JUDGE: Chadwick J

 

DATE: 2 August 1996

 

INTRODUCTION:

This is a signed judgment handed down by the judge, with a direction that no further record or transcript need be made (RSC Ord 59, r9(1)(f), Ord 68, r 1). See Practice Note dated 6 July 1990, [1990] 2 All ER 1024.

 

JUDGMENT:

CHADWICK J: The first plaintiff, Barings plc. is a company incorporated in England. At all material times Barings plc was the ultimate holding company of a group which included the second plaintiff (“BSL”), a company incorporated in the Cayman Islands and formerly known as Baring Securities Limited . Subsidiaries of BSL included Baring Securities (London) Limited (“BSLL”), Baring Securities Japan Limited (“BSJ”) and Baring Futures (Singapore) Pte Ltd (“BSF”) . BSF is a company incorporated in Singapore. At all material times BSF traded in financial futures on the Singapore International Monetary Exchange (“SIMEX”). The companies within the Barings group for which BSF executed and cleared orders were BSL, BSLL and BSJ. Mr Nicholas Leeson was an employee (and, from the middle of 1993, the general manager) of BSF.

 

The Barings group of companies collapsed at the end of February 1995 following the discovery of massive losses incurred by BFS. On 26 February 1995 an administration order was made in this Court in relation to Barings plc. On the same day provisional liquidators of BSL were appointed by the Grand Court of the Cayman Islands. On the following day, 27 February 1995, the administrators of Barings plc were appointed administrators of BSL by this Court. BSF is in liquidation in Singapore.

 

The collapse of the Baring group has been the subject of a report under the Banking Act 1987 by the Board of Banking Supervision of the Bank of England. The conclusions reached by the Board included the following:

 

“14. 1 Barings’ collapse was due to the unauthorised and ultimately catastrophic activities of, it appears, one individual (Leeson) that went undetected as a consequence of a failure of management and other controls of the most basic kind. Management failed at various levels and in a variety of ways, described in the earlier sections of this report, to institute a proper system of internal controls, to enforce accountability for all profits, risks and operations, and adequately to follow up on a number of warning signals over a prolonged period. Neither the external auditors nor the regulators discovered Leeson’s unauthorised activities.”

 

The first defendant, Coopers & Lybrand, a firm of Chartered Accountants practising in England (“C&L”), were the external auditors of Barings plc in respect of the financial years ended 31 December 1991 to 1994. Deloitte & Touche, a firm of Certified Public Accountants practising in Singapore of which the second and third defendants were partners at the material times (“D&T”), were the external auditors of BFS in respect of the financial year ended 30 September 1992 and the subsequent accounting period of fifteen months ended 31 December 1993. The fourth and fifth defendants are, and were at the material times, partners in a firm of Certified Public Accountants practising in Singapore under the firm name Coopers & Lybrand (“C&L(S)”) . C&L(S) were the external auditors of BFS in respect of the financial year ended 31 December 1994; having been appointed to that office in place of D&T on 11 June 1994.

 

The present proceedings, in which Barings plc and BSL claim damages against C&L and D&T and Barings plc (but not BSL) claims damages against C&L(S), were commenced by writ issued on 23 January 1996. Leave to serve the writ on the second, third, fourth and fifth defendants out of the jurisdiction was granted by Master Barratt on the same day. The statement of claim, which extends to 336 paragraphs over 143 pages, was served on 15 February 1996. The fourth and fifth defendants have applied, under Ord 12 r 8 of the Rules of the Supreme Court 1965, to set aside service of the writ. That application, made on motion of which notice was given on 6 June 1996, is now before me. There is no parallel application on behalf of the second and third defendants. They have decided to submit to the jurisdiction of this Court and have allowed their time for making an application to set aside service of the writ to expire.

 

The relief sought in the notice of motion includes the discharge of the order made on 23 January 1996. The grounds upon which that relief is sought are (a) that there is no good arguable claim (in the alternative, no serious issue to be tried) as between Barings plc and C&L(S) so that the case is not a proper case for service out of the jurisdiction within Ord 11 r 1(1) RSC (in the alternative, the Court should have refused to grant leave in accordance with r 4 of Ord 11) and (b) that having regard to all the circumstances of the case this Court is not the appropriate forum for the trial of the claim advanced against C&L(S) so that the Court should have refused to grant leave in accordance with Ord 11 r 4.

 

The application for leave to serve the writ out of the jurisdiction was made in reliance on paragraphs (c) and (f) of Ord 11 r 1(1). This is made clear, as required by r 4(1) (a) of Ord 11, in the affidavit sworn on 22 January 1996 in support of the application for leave by Margaret Elizabeth Mills, one of the joint administrators of Barings plc. It has been common ground that, on the application before me to discharge the order of 23 January 1996, Barings plc cannot seek to support the order by reliance on any other of the paragraphs in r 1(1). Unless satisfied that the claim does fall within paragraphs (c) or (f) I must discharge the order; it is not relevant to consider, on this application, whether the claim might fall within any other paragraph of the sub-rule.

 

Order 11 r 1(1) is in these terms, so far as material:

 

“1 (1) service out of the jurisdiction is permissible with the leave of the Court if in the action begun by writ -

 

(c) the claim is brought against a person duly served within or out of the jurisdiction and a person out of the jurisdiction is a necessary and proper party thereto; …

 

(f) the claim is founded on a tort and the damage is sustained, or resulted from an act committed, within the jurisdiction;”

 

Rule 4(2) requires that no leave shall be granted under r 1(1) “unless it shall be made sufficiently to appear to the Court that the case is a proper one for service out of the jurisdiction under this Order”.

 

Guidance as to the proper approach to the exercise of discretion under rr 1(1) and 4(2) of Ord 11 has been given by the House of Lords in the recent decision in Seaconsar Far East Ltd v Bank Markazi Jomhouri Islami Iran [1994] AC 438, [1993] 4 All ER 456. Lord Goff, with whom the other members of the House agreed, recognised a distinction, reflected in the grounds set out in C&L(S)’s notice of motion in the present application to discharge, between a test of “good arguable case” and that of “serious issue to be tried”. It is clear (i) that the test of “good arguable case” is to be applied for the purpose of determining whether the Court has jurisdiction to grant leave under Ord 11 r 1(1), (ii) that that test imposes a higher threshold than the test of “serious issue to be tried” and (iii) that it is the test of “serious issue to be tried” that is to be applied to a consideration of the merits of the plaintiff’s claim. Lord Goff explained the judge’s task in these words, at page 456H:

 

“Accordingly, a judge faced with a question of leave to serve proceedings out of the jurisdiction under Order 11 will in practice have to consider both (1) whether jurisdiction has been sufficiently established, on the criterion of the good arguable case laid down in Korner’s case [Vitkovice Horni a Hutni Tezirstvo v Karner [1951] AC 869), under one of the paragraphs of rule 1(1), and (2) whether there is a serious issue to be tried, so as to enable him to exercise his discretion to grant leave, before he goes on to consider the exercise of that discretion, with particular reference to the issue of forum conveniens.”

