Costs – Order for costs – Payment of costs by non-party – Non-party outside the jurisdiction – Underwriters successfully defending proceedings in England and seeking to recover costs from non-party domiciled in Greece – Whether court had jurisdiction to make order: National Justice Compania Naviera SA v Prudential Assurance Co Ltd (The Ikarian Reefer) COURT OF APPEAL, CIVIL DIVISION
National Justice Compania Naviera SA v Prudential Assurance Co Ltd (The Ikarian Reefer)
COURT OF APPEAL, CIVIL DIVISION
 1 All ER 37;  1 WLR 603
HEARING-DATES: 17 September, 12 October 1999
12 October 1999
Costs – Order for costs – Payment of costs by non-party – Non-party outside the jurisdiction – Underwriters successfully defending proceedings in England and seeking to recover costs from non-party domiciled in Greece – Whether court had jurisdiction to make order – Supreme Court Act 1981, s 51 – Civil Jurisdiction and Judgments Act 1982, Sch 1, arts 2, 6.
P Ltd was the lead hull and machine underwriter of a vessel owned by a Panamanian company. The vessel grounded and caught fire, and the owners brought a claim against the underwriters. Judgment was given for the owners, but P Ltd succeeded in the Court of Appeal and was awarded its costs both on appeal and in the court below. It recovered some of those costs under orders for security made before the trial, and sought to recover the remainder from C, a person domiciled in Greece who was the sole shareholder of the shipowners. Accordingly, P Ltd served a summons on C in Greece, seeking an order pursuant to s 51 of the Supreme Court Act 1981 requiring him to pay those costs as a person who had been involved in the direction of the action and who had instituted, controlled and financed the litigation. C challenged the English court’s jurisdiction, contending, inter alia, that such proceedings were distinct and separate from the main action, and that they could be brought against him only in Greece by virtue of art 2 of the Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters 1968 (as set out in Sch 1 to the Civil Jurisdiction and Judgments Act 1982) (the Brussels Convention). The judge rejected that contention, and dismissed C’s challenge to the court’s jurisdiction. C appealed.
Held – The court had jurisdiction under s 51 of the 1981 Act to determine whether a non-party should be liable to pay the costs of proceedings, even though such a person was outside the court’s territorial jurisdiction or was domiciled in another contracting state of the Brussels Convention. In such a case, the court would be exercising its powers in the context of substantive proceedings over which the court had jurisdiction. Moreover, on an application against a non-party under s 51, that person was not being ‘sued’ within the meaning of art 2 of the Brussels Convention since ‘suing’ contemplated the pursuit of a substantive cause of action, not the making of orders ancillary to proceedings pending before a particular court. Even if that was wrong, the English court had jurisdiction since such an application would constitute third-party proceedings within the meaning of art 6(2) (Article 6, so far as material, provides: ‘A person domiciled in a Contracting State may also be sued . . . (2) as a third party in an action on a warranty or guarantee or in any other third party proceedings, in the court seised of the original proceedings . . .’) of the Brussels Convention. Furthermore, the position was all the more clear where it was alleged that the non-party was the alter-ego of the party which had brought proceedings, since in such a case the non-party would, if the allegation was proved, have submitted to the jurisdiction. Accordingly, the appeal would be dismissed.
Mansour v Mansour  1 FLR 418 considered.
Per curiam. CPR 48.2(1), which deals with the procedure when the court is considering exercising its power to make a costs order in favour of or against a non-party, may contain a lacuna where the non-party is outside the jurisdiction. It is not clear whether the appropriate course is to serve the application to join the non-party only on the other named parties, and then serve the amended proceedings on the non-party, or whether the application to join itself should be served on the non-party. If, as is probable, the latter position is correct, RSC Ord 11, r 9(4) and (5) will apply as they would apply to a summons under the procedure applicable before the CPR came into effect. Furthermore, there must at present be an inherent power to give leave to join a party and to give leave to serve him out of the jurisdiction once the hearing of the application to join has resulted in an order for joinder.
For the court’s power to order a non-party to pay costs, see 20 Halsbury’s Laws (4th edn reissue) para 355.
For the Supreme Court Act 1981, s 51, see 11 Halsbury’s Statutes (4th edn) (1991 reissue) 1019.
For the Civil Jurisdiction and Judgments Act 1982, Sch 1, arts 2, 6, see 11 Halsbury’s Statutes 1135, 1138.
Aiden Shipping Co Ltd v Interbulk Ltd, Interbulk Ltd v ICCO International Corn Co NV, The Vimeira (No 2)  2 All ER 409,  AC 965,  2 WLR 1051, HL.
Cliff, Re, Edwards v Brown  2 Ch 21, CA.
