Canada Trust Company v Stolzenberg (No 2)

JurisdictionUK Non-devolved
JudgeLORD STEYN,LORD HOFFMANN,LORD COOKE OF THORNDON,LORD HOPE OF CRAIGHEAD,LORD HOBHOUSE OF WOODBOROUGH
Judgment Date12 October 2000
Judgment citation (vLex)[2000] UKHL J1012-1
CourtHouse of Lords
Date12 October 2000
Canada Trust Company

(Acting in its Capacity as Trustee of the Chrysler Canada Limited's Benefit Plan, the Chrysler Canada Limited Master Trust Fund, the Chrysler Canada Limited Non-Canadian Master Trust Fund and the Holme Foundry Division Master Trust Fund) and Others

(Respondent)
and
Stolzenberg and Gambazzi

And Others

(Appellants)

[2000] UKHL J1012-1

Lord Steyn

Lord Hoffmann

Lord Cooke of Thorndon

Lord Hope of Craighead

Lord Hobhouse of Wood-borough

HOUSE OF LORDS

LORD STEYN

My Lords,

1

This appeal is concerned with the interpretation and application of provisions of the Lugano Convention, which for present purposes is in identical terms to the Brussels Convention. English texts of these Conventions are set out as Schedules to the Civil Jurisdiction and Judgments Act 1982 as amended. The principal objective of the earlier Convention, the Brussels Convention, was to facilitate the enforcement of judgments between Members States of the European Economic Community. The economic context was the aim of inspiring business confidence and encouraging the right conditions for trade. This Convention entered into force in the United Kingdom in 1978. The purpose of the Lugano Convention was to promote the same purpose between Members States of the European Communities and Member States of the European Free Trade Association, viz Austria, Finland, Iceland, Norway, Sweden and Switzerland. It entered into force in the United Kingdom in 1992. A major difference between the two Conventions is that the European Court of Justice has no jurisdiction to rule on questions of interpretation under the Lugano Convention. Subject to this qualification the differences are minor. Together the two Conventions not only facilitate the enforcement of judgments but provide a sophisticated system of direct jurisdictional rules to which courts in the countries concerned must adhere. It involves a system of required and prohibited jurisdiction of courts.

2

Under both Conventions the primary ground of jurisdiction of those domiciled in the Contracting State is the domicile of the defendant. In addition there are special grounds of jurisdiction, in matters in respect of contract, delict (tort) and quasi-delict, as well as special provisions for the joinder of defendants, which may displace the general principle. There are also special provisions dealing with jurisdiction in matters relating to insurance and consumer contracts. Finally, there are tie-break rules dealing with the position where proceedings are brought involving the same cause of action between the same parties, or related actions, in the courts of different contracting states.

3

The present case is concerned with Articles 2 and 6 of the Lugano Convention. Article 2 states the general principle in the following terms:

"Subject to the provisions of this Convention, persons domiciled in a Contracting State shall, whatever their nationality, be sued in the courts of that State.

4

Persons who are not nationals of the State in which they are domiciled shall be governed by the rules of jurisdiction applicable to nationals of that State."

5

Article 6 contains a special rule of jurisdiction. It provides, so far as material, as follows:

"A person domiciled in a Contracting State may also be sued:

6

1.

where he is one of a number of defendants, in the courts for the place where any one of them is domiciled…."

7

The principal question of law before the House is whether the concept "sued" in Articles 2 and 6, when applied to legal proceedings taken in England, means the date of issue of the writ (as the plaintiff respondents contend) or the date of service of the writ (as the appellants contend). At first instance the judge decided this question against the appellants. They appealed. By a majority (Nourse L.J. and Waller L.JJ.) the Court of Appeal ruled that the date of issue of the writ is the critical date: Canada Trust Co. v. Stolzenberg (No. 2) [1998] 1 W.L.R. 547. The leading judgment was given by Waller L.J. In a dissenting judgment Pill L.J. came to the opposite conclusion on this point.

8

The forensic story in a nutshell

9

On 1 August 1996 the plaintiffs, Daimler-Chrysler Canada (formerly called Chrysler Canada Ltd.) and the trustees of certain pension and other benefit funds established by Daimler-Chrysler Canada Ltd. for its employees, issued a writ against Wolfgang Otto Stolzenberg as first defendant and 36 other defendants. Mr. Stolzenberg was the President and Chief Executive of the Castor Group Companies. The plaintiffs pleaded case was that Mr. Stolzenberg was principally responsible with others for inducing the plaintiffs by fraud to make investments amounting to some 240 million Canadian dollars (equivalent to about £120m.) in a group of companies called the Castor Group. All those companies are now insolvent. It is alleged that some of the defendants were implicated in the fraud perpetrated by Mr. Stolzenberg and other defendants have been joined in respect of claims tracing assets.