 

In relation to the jurisdiction to grant leave under Ord 11 r 1(1) (c) it is not in dispute that the following conditions must be satisfied: (i) the writ must include a claim against a person who has been duly served (either within the jurisdiction or out of the jurisdiction – for example, pursuant to leave properly granted or where no leave is necessary), (ii) there must exist between the plaintiff and the person on whom the writ has been served … “ a real issue which the plaintiff may reasonably ask the Court to try” … and (iii) the person who is to be served out of the jurisdiction pursuant to the leave sought must be … “a necessary or proper party” … to the action brought against the person who has been served.

 

In the present case the writ includes claims by the first plaintiff, Barings plc, against the first defendant, C&L. The writ has been duly served on C&L.

 

The expression “a real issue which the plaintiff may reasonably ask the Court to try” is derived from a passage in the judgment of Morton J. in Ellinger v Guiness, Mahon & Co [l939] 4 All ER 16, at 22, which was cited with approval by the House of Lords in Tyne Improvement Commissioners v Armement Anversois S/A (The Brabo) [1949] AC 326, [1949] 1 All ER 294 – see per Lord Porter at page 340, per Lord du Parcq at page 353 and per Lord MacDermott at page 359. It has since been adopted as one of the requirements which must be established by the affidavit in support of an application for leave based upon r 1(1) (c) – see r 4(1) (d). It was not submitted in argument before me that, as between the first plaintiff, Barings plc, and the first defendant, C&L, there was not a real issue which the first plaintiff might reasonably ask the Court to try.

 

It follows that I approach the question whether jurisdiction has been established under paragraph (c) of r 1(1) on the basis (i) that there is no dispute that the writ has been duly served on C&L within the jurisdiction, (ii) that there is no dispute that there exists between Barings plc and C&L a real issue which the plaintiff may reasonably ask the Court to try and (iii) that I must be satisfied, to the standard of “good arguable case”, that C&L (S) are necessary or proper parties to the action brought by Barings plc against C&L.

 

In Massey v Heynes & Co (1888) 21 QBD 330 Lord Esher MR explained the meaning of the phrase “proper party” in the context of Ord 11 r 1(1) (c) – then r 1(g) – in these terms:

 

“The question, whether a person out of the jurisdiction is a “proper party” to an action against a person who has been served within the jurisdiction, must depend on this, – supposing both parties had been within the jurisdiction would they both have been proper parties to the action? If they would, and only one of them is in this country, then the rule says that the other may be served, just as if he had been within the jurisdiction.”

 

Lord Porter accepted that test as “sufficiently accurate in regard to the circumstances in connexion with which it was used” see his observations in The Brabo (supra, at page 340). I find nothing in the speech of Lord Goff in Seaconsar Ltd v Bank Markazi (supra) which leads to the conclusion that the Court should apply any other test to determine whether the third of the three conditions required to found jurisdiction under Ord 11 r 1(1) (c) is satisfied; and I can think of no other test which would be consistent with the language of the rule; construed, as it must be, in the context of the Rules of the Supreme Court as a whole. I am satisfied that Lord Esher’s test in Massey v Heynes (supra) remains the test to be applied in the present case.

 

Whether a person is a “proper party” to an action in which he has been, or is to be, joined as co-defendant with another must depend on the Rules of the Supreme Court and the practice under those rules. Order 15 r 4(1) permits joinder of two or more persons as defendants with the leave of the Court or where:

 

“(a) if separate actions were brought against each of them some common question of law or fact would arise in all the actions, and

 

(b) all rights to relief claimed in the action (whether they are joint, several or alternative) are in respect of or arise out of the same transaction or series of transactions.”

 

Order 15 r 6(2) enables the Court, at any stage of the proceedings and either of its own motion or on application, to order any person who has been improperly joined as a party or who has for any reason ceased to be a proper party, to cease to be a party; and to order the joinder as a party of:

 

“(i) any person whose presence before the Court is necessary to ensure that all matters in dispute in the cause or matter may be effectually and completely determined and adjudicated upon, or

 

(ii) any person between whom and any party to the cause or matter there may exist a question or issue arising out of or relating to or connected with any relief or remedy claimed in the cause or matter which in the opinion of the Court it would be just or convenient to determine as between him and that party as well as between the parties to the cause or matter.”

 

It seems to me beyond argument that any person who has or could have been joined as a party, without leave, under Ord 15 r 4(1) must be a “proper party” for the purposes of the rules; in particular, such a person must be a “proper party” for the purposes of Ord 11 r 1(1) (c). Further, a person whose presence is necessary to ensure that all matters in dispute in the cause or matter are effectually and completely determined and adjudicated upon is, in my view, a “necessary party” for the purposes of Ord 11 r 1(1) (c) .

 

It is not, I think, necessary to decide on the present application whether any person whom the Court could itself join under r 6(2) (b) (ii) must be treated as a “proper party” for the purposes of Ord 11 r 1(1) (c). Given that, under each rule, an application to the Court will need to be made I see no reason in principle why the Court should not, in an appropriate case, give leave to serve out of the jurisdiction in circumstances in which it could order the person to be added as a party to existing proceedings. As Lindley LJ put it in Massey v Heynes (supra, at page 338):

 

“When the liability of several persons depends upon one investigation, I think they are all “proper Parties” to the same action, and, if one of them is a foreigner residing out of the jurisdiction, rule 1(g) (now, rule 1(1)(c)] of Order XI applies.”

 

In order to decide whether C&L(S) are “proper parties” to the action brought by Barings plc against C&L it is necessary, first, to consider the allegations made in the statement of claim which has been served in that action. Applying the test derived from Ord 15 r 4 (1), I must be satisfied, to the standard of “good arguable case”, (a) that if separate actions were brought by Barings plc against C&L and C&L(S) some common question of law or fact would arise in each, and (b) that the relief claimed in the action against C&L and C&L(S) does arise out of the same transaction or series of transactions.

 

The principal allegations made in the statement of claim in respect of the claim by Barings plc against C&L(S) are to be found in the following groups of paragraphs: (A) paras 7 to 41 (“The Barings Group” and “The business of the Barings Group in Singapore”), (B) paras 43 and 46 to 49 (“Accounting, Auditing and Reporting Requirements”), (C) paras 62 to 64 (“C&L Singapore’s appointment as auditors and their duties to the plaintiffs”), (D) paras 121 to 146 (“The Audits and the Reports: C&L Singapore’s audit of BFS for the year ended 31 December 1994”), (E) paras 160 to 187 (“Matters not discovered during the audits”) in so far as those relate to the 1994 audit of BFS, (F) paras 270 to 290 (“Negligence and breaches of duty: C&L Singapore’s audit of BFS for the year ended 31 December 1994”) and (G) paras 318 to 332 (“Reliance, Loss and Damage”).

