Gresham Legal successfully applies for stay of fraud claim

Published on November 1, 2021

Gresham Legal successfully applied for a stay of proceedings against the last remaining defendant in a fraud claim on the grounds that Thailand was the more appropriate forum to determine the dispute despite proceedings being on foot since 2016 and the application requiring an extension of time of almost five years.

The Claimant, Apollo Ventures Co. Ltd (“Apollo”), is a Thai company in which the Defendant, Mr Manchanda (a Thai-resident), was a director and substantial shareholder. It is alleged that Mr Manchanda, in breach of his duties as a director, caused Apollo to enter into loans of £4.4m with a Thai businessman secured on a commercial property it owned. The loan proceeds were said not to have been paid for the benefit of Apollo, but were paid to Mr Manchanda and through him to members of his family (and to Companies they owned), who were said to be liable as constructive trustees and who were also sued by Apollo (“the Other Defendants”).

Gresham Legal initially acted only for the Other Defendants, four of whom were resident or incorporated in England and had been ‘anchor’ defendants for the founding of jurisdiction against Mr Manchanda (“the English Defendants”).

Apollo had commenced proceedings in May 2016 when it also obtained a worldwide freezing order against all of the defendants. Jurisdiction was disputed at the outset but the application to challenge jurisdiction failed because, although there were strong connecting factors with Thailand, these were outweighed by the fact that the claims would continue as of right against the English Defendants.

The claim did not materially progress for several years. All that happened (apart from some occasional without prejudice discussions) was that default judgments had been wrongly entered and then set aside, and the pleadings had been amended once.

In May 2020, Gresham Legal took over representation of the Other Defendants. A security for costs application was made at the costs and case management conference which took place in July 2020. It was opposed by Apollo, primarily on the basis that any order for security would stifle its claim. The application was successful and Apollo was ordered to pay £500,000 by way of security (Apollo Ventures Co Ltd v Manchanda & Ors [2020] EWHC 2206 (Comm)). Apollo failed to pay and in January 2021 (after several further contested applications in which it sought further time) the claim against the Other Defendants was struck-out; the WFO as against them dismissed; and Apollo was ordered to pay their costs of the proceedings, including an interim payment on account of £200,000.

At this point, Mr Manchanda, now the sole remaining defendant, instructed Gresham Legal. In May 2021, an application was made for an order that the court should not exercise its jurisdiction and that the proceedings should be stayed pursuant to CPR Part 11. It was submitted that following the claims being struck out against the Other Defendants, it was clear that Thailand was the more appropriate forum for the trial of this action.

Sir Nigel Teare (sitting as a Judge of the High Court) first had to decide whether to grant a significant retrospective extension of time. Pursuant to CPR 11(4), applications to challenge jurisdiction must be made within 14 days of filing an acknowledgement of service (28 days in the Commercial Court). In considering the extension, the Denton principles were required to be applied. It was found that the breach of the CPR was both serious and significant and that there was no good reason for delay (as regards the period between the claim against the Other Defendants being struck-out and the issue of the application).

However, considering ‘all the circumstances of the case’, it was held to be appropriate to grant the extension. In doing so, emphasis was placed on the existence of parallel proceedings in Thailand; the fact that proceedings in England had not progressed substantially and would not be ready for trial for some time; and the fact that although the Apollo had incurred significant costs (over £750,000) since the outset of the proceedings which would be ‘sunk’ if the claim was to be stayed, that would be its own fault.

This was a novel application, but the real issue was whether it was too late for Mr Manchanda to challenge jurisdiction. When considering the fact that there was no reported case where a long extension of time had been granted for an application to challenge jurisdiction where the defendant had submitted to that jurisdiction, the Judge observed that: [“i]f exceptional circumstances are required to justify an extension where there has been a submission to the jurisdiction then the dismissal of the proceedings against the other Defendants, where the existence of such proceedings was a reason for keeping the claim against the Defendant in this jurisdiction, provides such circumstances.”

Having granted the extension, a stay was ordered as Thailand was “clearly and distinctly” the more appropriate forum. This was a claim by a Thai company against a Thai-resident former director concerning an alleged fraudulent loan procured from another Thai resident secured on a commercial property in Thailand, involving Thai law issues.

Apollo Ventures Co. Ltd v Manchanda [2021] EWHC 3210 (Comm)





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