Company, Re a (No 004055 of 1991), ex p Doe Sport Ltd  BCLC 865,  1 WLR 1003.
Davies (Joseph Owen) v Eli Lilly & Co  3 All ER 94,  1 WLR 1136, CA.
Framework Exhibitions Ltd v Matchroom Boxing Ltd  CA Transcript 873.
Gupta v Comer  1 All ER 289,  1 QB 629,  2 WLR 494, CA.
Land and Property Trust Co plc, Re (No 2) (1993) The Times, 16 February,  CA Transcript 160.
Land and Property Trust Co plc, Re (No 3)  BCLC 856.
Land and Property Trust Co plc, Re  3 All ER 409,  1 WLR 601, CA.
Letang v Cooper  2 All ER 929,  1 QB 232,  3 WLR 573, CA.
Mansour v Mansour  1 FLR 418, CA.
Murphy v Young & Co’s Brewery plc  1 All ER 518,  1 WLR 1591, CA.
Pritchard v J H Cobden Ltd  1 All ER 300,  Fam 22,  2 WLR 627, CA.
Seismik Securitik AG v Sphere Drake Insurance plc (3 February 1998, unreported), QBD.
Singh v Observer Ltd  3 All ER 777, CA; rvsg  2 All ER 751.
Symphony Group plc v Hodgson  4 All ER 143,  QB 179,  3 WLR 830, CA.
Taylor v Pace Developments Ltd  BCC 406, CA.
Constantine Emanuel Comninos, the sole shareholder of National Justice Compania Naviera (the company), owners of the vessel Ikarian Reefer (the vessel), appealed from the decision of Rix J on 30 July 1999 dismissing his jurisdictional challenge to an application by Prudential Assurance Co Ltd (Prudential), the lead hull and machinery underwriter of the vessel, for an order making him liable, pursuant to s 51 of the Supreme Court Act 1981, for the unpaid costs of an unsuccessful action brought against Prudential by the company arising from the loss of the vessel in April 1985. The facts are set out in the judgment of Waller LJ.
Alexander Layton QC and Lucy Wyles for Mr Comninos; Robert Hildyard QC and Anna Markham for Prudential.
Cur adv vult 12 October 1999. The following judgments were delivered.
PANEL: SIMON BROWN, WALLER, TUCKEY LJJ
JUDGMENTBY-1: WALLER LJ
WALLER LJ (giving the first judgment at the invitation of Simon Brown LJ): Introduction
This appeal relates to a jurisdictional challenge raised by Mr Constantine Comninos to an application by Prudential Assurance Co Ltd (Prudential) to make him liable, pursuant to s 51 of the Supreme Court Act 1981, for the balance of the unpaid costs of an action in which Prudential obtained judgment and an order for costs against the plaintiffs.
The action was concerned with the claim by the plaintiffs, a Panamanian company, as owners of the MV Ikarian Reefer, to recover from her hull and machinery underwriters, represented for these purposes by Prudential, the lead underwriter. The claim was made on the basis that the Ikarian Reefer was a constructive total loss following grounding and a fire in April 1985. Prudential defended the claim on the ground that the vessel had been deliberately cast away by her owners. At the trial, Cresswell J gave judgment in favour of the owners (see  2 Lloyd’s Rep 68). In December 1994, following a hearing lasting 30 days in the Court of Appeal, Prudential’s appeal was allowed (see  1 Lloyd’s Rep 455). The Court of Appeal held that the vessel had been deliberately run aground and then deliberately set on fire on the authority of her owners, the plaintiffs. Prudential were awarded their costs both on appeal and in the court below. The total costs for which Prudential has obtained certification amount to £2,771,072.81 to which a sum in excess of £1m in interest needs to be added. Prudential has recovered £1,175,000 of those costs by reason of awards of security for costs made prior to trial. Prudential claims a balance including interest in the sum of £2,680,215.87.
On 15 December 1998 Prudential issued a summons in this action seeking an order pursuant to s 51 of the Supreme Court Act (the Act) that Mr Comninos be liable personally to pay its costs. There is no issue that s 51 does permit such an order to be made against a non-party (see Aiden Shipping Co Ltd v Interbulk Ltd, Interbulk Ltd v ICCO International Corn Co NV, The Vimeira (No 2)  2 All ER 409,  AC 965).
Section 51(1) provides:
‘Subject to the provisions of this or any other enactment and to rules of court, the costs of and incidental to all proceedings in — (a) the civil division of the Court of Appeal; (b) the High Court; and (c) any county court, shall be in the discretion of the court.’
Section 51(3) provides: ‘The court shall have full power to determine by whom and to what extent the costs are to be paid.’
