Newland Shipping & Forwarding Ltd v Toba Trading FZC, Court of Appeal - Admiralty Division, February 06, 2014, [2014] EWHC 210 (Comm),[2014] 2 Costs LR 279

Resolution Date:February 06, 2014
Issuing Organization:Admiralty Division
Actores:Newland Shipping & Forwarding Ltd v Toba Trading FZC

Neutral Citation Number: [2014] EWHC 210 (Comm)

Case No: 2011-1213

Case No:2011-1214




Royal Courts of Justice

Rolls Building, Fetter Lane, London, EC4A 1NL

Date: 6 February 2014

Before :


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Between :

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Richard Slade QC and Edward Harrison (instructed by Holman Fenwick Willan LLP) for the Claimant

Stephen Cogley QC and Peter Ferrer (instructed by Stephenson Harwood LLP) for the Defendant and First and Third Defendant

Hearing dates: 28 January 2014

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Mr Justice Hamblen :


  1. The First Defendant, Toba Trading FZC (``D1''), and the Third Defendant, Hossein Rahbarian (``D3''), apply for relief from sanctions under CPR 3.9 in respect of the order of Field J dated 15 November 2013 entering judgment against D1 and D3. D1 and D3 also seek to make a late amendment to their application to rely on CPR 3.1(7), which is opposed.

  2. The effect of Field J's order was that:

    (1) D1's defence and counterclaim in 2011 Folio 1213 (``Action 1213'') was struck out and judgment entered against D1 for US$7,260,382;

    (2) D1's defence and counterclaim in 2011 Folio 1214 (``Action 1214'') was struck out and judgment entered against D1 for US$1,752,291;

    (3) Judgment was entered against D3 in Action 1213 in the sum of US$7,260,382.

    Factual Background

  3. The Claimant, Newland Shipping and Forwarding Limited, supplied oil products to D1, which is an Iranian owned UAE company engaged in the business of trading oil and gasoline related products. D1 made certain advance payments but failed to pay the full amount due for the cargoes. The cargoes were sold elsewhere. A series of advance payments therefore built up which the parties agreed (by a contract dated 6 February 2011) would be deducted from sums due in respect of a series of five further cargoes, which in each case were to be delivered CFR Iranian Caspian Port.

  4. The Second Defendant, Seyed Majed Taheri (``D2''), is said to be the commercial manager, shareholder and an (or the) alter ego of D1. D3 is said to be a board member, managing director and an (or the) alter ego of D1.

  5. The Claimant's case is that, rather than waiting for reimbursement to be made in five stages as had been agreed, the Defendants resorted to stratagems to attempt to obtain the cargoes before payment. In the 1213 Action, D1 did obtain a cargo worth over $4 million formerly on board the vessel ``TETI''. The Defendants gave various reasons for delaying payment until the TETI finally put into port in Neka in Iran. Shortly afterwards, the cargo was arrested by the Iranian Courts in allegedly contrived proceedings between D1 and a company (``Chirreh''), which was (as is common ground) a company controlled by D3's sister.

  6. In the 1214 Action, which relates to the delivery of cargo by rail, D1's alleged ruses to obtain the cargo without payment were unsuccessful, and the cargo was eventually sold elsewhere by C in a distressed sale. The claim in this action is only brought against D1.

  7. The principal claim in the 1213 Action is for the purchase price of about US$4.5 million, and in the 1214 Action for the purchase price of about US$1 million, together in both actions with damages claims including (in the 1213 Action) a claim for conspiracy and conversion of the goods.

  8. In both the 1213 and the 1214 Actions, D1 counterclaims for its advance payments of some US$3.6 million. There is an issue in respect of the counterclaims as to whether the 6 February 2011 contract was a compromise agreement which settled how D1 would recover the advance payments, and (if so) whether D1 (in concert with D2 and D3) acted in repudiatory breach of that agreement.

    Procedural history

  9. The Claim Forms in both Actions were issued on 12 October 2011.

  10. The only claim initially advanced under the Claim Form in Action 1213 was a contractual claim for failure to pay the purchase price of US$4,534,120.48 and wrongful repudiation of the contract. The claim was only advanced against D1 as the counterparty under the Contract.

  11. Following the order allowing service out of the jurisdiction, the Claimant served Particulars of Claim in Action 1213 dated 26 January 2012. These particulars alleged for the first time unlawful conspiracy and conversion.

  12. On 14 May 2012, the Claimant sought to amend the Claim Form in Action 1213 to add D2 as a party to the contractual claim.

  13. On 29 June 2012, the Claimant filed its application to amend.

  14. On 18 July 2012, D1 and D2 applied to strike out the Claim Form and Particulars in Action 1213, alternatively for an order for summary judgment.

