England and Wales High Court (Commercial Court) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT

		Royal Courts of Justice Strand, London, WC2A 2LL
		12/09/2011

Mr Justice Eder:

Introduction

1. This is an application by the claimant pursuant to CPR 40.12(1) to correct the order which I made dated 6 June 2011 following the trial in this action ("my Order") which provided in material part as follows:

"IT IS HEREBY ORDERED THAT:-

1. Subject to the question of set-off and paragraph 2 below:

(1) The Claimant's claim succeeds in the total sum of €54,900;

(2) The Defendant's counterclaim succeeds in the sum of €279,694.11.

2. The Claimant's claim in paragraph 1(1) above is subject to a set-off against the Defendant's counterclaim in paragraph 1(2) above, and the Defendant is therefore entitled to:

(1) Judgment in the sum of €224,794.11; and

(2) Interest from January 2009, at the rate of 3 monthly EURO LIBOR plus 1% with 3 monthly rests, in the sum of €11,238.50 as at the date hereof and continuing until payment at the daily rate of €8.94. "

2. In addition I made various further orders including an order that the claimant make a payment on account of costs to the defendant in the sum of £250,000 within 28 days; and a refusal of the claimant's application for a stay.
3. The corrections now sought by the claimant in the present application are as follows:

"IT IS HEREBY ORDERED THAT:

1. Pursuant to CPR 40.12, the Order of the Honourable Mr Justice Eder dated 6 June 2011 be corrected so that it reads as follows:

[1(2) The Defendant's counterclaim succeeds in the sum of €192,194.11

2(1) Judgement in the sum of €137,294.11]

[Alternatively

1(2) The Defendant's counterclaim succeeds in the sum of €211,911.95

2(1) Judgement in the sum of €157,011.95]

[Alternatively

1(2) The Defendant's counterclaim succeeds in the sum of €230,888.51

2(1) Judgment in the sum of €175,988.51]."

As I say, the application is made pursuant to CPR 40.12(1) which provides as follows:

"40.12(1) The Court may at any time correct an accidental slip or omission in the judgment or order."

Background

4. The trial of this action commenced on 21^st March 2011. Both sides served lengthy written opening submissions and made brief oral opening submissions. The evidence was concluded on 31^st March and the court then adjourned to allow the preparation of written closing submissions. These were exchanged on the morning of 4^th April. The court then heard oral closing submissions on 5^th and 6th April. Both parties were invited to submit a list of "typing corrections and other obvious errors". The defendant's junior counsel submitted a list on 2^nd June and the claimant's junior counsel made some further suggestions on 3^rd June. I handed down judgement on 6^th June at which time I heard argument and ruled on various consequential matters. The defendant had submitted a proposed draft order prior to the hearing on 6^th June. This was amended to reflect the rulings which I made on 6^th June and circulated between counsel. On 8^th June, leading counsel for the claimant confirmed that "the order is agreed" and it was subsequently signed and lodged and, following my signature, perfected in the usual way. That is the order which I have already referred to above and which the claimant now seeks to correct pursuant to CPR 40.12.
5. I understand that the claimant has applied to the Court of Appeal for permission to appeal against my judgment. The result of such application is still outstanding at the date of this hearing before me.
6. As to the underlying disputes, the relevant facts are set out in my earlier Judgment. For present purposes it is sufficient to note that the figure of €279,694.11 which appears in paragraph 1 (2) of my Order was the total of the figure of €134,241.50 (in respect of crew costs) and €145,452.61 (in respect of other costs and expenses) referred to respectively in paragraphs 250 and 251 of my judgment. These had been the headline figures set out in the defendant's closing submissions. However, on 16^th June and prior to the expiry of the 14 days for payment, the claimant's solicitors, Messrs Clyde & Co, wrote to the defendant's solicitors asserting (in summary) that although the first figure of €134,241.50 had not been disputed it did not take into account payments previously made by the claimant in respect of crew costs totalling €87,500. The letter continued in material part as follows:

"During the trial, the claimants did not recollect that these sums had already been paid. It was in this light that the claimants did not dispute the sums claimed by the defendants in respect of crew costs. It has now been drawn to our attention by our clients that they have in fact already paid a significant sum in respect of the judgement against them.

