Cifal Groupe S.A. and Others v Meridian Securities (UK) Ltd and Others

JurisdictionEngland & Wales
CourtQueen's Bench Division (Commercial Court)
JudgeThe Hon. Mr Justice Males,Mr Justice Males
Judgment Date15 November 2013
Neutral Citation[2013] EWHC 3553 (Comm)
Docket NumberCase No: 2012 Folio 1268
Date15 November 2013

[2013] EWHC 3553 (Comm)

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

COMMERCIAL COURT

Royal Courts of Justice

Strand, London, WC2A 2LL

Before:

The Hon. Mr Justice Males

Case No: 2012 Folio 1268

Between:
(1) Cifal Groupe S.A.
(2) Grontmij Investment Management s.a.s. (formerly known as Ginger Investment Management s.a.s)
(3) Asia Gulf Services LLC
Claimants
and
(1) Meridian Securities (UK) Ltd
(2) Meridian Capital LLP
(3) Central Asia Industrial Holdings NV
(4) Yevgeniy Feld also known as Evgeny Feld
Defendants

Mr Richard Morgan QC and Mr Ciaran Keller (instructed by Olswang LLP) for the Defendants

Mr Richard Walford and Mr Daniel McCourt Fritz (instructed by Ashfords LLP) for the Claimants

Approved Judgment

Hearing dates: 29 th, 30 th & 31 st October 2013

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 Males Mr Justice Males

Introduction

1

These are applications (i) by the second and fourth defendants challenging the jurisdiction of the English court and (ii) by the claimants for permission to amend their Particulars of Claim.

2

This action is concerned with a project for the development of a large shopping centre in a prime position in St Petersburg described as the "Ligovsky Prospekt project". The development is on the junction between Ligovsky Prospekt and Nevsky Prospekt, a location which (I was told) is broadly comparable to Oxford Circus in London. The claimants, a consortium of French-managed companies, say that they were appointed by the defendants as project managers for this development on the basis that they would be rewarded by a success fee and a share of the profits, but that the defendants wrongly repudiated this agreement, and thereby prevented them from earning this success fee and profit share. They seek to recover, by way of damages or other compensation, the success fee and profit share to which they say they would have been entitled if the agreement had not been repudiated. It appears that the completed development was sold to Morgan Stanley in 2012 for US $1.1 billion, which may give some idea of its scope and scale, and that the claimants' claim, at least according to the principal way in which they put their case, may be for in excess of US $20 million.

3

The defendants say that no binding agreement was ever made entitling the claimants to a success fee or profit share. They accept that there were discussions about this, but say that terms were never agreed and that it was always clear that there was to be no binding agreement until whatever terms were eventually agreed were reduced to writing in a signed contract, which never happened. They add that there is in any event no basis on which the fourth defendant can be held personally liable as he acted throughout as an agent, as the claimants understood, and he was properly authorised to do so.

4

In addition to their contractual claim, the claimants also invoke principles of estoppel by convention and quantum meruit, but their counsel Mr Richard Walford made clear that these further claims all depend to some extent on the existence of an agreement that a success fee and profit share would be paid.

5

There are two potential agreements on which the claimants seek to rely. Their primary case is that an oral agreement was concluded at a meeting or meetings in St Petersburg on 12 and 13 December 2005 at which detailed agreement was reached on the success fee and profit share to which the claimants were to be entitled. Alternatively and in outline they say that there was a legally binding agreement in principle that a success fee and profit share would be payable on terms contained in an agreement described as a Consulting Services Agreement.

Jurisdiction — the three-stage test

6

The court has a discretionary power under CPR 6.36 and 6.37 to grant permission to serve a claim form out of the jurisdiction if the following conditions are met, on all of which the burden lies upon the claimant.

a. First, the claimants must satisfy the court that in relation to the foreign defendants there is a serious issue to be tried on the merits. This is the same test as for summary judgment, namely whether there is a real (as opposed to fanciful) prospect of success.

b. Second, the claimants must satisfy the court that there is a good arguable case that the claim falls within one or more of the jurisdictional gateways set out in CPR PD6B. This means that the claimants must have much the better argument on this point.

c. Third, the claimants must satisfy the court that in all the circumstances England is clearly or distinctly the appropriate forum for the trial of the dispute, and that in all the circumstances the court ought to exercise its discretion to permit service of the proceedings out of the jurisdiction.

