Eurasia Sports Ltd v Omar Mahchi Aguad
| Jurisdiction | England & Wales |
| Judge | Lord Justice Floyd,Lord Justice Longmore,Lord Justice Gross |
| Judgment Date | 24 July 2018 |
| Neutral Citation | [2018] EWCA Civ 1742 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: A2 2016 3771 |
| Date | 24 July 2018 |
[2018] EWCA Civ 1742
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Mr Justice Edis
[2016] EWHC 2207 (QB)
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Longmore
Lord Justice Gross
and
Lord Justice Floyd
Case No: A2 2016 3771
Alexander Gunning QC (instructed by Hogan Lovells International LLP) for the Appellant
Antony White QC (instructed by Reed Smith LLP) for the Respondent
Hearing date: 12 July 2018
Judgment Approved
The eleventh defendant and sole appellant, Omar Mahchi Aguad, challenges the jurisdiction of the court to try the proceedings brought against him by the claimant, Eurasia Sports Limited. His challenge, which was originally made together with the third and sixth defendants, Messrs Letts and Nieri, was rejected by the order of Edis J of 8 September 2016. He now appeals, with the permission of Henderson LJ, granted at an oral hearing. Messrs Letts and Nieri, whose jurisdiction challenge was also rejected by the judge, have now served a joint defence on the merits.
The facts
The claimant is a company incorporated in Alderney which operates a betting agency. It alleges that all of the defendants, who were resident in Peru at the time of the relevant events, conspired to defraud it. There are claims against each of the defendants for sums due under the terms of individual gambling accounts opened with the claimant in the name of each of them. Claims are also made against some defendants, but not Mr Mahchi Aguad, for fraudulent misrepresentation. So far as Mr Mahchi Aguad is concerned, in addition to the claim based on the indebtedness on his betting account, it is alleged that he was involved in the conspiracy to defraud because he has revealed his close links with the first defendant.
The claimant's business is operated in the following way. It identifies new betting customers and procures accounts for them with Triplebet Limited, which trades as Matchbook, an online betting exchange, located at www.matchbook.com. At the material time Triplebet was a part of the same corporate group as Matchbook. The claimant itself operates through employees of Xanadu, a company incorporated in Ireland. Those employees include Mr Osei-Amoaten and Mr Paul McGuinness, both of whom are based wholly or partly in London and are said to work for the claimant on a consultancy basis.
Mr McGuinness and a Mr Pantling (a director of Triplebet) visited Peru in early September 2014 and met Mr Mahchi Aguad, who is the owner of a casino called Atlantic City in Lima. As a result of that meeting, Mr Mahchi Aguad became a client of the claimant. Mr Pantling had initially been prepared to offer Mr Mahchi Aguad $1m in credit against a $500,000 deposit, but at the meeting the requirement for a deposit was removed. By the end of 4 September 2014 Mr Mahchi Aguad had bet and lost nearly the entire $1m. Further credits were arranged and some payments were made on Mr Mahchi Aguad's behalf. Nevertheless, by the end of September, an unsecured sum in excess of $2m was owing on his account.
Mr Osei-Amoaten also set up betting accounts for the first and second defendants. They were to provide security of $1m. It is alleged that the first and second defendants represented that they were wiring or had wired sums to provide for this security inter alia by sending photographs of purported wire transfers, but, although US$500,000 was received, the balancenever arrived as promised.
The first and second defendants suggested that they would be able to introduce clients to the claimant who would use the claimant's services. Thereafter Mr Osei-Amoaten travelled to Peru. An agency agreement was mapped out under which the first defendant would introduce clients to the claimant. The third and sixth defendants were also involved at this stage. That agreement was concluded in Peru in October 2014. $10m was to be provided as security, by cheque. The cheque was to be payable to the claimant and sent to the claimant's bank in Malta.
On the same trip to Peru Messrs Osei-Amoaten and Mr McGuinness also met Mr Mahchi Aguad in the presence of the sixth defendant. Mr Mahchi Aguad agreed to pay his outstanding debt, but said that he would have to sell some shares to do so. He now claims that he paid this debt to the first defendant. The claimant disputes this and also disputes that payment to the first defendant would discharge the debt. No evidence of a payment to the first defendant has been produced.