 

In summary, the case against C&L(S) is that, as auditors of BFS and as reporting accountants to C&L and to Barings plc in respect of the consolidation schedules to be incorporated in the group accounts of Barings plc, they failed to identify and report on the lack of internal controls (paras 275(3), 276 and 277), failed to identify and report upon Leeson’s unauthorised trading through an account designated account 88888 (paras 278 to 281), and wrongly reported (contrary to fact) that a supposed receivable of Yen 7.778 billion from Spear, Leeds & Kellogg (“SLK”) in respect of an over-the-counter transaction had been received by BFS on 2 February 1995.

 

The comparable allegations made against C&L are contained in the paragraphs in groups (A) and (B) (as above), (C) paras 50 to 56 (“C&L’s appointment as auditors and their duties to the plaintiffs”), (D) paras 157 to 159 (“The Audits and the Reports: C&L’s audit of Barings plc and the Barings Group for the year ended 31 December 1994”), (E) paras 160 to 187 (“Matters not discovered during the audits”) in so far as those relate to the 1994 audit of Barings plc, (F) paras 292 to 314 and 315 to 317 (“Negligence and breaches of duty: C&L’s audit of Barings plc and the Barings Group for the year ended 31 December 1994”) and (G) (as above).

 

In summary, the case against C&L, in respect of the 1994 accounts and group accounts of Barings plc (so far as material) is that, as auditors of Barings plc, they failed to identify the deficiencies in the audit and report of C&L(S), and so failed to bring to light the lack of internal controls at BFS, Leeson’s unauthorised trading on account 88888 and the true financial position of BFS (para 305), failed to discover that the supposed receivable of Yen 7.778 billion was fictitious (paras 307 to 310) and failed to qualify their audit and reports in respect of Barings plc and the Barings Group to the effect that they were unable to satisfy themselves that proper accounting records had been kept by BFS (paras 313 and 314).

 

So far as material, the allegations in the final group of paragraphs – Group (G) – are in these terms:

 

“318. C&L, D&T and C&L Singapore carried out the audits identified above and made their audit reports and their reports on internal controls for the purposes of:

 

(1) providing assurances to the Plaintiffs that the accounts audited showed a true and fair view;

 

(2) providing an assurance to the plaintiffs that the accounts audited were not materially misstated due to material fraud or irregularities or significant and continued weaknesses in internal control;

 

(3) complying with statutory and regulatory requirements pleaded at paragraphs 43 to 49 above; …

 

319. C&L, D&T and C&L Singapore carried out the following audits for the purposes of Barings plc and addressed reports on them to Barings plc (or to its directors or members):

 

…

 

(4) C&L Singapore’s audit of BFS for the year ended 31 December 1994; and

 

(5) C&L’s audit of the Barings Group and of Barings plc for the year ended 31 December 1994.

 

320. Each of C&L, C&L Singapore and D&T knew, or ought to have known, that Barings plc would rely, for the purposes pleaded at paragraph 318 above .upon their respective audits as identified in paragraph 319 above and upon the audit reports and reports on internal controls made by them in relation to those audits, and Barings plc did so rely.

 

…

 

323. As a result of Leeson’s continued and authorised and loss-making trading on account 88888 the Barings Group (including each of BFS, BSL and Barings plc) became insolvent and collapsed on 26 February 1995.

 

324. As pleaded above, the existence of account 88888 and Leeson’s unauthorised trading on it ought to have been brought to light:

 

…

 

(7) by C&L Singapore in the course of their audit of BFS for the year ended 31 December 1994 and before 2 December 1994, alternatively before mid-January 1995, alternatively before 3 February 1995; and

 

(8) by C&L in the course of their audits of BSL and the BSL Group and Barings plc and the Barings Group for the year ended 31 December 1994 and before 31 October 1994, alternatively before 3 February 1995, alternatively before 10 February 1995, alternatively before 17 February 1995.

 

325. D&T, C&L and C&L Singapore acted in breach of the duties pleaded at paragraphs 50 to 64 above in failing to uncover account 88888 and Leeson’s unauthorised trading on it during the course of the audits referred to above…

 

326. Had the existence of account 88888 and Leeson’s unauthorised trading on it been brought to light by any of the above audits and reported to the senior management of Barings plc, of BSL, or of the Barings Group, they would immediately have brought Leeson’s trading to an end and, after due enquiry, dismissed him or caused him to be dismissed. They would then have wound down and settled as cheaply as possible any open positions remaining on account 88888.

 

327. Leeson was able to commence and continue his unauthorised trading on account 88888 by reason of significant and continuing weaknesses in the internal controls of BFS, BSL and BSLL, namely:

 

(1) the absence of any proper segregation of duties at BFS and of any adequate supervision of Leeson;

 

(2) the absence at BSL, BSLL and BSF of reconciliations between statements obtained from SIMEX of positions and margin, and the positions and margin recorded in the records of the companies;

 

(3); (4)

 

328. As pleaded above, the weaknesses in internal controls identified at paragraph 327(1) to (4) above ought to have been reported to BSL and/or Barings plc, or, in the case of D&T and C&L Singapore, to C&L on their behalf:

 

(7) as to (1) and (2), by C&L Singapore in the course of their audit of BFS for the year ended 31 December 1994 and before 2 December 1994, alternatively before mid-January 1995, alternatively before 3 February 1995; and

 

(8) as to (1), (2), (3) and (4) by c&L in the course of their audits of … Barings plc and the Barings Group for the year ended 31 December 1994 before 31 October 1994, alternativelybefore 3 February 1995, alternatively before 10 February 1995, alternatively before 17 February 1995.

 

329. D&T, C&L and C&L Singapore acted in breach of the duties pleaded in paragraphs 50 to 64 above in failing to report such weaknesses of internal control during the course of the audits referred to above. The Plaintiffs rely on the negligence pleaded at paragraphs 198 to 317 above.

 

330. Had the existence of the above weaknesses in internal control been reported to the senior management of Barings plc and/or BSL by the auditors, they would have remedied the deficiencies so reported and Leeson’s unauthorised trading on account 88888 would have been prevented or discovered and would immediately have been brought to an end. After due enquiry, Leeson would have been dismissed and any open positions remaining on account 88888 wound down and settled as cheaply as possible.

 

331. Barings plc complains of:

 

…

 

(4) C&L Singapore’s breaches of their tortious duties in respect of their audit of BFS for the year ended 31 December 1994; and

 

(5) C&L’s breaches of their contractual and tortious duties in respect of their audit of Barings plc and the Barings Group for the year ended 31 December 1994.

 

332. By reason of the matters complained of, Barings plc has suffered loss and damage. The insolvency and collapse of the Barings Group has deprived Barings plc of the whole value of the group. The value of the Barings Group will be quantified in an expert report to be served in due course.”

 

The common questions which arise, on the paragraphs set out above, include the following: (i) whether, as a result of Leeson’s continued unauthorised and loss making trading on account 88888 the Barings Group (including each of BFS, BSL and Barings plc) became insolvent and collapsed on 26 February 1995 (paragraph 323), (ii) whether, if the trading on account 88888 had been brought to light and reported to the senior management of Barings plc, they would immediately have brought that trading to an end and would have wound down and settled as cheaply as possible any open positions on account 88888 (paragraph 326), (iii) whether Leeson was able to continue his unauthorised trading on account 88888 by reason of significant and continued weaknesses in the internal controls of BFS, BSL and BSLL (paragraph 327), (iv) whether, if the existence of weaknesses in the internal controls had been reported to the senior management of Barings plc they would have remedied the deficiencies, brought Leeson’s trading on account 88888 to an end and would have wound down and settled any open positions on that account as cheaply as possible (paragraph 330) and (v) whether the failure to identify and report the matters complained of led to the insolvency and collapse of the Barings Group and deprived Barings plc of the whole value of the group.