10

Mr. Stolzenberg was known to have owned and resided in a house in London until August 1996. He then sold that house. He moved to another house in London. At that stage he was domiciled in England but on a date which is not known he departed from England to reside in Germany. His domicilary position in the period immediately after the issue of the writ was therefore uncertain. The plaintiffs asserted that at the time of the issue of the writ, which they contended was the relevant date, Mr. Stolzenberg was an anchor defendant entitling them to sue other defendants in England.

11

The appeal before the House is only concerned with six defendants. The other defendants are no longer being actively pursued, have submitted to the jurisdiction or have had judgments entered against them. The six defendants, who are the appellants on the present appeal, fall into two categories, namely:

12

(1)

13

The second defendant (a Swiss lawyer) and the sixteenth defendant (a Swiss company) are domiciled in Switzerland. The jurisdiction over them of the English courts is dependent on the proper construction of Article 2 and Article 6.1 of the Lugano Convention. I will call these defendants "the Convention appellants."

14

(2)

15

The fifth, seventh, tenth and fifteenth defendants (respectively entities based in Panama, Liechtenstein and Netherlands Antilles) are domiciled in non-Convention countries. The jurisdiction over them of the English courts is governed by R.S.C., Ord. 11, r. 1(1)(c). I will call them "the non-Convention appellants."

16

After the issue of the writ Mr. Stolzenberg took active steps to avoid being served in England. On 11 March 1997 there was purported service of the writ on Mr. Stolzenberg by post and by insertion through a letter box. On the same day the present appellants were served with the writ. On 21 March 1997 Mr. Stolzenberg issued proceedings in Germany for declarations that he was not liable. On 11 April 1997 the appellants challenged the jurisdiction of the English court over them by issuing a notice of motion under R.S.C., Ord.12, r. 8.

17

The decision of Rattee J.

18

The case came before Rattee J. Three principal legal issues were debated before the judge. The first was whether a test of more than a good arguable case had to be applied in deciding the question whether Mr. Stolzenberg was domiciled in England at the critical time. The second was whether the domicile of Mr. Stolzenberg had to be established on the date of the issue of the writ or on the date of service of the writ on the appellants, the latter being the contention advanced by the appellants. Thirdly, the appellants contended that Article 6(1) could only be relied on if Mr. Stolzenberg had already been served before the issue or service of the proceedings on the co-defendants. In an unreported judgment the judge ruled against the appellants on all three questions. Central to his judgment was the conclusion that under Articles 2 and 6 of the Lugano Convention "sued" in relation to England means the time of the issue of the writ. The judge observed that Mr. Stolzenberg had not been properly served with the writ. On 3 June 1997 he made an order for substituted service on Mr. Stolzenberg. On 13 June 1997 the judge declared that steps taken by the plaintiffs pursuant to the order for substituted service constituted good and sufficient service of the writ. The challenge to jurisdiction before the judge had failed. On 5 February 1998 the German Court stayed the proceedings to await the outcome of the challenge to English jurisdiction. On 24 April 1998 final judgment was entered against Mr. Stolzenberg in England.

19

The Court of Appeal judgments

20

The appellants appealed to the Court of Appeal. On 28 to 30 July 1997 the Court of Appeal heard the appeal against the issues of principle decided by Rattee J. In its judgment delivered on 29 October 1997 the Court of Appeal dealt with these matters: [1998] 1 W.L.R. 547. The Court of Appeal ruled unanimously that the standard of proof which the plaintiffs were required to satisfy in order to establish jurisdiction was that of a good arguable case and not the civil standard of a balance of probabilities. By a majority the Court of Appeal ruled that the date upon which Mr. Stolzenberg was required to have had an English domicile was the date of issue of the writ and not the date of service upon him. On this issue Pill L.J. dissented. The majority ruled further that it was not necessary under Article 6 of the Convention for Mr. Stolzenberg to have been served before service upon the Convention defendants. Pill L.J. did not address this issue. In the light of these rulings the Court of Appeal dismissed the appellants' appeal. The Court of Appeal found it unnecessary to deal with a Respondents' Notice which sought affirmation...

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