Therefore, we consider that the claimants have already satisfied €87,500 of the judgement made against them and that this reduces the sums owing by them to the defendants in respect of crew costs to €46,741.50. We hereby seek your clients' agreement that the Judgement sum in respect of crew costs be reduced to €46,741.50."

7. The effect of such proposed reduction would be to reduce the figure in paragraph 1 (2) of my Order from €279,694.11 to €192,194.11 and a similar reduction in paragraph 2 (1) of my Order from €224,794.11 to €137,294.11.
8. There followed some correspondence between the parties which it is unnecessary to refer to in detail save to say that the defendant's position was and remains that it did not agree any correction of my Order and that full payment was expected.
9. The claimant did not pay and has not yet paid the sums due under my Order.
10. On 1 July 2011, the defendant arrested the vessel "Namasté" in Italy by way of enforcement of my Order. For present purposes, it is sufficient to note that shortly thereafter on or about 7^th July, the claimant paid €224,794.11 into court in Italy and a further sum of €280,000 into an escrow account, both to secure the release of the vessel from arrest. The claimant is arguing that my Order was not enforceable in Italy and that the defendant was not entitled to arrest the vessel. If these arguments (which the claimant is actively pursuing through the Italian court) succeed, the money in court and in escrow will, as I understand, be released to the claimant and my Order will remain wholly unsatisfied.
11. As to the alleged payment of €87,500, the position is somewhat complicated. The defendant's original pleaded case was that its counterclaim was for a total sum of €230,888.51 i.e. approximately €50,000 less than the amount referred to in paragraph 1(2) of my Order. The breakdown of this figure of €230,888.51 was set out in a schedule attached to the counterclaim. Included in that breakdown was a credit for two payments for €32,890.93 and €32,891.23 totalling, as stated in the schedule, €67,782.16. That total figure was in fact an arithmetical error. The total of the two figures was only €65,782.16 i.e. €2000 less than the amount stated in the schedule.
12. Initially, the defendant denied that there had been any relevant previous payment and that there was no basis for any variation of my Order. However, the position has been clarified in particular by the fourth witness statement of Mr Tamsen dated 2^nd September 2011. In paragraph 6 of that statement, he accepts that the sum of €65,782.16 was paid to a related company, Tamsen Yachts International Ltd., and that "…this should only have reduced the counterclaim amount to €232,888.51…" That latter figure is the same as set out in the schedule to the defendant's counterclaim that I have referred to after adjustment for the arithmetical error of €2000. Before me, Mr Smith QC on behalf of the defendant accepted that I could and should ignore the arithmetical error of €2000. I therefore put that to one side. He also accepted that but for my Order and ignoring the arithmetical error of €2000, the correct amount of the defendant's counterclaim was €230,888.51. To that extent, and I should emphasise to that extent only, he accepted that this figure is the one which should have been contained in paragraph 1(2) of my Order - although for the reasons set out below he submits that the court cannot or at least should not now correct my Order. The reason for this discrepancy is not easy to explain or to unravel. For present purposes, it is sufficient to say that I dealt with the defendant's counterclaim for crew costs and other costs and expenses by reference to the parties' closing written and oral submissions. I was not aware at the time of any discrepancy between those submissions and the defendant's original pleaded case.
13. In addition to the figures that I have just referred to and as part of the credit of €87,500 that the claimant now says it is entitled to credit for, the claimant says that a further sum of €21,700 was paid by the claimant to the defendant. In support of that contention, the claimant now relies upon an e-mail dated 20^th January 2009. That is disputed by the defendant. On any view, it seems to me that the claimant cannot now seek to rely upon that alleged but disputed payment in order to correct my Order under CPR40.12. It is too late. Any remedy must lie elsewhere if at all.
14. In support of his argument that the court should not correct my Order, Mr Smith QC advances two main submissions.