 

There are many other common questions of fact which arise on the pleadings. It is unnecessary to identify each and every one; but they can be found in paragraphs 7 to 13 (“The Barings Group”), paragraphs 14 to 42 (“The business of the Barings Group in Singapore”) and paragraphs 182 to 187 (“Matters not discovered during the audits”) By way of example, I set out the relevant passages in relation to the supposed Yen 7.778 billion receivable from SLK:

 

“183. Leeson frequently concealed the existence of deficits on account 8888 by “window dressing” the account at month ends. That is to say, he would transfer the balance on account 8888 to another account in the records of BFS just before the end of the month and make a reverse transfer back to 88888 at the beginning of the following month. The effect of this was to leave a zero (or small) balance on account 88888 at the end of the accounting period.

 

184. Instances of this window dressing were:

 

…

 

(3). at 31 December 1994 a sum of Yen 7.778 billion was transferred from account 88888 to receivables; this transfer was reversed with effect from 3 January 1995.

 

186. The SLK receivable described by Leeson to C&L Singapore see paragraphs 132 to 141 above) was entirely fictitious.

 

187. Leeson forged each of the documents furnished to C&L Singapore in respect of the fictitious SLK receivable (see paragraphs 133,139 and 141 above) namely:

 

(1) the purported letter from SLK dated 1 October 1994 confirming the deal;

 

(2) the fax purportedly received by BFS on 1 February 1995 from Hogan of SLK;

 

(3) the fax dated 2 February purportedly received from Ron Baker confirming knowledge and approval of the option; and

 

(4) the Citibank statement. This statement was generated by a transfer by Leeson of funds from another BFS account; the source of the funds was obscured on the copy of the statement by Leeson before it was made available to C&L Singapore.”

 

I am satisfied, to the standard of “good arguable case” – indeed, I think it is beyond argument – that, if separate actions were brought by Barings plc against C&L and C&L(S) common questions of fact would arise in each action. I am satisfied, also, that the rights to relief claimed by Barings plc against C&L and C&L(S) in this action arise out of the same series of transactions – namely Leeson’s unauthorised trading on account 88888. It follows that I am satisfied that C&L(S) are proper parties to the claim brought by Barings plc against C&L; and that the Court had jurisdiction, under Ord 11 r 1(1) (c), to grant leave to serve the writ on C&L(S) in Singapore.

 

It was submitted on behalf of C&L(S) that it was not enough that I should be satisfied that the claims against C&L and C&L(S) gave rise to some common question of law or fact, or that the relief claimed arose out of the same series of transactions. It was said that I must also be satisfied, to the standard of “good arguable case”, that the claim against C&L(S) had merit.

 

I reject that submission. It appears to me inconsistent with the approach which is to be adopted following the guidance given by the House of Lords in Seaconsar v Bank Markazi (supra). In my view, paragraph (c) of r 1(1) is one of those “many paragraphs” to which Lord Goff referred in the following passage, at page 454E:

 

“Under many paragraphs, once the plaintiff’s claim has been shown to have been made under a certain statutory provision, the jurisdiction of the court is established; and a separate question will arise as to the merits of the plaintiff’s claim”;

 

In addressing that separate question, the test to be applied is that of “serious question to be tried”. As Lord Goff put it, at page 455 A-C, in the context of an application under paragraph (d):

 

“ … the existence of the relevant contract has to be proved. But, once that is done, there arises a separate question as to the merits of the plaintiff’s claim relative to that contract. That question was however not addressed by their Lordships in Korner’s case, with the exception of Lord Tucker, who expressed the opinion, at p. 889 (with reference to claims founded on a tort under paragraph (ee), now paragraph (f)), that a lesser burden will fall on the plaintiff with regard to the merits of his claim, viz. whether the affidavits disclose a case which appears to merit consideration at the trial – a test consistent with the approach of Lord Davey in the Badische Anilin case, [Chemische Fabrik vormals Sandoz v Badische Anilin und Soda Fabriks (1904) 90 LT 733], and indeed with that of Lord Goddard c.J. in Malik (Malik v Narodni Banka Ceskoslovenska [1946] 2 All ER 663] in so far as he was not concerned with the question of jurisdiction under rule 1(1).

 

This approach is consistent with rule 4(1)(d) of Order 11, concerned with applications made under rule 1(1)(c). Moreover, support for this approach is to be derived from the development of the requirement of forum conveniens as an element in the exercise of the court’s discretion under Order 11.”

 

In my view, in deciding whether a person is a “proper party” in the context of r 1(1) (c), the Court is not required to do more than (i) identify the common questions of law or fact which arise in the claim against the party duly served and the person sought to be served, and the transaction or series of transactions out of which the rights to relief against each arise, and (ii) satisfy itself that the questions of law or fact do merit consideration at a trial – alternatively do raise real issues which the plaintiff may reasonably ask the Court to try.

 

If I am correct in my view that jurisdiction to grant leave to serve out is established under Ord 11 r 1(1) (c) it is unnecessary to go on to consider whether it is also established under rule (1) (f). But that question was argued fully before me; and, in deference to those arguments and in case this application is taken further, it is appropriate that I should decide it.

 

The claim against C&L (S), as pleaded, is founded on a tort. The tort alleged is negligence by C&L(S) in respect of their audit of BFS for the year ended 31 December 1994 – see para 331(4) of the statement of claim which I have set out above. Prima facie, the acts of negligence complained of were committed in Singapore: the connection between C&L(S) and Barings plc in London lies in the reports sent by C&L(S) to C&L in respect of the consolidation schedules. But the damage sustained by Barings plc, as pleaded, is the loss of “the whole value” of the Barings Group. The Barings Group, as appears from paras 7 and 8 of the statement of claim, was based in London, and included a banking business carried on in London by Baring Brothers & Co Limited. The assertion that the damage in respect of which Barings plc claims against C&L(S) was sustained in London is contained in para 43 of the affidavit of Margaret Elizabeth Mills sworn on 26 February 1996:

 

43. The instructions for the payment of funds by BSL to BFS were given in London. The funds which were supplied to BFS and lost by BSL, were paid from London Bank accounts, pursuant to the instructions given on behalf of BSL in London. The damage suffered by the payments out of the bank accounts was thus sustained within the jurisdiction. Equally, the losses in the value of the subsidiaries of the Plaintiffs was a loss suffered by the Plaintiffs within the jurisdiction. The Plaintiffs also claim overpaid dividends and bonuses: these losses were also sustained within the jurisdiction.”

