This week's case law
AB Bank v Abu Dhabi Commercial Bank: Judge rules that court does not have jurisdiction to permit service out of the jurisdiction of an application for a Norwich Pharmacal Order
A Bangladeshi bank claimed that a Singaporean company had committed a fraud on it (and that this claim was connected to England because the parties had agreed that English law and jurisdiction would apply to their agreement). The claimant alleged that a Dubai bank had been mixed up in the fraud and sought a Norwich Pharmacal order against it from the English courts in order to obtain more information about the alleged fraud. The claimant sought to rely on three gateways under PD6B:
- A claim is made for an interim remedy under section 25(1) of the Civil Jurisdiction and Judgments Act 1982 (PD 6B para 3.1(5)). This is the first time that the English courts have had to consider whether they have jurisdiction to allow service out of the jurisdiction of an application for a Norwich Pharmacal order in reliance on this gateway. Teare J noted that the object of the gateway is to aid foreign proceedings. He held that the gateway cannot apply to proceedings within the jurisdiction. Ordinarily, if the proceedings were taking place here, service out of an interim application would not be required because the defendant is here or because permission had been given to serve the substantive proceedings out of the jurisdiction. An application for a Norwich Pharmacal order is not "interim" within the meaning of para 3.1(5), because the third party from whom information is sought will not be the defendant to the substantive proceedings. Norwich Pharmacal relief is the final relief being sought against that third party.
- A claim is made for an injunction ordering the defendant to do an act within the jurisdiction (PD 6B para 3.1(2)). The judge held this gateway did not apply. Although the bank could comply with the order in England, the injunction would not require that: it would be entitled to take steps to procure the requested information in the UAE.
- A claim is made against a person on whom the claim form will be served and the claimant wishes to serve the claim form on another person who is a necessary or proper party to that claim (PD 6B para 3.1(3)). This gateway did not apply either. The claimant did not wish to serve a claim form on the bank and nor is the bank jointly liable for any fraud.
The judge went on to hold that, even if he was wrong about the gateways, he would have exercised his discretion to decline permission to serve out. That was because there was a risk that compliance with the Norwich Pharmacal order might breach UAE law and because there was a means by which the information could be provided in the UAE (by seeking the consent of the Central Bank).
One further issue in the case was whether service of the application could, alternatively, be made at the UK office of the bank. Section 1139(2)(b) of the Companies Act 2005 provides that service may be made by leaving or posting the claim form to "any place of business of the company in the UK" (this wording is repeated in CPR r6.9(2)para 7). Teare J accepted that such an argument could be made (the available evidence suggested that the UK office had no business of its own and it's only activity was marketing for the Dubai bank). However, he concluded that he did not have sufficient evidence to reach a decision on this issue. He relied on Cape Industries v Adams , which he said suggested that "information about other matters concerning the relationship between the two companies must be considered before a decision can be reached as to whether ADCB Dubai has a place of business within the jurisdiction".
COMMENT: In light of this decision, a suggested approach for a claimant who wishes to seek a Norwich Pharmacal order against a foreign third party might be to seek an order requiring the third party to provide the requested information to solicitors in London (thus bringing the application within the gateway of para 3.1(2)). Whether the court would acceded to that request remains to be seen, though.
Golden Endurance v RMA Watanya: Whether claimant had submitted to foreign proceedings
Insurers brought a subrogated claim against the Master of a vessel in Morocco. Three months later the vessel owner ("the claimant") commenced proceedings in England seeking an anti-suit injunction. The claimant then commenced arbitration proceedings in London against the insurers.
When insurers were awarded damages in Morocco, the claimant asked the English court to rule that the judgment should not be recognised here. The insurers argued that the judgment should be recognised here as the claimant had voluntarily submitted to the jurisdiction of the Moroccan courts by asking them to dismiss or stay the proceedings in favour of London arbitration.
The claimant sought to rely on section 33 of the Civil Jurisdiction and Judgments Act 1982 which provides that a person against whom judgment has been given shall not be regarded as having submitted to the jurisdiction of the court "by reason only of the fact the he appeared ...in the proceedings...to ask the court to dismiss or stay the proceedings on the ground the dispute in question should be submitted to arbitration...."
However, the insurers raised the following objections:
- The claimant's defence in the
Moroccan proceedings that the dispute should be arbitrated was a
"procedural defence" rather than a jurisdictional
challenge. Phillips J rejected that argument, finding that, as a
matter of Moroccan law, the claimant had had no other option to
challenge the proceedings:
"Throughout that course the claimant's objection based on the alleged incorporation of arbitration clauses was its primary contention, and was never abandoned". Furthermore, the question of whether a party has submitted to a foreign court is to be inferred from all the facts, and the court has no discretion to determine this issue. Although there is textbook commentary suggesting that a jurisdictional challenge must be "rational", the mere fact that a challenge may be obviously wrong, or even irrational, does not in itself justify a conclusion that the party has submitted (instead, an extreme case would be needed ie where a challenge is "so obviously absurd"). Nor is there any support for the contention "that a party may be held to have submitted in a foreign jurisdiction because of actions in this jurisdiction".