The grounds on which the order is sought against Mr Comninos are set out in the seventh affidavit of Mr Jeremy Farr, a partner in Ince & Co, Prudential’s solicitors, sworn on 14 December 1998. They are summarised by Rix J as follows:
‘The owners were a typical one ship company whose only asset, the Ikarian Reefer, has been scuttled. The principals behind the owners were two brothers, Mr Constantine (Costas) Comninos, against whom the summons has been issued, and his brother, Anthony. At the time the vessel was scuttled, they were both directors of the owning company, and Costas held 80% of its shares and Anthony held the other 20%. Subsequently, in November 1986 Anthony transferred his shares to Costas, who became the sole shareholder, and in June 1987 Anthony formally resigned as a director. In an affidavit in these proceedings dated 13 May 1992, by which time the bank to which the vessel had been mortgaged had been paid out, Costas referred to himself as having “effectively the entire beneficial interest in the Ikarian Reefer and in the proceeds of this insurance”. Prudential draws the inference from these and other indications that Costas Comninos was involved in the direction of the action and that it was he who instituted, controlled and financed the litigation.’
Prudential’s summons of 15 December 1998 was served on Mr Comninos in Greece. No leave was obtained from the English court for that service. The only evidence before Rix J, so far as Greek law was concerned, indicated that that service was good service according to Greek law. On 12 January 1999 copies of the summons and of Mr Farr’s affidavit were served on Clifford Chance, the plaintiff’s solicitors, who acknowledged that service on 13 January 1999.
Mr Comninos wished to challenge the jurisdiction of the English court. Agreement was given by Ince & Co, for Prudential, that such challenge would not itself be taken as a submission to the jurisdiction. It was in those circumstances that the matter came before Rix J on 12 July 1999. At the hearing on 12 July 1999 Mr Hildyard QC on behalf of Prudential, without notice to Mr Comninos, sought permission to add Mr Comninos as a party to the proceedings (for the purpose of costs only) and in that connection for permission to dispense with further service of the amended summons and with service of any amended writ.
Rix J dismissed Mr Comninos’ application challenging the court’s jurisdiction. He held that leave should have been obtained for the service of the summons on Mr Comninos in Greece. He however held that that leave could be given retrospectively, and gave such leave, and in the result Mr Comninos’ challenge failed.
Mr Layton QC, for Mr Comninos, submitted before Rix J and again before us that there is simply no basis on which the English court has jurisdiction or can assume jurisdiction over Mr Comninos. His main argument was that the summons under s 51 seeking an order for costs against Mr Comninos must be considered distinct and separate from the main action and that the Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters 1968 (set out in Sch 1 to the Civil Jurisdiction and Judgments Act 1982) (the Brussels Convention) applies to that claim. He submitted that s 51 proceedings against a non-party are a ‘civil or commercial matter’ to which art 1 of Title I applies. He submitted accordingly that the English court is not entitled to take jurisdiction because (a) by art 2 a person such as Mr Comninos domiciled in a contracting state (Greece) is entitled to be sued only in Greece, unless other provisions of the Brussels Convention allow otherwise, and because (b) the only provisions that could apply ‘otherwise’ are (as art 3 provides) set out in sections 2 to 6 of Title II and none apply. He submitted that art 6(2) (third party proceedings) would effectively be the only candidate, and that provision, he submitted, does not apply. In the alternative, he submitted that if the s 51 process is not to be considered separately from the main action for jurisdiction purposes, then section 3 of Title II of the Brussels Convention applies on the basis that the action is a matter relating to insurance. He submitted thus on that basis that by art 11 Prudential could bring proceedings only in Greece. In the further alternative he submitted that if the Brussels Convention did not apply, then the court had no inherent jurisdiction over someone not physically within the United Kingdom. He submitted that (in the absence of a submission to the jurisdiction) the English court could only have jurisdiction over someone outside the territorial jurisdiction of the English court where statute had provided that jurisdiction. He submitted that the only relevant statutory jurisdiction available to the English court in these circumstances was that provided by the rules of court made with statutory authority. Those rules are set out under RSC Ord 11, r 1 which he submitted simply did not cover a s 51 application against a non-party. He submitted this was so whether one was considering the position under the rules applicable at the time of the issue of the s 51 summons or whether one was considering the position under the new Civil Procedure Rules. Under the new CPR (r 48.2(1)) it is specifically provided in relation to costs orders in favour of or against non-parties as follows:
‘Where the court is considering whether to exercise its power under section 51 of the Supreme Court Act 1981 (costs are in the discretion of the court) to make a costs order in favour of or against a person who is not a party to proceedings — (a) that person must be added as a party to the proceedings for the purposes of costs only; and (b) he must be given a reasonable opportunity to attend a hearing at which the court will consider the matter further.’
