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You are here: BAILII >> Databases >> England and Wales High Court (Commercial Court) Decisions >> ABB Asea Brown Boveri Ltd & Ors v Hiscox Dedicated Corporate Member Ltd & Ors [2007] EWHC 1150 (Comm) (16 May 2007) URL: https://www.bailii.org/ew/cases/EWHC/Comm/2007/1150.html Cite as: [2007] EWHC 1150 (Comm) |
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QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice Strand, London, WC2A 2LL |
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B e f o r e :
____________________
Claim No: 2005 Folio 862 (1) ABB ASEA BROWN BOVERI LTD (2) ABB EQUITY VENTURES INC. |
Claimants |
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(1) DAEWOO POWER (INDIA) LIMITED (2) ABB EQUITY VENTURES B.V. (3) ABB POWER INVESTMENTS (INDIA) B.V. |
Proposed Claimants |
|
- and - |
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HISCOX DEDICATED CORPORATE MEMBER LIMITED & 8 OTHERS |
Defendants |
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AND BETWEEN |
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Claim No: 2005 Folio 279 (1) ABB ASEA BROWN BOVERI LTD (2) ABB EQUITY VENTURES INC. |
Claimants |
|
- and - |
||
(1) DAEWOO POWER (INDIA) LIMITED (2) ABB EQUITY VENTURES B.V. (3) ABB POWER INVESTMENTS (INDIA) B.V. |
Proposed Claimants |
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- and - |
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JARDINE LLOYD THOMPSON LIMITED (formerly JLT Risk Solutions Limited) |
Defendants |
____________________
Mr Robert Bright QC (instructed by Ince & Co) for the Defendants
Mr John Lockey QC (instructed by CMS Cameron McKenna) for JLT Ltd
Hearing dates: 30th March – 2nd April 2007
____________________
Crown Copyright ©
MR JUSTICE CHRISTOPHER CLARKE:
(a) to amend Inc so as to read BV (under CPR 17.4 (1)) or to substitute BV for Inc (under CPR 19.5); and
(b) to add as claimants two further companies viz:
(1) Daewoo Power (India) Ltd ("DPIL"); and
(2) ABB Power Investments (India) Ltd ("PII"); and
(c) to amend the Particulars of Claim.
"1. ASSURED ABB Asea Brown Boveri and/or their subsidiary and/or their Associate Companies (as per appendix 1) for their respective rights and interests.
1. INSURED RISKS
PART A
The CALLING of a COUNTER-INDEMNITY by an ISSUING BANK or by a COUNTER GUARANTEEING BANK caused solely and directly by the calling of a BOND by a BUYER or a COUNTER-GUARANTEE by an ISSUING BANK and where,
1.1. the ASSURED is not in material default of its obligations under a CONTRACT …
PART B
The CALLING of a BID BOND where the ASSURED has submitted a TENDER to a BUYER and where:
1.7. Capricious Call
The ASSURED has neither failed nor refused to enter into a CONTRACT with a BUYER in accordance with the terms and conditions set out in the said TENDER where the ASSURED has not given any indication of any failure or refusal to enter into a CONTRACT with a BUYER…".
"3.6. COUNTER INDEMNITY
A binding agreement issued by the ASSURED or by a THIRD PARTY to pay to an ISSUING BANK or a COUNTER GUARANTEEING BANK in case of a CALLING of a BOND
3.7. COUNTER GUARANTEE
A binding agreement issued by a COUNTER GUARANTEEING BANK to pay an ISSUING BANK in case of a CALLING OF a BOND
3.8. BOND
Any guarantee, BOND or other payment undertaking however named or described by a bank, insurance company or other body or person issued in relation to a contract or a tender (BID BOND) in writing for the payment of money on presentation in conformity with the terms of the undertaking of a written demand for payment and such documents as may be specified in the BOND and where the duty of the issuer is not conditional on actual default of the ASSURED"
3.9. BID BOND
A guarantee issued by either the ASSURED and/or an ISSUING BANK and/or an insurance company in respect of a TENDER
3.10 ISSUING BANK
An entity which has issued a BOND in favour of a BUYER in relation to a CONTRACT or a TENDER
3.11 COUNTER GUARANTEEING BANK
An entity that has issued a COUNTER GUARANTEE in favour of an ISSUING BANK
……………
3.17 DATE OF LOSS
A date within the POLICY PERIOD on which an INSURED RISK occurs.
