. As a result, we agreed that a draft order would be drawn up and circulated between the parties for approval.”
[25]Mr Rees also said, incidentally, that he saw Mr Power’s skeleton argument about 5 minutes before the start of the hearing. Mr Power thinks it was 15 minutes, but that is not material: Mr Rees had only a limited opportunity to consider it and, of course, since he was not anticipating any substantive issue to arise that affected his client (which indeed is exactly how the actual hearing before McCombe J proceeded), he would, understandably, not have been examining the skeleton argument with a fine toothcomb in any event. To the extent that it is argued on Enzo’s behalf that paragraph 14 of the skeleton argument (see paragraph 16(iii) above) would have brought home explicitly to the reader that Enzo was considering pursuing Australia in the interpleader proceedings for the sums in question, I reject that argument.[26]Mr Selley has put in a witness statement in which he responds to Mr Rees’ witness statement in this way:
“Mr Rees agreed to the directions and made no mention to me of the provisional nature of his agreement just as he failed to mention that to the court.”
[27]I am unclear as to the meaning of the reference to Mr Rees’ alleged failure to mention the provisional nature of his agreement to the court, because I have seen no further transcript of any further hearing. At all events, what is clear is that within a very few hours of the conversations taking place, DLA Piper wrote directly to McCombe J (delivering the letter by hand and also by faxing it) saying that the agreement to the directions had been, as Mr Rees said, “provisional” and that, on reflection, it was not considered appropriate to agree to a direction that enabled both PKI and Enzo to bring Part 20 claims against Australia. The material part of the letter was in these terms:
“The objections to the Part 20 claim can be summarised as follows: - 1.The purpose of [Australia’s] application for interpleader relief was to extract itself from a contentious dispute between Enzo and PKI, with a view to minimising its costs of being involved as an innocent party in this dispute. It would be inappropriate and disproportionate as to costs for [Australia] to have to prepare evidence in respect of two potential Part 20 claims based upon different facts where the main issue as to ownership of the four armoured vehicles is still to be determined. 2.Without any admission as to [Australia’s] liability, it is only once the hearing of the main issues has been determined that either party should be entitled to seek to bring the Part 20 claim against [Australia] if it so wishes. 3.It is unclear whether the English courts would be an appropriate forum for PKI or Enzo to bring a Part 20 claim against [Australia] or the law that would apply to the determination of such a claim. 4.The possibility of a Part 20 claim being brought by Enzo and/or PKI against [Australia] was not raised by either party at the hearing before Mr Justice McCombe and was not referred to in the draft Minute of Order previously submitted by Enzo. We understand that despite this firm raising objections as to the content of directions (before the order was finalised and provided to the court), counsel for PKI and Enzo have signed and submitted the Minute of Order on the basis that the order for directions [was] previously agreed by all parties after the hearing. However, this firm was not furnished with a finalised version of the draft order before it was submitted to court for final approval, nor has it agreed the terms of the draft order. In such circumstances, we respectfully ask that reference to Part 20 claims should be removed from the Minute of Order submitted by counsel for PKI and Enzo.”
[28]That letter was, as I have indicated, written on the day of the hearing before McCombe J. On the following day Messrs Bevans, the solicitors acting for Enzo, also took a copy of the order that had been signed by Mr Power and Mr Herbert to the court inviting McCombe J’s approval to it. The penultimate paragraph of the letter written was in these terms:
“After the order was approved by those present we received a communication from DLA, solicitors for [Australia] to the effect that they did not agree [certain paragraphs] so far as they related to the possibility of Part 20 claims. Our view, and that of counsel for PKI is that if [Australia] wishes to change its ‘neutral’ stance taken at the court hearing or to alter the form of order that was agreed outside the court then they have liberty to apply.”
