Kuwait Oil Tanker Company SAK & Anor v Al Bader & Ors

A judgment creditor may bring a fresh action on an earlier judgment where the action is brought for a legitimate enforcement purpose. The action is not an abuse merely because enforcement could have been pursued earlier, particularly where execution remains subject to judicial control.

Whether later proceedings are abusive requires a broad, merits-based assessment of all the circumstances. A tracing claim may properly be brought in enforcement proceedings even though it could have been included in the original fraud action. The doctrines of abuse of process and election do not prevent damages and later tracing relief where the remedies are not inconsistent.

The claimants had obtained a substantial judgment against the first defendant for fraud. They brought a second action shortly before expiry of the six-year limitation period, seeking judgment on the earlier judgment and declarations concerning assets held through Pontirana Investments.

The first defendant alleged abuse of process and election, contending that the claimants should have sought tracing relief in the first action. The sixth defendant, alleged to hold Pontirana’s bearer shares for the first defendant, took no part in the trial. The issues were whether the second action was abusive, whether judgment could be entered on the earlier judgment, and whether the declarations were justified.

1. Judgment on the earlier judgment. The claimants were entitled to judgment against the first defendant on the earlier judgment. The cause of action was founded on the implied contractual obligation to honour the judgment, supported by Adams v Ready (1861) 6 H & N 261, Grant v Easton (1883) 13 QBD 302, ED and F Man (Sugar) v Haryanto (unreported) 17 July 1996 and Bennett v Bank of Scotland [2004] EWCA Civ 988.
2. Abuse of process. The second action was not an abuse. The claimants’ evidence showed that it had been brought to preserve the enforceability of the judgment and avoid administrative difficulties in foreign jurisdictions. Execution was stayed pending permission from the court, preserving the control contemplated by RSC Order 46(2).
3. The outstanding principal, interest and costs awarded in the first action could be included in the judgment in the second action. The claim for a declaration concerning the costs of the unsuccessful appeal was not pursued because it would serve no useful purpose.
4. Declarations. The evidence established that Pontirana had been acquired by the first defendant to conceal assets from the claimants and that the sixth defendant held its bearer shares as agent for him. Possession of bearer shares did not prevent an arrangement that the shares were held for another person, nor prevent that arrangement being alleged.
5. Tracing and election. It was not abusive to seek tracing relief in the second action. Applying Johnson v Gore Wood [2002] 2 AC 1, the relevant question was whether, in all the circumstances, the later claim misused the court’s process. The fraud liability issue belonged to the first action, whereas tracing more properly belonged to enforcement proceedings. Damages and tracing relief were not inconsistent remedies, so the doctrine of election did not apply.

Judgment was therefore entered for the claimants against the first and sixth defendants, with the requested declarations and a stay of execution capable of being lifted on application.

The judgment itself records earlier proceedings, including the first-action judgment and an unsuccessful appeal, but this was a first-instance trial in the Commercial Court. The second action had previously survived a summary strike-out application, subject to the striking out of interest claimed for more than six years.