Bright: Serious failures
The High Court has set aside a decision to add a defendant and serve them out of the jurisdiction after finding the case was “not fairly presented” to the judge.
Mr Justice Bright said lawyers had to protect their clients from “magical thinking” that meant everything was seen as part of a conspiracy, including evidence to the contrary.
The case, Degroma Trading Inc v Dreter 2 Ltd & Anor, was a shipping dispute begun in 2024. Earlier this year, the claimants made a without-notice application to add Interunity Management Corporation (IMC), a ship management company registered in Panama, as a defendant and serve it out of the jurisdiction.
They alleged that IMC exercised control over the other defendants and was their ultimate beneficial owner.
Mr Justice Waksman granted the order in May on the basis that IMC exercised “indirect and/or de facto control” over the other defendants through a nominee called Alexandra Mangos.
In the latest ruling, Mr Justice Bright said his colleague’s conclusion “was not unreasonable, in the light of the way that the case had been presented”.
But he went on to set the order aside on two grounds: first, that the claimants had not raised a serious issue to be tried in relation to their case that IMC exercised control over the defendants, or was their ultimate beneficial owner, and second, that the case was not fairly presented.
When Waksman J asked about details of beneficial ownership, he was told that this was “quite purposefully… not documented”, when in fact there were two notices on beneficial owners filed in Malta which were not put before him.
Bright J said: “I therefore regard what was said to Waksman J on this point, and the failure to show him the two notices, as a serious failure. They constituted material that Waksman J would undoubtedly have wished to take into account in deciding whether to grant permission.”
Further, there was a 2024 email from the defendants’ US lawyers, Morgan Lewis, which stated that Ms Mangos was the beneficial owner.
Though this was put before Waksman J, it “was framed in a context that did not draw the reader’s attention to its plain meaning” and instead “re-packaged so as to suggest the opposite”.
Bright J said: “It of course is a common feature of conspiracy theories that every item of evidence that runs counter to the existence of a conspiracy is seized on as a further part of the conspiracy. This is true in legal proceedings no less than elsewhere.
“However, one of the functions of lawyers is to protect their clients from this kind of magical thinking and advise against it. They should not encourage or promote it.
“Above all, they certainly should not advance it uncritically to a judge on a without notice application where the other party is not represented.
“A key duty of the advocate presenting a without notice application is to think, objectively and carefully, about logical flaws in the client’s case. This email from Morgan Lewis ought to have leapt out as something that must be brought to the judge’s attention as a point strongly against the claimants’ case – not merely as one that supported it.”
Bright J said that, had Waksman J had more time, “he might well have appreciated this for himself”, but he did not, as he was instead focused at the hearing on dealing with the claimants’ contested application for permission to amend, rather than the uncontested application for permission to serve out of the jurisdiction.
Bright J added that the claimants’ counsel, John Passmore KC, had the opportunity to remind the judge about the Morgan Lewis email in reply to a question from the judge but did not. “Once again, I regard this as a serious failure.”
Finally, the claimants failed to help Waksman J properly understand the relationship between IMC and the other entities affiliated to it.
Bright J added: “This case underlines the importance in without notice applications of practitioners giving serious thought to the duty of full and frank disclosure, in order that the application be presented fairly to the Judge.
“The guidance in appendix 9 to the Commercial Court Guide, including the checklist, should never be ignored; not even in a case where, as here, the application for permission to serve out of the jurisdiction was not a stand-alone application but an adjunct to a contested application for permission to amend.
“Adhering to and following this guidance, by adopting the structure of the checklist, is good mental discipline which encourages those involved to address their minds fully to every relevant step.”
Neither City firm Campbell Johnston Clark, which acts for the claimants, nor Mr Passmore, has responded to a request for comment.
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