CASE MANAGEMENT HEARING: SHOULD WE STAY OR SHOULD WE GO? PROCEEDINGS NOT DELAYED BECAUSE THERE ARE PENDING APPEALS

In Sberbank of Russia v The OJSC International Bank of Azerbaijan [2018] EWHC 2777 (Comm)Mr Justice Bryan had to consider whether to adjourn a case management conference pending appeals in other cases.  The judge considered the overriding objective and held that case management should take place. There are also some interesting observations about the costs order in a CMC

THE CASE

The claimant brought an action for a debt. There was an appeal pending to the Court of Appeal in relation to whether the courts should grant a moratorium on the defendant’s debts. The defendant sought an adjournment of the CMC until after that appeal hearing and, possibly, a subsequent appeal to the Supreme Court.

THE JUDGMENT ON WHETHER CASE MANAGEMENT SHOULD PROCEED

  1. bear well in mind the overriding objective in CPR 1.1, and 1.2, including dealing with cases justly and at proportionate cost, including, so far as practical, (d), “ensuring that it is dealt with expeditiously and fairly”.
  2. The first important point is that the Court of Appeal hearing is concerned, and is concerned only with the narrow issue in relation to CBIR Article 21. At the moment, it is not even concerned with the Gibbs issue, which may or may not, if matters proceed any further, be incorporated in any proceedings that take place in the Supreme Court.
  3. I have before me for case management today an action which has progressed to close of pleadings. If I were to accede to the suggestion of the respondent and not progress the matter today, then, as must be accepted by Mr. Perkins, there would be an inevitable loss of time. Whether that loss of time would be a year, 18 months or two years, a significant amount of time would be lost. It would cause delay in the furtherance of the action.
  4. Essentially at the end of such appellate proceedings as take place, at whatever appellate level, the issues which arise in this case, certainly in relation to the alternative basis at common law which is advanced, would not have been addressed and, therefore, there would then be a standing start and the action would take as long as it takes to get to trial.
  5. That is, in my view, an important consideration in the context of the overriding objective and from a case management point of view, because at least in the abstract a claimant is entitled to have his action determined within a reasonable period of time, in particular debt claims. Whilst there is no evidence before me of any specific prejudice in this case, the mere passage of time in relation to a debt claim is something that could cause prejudice for a claimant, not least because no one knows how a bank will trade in the future, what will happen in the future or, indeed, what happens in the world in the future. Therefore, there is a potential prejudice that results from delay if I were effectively to stay these proceedings so that they do not continue beyond this point, which is the effect of what IBA seeks before me today.
  6. The real battleground between the parties was to consider how things might play out as a result of matters in the appellate courts, including the Supreme Court. It is accepted (rightly, in my view) by Mr. Perkins, on behalf of IBA, that it is inherently unlikely that even if the matters under appeal reached the Supreme Court, and the Supreme Court allowed any widening of the issues, the Supreme Court would rule on the particular facts of this case in relation to any common law public policy defence. At the very highest (and this, of course, assumes that the Supreme Court was willing to consider the Gibbs point), it is possible that the Supreme Court might offer some general guidance in relation to what exceptions there might be to any recognition and enforcement of foreign plans. However, it seems to me that even if the point was live before the Supreme Court, assuming of course that matters reached the Supreme Court, and even assuming that the Supreme Court was willing to give some general guidance, it is inherently unlikely that such guidance would be otherwise than at a high level, and no doubt the Supreme Court would be careful and reluctant not to trespass upon the facts of any particular case; nor, indeed, to give such detailed guidance as would straightjacket judges in the future, given the myriad of circumstances that could arise and which might not necessarily be foreseeable or foreseen in advance.
  7. I consider, therefore, that if one was within a scenario whereby Gibbs was overturned, but there were some circumstances in which the Gibbs rule did still arise (which Mr. Perkins accepted was a possibility which could well happen, for example, if the principle in Gibbs was found to be limited to certain circumstances, as opposed to not forming part of English law at all), then the reality is that this would not determine the point in many cases, including in relation to the alternative common law principle that Sberbank submits exists and would wish to rely upon.
  8. Against that background, there is inevitably going to be delay, it seems to me, if matters proceed in the way that is suggested by IBA. Of course, if Gibbs was not overturned, then I accept that, in that scenario, there would be no necessity for Sberbank to rely on the alternative ground. If the judgment of Hildyard J was not overturned (but the Gibbs point was not determined in the appellate proceedings), IBA says that it would submit to summary judgment in Sberbank’s favour (based on Gibbs) – whilst reserving the right to seek a leapfrog appeal to the Supreme Court. However, in such a scenario it would be a matter for Sberbank whether it wished to proceed to summary judgment or not. It might wish to proceed to trial – for example not only on the Gibbs point but on its alternative case at common law. It is not true to say therefore (as IBA submitted) that there will necessarily never be a trial of the present action.
  9. Ultimately, this is a matter of case management for me and is a case management decision on which there are, no doubt, different views that could be formed. However, there is no doubt in my mind that the appropriate course is that this action should proceed for the time being and that I should hold the case management conference today and give directions towards trial.
  10. In that regard, I have already heard some debate on this, because part of Mr. Perkins’s opposition to the CMC proceeding is to say that, in reality, the issues that would arise for determination would not actually involve a great deal of factual evidence, although he says (and recognises, rightly), that there would have to be some Azeri law evidence. However, against that, Mr. Hobson says that, in fact, there will need not only to be Azeri law evidence, or potentially Azeri law evidence, but also factual evidence, because one of the allegations Sberbank have made in the reply is that there was, effectively, discriminatory conduct between different debtors, because another debtor, Cargill, was put into a different category. The result of that is there may be need for disclosure and, indeed, potentially factual witness evidence from IBA in that regard.
  11. I consider, therefore, that there is likely to be a significant amount of work that needs to be done between now and any trial, and I was not impressed with the suggestion that there is no reason why matters should be progressed now on the basis that, from a standing start, the action could progress to a trial fairly quickly. I consider that there are two problems with that submission. Firstly, it does not answer the question of the delay which inevitably would take place if the action is not progressed today, and the potential prejudice, at a conceptual level, that could arise from that delay; and secondly, the action will take as long as it takes, and it seems to me that there are strong case management grounds in furtherance of the overriding objective to progress the action today.
  12. Of course, that does not mean that this matter will necessarily proceed to trial. Events may evolve hereafter, as a result of something said or determined in the Court of Appeal or, indeed, in the Supreme Court, which may determine the matter, in one direction at least. Equally, once the Court of Appeal has ruled and depending on what happens thereafter (in terms of whether the matter does or does not proceed to the Supreme Court), a court hereafter may be better placed than I am today to decide whether the action should continue to trial at that time.
  13. That circumstances may change, is, indeed, one of the matters contemplated at paragraph 3 of the order of Hildyard J, in terms of a material change of circumstances. That, indeed, was effectively Mr. Perkins’s fallback position, which was to reserve the right hereafter to come back to this court at a stage when matters are clearer, in order to invite the court not to proceed further at that time. The flip side of that is, of course, that it would be equally open to Mr. Hobson hereafter to seek a variation or a lifting of the undertaking that was given to Hildyard J, in the light of the events hereafter. However, and for the reasons I have given, I consider that in the exercise of my case management powers, the overriding objective is best furthered by continuing this action, and for me to give case management directions today, which I will now proceed to hear counsel on.
  14. Therefore, and for the reasons I have given, I dismiss IBA’s application that I should adjourn the CMC and should, effectively, stay the proceedings pending any appellate proceedings on the other issues that arise, and accordingly this action will proceed with case management directions to trial being given today.

