Tobias Gruber & Others v (1) Aig Management France Sa

An alternative claim against a defendant is not properly maintainable on a speculative basis where the claimant’s primary case identifies another defendant as liable and that liability is admitted. On an application under Part 24, the court may decide the issue on the evidence where the alleged transfer of assets has no real prospect of being established. A transfer of some business, employees or derivative positions does not, without more, establish a transfer of all or substantially all of an undertaking’s assets.

For limitation purposes, the addition of new parties is governed exclusively by CPR 19.5. CPR 17.4(2), concerning amendments adding new claims by existing parties, does not apply to new parties. Where there is a reasonably arguable limitation defence, the proposed parties should generally issue fresh proceedings.

The claimants, former employees of companies within the AIG group, claimed substantial unpaid bonuses under deferred compensation and incentive plans. They primarily alleged that AIG Financial Products Corp was liable. In the alternative, they alleged that the liability had transferred to AIG Asset Management (Europe) Ltd and AIG Markets Inc.

Applications were made to set aside service out of the jurisdiction, for summary judgment, and to add four further claimants. The court considered whether there was a serious issue or real prospect of success concerning the alleged transfer, whether AIG Trading Group Inc was also liable under the plan, and whether the proposed additional claimants could be joined after expiry of the applicable limitation period.

1. Claims against D5 and D6. The alternative case was speculative and inconsistent with the claimants’ primary case that D2 remained liable. Since D2 accepted that it was the liable party if the claims were well founded, there was no serious issue to be tried against D6 and no real prospect of success against D5. The desire to retain solvent defendants as alternatives was not a compelling reason for trial.
2. In any event, the evidence showed no transfer by D2 of all or substantially all its assets to D5 or D6. D2’s run-off of its proprietary derivatives business did not itself establish such a transfer. The transfer of a small London branch business, some employees, and certain derivatives through novation and back-to-back arrangements was insufficient when compared with D2’s balance sheet. The alternative claims were therefore dismissed. Service on D6 was set aside.
3. D4. The plan’s definition of AIGFP did not make D4 jointly and severally liable. The words “where applicable” applied to the relevant subsidiaries. The payment provisions identified D2 specifically, including its unsecured liability and obligation to pay from its general funds. D4’s losses being relevant to account calculations did not alter the identity of the liable entity. Summary judgment was granted to D4.
4. Joinder and limitation. CPR 19.5 governed the addition of new parties after expiry of limitation. CPR 17.4(2) applied to a new claim by an existing party and did not govern the addition of new claimants. Applying the approach in Welsh Development Agency v Redpath Dorman Long [1994] 1 WLR 1409 by analogy, a reasonably arguable limitation defence required the new claimants to issue fresh proceedings. Their alleged core breach occurred, or arguably occurred, before 15 May 2009. Joinder was refused.
5. The court accepted the principle in Doncaster Pharmaceuticals v Bolton Pharmaceuticals [2007] FSR 63 that further investigation may sometimes establish a real prospect of success, but held that this was not such a case.