Real prospect of success

7

The principal issue arising on this application is whether the claimants can satisfy the first of these requirements, that is to say, whether there is a real prospect of the claimants being able to establish that a binding agreement was concluded entitling them to payment of a success fee and a share in the profits of the development. In addition, in the case of the fourth defendant, there is the further issue whether there is a real prospect of the claimants being able to establish that although he purported to act as an agent, Mr Feld nevertheless incurred personal liability. The test of "real prospect of success" is a relatively low hurdle for a claimant and the cases are replete with warnings against attempting to conduct anything in the nature of a mini trial on the merits.

8

The approach to be taken in deciding whether a case has a real prospect of success has been considered in many cases. I would respectfully adopt the approach of Lewison J in Easyair Ltd v Opal Telecom Ltd [2009] EWHC 339 (Ch) at [15]. Omitting citations, he said:

"i) The court must consider whether the claimant has a "realistic" as opposed to a "fanciful" prospect of success.

ii) A "realistic" claim is one that carries some degree of conviction. This means a claim that is more than merely arguable.

iii) In reaching its conclusion the court must not conduct a 'mini-trial'.

iv) This does not mean that the court must take at face value and without analysis everything that a claimant says in his statements before the court. In some cases it may be clear that there is no real substance in factual assertions made, particularly if contradicted by contemporaneous documents.

v) However, in reaching its conclusion the court must take into account not only the evidence actually placed before it on the application for summary judgment, but also the evidence that can reasonably be expected to be available at trial.

vi) Although a case may turn out at trial not to be really complicated, it does not follow that it should be decided without the fuller investigation into the facts at trial than is possible or permissible on summary judgment. Thus the court should hesitate about making a final decision without a trial, even where there is no obvious conflict of fact at the time of the application, where reasonable grounds exist for believing that a fuller investigation into the facts of the case would add to or alter the evidence available to a trial judge and so affect the outcome of the case. …"

9

The Supreme Court has recently emphasised that hearings on jurisdictional issues should not "involve masses of documents, long witness statements, detailed analysis of the issues, and long argument": VTB Capital Plc v Nutritek International Corpn [2013] UKSC 5, [2013] 2 WLR 398 at [82] and [83]. Even more recently, Flaux J has spoken of the need for a defendant challenging jurisdiction on the basis that the claim has no real prospect of success to identify "some 'killer point' which demonstrated that [the claimant's] case on the facts was unsustainable", without which "the expending of so much time and energy on a full-scale evidential challenge is a fruitless exercise": Erste Group Bank AG v JSC "VMZ Red October" [2013] EWHC 2926 (Comm) at [11].

10

I respectfully agree. If a claimant adduces apparently plausible evidence in support of its case, it is likely to be fruitless for a defendant to adduce substantial contrary evidence, unless it can identify some "killer point" to show even at this early stage why the claimant's evidence has no real prospect of being accepted at trial. That said, however, the burden remains on the claimant to establish by evidence that its claim has a real prospect of success.

11

For this reason Mr Richard Morgan QC for the defendants concentrated his fire on what he said were the weaknesses inherent in (and in some cases the absence of) the claimants' own evidence, the absence of any support for their case in the contemporary documents, and the ways in which the claimants' current case is contradicted out of their own mouths. While this took a little while to explain in view of the somewhat tangled dealings between the parties, not only at the time of the events in question but in subsequent litigation in France, in my view this represents a legitimate approach. It does not involve attempting to choose between conflicting evidence from each party or conducting any other form of mini trial, only an analysis of the claimants' case and of the evidence on which they seek to rely in support of that case. A defendant should not be required to come here to defend a case which is inherently weak and not supported by proper evidence, merely because the claimant is able to conceal that weakness within a complicated story.

The claimants' evidence

12

In a case such as the present, which turns on whether an oral agreement was concluded at a meeting in...

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    ...400 (“Probo Pacific”) at [18] and the English High Court in CIFAL Groupe SA and others v Meridian Securities (UK) Ltd and others [2013] EWHC 3553 (Comm) (“CIFAL”)) where the plaintiff had entered into an agreement with the defendant who had purportedly acted on behalf of an unincorporated c......

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