The cheque for $10m payable to the claimant was presented but not paid. The bank on which it was drawn informed the claimant on 10 December 2014 that there were insufficient funds in the account and the account was closed. The total of the amounts due and owing on the accounts of the first to eleventh defendants was in excess of $12.5m.
Thus the claimant alleges that all the defendants conspired together to injure the claimant by unlawful means by procuring the claimant to provide online gambling services without security by falsely representing that money had been or was about to be transferred to the claimant or alternatively that the online gambling services had been secured by the third defendant's cheque for $10m.
Paragraph 67 of the particulars of claim alleges that, by reason of the conspiracy:
“the claimant has suffered loss and damage in the sum of US$12,642,982.90, being the total of the amounts due and owing to the Claimant on the accounts of the First to Eleventh Defendants with the Claimant.”
The issues on this appeal
In order to establish jurisdiction it was necessary for the claimant to establish (a) that there was a serious issue to be tried against Mr Mahchi Aguad in respect of the causes of action alleged; (b) that it has a good arguable case that its claims fall within one of the jurisdictional gateways; (c) that in all the circumstances England is clearly or distinctly the appropriate forum for the trial of the dispute: see Altimo Holdings v Kyrgyz Mobil Tel Ltd [2011] UKPC 7; [2012] 1 WLR 1804 at [71] as explained in Brownlie v Four Seasons Holdings Inc [2017] UKSC 80; [2018] 1 WLR 192 at [7]. Each of those requirements remains in issue between the claimant and Mr Mahchi Aguad on this appeal.
The jurisdictional gateways
The following four jurisdictional gateways in CPR PD 6B are relevant. I will, so far as possible, use the indicated shorthand for each gateway rather than paragraph numbers.
Paragraph 3.1(3) (“the necessary or proper party gateway”):
A claim is made against a person (‘the defendant’) on whom the claim form has been or will be served (otherwise than in reliance on this paragraph) and –
(a) there is between the claimant and the defendant a real issue which it is reasonable for the court to try; and
(b) the claimant wishes to serve the claim form on another person who is a necessary or proper party to that claim.
Paragraph 3.1(4A) (“the 4A gateway”):
(4A) A claim is made against the defendant in reliance on one or more of paragraphs (2), (6) to ( 16), (19) or (21) and a further claim is made against the same defendant which arises out of the same or closely connected facts.
Paragraph 3.1(6): (“the contract gateway”)
(6) A claim is made in respect of a contract where the contract –
(a) was made within the jurisdiction;…
Paragraph 3.1(9)(a) (“the tort gateway”):
A claim is made in tort where –
(a) damage was sustained, or will be sustained, within the jurisdiction;
…
The 4A gateway is relatively new, having been added on the recommendation of the Lord Chancellor's Advisory Committee on Private International Law, chaired by Lord Mance JSC. It came into effect from 1 October 2015.
The conclusions reached by the judge
On the first of the issues, the judge held that the tortious conspiracy claim against Mr Mahchi Aguad raised a serious question to be tried. It was common ground that the indebtedness claim against him satisfied that test as well. On the second issue, the judge held that the conspiracy claim fell within the tort gateway because the damage was sustained in London. As the contract with Mr Mahchi Aguad was made in Peru, it did not fall within the contract gateway, although the contract claims against certain other defendants did (see further below). Next, he held that the claim in debt was so closely bound up with the action against him and others in conspiracy that Mr Mahchi Aguad was a necessary or proper party to that action. Finally he held that, in the light of the admissibility of the tort claim, the indebtedness claim fell within the 4A gateway. On the third issue, the judge held that England was clearly or distinctly the appropriate forum for the trial of the claims.
The first issue: serious issue to be tried
At the stage of seeking permission to appeal, Mr Mahchi Aguad's skeleton argument challenged the judge's conclusion that there was a serious question to be tried as to whether he was a participant in the alleged conspiracy. Although Mr Mahchi Aguad was given permission to argue that point by Henderson LJ, a replacement skeleton argument served on his behalf thereafter contains no trace of this point. Instead, the replacement skeleton advances two different points on the issue of whether there is a serious question to be tried, only one of which is now pressed on the appeal. The surviving point is that the loss pleaded as flowing from the conspiracy, namely the sum of the indebtedness accrued by the defendants on their betting accounts which remains due, does not represent a loss in law. Rather, the several debts are assets which, but for the conspiracy, the claimant would not have acquired. However worthless they are as debts, they do not represent a loss. Mr Gunning QC,...
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