MOTOROLA SOLUTIONS CREDIT COMPANY LLC v. KEMAL UZAN AND OTHERS

HCA 2232/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2232 OF 2013

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BETWEEN

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Introduction

1.  The two summonses in relation to this case first came on before me on 27 February 2014, and in a decision on 11 March 2014 I adjourned the hearing to 1 April 2014 in order for the 2^nd to 5^th and 7^th defendants to put evidence before me as to the grounds on which they wished to contest the proceedings.  One summons is an application by the plaintiff seeking judgment in default against the 1^st to 7^th defendants for failing to file a defence,[1] and the other is an application by the 2^nd to 5^th and 7^th defendants seeking an extension of time to file a defence and to make application to dispute the jurisdiction and to stay the proceedings.[2]

2.  In the course of this decision, I will describe the 2^nd to 5^th and 7^th defendants as the defendants, unless I make specific reference to any one of them in particular.

3.  Prior to the hearing of these applications, the defendants took out a summons to apply for leave to file further evidence.  The application seeks to put before me for the purpose of these proceedings a 2^nd affidavit from the 2^nd defendant and a legal opinion on French law. I granted leave to the defendants to file the further evidence.

Background facts

4.  The plaintiff is a large US multinational company involved in the sale of cellular telephone equipment.  The first five defendants are members of the Uzan family, a well known Turkish family, who owned among other business interests a telecommunications company, Telsim Mobil Telekomunikayson Hizmetleri AS (“Telsim”).  On 28 January 2002, the plaintiff commenced an action in the US District Court for the Southern District of New York before District Judge Rakoff against members of the Uzan family and others alleging that the defendants fraudulently induced it to enter into various financing agreements with Telsim without any intention to repay the monies advanced.  The court found that the defendants had perpetrated a large scale fraud on the plaintiff by misappropriating advanced payments in the sum of US$1.7 billion it made to Telsim and that as part of their scheme they ensured that the security provided for the advance payments by way of a share pledge were devoid of any value.

5.  There were three judgments by the US District Court.  The first was on 31 July 2003 when the court entered judgment against the defendants, including the 1^st to 6^th defendants, and ordered them to pay the plaintiff compensatory damages and interest of US$2,132,896,905.66.[3]  The second was on 20 June 2006 when the court entered judgment against members of the Uzan family for punitive damages in the sum of US$1 billion, which was in addition to the compensatory damages.[4] The third was on 25 October 2010 when the court entered judgment against the 7^th defendant in the total sum of US$4,359,619,155.74 inclusive of interest having found that it was the alter ego of the 1^st to 6^th defendants.[5]

6.  The US judgment of 31 July 2003 was domesticated in the United Kingdom.  The English High Court entered judgment in the amount of US$2,132,896,905.66 together with pre-judgment interest, continuing post-judgment interest at 8% per annum and costs against the 2^nd and 4^th defendants on 6 December 2004 and against the 1^st and 3^rd defendants on 16 April 2010.  The US and UK judgments have been upheld on appeal and are final and conclusive.

7.  As I have previously noted no voluntary recovery had been made under the various judgments obtained in the US and the UK, although the plaintiff has been able to collect funds in part settlement of the judgments through ancillary proceedings in various jurisdictions, including an arbitral settlement with Telsim and the Government of Turkey in relation to this matter where it received US$910 million. Several members of the Uzan family have been dealt with for contempt of court in the US and UK for failure to comply with court orders and have had imposed on them in absentia terms of imprisonment.  Also, various members of the Uzan family are either wanted or have been dealt with in absentia in relation to criminal matters in Turkey.  

8.  In the writ of summons, the plaintiff claims that as at 8 November 2013, after allowing for monies collected so far, it is owed:

(a) US$2,607,798,489.65 on the UK judgments, with interest continuing to accrue thereon at 8% per annum; and

(b) US$2,653,286,596.23 on the US judgments, with interest continuing to accrue thereon at the statutory rate.

