Aegean Baltic Bank S.A. v Renzlor Shipping Ltd & Ors

Under CPR 19.2(2)(b), a person may be joined where an issue involving that person and an existing party is connected with matters already in dispute and joinder is desirable to resolve it. The issue need not already be pleaded between the existing parties, and the proposed party’s rights need not necessarily be affected by the outcome.

Desirability is assessed in context. The court must weigh the connection and possible avoidance of multiplicity against fairness, procedural readiness, trial timing, evidential complexity and the interests of other court users. Joinder will generally be refused where the proposed issue is unpleaded, requires substantially different evidence or law, and cannot fairly be accommodated without delaying a ready trial.

The claimant bank sued the ship owner, its corporate guarantor and its managing director under a loan secured on the vessel. Axa XL, a following hull-and-machinery insurer, applied to be joined under CPR 19.2(2)(b).

Axa sought determination of the effect of a follow-the-settlements clause and, as an adjunct, the identity of the proper loss payee. It argued that early determination could avoid later proceedings and bind the bank and defendants. The claimant opposed joinder, relying on the lateness of the application, the imminent trial and the potential need for evidence concerning Italian law, the Generali policy and the settlement. The central issue was whether joinder was connected and desirable at that stage.

1. Application refused. Axa was not added as a party under CPR 19.2(2)(b), and the trial was not adjourned.
2. CPR 19.2(2)(b) is wider than CPR 19.2(2)(a). It can apply where the proposed issue is not already an issue between the existing parties. The connection must nevertheless be assessed by reference to the nature of the existing issues. It is not necessary that the existing proceedings would affect the proposed party’s rights.
3. The follow-clause issue had a broad connection with the pleaded dispute because it might bear on the defendants’ allegations concerning the bank’s recovery and loss. However, the existing pleadings did not advance a case that the Lloyd’s insurers’ liability was limited by the Generali settlement. The parties had prepared for trial on the basis that the issue would not arise.
4. The issue could not safely be treated as a short construction point. It might require consideration of the interaction between policies governed by different laws, the factual matrix, the Generali settlement and the effect of the settlement’s terms. The court therefore could not discount the need for factual or expert evidence. Three weeks before trial there was insufficient time for orderly pleading, evidence and argument.
5. Although avoiding multiplicity of proceedings was relevant, it did not outweigh fairness and practical justice. Axa had known of the proceedings for a substantial period and could have applied earlier. It was also questionable whether it was desirable to determine issues in proceedings to which the MII insurers were not parties.
6. The proposed loss-payee issue was unclear and had not crystallised. It was insufficiently connected with the existing proceedings and could not fairly be introduced at that late stage.