Nussberger v Phillips
| Jurisdiction | England & Wales |
| Judge | Pill,Neuberger,Wilson L JJ. |
| Judgment Date | 19 May 2006 |
| Court | Court of Appeal (Civil Division) |
| Date | 19 May 2006 |
Court of Appeal (Civil Division).
Pill, Neuberger and Wilson L JJ.
John Martin QC and Thomas Lowe (instructed by Withers) for the appellants.
Alan Steinfeld QC, Richard Millett QC and Jessica Chappell (instructed by Lane and Partners) for the respondents.
The following cases were referred to in the judgments:
Anderton v Clwyd County CouncilWLR [2002] 1 WLR 3174
Bas Capital Funding Corp, ReUNK [2004] 1 Ll Rep 652.
Canada Trust Co v Stolzenberg (No. 2) [2001] CLC 118; [2002] 1 AC 1.
Cranfield v Bridgegrove LtdWLR [2003] 1 WLR 2441.
Dresser UK Ltd v Falcongate Freight Management LtdELR [1992] QB 502.
Elmes v Hygrade Food Products plcUNK [2001] EWCA Civ 121.
Erich Gasser GmbH v Misat SrlECAS (Case C-116/02) [2003] ECR I-14693; [2005] 1 QB 1.
Golden Ocean Assurance Ltd v Martin (The Goldean Mariner)UNK [1990] 2 Ll Rep215.
Grupo Torras v Al-Sabah [1995] CLC 1025.
Knauf UK GmbH v British Gypsum Ltd [2002] CLC 239.
Kuenyehia v International Hospitals Group LtdUNK [2006] EWCA Civ 21.
Molins plc v GD SpA [2000] CLC 1027; [2000] 1 WLR 1741.
Murphy v Staples UK LtdWLR [2003] 1 WLR 2441.
Neste Chemicals SA v DK Line SA (The Sargasso) [1994] CLC 358.
Owusu v JacksonECAS (Case C-281/02) [2005] 1 CLC 246; [2005] 2 WLR 942;
Shiblaq v Sadikoglou (No. 2)UNK [2004] EWHC 1890 (Comm); [2005] 2 CLC 380.
Tavoulareas v Tsavliris [2004] 1 CLC 423.
Turner v GrovitECAS (Case C-159/02) [2004] 1 CLC 864; [2005] 1 AC 101.
Vinos v Marks & Spencer plcUNK [2001] 3 All ER 784.
Wilkey v British Broadcasting CorporationWLR [2003] 1 WLR 1.
Zelger v SalinitriECAS (Case 129/83) [1984] ECR 2397.
Service out of jurisdiction — Dispensing with service of claim form — Service of proceedings in Switzerland under Hague Convention on Service Abroad — Documents filed with Foreign Process Section and forwarded to Senior Master — Documents served in Switzerland with exception of claim form which was removed from package because it was erroneously stamped not for service out of jurisdiction — In the meantime defendants had issued proceedings in Switzerland and claimed priority for them under Lugano Convention — Short of reconsideration by House of Lords English rule that court first seised of proceedings when served — Position not altered by CPR — Dispensing with service of claim form would not have achieved priority for English proceedings — Even if such relief effective it would be wrong to grant such relief to achieve priority over Swiss proceedings — Civil Jurisdiction and Judgments Act 1982, Sch. 3C (Lugano Convention) art. 21 — Civil Procedure Rules 1998, r. 3.10, 6.9.
This was an appeal by the defendant (FN) and a Swiss company (Nefer), of which FN was the sole proprietor and sole officer, against a decision that, pursuant to the Lugano Convention, the English court could entertain the proceedings brought by the claimants, despite the existence of proceedings brought in Switzerland by the defendants against the claimants.
The proceedings had their origin in partnership between two individuals, S and M, which carried on business dealing in antiquities. After M's death, the claimants, as administrators of his estate, brought proceedings against S which resulted in a default judgment, a direction for the taking of partnership accounts and enquiries, the bankruptcy of S, and the appointment of trustees in bankruptcy. The court had put in place a regime which enabled the business to continue during the currency of the dispute but in contempt of court S had sold a statue to Nefer for US$3m. No money had been paid by Nefer on the basis that FN, who owned Nefer, had various claims exceeding $3m which she was entitled to set off against the money due for the statue. The claimants issued proceedings and obtained a worldwide freezing order against the defendants, restraining them from disposing of their assets up to a value of $3m.
The defendants were resident in Switzerland and the proceedings had to be served on them in accordance with the provisions of the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters 1965. The relevant documents were lodged with the Senior Master for service abroad and forwarded to the Swiss court. The documents were served in Switzerland on FN but, unknown to the claimants, a Swiss court official had removed the certified copy of the claim form because it had erroneously been marked as not for service out of the jurisdiction. Before the claimants learned that service had not been properly effected the defendants instituted Swiss proceedings against the claimants seeking negative declaratory relief.