The Hong Kong proceedings

9.  The basis of the plaintiff’s present proceedings is to enforce the outstanding amounts due under the US and UK judgments against associates of the Uzan family who hold assets for them in Hong Kong.

10.  The plaintiff claims that it is entitled to enforce the US judgments and UK judgments in Hong Kong at common law, and in the alternative, that the UK judgments be registered against the 1^st to 7^th defendants pursuant to the provisions of the Foreign Judgments (Reciprocal Enforcement) Ordinance, Cap 319.

11.  On 15 November 2013, the plaintiff obtained from Deputy High Court Judge Lok an ex parte order for a freezing injunction and leave to serve the intended writ out of jurisdiction by way of e-mail on the 1^st to 7^th defendants.  The plaintiff submitted evidence explaining the difficulties that it had had in locating and contacting members of the Uzan family and why substituted service out of the jurisdiction by e-mail was justified in the circumstances.  Ms Anita Fong Man Ieng in an affirmation dated 21 November 2013, confirmed that service had been effected on the 1^st to 7^th defendants as ordered.

12.  On 18 November 2013, the plaintiff issued a writ against the 12 defendants, claiming the outstanding balance of US$2,607,798,489.65 on the UK judgments as a debt payable by the 1^st to 4^th defendants, or the outstanding balance of US$2,653,286,596.23 on the US judgments as a debt payable by the 1^st to 7^th defendants.

13.  On 19 November 2013, the 2^nd defendant received by e-mail the writ.  He appears to be the representative of the Uzan family and that has been confirmed by him in his affidavit that he has filed in these proceedings, insofar in relation to the 3^rd, 4^th and 5^th defendants.  On 2 December 2013, he responded by e-mail, returning the acknowledgement of service and stating that he objected to the service of the writ and that it had not been served in accordance with international requirements.  He also stated that he objected to the enforcement and domestication of the US judgments in Hong Kong and that he would contest the proceedings. 

14.  On 16 December 2013, the 7^th defendant by its director, Mr Andreas Partellas of Cyprus, in similar terms as stated by the 2^nd defendant, objected to service of the writ and that it would contest the proceedings. 

15.  The defendants have instructed Hong Kong lawyers who have filed an acknowledgment of service for the 2^nd to 5^th defendants on 30 January 2014 and the 7^th defendant on 5 February 2014. There has been no response by the 1^st and 6^th defendants.

16.  The freezing injunction granted by Deputy High Court Judge Lok was ordered to remain in force until trial or further order by the court.  On 18 February 2014, G Lam J appointed receivers over all the assets of the 9^th, 11^th and 12^th defendants.

Present proceedings

17.  As I mentioned in my decision of 11 March 2014, the principles applicable to extension of time applications were addressed in The Decurion [2012] 1 HKLRD 1063.  The Court of Appeal held that in the exercise of the discretion to extend time, a court was obliged to look at all relevant matters and consider the overall justice of the case, and not apply a rigidly mechanistic approach, in order to strike a balance between the two principles: that a party should observe procedural rules with judgment entered against him in default; and that a party should not be deprived of an adjudication of the case on its merits unless there had been prejudice to the other party that could not be compensated by costs.

18.  Where a defendant has failed to file a defence, the court has discretion to grant an extension of time for the defendant to plead his case when it is just to do so, and in light of the principles stated in The Decurion, a court in the exercise of this discretion is obliged to look at all relevant matters and consider the overall justice of the case.  This may involve taking into account the nature and merits of the defendant’s case, together with all other relevant matters in considering whether to grant an extension of time in order for him to defend the proceedings.  I was of the view, that given the nature and history of this case and the plaintiff’s claim, the defendants needed to show a good arguable case supported by evidence on the grounds that they wish to challenge the proceedings, which together with other relevant matters, would be taken into account in considering the overall justice of the case. I adjourned the proceedings for that purpose.

