This appeal relates to a jurisdictional challenge raised by Mr. C. C. to an
application by P. Assurance Co. Ltd. ("P.") to make him liable, pursuant to
section 51 of the Supreme Court Act 1981, for the balance of the unpaid
costs of an action in which P. obtained judgment and an order for costs
against the plaintiffs.
The action was concerned with the claim by the plaintiffs, a Panamanian
company, as owners of the I. R., to recover from her hull and machinery
underwriters, represented for these purposes by P., the lead underwriter.
The claim was made on the basis that the I. R. was a constructive total
loss following grounding and a fire in April 1985. P. defended the claim
on the ground that the vessel had been deliberately cast away by her
owners. At the trial, Cresswell J. [1993] 2 Lloyd's Rep. 68 gave judgment
in favour of the owners. In December 1994, following a hearing lasting 30
days in the Court of Appeal, P.'s appeal was allowed. The Court of Appeal
[1995] 1 Lloyd's Rep. 455 held that the vessel had been deliberately run
aground and then deliberately set on fire on the authority of her owners,
the plaintiffs. P. was awarded its costs both on appeal and in the court
below. The total costs for which P. has obtained certification amount to
£2,771,072.81 to which a sum in excess of £1m. in interest needs to be
added. P. has recovered £1,175,000 of those costs by reason of awards of
security for costs made prior to trial. P. claims a balance including interest
in the sum of £2,680,215.87.
On 15 December 1998 P. issued a summons in this action seeking an
order pursuant to section 51 of the Supreme Court Act 1981 that Mr. C.
be liable personally to pay its costs. There is no issue that section 51 does
permit such an order to be made against a non-party: see Aiden Shipping
Co. Ltd. v. Interbulk Ltd. [1986] A.C. 965.
Section 51 provides:
"(1) Subject to the provisions of this or any other enactment and to rules
of court, the costs of and incidental to all proceedings in--
(a) the civil division of the Court of Appeal;
(b) the High Court, and
(c) any county court shall be in the discretion of the court...
(3) The court shall have full power to determine by whom and to what
extent the costs are to be paid"
The grounds on which the order is sought against Mr. C. are set out in the
seventh affidavit of Mr. Jeremy Farr, a partner in Ince & Co., P.'s solicitors,
sworn on 14 December 1998. They are summarised by Rix J.:
"The owners were a typical one-ship company whose only asset, the I. R.,
has been scuttled. The principals behind the owners were two brothers,
Mr. C. ('Co.') C., against whom the summons has been issued, and his
brother, Anthony. At the time the vessel was scuttled, they were both
directors of the owning company, and Co. held 80 per cent. of its shares
and Anthony held the other 20 per cent. Subsequently, in November 1986
Anthony transferred his shares to Co., who became the sole shareholder,
and in June 1987 Anthony formally resigned as a director. In an affidavit
in these proceedings dated 13 May 1992, by which time the bank to which
the vessel had been mortgaged had been paid out, Co. referred to himself
as having’effectively the entire beneficial interest in the I. R. and in the
proceeds of this insurance.' P. draws the inference from these and other
indications that Co. C. was involved in the direction of the action and that
it was he who instituted, controlled and financed the litigation"
P.'s summons of 15 December 1998 was served on Mr. C. in Greece.
No leave was obtained from the English court for that service. The only
evidence before Rix J., so far as Greek law was concerned, indicated that
that service was good service according to Greek law. On 12 January
1999 copies of the summons and of Mr. Farr's affidavit were served on
Clifford Chance, the plaintiff's solicitors, who acknowledged that service
on 13 January 1999.
Mr. C. wished to challenge the jurisdiction of the English court. Agreement
was given by Ince & Co., for P., that such challenge would not itself be
taken as a submission to the jurisdiction. It was in those circumstances
that the matter came before Rix J. on 12 July 1999. At the hearing on
12 July 1999 Mr. Hildyard on behalf of P., without notice to Mr. C., sought
permission to add Mr. C. as a party to the proceedings (for the purpose of
costs only) and in that connection for permission to dispense with further
service of the amended summons and with service of any amended writ.
