Catalyst Investment Group Ltd v Lewinsohn and Others
| Jurisdiction | England & Wales |
| Judge | The Honourable Mr Justice Barling |
| Judgment Date | 16 November 2009 |
| Neutral Citation | [2009] EWHC 1964 (Ch),[2009] EWHC 3501 (Ch) |
| Docket Number | Case No: HC08C03158 HC08C03618,Case No: HC08CO3158 Claim No: HC08C03618 |
| Court | Chancery Division |
| Date | 16 November 2009 |
[2009] EWHC 1964 (Ch)
The Honourable Mr Justice Barling
Case No: HC08C03158
HC08C03241
HC08C03618
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Anthony De Garr Robinson QC with Camilla Bingham (instructed by Forsters LLP) for the Claimants of HC08C03158 & HC08C03241
David Wolfson QC with Henry Forbes Smith (instructed by Fulbright & Jworski International LLP) for the Claimants of HC08C03618
David Phillips QC with Hefin Rees (instructed by Mark Taylor & Co) for the Defendants in all actions
Hearing dates: 19—22 May 2009
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
THE HON MR JUSTICE BARLING
Introduction
There are before me five applications in three separate claims. One of the applications, which is not opposed, is for joinder of additional claimants in one of the claims, pursuant to CPR Rule 19.2(2). The remaining four applications are contentious. I heard them over four days, with an additional day for reading. Each is a Part 11 application seeking, in effect, to stay the relevant claim. At the end of the hearing Mr de Garr Robinson QC, who appeared for two of the three respondents to the applications, stated that it would be helpful if in due course I felt able to give an indication of the outcome of the applications in advance of my providing a reasoned judgment. This request was renewed in a letter dated 16 June 2009 which was copied to leading counsel for the other parties. None of those parties raised any objection. Accordingly I indicated by letter dated 25 June 2009 that, subject to the appropriate caveat, I proposed to dismiss all the Part 11 applications, for reasons which I would set out in a judgment to be delivered in due course. This judgment contains the reasons.
All the Part 11 applications are based on forum conveniens grounds, reliance being placed in particular upon the existence of corresponding proceedings between the same parties in another jurisdiction (Utah, USA). Each application raises amongst other issues an important question of law, namely whether this court has power to decline jurisdiction or to grant a stay on such grounds in favour of the courts of a non-EU country in respect of proceedings of which this court is admittedly properly seised under Article 2 of Council Regulation (EC) No 44/2001 on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters (“the Regulation”). This question involves an examination of whether the decision of the Court of Justice of the European Communities (“ECJ”) in Case C-281/02 Owusu v. Jackson [2005] QB 801, applies to a case such as the present ie. where there is a lis alibi pendens. In that decision the ECJ held that, where a court which is subject to what is now the Regulation (for convenience “an EU court”) is properly seised of proceedings under Article 2 of the Regulation, the EU court cannot decline its jurisdiction on forum non conveniens grounds in favour of the courts of a non-EU country. In the specific case before the ECJ there was no lis alibi pendens and the ECJ expressly declined to answer the national court's question as to whether its ruling applied in such a case.
The Part 11 applications fall into two groups. The first group consists of the defendants' application in claim HC08 CO3241 and the defendants' parallel application in claim HC08 C03618. The claimants in the first of these actions are Catalyst Investment Group Limited (“Catalyst”) and Mr Tim Roberts (“Mr R”). The claimant in the second is ARM Asset-Backed Securities S.A. (“ARM”). In both these actions the defendants are Mr Max Lewinsohn (“Mr L”) and Maximillian & Co. Throughout the hearing counsel referred to these two actions collectively as “the Declaratory Proceedings”. I will adopt the same approach. Where it is necessary to refer to them separately I will use “the Catalyst Declaratory Proceedings” or the ARM Declaratory Proceedings” as the case may be.
The second group of Part 11 applications consists of two applications in action HC08 C03158, namely the application by two of the defendants (Mr L and Maximillian & Co) and a corresponding application by the third defendant Micropower Global Limited (“Micropower”). The sole claimant in this action is Catalyst. This action was called “the Noteholder Proceedings” during the hearing.