19.  The defendants by their summons seek an order in the following terms:

“(1)The time for the 2^nd to 5^th defendants and the 7^th defendant to file and serve a Defence and Counterclaim (if any) be extended to 28 days after this Order to be made herein;

(2)The time for the 2^nd to 5^th defendants and the 7^th defendant to file and serve an application to dispute the jurisdiction (if any) be extended to 28 days after this Order to be made herein;

(3)The time for the 2^nd to 5^th defendants and the 7^th defendant to file and serve an application to stay the proceedings (if any) be extended to 28 days after this Order to be made herein;

…”

20.  The basis on which the defendants wish to contest these proceedings is as follows:

(1) To challenge the court’s jurisdiction over the defendants in that they have no assets or presence in or any connection to Hong Kong.

(2) To challenge the leave granted to serve the writ of summons out of the jurisdiction and to set aside the order permitting substituted service by e-mail.

(3) To defend the substantive proceedings by filing a defence in order to raise arguable and triable issues in that,

(a) the enforcement of the US and UK judgments are time barred under the Limitation Ordinance, Cap 347,

(b) the US judgment includes punitive damages which are not enforceable in Hong Kong,

(c) the plaintiff is not entitled to rely on the Foreign Judgments (Reciprocal Enforcement) Ordinance, Cap 319, to enforce the UK judgments,

(d)the UK judgments are unenforceable as they are a judgment on a judgment; and

(e) the plaintiff in settlement agreements has denied itself of the right to claim any outstanding balance under the judgments against the defendants.

21.  The 2^nd defendant has filed an affidavit in these proceedings. He does so in his personal capacity and also on behalf of his family members, the 3^rd, 4^th and 5^th defendants.  He states on behalf of the Uzan defendants that they do not have any presence or assets in Hong Kong.[6]  He also states that the 8^th to 12^th defendants are neither nominees of the Uzan defendants or the 7^th defendant, nor do they hold any property directly or indirectly which is beneficially owned by the Uzan defendants or the 7^th defendant.[7]  Ms Antonia Kyriakou, a director of the 7^th defendant has also filed an affidavit in these proceedings in which she also confirmed that the 7^th defendant does not have any presence or assets in Hong Kong.[8]

Jurisdiction over the defendants

22.  The plaintiff obtained leave to serve the defendants out of the jurisdiction, by relying on O 11 r 1(1) (b) and (1) (m) of the Rules of the High Court (RHC).  Ms Roxanne Ismail, SC, leading counsel for the defendants, correctly points out that a court has jurisdiction to entertain a claim in personam if, and only if, the defendant is served with process inside the jurisdiction or abroad in circumstances authorised by, and in the manner prescribed by, statute or statutory order. On the basis of this well established principle, Ms Ismail argues that in order to establish jurisdiction over overseas defendants by service out of the jurisdiction, the plaintiff must show that the case falls clearly within one or more of the subparagraphs under O 11 r 1(1).  She argues that the plaintiff has failed to do so, or at least it is reasonably arguable that Hong Kong courts do not have jurisdiction, in that as a matter of law it may be necessary for the plaintiff to prove that the defendants have assets in Hong Kong in order to invoke O 11 r 1(1) (b) or (m), and that the evidence adduced by the plaintiff as to the link between the defendants and the 8^th to 12^th defendants is speculative.  On what I have before me, I do not agree with this submission.

23.  Under O 11 r 1(1), service of a writ out of the jurisdiction is permissible with the leave of the court if in the action begun by the writ the case falls within one or more of the subparagraphs.  Subparagraph (1) (b) operates where an injunction is sought ordering a defendant to “do or refrain from doing anything within the jurisdiction”.  Ms Ismail argues that this subparagraph concerns injunctive relief within the jurisdiction and that as the defendants have no assets in or no connection to Hong Kong, the claim falls outside the scope of this subparagraph. She relies on SFC v C [2009] 4 HKLRD 315 and SFC v Lee Sung Ho & Ors [2012] 5 HKC 20. Those two cases are set in an entirely different factual situation where the defendants had no apparent presence or assets in Hong Kong.  In this case, the plaintiff is alleging that the defendants hold assets in Hong Kong through nominees or associates and seeking injunctive relief within the jurisdiction.