[29]Mr Power has submitted that Australia are bound by what he contends was the agreement of Mr Rees to the proposed order and he has submitted, as I understood him, that even if an application had been made to the court to vary the order, the court would not have had the basis to do so because it would have required there to have been some material change of circumstances or circumstances in which it could be said that the judge who had made the earlier order was misled in some way as to the correct factual position. He referred to Collier v Williams [2006] EWCA Civ 20.[30]I do not agree with this analysis for a number of reasons. In the first place, no order has actually been made in this case. No sealed order has been made, presumably because of the issues thrown up by the correspondence referred to in paragraphs 27 and 28 above. To that extent the issue of whether the court should set aside or vary an order does not arise. The position seems to me to be wholly different from the situation under consideration in Collier v Williams. (I should, perhaps, add, in the light of arguments foreshadowed in Mr Power’s Skeleton Argument concerning costs that I have seen since a draft of this judgment was sent to the parties, that I am here, of course, suggesting that the reason why no order has been sealed is because of the disputes about what was agreed in relation to those parts of the proposed order that are under review in the present applications. There would, in my judgment, have been no reason why a sealed order should not have been made – nor indeed still could not be made – in respect of the decision actually made by McCombe J and in relation to his essential approval that the interpleader proceedings should proceed as a Part 7 claim: see the quotation from McCombe J’s judgment at paragraph 22 above.)[31]Secondly, I have not been invited to resolve the factual dispute about what was or was not said outside court by hearing any oral evidence about it. However, Mr Power submitted that all the contemporaneous material suggests that Mr Rees’ recollection of the events is wrong. I do not think that that is so. The contemporaneous material is, in my judgment, as consistent with his recollection as it is with the recollections of the others present. But even if I had been driven to accept that he had agreed the provision as it stood and made no reference to the provisional nature of that agreement, I would have considered that there were ample grounds for concluding that the agreement did not bind his client. It could well have been said that he was acting under a misapprehension as to the extent of his authority and, traditionally, that has always afforded grounds for intervention by the court before, using pre-CPR terminology, the order was “perfected”: see, e.g. Shepherd v Robinson [1919] 1 KB 474. The short point is that within a very short while of the discussion the mistake, if indeed there was one, was rectified both vis-à-vis the judge and the other parties to the discussions. I should be most reluctant to conclude that there was no power in the court to deal with a situation such as that, certainly in the circumstances that obtained in this case. Whilst Miss John for Australia has not suggested that any deliberate “ambush” was put in place by those representing Enzo, and I for my part am happy to accept there was not, the fact of the matter is that, if Mr Rees did not use the word “provisional” at the time, he can readily be forgiven for having taken his eye off the ball of a Part 20 claim since that ball had never been in play during the lead up to and at the proceedings before McCombe J. It could well be said that taking the points now taken, Enzo is being opportunistic.[32]For all those reasons, shortly expressed, I do not think that Australia has bound itself to the terms of the directions reflected in the order signed on behalf of Enzo and PKI following the hearing before McCombe J that have been under review in the application made by Australia before me. I will deal below with the other aspect of this matter, namely, whether the court has the power and/or ought to sanction such a direction in any event given the true ambit of interpleader proceedings.[33]What about PKI? Their objection to what has occurred is slightly different. It is accepted that they agreed to the directions given, though I observe again in relation to their position that no order giving effect to the proposed direction has in fact been made. They say that, because the issue had never been raised before, the addition of a claim in the Particulars of Claim alleging unlawful interference with Enzo’s business (see paragraph 14 above)(a) is well beyond anything that they agreed should be incorporated in the claim and(b) if permitted to proceed would have the effect of circumventing the need to apply to serve out of the jurisdiction because PKI is a non-resident company. PKI had specifically agreed to accept the jurisdiction of the English courts in relation to the interpleader proceedings, but no further. PKI says that it has not submitted to the jurisdiction of the English courts in relation to any other claim.[34]Enzo’s argument is that PKI has submitted to the jurisdiction by engaging in the interpleader proceedings and as a result of so doing has opened the door to other claims being made within the jurisdiction.[35]These arguments bring into relief the nature of interpleader proceedings and what can or cannot properly be added to them. Miss John, supported by Mr Herbert, has argued that the court has no power to convert interpleader proceedings into a general action. I must turn to this issue.