Rix J. dismissed Mr. C.'s application challenging the court's jurisdiction. He
held that leave should have been obtained for the service of the summons
on Mr. C. in Greece. He however held that that leave could be given
retrospectively, and gave such leave, and in the result Mr. C.'s challenge
failed.
Submissions
Mr. Layton, for Mr. C., submitted before Rix J. and again before us that
there is simply no basis on which the English court has jurisdiction or
can assume jurisdiction over Mr. C.. His main argument was that the
summons under section 51 seeking an order for costs against Mr. C. must
be considered distinct and separate from the main action and that the
Brussels Convention on Jurisdiction and the Enforcement of Judgments in
Civil and Commercial Matters (1968) applies to that claim. He submitted
that section 51 proceedings against a non-party are a "civil or commercial
matter" to which article 1 of Title I applies. He submitted accordingly
that the English court is not entitled to take jurisdiction because (a)
by article 2 a person such as Mr. C. domiciled in a contracting state
(Greece) is entitled to be sued only in Greece, unless other provisions
of the Convention allow otherwise, and because (b) the only provisions
that could apply "otherwise" are, as article 3 provides, set out in articles
2 to 6 of Title II and none apply. He submitted that article 6(2) (third
party proceedings) would effectively be the only candidate, and that
provision, he submitted, does not apply. In the alternative, he submitted
that if the section 51 process is not to be considered separately from
the main action for jurisdiction purposes, then article 3 of Title II of the
Convention applies on the basis that the action is a matter relating to
insurance. He submitted thus on that basis that by article 11 P. could
bring proceedings only in Greece. In the further alternative he submitted
that, if the Brussels Convention did not apply, then the court had no
inherent jurisdiction over someone not physically within the United
Kingdom. He submitted that, in the absence of a submission to the
jurisdiction, the English court could only have jurisdiction over someone
outside the territorial jurisdiction of the English court where statute had
provided that jurisdiction. He submitted that the only relevant statutory
jurisdiction available to the English court in these circumstances was that
provided by the rules of court made with statutory authority. Those rules
are set out under R.S.C., Ord. 11, r. 1 and he submitted that Ord. 11, r.
1 simply did not cover a section 51 application against a non-party. He
submitted this was so whether one was considering the position under
the rules applicable at the time of the issue of the section 51 summons or
whether one was considering the position under the new Civil Procedure
Rules 1998. Under the new rules it is specifically provided in relation to
costs orders in favour of or against non-parties as follows:
"48.2
(1) Where the court is considering whether to exercise its power under
section 51 of the Supreme Court Act 1981 (costs are in the discretion of
the court) to make a costs order in favour of or against a person who is
not a party to proceedings--
(a) that person must be added as a party to the proceedings for the
purposes of costs only; and
(b) he must be given a reasonable opportunity to attend a hearing at
which the court will consider the matter further"
There is, however, nothing in the Civil Procedure Rules which expressly
deals with the situation where the non-party is domiciled outside the
jurisdiction. Accordingly, submitted Mr. Layton, even now the court is
driven back to Ord. 11, r. 1 if there is to be power to exercise jurisdiction
over a non-party out of the jurisdiction and Ord. 11, r. 1 simply does not
provide a basis for jurisdiction.
Mr. Hildyard's submissions in broad terms were as follows.
(1) The application is made on the basis that Mr. C. was the directing
mind of the company that brought the proceedings and that thus he and
the company were really one and the same. He submitted thus that the
English court should have jurisdiction to decide that issue and that in
reality the preliminary point on jurisdiction and the main point under
section 51 merge one with the other. He submitted that if the issue is
decided against Mr. C. that will establish that Mr. C. has in fact submitted
to the jurisdiction by bringing the action through his company. Mr. Layton
suggested in his skeleton argument that the question of submission
to jurisdiction did not form part of the judge's reasoning and was not
raised as a separate ground in the respondent's notice. But the main
thrust of Mr. Hildyard's submission that the hearing on the merits and
the jurisdiction question are really intertwined involves, as it seems
to me in reality, a submission that if the section 51 proceedings were
decided against Mr. C. that decision would involve deciding that Mr.
