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You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Latreefers Inc & Ors v Hobson & Ors [2002] EWHC 1696 (Ch) (25 July 2002) URL: https://www.bailii.org/ew/cases/EWHC/Ch/2002/1696.html Cite as: [2002] EWHC 1696 (Ch) |
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HC 01/00278 |
CHANCERY DIVISION
Strand, London, WC2A 2LL | ||
B e f o r e :
____________________
LATREEFERS INC AND OTHERS | Claimants | |
- and - | ||
HOBSON AND OTHERS | Defendants |
____________________
Mr. Angus Glennie QC and Mr. Jeremy Goldring (instructed by Messrs Lawrence Graham) for the 4th - 6th Defendants
Hearing dates : 9th, 10th and 11th July 2002
____________________
Crown Copyright ©
The Vice-Chancellor :
(a) by Latco to set aside the order of Lightman J extending the validity of the claim form in the First Action;
(b) by Latco challenging the jurisdiction of the court to try any of the claims against it made by Latreefers in the First Action;
(c) by Latreefers for leave to amend its particulars of claim in the First Action; and
(d) by Latco and Latmar challenging the jurisdiction of the court to try any of the claims against them made by Latreefers in the Second Action;
(e) by Latco and Latmar to set aside the order of Lightman J extending the validity of the claim form in the Second Action;
(f) by Latreefers for the consolidation of the First Action and the Second Action.
“..the court may make such an order only if
(a)...
(b) the claimant has taken all reasonable steps to serve the claim form but has been unable to do so; and
(c) ....the claimant has acted promptly in making the application.”
“there is nothing unjust in a system which says that, if you leave issuing proceedings to the last moment and then do not comply with this particular time requirement and do not satisfy the conditions in rule 7.6(3), your claim is lost and a new claim will be statute-barred. You have had three years and four months to get things in order. Sensible negotiations are to be encouraged, but protracted negotiations generally are not.”
“In my view that argument for the claimants would fail at two stages. First, in my view the word “serve” means what it says. Rule 7.6(3)(b) is concerned with the actual process of service and as to whether actual service has been reasonably attempted, and not with the preparation of documents. But, secondly, and even if that were too narrow a view (and I do not accept that it is) the claimants have not established how it was reasonable for their solicitor to leave until the last moment preparation of the schedule of special damage. Nor have they established that, even leaving it until the last minute, he could not have drafted these documents and prepared them prior to the expiry of the four month period. The plain fact here is that [the solicitor] made a mistake in relation to the date by which he had to serve the claim form.”
“Against that chronology, I do not see how it can possibly be said with any degree of conviction that the provisions of rule 7.6(3)(b) had been satisfied. That rule is clearly intended to cover cases where the person endeavouring to effect service has taken all reasonable steps, but his reasonable efforts have been frustrated by some near insuperable difficulty or obstacle. All we have here is a history of either incompetent or dilatory practice, a history which seems to have more than one chapter.”
“...not only can it not be said that the claimant has taken all reasonable steps to serve the claim form, on the construction of the law adopted by this court he has taken no steps at all to serve the claim form, because service of the claim form in this case required service on the solicitors. Even if that were not the case, it is manifest, as Thorpe LJ has said, that rule 7.6(3) is addressing those cases, familiar enough, where the claimant tries to find his defendant but cannot do so, either because the defendant is, unknown to him, out of the jurisdiction, or because he is evading service, or matters of that sort. The terms of endeavour and lack of success that are set out in paragraph (3)(b) clearly address that situation. They do not address a situation such as the present.”
“It seems to me that throughout the period that Sorainen were instructed the solicitors for the claimants acted entirely reasonably in acting as they did, verifying with Sorainen as best they could whether the advice they gave was correct, going to fresh solicitors for advice in this regard when they had reason to believe that perhaps Sorainen had got it wrong, and then acting promptly in conceding the inadequacy of service when this matter became clear to them. I am quite satisfied that this is a case where the 7.6(3) conditions are fully satisfied, and therefore the necessary extension of time should be granted.”
“It must be very much an open question whether...Latco should be permitted to challenge this decision, or seek to have the order set aside, on the basis that it was made without their attendance when they are really seeking, as it seems to me, two bites of the same cherry, and to adopt a course which is calculated to increase costs and waste time in these proceedings.”
“9A. Alternatively, in the event and to the extent that the law of Liberia governs any claim, issue or question in these proceedings:
9A.1 Each and every director of the Company owed to the Company a duty to act in good faith and with that degree of diligence, care and skill which ordinarily prudent men would exercise under similar circumstances, in like positions.
9A.2 Each and every controlling stockholder of the Company owed to the Company a duty of utmost fairness and good faith.
9A.3 Each and every affiliate company of the Company who exercised control over the Company, seeking to, and in fact controlling the de jure board of directors of the Company ("affiliate company"), owed to the Company a fiduciary duty.