  15. The Claimant's application dated 29 June 2012 and D1 and D2's application to strike out/summary judgment was due to be heard on 2 November 2012.

  16. Shortly before the hearing on 23 October 2012, the Claimant wrote to D1/D2's solicitors, Stephenson Harwood LLP, requesting an adjournment of both applications as they wished to further amend their particulars and issue applications in relation to joinder and service. D1 and D2 agreed to the adjournment of both applications on that basis and a consent order was drawn up.

  17. On 11 January 2013, a further application to re-amend the Particulars of Claim was served and add D3 together with various orders for alternative service.

  18. On 8 February 2013, the Claimant's applications dated 29 June 2012, and 11 January 2013 to re-amend and the Defendants' application dated 18 July 2012 came before Cooke J on a CMC. Without prejudice to D1 and D2's application dated 18 July 2012, Cooke J gave permission to serve the amended claim form and amended Particulars of Claim in Action 1213 on D1, D2 and D3.

  19. On 22 February 2013 a further short CMC took place before Cooke J. He ordered that the 1213 Action and the 1214 Action be heard together and at the same time. The two Actions were fixed for a 6 day trial commencing on 24 February 2014.

  20. D1 and D2's application dated 18 July 2012 was listed for May 2013, but was adjourned by agreement because of ongoing settlement discussions. It was later re-listed for hearing in January 2014, but this was stood out following Field J's order.

  21. D1/D2 (but not D3) had already applied for security for costs from the Claimant. The matter came before the Court on 26 July 2013. Popplewell J dismissed the application and gave directions down to trial. He gave the following directions ``in respect of 2011 Folio 1213'':

    ``(a) Standard disclosure is to be made by 20 September 2013, with inspection 7 days after notice.

    (b) Signed witness statements of fact and hearsay notices in 2011 Folio 1213 are to be exchanged by no later than 25 October 2013.''

  22. There was no need to give directions in Action 1214 as disclosure had already taken place, witness statements had been exchanged and the action was ready for trial.

  23. On 30 September 2013, following an agreed extension of 10 days, the parties exchanged disclosure lists. Separate lists of documents and disclosure statements were not provided by D1 and D2. Instead an allegedly deficient disclosure list was provided by Stephenson Harwood LLP (purportedly on behalf of D1 and D2, but contrary to E3.2 of the Admiralty and Commercial Court Guide which requires separate lists from each party). Inspection was provided on 13 October 2013.

  24. Exchange of witness statements had been ordered to take place on 25 October 2013. On 24 October 2013, the Claimant's solicitors, Holman Fenwick & Willan LLP (``HFW''), received a letter from Stephenson Harwood LLP indicating that they were no longer acting for the Defendants, and asking that further communications be addressed to ``Iranian legal counsel'' at two yahoo email addresses that the letter provided. The letter from Stephenson Harwood LLP indicated that their former clients had asked them to pass on a request for an extension of time ``for exchange of witness statements and regarding disclosure'' of one month. HFW responded indicating that they did not agree to any extension and explained that the Claimant would be sending copies of its statements to Stephenson Harwood LLP to be held in escrow.

  25. On 29 October 2013, the Claimant's application seeking judgment against the Defendants for non-compliance with the court's orders was served on Stephenson Harwood LLP. A copy was also sent to the two yahoo email addresses that Stephenson Harwood LLP had provided. The email serving the application informed the parties that HFW's clerk would be attending the listing office of the Commercial Court on the next day to fix a hearing. In the event, no representative of any of the other parties attended. On 1 November 2013, HFW therefore informed all relevant parties of listing arrangements for the hearing.

  26. On 30 October 2013 D1 and D2 wrote to the court in the following terms, without copying in the Claimant or HFW:

    ``We regret to inform that our solicitor Mr Rovine Pradeep Chandrasekera of Messrs STEPHENSON HARWOOD LLP has caused us some difficulties whilst we do not deny that we had some financial disagreement with each other;

    1) He informed us on Wednesday (23rd Oct. 2013) that he had resigned; as a result we didn't have enough time to prepare our witness statement in the two remaining days considering the fact that we could not have any access to new and vital documents in the claimant's disclosure list.

    2) He unreasonably refused to submit to us the relevant documents sent by Holman Fenwick Willan LLP during the process of disclosure and to prepare the witness statement to be exchanged on 25th October 2013. Considering the foregoing and the remaining time, it has been impossible for the witness statement/s to be exchanged on time, pursuant to Court Order on 26th July 2013; therefore we need more time to prepare the relevant witness statement .

    3) We wrote to the...

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