We previously blogged about Turner J’s decision to strike out the Fundão Dam Disaster Litigation. Coulson LJ then refused permission to appeal that decision on paper. The claimants applied for Coulson LJ’s decision to be re-opened on the basis of the court’s exceptional powers to avoid injustice pursuant to CPR r. 52.30.

The Court of Appeal has granted that application and now given permission to appeal following a hearing before three appeal judges.

They considered that Coulson LJ had failed properly to address the point of principle raised by the claimants that the “unmanageabillity” of the English proceedings was not a proper ground on which to strike out a claim for abuse of process. Nor had he properly addressed the question of whether the proceedings were in fact “unmanageable”.

In relation to the secondary issue of whether a stay would in any event have been imposed on the English proceedings due to the existence of parallel proceedings in Brazil, the appeal judges were “concerned about the brevity of the appellate judge’s treatment of the particular points made”.

But even more concerning was the point that strike out on the grounds of unmanageability would arguably undermine the claimants’ right to sue in England under article 4 of Brussels I (Recast). This was simply not dealt with:

To be blunt, it is not an answer to the argument that a claimant, who is not suing elsewhere, has the right to sue a defendant who can be properly served within the jurisdiction, to say that the proceedings are unmanageable or complex. Neither Jameel nor Wyeth provide a legal foundation for automatically striking out non-duplicative claims against defendants properly served within the jurisdiction on the grounds of abuse of process. The claimants were entitled to be told why their argument that unmanageability did not trump article 4 was wrong.

Coulson LJ also did not properly address the question of why the claims of claimants who had not brought proceedings in Brazil were considered to constitute a Henderson abuse of process:

The appellate judge did not really grapple with the argument that most claimants, including some of the 58 institutions, had brought no other claims. As we have said, the unmanageability or complexity of such proceedings is not really an answer. Nor is it an answer to say that claimants can bring different proceedings against different defendants in Brazil. We think that the claimants were entitled to be told why, in the appellate judge’s view, the Henderson point was bad.

In summary, there had been a failure of Coulson LJ to grapple with the key features of the application for permission to appeal:

As we have explained above by specific reference to the Grounds and the appellate judge’s reasons, we have concluded that the appellate judge failed fundamentally to grapple with (a) the unmanageability point, to the effect that there was no legal basis to strike out on the grounds of irredeemable unmanageability, (b) the article 4 point, to the effect that there had been no basis for the judge to strike out claims brought as of right against defendants duly served within the jurisdiction, and (c) the Henderson point, to the effect that the judge had mistakenly prevented numerous claimants, who had made no claims in Brazil, from suing in England.

This meant that the application to re-open the decision would succeed:

The essential points that the judge failed to address go to the heart of the claimants’ challenge to the judge’s decision on abuse of process. It was wrong for the appellate judge to have failed to grapple with the contentions that neither unmanageability nor the ability to bring proceedings elsewhere are grounds, in law, for striking out proceedings, properly brought and served.

The integrity of the decision was “critically undermined” such that there was a “powerful probability” that the outcome would have been different and permission would have been granted if the grounds had properly been grappled with.

The appeal judges were satisfied that permission to appeal would therefore be granted:

Whilst we fully understand the considerations that led the judge to his conclusion that the claim should be struck out, we nevertheless believe that the appeal has a real prospect of success. We would add that on any view the situation facing the court was a difficult and novel one which we believe would benefit from full and thorough consideration by this court.

It is worth noting that a condition of the appeal proceeding is payment of the costs ordered by Turner J.

A postscript to the judgment explained that difficulties referred to by the claimants in paying those costs were not a sufficient reason to defer the order. Presumably, this is a reference to the eye-watering £8 million interim costs order reported here.

The claimants will, however, be given the opportunity to try to persuade the Court of Appeal to depart from this “provisional view”. We will blog on the outcome of that attempt as soon as it has been reported.

James Beeton Cross-Border

Leave a Reply