3.18 CALLING
For the purposes of this Policy, the terms "calling" or "call" shall mean either
a) the actual calling of a BOND
or
b) a stated intention to call a BOND in circumstances which are advised to Underwriters hereon and which ultimately lead to a financial loss to the ASSURED for which the ASSURED is indemnified by Underwriters hereon, subject to the terms and conditions hereunder
or
c) an indirect call where the ASSURED is obliged to pay to a Third Party in accordance with subcontracting or consortium agreements…
3.19 WAITING PERIOD
The period specified in item 6 of the SCHEDULE [which was 180 days], beginning at the DATE OF LOSS."
"In all cases, admission of the above companies shall include all subsidiaries or associated companies (referred to as "contracting companies") in which the above parent companies (referred to as "holding" or "regional" companies), directly or indirectly, have more than 50% of the voting rights or over which they exert decisive influence".
"Discretionary Admission of BONDS to the Policy
Subject to the Leading Underwriters' approval and - if so approved – premium rating in each case, the ASSURED may admit to the Policy for coverage:
…
b. BONDS issued by order of a subsidiary or minority owned or joint venture or associate company of the [ABB] Group of Companies or by order of a company acting as agent for an [ABB Group Company] where the ASSURED has issued a counter-indemnity and is ultimately at risk …"
"6.1. AMOUNT OF LOSS for Tender, Performance, Retention and Warranty Bonds
Where loss occurs in respect of Tender, Performance, Retention or Warranty BONDS, the AMOUNT OF LOSS is calculated as the sum paid by the ASSURED under the COUNTER INDEMNITY less all recoveries and only up to the MAXIMUM LIABILTY
……………………
6.6. Settlement of Claim
Underwriters will pay to the ASSURED the INSURED PERCENTAGE of the AMOUNT OF LOSS as soon as practicable after the AMOUNT OF LOSS has been calculated. The AMOUNT OF LOSS will not be calculated until after the respective WAITING PERIOD is completed"
Assured ? [Counter Guaranteeing Bank] ? Issuing Bank ? Buyer
The Korba Project
Endorsement No 5
"It is hereby understood and agreed by Underwriters that the Rs 107456800[1] Demand Draft by [DPIL] in favour of [the Board] is eligible for cover hereunder"
Endorsement No 6
No 6 - which read as follows:
"It is hereby understood and agreed that, with effect from 5th October 1998 the Security Deposit issued by the Assured in respect of the Korba Project is included for coverage hereunder.
Coverage is in respect of "Events of Unfair Forfeiture" as per the schedule of definitions attached hereto and the Sum Insured is Indian Rupees 625,000,000 subject to all Policy Limits and Mechanisms for calculating conversion to Policy Currency"
The Events of Unfair Forfeiture included, in paragraph 1.1 thereof, the Board declaring the deposit forfeited in circumstances where the Board had failed to present a form of escrow agreement "accepted as bankable by DPIL's Indian and International lenders".
Financing the Korba Security Deposit
BV (indemnity of 9.9.98) ? Sirius (guarantee of 14.8.98) ? HSBC –B/M (guarantee) ? HSBC-ND (loan of 14.8.98) ? DPIL ? Board.
The 1999 policies
"The CALLING of a BID BOND by the ISSUING BANK or by a COUNTER GUARANTEE BANK caused solely and directly by the calling of a BOND by a BUYER or a COUNTER-GUARANTEE by an ISSUING BANK where the ASSURED has submitted a TENDER to a BUYER.."
Developments in 1999
Developments in 2003
BV (deposit of $ 12.5 million) ? HSBC–M ? HSBC–ND.
Developments in 2005
ABB Zurich ? HSBC-Stockholm ? HSBC-ND.
