Crown Aluminium Ltd v Northern & Western Insurance Company Ltd & Anor

CPR 12.8 prevents default judgment against one defendant where entering judgment would prevent the claim being pursued against another defendant. The rule applies even where the claims arise from different causes of action, if success against one defendant would eliminate the claimant’s loss against the other.

Where disputed issues affecting both claims may produce inconsistent findings, the claims should ordinarily be tried together. A defendant cannot obtain summary judgment against a co-defendant’s claim merely by asserting that the claimant must succeed against a defendant who is debarred from defending. The claimant must still establish the relevant contractual and factual issues on the merits.

Crown Aluminium claimed under trade credit supplier guarantees issued by Northern & Western Insurance Company Ltd. It alleged that Cambridge Risk Advisors Ltd had acted as Northern & Western’s agent in varying or waiving the guarantees’ notice requirements. Cambridge Risk applied for summary judgment or strike-out on the basis that Northern & Western was debarred from defending and Crown’s primary claim against it must therefore succeed.

The application required the court to determine the scope of CPR 12.8, whether Crown’s claims could be dealt with separately, and whether the disputed issues concerning the guarantees and Cambridge Risk’s conduct should be resolved at a single trial.

1. Application dismissed. Cambridge Risk failed to establish that Crown’s claim against it must fail merely because Northern & Western had been debarred from defending.
2. CPR 12.8 applies where entering default judgment against one defendant would prevent the claim being pursued against another. This extends beyond cases involving the same cause of action or the doctrine of election. It also covers a case where judgment against the guarantor would ordinarily satisfy the claimant’s loss and thereby defeat a claim against an adviser whose alleged breach caused that loss.
3. The validity of Crown’s demands required consideration of the guarantees’ terms and the acts done in giving notice. If the demands failed to comply strictly with the guarantees, the court would then have to decide whether Cambridge Risk had authority to vary or waive the requirements. Those matters involved disputed factual and legal issues and could not be assumed in Crown’s favour because Northern & Western could not participate.
4. The claims should be determined together. Separate trials created a clear risk of inconsistent findings about what Cambridge Risk had advised and whether that advice was correct. A joint trial was therefore required in the interests of fairness and justice and was a compelling reason to refuse summary judgment under CPR 24.2.
5. Crown was entitled to abandon the separate claim based on Northern & Western’s alleged misrepresentation of the guarantees’ commercial purpose, because that issue could arise only if Northern & Western pleaded and proved it. That abandonment did not require Crown to abandon its primary claim against Cambridge Risk.
6. The further argument that Crown’s loss resulted from failing to obtain and enforce default judgment was also refused. Cambridge Risk had produced no evidence that such a judgment would be enforceable in Nevis, and the issue was suitable for determination at trial.