Joinder of parties - Joinder of defendant - Claimant bringing proceedings for wrongful dismissal

Shetty v Al Rushaid Petroleum Investment Company and others [2011] All ER [D] 195 [Jun], Christopher Pymont QC [2011] EWHC 1460 (ch)

A group of companies, including the first, second and third defendant firms, were controlled by the same group of individuals (the group).

The claimant was a high-ranking member of that group.

In September 2009, he was dismissed from his employment.

He subsequently began proceedings against the first and second defendants for, inter alia, wrongful dismissal.

In March 2010, the first and second defendants served a defence which alleged, inter alia, that the claimant had been guilty of fraud regarding another company in the group, A Ltd.

The details of the alleged misconduct were set out in another action commenced by another company in the group (the fraud action).

The fraud action alleged that the claimant had conspired with C and W, two other members of the group to take secret commissions.

In November 2010, the three defendants applied to the court without notice for an order joining A Ltd to the main claim as the third defendant, permitting the defendants to counterclaim against the claimant, and permitting the first and third defendants to issue an additional claim against C and W.

The court granted the order.

Also in November 2010, the claimant made an application for security of costs against the third defendant.

On service of the order, the claimant, C and W applied for a new order to the effect that the order of November 2010 be set aside or not continued.

Three main issues arose: (i) whether the court had possessed the power to join the third defendant in the employment action and, if so, whether it ought to have used that power and on what terms; (ii) whether the court had possessed the power to permit the first defendant and (if joined) the third defendant to make claims against C and W and, if so, whether it ought to have used that power; and (iii) whether the order ought to be set aside on the grounds that the application ought not to have been made without notice.

On the issue of bringing claims against C and W, it was submitted that, as they were both domiciled out of the court's jurisdiction, proceedings should be brought against them in their countries of residence, namely Spain and Scotland respectively.

It was further necessary to consider whether it was appropriate to grant the claimant's application for security of costs against the third defendant. Consideration was also given to the European Convention on Human Rights (the Convention).

The court ruled:(1) All that was required for the court to be able to add a new party would be that there was an 'issue' to be determined, which was 'closely connected to the matters in dispute in the proceedings', not that that issue formed a claim for relief against the new party.

The definition of 'defendant' in CPR r 19.2 was not intended to restrict the issues: once a party had been joined properly, he would become a defendant within the meaning of the definition (see [19] of the judgment).

In the instant case, the court had possessed the power to join A Ltd as a third defendant.

The joinder of the third defendant had been desirable so that the issue of the claimant's alleged breach of duty to the third defendant could be resolved at a trial involving C and W.

Furthermore, on the true construction of the Convention, it was appropriate for the cases against C and W to be heard in England.

There was nothing to be gained in the interests of justice or administration in issuing proceedings elsewhere (see [20], [26], [33] of the judgment).

The order joining the third defendant to the employment action would not be set aside (see [27] of the judgment).

Knauf UK GmbH v British Gypsum Ltd [2002] All ER (D) 180 (Apr) distinguished; Dollfus Mieg & Cie v CDW International Ltd, LBJ Regents Ltd v Dollfus Mieg & Cie [2003] All ER (D) 229 (Mar) distinguished; Dunlop Haywards Ltd v Erinaceous Insurance Services Ltd [2008] All ER (D) 11 (Apr) considered.

(2) On the evidence, there was clearly a connection between the two claims in the matter.

The claimant's claim could only succeed if the court rejected the defendants' contention that he had been in breach of his duty to the third defendant. Taking into account all the factors, it had been appropriate for the additional claims to be allowed.

It would not matter that the claimant did not seek any relief against the defendant making the additional claim (see [32], [34] of the judgment).

The order allowing additional claims to be brought against C and W would not be set aside (see [37] of the judgment).

Kinnear v Falconfilms NV (Hospital Ruber Internacional, third parties) [1994] 3 All ER 42 considered; Waterford Wedgwood Plc v David Nagli Ltd [1998] FSR 92 considered; Kongress Agentur Hagen GmbH v Zeehaghe BV: 365/88 [1990] ECR I-1845 considered; Barton v Golden Sun Holidays [2007] I.L. Pr. 57 considered.

(3) On the evidence, it was possible that if the application had been made with notice, the claimant would have informed C and W about it whilst awaiting a hearing, and one or both of them would have commenced proceedings in another jurisdiction, frustrating the purpose of the application.

A Ltd, the first defendant and the second defendant had had a firm evidential basis that the claimant and C and W had been engaged in a conspiracy to procure the payment of secret commissions to themselves.

In such circumstances, it was unsurprising that the applicants had sought to proceed without notice.

Further, on the facts there had been no material non-disclosure.

Furthermore, on the true construction of the order, it was incorrect to suggest that the court had declared that it had no jurisdiction over C and W in relation to the claims in the fraud action (see [39], [40], [47] of the judgment).

There was no reason to interfere with the decision to proceed without notice (see [41] of the judgment).

(4) On the facts, the application for security of costs had been made promptly and was not being used improperly.

It would be inappropriate to enter into detailed discussion of the general merits of the third defendant's claim.

On the material before the court, it would be appropriate to make an order for security of costs (see [52] of the judgment).

It would be appropriate in the instant case to make an order for security of costs (see [52] of the judgment).

Charles Samek QC and Joanne Sefton (instructed by Speechly Bircham LLP) for the claimant.

James Evans (instructed by Geldards LLP) for C and W.

Andrew Moran and James Mather (instructed by Kingsley Napley LLP) for the first, second and third defendants.