PURETON CO (a firm) v. B.K. REKHATEX (HK) LTD

(Consolidated by Order of the Honourable Mr. Justice Jackson-Lipkin made on the 17th day of January 1985)

__________

____________

JUDGMENT

____________

1. This is an appeal under Order 58 against an Order made by Master O'Donnell on 6th June. Basically, I was told, it is an application to have the Third Party Notice stayed, but, in addition, it is an attack upon almost the entirety of the Order.

2. Under Order 16 r. 1(1)(a), Third Party proceedings may to commenced where there is a claim for a contribution or an indemnity against "a person and already a party to the action" : But there is no such claim here.

3. Third, where "any question or issue relating to or connected with the original subject-matter should be determined not only between the plaintiff and the defendant but also as between either or both of them and a person not already a party to the action" : That is rule 1(1) (c). That is not applicable to this case.

4. Second, and that is rule 1(1)(b), is where a claim against a proposed third party is for "any relief or remedy relating to or connected with the original subject-matter of the action" - that is, in this case, the claim by Pureton a against Rekhatex ("B.K.R.") "and substantially the same as some relief or remedy claimed by the plaintiff". I have listened with very great care and attention to what Mr. Patrick Chan has said, and, even after four hours' argument, I am still quite unable to see the nexus between what is alleged against the bank and the claim by Pureton against B.K.R..

5. B.K.R., qua customer, asked the Sank of India to open a Letter of Credit; the Bank of to India did. The Bank of India, like a prudent bank, needed money in the account of the requesting party, B.K.R.. It got that money. It paid cut under the Letter of Credit. The dispute between Pureton and B.K.R. has nothing whatever to do with the claim the bank under the Letter of Credit, and none of the facts alleged by Ins the B.K.R. in its consolidated defence and counterclaim, other than a complete irrelevancy in paragraph 21, even touches on the relationship of bank and customer under the Letter of Credit. There is an allegation in the consolidated counterclaim, which Pureton, in their Reply, say is wholly irrelevant (that is paragraph 21 of the counterclaim), and does not support the Third Party Notice which B.K.R. has put in. What I agree with Pureton to be a wholly irrelevant passage in B.K.R.'s pleadings, that is that paragraph 21, does not even found any prayer. Paragraph 22(a) founds prayer 1. paragraph 22(b) founds prayer 2. So. as I say, I have found that this proposed Third party proceeding here do not fall within Order 16.

6. But say that I were wholly wrong on that, I would not exercise my discretion in favour of allowing these Third party proceedings to continue, for divers and multitudinous reasons, not the least being the gross inconvenience, the necessity for the bringing in of a large number of other parties (which itself is not really suitable in Third Party proceedings) and the existence of an another action, between the bank and B.K.R., which will resolve the matter once and for all.

7. I am told by Counsel for Pureton that they would like the bank's action heard first, and I am told by the bank that it would also like it heard first, and has no objection at all; Counsel for the bank has very properly said to me that he thinks that the whole matter can be very properly and easily arranged between the solicitors to ensure that the bank's action comes on before this consolidated action.

8. In those circumstances, it seems to me that it would be wrong to exercise my discretion in favour of continuation of these Third Party proceedings, quite apart from all other matters which have convinced me that such Third party proceedings are hindrance, a drag on this particular action, and not meet to be heard together with the claims as between Pureton and B.K.R. - that is, quite apart from my finding under Order 16 rule 1.

9. When I look at paragraphs 4 and 5 of Master O'Donnell's Order, I am reinforced in my view. Paragraph 4 says that the Third Party should be at liberty to appear at the trial of the action and take such part as the Judge shall direct and be bound by the result. I can not imagine what possible part the bank could play in the issues between Pureton and B.K.R., or how the bank could possibly be bound by the money claim by the Pureton against B.K.R. or the B.K.R.'s defence to it : It would be quite wrong. Paragraph 5 says, and it is somewhat strange Order, that the question of liability of the Third Party to indemnify the defendant should be tried at the trial of this action but subsequent thereto : There must be something wrong there. First, it can not be tried to at the same time and also subsequently : It must be one or the other. But, second, there is not even a claim far an indemnity; so how any question of the liability of the Third Party to indemnify B.K.R. can arise, I know not.

10. Even if I were wrong on everything I have said so far, I would allow the appeal against paragraphs 4 and 5; and what I would do, if I were wrong on all the other matters, that is whether or not it comes within Order 16 rule 1, or whether or not I ought to exercise my discretion in favour of B.K.R.'s proceedings against the Third Party, would be to adjourn the Third Party proceedings to come on at the same time as the bank's action, and to be dealt with at the hearing of the Summons for Directions in the bark's action.

11. If follows, therefore, that this appeal must succeed and the Order of master O'Donnell, must be set aside, and I also set aside the Third Party Notice.

12. As between the Third Party and B.K.R., the Third Party must have its costs of this appeal, and the Third Part will also have its costs before Master O'Donnell. Pureton's costs here and below will be borne by Pureton.

Appearances :
(R.) Mayne for Pureton Co.
(P.) Chan for B.K. Rekhatex (H.K.) , Ltd.
(E.) Chan for Bank of India Ltd.