Developments in 2007
Operation of an Insured Peril
Proceedings in India
Claiming under the policies
The reason why Inc was included as claimant
Limitation
"35. New claims in pending actions: rules of court.
(1) For the purposes of this Act, any new claim made in the course of any action shall be deemed to be a separate action and to have been commenced—
(a) in the case of a new claim made in or by way of third party proceedings, on the date on which those proceedings were commenced; and
(b) in the case of any other new claim, on the same date as the original action.
(2) In this section a new claim means any claim by way of set-off or counterclaim, and 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;
(3) Except as provided by section 33 of this Act or by rules of court, neither the High Court nor any county court shall allow a new claim within subsection (1) (b) above, other than an original set off or counterclaim, to be made in the course of any action after the expiry of any time limit under this Act which would affect a new action to enforce that claim.
……..
(4) Rules of court may provide for allowing a new claim to which subsection (3) above applies to be made as there mentioned, but only if the conditions specified in subsection (5) below are satisfied, and subject to any further restrictions the rules may impose[6].
(5) 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 original action; and
(b) in the case of a claim involving a new party, if the addition or substitution of the new party is necessary for the determination of the original action.
(6) The addition or substitution of a new party shall not be regarded for the purposes of subsection (5) (b) above as necessary for the determination of the original action unless either
(a) the new party is substituted for a party whose name was given in any claim made in the original action in mistake for the new party's name; or
(b) any claim already made in the original action cannot be maintained by or against an existing party unless the new party is joined or substituted as plaintiff or defendant in that action."
CPR 17.4.
"17.4. (1) This rule applies where –
(a) a party applies to amend his statement of case in one of the ways mentioned in this rule; and
(b) a period of limitation has expired under –
(i) the Limitation Act 1980…
(3) The court may allow an amendment to correct a mistake as to the name of a party, but only where the mistake was genuine and not one which would cause reasonable doubt as to the identity of the party in question"
"19.5
(1) This rule applies to a change of parties after the end of a period of limitation under –
(a) the Limitation Act 1980;
(2) The court may add or substitute a party only if –
(a) the relevant limitation period was current when the proceedings were started; and
(b) the addition or substitution is necessary.
(3) The addition or substitution of a party is necessary only if the court is satisfied that –
(a) the new party is to be substituted for a party who was named in the claim form in mistake for the new party;
(b) the claim cannot properly be carried on by or against the original party unless the new party is added or substituted as claimant or defendant; or
(c) …."
"An amendment to correct the name of a party may be allowed …. notwithstanding that it is alleged that the effect of the amendment will be to substitute a new party if the Court is satisfied that the mistake sought to be corrected was a genuine mistake and was not misleading or such as to cause any reasonable doubt as to the identity of the party intending to sue or, as the case may be, intended to be sued".
That rule was made pursuant to the powers contained in section 99 (a) of the Supreme Court of Judicature (Consolidation) Act 1925.
Discussion
Amendment in Folio 862
"in respect of the unfair calling and/or capricious calling and/or non repayment and/or unfair forfeiture and/or implied declaration of forfeiture by [the Board] in the sum of Indian Rupees 1.074.568.000 deposited in [SBI] on or about 17th August 1998 by or on behalf of [DPIL] and/or the First Claimant and/or the Second Claimant together with accrued interest thereon".
(a) ABB made the deposit;
(b) Some other entity made the deposit on ABB's behalf;
(c) Inc made the deposit;
(d) Some other entity made the deposit on Inc's behalf.
ABB EVE ? Sirius (guarantee) ? Special Purpose company ? Local Bank ? (On demand instrument) Beneficiary.
"ABB EVE" is plainly an abbreviation for ABB Energy Ventures; although which of the companies with that name is referred to is not stated. But by a fax of 17th August JLT was told that "The ABB company ABB Energy Ventures B.V. is located in the Netherlands". The diagram indicates that the Bank would make a loan to and receive a deposit from the Special Purpose company which is described as owned 50/50 by ABB EVE and Daewoo. So it is tolerably clear that "ABB EVE" is ABB Energy Ventures B.V. and that it owns 50% of the special purpose company and is the guarantor or indemnifier of Sirius.