There is however nothing in the CPR which expressly deals with the situation where the non-party is domiciled outside the jurisdiction. Accordingly, even now, the court (submitted Mr Layton) is driven back to Ord 11, r 1 if there is to be power to exercise jurisdiction over a non-party out of the jurisdiction and Ord 11, r 1 simply does not provide a basis for jurisdiction.
Mr Hildyard’s submissions in broad terms were as follows.
(1) The application is made on the basis that Mr Comninos was the directing mind of the company that brought the proceedings and that thus he and the company were really one and the same. He submitted thus that the English court should have jurisdiction to decide that issue and that in reality the preliminary point on jurisdiction and the main point under s 51 merge one with the other. He submitted that if the issue is decided against Mr Comninos that will establish that Mr Comninos has in fact submitted to the jurisdiction by bringing the action through his company. Mr Layton suggested in his skeleton argument that the question of submission to jurisdiction did not form part of the judge’s reasoning and was not raised as a separate ground in the respondent’s notice. But the main thrust of Mr Hildyard’s submission that the hearing on the merits and the jurisdiction question are really intertwined, involves, as it seems to me in reality, a submission that if the s 51 proceedings were decided against Mr Comninos that decision would involve deciding that Mr Comninos had in effect submitted to the jurisdiction. Mr Hildyard submitted thus that procedurally all that was required for that issue to be placed before the English court was compliance with such rules of procedure as the English court had laid down for resolving the s 51 issue. He submitted that notice of the fact that the issue was to be raised by a summons in the action was all that was required. He relied on Re Cliff, Edwards v Brown  2 Ch 21. He submitted that Prudential had complied with their obligation to give notice by service of the summons in Greece without leave. In the alternative, so far as the appropriate procedure was concerned, he relied on Ord 11, r 9, which provides:
‘(1) Rule 1 of this Order shall apply to the service out of the jurisdiction of an originating summons, notice of motion or petition as it applies to service of a writ . . . (4) Service out of the jurisdiction of any summons, notice or order issued, given or made in any proceedings is permissible with the leave of the Court but leave shall not be required for such service in any proceedings in which the writ, originating summons, motion or petition may by these rules or under any Act be served out of the jurisdiction without leave.’
Mr Hildyard submitted that despite a dictum in Murphy v Young & Co’s Brewery plc  1 All ER 518,  1 WLR 1591 of Phillips LJ to the contrary, an originating summons under the old rules was not necessary in relation to an application under s 51. He submitted that the requirement to swear an affidavit under Ord 11, rr 9(5) and 4(1) was inapplicable; or if it was applicable there was no requirement under Ord 11, r 9 to comply with Ord 11, r 1(1)(a) to (u) in order to obtain leave to issue and serve a summons in an already existing action. Order 11, r 9(5) allowed for sensible adaptation. In the final alternative, so far as the appropriate procedure relating to this first submission was concerned, Mr Hildyard submitted that if an originating summons was necessary and if thus service was only permissible with the leave of the court in the circumstances set out under Ord 11, r 1(1), then Prudential could satisfy the court that Mr Comninos was a necessary or proper party under Ord 11, r 1(1)(c). He suggested furthermore that the linguistic difficulty which might at first sight appear if an affidavit was required to be sworn in accordance with Ord 11, r 4 was concerned, should not constrain the court. He in any event suggested that retrospective leave should be given in relation to the service of the summons.
(2) Mr Hildyard submitted in the alternative that even if he cannot rely on a submission to the jurisdiction, the issue under s 51 is still an issue which the English court has the jurisdiction to try in relation to a person outside the territorial jurisdiction of the court unless the circumstances are such that the United Kingdom by the Brussels Convention has agreed that the English court should not have jurisdiction. He submitted that Mr Comninos did not bring himself within Titles I to III of the Brussels Convention. He thus submitted that Mr Comninos had no right to be proceeded against in Greece. He submitted that the procedure for deciding the s 51 issue was precisely that already discussed, ie either notice to Mr Comninos without leave of the court or leave under Ord 11, r 9 or leave under Ord 11, r 1(1)(c).
(3) In the final alternative Mr Hildyard submitted that, if in fact Titles I to III of the Brussels Convention did apply, the court had jurisdiction by virtue of art 6 of the Brussels Convention which provides as follows:
‘A person domiciled in a Contracting State may also be sued . . . (2) as a third party in an action on a warranty or guarantee or in any other third party proceedings, in the court seised of the original proceedings, unless these were instituted solely with the object of removing him from the jurisdiction of the court which would be competent in his case.’
