Wed, 12 Oct 2016
Mr Justice Phillips, sitting in the Queens Bench Division, declined to grant the claimants’ application to compel the first and second defendants to file and serve their defence prior to the defendants’ challenge to jurisdiction being determined. Mr Justice Phillips found that it would be wrong, where a defendants’ challenge to English jurisdiction remained live, to compel the defendants to serve their defence to a particulars of claim, running to 85 pages and alleging fraud.
By way of background, the claimants traded oil and asserted that the claimants had been subject to a fraud by its previous chief executive and chief financial officers – the first and second defendants to the claim. In summary, it was alleged that the defendants had diverted sums to themselves.
Freezing injunctions had already been obtained by the claimants. The first and second defendants resided in Switzerland and disputed that the English Court had jurisdiction.
The jurisdiction challenge had, however, already failed; both before the High Court and the Court of Appeal. The first and second defendants therefore had made an application to the Supreme Court for permission to appeal.
The parties had, by a consent order, extended the period for acknowledgment of service to 14 days after the determination of the jurisdiction challenge. The claimants did not aim to discharge the consent order; rather, the claimants argued that the court should make a direction that the first and second defendants file and serve their defence. The crux of the claimants’ argument was that it was in interest of all parties that the litigation should, now, move forward.
The claimants were engaged in trading oil and its derivatives and claimed that they had been defrauded by their former chief executive and chief financial officers, the first and second defendants, who had allegedly diverted money and transactions to themselves via related companies. The claimants had obtained freezing injunctions against the defendants. The first and second defendants were domiciled in Switzerland and challenged the jurisdiction of the English court. Their jurisdiction challenge had failed before the judge and the Court of Appeal (see Arcadia Petroleum Ltd v Bosworth  EWCA Civ 818). They had applied to the Supreme Court for permission to appeal. By a consent order the time for the first and second defendants to acknowledge service had been extended to 14 days after the jurisdiction issue was finally determined. The claimants did not seek to discharge that order, but applied for the court to direct the first and second defendants to serve their defence to the particulars of claim.
The claimants argued that the defendants should be required to put in their defence since it was in the interests of all parties to progress the litigation and would minimise delay if the jurisdiction challenge was ultimately unsuccessful.
Mr Justice Phillips declined to grant the application; largely, because it was wrong to require the first and second defendants to respond to such a detailed particulars of claim when, ultimately, there may be no need to do so. It was further considered that a direction to require that the first and second defendants file and serve a defence may be of little practical use: the defendants could enter a ‘holding’ defence.
Article Written by Emma Williams Barrister to view her Commercial LItigation CV CLICK HERE