Claim No: CFI 024/2010
THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS
In the name of His Highness Sheikh Mohammad Bin Rashid Al Maktoum, Ruler of Dubai
IN THE COURT OF FIRST INSTANCE
BEFORE JUSTICE SIR DAVID STEEL
CORINTH PIPEWORKS S.A.
BARCLAYS BANK PLC
Defendant/Part 21 Claimant
(1) AFRAS LIMITED
(2) RADHAKRISHNAN NANDA KUMAR
Part 21 Defendants
Hearing: 22 April 2014
Counsel: Mr John Taylor QC, Melissa McLaren and Shane Jury (Clifford Chance) for the Defendant/Part 21 Claimant
Mr John Brisby QC, Joseph Wigley and Bushra Ahmed (KBH Kaanuun) for the Part 21 Defendant
Judgment: 22 April 2014
2. There is no need for me to outline the nature of Corinth’s claim against Barclays or indeed the scope of the claim made by Barclays against Afras and Kumar. They are set out in considerable detail in the pleadings and in the skeleton arguments that have been produced both for the purposes of the trial and for the purposes of these applications.
3. On 11 April, Corinth settled with Barclays, a settlement which required the payment by Barclays of US$4 million and, accordingly, Corinth fell away from the proceedings.
4. The third-party claim, of course, continued in existence, but it was clear that a shorter period of time was required for the determination of that part of the claim and, accordingly, the earlier part of the period set aside for the trial was effectively adjourned by consent.
5. We are now on 21 April and the Court is being invited to deal with some rather startling and certainly expensive interlocutory matters that are said to arise from the settlement and the continuing conduct of the third-party claim.
6. Following the settlement, Barclays produced an amended third-party points of claim and an amended reply, the primary purpose of which was to advance the claim against Afras and Kumar under a different section of the Law of Obligations, No. 5 of 2005. That is a point which I will elaborate a little more detail in a moment.
7. Before the application to amend was in play, those acting for Afras and Kumar busied themselves in first of all seeking to strike out in its entirety the whole of the third party claim on the grounds that it relied upon a part of the Law of Obligations which was no longer applicable and secondly seeking an adjournment of the trial to some unspecified date later in the year. This adjournment was said to be needed for the purposes of taking stock of the litigation, ascertaining and obtaining statements from additional witnesses, unearthing additional documents and even seeking expert opinions.
8. When thereafter proposed amended statements of claim and reply were served, the Defendants took the line that the court should not give leave to amend or, if it did give leave, such would be an added reason to adjourn the whole case.
9. Unquestionably, the Court approaches an application for an adjournment in these circumstances with a considerable degree of caution if not scepticism. The Court has reserved a considerable period of time for the benefit of the parties. The case is at least largely ready for trial, whatever view the third party Defendants may have of it, counsel have been instructed and have flown into the jurisdiction and skeleton arguments have been exchanged. The expense of an adjournment would be very substantial indeed and the Court should only contemplate it if it really is necessary to achieve justice between the parties.
10. The focus of much of the debate before me has, as I have already indicated, been the significance of the amendment to introduce a different section of the Law of Obligations. The contribution claim being made by Barclays was originally based upon article 14(1), to the effect that:
“A person who is liable under this Law for any loss may recover contribution from any other person who is liable in respect of the same loss.”
11. Concerned, no doubt, that Corinth would or might succeed in the claim and liability would be established on Barclays’ part, they wanted to make sure they had a contribution from Mr Kumar and Afras who they asserted were liable in respect of the same loss. I am not going to describe the pleaded loss. It centres upon a failure to pay a total of something like US$24 million in respect of pipes supplied by Corinth to various contractors.
12. Of course, once the settlement with Corinth was implemented, as was predictable, the Defendant bank proposed an amendment to their claim to rely upon Article 14(2)which reads:
“A person who makes a payment in settlement of a claim arising under this Law may recover from any other person who would have been liable in respect of the same loss if the factual basis of the claim against him could be established.”