 

I do not find it self evident that a loss in the value of a subsidiary incorporated in the Cayman Islands (for example, BSL) or elsewhere outside the United Kingdom, is a loss suffered by Barings plc in London. Nevertheless, it is plain (and not in dispute) that the Barings Group included companies which were incorporated in the United Kingdom and that the loss to Barings plc of the value of those subsidiaries was loss sustained within the jurisdiction. It is also plain that that loss resulted from acts done by C&L(S) which included acts done within the jurisdiction; that is to say the provision of information in reports sent to London. In my view the evidence does establish, to the required standard of “good arguable case”, that the damage in respect of which Barings plc claims against C&L(S) has been sustained, and does result from acts committed, within the jurisdiction. It follows that, subject to the point which I am about to address, I am satisfied that the Court had jurisdiction, under Ord ii r 1(1) (f), to grant leave to serve the writ on C&L(S) in Singapore.

 

It was submitted, in relation to jurisdiction under r 1(1) (f) as in relation to jurisdiction under r 1(1) (c), that the Court must be satisfied, to the standard of “good arguable case”, of the merits of the claim in tort. In particular, that the Court must be satisfied that, if the facts alleged are established at trial, the claim that C&L(S) owed a duty of care to Barings plc is well founded in law. For reasons similar to those which I have already set out in rejecting the parallel submission in relation to r 1(1) (c), I reject this submission also. The passage in the speech of Lord Davey in the Badische Anilin case, to which Lord Goff referred in Seaconsar (supra, at page 455C) is set out earlier in Lord Goff’s own speech (at page 451F – 452A). It includes the following:

 

“On the other hand, the court is not, on an application for leave to serve out of the jurisdiction, or on a motion made to discharge an order for such service, called upon to try the action or express a premature opinion on its merits, and where there are conflicting statements as to material facts, any such opinion must necessarily be based on insufficient materials A more difficult question is where it is in dispute whether the alleged or admitted facts will, as a matter of law, entitle the plaintiff to the relief which he seeks. If the court is judicially satisfied that the alleged facts, if proved, will not support the action, I think the court ought to say so, and dismiss the application or discharge the order. But where there is a substantial legal question arising on the facts disclosed on the affidavits which the plaintiff bona fide desires to try, I think that the court should, as a rule, allow the service of the writ. [Chemische Fabrik vormals Sandoz v Badische Anilin und Soda Fabriks (1904) 90 LT 733 at page 735] emphasis added]

 

It was that approach which Lord Goff, in Seaconsar (supra, at page 452D), treated as the basis for the conclusion that the standard of proof, in respect of the cause of action, could broadly be stated to be whether, on the affidavit evidence before the court, there is a serious question to be tried.

 

There is no doubt, however, that the Court must consider, on an application for leave to serve out or on a motion to discharge an order for such service, whether it is satisfied that the alleged facts, if proved, would not support the action. At its lowest this can be put on the basis that the person to be served out ought not to be put to the necessity of appearing in this jurisdiction in order to have a claim against him struck out. More pertinently, perhaps, it cannot be a proper exercise of discretion to grant leave if the Court is satisfied that the claim must fail; alternatively, the case cannot be a proper one for service out of the jurisdiction. The position was examined by the Privy Council in an appeal from the Court of Appeal of New Zealand, Kuwait Asia Bank E.C. v National Mutual Life Nominees Ltd [1991] 1 AC 187, [1990] 3 All ER 404 at 224 of the former report:

 

“The fact that applications to strike out may raise difficult questions of law requiring extensive argument does not exclude the jurisdiction to do so: Gartside v Sheffield Young & Ellis [1983] NZLR 37, 45, and the same principle applies to applications under rule 131 of the High court Rules and R.S.C. Ord.12 r.8. There is no need for the circuity of procedure which would be involved in an application to strike out the statement of claim in a case like the present, since “no cause of action” provides the ultimate example of failing to show a good arguable case.”

 

In the light of the guidance given subsequently in Seaconsar [1994] 1 AC 438, [1993] 4 All ER 456 the reference in that passage to “a good arguable case” must, now, be treated with caution; but the principle is unaffected. The Court may require extensive argument before it can reach a conclusion that a difficult question of law can be resolved in favour of the party applying to strike out, or the party resisting service out of the jurisdiction; but, once it has reached that conclusion it must give effect to it by refusing to allow the action to proceed.

 

I turn, therefore, to consider whether there is a serious question of law to be tried.

 

It was submitted on behalf of C&L(S) that, on a true analysis of the facts alleged and a proper understanding of the law, there is no serious question to be tried. The submission was put, broadly, on two grounds. First, that C&L(S) owed no relevant duty of care to Barings plc; secondly that, if any duty was owed, that was secondary to the duty owed by C&L(S) to BFS with the consequence that BFS, and not Barings plc, was the proper plaintiff.

 

I was, of course, referred to the speeches in the House of Lords in Caparo Industries plc v Dickman and others [1990] 2 AC 605, [1990] 1 All ER 568; and, in particular, to those passages in the speech of Lord Bridge (ibid, at pages 626C to 627F) in which he analysed the duties of auditors to members of the company. Lord Bridge accepted that the relevant provisions in the Companies Act 1985 (summarised in the judgment of Bingham LJ below – [1989] QB 653, 680-681) established a relationship between the auditors and the shareholders of a company on which the shareholder is entitled to rely for the protection of his interest; but went on to say this:

 

“But the crucial question concerns the extent of the shareholder’s interest which the auditor has a duty to protect. The shareholders of a company have a collective interest in the company’s proper management and in so far as a negligent failure of the auditor to report accurately on the state of the company’s finances deprives the shareholders of the opportunity to exercise their powers in general meeting to call the directors to book and to ensure that errors in management are corrected, the shareholders ought to be entitled to a remedy. But in practice no problem arises in this regard since the interest of the shareholders in the proper management of the company’s affairs is indistinguishable from the interest of the company itself and any loss suffered by the shareholders, e.g. by the negligent failure of the auditor to discover and expose a misappropriation of funds by a director of the company, will be recouped by a claim against the auditors in the name of the company, not by individual shareholders.

 

I find it difficult to envisage a situation arising in the real world in which the individual shareholder could claim to have sustained a loss in respect of his existing shareholding referrable to the negligence of the auditor which could not be recouped by the company.

 

Lord Bridge emphasised the importance of “the crucial question” in a subsequent passage (ibid, at page 627D)

 

“It is never sufficient to ask simply whether A owes B a duty of care. It is always necessary to determine the scope of the duty by reference to the kind of damage from which A must take care to save B harmless. ‘The question is always whether the defendant was under a duty to avoid or prevent that damage, but the actual nature of the damage suffered is relevant to the existence and extent of any duty to avoid or prevent it.’ see Sutherland Shire Council v Heyman 60 ALR 1, 48, per Brennan J. Assuming for the purpose of the argument that the relationship between the auditor of a company and individual shareholders is of sufficient proximity to give rise to a duty of care, I do not understand how the scope of that duty can possibly extend beyond the protection of any individual shareholder from losses in the value of the shares which he holds.”

