The English Court has set aside permission to bring proceedings against foreign defendants based on non-disclosures and subsequent conduct.
The recent decision in Punjab National Bank (International) Limited v Ravi Srinivasan and others  EWHC 89 (Ch) provides guidance on the proper conduct of an application for service out of the jurisdiction and highlights the potential pitfalls an applicant may encounter. In particular, the decision demonstrates that a party must:
- Make full and frank disclosure on a without notice application, in particular if there are related foreign proceedings or new material facts arise
- Renew its application for permission for any substantive changes to its pleadings
- Plead fraud with care, precision, and particularity
Failure to follow these guidelines may result in the court setting aside permission for service, thereby bringing the claim to an end.
The claimant, Punjab Bank, brought proceedings in the English High Court against nine defendants — all domiciled in either India or the US — arising from US$45 million of unpaid loans to the second and fifth defendants, guaranteed by the third, fourth, and seventh to ninth defendants.
The claimant issued the claim form in England in June 2017, alleging fraudulent misrepresentation and breach of contract, and sought permission (without notice to the defendants) to serve proceedings out of the jurisdiction on the basis that the loans were negotiated and executed, and that the accounts were held and operated, in England. However, the claimant did not disclose that in March 2017 it had brought related proceedings against some of the defendants in South Carolina arising out of the same loans.
On 13 September 2017, the English court gave permission for service out of the jurisdiction.
Rather than immediately serve the claim form and the particulars of claim, the claimant made a series of substantial changes to its particulars of claim over several months, including adding the first defendant and an additional cause of action in deceit. The particulars of claim also expanded significantly by the time of the final hearing.
In addition, in November 2017 the claimant brought related proceedings in India.
In February 2018, the English court gave permission to serve the claim form and particulars of claim on the first defendant, following the claimant’s second without notice application. The claimant did not draw the court’s attention to the significant amendments to the pleaded case, nor to the existence of the US or Indian claims. The claimant effected service later that month.
On 25 April 2018, the defendants applied to set aside the English court orders on a number of grounds, including:
- The claimant did not provide an arguable case in deceit
- The claimant made material non-disclosures, including the failure to inform the court of the existence of the US claim and the Indian claim
- The claimant did not seek or obtain permission for the substantial changes and additions to the particulars of claim
Chief Master Marsh handed down his judgment on 24 January 2019, setting aside permission for service out of the jurisdiction and bringing the claimant’s claim in England to an end.
The Chief Master reiterated that allegations of fraud must be pleaded with care, noting that a claimant must set out the facts relied upon in a concise manner to allow a defendant to understand the case against it and that lengthy pleadings may serve to obscure a claimant’s case.
He held that it was impossible for the defendants to know the case against them in deceit, stating that “It is not that the claimant has failed to plead sufficient facts to constitute the cause of action, or that they are not comprehensive, but rather that they are too comprehensive and not sufficiently particular.” and that the claimant had failed to particularise which allegations of deceit were made against which defendant. The claims in deceit and misrepresentation did not, therefore, meet the “serious issue to be tried” test, and permission to serve out on those claims was set aside.
As the claimant brought the US claim several months before the claim form was issued in England, the Chief Master held that the claimant needed to do more than simply refer to the US claim in the draft particulars of claim. In order to meet its duty of full and frank disclosure, the claimant needed to inform the court about the foreign claims and the interrelationship between those claims and the English proceedings.
Further, the claimant failed to inform the court about the Indian claim, which was a material change affecting the court’s pre-existing analysis on the proper forum for the claim.
The Chief Master considered that the claimant’s most serious failing in its application was not to inform the court about the related claims, on which basis alone he would have set aside permission.
Changes to the Particulars of Claim
The Chief Master held that the claimant could not make substantial amendments and additions to its particulars of claim without obtaining renewed permission for service. In the absence of binding authority, the Chief Master reviewed the scope of the original order and the test the court considered in making such an order. In the present case, the court was required to determine whether the claim had reasonable prospects of success, and if there was an arguable case that one of the jurisdictional gateways was met. The court’s review and approval was on the documents before it and did not extend to substantial amendments.
The Chief Master stressed that “if the claimant does not refer the application back to the court the order is vulnerable to being set aside if the amendments are more than minor changes.” In this case, the claimant had made substantial changes to the length, form, and nature of its pleadings, and had acted beyond the scope of the permission granted by the court.