24.  Subparagraph (1) (m) operates where the claim is brought to enforce any judgment or arbitral award.  Ms Ismail points out that it is not yet settled whether there is a requirement for there to be assets within the jurisdiction, although it is likely, in order to make a claim for the enforcement of a judgment or arbitral award.  I do not think the issue really arises in this case, as the plaintiff’s claim is that the defendants have assets in the jurisdiction through their nominees or associates. Ms Ismail seeks to rely on Linsen International v Humpuss Transportasi Kimia [2011] EWCA Civ 1042 [9] to argue that Fonu v Demirel [2007] 1 WLR 2508 is not authoritative on this topic.  On this issue, the case of Fonu was specifically on point, whereas Linsen was not, in that the comments of the court were not lying down any rule of principle but simply making a conclusion that the rule did not apply to the case in question.  In Fonu a foreign claimant obtained an order to serve upon the 1^st defendant outside the jurisdiction of a claim to enforce a Turkish judgment.  The 1^st defendant, a foreign national living outside the United Kingdom, applied to set aside the order on the grounds that he had no assets within England and Wales against which a judgment could be executed and that the court therefore lacked jurisdiction under the rule to permit service out.  It was held by the judge and confirmed by the Court of Appeal that the rule did not require the claimant to establish the presence of assets within the jurisdiction.  Sir Anthony Clarke MR gave the judgment of the court and stated that the rule was to be given its ordinary and natural meaning and there was no reason to imply into it a requirement that there must be assets in the jurisdiction in order to permit service out of the jurisdiction of an action to enforce a foreign judgment.  He said:

“… we accept that the court should not automatically exercise its discretion in favour of permitting service out of the jurisdiction unless it is just to do so, and that it will ordinarily not be just to do so unless there is a real prospect of a legitimate benefit to the claimant from the English proceedings. We see no reason why that benefit should not be indirect or prospective.” [10]

25.  He went on to say:

“Thus a claimant seeking to enforce a foreign judgment by action does not have to show that there are assets in the jurisdiction. To require him to do so would be tantamount to construing the rule as if it were limited in that way. The claimant must show that he has a good arguable case in the action, that is that he has a good arguable case that judgment should be given based upon the foreign judgment. He must in our opinion ordinarily show further that he can reasonably expect a benefit from such a judgment. Otherwise there would be no useful purpose in the proceedings.”[11]

26.  There is no reference to Fonu’s case in Linsen, and it appears it was not cited.  On a careful reading of the judgments in Linsen, it is clear in my view, that the court was not laying down any rule of principle contrary to Fonu but simply stating that the rule did not apply in the circumstances of that case because enforcement could not be done in England due to the fact that the assets the plaintiff were pursuing were in another country.[12]

27.  Mr Westbrook SC, for the plaintiff, makes the point, which I accept, that there is no express or implied requirement of local assets in the Order 11 protocol.  This view was also expressed in Hong Kong Civil Procedure 2014 [13] where in the commentary it is stated that there is no express requirement of local assets in the wording of O 11 and there is no reason to imply one generally.  Under subparagraph (1) (m) there is no determination of issues to take place in Hong Kong and the very purpose of service out of the jurisdiction is for enforcement in the jurisdiction, but that decision will rest on whether the case is a proper one for service out of the jurisdiction.[14]  I can envisage that it would be proper for service out of the jurisdiction where there is a real prospect of a legitimate benefit, whether indirect or prospective, to the claimant from the proceedings in Hong Kong.  Accordingly, in my view, the correct test is whether there is a real prospect of a legitimate benefit to the plaintiff’s proceedings if leave to serve out of the jurisdiction is granted.

