Brinkibon Ltd v Stahag Stahl und Stahlwarenhandelgesellschaft m.b.H.
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE STEPHENSON |
| Judgment Date | 12 June 1980 |
| Judgment citation (vLex) | [1980] EWCA Civ J0612-1 |
| Docket Number | 1979 B 5887 |
| Court | Court of Appeal (Civil Division) |
| Date | 12 June 1980 |
[1980] EWCA Civ J0612-1
In The Supreme Court of Judicature
Court of Appeal
On Appeal from the High Court of Justice
Queen's Bench Division
Commercial Court
Lord Justice Stephenson
and
Lord Justice Templleman
MR. N. PHILLIPS, QC. and MR. M. WHITE (instructed by Messrs. Linklaters & Paines (HIT) appeared on behalf of the Appellants (Defendants).
MR. A. THOMPSON, QC. and MR. A. McGREGOR (instructed by Messrs. Heald and Nickinson) appeared on behalf of the Respondents (Plaintiffs).
This is an appeal from an order of Mr. Justice Mocatta of 11th March 1980 dismissing the defendants' application to set aside an order of Mr. Justice Goff of 30th November 1979 giving the plaintiffs leave to issue a writ and serve notice of it upon the defendants in Austria.
Both parties deal in steel, the plaintiffs in England acting for a Swiss company, the defendants incorporated in Austria. The claim indorsed on the writ is for damages for breach of a contract whereby:
"3. The Defendants agreed to sell to the Plaintiffs and the Plaintiffs agreed to purchase from the Defendants 20,000 metric tonnes of mild steel bars for a total consideration of US.$7,060,000. C & Liner out of Alexandria. Delivery was to be by five roughly equal shipments in June, July, August, September and October 1979. Payment was to be in Vienna by irrevocable letter of credit in the sum of US $1,412,000 revolving four further times and payable against (i) commercial invoice (ii) full set of clean bills of lading and (iii) certificate of origin and (iv) black-list certificates and (v) works certificate showing steel manufactured to BSS 4449/1969. Further the Defendants were to open a performance bond for three per cent of the contract price, namely US. $ 211,800 within seven days of receipt of the letter of credit."
Particulars of the contract alleged, its short history and the alleged breach of or breaches of it are set out in the following paragraphs:
"4. The aforesaid terms and conditions of the contract are contained in and evidenced by a telex from the Plaintiffs to the Defendants dated 26th April 1979 offering to purchase on those terms and an acceptance by the Defendants to sell to the Plaintiffs on those terms by telex dated 3rd May 1979.
5. Pursuant to the aforesaid agreement and in performance thereof the Plaintiffs caused to be opened through the Bank of Credit and Commerce InternationalS. A. 100 Leadenhall Street, London E. C.3 a revolving irrevocable letter of credit in the sum of US. $1,412,000 payable against the aforesaid documents to the Defendants in Vienna through their Bank the Zentralsparkasse Der Gemeinde on 4th May 1979.
6. By telex dated 9th May 1979 the Defendants wrongly alleged that the letter of credit was unworkable and that despite requests by the Plaintiffs by telex declined to state how or why or in what way the said letter of credit was unworkable, and by further telex dated 21st May 1979 the Defendants purported to withdraw from the contract with effect from that date.
7. In breach of the aforesaid agreement the Defendants have not opened a performance bond and have delivered no steel.
8. By reason of the Defendants aforesaid breach of the said agreement the Plaintiffs have suffered loss and damage, namely the difference between the contract price and the market price of 4,000 mild steel bars in each of the months of June, July, August, September and October 1979.
AND the Plaintiffs claim damages for breach of contract."
The plaintiffs' ex parte application to Mr. Justice Goff under RSC 0. 11 r.4 was supported by an affidavit of the defendants1 solicitor alleging that the contract was made in England by exchange of the two telex messages of 26th April and 3rd May, although he was instructed that there were also some telephone conversations, and that the telex message of 21st May constituted a repudiation and breach of the contract which occurred in England where the plaintiffs received it. The first two telexes, but not the third, were exhibited to the affidavit and on that material Mr. Justice Goff gave leave.