Background
Although the Declaratory Proceedings and the Noteholder Proceedings concern different circumstances and issues, and are likely to be subject to separate trials, a good deal of the factual background to both sets of claims is common, and the main players are to a large extent the same. In order to deal with the applications before me it is necessary to set out this background in some detail. I was asked to read virtually all the witness statements lodged in relation to these applications (some twenty or so). Some of this material is argumentative, and it is clear that there is, to put it mildly, a good deal of bad feeling and mistrust between the main parties. Notwithstanding this, much of the factual background relevant to these applications is not really in dispute, and those matters which are disputed have little if any bearing on the issues which I have to decide. The summary account which I now give (and which is not by any means exhaustive of the history of the unhappy relationship between the main protagonists) is intended to be non-controversial, at least so far as these applications are concerned, save where I indicate otherwise. I should not be taken to be making any findings of fact in respect of any disputed matters.
Catalyst is a company incorporated in England & Wales which provides financial services and Mr R is its beneficial owner and chief executive. Both Catalyst and Mr R are domiciled in England.
Mr L is also domiciled in England and lives in Sussex. Maximillian & Co is a trading name which Mr L uses, and is for all relevant purposes his alter ego. Except where the context otherwise requires I shall refer to Mr L as including also Maximillian & Co (“Maximillian”).
ARM is a Luxembourg entity whose financial products are distributed by Catalyst.
Micropower is a company registered in the British Virgin Islands.
Eneco Inc (“Eneco”), which is now defunct, was a Utah corporation. For a good many years Mr L was involved in the management of Eneco. Mr L was one of the Noteholders to which I refer below.
Prior to 2006 Eneco had wished to raise working capital for its research and development activities, and to that end had entered into a series of secured loan agreements (“the Secured Loan Agreements”) by which the lenders agreed to advance funds to Eneco in exchange for promissory notes issued by Eneco (“the Notes”). The Notes, which were issued between 2003 and 2006, bore interest at the rate of 12% and their transfer was subject to certain restrictions under Utah securities laws. The Secured Loan Agreements and the Notes were expressly governed by Utah law. They also contained jurisdiction agreements in favour of the Utah courts.
Eneco's repayment obligations under the Notes were secured against Eneco's reversionary interest in certain international patents registered in Eneco's name (“the IP Rights”). By clause 4 of the Secured Loan Agreement Eneco granted its lenders a security interest in “all the Collateral” on the terms set out in two agreements, namely a “Security Agreement” and an “Intercreditor Agreement”. Under the Security Agreement, which was expressed to be between Eneco and “Christopher P Baker, as collateral agent (the “Collateral Agent”), acting as agent for holders of [the Notes]…” Eneco granted a security interest in the IP Rights “in favour of the Collateral Agent for the benefit of” the holders of the Notes (“Noteholders”). Upon Eneco's default the Collateral Agent was to be entitled to realise the IP Rights and apply the proceeds of sale in accordance with the terms of the agreement, including in the discharge of Eneco's obligations to the Noteholders.
The relationships between the Collateral Agent and the Noteholders, and between the Noteholders themselves, were governed by the Intercreditor Agreement. By the terms of that agreement the Noteholders appointed the Collateral Agent as their agent with respect to, in effect, enforcement of the security interest in the IP Rights. The Collateral Agent was empowered “but shall not be obligated” to take enforcement action under the agreement “that it deems necessary or advisable to preserve its rights in the Collateral.” Any action taken was binding on the Noteholders. The Collateral Agent was required to act in “a commercially reasonable manner” in the exercise of his rights, powers and duties, and the Noteholders undertook to reimburse certain expenses reasonably incurred by him on their behalf in connection with the enforcement of their rights under the Intercreditor Agreement or the Security Agreement.
The Security Agreement and the Intercreditor Agreement were expressly governed by Utah law. However, both these agreements omitted the jurisdiction clause that was included in the Notes and the Secured Loan Agreements.
In the spring of 2006 Catalyst was engaged by Eneco to assist Eneco in raising funds. The written agreements between Catalyst and Eneco (“the...
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