England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE COMMERCIAL COURT
(MR. JUSTICE LANGLEY)

		Royal Courts of Justice Strand London WC2 Wednesday, 27th March 2002

Wednesday, 27th March 2002

1. LORD JUSTICE PILL: Lord Justice Longmore will give the first judgment.
2. LORD JUSTICE LONGMORE: There is litigation brought by Kuwait Airways Corporation ("KAC") against Iraqi Airways Corporation ("IAC") in respect of the conversion or interference with goods on the part of IAC in relation to KAC's aircraft following the invasion of Kuwait. There are two actions, and the present appeal is an appeal in what is known as the "spares" action. The main question is whether KAC has abandoned and should not now be allowed to resurrect claims for losses of certain specific categories of aircraft spares which were originally included among the spares which it alleges were converted by the defendants.
3. The spares action was begun in December 1991 by a generally endorsed writ. The annexes to the writ contain brief descriptions of the spares allegedly converted. They included the three items now in issue which, like the judge, I shall describe as 'Boeing 727' spares for the Emir's Boeing 727", Boeing 727 spares for the KAC fleet and what have been called "DPI" items. DPI stands for deferred purchase inventory, and the items consist of parts manufactured by Pratt and Whitney.
4. The spares action was rightly and sensibly treated by both parties as raising many issues which were common to issues in the principal claim involving KAC's aircraft fleet. The common issues in the aircraft action have been the subject of extensive litigation, and that has led to a number of agreements or orders that had the effect that the spares action should not be progressed until after their expected determination. There was thus a stay, in effect, from shortly after the issue of the writ in the spares action in late 1991 until 1995 when the House of Lords gave judgment in the aircraft action on, among other matters, sovereign immunity. In broad terms, the House of Lords decided that a claim could be pursued against IAC in relation to events after 17th September 1990, when an Iraqi decree vested stolen aircraft and (at any rate arguably) spares in IAC.
5. The substantial issues in the aircraft action have now been tried by Mance J. (as he then was) and Aikens J., and those issues are themselves now awaiting judgment in the House of Lords. Meanwhile, an agreement not to pursue the spares action has been in effect for various parts of the last 10 years.
6. KAC have, however, served points of claim, which they did on 28th November 1996, accompanied by schedules containing five lever arch files of documents. IAC objected to the form of the schedules and refused to serve a defence. They referred the matter to the court and on 14th February 1997 Cresswell J. upheld their objection to the form of the schedules and ordered KAC to serve further schedules setting out their claims. KAC did so on 4th March 1997, for the first time in a manner comprehensible and serviceable to any judge who will in due course have to try the action.
7. Before that, KAC's solicitors had written to IAC's solicitors on 10th January 1997, referring to their intention to revise the schedules "so that they related only to the 10 aircraft which are the subject matter of the aircraft action", adding that this had been done but also:

"The schedule includes only those spares and equipment relating to the 10 aircraft in the aircraft action and to spares for other aircraft such as B747s which were operated by IAC prior to the invasion. It does not include spares for any of the other 5 KAC aircraft seized."

8. The judge explained this by saying this:

"The 10 aircraft, the subject of the aircraft action, were seized from Kuwait Airport. Spares for them are included in the claim and are not the subject of the present dispute. The other five aircraft also seized from Kuwait Airport included the Emir's 727, so the letter expressly addressed and excluded spares for that plane from the schedules. That was, I think, the case. The evidence suggested that the plane had never come into use by IAC, as distinct from the government of Iraq. KAC also had other aircraft at the time of the invasion which were not in Kuwait and therefore did not fall into Iraqi hands. They included two other 727s. Spares for all the aircraft were, however, held at Kuwait Airport, and IAC itself, so it is said, already operated both 727s and aircraft for which the DPI items were appropriate. These spares therefore could be said to be covered by the reference in the letter to spares for 'other aircraft operated by IAC prior to the invasion'. The reason for including them in principle was that KAC alleged that the spares had been taken and used for the benefit of IAC's own existing fleet."