C. had in effect submitted to the jurisdiction. Mr. Hildyard submitted
thus that procedurally all that was required for that issue to be placed
before the English court was compliance with such rules of procedure
as the English court had laid down for resolving the section 51 issue.
He submitted that notice of the fact that the issue was to be raised by a
summons in the action was all that was required. He relied on In re Cliff;
Edwards v. Brown [1895] 2 Ch. 21. He submitted that P. had complied
with its obligation to give notice by service of the summons in Greece
without leave. In the alternative, so far as the appropriate procedure was
concerned, he relied on Ord. 11, r. 9, which provides:
"(1) Rule 1 of this order shall apply to the service out of the jurisdiction
of an originating summons, notice of motion or petition as it applies to
service of a writ...
(4) Service out of the jurisdiction of any summons, notice or order issued,
given or made in any proceedings is permissible with the leave of the
court but leave shall not be required for such service in any proceedings
in which the writ, originating summons, motion or petition may by these
rules or under any Act be served out of the jurisdiction without leave."
Mr. Hildyard submitted that, despite a dictum of Phillips L.J. to the
contrary in Murphy v. Young & Co.'s Brewery Plc. [1997] 1 W.L.R. 1591,
an originating summons under the old rules was not necessary in relation
to an application under section 51. He submitted that the requirement to
swear an affidavit under Ord. 11, rr. 9(5) and 4(1) was inapplicable, or if
it was applicable there was no requirement under Ord. 11, r. 9 to comply
with sub-paragraphs (a) to (u) of Ord. 11, r. 1(1) in order to obtain leave
to issue and serve a summons in an already existing action. Ord. 11, r.
9(5) allowed for sensible adaptation. In the final alternative, so far as the
appropriate procedure relating to this first submission was concerned,
Mr. Hildyard submitted that if an originating summons was necessary
and if thus service was only permissible with the leave of the court in the
circumstances set out under Ord. 11, r. 1(1), then P. could satisfy the
court that Mr. C. was a necessary or proper party under Ord. 11, r. 1(1)
(c). He suggested furthermore that the linguistic difficulty which might at
first sight appear if an affidavit was required to be sworn in accordance
with Ord. 11, r. 4 was concerned should not constrain the court. He in any
event suggested that retrospective leave should be given in relation to the
service of the summons.
(2) Mr. Hildyard submitted in the alternative that, even if he cannot
rely on a submission to the jurisdiction, the issue under section 51
is still an issue which the English court has the jurisdiction to try in
relation to a person outside the territorial jurisdiction of the court unless
the circumstances are such that the United Kingdom by the Brussels
Convention has agreed that the English court should not have jurisdiction.
He submitted that Mr. C. did not bring himself within Titles I to III of
the Brussels Convention. He thus submitted that Mr. C. had no right to
be proceeded against in Greece. He submitted that the procedure for
deciding the section 51 issue was precisely that already discussed, that is,
either notice to Mr. C. without leave of the court, or leave under Ord. 11,
r. 9, or leave under Ord. 11, r. 1(1)(c).
(3) In the final alternative Mr. Hildyard submitted that, if in fact Titles I
to III of the Convention did apply, the court had jurisdiction by virtue of
article 6 of the Convention which provides:
"A person domiciled in a contracting state may also be sued...
(2) as a third party in an action on a warranty or guarantee or in
any other third party proceedings, in the court seised of the original
proceedings, unless these were instituted solely with the object of
removing him from the jurisdiction of the court which would be competent
in his case."