To what extent can interpleader proceedings be extended?

[36]Interpleader proceedings are still governed by what was Order 17, RSC, which now forms part of Schedule 1 to the Civil Procedure Rules. I was told by Counsel that the Civil Procedure Rule Committee is currently considering the rules relating to interpleader proceedings but, of course, I must apply the current rules to the issues before me. Since Order 17 is one of the scheduled orders of the RSC it does, of course, form part of the “new procedural code” that the CPR provides. However, to the extent that issues arise as to how it operates, it is certainly one order in respect of which, if necessary, reference to pre-CPR authority has a greater relevance than might otherwise be the case: cf. Nomura International Plc v Granada Group Ltd [2007] EWHC 642 (Comm).[37]The editors of The White Book (2008) describe the nature of interpleader proceedings in this way (Vol 1, sc17.0.2):
“Interpleader proceedings arise where a person, who himself makes no claim to property, faces competing claims from others to the property. The interpleader action is commenced by the party facing the claims with the objective of removing himself from the dispute and protecting himself from the competing claims; the court then decides the rival claims.”
[38]That encapsulates neatly in contemporary language the rationale for the interpleader jurisdiction described by the Court of Appeal in De La Rue v Hernu, Peron & Stockwell Ltd [1936] 2 KB 164, 168-169.[39]In Glencore International AG v Shell International Trading & Shipping Co Ltd [1999] 2 Lloyd's Rep. 692, Rix J, as he then was, said this:
“It follows that the claim for interpleader relief (1) is an application to be released from proceedings, not a claim for any substantive right; (2) is conditional on at least the threat of adverse claims to the same subject-matter; (3) is further conditional on the applicant disclaiming any interest in that subject-matter; (4) typically results in the release of that applicant from any pending proceedings and (5) leads to the stating of an issue or issues between the claimants themselves (hence “interpleader”).”
[40]Miss John argues, in my view with considerable force, that interpleader proceedings are designed solely to enable the issue of the disputed title to goods between two or more parties to be resolved with the party in physical possession of the goods, but who does not claim title, to be absolved from taking part. She submits that if interpleader proceedings are permitted to be transformed into substantive proceedings involving the property holder their whole purpose is negated. She contends that there is nothing in Order 17, RSC, that permits the expansion of interpleader proceedings into substantive proceedings of the sort contemplated in this case and, whilst recognising that the authority is now of some antiquity, she draws attention to Eschger Co v Morrison, Kekewich Co (1890) 6 TLR 145 (CA) where Lord Esher MR said that he “doubted very much whether the Court had power to transform an interpleader issue into a wholly general action”, though holding that it was unnecessary to decide the issue because “he was clearly of opinion that it was wrong to do so” in that case.[41]Mr Power has a broader argument concerning submission to the jurisdiction to which I will refer shortly, but so far as Order 17 itself is concerned he draws attention to Rule 8(1) which provides as follows:
“Subject to the foregoing rules of this Order, the court may in or for the purpose of any interpleader proceedings make such order as to costs or any other matter as it thinks just.”
He suggests that those words confer a wider discretion on the part of the court to deal with all disputes between the parties.[42]For my part, as the present rule relating to interpleader proceedings stands, it seems to me that there is very little scope within Order 17 itself for the court to transform interpleader proceedings into a substantive action. Rule 8(1) is the nearest one gets to a broad discretion, but it is said expressly to be “Subject to the forgoing rules of this Order” and that, in my judgment, limits the scope of the discretion considerably. Leaving aside the precise words of Order 17, however, it seems to me, as I have said already, that there is considerable force in the suggestion that the whole purpose of interpleader proceedings is to afford a simple mechanism for the property holder to get the protection of the court from competing claimants. If the procedure of itself is extended to require the property holder to become embroiled in the dispute between the disputing claimants or its consequences, then the essential purpose of the procedure is negated.[43]That conclusion does not, of course, mean that there may not be cases (albeit, one imagines, rare cases) where it may be appropriate for the court to exercise its wide-ranging case management powers within the CPR to direct that substantive claims or counterclaims involving the property holder could be dealt with at the same time as, or in parallel with, the interpleader proceedings. But that is the exercise of a power outside Order 17 and would require careful consideration of the consequences. Where Order 17 is solely in play, there is, in my judgment, very limited scope for going beyond the traditional use to which it has been put, namely, as a vehicle by which the property holder escapes from the litigious clutches of the competing claimants as to title.[44]I suspect that this is what McCombe J had in mind in his concluding remarks of his ruling to which I have referred in paragraph 19 above. If so, I would respectfully agree.