On 7th February 1980 the defendants entered a conditional appearance, having applied on 6th February not under 0. 12 r.8 (as I think they should have done) but under0. 2 r.2, to set aside the writ and the service of notice of it on the ground that the subject matter of the action did not fall within 0. 11 r.1 and/or was not suitable for the court to exercise its discretion under 0. 11 r.4(2). That application was supported by an affirmation from the defendants' solicitor alleging that the first two telexes dealt solely with the terms of the letter of credit; that she was instructed by the defendants Austrian lawyer "that the contract of sale was in fact concluded in the course of telephone conversations between Mr. Shaban of the plaintiffs and Mr. Racz of the defendants", in the course of which the main terms of the contract and the letter of credit were worked out and agreed: and that the two telexes merely dealt with "refining the details of the letter of credit". The telex of 3rd May was not an acceptance of an offer by the telex of 26th April but a counter-offer with important differences. The letter, of credit was advised to the defendants by a telex of 7th May 1979, which she exhibited, and was payable at an Austrian bank. The sending of the telex of 21st May amounted to a breach of contract in Austria.
The affirmation ended with a submission that the case was not a proper case for the exercise of the court's discretion to grant leave even if there was jurisdiction to grant it. That was succinctly rejected by Mr. Justice Mocatta and though raised again in the defendants notice of appeal to this court was not pursued by Mr. Phillips for the defendants and calls for no further comments.
In his judgment, of which we have an approved note,Mr. Justice Mocatta held also that the contract was made in England but the repudiation and breach occurred in Austria. He accordingly gave leave in effect under 0. 11 r.1(1)(f), but not under r.1(1)(g). Both parties appeal, the defendants against the grant of leave on his finding that the contract was made in England, the plaintiffs against his refusal of leave on his finding that the breach of contract was committed in Austria.
I have not found the case any easier than did Mr. Justice Mocatta. In the hope of making it easier we allowed Mr. Phillips to adduce the evidence of further telexes including the telex of 21st May which we are told was in fact before the judge, though not exhibited to any affidavit. Those telexes clarified some obscurities but did not resolve all difficulties. Those difficulties arise not, in my opinion, from the rules and their meaning but from the facts, or the lack of them, and the application of the rules to them.
0. 11 r.1(1) provides:
"…… service of a writ or notice of a writ out of the jurisdiction is permissible with the leave of the court in the following cases, that is to say:
(f) if the action begun by the writ is brought against a defendant…… to recover damages or obtain relief in respect of a contract…. which -
(i) was made within the jurisdiction……
(g) if the action begun by the writ is brought against a defendant in respect of a breach committed within the jurisdiction of a contract made within or out of the jurisdiction, and irrespective of the fact, if such be the case, that the breach was preceded or accompanied by a breach committed out of the jurisdiction that rendered impossible the performance of so much of the contract as ought to have been performed within the jurisdiction …."
Rule 1 has to be read with rule 4 which provides:
"(1) An application for the grant of leave under Rule 1 or 2 must be supported by an affidavit stating the grounds on which the application is made and that, in the deponent's belief, the plaintiff has a good cause of action, and showing in what place or country the defendant is, or probably may be found.
(2) 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."
We have been taken, as I think Mr. Justice Mocatta was, through the speeches of their Lordships in Vitkovice Horni A Hutni Tezirstvo v. Korner 1951 AC 869 and to a sentence which Mr. Justice Mocatta quoted from the judgment of Mr. Justice Lloyd in Atlantic Underwriting Agencies Limited v. Milano 1979 2 LLR 240, 245. For my part I would not if I could draw distinctions between what is necessary to make sufficient merits appear and what is necessary to make the place where a contract is made or broken sufficiently appear. Nor between the 'good arguable case which Lords Simonds and Normand accepted in Korner's case, the 'strong case for argument or 'good case for argument which Lord Radcliffe there adopted, and 'cogent evidence pointing to a strong probability' which Lord Tucker there preferred. All those four Lords of Appeal were putting in different language a requirement somewhere between a prima facie case resting on an assertion or little more than an assertion in an affidavit and a case which satisfied the court that it would be proved at the trial. Such a requirement is easily if not necessarily derived from the language and subject matter of Order 11, which renders permissble in certain specified cases an encroachment on the jurisdiction ofother states which they do not reciprocate. This judge would have been very familiar with these considerations and would not lightly have affirmed Mr. Justice Goff's order.
Was he then right in exercising his discretion to hold "although not without some doubt", as he said, that it had been "made sufficiently to appear"...
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