This submission obviously lies uneasily with the submission that Titles I to
III of the Convention did not apply, but, encouraged by the view taken by
the judge and possibly some interjections from this court on the hearing
of this appeal, Mr. Hildyard submitted progressively more boldly that
a claim against a non-party under section 51 could be brought by way
of third party proceedings under article 6(2), and that it was proper to
construe what had taken place in this case, that is, service of a summons
in the action on Mr. C. as third party proceedings within that article.
Discussion
Mr. Layton emphasised at the outset of his submissions that the court
must bear in mind the different ways in which the term "jurisdiction" may
be used. He emphasised that a country such as the United Kingdom has
jurisdiction over persons present within its territory. It may, however, give
itself the power to make orders against persons outside its territory but
only in certain clearly defined circumstances. Possibly of more relevance
he stressed that enforcement of orders outside the United Kingdom in
other countries would depend on the recognition by those other countries
of the jurisdiction which the English court had purported to exercise.
These are important and fundamental points. That is particularly so where
the English court is seeking to bring before it someone who is prima facie
not subject to the territorial jurisdiction of the English court. Even in
the Order 11 context there are many dicta to the effect that the English
court should be cautious in its approach to bringing persons outside the
jurisdiction before it.
What, however, it is necessary to stress in this context is that where
the court is exercising its power under section 51 of the Act of 1981 it
is doing so in the context of substantive proceedings in which the court
does have jurisdiction. The exercise of the power to order costs to be
paid by a party not named is an order made in those proceedings and it
will only be exercised on the basis of a substantial connection with those
proceedings by a non-party. It is worth reminding oneself of the summary
of the decisions relating to the award of costs against a non-party in the
judgment of Balcombe L.J. in Symphony Group Plc. v. Hodgson [1994]
Q.B. 179, 191-192:
"These decisions may be conveniently summarised under the following
heads. (1) Where a person has some management of the action, e.g. a
director of an insolvent company who causes the company improperly to
prosecute or defend proceedings: see In re Land and Property Trust Co.
Plc. [1991] 1 W.L.R. 601; In re Land and Property Trust Co. Plc. (No. 3)
[1991] B.C.L.C. 856; In re Land and Property Trust Co. Plc. (No. 2) The
Times, 16 February 1993; Court of Appeal (Civil Division) Transcript No.
160 of 1993; Taylor v. Pace Developments Ltd. [1991] B.C.C. 406; In re
A Company (No. 004055 of 1991) [1991] 1 W.L.R. 1003 and Framework
Exhibitions Ltd. v. Matchroom Boxing Ltd. (unreported), 23 September
1992; Court of Appeal (Civil Division) Transcript No. 873 of 1992. It
is of interest to note that, while it was not suggested in any of these
cases that it would never be a proper exercise of the jurisdiction to order
the director to pay the costs, in none of them was it the ultimate result
that the director was so ordered. (2) Where a person has maintained or
financed the action. This was undoubtedly considered to be a proper case
for the exercise of the discretion by Macpherson of Cluny J. in Singh v.
Observer Ltd. [1989] 2 All E.R. 751, where it was alleged that a non-
party was maintaining the plaintiff's libel action. However, on appeal the
evidence showed that the non-party had not been maintaining the action
and the appeal was allowed without going into the legal issues raised
by the judge's decision: see Singh v. Observer Ltd. [1989] 3 All E.R.
777n. (3) In Gupta v. Comer [1991] 1 Q.B. 629 this court approached
the power of the court to order a solicitor to pay costs under Ord.62,
r.11 as an example of the exercise of the jurisdiction under section
51 of the Act of 1981. (4) Where a person has caused the action. In
Pritchard v. J. H. Cobden Ltd. [1988] Fam. 22 the plaintiff had suffered
brain damage through the defendant's negligence. That resulted in a
personality change which precipitated a divorce. This court held that the
defendant's agreement to pay the costs of the divorce proceedings could
be justified as an application of the Aiden Shipping Co. Ltd. v. Interbulk
Ltd. [1986] A.C. 965 principle: see [1988] Fam. 22, 51. (5) Where the
person is a party to a closely related action which has been heard at the
same time but not consolidated--as was the case in Aiden Shipping itself.