 

There are observations to the same effect in the speech of Lord Oliver, at page 651F; and those were reflected in Lord Oliver’s speech in the subsequent decision of the House of Lords in Murphy v Brentwood District Council [1991] 1 AC 398, [1990] 2 All ER 908 at pages 485H to 486B:

 

“The essential question which has to be asked in every case, given that damage which is the essential ingredient of the action has occurred, is whether the relationship between the plaintiff and the defendant is such – or, to use the favoured expression, whether it is of sufficient “proximity” – that it imposes upon the latter a duty to take care to avoid or prevent that loss which has in fact been sustained.”

 

The question, therefore, requires an examination of the relationship between Barings plc and C&L (S); with reference to the work on which C&L(S) was engaged and the information which C&L(S) supplied. It is material to keep in mind (i) that C&L(S) was not performing, in relation to Barings plc, the role of auditor under the Companies Act 1985; and (ii) that Barings plc was not, itself, a member of BFS, the company of which C&L(S) was the statutory auditor for the purposes of the Companies Act of Singapore. Accordingly, observations as the duties which an auditor may or may not owe to the company, or the members of the company, which is the subject of the audit are of little direct relevance. The relevant relationship, in the present case, is that of the auditor of a subsidiary company to the parent company of the group.

 

Section 227 of the Companies Act 1985 requires that the directors of a company which is a parent company – as defined by s 258 of that Act – prepare group accounts in addition to its own individual accounts. Group accounts are consolidated accounts comprising (a) a consolidated balance sheet dealing with the state of affairs of the parent and its subsidiaries, and (b) a consolidated profit and loss account dealing with the profit or loss of the parent company and the subsidiaries – see s 227(2) of the Act. Those accounts must give a true and fair view of the financial affairs of the group as a whole – see s 227(3). It is for the auditors of the parent to report to the members of the parent on its annual accounts, including the group accounts – see s 235 (in particular, subsection (2) (c)) of the Act. The auditors of a subsidiary have no statutory duty (as such) to the parent company (unless, of course, the parent is a member of the subsidiary) or to the members of the parent company. In practice the parent and the subsidiary may have the same auditors; but that is not this case. Accordingly, if there is such a relationship between the auditors of a subsidiary and the parent company as gives rise to a duty on the auditors of the subsidiary to take care to avoid or prevent damage to the parent of the relevant kind, that relationship must be found outside the statutory provisions of the Companies Act.

 

It is not necessary or appropriate, on the present application, to examine, in abstract, the generic question whether auditors of subsidiary companies owe duties of care to the parents of those subsidiaries. I would not be prepared to hold, on an application of this nature, that such duties arose merely because the auditor of the subsidiary might be expected to know that his audit of the subsidiary’s accounts would or might be relied upon by the directors of the parent in preparing consolidated accounts for the group – see the observations of Millett J in Al Saud Banque and others v Clark Pixley (a firm) [1990] Ch 313, at 337-338.

 

In the present case the duties (if any) which C&L(S) owed to Barings plc arose out of the following, specific, facts and matters:

 

(1) On 2 November 1994 Andy Turner, a partner of C&L with responsibility for the Barings Group audit, sent to the fourth defendant, Khoo Kum Wing, group instructions for the carrying out of the audits of companies in the Barings Group. Those instructions included the following paragraphs:

 

Communication

 

5. You are required to keep us informed of any matters of significance which come to your attention on a regular basis so that we can keep Barings central management fully briefed on any issues as they emerge.

 

APPENDIX A

 

Scope

 

3. You are requested to undertake an audit of your client’s financial statements and consolidation schedules for the year ending 31 December 1994.

 

Reporting Package

 

5. Each subsidiary is required to complete a standard reporting package which it submits to head office. These packages are the consolidated and must therefore comply with:

 

(a) the requirements of the United Kingdom companies Act 1985, as amended by the United Kingdom Companies Act 1989 and the Bank Account Regulations 1991. …

 

Audit procedures

 

9. Audits of the consolidation schedules should be conducted in accordance with the Auditing Standards and Auditing Guidelines issued by the Institute of Chartered Accountants in England and Wales. Offices of Coopers & Lybrand will meet this requirement through compliance with the International Firm’s Practice Manual.

 

Reporting

 

16 We have set out at App J the form of report you are required to submit for the purpose of consolidation.”

 

(2) On 22 November 1994 Khoo Kum Wing confirmed to C&L that the instructions had been received and fully understood.

 

(3) On 2 December 1994 C&L(S) sent to C&L by fax a document described as “Audit Strategy Memorandum” in respect of BFS. This ASM was dated, as approved, 22 November 1994 and initialled by Khoo Kum Wing. Listed amongst the “Engagement Objectives” was the consolidation package for C&L (London). The client’s business was described as the provision of broking services to its clients. The BFS clients were identified; in particular, it was noted that BFS had only four customers, of which three were group companies (BSL, BSLL and BSJ).

 

(4) On 9 January 1995 Khoo Kum Wing sent an interim status report to Andy Turner at C&L. That disclosed no issues in relation to account 88888 or the supposed SLK receivable.

 

(5) On 27 January 1995 Khoo Kum Wing sent a further status report to Andy Turner. That report did refer to the supposed SLK receivable, in the following terms:

 

“Trade receivable from a third party

 

8 There is a Yen 7.7 billion (S$ equivalent 115 million) trade receivable from a third party – Spear, Leeds and Kellogg (“SLG”) (sic). This represents refund of margin deposited with SLG for an over-the-counter Nikkei option which expired on 30 December 1994. The amount is still outstanding. We are awaiting the audit confirmation of the year end balance.

 

9 We are informed by BFS that collectability of the said Yen 7.7 billion is not envisaged to be a problem. Also, the contracting party with SLG is Baring Securities Limited (“BSL”) and that SLG’s credit worthiness had been discussed with BSL. Could you confirm with BSL that SLG is an on-going customer and is credit worthy.”

 

(6) The response to that information was contained in a fax from C&L to Kum Wing Khoo dated 1 February 1995. The fax was sent, by mistake, to D&T. There is an apparent dispute between Duncan Fitzgerald of C&L and Kum Wing Khoo as to whether it was discussed between them on 2 February 1995. The fax was in these terms:

 

“Baring Futures (Singapore) Pte Ltd (“BFS”)

 

Thank you for your recent status report. I have discussed certain matters with Geoff Broadhurst [group finance director at Barings head office] and he is concerned about certain aspects of the audit of the above company.

 

Firstly he was not aware that BFS had a large receivable from Spear, Leeds & Kellogg. He considers that this is an issue which needs to be followed up by a suitable member of your audit team. If the option expired in December then it should have been repaid by now. He is also surprised at your comment regarding BSL being the contracting party. What does this mean? If BSL was the contracting party should the receivable be in the books of BSL?

 

BSF is largely operated by one person and therefore there will not be the same segregation of duties found in other companies. He has therefore requested me to ask you to perform a rigorous audit of the balance sheet paying particular attention to intercompany balances and receivables. There should be no material reconciling items in the intercompany accounts.