COSTS OF THE CMC

There is an interesting coda to the judgment in relation to the costs of the CMC.  Despite the fact there had been a heavily contested issue in relation to whether the CMC itself should proceed the appropriate order was costs in the case.

  1. The final matter that arises for determination on this CMC is the question of the costs of the CMC. The normal order on the CMC is costs in the case as contemplated by the Commercial Court Guide. That is because a CMC is an opportunity to air all case management issues. It is true that on a CMC, on occasions, there are contested matters between the parties which have to be aired. That is one of the purposes of the CMC and, generally, on a CMC, if one party is or is not successful on a particular case management issue, that is not normally regarded as a relevant event to depart from the normal order on a CMC of costs in the case, at least unless it can be categorised as a discrete issue with its own time listing.
  2. This is a case where a very substantial part of the time of the CMC has been to the question of whether or not this CMC should proceed or whether or not the matter should be stayed, but that was closely connected with case management and what this action and any associated trial actually involves, what the issues are in this case, and how the matter should progress to trial in terms of disclosure, witness evidence and expert evidence. These issues were quite closely bound up with the question of whether or not the action should proceed at this stage.
  3. Although there was a substantial difference between the parties, which no doubt occupied the parties, both in preparation and at the hearing, it was essentially in relation to a particular type of case management issue which concerned how this matter should be case managed. Therefore, I do not consider that this is a case where there is a discrete event which is easily carved out from the costs of the CMC.
  4. The whole purpose of a CMC is to consider the issues that arise and how the action is to be case-managed. This particular CMC threw up particular facts which are perhaps out of the norm, but which were in all the more need for active case management by this court, which is what a case management conference is ultimately all about. Therefore, I do not consider this would be an appropriate case to depart from the normal order on a case management conference and, therefore, I order that costs be in the case.