This submission obviously lies uneasily with the submission that Titles I to III of the Brussels Convention did not apply, but encouraged by the view taken by the judge and possibly some interjections from this court on the hearing of this appeal, Mr Hildyard submitted progressively more boldly that a claim against a non-party under s 51 could be brought by way of third party proceedings under art 6(2), and that it was proper to construe what had taken place in this case, ie service of a summons in the action on Mr Comninos, as third party proceedings within that article.
Mr Layton emphasised at the outset of his submissions that the court must bear in mind the different ways in which the term jurisdiction may be used. He emphasised that a country such as the United Kingdom has jurisdiction over persons present within its territory. It may however give itself the power to make orders against persons outside its territory but only in certain clearly defined circumstances. Possibly of more relevance he stressed that enforcement of orders outside the United Kingdom in other countries would depend on the recognition by those other countries of the jurisdiction which the English court had purported to exercise. These are important and fundamental points. That is particularly so where the English court is seeking to bring before it someone who is prima facie not subject to the territorial jurisdiction of the English court. Even in the Ord 11 context there are many dicta to the effect that the English court should be cautious in its approach to bringing persons outside the jurisdiction before it.
What however it is necessary to stress in this context is that where the court is exercising its power under s 51 of the 1981 Act it is doing so in the context of substantive proceedings in which the court does have jurisdiction. The exercise of the power to order costs to be paid by a party not named is an order made in those proceedings and it will only be exercised on the basis of a substantial connection with those proceedings by a non-party. It is worth reminding oneself of the summary of the decisions relating to the award of costs against a non-party, in the judgment of Balcombe LJ in Symphony Group plc v Hodgson  4 All ER 143 at 151-152,  QB 179 at 191-192:
‘These decisions may be conveniently summarised under the following heads. (1) Where a person has some management of the action, eg a director of an insolvent company who causes the company improperly to prosecute or defend proceedings: see Re Land and Property Trust Co plc  3 All ER 409,  1 WLR 601, Re Land and Property Trust Co plc (No 2) (1993) The Times, 16 February, Re Land and Property Trust Co plc (No 3)  BCLC 856, Taylor v Pace Developments Ltd  BCC 406, Re a Company (No 004055 of 1991), ex p Doe Sport Ltd  BCLC 865,  1 WLR 1003 and Framework Exhibitions Ltd v Matchroom Boxing Ltd  CA Transcript 873. It is of interest to note that, while it was not suggested in any of these cases that it would never be a proper exercise of the jurisdiction to order the director to pay the costs, in none of them was it the ultimate result that the director was so ordered. (2) Where a person has maintained or financed the action. This was undoubtedly considered to be a proper case for the exercise of the discretion by Macpherson J in Singh v Observer Ltd  2 All ER 751, where it was alleged that a non-party was maintaining the plaintiff’s libel action. However, on appeal the evidence showed that the non-party had not been maintaining the action and the appeal was allowed without going into the legal issues raised by the judge’s decision: see Singh v Observer Ltd  3 All ER 777. (3) In Gupta v Comer  1 All ER 289,  1 QB 629 this court approached the power of the court to order a solicitor to pay costs under Ord 62, r 11 as an example of the exercise of the jurisdiction under s 51 of the 1981 Act. (4) Where the person has caused the action. In Pritchard v J H Cobden Ltd  Fam 22 the plaintiff had suffered brain damage through the defendant’s negligence. That resulted in a personality change which precipitated a divorce. This court held that the defendant’s agreement to pay the costs of the divorce proceedings could be justified as an application of the Aiden Shipping principle (see  Fam 22 at 51). (5) Where the person is a party to a closely related action which has been heard at the same time but not consolidated-as was the case in Aiden Shipping itself. (6) Group litigation where one or two actions are selected as test actions: see Davies (Joseph Owen) v Eli Lilly & Co  3 All ER 94,  1 WLR 1136. I accept that these categories are neither rigid nor closed. They indicate the sorts of connection which have so far led the courts to entertain a claim for costs against a non-party.’
