Benkel v East-West German Real Estate Holding & Anor

When deciding whether to join a defendant under Article 8.1 of the Recast Brussels Regulation, the court should adopt a broad, common-sense approach. The relevant risk includes irreconcilable findings of fact as well as conflicting conclusions of law. Joinder may be expedient where separate proceedings would require different courts to decide substantially the same factual relationship.

Under CPR 19.2(2)(b), joinder is permissible where an issue involving the proposed party and an existing party is connected with the matters in dispute and joinder is desirable to resolve it. The lateness of an application is not an absolute bar. The court may reconsider an earlier case-management decision under CPR 3.1(7) where later developments show that a different order would better secure an effective and fair resolution.

The claimant, a trustee in bankruptcy, brought proceedings concerning alleged trusts and beneficial ownership of interests in East-West UK and East-West Germany. The proposed third defendant, Mr Dikautschitsch, was not a party, although the existing defendants had conducted the litigation under his direction and their evidence indicated that Ms Helbet held her interests as his nominee.

The claimant applied during the trial to join Mr Dikautschitsch. The application raised jurisdiction under Article 8.1 of the Recast Brussels Regulation, the joinder requirements in CPR 19.2, alleged abuse of process, and the effect of the application’s lateness. An earlier joinder application concerning a separate JURAG claim had been dismissed, but that decision had not determined a freestanding application concerning the East-West interests.

1. Jurisdiction. The court had jurisdiction under Article 8.1 of the Recast Brussels Regulation. Although Mr Dikautschitsch was not domiciled in England and Wales, East-West UK was domiciled there and the claims were closely connected. If he were not joined, both the English court and a court in Spain or Germany might have to determine the same alleged relationship between him and Mr Fishman. That created a clear risk of irreconcilable findings of fact.
2. The court applied the broad, common-sense approach described in Casio Computer Company Limited v Sayo [2001] IL Pr 43, drawing on Sarrio SA v Kuwait Investment Authority [1999] 1 AC 32. The risk of irreconcilability was not confined to mutually exclusive legal consequences. It extended to conflicting factual findings, particularly where the same relationship and evidence would be examined in separate proceedings.
3. Joinder. CPR 19.2(2)(b) was satisfied because there was an issue involving the proposed defendant and an existing defendant which was connected with the matters in dispute, and joinder was desirable to resolve it. Joining him would permit the court to determine whether he held the relevant interests for the bankrupt estate or beneficially, and would enable effective orders to be made against him.
4. The lateness of the application did not justify refusal. Mr Dikautschitsch had been involved in the litigation from its inception, had directed the defendants’ conduct, and had received the benefit of their legal representation. In those unusual circumstances, joining him would cause no material procedural unfairness.
5. The application was not an abuse of process. The earlier decision concerning joinder for the JURAG claim had not determined the separate issue now raised. In any event, abuse of process was fact-sensitive and merits-based, applying the approach in Johnson v Gore Wood [2002] 2 AC 1.
6. The court could also reconsider the matter under CPR 3.1(7), applying the guidance in Tibbles v SIG plc [2012] 1 WLR 2591. Later evidence and the trial context justified reviewing the earlier case-management position. Mr Dikautschitsch was ordered to be joined, with directions for prompt service and further procedural arrangements.

Not an appeal. The judgment concerned an application made during the trial of first-instance proceedings.