 

(7) On 3 February 1995 C&L(S) sent to C&L “in accordance with your audit instructions of 2 November 1994” the audit report, consolidation package and MAPs (Matters for the attention of Partners) of (inter alios) BFS. The covering letter drew attention to the following, amongst other, matters:

 

“Trade balance Receivable of 7.778 Million (sic) from An Over-the-Counter Trade

 

15 This amount arose due to a right purchased on a Nikkei option by a client – Spear, Leeds & Kellogg (‘SLK’). The option expired on 30 December 1994 and was not exercised by SLK. As a result, premium payable by SLK which was agreed to be withheld and treated as collateral was receivable from SLK at year end. The premium of Yen 7.778 million was confirmed by SLK as outstanding as at year end and has been received on 2 February 1995. An audit confirmation from Baring Securities Limited (“BSL”) has been received stating knowledge and approval of the said deal. We understand that BSL is a counter party to the transaction and the payment to BSL was made by 31 December 1994.”

 

The audit report sent with that letter was in the form required by the group audit instructions sent to C&L(S) on 2 November 1994:

 

“AUDIT REPORT TO THE DIRECTORS OF BARINGS PLC

 

1. We have examined the accompanying consolidation schedules on pages 1 to 36 for the year ended 31 December 1994 of Baring Futures (Singapore) Pte Ltd that have been prepared solely for the purpose of consolidation with the financial statements of Barings plc. Our audit was conducted in accordance with Accounting Standards in the United Kingdom.

 

2. In our opinion, the standard financial statements [of BFS] and supporting consolidation schedules have been prepared in accordance with the Barings Group accounting policies and Group consolidation instructions dated 2 November 1994. The information shown in them is presented fairly in conformity with accounting practices generally accepted for banking groups in the United Kingdom.”

 

In my view it is clear, on the evidence set out in the documents to which I referred, that C&L(S) knew that the information which they were instructed to supply was required by Barings plc; and was required in order that the directors of Barings plc could comply with the obligation, imposed upon them by s 227 of the Companies Act 1985, to prepare consolidated accounts which showed a true and fair view of the financial affairs of the group. In those circumstances I am satisfied that this is not a case in which it can be said, at this stage, that there is no serious question of law to be tried as to the existence of a duty of care owed by C&L(S) to Barings plc. It seems to me that the Court can properly be asked to consider, at trial, whether C&L(S) owed a duty of care to avoid or prevent the damage that would or might be suffered by Barings plc if it was not brought to the attention of its directors that no assurance could be given by the auditors of BFS that the financial statements and consolidation schedules prepared in respect of BFS could be relied upon. Accordingly, I reject the first ground upon which the submission of no serious case to be tried has been based.

 

In support of the second ground – that the proper plaintiff in an action brought against C&L(S) in respect of the audit of the BFS accounts is BFS and not Barings plc – reliance was placed on the decision of the Court of Appeal in Prudential Assurance Co Ltd v Newman Industries Ltd and others (No 2) [1982] Ch 204. The action included a personal claim against two defendants, Mr Bartlett and Mr Laughton, for damages for conspiracy. The Court of Appeal rejected that claim in the following passage, at page 222G to 223B:

 

“In our judgment the personal claim is misconceived. It is of course true, as the judge found and Mr Bartlett did not dispute, that he and Mr Laughton, in advising the shareholders to support the resolution approving the agreement, owed the shareholders a duty to give such advice in good faith and not fraudulently. It is also correct that if directors convene a meeting on the basis of a fraudulent circular, a shareholder will have a right of action to recover any loss which he has been personally caused in consequence of the fraudulent circular; this might include the expense of attending the meeting. But what he cannot do is to recover damages merely because the company in which he is interested has suffered damage. He cannot recover a sum equal to the diminution in the market value of his shares, or equal to the likely diminution in dividend, because such a “loss” is merely a reflection of the loss suffered by the company. The shareholder does not suffer any personal loss. His only “loss” is through the company, in the diminution in the value of the net assets of the company, in which he has (say) a 3 per cent shareholding. The Plaintiff’s shares are merely a right of participation in the company on the terms of the articles of association. The shares themselves, his right of participation, are not directly affected by the wrongdoing. The plaintiff still holds all the shares as his own absolutely unencumbered property. The deceit practised upon the plaintiff does not affect the shares; it merely enables the defendant to rob the company.”

 

The ratio of the decision on the personal claim, as I understand it, is that a shareholder cannot recover damage in respect of the diminution in the value of his shareholding in circumstances in which the wrong of which he complains is a wrong done to the company. In those circumstances the law provides sufficient protection to the shareholder in respect of his loss through the right of action which it affords to the company. To put the point in a different way, the shareholder has suffered no loss because he continues to have exactly the same rights as before – namely, such interest in the assets and profits of the company as he is entitled to enjoy by virtue of the shares which he holds – and the value of the assets of the Company, and any loss of profits, is enhanced or restored by whatever value there may be in the right of action which the company has against the wrongdoer. But there is no basis for the application of that principle in circumstances in which the shareholder has suffered a loss which is distinct from that suffered by the company; in such a case the relevant question is whether the relationship between the alleged wrongdoer and the shareholder is such as to give rise to a duty on the one to avoid or prevent damage to the other.

 

I was referred to a decision of the Court of Appeal in New Zealand, Christiensen v Scott [1996] 1 NZLR 273, in which that Court allowed an appeal against a order striking out a claim against professional advisers brought by guarantors of a company’s liabilities. The Court held (i) that there was material on which a judge at trial could come to the view that the advisers owed a duty to the guarantors personally as well as to the company of which they were directors, and (ii) that the guarantors were not precluded, as a matter of law, from recovering the loss which they had suffered, including diminution in the value of their shares. The judgment of the Court includes the following passages, at pages 280 and 281:

 

“We consider, therefore, that it is certainly arguable that, where there is an independent duty owed to the plaintiff and a breach of that duty occurs, the resulting loss may be recovered by the plaintiff. The fact that the loss may also be suffered by the company does not mean that it is not also a personal loss to the individual… .

 

In circumstances of this kind the possibility that the company and the member may seek to hold the same party liable for the same loss may pose a difficulty. Double recovery, of course, cannot be permitted. The problem does not arise in this case, however, as the company has chosen to settle its claim… . It may well be, as was acknowledged … in the course of argument, that an allowance will need to be made for the amount already paid to the liquidator.

 

It is to be acknowledged, however, that the problem of double recovery may well arise in other cases. No doubt, such a possibility is most likely with smaller private companies where the interrelationship between the company, the directors and the shareholders may give rise to independent duties on the part of the professional advisers involved. But the situation where one defendant owes a duty to two persons who suffer a common loss is not unknown in the law, and it will need to be examined in this context. It may be found that there is no necessary reason why the company’s loss should take precedence over the loss of the individuals who are owed a separate duty of care. To meet the problem of double recovery in such circumstances it will be necessary to evolve principles to determine which party or parties will be able to seek or obtain recovery. A stay of one proceeding may be required. Judgment, with a stay of execution against one or other of the parties, may be in order. An obligation to account in whole or in part may be appropriate. The interests of creditors who may benefit if one party recovers and not the other may require consideration. As the problem of double recovery does not arise in this case, however, it is preferable to leave an examination of these issues to a case where that problem is squarely in point.