(6) Group litigation where one or two actions are selected as test actions:
see Joseph Owen Davies v. Eli Lilly & Co. [1987] 1 W.L.R. 1136. I accept
that these categories are neither rigid nor closed. They indicate the sorts
of connection which have so far led the courts to entertain a claim for
costs against a non-party"
It seems to me important to distinguish between a situation in which
there is no pending action but the English court is concerned to exercise
jurisdiction over someone resident outside its territory and a situation
in which there is pending in the English court an action over which on
any view the English court has jurisdiction. If, for example, a party to
an English action were to commit a contempt of court by refusing to
obey an order, the fact that that party was outside the jurisdiction would
not prevent the court exercising its powers to commit the infringer for
contempt. In Mansour v. Mansour [1989] 1 F.L.R. 418 that very point
was considered. This authority was not cited to us but it is of assistance
in confirming the view which we had formed at the conclusion of the
hearing of the appeal. In that case the parties were Egyptian nationals
normally resident in Egypt. The husband claimed damages against the
wife for conversion of various chattels within the jurisdiction and the wife
counterclaimed for breach of trust in relation to certain sums of money.
The court granted a Mareva injunction against the wife relating to various
chattels including a car. The husband alleged that the wife disposed of the
car after the making of the injunction and with knowledge of it. He took
out a notice of motion for her to be committed to prison for contempt
of court. The wife applied to set aside that notice on the basis that the
English court did not have jurisdiction over her as a resident in Egypt.
The application was refused and leave to appeal was sought. The Court of
Appeal refused leave to appeal. The court held that it was very doubtful
whether committal proceedings to enforce Mareva injunctions fell within
Ord. 11, r. 1(1)(m), that is, enforcement of judgments. The court further
held that a notice of motion was not an originating process to which Ord.
11, r. 9(1) applied. It further held that rule 9(4), which was in slightly
different terms to the rule quoted above, was concerned with summonses,
notices and orders issued, given or made in proceedings which are "in
esse." Ord. 11, r. 9(4) in those days (1988) was in the following terms:
"Subject to Ord. 73, r. 7, service out of the jurisdiction of any summons,
notice or order issued, given or made in any proceedings is permissible
with the leave of the court but leave shall not be required for such service
in any proceedings in which the writ, originating summons, motion or
petition may by these rules or under any Act be served without leave."
And following quotation of that provision Sir John Donaldson M.R. in the
judgment of the court, with which Neill and Balcombe L.JJ. agreed, said,
at p. 421:
"Clearly, if it had been necessary to serve the writ out of the jurisdiction,
leave would have been required and could have been obtained. In fact,
it was served within the jurisdiction, but that does not alter its character
in the context of a defendant who is abroad. R.S.C., Ord. 11, r. 9(4) is
dealing with summonses, notices and orders issued, given or made in any
proceedings which are already in being, and it seems to me quite clear
that a notice of a motion to be made in existing proceedings is within the
paragraph. If the proceedings were such that leave to serve the writ was
required, leave can be given to serve the summons, notice or order. If no
leave to serve the writ was required, no leave is necessary to serve the
summons, notice or order"
The difference between paragraph (4) as quoted by Sir John Donaldson
M.R. and the present paragraph (4) relates to the insertion of the words
at the end of paragraph (4) "out of the jurisdiction." With the insertion
of those words it is not possible to argue that, simply because this action
was started by a writ where service of the same could be made without
leave, any summons in the action which is to be served on a person
outside the jurisdiction can be served without leave. However, the above
paragraph in the judgment of Sir John Donaldson M.R. still supports the
view that, where there is an action pending before the English court,
then a summons in that action can be served on a person domiciled and
resident outside the jurisdiction. I appreciate that in that case the party
being served was a party to the proceedings. But that was not the basis of
Sir John Donaldson M.R.'s reasoning and I venture to think that if a non-
party committed a contempt of the English court the fact that that non-
party was outside the jurisdiction physically would not prevent the English
court having jurisdiction to proceed to commit for contempt. By analogy,
as it seems to me, unless by some Convention the United Kingdom has
agreed that its courts would not exercise a jurisdiction, the English court
has jurisdiction to decide the issue whether a non-party has taken such
steps in relation to an action as should render that person liable to pay
the costs of that action. Even more clearly, if what is alleged (as in this
case) is that the non-party in reality brought the main proceedings, the
English court has jurisdiction to decide whether there has in effect been a
submission to the jurisdiction by the non-party.