9. The truth of the matter was that neither the 1996 nor the 1997 schedules included any of the spares now the subject of the dispute, being the three categories that I have mentioned. KAC accept that that was deliberate in the case of the spares for the Emir's plane but say it was mistaken in the case of the other 727 spares and the DPI inventory. It seems in fact that neither side realised that the spares for which leave to amend is now sought had not been included in the schedules served in 1996 or 1997 until 1st May 2001. Application to amend to include them was then made in the course of a case management hearing which had already been fixed before Langley J., and was being heard on 4th May 2001.
10. The judge decided he had a discretion to allow the amendment, despite the fact that, on one view, the claims for the three categories of spares had been abandoned, together with many other categories, when the schedules to the points of claim were served. He decided that the abandonment of a claim would be material to the exercise of discretion, as also was the fact that any new claim would now be time-barred. He nevertheless gave permission to amend.
11. Mr. Nathan Q.C. now attacks the judgment on three main grounds. Firstly, he submits that there is a principle of the common law that once a Statement of Claim makes a narrower claim than was made in the claim form, the respects in which the claim made in the writ was wider are to be regarded as having been abandoned. The judge therefore had no discretion to permit the amendment. He cites the case of Cargill v. Bower (1878) 10 ChD 502, a decision of Fry J., and he explains the principle by analogy to the principle of election, citing to us Scarf v. Jardine (1882) 7 App.Cas. 345. The second main ground on which Mr. Nathan attacks the judgment is that the judge was, in any event, wrong to permit amendment to include claims which are now time-barred. Thirdly, he attacks the exercise of the judge's discretion in any event as being flawed.
12. Mance L.J. refused permission to appeal, treating the case as effectively a matter for the judge's discretion. The full court concluded that IAC had a respectable argument in relation to the two matters of law, the subject matter of Mr. Nathan's first two attacks on the judgment, and, not unnaturally, gave permission to appeal in respect of the case as a whole.
13. The judge understood Mr. Nathan to have conceded that he, the judge, did have a discretion in the matter. Mr. Nathan says the judge misunderstood the position and he now seeks to say (and in any event this is a matter of law if Mr. Nathan is correct) that there is no discretion because of what Mr. Nathan has called "the common law doctrine of abandonment", which he says received the sanction of this court in Barrow v. Bankside [1996] 1 WLR 257, where it was referred to in the judgment of Saville L.J. at page 269. However, both the cases cited by Mr. Nathan were cases about the exercise of potentially inconsistent remedies. In each case, the court held that a positive election by a claimant in favour of one remedy in a subsequent pleading must mean that a claimant had abandoned the other inconsistent remedy which he had claimed in his writ. In that sense it is easy to see that a claim for particular relief in a writ, if inconsistent with other relief claimed, will be deemed to be abandoned if a subsequent Statement of Claim no longer seeks that relief, especially if, as in Cargill v. Bower, there is other contemporaneous conduct which the court can take into account.
14. The present case, however, is not a case about election between inconsistent remedies. What KAC seek to do is to add, to the claims which are already made in the points of claim, three claims which were originally pursued in the writ but not mentioned in the schedules attached to the points of claim. The claimants now want to add those three categories back, asserting that two of the categories were omitted inadvertently, and one of the omitted categories deliberately for what seemed good reasons at the time but can now be seen to be bad reasons in as much as the spares for the Emir's plane were in Kuwait all the time.
15. For my part, I do not consider that, even if the concept, when properly understood, of abandonment of claims which are mentioned in the writ but not mentioned in the points of claim has survived as a concept into the days of the new Civil Procedure Rules, it precludes the judge from exercising his discretion to permit an amendment to put the unmentioned claims back into the proceedings in a proper case. The Court of Appeal certainly thought that such a discretion existed in the case of Worldwide Corporation Limited v. Marconi Communications Limited, decided on 22nd June 1999. That case is authority that even an abandonment in the face of the court at trial is something that may not be finally irrevocable.
16. If the principle for which Mr. Nathan contends did in fact exist, the claimants would presumably have been precluded even from adding these three categories of claim at the time of formulating the schedule in compliance with the order of Cresswell J., since they had already served some (albeit unsatisfactory) schedules which did not include those three categories of claim. That would be carrying a technical doctrine of the common law to an absurd length. Of course any abandonment (if it is right so to call it) is a matter which goes very much to the judge's discretion. The judge here accepted that omission was deliberate in the circumstances I have just briefly described, and he decided that two were inadvertent. That decision about inadvertence was challenged by Mr. Nathan but both counsel took us through all the relevant material and there was, in my judgment, ample material before the judge to justify the conclusion that he reached.
17. The next point is Mr. Nathan's limitation point. He submits that the claimants do not get through the relevant gateway of CPR Part 17.4, which provides:

"(1) This rule applies where --

(a) a party applies to amend his statement of case in one of the ways mentioned in this rule; and

(b) a period limitation has expired under --

(i) the Limitation Act 1980

.....

(2) The court may allow an amendment whose effect will be to add or substitute a new claim, but only if the new claim arises out of the same facts or substantially the same facts as a claim in respect of which the party applying for permission has already claimed a remedy in the proceedings."

18. Mr. Nathan submits it is for the claimants to prove that the new claim is the same or substantially the same as claims already brought by him. It is not sufficient to prove that they are similar, which, for the purposes of this appeal, Mr. Nathan is prepared to accept they are. Mr. Nathan says further that the categories of spares now sought to be brought into the action are distinct from other categories of spares and it is unlikely that any taking for the purposes of the tort of unlawful interference with goods occurred at the same time as any taking of the other matters in respect of which claims are made.
19. In my judgment, that is an over-legalistic approach. The fact is that there was the invasion of Kuwait. If the claimants are right, all spares, whenever and by whom they may precisely have been originally "taken", became vested in, and thereafter used by and remained at the disposal of, IAC unless they were subsequently returned. In this respect, the interference with KAC's property is a continuing tort and the three categories are indeed properly to be said to be part of the same claim as the other spares, and the claim for them arises out of the same facts as the claim in respect of which a remedy has already been claimed. On any view, the claim for them arises out of substantially the same facts.
20. The judge dealt with this in paragraph 7 of his judgment. He said:

"Mr. Nathan submitted that the claims were now statute-barred. Whether that be right or wrong, I agree with Mr. Vos' submissions that the claims plainly fall within CPR Part 17.4(2) as claims which arise out of the same or substantially the same facts as existing claims in the action. In commonsense terms they arise out of seizure from the same place in the same circumstances of all the aircraft spares. I do not think it is any answer to say, as Mr. Nathan said, that the new claims involve three large and different categories of items which must have involved some kind of separate taking."