The defendants contended that, under art. 21 of the Lugano Convention, the Swiss proceedings had priority over the English proceedings, because the Swiss court was seised when the proceedings were issued and the English court only when the proceedings had been served, and that the English court was obliged to stay its proceedings as against the defendants.
The claimants then applied under CPR, r. 6.9 for an order dispensing with service of the copy claim form on the defendant, on the basis that that would enable the English proceedings to obtain priority over the Swiss proceedings pursuant to art. 21.
The judge held that he had a discretion under r. 6.9 to dispense with service, that he should exercise that discretion, and that, in the light of the provisions of CPR, r. 3.10, the English proceedings thus achieved art. 21 priority over the Swiss proceedings.
The defendants appealed arguing that an order under r. 6.9 would not achieve priority for the English proceedings and that even if it would do so it would be wrong in principle to grant that relief.
Held, allowing the appeal:
1. It was established by binding authority that English proceedings were not pending for the purposes of art. 21 until they had been served, even though there was reason to think that in an appropriate case the House of Lords might be prepared to consider whether or not to uphold that rule. (Dresser UK Ltd v Falcongate Freight Management LtdELR[1992] QB 502andNeste Chemicals SA v DK Line SA(The Sargasso)[1994] CLC 358applied;Canada Trust Co v Stolzenberg(No. 2)[2001] CLC 118; [2002] 1 AC 1considered.)
2. Analysis of the provisions of CPR, r. 6 led to the conclusion that a foreign defendant was not served with documents under the Hague Convention until he received those documents.
3. On the very unusual facts the case would have been one in which r.6.9 could have been invoked, were it not for the international aspect. (Cranfield v Bridgegrove LtdWLR[2003] 1 WLR 2441considered.)
4. The invocation of r. 6.9 in the present case would be ineffective, or, if it would be effective, would be inappropriate. The rule could not and should not be invoked to enable English proceedings to enjoy art. 21 priority when the courts of another Convention state had already achieved such priority. Even if the exercise of the court's power under r. 6.9 could achieve the result desired by the claimants, it would be a power which could be exercised only in exceptional circumstances and the facts of the present case would not justify invoking it. (Grupo Torras SA v Al-Sabah[1995] CLC 1025, Molins plc v GD SpA[2000] CLC 1027, Tavoulareas v Tsavliris[2004] 1 CLC 423, Knauf UK GmbH v British Gypsum Ltd[2002] CLC 239 and Shiblaq v Sadikoglu[2005] 2 CLC 380considered.)
5. The effect of an order under r. 6.9 to dispense with the service of the copy claim form did not mean that, as a result of CPR, r. 3.10, the service of some other document was to be treated as service of the claim form.
6. If relief under r. 6.9 could be granted in a case of non-service of the claim form, seisin could not occur earlier than when the application for such relief was made, and probably not before it was granted.
Neuberger LJ:
1. This is an appeal brought by Frieda Nussberger (“the defendant”) and a Swiss company, of which she is the sole proprietor and sole officer, Galerie Nefer AG (“Nefer”) (together “the defendants”), against a decision of Peter Smith J handed down on 19 August 2005. The effect of his decision is that, pursuant to the Lugano Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters 1988 (“the Lugano Convention”), the High Court can entertain the instant proceedings brought by Jonathan Phillips and Robert Harland (“the claimants”) against the defendants, despite the existence of proceedings brought in Switzerland by the defendants against the claimants.
2. The instant proceedings started on 16 December 2004, when the claimants, in their capacity of administrators of the estate of the late Christo Michailidis, issued a claim form out of the High Court in London. Their claim against the defendants is for (a) US$3m, less such sums as they may be paid by Geoff Rowley and Kevin Hellard (“the Trustees”), the trustees in bankruptcy of Robin Symes, or (b) US$2.7m on an account, or (c) damages for wrongful interference with property. The US$3m is additionally claimed from the Trustees and Mr Symes, who are also defendants. The claimants further claim US$300,000 and damages from Bracher Rawlins (“Brachers”), the sixth defendants.
3. On 15 December 2004, the day before the claim form was issued, Peter Smith J granted the claimants a worldwide freezing order against the defendants, restraining them from disposing of their assets, up to a value of US$3m.
4. These proceedings have their origin in a partnership between Mr Symes and Mr Michailidis, which carried on business dealing in antiquities (partly through a company owned by Mr Symes). After Mr Michailidis died in July 1999, the claimants brought proceedings against Mr Symes. In March and April 2003, those proceedings resulted in a default judgment in favour of the claimants, a...
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