Alliance Petrochemical Investment (Singapore) PTE Ltd v Francesco Mazzagatti & Ors

On an application challenging service out of the jurisdiction, the court must assess whether the pleaded claim has a realistic prospect of success, assuming pleaded facts unless they are demonstrably untrue or unsupportable. The court may examine each cause of action separately and set aside service in relation to claims that are fanciful while allowing arguable claims to continue.

For contribution under the Civil Liability (Contribution) Act 1978, the claimant must face liability for the same damage as the proposed contributor. There is no general rule preventing a party who benefited from wrongdoing from seeking contribution. Retained benefits are relevant to the just and equitable apportionment, ordinarily after a trial.

The claimant alleged that the defendants had misappropriated more than €140 million and pursued claims for breach of trust or fiduciary duty, dishonest assistance, knowing receipt, unjust enrichment, conversion and conspiracy.

The defendants issued a Part 20 claim seeking contribution or indemnity from a former alleged shadow director and the claimant’s directors. Permission was granted for service out of the jurisdiction. The third parties applied to set aside that permission and service, alleging that the contribution claims disclosed no serious issue to be tried and that there had been material non-disclosure.

The central issues were whether the pleaded contribution claims were arguable, whether the alleged liabilities concerned the same damage, and whether the application for permission had failed to make full and frank disclosure.

1. Merits threshold. The test for a serious issue to be tried was materially the same as the test applicable to summary judgment under CPR Part 24. The question was whether the pleaded claim had a realistic, rather than fanciful, prospect of success. The court assumed pleaded facts unless they were demonstrably untrue or unsupportable, while avoiding a mini-trial. Adequate particularisation could be considered, especially where dishonesty was alleged.
2. Separate causes of action. The court was entitled to scrutinise each pleaded cause of action and each asserted basis for contribution. It could set aside service in part where some claims were fanciful but another claim remained arguable.
3. FM/FD Payments. The claim against the directors disclosed no arguable basis merely because they were directors or allegedly responsible for the company’s affairs. The claim against the alleged shadow director was arguable because the pleaded control of the company, subsidiary and bank accounts could support an inference that he knew, or was reckless as to whether, the defendants were misappropriating funds and failed to prevent it.
4. Contribution. The proposed claims concerning payments allegedly made by the shadow director, rather than by the defendants, failed because the defendants were not alleged to be liable for the same damage. By contrast, the fact that a defendant had benefited from wrongdoing did not automatically bar contribution. Retained benefits were relevant to the just and equitable assessment under the Civil Liability (Contribution) Act 1978, but the issue could not be summarily determined.
5. Other claims. The pleaded allegations concerning the Selenium transaction, letters signed by a director and the transfer of a debt disclosed no actionable wrong capable of founding contribution. A subsequent actionable wrong aggravating loss could, in principle, leave the original defendant liable for the full loss; causation was a matter of fact and degree.
6. Full and frank disclosure. The omission of correspondence from the permission application was a mistake, but not material. The application fairly presented the directors’ position and the omitted material would not have altered the court’s assessment.
7. Disposition. The directors’ jurisdiction challenge succeeded in full. The alleged shadow director’s challenge succeeded except for the narrowly pleaded contribution claim concerning FM/FD Payments and his alleged breach of shadow-director duties. The Part 20 claim was to be set aside accordingly and re-pleaded subject to court approval.

First-instance decision on applications to set aside permission for service out of the jurisdiction and service of a Part 20 claim.