28.  Ms Ismail argues that the evidence filed by the plaintiff to support its allegation that the 8^th to 12^th defendants are nominees or holding companies of assets belonging to the defendants is speculative. Without going into the specifics, she criticises some of the assertions in the affidavit of Mr Jules B Kroll for the lack of supporting material or logic. I do not agree. Both Mr Kroll and Mr George Reid Calhoun, V have provided very comprehensive and detailed statements.[15]

Service on the defendants

29.  The defendants challenged the service of these proceedings on them.  On this issue, Ms Ismail makes the following points on behalf of the defendants.  First, it is complained that in the affirmation in support of the application for leave to serve outside the jurisdiction, there was no mention of where the defendants were or likely to be found or what efforts had been made to locate them.  Ms Ismail argues that because of this there has been noncompliance with O 11 r 4 (1) (c). The plaintiff argues that evidence was filed with the court of the difficulties that had been experienced in the past in locating or dealing with the defendants.  Mr Calhoun stated that various Uzan defendants were fugitives and subject to arrest in the US, UK and Turkey and their addresses for service were unknown and that the plaintiff had previously corresponded with the Uzans using the cited e-mail addresses.[16]  There were also contempt proceedings against the defendants in the US and UK for their failure to comply with court orders. In addition to Mr Calhoun’s evidence, there was also evidence from Mr Kroll on these matters.[17] Secondly, the claim by the plaintiff that he did not know of the whereabouts of the defendants is contrary to information that is well known and public. Mr Westbrook in submission referred to the evidence of both Mr Calhoun and Mr Kroll and the uncertainty of the defendants’ whereabouts.  Thirdly, there was no reason given why service could not be effected on the 7^th defendant, which is a company incorporated in Cyprus.  It appears that the plaintiff’s evidence on the issue of service was mainly in relation to the members of the Uzan family. I note that the 7^th defendant is a company with a registered office in Cyprus.  Fourthly, there was no disclosure to the court that service by e-mail was not a permitted method under French law and likely to be in contravention of the Hague Convention. It is argued by Ms Ismail that this is contrary to O 11 r 5(3) (a).  The defendants have submitted evidence that under French law e-mail service is not permitted.  Mr Westbrook makes the point that this only relates to the 2^nd defendant who claims to reside in France and in any event as service was effected by e-mail it is unknown in which country or place it was received.  Fifthly, it is complained that the failure by Mr Calhoun to mention that the present claim includes a claim for enforcement of a judgment awarding punitive damages may amount to material nondisclosure. It was apparent from the papers that punitive damages were included in the judgments but the compensatory damages were substantial. 

30.  The prohibition under O 11 r 5(2) is that no order or direction for service out of the jurisdiction “shall authorise or require the doing of anything in a country or place in which service is to be effected which is contrary to the law of that country or place.”  I read this to mean that in effecting service elsewhere nothing in the order or direction shall authorise or require the doing of anything that is contrary to the law of that country or place.  However, O 11 r 5(1)(3) provides that:

“a writ which is to be served out of the jurisdiction (a) need not be served personally on the person required to be served so long as it is served on him in accordance with the law of the country or place in which service is effected; …”

31.  The foregoing matters are issues in dispute between the parties and some aspects of which do provide a basis for argument.  I note, however, that service of process by e-mail has been effective and, as required, gave the necessary notice to the parties of the claim against them.  It is also clear in the circumstances of this case that the 2^nd defendant is the representative of the family and on his own admission he has appropriately notified the other Uzan defendants.

