Shetty v Al Rushaid Petroleum Investment Company & Ors

The court may join a person as a defendant where an issue involving that person is closely connected with the matters in dispute and joinder is desirable for resolving it, even though the claimant seeks no relief against that person. Under Article 6(2) of the Judgments Regulation, third-party proceedings include additional claims permitted by national procedural rules where a sufficiently close connection makes a single trial conducive to efficient justice and avoids irreconcilable judgments. The exception is unavailable where proceedings are brought solely to remove a party from the jurisdiction otherwise competent to hear the claim. Applications made without notice require full and fair disclosure, but an order need not be set aside for immaterial omissions. Security for costs depends on the statutory conditions and the discretionary factors applicable to the case.

Mr Shetty brought an employment claim against ARPIC and Cleveland Bridge alleging wrongful dismissal, false imprisonment and unpaid employment benefits. The defendants relied on allegations that he had breached duties owed to ARPD through secret commissions involving TSJ.

ARPD had brought a separate fraud action against Mr Shetty, Mr Caplis and Mr Wight. Jurisdiction over Mr Caplis and Mr Wight in that action was set aside because they were not domiciled in England. Master Bowles then joined ARPD to the Employment Action and permitted counterclaims and additional claims against Mr Caplis and Mr Wight. Mr Shetty, Mr Caplis and Mr Wight applied to set that order aside. Mr Shetty also sought security for costs.

1. Applications to set aside refused. Under CPR r 19.2(2)(b), joinder is not confined to a person against whom the claimant wishes to make a claim. It is sufficient that an issue involving the proposed party is closely connected with the matters in dispute and that joinder is desirable to enable the court to resolve that issue. The definition of defendant in CPR r 2.3 does not narrow that power.

2. Although the Fraud Action remained pending, it was not a suitable vehicle for resolving the issues with all relevant participants present. A trial involving ARPD, Mr Shetty, Mr Caplis and Mr Wight was desirable because their evidence and explanations concerning TSJ were materially connected with the allegations against Mr Shetty. Duplication and case-management consequences did not make joinder impermissible.

3. Article 6(2) of Council Regulation (EC) No 44/2001 is an exception to the domicile rule in Article 2. It requires both that the proceedings are permissible under national procedural rules and that there is a close connection serving the rational and efficient disposal of the proceedings and avoiding irreconcilable judgments. The expression third-party proceedings is broad enough to include additional claims under CPR r 20.7. It may apply even where the original claimant seeks no relief against the defendant making the additional claims, provided the joined defendant will be bound by issues determined in the claim. The claims were not brought solely to remove Mr Caplis or Mr Wight from another competent jurisdiction.

4. The without-notice application was justified by a genuine risk that notice would lead to proceedings elsewhere and frustrate the application. The principles requiring full, fair and accurate disclosure were satisfied. The identified error concerning the number of foreign proceedings was immaterial, and the Master’s order was not set aside for non-disclosure or abuse of process. The consent order in the Fraud Action dealt only with jurisdiction in that action and did not preclude reliance on another exception to Article 2 in different proceedings.

5. Both statutory grounds for security for costs under CPR r 25.13(2)(a) and (c) were established. Having considered the discretionary factors and declining to undertake a detailed merits assessment, the court ordered security of £300,000 to the end of trial, payable within 28 days by payment into court, a solicitors’ joint account or a suitable bank guarantee payable in England.