England and Wales High Court (Commercial Court) Decisions

Case No: 1991 Folio 2587

IN THE HIGH COURT OF JUSTICE

QUEENS BENCH DIVISION

COMMERCIAL COURT

Royal Courts of Justice

Strand, London, WC2A 2LL

Date: Tuesday 15th May 2001

B e f o r e : THE HONOURABLE MR JUSTICE LANGLEY - - - - - - - - - - - - - - - - - - - - -

	KUWAIT AIRWAYS CORPORATION	Claimant
	- and -
	IRAQI AIRWAYS COMPANY (Body Corporate)	Defendant

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Mr G. Vos QC, Mr J. Smouha and Mr S. Wordsworth (instructed by Messrs Howard Kennedy for the Claimant) Mr S. Nathan QC (instructed by Messrs Landau & Scanlan for the Defendant) - - - - - - - - - - - - - - - - - - - - - JUDGMENT: APPROVED BY THE COURT FOR HANDING DOWN (SUBJECT TO EDITORIAL CORRECTIONS)

Mr Justice Langley :

1. A point has arisen in these proceedings as to whether the Claimant (KAC) has abandoned and should not now be allowed to resurrect claims for losses of certain specific categories of aircraft spares which were included in those which it alleges were converted by the Defendant (IAC) shortly after the Iraqi invasion of Kuwait in August 1990. The proceedings (known as the spares action) were begun in December 1991 by a generally indorsed Writ. The Annexes to the writ contained brief descriptions of the spares allegedly converted. They included the three items now in issue which I shall describe as Boeing 727 spares for the Emir's 727, Boeing 727 spares for the KAC fleet and DPI items. DPI stands for deferred purchase inventory and the items consist of Pratt & Witney manufactured parts.
2. The spares action was rightly and sensibly treated by both parties as raising many issues which were common to issues in a similar claim involving aircraft of KAC's fleet which were also alleged to have been converted. The common issues in the aircraft action have been the subject of extensive litigation which 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. Thus there was a stay in effect from shortly after the issue of the spares action in late 1991 until July 1995 when the House of Lords gave judgment on one issue and an agreement not to pursue the spares action was in effect from July 1999 to mid-January 2000.
3. In the interim, KAC served Points of Claim on 28.11.96 accompanied by 5 lever arch files of Schedules. IAC objected to the form of the Schedules, refused to serve a Defence and referred the matter to the court. On 14.2.97 Cresswell J ordered KAC to serve further Schedules setting out the claim which KAC did on 4.3.97. In the course of these events KAC's then solicitors wrote to IAC's solicitors on 10.1.97 referring to KAC's 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 that "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". To put that in context, 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 5 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, because the evidence suggested 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 2 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 the spares had been taken and used for the benefit of IAC's own existing fleet.
4. In fact, however, neither the 1996 nor 1997 schedules included any of the spares now the subject of dispute. KAC accepts that was deliberate in the case of the spares for the Emir's plane but says it was mistaken in the case of the other 727 spares and the DPI inventory. There is no statement from KAC's solicitors to support that beyond such inference as can properly be drawn from the letter itself and the subsequent correspondence. In a context where the spares were included in the Annexes to the Writ but thereafter omitted and where no statement is provided the inference of mistake rather than conscious omission is not without a measure of doubt but I am quite satisfied it was mistaken both because the relevant solicitor is in court and would not have allowed the submission to be made if it were wrong and because no one can think of any sensible reason why it should have been decided to omit the claims.
5. The relevance of this is to IAC's submission that KAC has abandoned its claims for the 3 types of spares and, so it is said, cannot now advance them. Abandonment is a common law principle, not to be found in the old rules or the C.P.R. It was most recently referred to in Barrow v Bankside [1996] 1 WLR 257 at 269, where Saville LJ said abandonment was dependent upon drawing a proper conclusion in the circumstances that a claimant had chosen to give up a claim for relief which was specifically made in the writ but not advanced in the statement of claim. In principle therefore there may be a difference between a deliberate or conscious choice not to pursue a claim and an accidental or mistaken failure to do so. However, in my judgment, such a distinction is not of major importance in this case as, whatever may be required to establish "abandonment", cannot I think override the general discretion of the court to permit amendments to be made where it considers it just and proportionate to do so. The fact a claim has not been pursued by mistake or has been consciously abandoned may and usually will be material to the exercise of that discretion but I do not see why it should be decisive and in the end I did not understand Mr Nathan to submit otherwise. In principle, I think the situation is not much different from the not uncommon situation in which a party seeks to add a further claim or cause of action to an existing claim.
6. In this case Mr Nathan submits there are two further hurdles for KAC to jump in considering whether permission to amend should be given. First he submitted that as the amendments added or were to be treated as adding new causes of action it would not be fair and so not right to permit that to be done in circumstances where permission to serve a discrete claim out of the jurisdiction on IAC would not be granted. Mr Nathan referred me to the decision of Goulding J in Beck v Value Capital Ltd [1975] 1 WLR 6 in particular at page 15. That decision, however, turns on the fact that the original proceedings there in question were ones in respect of which permission to effect service out of the jurisdiction was required and given. That was not so in this case. The proceedings were, as Mr Nathan accepted, validly served on IAC in this country where it had an office at the time. Mr Nathan then submitted that the fact that service in this country of a new claim would no longer be possible was a factor in the exercise of discretion, the question being whether it would be just to allow such an amendment in those circumstances. In my judgment there can only be one answer to that question viewed in isolation which is "Yes". The "new" claims are only sensibly to be tried in the present proceedings if they are to be tried at all. In a real sense, as Mr Vos submitted, they increase the quantum of the claims already made and do not affect the substance of the dispute.
7. Second Mr Nathan submitted that the claims were now statute-barred. Whether that be right or wrong I agree with Mr Vos' submission 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 a 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.
8. In my judgment, therefore, the discretion remains.
9. How should it be exercised? IAC rightly points to the fact that the relevant events occurred more than 10 years ago. There is some evidence that potentially relevant witnesses are no longer available. What went where and what was returned under UN auspices involves a difficult trail which there was no need to follow at least for these items once the 1996 schedule was served, and will now be more difficult than it would have been in 1996. KAC, on the other hand, points to the facts that most of the delay in pursuing the claims has been the subject of agreement, in reality until early 2000; that whatever difficulties of evidence may exist existed in large part from the outset and certainly have not been increased since the beginning of last year; and that, as a result, the proceedings are not far advanced (for example disclosure is not yet complete) and so there is no question of IAC having insufficient time to address the claims or of a trial date being put at risk. The claims themselves appear to involve several million US dollars, it is not suggested that they are bound to fail nor that they are not or at least cannot be properly particularised. No specific prejudice is suggested. Indeed the correspondence suggests that IAC and its advisers had not focused on the omission of at least the 727 spares from the 1996 and 1997 schedules. The same documents and witnesses so far as available, are involved as those involved in the existing claims.
10. 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 than 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 it from having an opportunity of doing so when, I repeat, in a real sense they affect quantum rather than the substantive issues which arise.
11. For these reasons, as I indicated at the end of the oral hearing, I think it right to give KAC leave to make the amendments it seeks.