The defendants’ case

(a) Judgments time barred

32.  The defendants argue that the US July 2003 judgment and the UK December 2004 judgment are time barred.  It is submitted that a foreign judgment is regarded as an implied debt and hence the statutory limitation period applicable to simple contract applies, in contrast to the statutory limitation period applicable to local judgments.  See Berliner v Jost [1971] 1 QB 278 at 279 and 285 F-H and Shenzhen Tian He Jian Sang Electronic Holdings Co Ltd v Hong Kong Jian Sang Electronics (Group) Ltd [2008] 4 HKLRD 314 at 319-320.  In the alternative it is argued, that even if the 12 years limitation period applies and enforcement is not time barred, under s 4 (4) no arrears of interest shall be recoverable after the expiration of 6 years from the date on which the interest became due.  The plaintiff relies on s 26 (1) (b) of the Limitation Ordinance which provides that if any fact relevant to the plaintiff’s right of action has been deliberately concealed from him by the defendant the period of limitation shall not begin to run until the plaintiff has discovered the fraud, concealment or mistake or could with reasonable diligence have discovered it.  The plaintiff also argues that the limitation period does not begin to run until late 2012 or early 2013 when the plaintiff discovered that the Uzan family had assets in Hong Kong. Ms Ismail argues that it would be wholly inappropriate to accept the plaintiff’s claim without full and proper argument. She submits that as a matter of law it is unlikely that s 26 (1) (b) applies where the existence of assets is concealed with respect to the enforcement of a foreign judgment debt.  She relies on the House of Lords decision of Lowsley v Forbes [1999] 1 AC 329 at 343E-G which she argued expressed doubt as to whether the fact that a defendant had deliberately concealed his whereabouts or the whereabouts of his assets would amount to concealment of a fact relevant to a right of action.  She further argues that fraud or deliberate concealment is a serious allegation which must be fully particularised and dealt with at trial.  There is an issue as to the application of the statute of limitations.

(b) Punitive damages not enforceable

33.  As a matter of public policy, Hong Kong courts will not enforce foreign judgments awarding damages which are not compensatory but are designed to punish the defendant and deter others from acting in the same way.  See Hung Fung Enterprises Holdings Ltd v Agricultural Bank of China [2012] 3 HKLRD 679.[18] The US judgment of 20 June 2006 was in the sum of US$1 billion for punitive damages.  The defendants complain that no allowance or recognition was given in the damages and interest sought in the judgments to be enforced and hence the plaintiff is not entitled to the full sum claimed under the US judgments.  There is an issue as to the inclusion of punitive damages in the US judgments, and whilst it may be true, as Mr Westbrook suggests, that the outstanding compensatory damages exceeds the value of the assets sought in Hong Kong, that is a matter more appropriately dealt with at the substantive hearing of this case. 

(c) Enforcement of foreign judgments

34.  The defendants submit that the claim made by the plaintiffs for registration of the UK judgments under the Foreign Judgments (Reciprocal Enforcement) Ordinance is fundamentally misconceived.  It is argued that the Ordinance no longer applies to UK judgments after 1 July 1997 by virtue of s 2A(2) (b) of the Interpretation of General Clauses Ordinance which provides that statutory provisions conferring privileges on the UK and Commonwealth countries shall have no further effect unless there are reciprocal arrangements.  See Robbie Ilana Tenzer v Dr Vincent C Goh HCPI 718/2011, unreported, 19 April 2013.[19]

35.  This aspect of the plaintiff’s claim, even though in the alternative, is flawed and the Ordinance cannot be relied on to register the UK judgments.