- It was also argued that the claimant had adopted an inconsistent stance in previously commencing English proceedings without arguing that the dispute should be referred to arbitration. This abuse of process argument was also rejected by the judge: "Whilst there is a degree of tension between the claimant's stance in these proceedings and its position in the Morocco proceedings, it is the type of situation which can arise where disputes are pursued in parallel proceedings in different jurisdictions and governed by different laws. It is certainly not the type of blatant inconsistency which would cause the court to prevent a party from relying on the position it has undoubtedly and properly adopted in foreign proceedings".
Accordingly, the Moroccan judgment was not entitled to recognition in England.
Blue Holdings v NCA: Court of Appeal considers whether letter of request mentioned in a witness statement can be inspected
The National Crime Agency made an application to the court at the request of the US Department of Justice to obtain a prohibition order against the appellants. This request was referred to in a witness statement and the appellants sought inspection of the request on the basis that it had been "mentioned in a witness statement" (see CPR r31.14). At first instance, inspection was refused and the Court of Appeal has now held as follows:
- The request had been "mentioned" in the witness statement. It could not be said that the witness statement had done no more than describe a transaction from which the existence of a document could be inferred.
- Although a party should ordinarily have the right to inspect a document mentioned in a witness statement, that right is not unqualified: "it is instead subject to CPR rules based limits", such as proportionality. Confidentiality is a relevant factor which can be taken into account. However, the judge was wrong to conclude that there is a free-standing "necessity" test: it is just a relevant factor whether inspection is "necessary to dispose fairly" of the case.
- The central issue in this case was the balance to be struck between the appellants' right to inspect and the NCA/DOJ's claim to confidentiality of state to state communications. The Court of Appeal concluded that inspection ought to be permitted. There is no inference that letters of request should not be disclosable. Although they are confidential, assistance is being sought by the court and so the matter has moved "beyond a communication between the executive branches of the friendly foreign state and of the UK". The Court of Appeal concluded that: "it seems to me that any party requesting this Court's assistance, could reasonably be taken to accept that it must abide by the procedural regime of the Court. A foreign Central Authority is not in any different position... Absent good reason for doing so, invoking the Court's jurisdiction but declining to make available the materials necessary for establishing the claim advanced is neither an attractive nor a tenable position. This can come as no surprise; ... the Requesting Party may have to choose between giving disclosure or abandoning the Request".
However, the Court of Appeal agreed that that a redacted version of the request should be provided.
Walsh v Hall: Drafting a consent order after a settlement agreement
The parties entered into a settlement agreement which provided that the defendants would pay a certain sum within 28 days of service of the consent order (to be prepared), in return for the claimants dismissing the proceedings which they had brought against the defendant. The parties were then unable to agree the terms of the draft consent order: the defendants were not prepared to agree to an order requiring payment within the 28 day deadline. They argued that dismissal of the claims was not conditional on payment of that money, and indeed the money was to paid only after service of the order dismissing the claims. Accordingly, their position was that, while the court order can contain a recital which records that matters have been compromised pursuant to the agreement and that the agreement be attached to the order, they were not prepared to agree to an order requiring payment since that was not what was agreed.
The judge rejected that argument. He refused the defendants' application for a strike out on the basis that the issue should be decided at a hearing between the parties. He referred to textbook commentary that, where proceedings are ongoing and the claimant wishes to allege that a settlement has been reached, he can seek a determination of the point as a preliminary issue (see Foskett on Compromise, para 11-03). The judge concluded that a reasonable person, with the background knowledge of the parties, would have concluded that the settlement agreement provided that the consent order should contain a paragraph obliging the defendants to make the payment.
The agreement had referred to the drafting of a consent order, and the judge commented that "I emphasise the word "order". It does not say that the parties will present to the court an order that gives effect to only part of the Agreement, nor does it say that the reference to £275,000 will be contained in a recital to the order. It says in effect that the terms of the Agreement shall be contained in a consent court order. It follows that since the Defendants agreed to pay £275,000 that should be in the order".
Lifestyles Equities v Sportsdirect.com: Court decides whether a claim is a money claim/correct court fee
Recent changes to the court fee structure has meant that the fee for a claim to "recover a sum of money" exceeding £200,000 is £10,000, whereas the fee for a "non-money claim" is £480. In this case, the issue was whether the claimants had paid the appropriate court fee when they issued their claim.
In Page v Hewetts (see Weekly Update 34/13) Hildyard J held that a claim for an account of profits was a non-money claim, since it was a self-standing claim (unlike an assessment of damages, which is necessarily ancillary to a claim for damages).
Here, the claimants (who had paid the fee for a non-money claim) sought both an account of profits and an inquiry as to damages (for inducing a breach of contract). Master Clark held that "the fact that an inquiry requires an assessment by the court as the amount of the damages is not sufficient for it to be a non-money claim", and accordingly the wrong court fee had been paid.
The master also rejected an argument that an order for an account is a money claim because it must include an order for payment of sums found due on the account. Agreeing with Hildyard J, he held that "an account is not simply an assessment of loss or a claim for money. It is a process by which the court investigates whether the defendant has in fact made any profits from his wrongdoing to which the claimant is entitled. The result of the process may be a finding that the defendant holds no profits and no monies are payable".
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