21. I agree.
22. Mr. Nathan thus fails in both matters in respect of which the full court thought that his appeal was arguable, so he is left with his attack on the judge's discretion.
23. In my judgment, it would be inappropriate to deal with the arguments under this head in any detail. Langley J. is dealing with all interim applications in what is, on any view, a complex commercial action. It may become considerably more straightforward, of course, once the House of Lords has given judgment in the pending appeal in relation to the aircraft action. But this judge has conducted the first case management conference over a not inconsiderable period of time. He knows far more about the detail of this case than this court could ever hope to become acquainted with in the course of a single day's appeal. Decisions made at case management conferences should preferably not be appealed at all. If they are appealed, this court should exercise all possible restraint before it interferes with what is essentially a case management decision.
24. It is, in any event, axiomatic that the court cannot interfere with an exercise of discretion unless the judge has misdirected himself in law (which in my view Langley J. has not) or has reached a decision so perverse that it has "exceeded the generous ambit within which a reasonable disagreement is permitted," to quote the words of Lord Fraser of Tullybelton in G v. G [1985] 1 WLR 647, at 652, recently followed by this court in Tanfern Limited v. Cameron-MacDonald [2000] 1 WLR 1311 at page 1317. One only has to read the judgment of the judge to see that it is a decision to which a judge could reasonably come.
25. Mr. Nathan's main complaints are firstly that when the judge came to exercise his discretion in paragraphs 9 and 10 of his judgment he did not expressly say that (1) the claimant's abandonment or failure to include the three categories in the schedules attached to the points of claim, and (2) the fact that any claim in respect of the three categories, if it was to be separately pursued, was time-barred, were important matters to be brought into account. But he has already discussed in detail the arguments in relation to those matters, and he prefaces his decision by saying that the submissions of counsel are "nicely balanced".
26. The second main complaint by Mr. Nathan was that there was more prejudice to the claimants ("litigation prejudice", as he called it) than mentioned by the judge. But we have been taken through the relevant matters by both Mr. Nathan and Mr. Smouha with great care. For my part, I am satisfied that the judge was entitled to reach the conclusion which he did in paragraph 10 of his judgment in these words:

"These submissions are nicely balanced, but in my judgment the weight of that balance comes down in favour of KAC. I do not think any real or greater prejudice will be suffered by IAC from the pursuit of these claims and the difficulties which have, from the outset, been inherent in these proceedings from their very nature and which have not substantially been increased by any delay. The proposed amendments come at a stage in the proceedings when they cause no prejudice in that context either. KAC must prove them if it can, but I do not think it right to prevent them from having an opportunity of doing so when I repeat in a real sense they affect quantum rather than the substantive issues which arise."

27. For my part, I would dismiss this appeal.
28. SIR MARTIN NOURSE: I agree that this appeal should be dismissed for the reasons given by Lord Justice Longmore.
29. LORD JUSTICE PILL: I also agree.
30. The claim is supported by a series of schedules setting out categories of aircraft parts, for the loss of which damages are claimed. I agree with Lord Justice Longmore that, in the present circumstances, the existence of an abandonment was a factor upon which the judge could exercise his discretion. There is no rule of law that permission cannot be given to amend to include a claim for scheduled items which had earlier been abandoned.
31. There is force in the submissions of Mr. Nathan Q.C. as to the claimants' conduct of their claim. At a time when the claim is 10 years old, the claimants seek to add categories of parts with respect to which they had earlier abandoned their claim and, in one case, abandoned it deliberately. This has occurred in circumstances where, in correspondence, the defendants had sought to have the claim against them fully particularised and, on 14th February 1997, Cresswell J. made an order that further schedules be provided, the existing schedules of items being inadequate. Moreover, another claim, which is not now pursued, was abandoned and it was on that basis that the defendants did not oppose an application to remove a stay which had been placed on the action. Mr. Smouha has appropriately accepted that the claimants have not been focusing on this action.
32. Having said that, I acknowledge the broad discretion in the judge. The judge considered the evidence and the relevant factors. He acknowledged that the submissions were nicely balanced. I would not disturb the judge's exercise of his discretion in this case.
ORDER: Appeal dismissed; claimants to pay respondent's costs, summarily assessed at £30,000. (ORDER NOT PART OF APPROVED JUDGMENT)