Mr Justice David Steel :
Introduction
This is the second round of a series of jurisdictional battles between
the parties to this action. The outcome of the first round, between the
claimant and the second defendant, is to be found in the decision of
the Court of Appeal reported in [2002] 1 Lloyd’s Rep. 191. This new
bout is between the two defendants themselves and focuses upon a
purported claim for contribution made by the first defendant against the
second defendant. In brief, the second defendant applies to strike the
contribution claim out. The first defendant counters with an application
seeking an order for service of the defence.
Background
The claimant (“K. UK”) and the first defendant (“British G.”) each
manufacture plaster board and gypsum building plasters. The second
defendant (“P.”) manufactures and provides paper liner for use in the
production of plasterboard.
This plasterboard is used to construct the internal walls and ceilings
of houses. It is the practice in certain areas of the United Kingdom to
apply a skim plaster finish to the exposed surface of plasterboard after
installation.
Between about October 1997 and September 1998, plaster board
manufactured by K. UK, using paper liner manufactured and supplied by
P., was used in the construction of a large number of houses in the UK.
The plaster used to skim the exterior surface of the plasterboard included
both British G. plaster and K. UK’s own plaster.
From December 1997, K. UK and British G. received complaints that
finished plaster board (manufactured by K. UK with P. paper liner and
then installed in homes after being skim plastered) was delaminating
- that is to say that the skim plaster was shelling off the surface of the
plaster board.
Claims were made for reimbursement of the cost of the remedial work
and other associated costs. It appeared either that the plasterboard or
the plaster or both were at fault and, ultimately, either K. UK or British
G. (or both in some proportion) would be liable to pay compensation to
claimants. K. UK and British G. were unable to agree where fault lay.
In these circumstances, in order to enable compensation to be paid
without delay pending resolution of the dispute, K. UK and British
G. entered into an agreement under the auspices of the G. Products
Development Association (the GPDA agreement) to offer to settle claims
where de-lamination occurred to plaster board manufactured by K. UK
and applied with plaster manufactured by British G. on a 50:50 basis
without admission of liability and without prejudice to their respective
liability (if any) to each other.
The claims
In these proceedings, K. UK claimed against P. that P. paper caused or
contributed to the de-lamination of the plaster from K. UK plaster board.
It was claimed that variable and abnormally high levels of starch on
the paper caused the problem. K. UK claimed from P. damages of over
£600,000 in respect of de-lamination of K. UK plaster from K. UK plaster
board and some £2.6 million in respect of de-lamination of British G.
plaster from K. UK plaster board. In respect of these claims, P. challenged
the jurisdiction and sought to set aside K. UK’s claim.
K. UK and British G. claim from each other the whole, or a proportionate
part, of sums paid out by them pursuant to the GPDA agreement alleging
that delamination was caused or contributed to by the defect in and/or
failure of the other’s product. However, notably, no claim is made by K.
UK against British G. to the extent of the losses suffered by K. UK arising
from instances of delamination in K. UK plaster from K. UK plasterboard.
In January 2001, British G. served a Part 20 claim for contribution
against P. claiming in essence that, if British G. is held liable to K. UK,
then P. is liable to British G. to pay contribution under the Civil Liability
(Contribution) Act 1978.
P. does not accept that the English Court has jurisdiction in respect of
British G.’s claim for contribution and in April 2001 took steps to join
British G. to an action by P. in Germany brought against K. UK (and K.
Germany) for a declaration of non-liability.
As already recorded, British G. has applied for an order that a defence to
the contribution claim be served and P. has applied for an order that the
contribution proceedings be struck out, or alternatively stayed. It is these
applications on which I am to rule.
The procedural history
The claim form was issued on the 11th July 2000 and served on British G.
on the 22nd July. In the meantime, K. UK obtained a without notice order
from Aikens J permitting service by an alternative method on P., namely
by service on P.s’ solicitors in England. This was expressly for the purpose
of ensuring that service of these proceedings on P. should precede any
service of German proceedings brought by P. against K. UK.
On 22nd August 2000, proceedings for negative declaratory relief were
commenced by P. in Germany and were served there on both K. UK and
its parent, K. Germany, on 18th September 2000. In the meantime, P.
had applied to set aside the order of Aikens J and the service effected
pursuant to it. They further sought a declaration that the Court had no
jurisdiction to entertain the claim because any contract between the
claimant and P. was governed by an exclusive jurisdiction agreement in
favour of the German Courts within the meaning of Article 17 of the 1968
Brussels Convention.
British G. served a defence and counterclaim in the British proceedings
on the 17th October to which a reply and defence to counter claim
was served by K. UK on the 21st November 2000. On the 19th
December 2000, British G. notified P. that they were intending to serve a
contribution notice. They asked whether P.s' solicitors had instructions to
accept service. On being informed that the solicitors had no instructions
to accept service of proceedings, British G. served a Part 20 contribution
claim on P. in Germany by post, purportedly pursuant to Article 6 of the
German / British Convention of the 20th March 1928. Arrangements were
also put in hand for service under the Hague Convention. Copies of the
documents were also served on P.s’ English solicitors accompanied by
a query as to their entitlement to reject service of the documents while
remaining solicitors on the record in the action.
On 11th January 2001, Messrs Fishburn Morgan & Cole, P.s’ solicitors,
wrote to Shoosmiths acting for British G., as follows:
“As we understand it, you purported to serve a Part 20 claim on the
second defendant pursuant to Part 20.6 of the Civil Procedure Rules.
Please confirm we have correctly interpreted the position.
We did not intend any discourtesy in refusing to accept service of this
document….our view is that if we were to accept service of a Part 20 claim
under Part 20.6 of the CPR, that could be interpreted as taking a step
in the action or accepting that our client was a defendant subject to the
jurisdiction of the court which is the very issue we are disputing.