Claimant's Failure to Pay

15. First, Mr Smith QC says that the claimant has not paid any of the amounts due under my Order. He emphasises that the claimant has not only refused or failed to pay the net amount due under my Order after deduction of the sum of €87,500 referred to above (which is undisputed save only by way of appeal) but has also refused or failed to pay the sum of £250,000 referred to in paragraph 4 of my Order in respect of costs which the claimant does not dispute at least before me now, although again that is subject, of course, to the pending application for permission to appeal. On this basis, Mr Smith QC submits that the claimant is deliberately and knowingly flouting my Order, that the claimant is thereby clearly in contempt of court and that the court should therefore reject the present application or at least decline to consider it unless and until the contempt is purged. In support of that submission Mr Smith QC has referred me to CPR 23.0.16.1 and also to sc52.1.30.
16. In response, Mr Ferrer submits that this is misconceived on three bases.
17. First, it is said that the claimant has made payment of the entire amount in Italy following the arrest of the Namasté. On this basis, it is said that there has therefore been compliance with my Order in any event. I do not agree. Whatever payments have been made into court in Italy or into the escrow account as referred to above, it does not seem to me that such payments constitute compliance with my Order.
18. Second, it is said that it is admitted by the defendant that it has received payment already of part of the judgement debt. That is apparently based upon the statement in paragraph 6 of Mr Tamsen's fourth witness statement which I have referred to above. However, that does not seem to be an admission by the defendant that it has received payment already of part of the judgment debt. On the contrary, the defendant's position is that that is not, or at least may not, be the case.
19. Third, it is said that if, which is denied, the claimant is in contempt, the contempt is not such that it ought to be shut out from making an application to correct an order that is admitted to contain an error and breach of which is said to give rise to the contempt. In support of that submission, the claimant relies upon Motorola Credit Corp v Uzan (no.2) [2004] 1 WLR 113 at paras 49 and 50. However, it seems to me that that case and, in particular, the paragraphs referred to are of no assistance to the claimant because, as I have indicated above, the present application only seeks to correct part of my Order. The remainder of my Order is unaffected by the present application. Notwithstanding, it seems to me that the proper approach is, as stated in sc52.1.30, that the court has a discretion whether to hear a contemnor who has not purged its contempt; and, regardless of what may be described as the general rule, as stated in CPR 23.0.16.1, it is preferable to ask whether, in the circumstances of the individual case, the interests of justice are best served by hearing a party in contempt or by refusing to do so, always bearing in mind the paramount importance which the court must attach to the prompt and unquestioning observance of court orders. Even on the assumption that the claimant is a contemnor (as to which I express no concluded view), it seems to me that the interests of justice are best served in the present case by hearing the claimant's submissions and dealing with the claimant's application on its merits. If this is indeed a case of an accidental slip or omission in a judgment or order within the meaning of CPR 40.12 which the court should correct then it seems to me that it would be wrong in principle or contrary to the interests of justice for the court to refuse to make the necessary correction.
20. For these reasons, I reject the defendant's first main submission.

