Phillips v Symes; Nussberger v Phillips
| Jurisdiction | England & Wales |
| Judge | Lord Justice Neuberger,Lord Justice Wilson,Lord Justice Pill |
| Judgment Date | 19 May 2006 |
| Neutral Citation | [2006] EWCA Civ 654 |
| Docket Number | Case No: B1/2005/2779 |
| Court | Court of Appeal (Civil Division) |
| Date | 19 May 2006 |
[2006] EWCA Civ 654
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
(CHANCERY DIVISION)
Mr Justice Peter Smith
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Pill
Lord Justice Neuberger and
Lord Justice Wilson
Case No: B1/2005/2779
HC04C03898
Mr John Martin QC and Mr Thomas Lowe (instructed by Withers) for the appellants
Mr Alan Steinfeld QC, Mr Richard Millett QC and Ms Jessica Chappell (instructed by Lane and Partners) for the respondents
Introduction
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.
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) US3m, 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) US2.7m on an account, or (c) damages for wrongful interference with property. The US3m is additionally claimed from the Trustees and Mr Symes, who are also defendants. The claimants further claim US300,000 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 US3m.
The background to these proceedings
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 direction for the taking of partnership accounts and enquiries, the bankruptcy of Mr Symes, and the appointment of the Trustees as his trustees in bankruptcy.
Meanwhile, on 24 July 2002, Hart J had put in place an interlocutory regime ("the regime") which enabled the business to continue during the currency of the dispute. Peter Smith J directed that that regime should continue after the default judgment.
Pursuant to the regime, a statue ("the first statue") was sold by Mr Symes, purportedly to Philos Partners Inc of Cheyenne, Wyoming, USA, for US1.6m. The claimants then discovered that the sale was in fact to Sheik Al-Thani for US4.5m, so that Mr Symes had effectively removed some US2.9m from the jurisdiction. In March 2003, the claimants made an application ("the first application") to the court for appropriate relief against Mr Symes. The claimants also claimed a determination whether, as Mr Symes alleged, the defendants had an interest in the first statue. The defendant swore an affidavit to support Mr Symes's case in this connection.
Neither of the defendants took part in the proceedings arising out of the first application. The hearing took place in May 2003 before Peter Smith J, and a Swiss lawyer retained by the defendant gave evidence. The Judge decided that (subject to the rights of Mr Michalidis's estate) Mr Symes (through the company to which I have made reference) was entitled to the entire beneficial interest in the first statue. An appeal against that decision by Mr Symes was subsequently dismissed by this Court.
The defendants also featured in connection with another contempt committed by Mr Symes. This concerned a different statue ("the second statue") which he had apparently offered to sell to the Sheikh for US8m. On learning of this, the claimants issued an application on 11 August 2003 ("the second application") seeking to commit Mr Symes for breach of the terms of the regime.9. The claimants eventually established that Mr Symes had sold the second statue to Nefer on 14 February 2003 for US3m, but that no money had been paid by Nefer. This was said to be justified on the basis that the defendant, who of course owns Nefer, had various claims exceeding US3m which she was entitled to set off against the money due for the second statue. Eventually, Mr Symes admitted that his sale of the second statue had been in contempt of court.
The course of these proceedings
In these proceedings, the claimants' claim against the defendants for US3m is based on the contention that this is the amount which the defendants should have paid for the second statue. The claimants' alternative claim for US2.7m is based on the fact that US300,000, now paid into court, was received by Brachers for Mr Symes, as commission for his efforts in selling the second statue.
The defendant resides in the canton of Aargau in Switzerland, and Nefer's registered office is in Zurich, Switzerland. Hence, these 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 Hague Convention"). Articles 2 and 3 require each contracting state to designate a "Central Authority" to effect service of such documents as are forwarded to it with a request in the appropriate form by the "authority or judicial officer competent under the law of the state in which the documents originate". The competent judicial officer for English proceedings is the Senior Master, and the relevant Swiss Central Authority is, in the case of the defendant, the Obergericht (or Superior Court) of Aargau, and, in the case of Nefer, the Obergericht of Zurich.
Accordingly, the claimants' solicitors set about arranging for service of the present proceedings on the defendants. They prepared an appropriate claim form, which contained a statement, verified by a certificate signed by their Mrs Eyre, that the High Court had power under the Civil Jurisdiction and Judgments Act 1982 to hear the claim and that no proceedings concerning the claim were pending between the parties in Scotland, Northern Ireland or any other convention territory or any Contracting State as defined in section 1(3) of the 1982 Act.
However, on issue by the Court Service, the claim form was stamped prominently on the front, "Not for service out of the jurisdiction". This appears to have been a plain error, because the claim form was expressly rendered eligible for service out of the jurisdiction, by virtue of the rubric at its end and the certificate verified by Mrs Eyre. The claimants' solicitors noticed the error and prepared fresh claim forms, in case the Foreign Process Section of the High Court refused to accept the certified copies of the claim form with the stamp, when they were lodged for forwarding to the Senior Master for service abroad.
On 31 December 2004, two identical packages, one for service on the defendant and the other for service on Nefer, together with requests for service abroad, were filed by Ms King of the claimants' solicitors with the Foreign Process Section. Those packages contained:
i) An official certified copy of the original claim form (the "copy claim form") erroneously stamped as explained above;
ii) A certified German translation of that claim form (with the stamp) ;
iii) The particulars of claim;
iv) A certified German translation of the particulars of claim;
v) An acknowledgment of service form, with a certified translation;
vi) Documents arising out of the freezing order made on 15 December.
Although an official in the Foreign Process Section queried the inappropriate stamp on the copy claim forms, she accepted the forms, once Ms King pointed out that they contained the appropriate rubric at the end. The packages, together with the requests, were forwarded to the Senior Master, so that service could be effected on the defendants in Switzerland in accordance with the Hague Convention. The Senior Master then arranged for service by the relevant Obergericht.
Meanwhile, to enforce the freezing order, the claimants had to obtain attachment orders against the defendants in Switzerland. Accordingly, the claimants issued requests for attachment in the Bezirksgericht (or District Court) of Zurzach in Aargau ("the Zurzach Court") and in the Zurich Obergericht. The attachment in the latter court was refused, and the claimants' appeal against that refusal was dismissed. However, the Zurzach Court granted attachment against both defendants on 20 December. Next day, the defendant was served with the attachment order and other documents including a copy of the freezing order.
The defendant applied to set aside the attachment order, and that application was heard in the Zurzach Court on 19 January 2005. The attachment order was discharged. More importantly for present purposes, the Zurzach Court Judge (no doubt at the request of...
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