It seems to me important to distinguish between a situation in which there is no pending action but the English court is concerned to exercise jurisdiction over someone resident outside its territory, and a situation in which there is pending in the English court an action over which on any view the English court has jurisdiction. If, for example, a party to an English action were to commit a contempt of court by refusing to obey an order, the fact that that party was outside the jurisdiction would not prevent the court exercising its powers to commit the infringer for contempt. In Mansour v Mansour  1 FLR 418 that very point was considered. This authority was not cited to us but it is of assistance in confirming the view which we had formed at the conclusion of the hearing of the appeal. In that case the parties were Egyptian nationals normally resident in Egypt. The husband claimed damages against the wife for conversion of various chattels within the jurisdiction and the wife counterclaimed for breach of trust in relation to certain sums of money. The court granted a Mareva injunction against the wife relating to various chattels including a car. The husband alleged that the wife disposed of the car after the making of the injunction and with knowledge of it. He took out a notice of motion for her to be committed to prison for contempt of court. The wife applied to set aside that notice on the basis that the English court did not have jurisdiction over her as a resident in Egypt. The application was refused and leave to appeal was sought. The Court of Appeal refused leave to appeal. The court held that it was very doubtful whether committal proceedings to enforce Mareva injunctions fell within Ord 11, r 1(1)(m), ie enforcement of judgments. The court further held that a notice of motion was not an originating process to which Ord 11, r 9(1) applied. It further held that r 9(4), which was in slightly different terms to the rule quoted above, was concerned with summonses, notices and orders issued, given, or made in proceedings which are ‘in esse’.
Order 11, r 9(4) in those days was in the following terms:
‘Subject to Order 73, rule 7, service out of the jurisdiction of any summons, notice or order issued, given or made in any proceedings is permissible with the leave of the Court but leave shall not be required for such service in any proceedings in which the writ, originating summons, motion or petition may by these rules or under any Act be served without leave.’
And following quotation of that provision Lord Donaldson MR in the judgment of the court, with which Neill and Balcombe LJJ agreed, said as follows:
‘Clearly, if it had been necessary to serve the writ out of the jurisdiction, leave would have been required and could have been obtained. In fact, it was served within the jurisdiction, but that does not alter its character in the context of a defendant who is abroad. RSC Ord. 11, r.9(4) is dealing with summonses, notices and orders issued, given or made in any proceedings which are already in being, and it seems to me quite clear that a notice of a motion to be made in existing proceedings is within the paragraph. If the proceedings were such that leave to serve the writ was required, leave can be given to serve the summons, notice or order. If no leave to serve the writ was required, no leave is necessary to serve the summons, notice or order.’ (See  1 FLR 418 at 421.)
The difference between sub-para 4 as quoted by Lord Donaldson MR and the present sub-para 4 relates to the insertion of the words at the end ‘out of the jurisdiction’. With the insertion of those words it is not possible to argue that simply because this action was started by a writ where service of the same could be made without leave, any summons in the action which is to be served on a person outside the jurisdiction can be served without leave. However, the above paragraph in the judgment of Lord Donaldson MR still supports the view that where there is an action pending before the English court, then a summons in that action can be served on a person domiciled and resident outside the jurisdiction. I appreciate that in that case the party being served was a party to the proceedings. But that was not the basis of Lord Donaldson’s reasoning and I venture to think that if a non-party committed a contempt of the English court the fact that that non-party was outside the jurisdiction physically would not prevent the English court having jurisdiction to proceed to commit for contempt. By analogy, as it seems to me, unless by some convention the United Kingdom has agreed that its courts would not exercise a jurisdiction, the English court has jurisdiction to decide the issue whether a non-party has taken such steps in relation to an action, as should render that person liable to pay the costs of that action. Even more clearly, if what is alleged (as in this case) is that the non-party in reality brought the main proceedings, the English court has jurisdiction to decide whether there has in effect been a submission to the jurisdiction by the non-party.
Of course, if an order were made by the English court, and once the question of enforcement was an issue, the question might arise as to whether a court other than the English court would recognise that jurisdiction. That is not in issue at this stage. But if the English court were to find on the issue arising under s 51 that Mr Comninos was effectively the alter ego of the plaintiff and that proper notice had been given to Mr Comninos that that issue was to be decided by the English court, then the judgment may well be one that would be recognised in other convention countries by virtue of art 26 of the Brussels Convention. It may be that fact which has led Mr Layton to run as his main point that Titles I to III of the Brussels Convention actually prevent the English court from taking jurisdiction.
In summary, in any event, it is in my view convenient to approach this case first as if no Brussels Convention point arose, ie on the basis that Mr Comninos was resident and domiciled outside all convention countries; second to consider whether residence within a convention country alters the position and in particular consider whether Titles I to III of the Brussels Convention apply; and third if Titles I to III do apply to consider what their effect is.
Position in a non-Brussels Convention case
As will by now be apparent, it seems to me that the English court does have jurisdiction to decide in relation to a non-party resident outside the jurisdiction whether they should be liable for costs under s 51 of the 1981 Act. It seems to me that it must be open to a party to serve a notice on someone outside the jurisdiction which in effect says:
‘. . . we have issued a summons in the action and we are going to contend you have had such a connection with proceedings within the jurisdiction and (more clearly still) that it is actually you that brought the action and that you have submitted to the jurisdiction, and we are going to seek an order for costs against you on that basis.’