13. At the forefront of the submissions made on behalf of Mr Kumar and Afras by Mr Brisby QC was the proposition that it was a necessary ingredient of any attempt to rely upon article 14(2) that the person who had made the payment and sought a contribution to it, namely Barclays, should have to establish that they themselves were in fact liable for the loss and it was not enough simply to rely upon the settlement as constituting the basis of the claim for contribution. If such was right it was argued there was no adequate pleaded case as to the basis upon which liability accrued
14. The particular feature of Article 14(2) that was at the forefront of the argument was a comparison with a similar provision in the English statutory law. Section 1(4) of Civil Liability Contribution Act 1978 being the equivalent English legislation is rather more elaborate and reads as follows:
“A person who has made or agreed to make a payment in bona fide settlement or compromise of any claim made against him in respect of any damage, including a payment into court which has been accepted, shall be entitled to recover contribution in accordance with this section, without regard to whether or not he himself is or ever was liable in respect of the damage, provided, however, that he would have been liable assuming the factual basis of the claim against him could be established.”
15. Absent those additional words it was contended that Article 14(2), did not allow for a contribution unless the claimant is or was liable in respect of the damage. I am quite unable to accept that submission. It seems to me that manifest that Article 14(2) which was no doubt drafted in reliance on the English statute albeit in a simplified form. It has precisely the same impact as Section 1(4) of the English legislation. It is simply premised on the basis that where there is a claim in respect of a payment in settlement of a claim, another person who would have been liable in respect of the same loss, may be required to contribute to it, regardless of whether the claimant himself is, or ever was, liable. The only criteria is that the person sued for the contribution would be liable in respect of the same loss if the factual basis of the claim against him could be established.
16. One of the great difficulties facing the argument that the person making the claim for contribution must in effect establish that he is liable in respect of the claim which he has settled is that that it would render the whole of Article 14(2) redundant, since Article 14(1) would encompass any such situation
17. This construction is fortified in my judgment by the material which has been furnished to me in one of the skeleton arguments supplied by Mr Taylor QC for Barclays, where there is set out the terms of the Law Commission report on contribution which led to the passing of Section 1(4) of the Civil Liability Contribution Act in 1978. I will not solemnly read out the quoted extract. It is simply enough to repeat the three points that the Commission made specific reference to as justifying a call for legislation to ensure that the settling defendant did not have to prove his own liability in order to entitle him to obtain a contribution from another tortfeasor. As the Commission said, the first problem with this approach is that it would mean turning all the usual conventions of civil litigation upside down, because the settling Defendant would have to call evidence in the possession of the plaintiff in order to establish his own liability and then the defendant from whom contribution was sought would then need to call the settling Defendant’s witnesses in order to raise doubts as to that Defendant’s liability. The second problem was that if the result of the contribution proceedings was that the liability of the second Defendant was established but the liability of the person who had made the compromise was not the Defendant who really was to blame would have to pay nothing at all. The third reason is that Defendants would be deterred from compromising claims in which liability was in doubt if their right of contribution was thereby put in risk. This approach of the common law courts is mirrored by other quotations supplied in regard to the position in New South Wales, in Canada and elsewhere.
18. In my judgment the mischief which this provision is intended to deal with is the problem that a Defendant who wants to settle should not be precluded from entering into a sensible settlement agreement by the mere fact that he would then have to establish, using someone else’s evidence, that he himself was liable. It would be extraordinary to construe the Law of Obligations as establishing by similar words the very problem which the English legislation was intended to overcome some 25 years earlier.
19. This is a point which no doubt could have been dealt with more conveniently and perhaps with greater facility in the course of the judgment following the main action if the point arose. But it seems important that the parties should be aware of where they stand in regard to the issues that are raised by Articles 14(1) and 14(2).
