James Kinsella v Emasan AG
| Jurisdiction | England & Wales |
| Judge | Master Teverson |
| Judgment Date | 21 November 2019 |
| Neutral Citation | [2019] EWHC 3196 (Ch) |
| Date | 21 November 2019 |
| Docket Number | Case No: BL-2018-002386 |
| Court | Chancery Division |
[2019] EWHC 3196 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
BUSINESS LIST (ChD)
The Rolls Building
7 Rolls Building
Fetter Lane
London EC4A 1NL
Master Teverson
Case No: BL-2018-002386
Victoria Windle and Tom Coates of counsel (instructed by Withers Worldwide LLP) for the Claimants
Tom Ford of counsel (instructed by Mayer Brown International LLP) for the Defendants
Hearing dates: 3 and 25 July 2019
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.
Introduction
The claim arises out of a dispute between the parties as to the sums payable to the Claimants consequential upon the sale of the Interoute group of companies in 2018.
The Claimants are US nationals and residents. They carry on business together as consultants and turn-around experts in the technology and telecommunications sectors. Between 1999 and 2018, the Claimants provided consultancy services in respect of the Interoute Group, a group of associated companies which carried on business as providers of telecommunications networks and private cloud services.
The First Defendant (“Emasan”) is a company incorporated in Switzerland and is a wholly owned subsidiary of the Second Defendant. The Second Defendant, (“the Foundation”) is a family foundation organised and existing under the laws of Liechtenstein.
The claim was issued on 12 November 2018. On 28 November 2018 the Claimants were granted permission to serve the claim form out of the jurisdiction on the Foundation in Liechtenstein. On 4 February 2019 the Claimants served Emasan at its statutory seat in Switzerland. Service was stated as being made pursuant to CPR r.6.33 on the basis that each claim made against Emasan was a claim which the court had power to determine under the Lugano Convention. The Lugano Convention is defined in CPR 6.31(j) to mean the Convention on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, between the European Community and the Republic of Iceland, the Kingdom of Norway, the Swiss Confederation and the Kingdom of Denmark and signed by the European Community on 30 th October 2007.
Emasan acknowledged service on 25 February 2019 stating an intention to contest jurisdiction. On 11 March 2019 Emasan applied under CPR r.11 for a declaration that the English Court does not have jurisdiction to try claims based on alleged breaches of what is referred to in the Particulars of Claim as “the 2002 Agreement”.
The Foundation acknowledged service on 11 June 2019 also stating an intention to contest jurisdiction. On 14 June 2019 the Foundation issued its own jurisdiction challenge. The basis of its challenge is that the claims referred to by it as “the 2002 Agreement Claims, “the Ordinary Share Total Consideration Claims” and “the Misrepresentation Act Claims” do not satisfy the merits threshold to warrant the Foundation being required to submit to the jurisdiction in order to defend them.
On 24 June 2019, without prejudice to their jurisdiction challenges, Emasan and the Foundation applied for summary judgment asking the court to dismiss the 2002 Agreement Claims, the Ordinary Share Total Consideration Claims and the Misrepresentation Act Claims. It was explained to me by Mr Tom Ford, counsel appearing before me for Emasan and the Foundation, that the summary judgment application relied on exactly the same evidence as the Foundation's jurisdiction challenge and that, if successful, would result in those claims being dismissed against both Emasan and the Foundation.
On 26 June 2019, the Claimants applied for permission to amend their Particulars of Claim in accordance with the draft Amended Particulars of Claim attached to the application notice.
In summary, there are four applications before me:-
(1) Emasan's jurisdiction challenge dated 11 March 2019;
(2) The Foundation's jurisdiction challenge dated 14 June 2019;
(3) Emasan and the Foundation's combined summary judgment application dated 24 June 2019;
(4) The Claimants' application for permission to amend the Particulars of Claim dated 26 June 2019.
The legal principles to be applied in determining each of these applications was not in dispute before me.
