CL-2025-000062 - [2025] EWHC 1506 (Comm)

Dealing first with the initial procedural point – the supposed bar to adding a defendant against the claimant’s wishes, this has no force. Eraaya’s case was advanced by reference to: Pawley v Whitecross Dental Care Ltd and another[2021] EWCA Civ 1827 at [31] (Stuart-Smith LJ), qualifying what Coulson J held in Milton Keynes Council v Viridor[2016] EWHC 2764 (TCC), [2016] 6 Costs L.R 1041 to the effect that the Court had no power to join a defendant against the wishes of the claimant.

It is true that in that passage Stuart Smith LJ did say that:

“…in any normal claim for damages where the claimant has chosen to sue some but not all potential defendants and has advanced their claim against the chosen defendants on a basis that cannot be dismissed as fanciful …it is wrong in principle in such a case for the court to exercise the power to join a party as a defendant and to require the claimant to pursue a claim against the newly-joined party where the claimant opposes that joinder. The …principle is not limited to cases where the claimant would become potentially liable for the costs of the new defendant.”

However, what this illustrates is that there is no general principle that a claimant has a right to choose its defendants. The point being discussed here is one which arises when the claimant has the same claim against a potential variety of defendants. In those circumstances a claimant does have a right to choose against which of these defendants it will seek relief (leaving them then to work out the questions of contribution inter se). This however is not such a case. There is no claim against the Bondholders in respect of the confirmation sought. Any claim which Eraaya has against the Bondholders is a materially different claim; and in reality the centre of gravity of the dispute between Bondholders and Eraaya is the Bondholders’ claim against Eraaya. There is no authority that a claim of this nature cannot or should not be joined if it otherwise meets the requirements of the rule.

Indeed there is support for this approach in the case of in Shetty v Al Rushaid Petroleum Investment Company & Ors[2011] EWHC 1460 (Ch). In that case the existing defendants and a proposed new defendant applied under CPR 19.2(2)(b) for the new defendant to be added as a party and permitted to bring a counterclaim against the claimant, who opposed the application on the basis that it had no desire to make a claim against that defendant. The Court granted the application, holding that: (1) the fact that the claimant has chosen not to sue the new defendant itself is not a barrier to joinder, as CPR 19.2(2)(b) is “not limited to the addition only of a defendant against whom the claimant would want to make a claim or whose joinder is needed to complete the claimant’s cause of action”;

As to merits, this point of course has essentially been dealt with in connection with the injunction application. The Bondholders appear to have an arguable proprietary claim - even if there is likely to need to be careful thought given to its exact formulation. And in addition, it is clear that the Bondholders have a claim in damages which is arguable. Thus there is plainly an arguable claim by the Bondholders.

Then as to the discretion and the question of desirability I conclude that the balance of the relevant considerations plainly falls in favour of joinder.

There is sufficient cross over between the two claims that joinder of the Bondholders can “assist the Court” to resolve the issues in Eraaya’s claim. The principal matter in issue in the Proceedings is whether Eraaya is entitled to specific performance/a final mandatory injunction requiring Elara to provide the confirmation, which would lead to GLAS paying the Unutilised Proceeds to Eraaya. The principal defence to the claim appears to be that on the true construction of the Second Settlement Agency Agreement it is not required to give the Confirmation under Clause 3.4 until either the Collateral has been granted or the Bondholders give their consent. While there are plainly issues as to the admissible evidence on this topic there are aspects of the Bondholders’ evidence as to the reasons why Clause 3.4 was amended which will form the relevant factual matrix for that question.

I do not agree that the nature of the two claims means that case management considerations militate against joinder. In particular, it is not (as Eraaya submits) the case where (borrowing a phrase from Gaia River SA v Behike Ltd and another[2020] EWHC 2981 (Comm)) joinder would “introduce unnecessary complexity into the proceedings”. It is perfectly permissible to join a defendant who may bring counterclaims that are more fact heavy than the original claim. In many cases – as here – the more fact heavy cross claim may in fact add necessary material to the more narrowly formulated claim. This is not a case like Gaia. There the Court was understandably concerned about “introducing considerable potential complexity into proceedings between two existing parties by joining two other parties who may have extensive disputes between themselves”. Here the Bondholders’ claims are a logical part of the main claim – in that the Bondholders are the real parties with an interest – Elara being something of a “bit part player”. This is a necessary concomitant of the fact that there is an arguable case that the Bondholders hold (or will hold) a proprietary right to all or most of the Unutilised Proceeds. Thus, to decide whether to grant a final injunction, the Court necessarily will need to determine whether the Bondholders currently (or will in future) hold a proprietary right to all or most of those funds. The proprietary issue between Eraaya and the Bondholders is inextricably connected with the key issue in the Proceedings.

In addition:

This is not a case where adding a defendant will (as Eraaya submits) introduce unnecessary complication into the proceedings. What it will do is ensure that the judge hearing the dispute has all relevant material before them, and that they are not deciding significant issues based on a partial evidential deck, (or with one hand tied behind their back). While Eraaya’s evidence suggested that its claim could be determined “with limited, if any, factual evidence and disclosure”, even the limited scrutiny possible at the interlocutory stage makes it clear that to do so would leave the judge with important questions incapable of being answered.

Overall therefore joining the Bondholders makes obvious sense. It will: (1) save expense (as it will avoid a multiplicity of proceedings dealing with the same or similar issues – with the inevitable risk of inconsistent findings); (2) deal with the issues in a proportionate way, given the large sum of money involved and the interlocking nature of the matters in issue and the underlying subject matter; (3) ensure that all matters in issue are dealt with expeditiously; and (4) allot an appropriate share of the Court’s resources to these issues (as determining these matters in the context of one proceeding will save valuable court time).

Finally for completeness Eraaya asserts that the Bondholders’ application should be dismissed solely because they have failed to produce a draft pleading. However CPR does not require an applicant for joinder to produce a draft pleading, and Eraaya has cited no authority in support of such a proposition. In fact, if an application to add a party is contested and the parties file evidence in relation to that application, the Court may consider the matter more analogous to summary judgment and determine the application based on the evidence: PeCe Beheer BV v Alevere Ltd[2016] EWHC 434 (IPEC) [38]-[44]; Credico Marketing Ltd v Lambert[2021] EWHC 204 (QB) [33]-[37]. In such cases, which include this one, no pleading is required.

The tests under CPR 19.2(2) are met. While it may not be right that, as they submitted, the Bondholders are positively entitled to an appropriate joinder order, I consider that it is clearly appropriate to exercise the discretion to do so, subject only to the question of abuse of process which is dependent upon the conclusions on collateral use.