CPR 40.12

21. The defendant's second main submission is that this is not a case which falls within the scope of CPR 40.12. In support of that submission, the defendant refers to the commentary to CPR 40.12 which states that "it is there to do no more than correct typographical errors…. Although not limited to errors by the court or court officers, the rule is limited to genuine slips and cannot be used to correct an error of substance nor in an attempt to get the court to add to its original order". This note was referred to with apparent approval by Floyd J in Leo Pharma v Sandoz Ltd [2010] EWHC 1911 at para 12. The defendant also submits that, on a proper analysis, there was here no accidental slip or omission in the judgement or order; that at most there was an omission by the claimant (or its advisors) to argue the point now relied upon at trial; and that CPR 40.12 cannot be used to correct an error of substance or, moreover, to allow a party to argue a point which it did not take at trial. Furthermore, the defendant submits that in any event, the present case is one where, following circulation of my draft judgment, a draft order was prepared, agreed and signed by counsel for the parties and that in such circumstances and relying upon what was stated by Floyd J in Leo v Sandez at para 17, my Order is not one which is susceptible to review under CPR 40.12.
22. These are forceful submissions. I accept, of course, the general submission that CPR 40.12 is of limited application and that, in particular, the slip rule cannot be used to enable the court to have second thoughts or to add to its original order. However, as stated by Aldous LJ in Bristol-Myers Squib Co. v Baker Norton Pharmaceuticals Inc (No 2) [2001] RPC 45 at [25] following a review of the authorities on the slip rule, it is possible under the slip rule to amend an order to give effect to the intention of the court.
23. So far as the present case is concerned, the figure of €279,694.11 was an arithmetical error which originated in the manner in which the defendant's counsel presented its final submissions to the court and which the claimant's counsel failed to notice at the relevant time. Thereafter, the error was perpetuated through into the draft order which was eventually signed by both parties' counsel and which eventually became my Order. The result was that the inclusion of that figure in paragraph 1(2) of my Order was, in my judgement, properly described as an "accidental slip or omission in a judgment or order" within the scope of CPR 40.12 as was the figure of €224,794.11 in paragraph 2(1) of my Order. For the avoidance of doubt, the fact that the slip or omission may arise from the accidental omission of counsel does not mean that CPR 40.12 is not engaged nor that there is any bar to the exercise of the discretion under the slip rule: see the decision of Morton J in Re Inchcape [1942] Ch 394 referring to the earlier decision of Fry J. in Fritz v Hobson (1880) 14 Ch D 542. The decision in Re Inchcape was considered by Lewison J in Smithkline Beecham v Apotex [2005] EWHC 1655 (Ch) and the principle stated in Re Inchcape held on the facts of that case to be inapplicable. However, it does seem to apply here. In the present case, it was never the court's intention to award the defendant sums which it had already received. Rather, the court's intention was to award the defendant those sums which it was owed and which were still outstanding. No more, no less.
24. I do not accept the defendant's submission based upon what Floyd J stated in paragraph 17 of his judgement in Leo v Sandoz. As there stated, Floyd J was dealing with a situation where it could be said that the court had no specific intention at the time it spoke its order and there was a subsequent agreement between the parties as to the form of order. In such circumstances, I am prepared to assume that the slip rule would not apply because, as stated by Floyd J, there was neither a failure to reflect the intention of the court nor any accident or slip. However, as I say, that is not the present case.
25. The defendant sought to meet this argument at least in part by asserting that even if it might be said that there was an accidental slip or omission, nevertheless it was impossible to say now what figure or figures would have been contained in my Order. This was, said the defendant, highlighted by the fact that the claimant's application was made on three alternative bases and that it was therefore impossible to say now what the intention of the court was at the time of making my Order. I confess that I did not find that submission easy to follow. It is of course right that the claimant's application was made on three alternative bases. However, it does not seem to me that this matters. What does matter is what the court's intention was at the relevant time, which I have already summarised above. Consistent with the court's intention at the time, and ignoring the discrepancy of €2000 that I have already mentioned above, the total figure which I would have awarded the defendant was €230,888.51. That is the correct figure which should have appeared in paragraph 1(2) of my Order. It follows that the corresponding figure in paragraph 2(1) of my Order should be replaced by the figure of €175,988.51. It seems to me necessarily to follow that the calculation of interest in paragraph 2(2) of my Order should also be corrected.
26. In light of the foregoing, it follows that what I said in my earlier Judgment with regard to the overall quantum of the counterclaim is now incorrect and that it must be read subject to the present Judgment.
27. Counsel are now requested to agree a draft form of order including costs failing which I will deal with any outstanding issues.