20. I concur with the proposition that all that Barclays will have to establish is that they were faced with a claim under the Law of Obligations, they settled it and Kumar and Afras from whom they seek contribution, would have been liable if the factual basis for the claim against them can be established.
21. It follows, it seems to me, that much of the argument which is centred upon the need it is said for the bank to provide extensive particularisation of the nature, background and rationale for the settlement is not to the point. I see nothing in the pleaded case which has now been put together in amended form, which calls for further particularisation in order to support a claim under Article 14(2).
22. Perhaps one can add in parentheses, one of the more remarkable submissions that fortunately has not seen the light of day orally is that it was necessary to provide the time to serve an amended defence. But one only has to see the terms of the various minor amendments that have been made to realise that no consequential amendment could ever really arise.
23. That deals with the main point that has been argued before me. I should add for completeness sake, that another point that was taken under Article 14(2), namely that Barclays had not made the payment in settlement. Barclays sought to circumvent that point, although it was somewhat lacking in reality given that there was an expectation of payment in the very near future, by seeking a declaration in regard to the issue. Points were made as to whether a declaration was suitable in the circumstances. That is a matter which would fall for determination in accord with the discretion of the court in due course. In any event I am now told that payment is en route, so the point is now defunct.
24. The next point taken, which is really allied to it, is the suggestion that Messrs Kumar and Afras are unclear as to what the legal basis of the claim brought by Corinth against the bank is. But the matter is pleaded in extenso. Indeed, even the points of claim were annexed to the points of defence. The matter was dealt with in some considerable detail in both written and oral argument. In the event I was unable to ascertain precisely what it was that was said to be needed in order to put Mr Kumar and Afras on notice of what the nature of the claim against the bank had been.
25. There was a fringe point about illegality, namely that contribution was not open when there had been a breach of Article 56 of the Law of Obligations. That I detect as having disappeared in the course of the argument.
26. There was also much debate about whether in the skeleton argument produced by the Claimant bank for the purposes of the trial, there was a large range of additional allegations which had never been pleaded. I am afraid I am not persuaded that there are. I reiterate that if a point has not been pleaded which should have been pleaded, then it will not receive the attention of the court absent a successful application to amend. That said I detected no material gaps in the way in which the case had been pleaded or any gaps in the way in which Mr Kumar and Afras had been put on notice as to what the claim was.
27. The suggestion that this was the opportunity to allow the Defendants, Mr Kumar and Afras, to go and seek additional documents, in my judgment, is almost laughable. There has been extensive disclosure, including disclosure requested by all parties. Mr Kumar had the difficulty that he had, as I understand it, arranged for the destruction of all his electronic communications, so his disclosure has been rather limited. Nobody has been able to point to any class of document, let alone a specific document, which has not been produced and which should be produced and even if there were such items, that is something that should have been raised a very long time ago.
28. Equally absurd, in my judgment, is the suggestion that the opportunity is needed to take stock as what other witnesses to call. The only person that is even indicated as a potential witness is the Chief Accountant of Afras, Mr Shah, but he has been in the mix for a long time. I have no doubt consideration was given some time ago as to whether a statement should be obtained from him and if so, whether he should be asked to give evidence. There is absolutely no justification for allowing for a review of that decision at this late stage.
29. One other point I should add. I am not persuaded that there is any injustice in allowing Barclays to pursue their case that the commission payments which are the subject of proceedings in the Dubai courts are bogus claims, based upon bogus documents. Again, that is something which has been very much in play so far as Mr Kumar is concerned, as his statement reveals. It was a topic he was going to have to deal with if the trial had taken place in its entirety. He cannot possibly be prejudiced that it is a point which is effectively picked up by Barclays, who would otherwise of course resist payment of part of the claim on the basis that commissions were due.
30. For all those reasons, I allow the application to amend. I refuse the application to strike out. I refuse the application to adjourn. We shall have to take stock as to how this trial should now proceed.
Maha Al Mehairi
Date of Issue: 23 April 2014
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