The broader question of submission to the jurisdiction

[45]Mr Power has argued that since both PKI and Australia have submitted to the jurisdiction of the courts of England and Wales for the purposes of the interpleader proceedings, that submission is not limited to a single issue within the proceedings and extends to any claim which may be brought within the proceedings. He seeks to rely on Glencore International AG v Exter Shipping Ltd & Others [2002] EWCA Civ 524, where at first instanceMoore-Bick J, as he then was, said this:
“…by becoming a litigant in this jurisdiction a person submits himself to the incidents of such litigation and thereby renders himself amenable to proceedings by way of counterclaim. The rules impose no restriction on the nature of the claim which may be made in that way.”
In the Court of Appeal Rix LJ, having reviewed the authorities, said this:
“… In the first case the foreign claimant submits himself willingly to the jurisdiction. He does so, and in my judgment must do so, without reservation, and is subject, so far as territorial jurisdiction is concerned, to all the incidents of litigation in this country, including, for instance, his amenability to a counterclaim. He cannot say: ‘I came here only for the purpose of my claim. I am not willing to accept this jurisdiction for the purpose of my defendant's counterclaim.’”
[46]Those principles are well-established; but it is to be observed that they have been enunciated in cases where substantive claims have been asserted within the jurisdiction of the English courts by parties otherwise based outside the jurisdiction. Doing that renders them amenable to all the incidents of litigation in the English courts including that of a counterclaim.[47]My attention has not been drawn to any case where the invocation by a foreign party of the interpleader jurisdiction has resulted in the court permitting substantive claims to be made within, or indeed allied to, those proceedings. Indeed in Eschger Co v Morrison, Kekewich Co (see paragraph 40 above) Lord Esher MR said this of the circumstances in that case:
“The effect of the order of the Divisional Court has been to make a foreign firm, wholly domiciled abroad, defendants without observing any of the conditions which the law required to be observed before making a foreigner a defendant in an independent action. The court ought not to allow itself to mix up modes of procedure for the purpose of doing that which they had no power to do in a direct way. The order of the Divisional Court could not be justified and must be set aside, and it followed that the original order for an interpleader issue stood.”
Miss John has also drawn attention to the view of the editors of Dicey & Morris, 14th edition, that Eschger is authority for the proposition that appearance as a claimant in interpleader proceedings does not constitute submission to the jurisdiction and contends that that the same principles should apply in relation to the applicant in interpleader proceedings. Dicey & Morris does, however, say of the proposition advanced in the text that this “will depend on the circumstances” and, accordingly, no hard and fast rule necessarily applies.[48]For my part, I would have little difficulty in concluding that ordinarily any participation in interpleader proceedings constituted for their traditional purpose would not amount to submission to the jurisdiction for the purposes of the consequences identified in a case such as Glencore. At all events, in the circumstances of this case I am certainly of the view that Australia has not submitted to the jurisdiction for any purpose other than asking the English court to assist in dealing with the dilemma it faces arising from the competing claims of Enzo and PKI to the four vehicles.[49]I have had a little more pause for thought in relation to PKI. That is not because, through their solicitors, they have entered into correspondence with Enzo’s solicitors about the subject matter of the case. I reject Mr Power’s submission to that effect: it is inevitable that parties will be drawn into correspondence when issues such as these arise and that is to be encouraged in case a resolution can be achieved without recourse to the courts. It could only be if the correspondence evidenced an unequivocal acceptance that the English court had jurisdiction over an identified dispute that might then lead to a conclusion that there had been a submission to the jurisdiction. My only pause for thought in relation to PKI is that it appears that it or its representatives were prepared to entertain the possibility of making and responding to wider claims than simply those involved in the interpleader proceedings by virtue of the reference to Part 20 proceedings in the discussions following the hearing before McCombe J. However, if what they truly entertained (and this seems to be likely given its initial stance when the draft directions were being debated in correspondence) was some kind of Part 20 claim against Australia, then I do not see how that could affect its position vis-à-vis Enzo. Since it had no notice whatsoever of Enzo’s claim for unlawful interference, it could not possibly be said to have submitted to the jurisdiction for purposes of that claim. It follows, therefore, that I do not consider that PKI has submitted to the jurisdiction other than to participate in the interpleader proceedings in their traditional sense.[50]That being the conclusion in respect both of the claim made in the Particulars of Claim against Australia and against PKI, those claims are, in my view, liable to be struck out.[51]Mr Power invited me to say that, should I arrive at the position I have in paragraph 50, I should exercise what he suggests is the court’s “discretion to add claims against PKI and Australia to the present proceedings under CPR, r.3.1(2)(g) or r.19.2(2)(a)” because – i) the claims against PKI and Australia raise matters so closely connected with the subject matter of the interpleader dispute that to force Enzo to bring separate proceedings would lead to multiplicity; and ii) it would be unfair to hold Enzo liable to pay PKI the remainder of the purchase price of the vehicles in the event Enzo proves its ownership, without allowing Enzo it right to set off sums due from PKI to Enzo.[52]I do not consider that I have a discretion in these circumstances. Both Australia and PKI are non-resident in the UK and have not, according to my decision, submitted themselves to the jurisdiction of this court save for the purposes of the interpleader proceedings. Each is, therefore, entitled to be pursued, if Enzo chooses to do so, by virtue of, at least initially, the rules as to service out. Certain safeguards exist in relation to that process as provided for in Part 6.20, CPR. Even if I had a discretion (which I do not consider that I have), I see no reason why I should exercise it in a way that deprives them of the opportunity to rely upon those safeguards if they are applicable. In relation to the second of the matters relied upon by Mr Power, I do not see why this should make any difference: the opportunity exists for Enzo to pursue PKI, if it so chooses, to recover any sums due to Enzo from PKI. Accordingly, I reject the suggestion that I should in some way re-introduce the claims that, for the reasons I have given, should be struck out.[53]For the reasons I have given, I accept Miss John’s broad submission that this case “took a wrong turn” after (and I do emphasise after) the hearing before McCombe J. For whatever reason, Enzo has attempted to move considerably further than it is, or was at any time, entitled to go so far as its alleged claims against Australia and PKI are concerned and, in my view, it is right that the proceedings should be put back on the right course henceforth.[54]I have reached the conclusions I have on the basis of the arguments and the evidence I have received. I derive some satisfaction from having been able to conclude as I have because to have found differently might have operated as a disincentive to parties, including a party such as the Government of another country, from utilising the long established and well respected civil process of the courts of England and Wales to assist them out of the dilemma created by facing competing claims to property from more than one party. The process of interpleader was fashioned out of the need to help those who, prior to the Interpleader Act 1831, did not know to whom of two or more competing claimants they had to account for the property or money they held (see De La Rue above). The availability of such a process, even if only occasionally invoked, is, on the evidence of this case, as important now as it has ever been.[55]The net effect of my decision is that the applications of Australia and PKI to strike out the relevant parts of the particulars of claim succeed and I will invite counsel to agree a form of order that gives effect to that determination.