It furthermore seems to me that procedurally the appropriate course under the old rules was to issue a summons in the action. That summons would be served on the plaintiff in the action and would also be served on Mr Comninos outside the jurisdiction. It would not on any view be material to look at Ord 11, r 1. Order 11, r 9(4) would apply and as it seems to me leave to serve that summons out of the jurisdiction should have been obtained. In this assumed situation under the old rules, I do not myself see that an originating summons effectively commencing fresh proceedings would have been the appropriate course and thus Ord 11, r 9(1) would not be material. Despite the dictum of Phillips LJ in Murphy v Young & Co’s Brewery plc  1 All ER 518,  1 WLR 1591, I prefer the approach of Sir Robert Gatehouse in Seismik Securitik AG v Sphere Drake Insurance plc (3 February 1998, unreported). In that case he said as follows:
‘Mr Kenny for Admiral Makris opposed the application. His primary submission is that the court has no jurisdiction because: (1) the application should have been made by originating process, not by way of summons in the action; and (2) the exercise of jurisdiction would, in any event, be contrary to the Brussels Convention. I am satisfied that there is nothing in either of the objections to jurisdiction. The first depends entirely upon the obiter expression of opinion (and a tentative one at that) of Phillips LJ in Murphy v Young & Co’s Brewery plc  1 All ER 518 at 525,  1 WLR 1591 at 1598. Phillips LJ’s remark was no doubt appropriate in the context of the procedural facts of that case but it affords no support for the argument that a s 51 application must be brought by originating process in the usual case, of which the present is typical. As far as I am aware, a summons in the action has been the universal method of procedure in all previous s 51 applications. There could be no justification for issuing an originating notice of motion, or a fresh writ, because the defendants have no cause of action against the individuals, any more than they have against the company. This consideration is also the basic reason why, in my judgment, art 2 of the Brussels Convention has no bearing on a s 51 application. There is no factual situation giving a right to a remedy against the non-parties; there is only a statutory discretion. Mr Kenny referred to Letang v Cooper  2 All ER 929,  1 QB 232, where Diplock LJ defined a cause of action as a “factual situation which entitles one person to obtain from the court a remedy against another person”. That is not what is provided by s 51. Mr Kenny accepts that it necessarily follows from his argument, that an application under the section can never be served upon a person domiciled in a contracting state. There is, in my view, no such limitation.’
In relation to obtaining leave, Ord 11, r 9(5) is relevant. It provides as follows:
‘Rule 4(1), (2) and (3) shall, so far as applicable, apply in relation to an application for the grant of leave under this rule as they apply in relation to an application for the grant of leave under rule 1.’
In my view the words ‘so far as applicable’ do not render it unnecessary to swear an affidavit as contended by Mr Hildyard. Those words allow good sense to dictate the contents of the affidavit. As it seems to me they provide a requirement to make it clear in the affidavit what the grounds are for the application; that in the deponent’s belief the applicant for the order has a good claim to have costs paid by the non-party; and the place where the person to be served with the summons can be found. In other words the affidavit, in much the same way as one relating to r 1(1), makes out the basis on which the non-party is being sued for costs and the basis on which it is contended that it is right that the English court should take jurisdiction.
It is convenient to mention the procedure under the new CPR at this juncture. I share the judge’s anxiety as to whether there may not be a lacuna in the rules where CPR 48.2(1) is to apply in relation to a non-party outside the jurisdiction. It is not in fact clear to me whether the appropriate course under the CPR is to issue an application for the joinder of a non-party and serve that application only on the other named parties, and then serve the amended proceedings in some way on the non-party, or whether the application to join should be served on the non-party. I incline to the latter view, in which event, so far as that application is concerned, Ord 11, r 9(4) and (5) would apply as I have indicated they should apply to a summons under the procedure applicable before the CPR came into effect. I also incline to the view that at present there must be an inherent power to give leave to join a party and to give leave to serve that party out of the jurisdiction once the hearing of the application to join has resulted in an order for joinder. But the matter was not fully argued before us and it would certainly be of assistance, as the judge indicated, to clarify the matter by a specific provision in Ord 11.
I now turn to the Brussels Convention to consider whether Mr Comninos’ residence and domicile in Greece affects the position as spelled out above. Mr Layton submitted on behalf of Mr Comninos that Titles I to III of the Brussels Convention apply to an application relating to s 51. In making that submission he treats such an application as proceedings separate from the main action. He cited a number of authorities concerned with the interpretation of the phrase ‘civil and commercial matters’ to which by art 1 the convention applies. But in my view the real question is whether Mr Comninos can succeed in suggesting that an application under s 51 involves ‘suing’ him. It is only if it does that he can rely on art 2 which prima facie entitles him to be sued only in the courts of his home state. Mr Layton suggested that the making of such an application does involve ‘suing’ a non-party and that the judge really accepted that. I do not think that the judge did accept that an application under s 51 involved ‘suing’. It seems to me that the judge was drawing the distinction between a substantive cause of action and proceedings which related to costs in the context of art 2 and that meant that a s 51 application did not involve ‘suing’.