It seems to us that if our challenge to the court’s jurisdiction is upheld,
your part 20.6 contribution notice will automatically fail, whilst if the Court
has jurisdiction over our clients as the second defendant in the action,
then you are entitled to pursue your contribution claim and effect service
in the usual way….”
Messrs Shoosmith’s response was as follows:
“You are correct that we have served the Part 20 Claim (Contribution
Notice) upon your clients pursuant to Part 20.6 of the Civil Procedure
Rules.
Part 6.24 of the Civil Procedure Rules confirms that, where a claim
form is to be served out of the jurisdiction, it may be served by any
method “permitted by the law of the country in which it is to be
served”…..Accordingly we believe that service has been properly effected
on your clients by post.”
On the 24th April 2001, P. joined British G. as third defendant to the
German proceedings. Matters thereafter lay in limbo pending the outcome
of the hearing before the Court of Appeal in July 2001. On 24th October
2001, the Court of Appeal gave judgment in favour of P. setting aside
Aikens J’s order, albeit not ruling on the Article 17 point. The form of the
Order made by the Court of Appeal is of some importance. It reads in part
as follows:
“4. All proceedings between the claimant and the second defendant be
stayed until such time that the jurisdiction of the courts of Germany
in respect of the claimant’s claim against the second defendant is
established.
5. In the event that the jurisdiction of the courts of Germany in respect of
a claimant’s claim against the second defendant is established
(a) the service of these proceedings on the second defendant pursuant to
the Hague Service Convention be set aside,
(b) The High Court of Justice of England and Wales shall decline
jurisdiction of the claimant’s claim against the second defendant. ”
I understand that the conditional form in which this order was made
was to allow for the possibility that K. UK might make an application to
the German Court pursuant to Article 22 of the Brussels Convention. In
the event, it did not. It is true that in December 2001 British G. issued
an application in Germany under Article 22 but that only related to the
claim advanced against them as third defendant. The prosecution of
this application, as I understand it, has been suspended pending the
outcome of this application but notably it has no potential impact on the
establishment or retention of jurisdiction in Germany in respect of the
proceedings as between P. and K. UK.
In my judgment, the reality of the position is, therefore, that the service
of the proceedings on the second defendant has been set aside and that
this court has declined jurisdiction in the claim made by K. UK against P..
Part 20.6
British G. rely upon CPR 20.6 as permitting the making of the contribution
claim against P.. Part 20.6 reads:
“A defendant who has filed an acknowledgement of service or a defence
may make a Part 20 claim for contribution or indemnity against another
defendant by:
(a) filing a notice containing the nature and grounds of his claim;
(b) serving that notice on the other defendant.”
It was British G.’s submission that, since they “served” their contribution
notice on P. at a time when P. was a named defendant and had served an
acknowledgement of service (albeit solely for the purposes of challenging
jurisdiction), it followed that the contribution notice was valid and
effective. In my judgment, this view is misconceived:-
i) The scope of CPR 20.6 is solely to permit cross claims between
defendants. Accordingly the court must have jurisdiction in respect of
both defendants. It follows that on its proper construction, the Part 20
claim must be against another “such” defendant, i.e. one who has filed an
acknowledgement of service or a defence.
ii) The filing of an acknowledgement of service for the purposes of
challenging jurisdiction does not permit service of a contribution notice. In
the event of an unsuccessful challenge to the jurisdiction, the defendant
concerned must serve a further acknowledgement of service: CPR 11.7.
Only then is the defendant deemed to have accepted that the court has
jurisdiction.
iii) In any event, the effect of the Order of the Court of Appeal is that
service on P. has been set aside and jurisdiction against them declined. In
effect, P. have ceased to be a defendant as defined i.e. a person against
whom a claim is made: CPR 2.3.
iv) Furthermore, a contribution notice is not a claim form: CPR 6.18 (j).
The contribution notice thus cannot be served out of the jurisdiction under
CPR 6.17. It is merely a document, which must be served within the
jurisdiction under CPR part 6.5.
Article 6.2
The alternative case argued by British G. was that the Court had
jurisdiction to entertain the contribution claim by virtue of Article 6.2 of
the Brussels Convention. Article 6.2 reads:
“A person domiciled in a Contracting State may also 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
unless these were instituted solely with the object of removing him from
the jurisdiction of the court which would be competent in his case."
But again this submission is misconceived:-
i) British G. never purported to invoke Article 6.2. Even if it had, it
merely affords the prospect of English jurisdiction. In order to invoke that
jurisdiction, it would still be necessary to effect proper service by way of
a claim form. Furthermore, if leave to serve out were now to be sought,
British G. would be faced with the impact of Article 21.
ii) The Article does not impose any obligation on the court to accede to a
request to join a third party: Kongress Agentur Hagen GmbH v. Zeehaghe
BV [1990] ECR 1-1845. It must be established that it is appropriate to
override the third party’s right to be sued in the court of his domicile:
Kinnear v. Falconfilms NV [1996] 1 WLR 920.
iii) This would not appear to be an appropriate case. P.s’ liability (if any)
to K. UK does not arise in the English proceedings. It only arises in the
German proceedings. Indeed, the claim is probably governed by German
law. To allow the same issue to be raised now in the English proceedings
would create rather than avoid the risk of inconsistent decisions.
iv) There is in any event the threshold difficulty as to the underlying basis
of any claim to contribution. The claim against British G. by K. UK is only
in respect of defects for which British G. is responsible. Thus, it is difficult
to conceive the basis upon which P. can be liable to K. UK for the same
damage as British G. is liable to K. UK.
Conclusion
For all these reasons, the contribution notice must be struck out and
service of the same set aside.