9A.4 Each and every director and/or controlling stockholder and/or affiliate company of the Company was not entitled to implement instructions received from a third party without questioning or second-guessing those instructions.
9A.4 On the imminent and/or actual insolvency of the Company:
9A.4.1 Each and every director and/or controlling stockholder and/or affiliate company of the Company became a fiduciary of the assets of the Company for the benefit of its creditors;
9A.4.2 The fiduciary duties of each director and/or controlling stockholder and/or affiliate company were thereupon owed to the Company and to the creditors of the Company;
9A.4.3 The duties of each director and/or controlling stockholder and/or affiliate company as fiduciaries of the assets of the Company for the benefit of its creditors required each director and/or controlling stockholder and/or affiliate company to take all available steps to procure the distribution of those assets amongst those creditors pari passu.
9A4.4 Each director and/or controlling stockholder and/or affiliate company owed a duty to procure or agree to be subordinated all loans or advances by the dominant or controlling stockholder to the claims of the other creditors of the Company.
9A.4.5 Each and every director and/or controlling stockholder and/or affiliate company of the Company owed a duty not to permit or procure the Company to make any form of distribution of corporate assets to shareholders in their capacity as such; and/or to prefer as a creditor of the corporation any persons who was a sole, dominant or influential shareholder of the corporation.
9B For the avoidance of doubt, any de facto director of the Company owed to the Company the same duties set out in paragraph 9A above.
9C In paragraph 9A above, the word "controlling stockholder" includes a person in accordance with whose instructions the de jure directors were accustomed to act and acted.”
“any claim involving either –
(a) the addition or substitution of a new cause of action; or
(b) the addition or substitution of a new party;”
As the time such a new claim is brought for the purposes of the Limitation Act is the time the relevant action or third party proceeding was commenced (s.35(1)) it is necessary to make some provision for preserving existing limitation defences. Thus s.35(3) forbids the introduction of new claims after the expiry of any time limit except as provided for by rules of court. Subsection (4) authorises Rules of Court to make provision for allowing a new claim to be introduced by way of amendment only if the conditions specified in subsection (5) are satisfied and subject to any further restrictions they may impose. Subsection (5) provides
“The conditions referred to in subsection (4) above are the following –
(a) in the case of a claim involving a new cause of action, if the new cause of action arises out of the same facts or substantially the same facts as are already in issue on any claim previously made in the action; and
(b)...]”
“The court may allow an amendment whose effect will be to add or substitute a new claim, but only if the new claim arises out of the same facts or substantially the same facts as a claim in respect of which the party applying for permission has already claimed a remedy in the proceedings.”
In Goode v Martin [2002] 1 AER 620 the Court of Appeal interpreted the phrase “same facts as a claim” as “the same facts as are in issue on a claim” so as to bring in the facts raised in the defence to the claim. Such an interpretation brings the rule into line with s.35(5)(a).
“However it is formulated, only those facts which are material to be proved are to be taken into account. The pleading of unnecessary allegations or the addition of further instances or better particulars do not amount to a distinct cause of action. The selection of the material facts to define the cause of action must be made at the highest level of abstraction.”
In SIB v Fincken [2001] EWCA Civ 1639 Peter Gibson LJ, with whom Robert Walker and Keene LJJ agreed, pointed out at paragraph 30 that the highest level of abstraction required there to be left out of account “mere instances or particulars of essential facts”.
“the common law and usages of the courts of England and of the United States of America, as set forth in case law and in Blackstone’s and Kent’s Commentaries and in other authoritative treatises and digests.”
There is no suggestion that Liberian law will not recognise and give effect to those circumstances which in England lead to fiduciary duties or claims for restitution. None of the experts on Liberian law excludes that possibility. In my view there is a real issue, which it is reasonable for this court to try, that the facts alleged against Latco in the particulars of claim in the Second Action give rise to a general law remedy whether or not the relationship between Latreefers and Latco is to be labelled as a de facto or shadow directorship.
“I accept that when deciding whether or not to make a declaration under s.214 of the Act, the court will take into account what the obligations of the director to his company were at the time when he had the opportunity to minimise the potential loss to the company’s creditors. And I accept that it might well be that, in circumstances where the relevant governing law imposed no obligation on directors to have any regard to the interests of the company or its creditors in the course of their management of its affairs, the English court would decide that a declaration was not appropriate.”
It is suggested by counsel for Latco that the particulars of claim contain no averments sufficient to show that it would be a proper exercise of the court’s discretion to make a declaration of liability to contribute.
a) the order of Lightman J made on 25th June 2001 extending the time for service of the claim form on Latco in the First Action is set aside;
b) permission to amend the particulars of claim in the First Action is granted;
c) the application of Latco to set aside the order of Lightman J made on 25th June 2001 in relation to service of the claim form and the jurisdiction of the court in the Second Action is dismissed.
I will hear further argument on any other issues which arise from my judgment and on the form of order.