What a relief (from the sanctions)! The court grants a request filed 5 years late

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In the recent case of Apollo Ventures Co Ltd v Manchanda [2021] EWHC 3210 (Comm) an extension of time of nearly five years was granted in the defendant’s application for a stay under Part 11 of the Rules of Civil Procedure (“CPR”) – challenging the Court’s jurisdiction.

Fund

The plaintiff is a Thai company of which the defendant, domiciled in Thailand, is a major shareholder. The Applicant alleges that (i) the Respondent caused the Applicant to enter into two loans with a Thai businessman under which the Applicant borrowed £4.4 million and became liable to repay some £5.8 million; (ii) the defendant purported to contract loans on behalf of the plaintiff without the knowledge of other officers of the plaintiff and using false documents and (iii) the loans were not obtained for the benefit of the plaintiff but for the benefit of the defendant and his family members.

The claim was issued on May 9, 2016 against the defendant and seven other defendants, three of whom were within the jurisdiction of the English court and were therefore referred to as ‘lead defendants’. On the same day, a worldwide freezing order (WFO) was granted. There was a request by the defendant and two other defendants to set aside the order authorizing service of the process out of court and a request by all of the defendants to set aside the WFO. These requests were rejected on June 15, 2016.

On February 20, 2018, the plaintiff served amended particulars of the claim and on April 19, 2018, the defendant served his defence, thereby submitting to the jurisdiction of the English court.

A number of similar claims were also made against the defendant in Thailand in 2018 and 2019.

The English claims against the other defendants were struck out in January 2021, leaving the defendant as the only remaining defendant to this claim.

In May 2021, the defendant filed a request for a stay of English proceedings on the grounds that Thailand, not England, was the proper jurisdiction to hear the claim – the claims arise from transactions between a Thai company and a businessman. Thai cases, key witnesses are in Thailand, the events involve issues of Thai law and related proceedings are progressing in Thailand (the “Stay Application”).

Request for extension of time

Regardless of the view, the residence application was filed late. CPR 11(4) requires that an application challenging the jurisdiction of the Court be made within 14 days of the filing of an acknowledgment of receipt. This deadline expired in June 2016. Therefore, the defendant had to apply for a retroactive extension of the deadline (more than 5 years) to file the stay request.

Whether or not it is appropriate to extend the deadline depends on the application of Denton’s test, which is used by courts to decide whether penalty relief (i.e. exemption sanctions for non-compliance with court orders or rules) should be granted in certain cases. . The test has 3 steps:

1. Gravity and significance of the CPR breach

The first step is to assess the severity and significance of the CPR breach.

In the present case, there have been a change in circumstances since the defendant served its defense in April 2018. First, additional proceedings were initiated in Thailand in 2018 and 2019 and, second, the English claims against the other defendants were struck out in January 2021. Accordingly, Respondent’s submission was that there was no reason why the Court could not now conclude that Thailand is clearly and distinctly the most appropriate forum to adjudicate the claim. of the plaintiff against the defendant.

The Court found that there was no reason for the defendant to file the stay application until the court struck out the plaintiff’s claims against the other defendants in January 2021. Nevertheless, the court concluded that 4 months from that date until the date of issuance of the request for stay represented a serious and important delay.

2. Why did this delay occur?

The second step is to investigate why the 4 month delay occurred.

The defendant did not provide any evidence to explain this delay, and the Court could therefore find no valid reason for this delay.

3. All the circumstances of the case; deal fairly with the extension request

The third step involves the court assessing all the circumstances of the case with a view to dealing fairly with the claim, including the need to conduct the litigation efficiently and at a proportionate cost and the need to enforce rules, guidelines practices and orders, as set out in CPR 3.9(1).

It is in this context that the decision of this claim raised new questions, for while the defendant had already submitted to English jurisdiction, it appeared that the defendant now had a convincing case that Thailand is clearly and distinctly the most appropriate forum. The processing of the request for an extension of time properly required that weight be given to this factor, and the Court found this to be a good reason for granting relief. an extension of time.

Another factor that the Court had to consider was that a stay would inevitably lead to the costs already incurred by the Applicant being “unrecoverable” (ie wasted), resulting in serious harm to the Applicant. However, since this waste arose from the striking out of the claim against the other defendants which arose from the plaintiff’s failure to provide security for costs as ordered by the court, the court concluded that the plaintiff had only to blame himself for the unrecoverable expense.

In weighing these two factors, one in favor of an extension of time and the other against an extension of time, the Court considered that the argument in favor of an extension of time was the strongest and accepted the respondent’s request for an extension of time.

The residence request

The reasons why Thailand can be seen clearly and distinctly as the most appropriate forum have been summarized by David Foxton QC in an earlier judgment from 2016, namely:

  • The complaint arises from transactions entered into by a Thai company with a Thai businessman and involves allegations of illegal acts under Thai law by a director of the company residing in Thailand;
  • At least four of the key witnesses live in Thailand;
  • The key events regarding entry into the loans relate to matters of Thai company law;
  • Procedures are already underway in Thailand regarding the loans;
  • While three of the original seven defendants are domiciled in England, only a small portion of the proceeds from the loans have been attributed to that jurisdiction.

The Court concluded that these reasons remained valid in 2021 and, in fact, stronger in circumstances where new proceedings had been brought against the defendant in Thailand in relation to the loans in 2018 and 2019.

The Court held that since no proceedings against the other defendants arising from the loans would take place in England, the defendant could establish that Thailand was clearly and distinctly the most appropriate forum.

In view of all of the foregoing, the Court granted the request for a stay.

This case should serve as a warning to plaintiffs of the risks of dropping or allowing claims to be struck against some, but not all, defendants, particularly where there are similar claims issued in other jurisdictions. In these circumstances, even when all of the remaining overseas defendants have initially submitted to the jurisdiction, it would appear that the English courts are reluctant to allow these claims to proceed absent any other connection to that jurisdiction, whatever the time. which has passed.

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