Commonwealth of Australia v Peacekeeper International FZC UAE & Anor

Interpleader proceedings are designed to protect a person holding disputed property from competing claims and to enable the claimants’ rights to be resolved. They should not ordinarily be transformed into substantive proceedings against that person. Any wider claims should generally be brought separately, although the court may, in rare cases, use its case-management powers to direct that related claims be heard alongside or in parallel with the interpleader proceedings. Participation in interpleader proceedings for their traditional purpose does not ordinarily amount to submission to the jurisdiction for unrelated substantive claims. A non-resident party is entitled to rely on the safeguards governing service out of the jurisdiction.

The Commonwealth of Australia commenced interpleader proceedings concerning four armoured vehicles in its possession, naming Peacekeeper International FZC UAE (PKI) and Enzo Services Limited as competing claimants to ownership or possession. Enzo later sought to pursue additional substantive claims against Australia and PKI, including claims for continuing lease payments and unlawful interference with its business.

McCombe J had directed that the dispute concerning the four vehicles proceed as a CPR Part 7 claim and had left open the possibility of a properly formulated claim concerning two other vehicles being heard with it. The issue was whether the proposed additional claims had been agreed or authorised, whether interpleader proceedings could be expanded to include them, and whether participation in the interpleader proceedings constituted submission to the jurisdiction.

1. The additional claims were struck out. Australia had not agreed to be bound by the proposed directions concerning Part 20 claims. No sealed order had been made, and the relevant agreement was at most provisional. Even if an agreement had been made, it would not have bound Australia where its representative had acted under a misapprehension about the extent of his authority and the position was promptly corrected: Shepherd v Robinson [1919] 1 KB 474.
2. Interpleader proceedings have a limited purpose. Under Order 17, RSC, they provide a mechanism by which a person holding property, but claiming no title to it, can obtain protection from competing claimants and leave the dispute about title or possession to be resolved between those claimants. The limited discretion under rule 8(1) is subject to the other rules of the Order and does not ordinarily permit conversion of the proceedings into a general substantive action.
3. The court agreed with the rationale described in De La Rue v Hernu, Peron & Stockwell Ltd [1936] 2 KB 164 and the formulation in Glencore International AG v Shell International Trading & Shipping Co Ltd [1999] 2 Lloyd's Rep 692. Wider substantive claims may exceptionally be directed to proceed at the same time as, or in parallel with, interpleader proceedings under the court’s general case-management powers, but this requires careful consideration of the consequences.
4. Participation by a foreign party in traditional interpleader proceedings does not ordinarily constitute submission to the jurisdiction for unrelated claims. The jurisdictional principles in Glencore International AG v Exter Shipping Ltd [2002] EWCA Civ 524 concerned substantive claims and counterclaims, and did not justify treating Australia or PKI as having accepted jurisdiction for Enzo’s additional claims.
5. The court had no discretion under CPR r.3.1(2)(g) or CPR r.19.2(2)(a) to reintroduce the claims. Australia and PKI remained entitled to rely on the safeguards applicable to service out of the jurisdiction under CPR Part 6.20. The applications to strike out the relevant parts of the particulars of claim succeeded. The four vehicles were ordered to be released to PKI pending determination of the interpleader proceedings, subject to the terms in the Annex and permission to apply.

First-instance decision. The judgment refers to an earlier application before Mr Justice McCombe, who rejected the proposed incorporation of claims concerning two additional vehicles and directed that the dispute concerning the original four vehicles proceed as a CPR Part 7 claim.