Of course, if an order were made by the English court, and once the
question of enforcement was an issue, the question might arise as
to whether a court other than the English court would recognise that
jurisdiction. That is not in issue at this stage. But, if the English court
were to find on the issue arising under section 51 that Mr. C. was
effectively the alter ego of the plaintiff and that proper notice had been
given to Mr. C. that that issue was to be decided by the English court,
then the judgment may well be one that would be recognised in other
Convention countries by virtue of article 26 of the Brussels Convention.
It may be that fact which has led Mr. Layton to run as his main point that
Titles I to III of the Convention actually prevent the English court from
taking jurisdiction.
In summary, in any event, it is in my view convenient to approach this
case first as if no Convention point arose, that is, on the basis that Mr.
C. was resident and domiciled outside all Convention countries; second
to consider whether residence within a Convention country alters the
position and in particular consider whether Titles I to III of the Convention
apply; and third if Titles I to III of the Convention do apply to consider
what their effect is.
Position in a non-Brussels Convention case
As will by now be apparent, it seems to me that the English court does
have jurisdiction to decide in relation to a non-party resident outside
the jurisdiction whether they should be liable for costs under section 51
of the Act of 1981. It seems to me that it must be open to a party to
serve a notice on someone outside the jurisdiction which in effect says:
"We have issued a summons in the action and we are going to contend
you have had such a connection with proceedings within the jurisdiction
and, more clearly still, that it is actually you that brought the action and
that you have submitted to the jurisdiction, and we are going to seek
an order for costs against you on that basis." It furthermore seems to
me that procedurally the appropriate course under the old rules was to
issue a summons in the action. That summons would be served on the
plaintiff in the action and would also be served on Mr. C. outside the
jurisdiction. It would not on any view be material to look at Ord. 11,
r. 1. Ord. 11, r. 9(4) would apply and as it seems to me leave to serve
that summons out of the jurisdiction should have been obtained. In
this assumed situation under the old rules, I do not myself see that an
originating summons effectively commencing fresh proceedings would
have been the appropriate course and thus Ord. 11, r. 9(1) would not be
material. Despite the dictum of Phillips L.J. in Murphy v. Young & Co.'s
Brewery Plc. [1997] 1 W.L.R. 1591, I prefer the approach of Sir Robert
Gatehouse in Seismik Securitik A.G. v. Sphere Drake Insurance Plc.
(unreported), 3 February 1998, where he said:
"Mr. Kenny for Admiral Makris opposed the application. His primary
submission is that the court has no jurisdiction because: (1) the
application should have been made by originating process, not by way
of summons in the action; and (2) the exercise of jurisdiction would,
in any event, be contrary to the Brussels Convention... I am satisfied
that there is nothing in either of the objections to jurisdiction. The first
depends entirely upon the obiter expression of opinion (and a tentative
one at that) of Phillips L.J. in Murphy v. Young & Co.'s Brewery Plc. [1997]
1 W.L.R. 1591, 1598. Phillips L.J.'s remark was no doubt appropriate in
the context of the procedural facts of that case but it affords no support
for the argument that a section 51 application must be brought by way
of originating process in the usual case, of which the present is typical.
As far as I am aware, a summons in the action has been the universal
method of procedure in all previous section 51 applications. There
could be no justification for issuing an originating notice of motion, or
a fresh writ, because the defendants have no cause of action against
the individuals, any more than they have against the company. This
consideration is also the basic reason why, in my judgment, article 2
of the Brussels Convention has no bearing on a section 51 application.