The disposal of the vehicles

[56]Australia has, through no wish of its own, been obliged to retain possession of the 4 vehicles since February 2007. I expressed the view during the hearing that it seemed nonsensical to allow this situation to continue. PKI indicated that it was prepared to take possession of them pending the outcome of the interpleader proceedings and Enzo indicated a willingness for that to occur. I invited discussions with a view to agreeing the precise terms of that order by midday on 22 May and then extended it until midday today, 23 May. I sent to the parties shortly after 8 am this morning (23 May) an order I proposed to make in the event of there being no agreement on some alternative form of order by midday. That order appears in the Annex to this judgment. I was not told of any alternative form of agreed order by midday and, accordingly, the order will be made in those terms with the addition of “permission to apply”.[57]Mr Herbert has raised in an e-mail the question of whether paragraph 3 is ambiguous in the sense that it might operate to discharge Australia from any historic liabilities it may have in relation to the vehicles arising from their retention of them. The purpose of choosing the word “further” was so that the order would not have that effect and, to that extent, I do not consider that the order is ambiguous. It will, therefore, be made in the terms I propose. If, in due course, I am persuaded that it needs amendment to reflect more accurately this intention, then this can be done under the “slip rule” or the inherent jurisdiction. But in the meantime the order is to be made in the terms of that appearing in the Annex and it is to be effective from today.

order

“It seems to be accepted that the dispute relating to the four vehicles that are the primary subject of these proceedings should be resolved broadly on the lines of directions in the form of a minute of order produced by Enzo. I have not studied the detail of those directions. I am not, by saying anything I have, adjudicating on the substance of any of the directions so given. But, in essence, the directions which are suggested seem quite sensible.”

Cited in 1 later judgment