The submission of Mr Layton must, as I see it, fail if either an application relating to s 51 does not involve ‘suing’ Mr Comninos, or if it does involve ‘suing’, the proceedings are third-party proceedings to which art 6(2) applies.
In my view Mr Hildyard must be right in one or other of his submissions. Either the application does not involve ‘suing’ or, alternatively, if it does, the application falls within the definition of third-party proceedings. My inclination is to the view that a summons issued in an action relating to costs does not ‘sue’ the non-party. I would agree with the judge that ‘suing’ contemplates pursuing a substantive cause of action. It does not relate to the making of orders ancillary to substantive proceedings pending before a particular court. To proceed to commit for contempt, for example, would in my view not be to ‘sue’ the alleged contemnor. A proceeding to obtain an order for costs because someone has interfered with or been responsible for the bringing of substantive proceedings is not in my view to ‘sue’ as contemplated in Titles I to III of the Brussels Convention. But if that be wrong then it seems to me that art 6(2) would apply. That article allows a person domiciled in a contracting state to be ‘sued’ as a third-party in an action on a warranty or guarantee or ‘in any other third-party proceedings, in the court seised of the original proceedings’. The language of art 6(2) certainly seems to me to cover the seeking of an order against a third-party or non-party for an indemnity as to costs incurred under an express contract to indemnify. The wide words ‘any other third-party proceedings’ seem to me entirely appropriate to cover a s 51 application.
So far as the procedure for bringing ‘any other third-party proceedings’ is concerned, that must be a matter for the English court. Thus, provided the process chosen for bringing the ‘third-party’ before the court is in accordance with English procedure, those proceedings can in my view be ‘other third-party proceedings’ within art 6(2).
There was a final string to Mr Layton’s bow. He submitted that if the application for costs was simply ‘ancillary to’ the main proceedings, then since the main proceedings ‘relate to insurance’, the proceedings can only be brought in the contracting state in which Mr Comninos is domiciled by virtue of art 11.
In my view this submission is unsound. If the claim for costs constitutes ‘proceedings’, then it does not relate to insurance matters. If the relevant proceedings are the main proceedings, albeit they do relate to insurance matters, they have already been brought against the insurer in the English court. Thus, the proceedings were brought against the insurer in the United Kingdom in compliance with art 8. It follows that the insurer is not seeking to bring proceedings relating to insurance matters against Mr Comninos.
Absence of leave to serve summons out of jurisdiction prior to service
The judge gave leave retrospectively. That was an exercise of his discretion. In my view there is no basis on which that exercise of his discretion can be attacked. It was clearly a sensible course and saved costs. Apart from delay that would otherwise have occurred, Mr Comninos has not been disadvantaged in any way.
Reference to the European Court
I do not think there is any basis for making a reference to the Court of Justice of the European Communities.
In summary my conclusion is as follows.
(i) The English court has jurisdiction over a party not domiciled within the jurisdiction to decide whether that party has had such a connection with proceedings pending in the English court that he should pay the costs although he was not named as a party. A fortiori if the connection alleged is that a non-party was the alter ego of a party, the English court has jurisdiction to decide that question and decide whether the non-party has in effect submitted to the English jurisdiction.
(ii) If the non-party is domiciled in a convention country, the Brussels Convention does not prevent the English court exercising the s 51 jurisdiction either because to make a s 51 application in subsisting proceedings does not involve ‘suing’ the non-party as that term is used in the convention, or because, if it does, the non-party is being sued as a third-party to those proceedings under art 6(2). Again if the allegation is that the non-party is the alter ego of a party who has sued and brought proceedings, the position is clearer still in that the non-party is not only not being sued but (if the allegation is made out) has submitted to the jurisdiction.
(iii) Mr Comninos is not being sued in relation to an insurance matter and thus has no right to the benefit under art 11.
(iv) Leave to serve out of the jurisdiction the summons relating to s 51 was required but the judge’s retrospective granting of leave should be upheld.
(v) There should be no reference to the European Court.
It was for the above reasons that I was in favour of dismissing the appeal.
JUDGMENTBY-2: TUCKEY LJ
TUCKEY LJ: I agree.
JUDGMENTBY-3: SIMON BROWN LJ
SIMON BROWN LJ: I also agree.
Appeal dismissed. Permission to appeal refused.
Waterson Hicks; Ince & Co