CPR 19.5.
"By comparison and contrast with r.17.4 (3) that mistake is not a mere mistake as to a name such as causes no reasonable doubt as to the identity of the party in question but is something more fundamental which can only be cured if a new party is substituted."
Further, since Order 20 r. 5 was not intended to implement section 35 of the Limitation Act, "The Sardinia Sulcis" cannot be regarded as an authority on section 35 or CPR 19.5, which was so intended, and does not represent the limits of rule 19.5: Morgan Est, paragraph 27.
(a) BV has no realistic claim under the insurance;
(b) the claim sought to be put forward is not the same claim as that made in the claim form (but corrected as to the name of the claimant); and
(c) the amendment will deprive them of a time bar defence.
As to the latter the Court should not, they claim, exercise its discretion, if it has any, to substitute BV for Inc in the light of the claimants' egregious failure, before the initiation of proceedings, to do any proper research into the basis upon which Inc was being joined.
No realistic claim under the insurance?
Not the same claim as made in the claim form?
"(a) the new party is substituted for a party whose name was given in any claim made in the original action in mistake for the new party's name;"
"on the formulation of the claim made in the original action, and on the question whether a mistake has been made as regards one or another person who is named as a party to that claim. There may, therefore, be a limit to the extent to which the provisions of rules 19.5 (3) (a) and 17.4. (3) can have cumulative effect ".
"..the application of rule 19.5 (3) has to be viewed in the statutory context of section 35 (6) and of the overriding objective, and in the factual context of the nature of the claim made, the amendments sought to be made and the evidence as to the nature and the circumstances of the mistake which it is said was made in respect of the original claim"
"..a process which is consistent with the words of section 35 (6) which refer to the substitution of the new party "for a party whose name was given in any claim made in the original action". Attention has therefore to be focussed on the "claim made in the original action" in relation to which the original party's name is said to have been used by mistake for that of the party proposed to be substituted. As Sedley LJ suggested in the course of argument it may be a convenient working test to ask whether you can change the identity of the claimant or, as the case may be, the defendant without significantly altering the claim".
Discretion
Amendment in Folio 279.
The addition of PII and DPIL
The general point
DPIL's claim against the insurers
DPIL's claim against the brokers
The failure to make a claim on behalf of DPIL
PII's claims
Against insurers
Against JLT
Amendment to the Particulars of Claim
Note 1 Then about $25,500,000. [Back] Note 2 These appear to have been drafts drawn on its account and certified by the SBI. [Back] Note 3 The insurers appear to have been given to understand that DPIL would make a cash deposit into a bank account in the name of ABB: see para 19 of the insurers’ defence and para 23A of APOC.
[Back] Note 4 It has since been sold. [Back] Note 5 Mr Hutchison’s witness statement (paragraph 10.j.) refers to HSBC-ND; but I assume this to be an error. [Back] Note 6 The Rules have imposed no further restrictions. [Back] Note 7 In Kesslar v Moore & Tibbits [2004] EWCA Civ 1551 Sedley, LJ, reserved for further consideration whether “there is in this field of the law a material dichotomy of identity and capacity or of nomenclature and liability”. [Back] Note 8 In paragraph 6.b of his witness statement [Back] Note 9 The interest claimed in the APOC is for the interest on the deposit as agreed between DPIL and the Board [Back] Note 10 The insurers could argue that the interposition of Sirius and DPIL meant that there was no cover because the structure was more complex than Assured – Counter Guaranteeing Bank – Issuing Bank – Buyer; but this would be difficult in the light of the fax of 13th August 1998. [Back] Note 11 Mr McPhun suggested that the situation was analogous to that in Merrett v Babb. It is not. In that case the surveyor knew when he was asked to produce his report, and when he did so, that the prospective purchasers were mother and daughter, and that both of them would rely upon his report for the purpose of effecting their joint purchase. [Back] Note 12 In paragraph 10 of his witness statement Mr Foss states that it is clear that PII was not in existence in October 1998 or April 1999 but the source of his clarity is not stated. [Back]