(d) Enforcing a judgment on a judgment

36.  It is common ground that the enforcement of a foreign judgment under the common law includes the requirement that the judgment be a final and conclusive decision on the merits. Ms Ismail raises the issue as to whether a court can enforce an order of an intermediary foreign court which had itself registered a judgment of the original foreign court.  Mr Westbrook in response relies on Morgan Stanley & Co International Ltd v Pilot Lead Investments Ltd [2006] 2 HKLRD 731 where it was held that a judgment creditor could enforce a foreign judgment for payment of a monetary sum in Hong Kong by either registering it under the Foreign Judgments (Reciprocal Enforcement) Ordinance, Cap 319, or having it enforced at common law by commencing an action.  Ms Ismail argues that the case of Morgan Stanley concerned enforcement under the Ordinance and not the common law.  In the course of argument before me, the issue was raised as to the correctness of this decision.[20] It seems that where the merits of a case have been decided by a foreign court and the judgment of that court is then enforced in another jurisdiction, it is done so in recognition that the foreign judgment is a final and conclusive decision on the merits and therefore not impeachable or examinable as to its merits.  It therefore means that if another jurisdiction is asked to enforce the order of the intermediary foreign court it is doing so in relation to an order that simply met the requirements of registration of a foreign judgment.  Ms Ismail argues that the case of Morgan Stanley is probably wrong. She makes the point that the practical problem which would arise from enforcing a judgment on a judgment is demonstrated in this case.  I have to agree that confusion may arise when the plaintiff seeks to enforce both the original US judgments and the enforcement UK judgments of the US judgments. As is illustrated by this case the two judgments are for different amounts because different interest rates apply.

37.  There is an issue as to the enforcement of the UK judgments.

(e) Settlement agreements

38.  The 2^nd defendant stated in his affidavit that by virtue of settlement agreements with the plaintiff, it has lost its right to pursue the outstanding balance of the claims. The settlement agreements referred to are the Assignment Agreement and the Corporate Defendants Agreement.[21] As pointed out by Mr Calhoun, this argument has been mounted before and has been rejected by trial and appellate courts in the US and Switzerland.  Ms Ismail argues that the point has not been specifically considered by the courts in question but it is apparent that it has been raised and unsuccessfully. The defendants have produced an affidavit from a Swiss lawyer giving an opinion that the plaintiff no longer has any legal standing to pursue the receivables which were the subject of the Assignment Agreement against any party. [22] Mr Westbrook notes that the Assignment Agreement does not preclude the plaintiff from pursuing the outstanding balance of the judgments against the defendants. It should be noted that the defendants were not a party to this agreement which was a separate settlement agreement in relation to Telsim.

E-mail as evidence

39.  There was a complaint made by the defendants in relation to access to their e-mails but it was pointed out this was a potential line of defence which had not been fully investigated.  I have not addressed the matter as it was unclear as to its relevance with respect to this application.

Conclusion

40.  As I stated from the outset of my decision, where a defendant has failed to file a defence, the court has discretion to grant an extension of time for the defendant plead his case when it is just to do so.  This requires the court to look at all relevant matters and consider the overall justice of the case.  I adjourned this case to allow the defendants to put before me the grounds on which they would defend the proceedings. I considered that in the circumstances of this case this was a relevant matter to take into account when considering the overall justice of the case.  I am satisfied for the foregoing reasons, in particular the number of points that have been raised that warrant adjudication, that this is an appropriate case for me to exercise my discretion and grant an extension of time for the defendants to plead their case.  They have advanced a number of points on which to challenge the claim against them.  This was done for the purpose of this application, and as to how they plead their case and on what basis, now that an extension has been granted, are matters for them. The defendants by their summons seek an extension of time to file and serve a defence and counterclaim (if any), an application to dispute the jurisdiction (if any) and an application to stay the proceedings (if any) within 28 days of the date of this order.  I make an order in those terms.  It follows that the plaintiff’s summons against the defendants seeking judgment in default for failing to file a defence is refused.  On the question of costs, I order that costs be reserved.

41.  This however does not include the 1^st and 6^th defendants who have failed to file a defence, and have not joined the other defendants in seeking an extension of time to do so.  Had they done so, I would have granted them an extension of time as well.  The court has been made aware of a number of matters that would make it inappropriate to enter default judgment against them until these matters have been appropriately resolved on their merits.  I therefore do not consider it just to enter default judgment at this stage.  It is for this reason that I order that the plaintiff’s application in relation to the 1^st and 6^th defendants be adjourned to the conclusion of the trial of the substantive proceedings or such earlier date by order of the court.  

42.  It remains for me to thank both counsel for their comprehensive and well researched submissions.