There is no factual situation giving a right to a remedy against the non-
parties; there is only a statutory discretion. Mr. Kenny referred to Letang
v. Cooper [1965] 1 Q.B. 232, 243, where Diplock L.J. defined a cause
of action as a 'factual situation which entitles one person to obtain from
the court a remedy against another person.' That is not what is provided
by section 51. Mr. Kenny accepts that it necessarily follows from his
argument that an application under the section can never be served upon
a person domiciled in a contracting state. There is, in my view, no such
limitation..."
In relation to obtaining leave, Ord. 11, r. 9(5) is relevant. It provides:
"Rule 4(1), (2) and (3) shall, so far as applicable, apply in relation to an
application for the grant of leave under this rule as they apply in relation
to an application for the grant of leave under rule 1."
In my view the words "so far as applicable" do not render it unnecessary
to swear an affidavit as contended by Mr. Hildyard. Those words allow
good sense to dictate the contents of the affidavit. As it seems to me they
provide a requirement to make it clear in the affidavit what the grounds
are for the application, that in the deponent's belief the applicant for the
order has a good claim to have costs paid by the non-party, and the place
where the person to be served with the summons can be found. In other
words the affidavit, in much the same way as one relating to rule 1(1),
makes out the basis on which the non-party is being sued for costs and
the basis on which it is contended that it is right that the English court
should take jurisdiction.
Civil Procedure Rules 1998, rule 48.2(1)
It is convenient to mention the procedure under the new Civil Procedure
Rules 1998 at this juncture. I share the judge's anxiety as to whether
there may not be a lacuna in the rules where rule 48.2(1) is to apply in
relation to a non-party outside the jurisdiction. It is not in fact clear to me
whether the appropriate course under the Rules is to issue an application
for the joinder of a non-party and serve that application only on the other
named parties, and then serve the amended proceedings in some way
on the non-party, or whether the application to join should be served on
the non-party. I incline to the latter view, in which event, so far as that
application is concerned, Ord. 11, r. 9(4) and (5) would apply as I have
indicated they should apply to a summons under the procedure applicable
before the Rules came into effect. I also incline to the view that at present
there must be an inherent power to give leave to join a party and to give
leave to serve that party out of the jurisdiction once the hearing of the
application to join has resulted in an order for joinder. But the matter was
not fully argued before us and it would certainly be of assistance, as the
judge indicated, to clarify the matter by a specific provision in Order 11.
Brussels Convention
I now turn to the Brussels Convention to consider whether Mr. C.'s
residence and domicile in Greece affects the position as spelt out
above. Mr. Layton submitted on behalf of Mr. C. that Titles I to III of
the Convention apply to an application relating to section 51. In making
that submission he treats such an application as proceedings separate
from the main action. He cited a number of authorities concerned with
the interpretation of the phrase "civil and commercial matters" to which
by article 1 the Convention applies. But in my view the real question
is whether Mr. C. can succeed in suggesting that an application under
section 51 involves "suing" him. It is only if it does that he can rely on
article 2, which prima facie entitles him to be sued only in the courts
of his home state. Mr. Layton suggested that the making of such an
application does involve "suing" a non-party and that the judge really
accepted that. I do not think that the judge did accept that an application
under section 51 involved "suing." It seems to me that the judge was
drawing the distinction between a substantive cause of action and
proceedings which related to costs in the context of article 2 and that
meant that a section 51 application did not involve "suing"
The submission of Mr. Layton must, as I see it, fail if either an application
relating to section 51 does not involve "suing" Mr. C. or, if it does involve
"suing," the proceedings are third party proceedings to which article 6(2)
applies.
In my view Mr. Hildyard must be right in one or other of his submissions.