In relation to Emasan's jurisdiction challenge, I was referred to the judgment of Green LJ in Kaefer Aislamientos SA de CV v AMS Drilling Mexico SA de CV [2019] EWCA Civ 10; [2019] 1 WLR 3514. In Kaefer at paragraph 70, Green LJ recorded that in Goldman Sachs International v Novo Banco SA [2018] 1 WLR 3683, the Supreme Court had unanimously approved Lord Sumption JSC's three-limbed reformulation of the test to be applied on applications disputing gateway jurisdiction set out in Canada Trust v Stolzenberg (No 2) [1998] 1 WLR 547. That reformulation is:-
“What is meant is (i) that the claimant must satisfy a plausible evidential basis for the application of a relevant jurisdictional gateway; (ii) that if there is an issue of fact about it, or some other reason for doubting whether it applies, the court must take a view on the material available if it can reliably do so; but (iii) the nature of the issue and the limitations of the material available at the interlocutory stage may be such that no reliable assessment can be made, in which case there is a good arguable case for the application of the gateway if there is a plausible (albeit contested) evidential basis for it. I do not believe that anything is gained by the word ‘much’, which suggests a superior standard of conviction that is both uncertain and unwarranted in this context.”
Guidance on the proper application of the test was given by Green LJ between paragraphs 74–80 of his judgment. These paragraphs make clear that:-
(1) The test to be applied is a relative one – the court will consider who has the better of the argument;
(2) The test is not to be determined on the balance of probabilities, which standard of proof is apt for use at trial, but not at the interim stage;
(3) There is no requirement for the claimant to show it has “much” the better of the argument. It need only show, to the appropriate standard, that it has the better argument;
(4) Where the court is unable to say which party has a better argument, then if the claimant has put forward a plausible evidential basis for jurisdiction, there is a good arguable case for that jurisdiction.
At paragraphs 81 to 83, Green LJ considered the relationship of this test with Article 25 of the Recast Brussels Regulation. He concluded at paragraph 83:-
“I consider in such a case as the present where the background legal context is article 25 some regard must be paid to the fact that …the clear and precise” test must be taken into account as a component of the domestic test and the melding of the two is necessary to ensure that domestic law remains consistent with the Regulation. As with so much of the language used in this context, that which is “clear and precise” is not easy to define with precision. But I would rely upon it as providing at least an indication of the quality of the evidence required. It supports the conclusion that the prima facie test in limbs (i) and (ii) is a relative one; and in so far as the court cannot resolve outstanding material disputes (limb (iii)) it affords an indication as to the sort of evidence that a court will seek. I would not go much beyond this though.” Paragraphs 81 to 83 of Green LJ's judgment are also applicable in my judgment where the background legal context is Article 23 of the Lugano Convention.
In relation to the Foundation's jurisdiction challenge, it was agreed that the Claimants must satisfy the court that there is a serious issue to be tried on the merits of the case. In Carvill America v Camperdown UK [2005] EWCA Civ 645, Clarke LJ said that it was common ground between the parties before him that the merits test under CPR 6.20 (now CPR 6.37) is in substance no different from the test of a real prospect of success under CPR 3.4 or 24.2. The underlying rationale (as explained by Toulson J. in MRG v Englehard Metals Japan [2004] 1 LI Rep 731) is that the court should not subject a foreign litigant to proceedings which the defendant would be entitled to have dismissed summarily. Clarke LJ stated that it was, however, important in his opinion to have in mind that the test is not a high one. He said that a claimant has a real prospect of success if its chances of success are not fanciful.
In relation to the summary judgment application of Emasan and the Foundation, I was referred to the principles formulated by Lewison J. in Easyair Ltd v Opal Telecom Ltd [2009] EWHC 339 (Ch) at [15] and approved by the Court of Appeal in AC Ward & Sons Ltd v Catlin (Five) Ltd [2009] EWCA Civ 1098 at 24:-
“(i) The court must consider whether the claimant has a “realistic” as opposed to a “fanciful” prospect of success: Swain v Hillman [2001] 1 All ER 91;
(ii) A “realistic” claim is one that carries some degree of conviction. This means a claim that is more than merely arguable: ED & F Man Liquid Products v Patel [2003] EWCA Civ 472 at [8]
(iii) In reaching its conclusion the court must not conduct a “mini-trial”; Swain v Hillman;
(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 will be clear that there is no real substance in factual assertions made, particularly if contradicted by contemporaneous documents: ED & F Man Liquid Products v Patel at [10];
(v) However, in reaching its...
To continue reading
Request your trial