 

I am not satisfied that the principle identified in Prudential Assurance v Newman Industries (supra) has the effect, in the present case, that there is no serious issue of law to be tried.

 

Indeed, for the reasons explained in Christiensen (supra) it seems to me that, if Barings plc establishes liability on the facts, there will be complex issues to be decided in relation to damages. But, for the reasons given there, these are issues which are best decided at or after a trial.

 

I turn therefore to the question of forum conveniens. The principles have been set out by Lord Goff in Spiliada Maritime Corporation v Cansulex Ltd [1987] AC 460. The Court, in the exercise of its discretion to grant or to refuse leave to serve a writ out of the jurisdiction, in a case where one of the grounds for the grant of such leave under Order 11 rule 1(1) has been made out, must take account of the provision in rule 4(2) that:

 

“No such leave shall be granted unless it shall be made sufficiently to appear to the court that the case is a proper one for service out of the jurisdiction under this Order.”

 

It is for the party seeking leave to satisfy the Court that the English Court is the appropriate forum for the trial of his claim against the defendant, who, ex hypothesi, is not within the jurisdiction of that Court. In reaching a conclusion the Court must have regard to the interests of all the parties and the ends of justice.

 

The factors which must be weighed in the present case include the following:

 

(1) The ends of justice will be served if the claims of Barings against C&L and C&L(S) are tried together. So also if the claims of Barings plc against D&T and C&L(S) are tried together. The potential for different decisions by different Courts on the same underlying facts ought to be avoided if possible. This is, of course, the foundation for the assumption of jurisdiction under Ord 11 r 1(1) (c) on the ground of “necessary or proper party”. The factors which lead the Court to conclude that the foreign defendant is a proper party to the proceedings commenced in England are bound to point, although not to the exclusion of other factors, to the conclusion that England is the appropriate forum. In the present case C&L and D&T are already defendants to the proceedings in England. To join C&L(S) in these proceedings will achieve the objective of having all the claims of Barings plc tried together.

 

(2) The claims of Barings plc against D&T and C&L(S) could be tried together in Singapore. But the claims against C&L could not be tried there unless C&L were to submit to the jurisdiction of the Singapore Court, or that Court were to give leave to serve C&L out of that jurisdiction under the provisions in its own rules. I have no reason to doubt that service out of the Singapore jurisdiction could be effected on C&L, with the leave of the Singapore Court; but, equally, I have no means of knowing whether the grant of leave would be opposed by C&L or what view the Singapore Court would take on an application for leave. C&L have not appeared by counsel before me either to support or to resist the application of their associate to be excluded from the present action. I must assume that they do not actively seek trial in Singapore and that they are content (perhaps even anxious) that the claims against them should be tried separately from those against C&L(S).

 

(3) The ends of justice and, prima facie, the interests of the parties will be served if a defendant to proceedings in one jurisdiction is not also a defendant to a concurrent claim arising out of the same transactions brought by a different plaintiff in another jurisdiction. Proceedings have been commenced by BFS against D&T and C&L(S), as co-defendants, in Singapore. D&T has applied for a stay of those proceedings on the grounds of forum non conveniens. That application has yet to heard. C&L(S) has made no application for a stay; but, if it is to be a defendant to proceedings in the English Court, its expressed desire to be sued only in one jurisdiction might be expected to lead it to do so. I do not know what view the Court in Singapore will take on the question of stay; but, prima facie it must be likely that, if faced with applications by both D&T and C&L(S) the Court will deal with each in the same way. Again prima facie it must be likely that the Court in singapore will give weight to the need to avoid double litigation; so that, to that extent, it will give some weight to the decision of the English Court on the present application.

 

(4) The decision of the Singapore Court on the question of stay is likely to be affected by the attitude of BFS to the future conduct of the proceedings which it has commenced. BFS is in liquidation in Singapore. The proceedings are under the control of the liquidators, subject always to the directions of the Court. By far the most substantial claims in the liquidation of BFS are claims by Baring Group companies (BSL, BSLL and BSJ) arising out of the unauthorised trading by Mr Leeson which led to the collapse of the group in February 1995. Notwithstanding a sale on 8 March 1995 of assets formerly held by Baring Group companies to Internationale Nederlanden Groep NV (“ING”), those claims remain vested in the administrators of BSL -see the judgment of Rattee J in the action between the administrators and ING which was handed down on 31 July 1996. Accordingly, those assets are under the control of the plaintiffs in this action. They are by far the largest creditors in the liquidation of BFS. It must be expected that the liquidators of BFS will give weight to their views. They will urge the liquidators of BFS to consent to, or to support, the application of D&T to stay the proceedings in Singapore. They will also, as I understand the position, urge the liquidators of BFS to commence identical proceedings against D&T and C&L(S) in London.

 

(5) Taking the matters in (4) above into account, it seems to me likely, although by no means inevitable, that the present plaintiffs will succeed in their objective of having composite proceedings in London to which Barings plc, BSL and BSF are plaintiffs. C&L and D&T will be defendants to those composite proceedings. If C&L(S) are also joined as defendants to those proceedings they will not be at risk of being sued in respect of the same matters in Singapore.

 

I am satisfied that composite proceedings in London offer the best chance of achieving the two objectives which I regard as paramount, and which each of Barings plc, D&T and C&L(S) profess a wish to achieve, that is to say: (i) avoiding the risk that different courts will reach different conclusions on the same underlying facts and (ii) avoiding the risk that either D&T or C&L(S) will be sued in both London and Singapore in respect of the same transactions.

 

I have taken account of the fact that, if C&L(S) are sued in London they will be deprived of the evidential advantage provided by s 238 of the Singapore Companies Act (Cp 50 in the Laws of Singapore). The effect of that section is that the report of inspectors appointed the Minister under Pt IX of that Act is admissible as evidence of facts upon which the opinion of those inspectors are based. Inspectors appointed under the Act reported to the Minister on 6 September 1995. I have been taken through the relevant parts of that report. I accept that the provisions of s 238 might afford some evidential assistance to C&L(S) in proceedings in Singapore; although I suspect that the report would be a two edged sword in those proceedings. It is not without significance that the authors of the report are also the liquidators of BFS who are bringing the claim against C&L(S). I do not accept that, in practice, the absence of that assistance would cause any substantial prejudice to C&L(S)’s defence to proceedings in London. Most, if not all, of the relevant witnesses are based in London and, if not called by the plaintiffs, will be available on sub-poena. Such prejudice as there may be is outweighed by the advantages of trying all claims in a single action.

 

For the reasons which I have set out I accept that the English Court is the most appropriate forum for the trial of the claims made by Barings plc against C&L (S). Accordingly, I am satisfied that the order of 23 January 1996 should stand. I dismiss the application to set that order aside.

 

DISPOSITION:

Application dismissed