Either the application does not involve "suing" or, alternatively, if it does,
the application falls within the definition of third party proceedings. My
inclination is to the view that a summons issued in an action relating to
costs does not "sue" the non-party. I would agree with the judge that
"suing" contemplates pursuing a substantive cause of action. It does
not relate to the making of orders ancillary to substantive proceedings
pending before a particular court. To proceed to commit for contempt,
for example, would in my view not be to "sue" the alleged contemnor. A
proceeding to obtain an order for costs because someone has interfered
with or been responsible for the bringing of substantive proceedings is not
in my view to "sue" as contemplated in Titles I to III of the Convention.
But if that be wrong then it seems to me that article 6(2) would apply.
That article allows a person domiciled in a contracting state to be "sued"
as a third party in an action on a warranty or guarantee or "in any other
third party proceedings, in the court seised of the original proceedings."
The language of article 6(2) certainly seems to me to cover the seeking
of an order against a third party or non-party for an indemnity as to costs
incurred under an express contract to indemnify. The wide words "any
other third party proceedings" seem to me entirely appropriate to cover a
section 51 application.
So far as the procedure for bringing "any other third party proceedings"
is concerned, that must be a matter for the English court. Thus, provided
the process chosen for bringing the "third party" before the court is in
accordance with English procedure, those proceedings can in my view be
"other third party proceedings" within article 6(2).
Article 11-insurance
There was a final string to Mr. Layton's bow. He submitted that, if the
application for costs was simply "ancillary to" the main proceedings, then,
since the main proceedings "relate to insurance," the proceedings can
only be brought in the contracting state in which Mr. C. is domiciled by
virtue of article 11.
In my view this submission is unsound. If the claim for costs constitutes
""proceedings," then it does not relate to insurance matters. If the
relevant proceedings are the main proceedings, albeit they do relate to
insurance matters, they have already been brought against the insurer in
the English court. Thus, the proceedings were brought against the insurer
in the United Kingdom in compliance with article 8. It follows that the
insurer is not seeking to bring proceedings relating to insurance matters
against Mr. C..
Absence of leave to serve summons out of jurisdiction prior to service
The judge gave leave retrospectively. That was an exercise of his
discretion. In my view there is no basis on which that exercise of his
discretion can be attacked. It was clearly a sensible course and saved
costs. Apart from delay that would otherwise have occurred, Mr. C. has
not been disadvantaged in any way.
Reference to the European Court
I do not think there is any basis for making a reference to the Court of
Justice of the European Communities.
Conclusion
In summary my conclusion is as follows.
(i) The English court has jurisdiction over a party not domiciled within
the jurisdiction to decide whether that party has had such a connection
with proceedings pending in the English court that he should pay the costs
although he was not named as a party. A fortiori, if the connection alleged
is that a non-party was the alter ego of a party, the English court has
jurisdiction to decide that question and decide whether the non-party has
in effect submitted to the English jurisdiction.
(ii) If the non-party is domiciled in a Convention country, the Brussels
Convention does not prevent the English court exercising the section 51
jurisdiction either because to make a section 51 application in subsisting
proceedings does not involve "suing" the non-party as that term is used
in the Convention or because, if it does, the non-party is being sued as a
third party to those proceedings under article 6(2). Again, if the allegation
is that the non-party is the alter ego of a party who has sued and brought
proceedings, the position is clearer still in that the non-party is not only
not being sued but (if the allegation is made out) has submitted to the
jurisdiction.
(iii) Mr. C. is not being sued in relation to an insurance matter and thus
has no right to the benefit under article 11.
(iv) Leave to serve out of the jurisdiction the summons relating to section
51 was required but the judge's retrospective granting of leave should be
upheld.
(v) There should be no reference to the European Court of Justice.
It was for the above reasons that I was in favour of dismissing the appeal.
Tuckey L.J.
I agree.
Simon Brown L.J.
I also agree.
3 February 2000. The Appeal Committee of the House of Lords
(Lord Nicholls of Birkenhead, Lord Hoffmann and Lord Hobhouse of
Woodborough) dismissed a petition by the applicant for leave to appeal