Service Temps Inc. v MacLeod
| Jurisdiction | Scotland |
| Judge | Lord Hodge |
| Judgment Date | 2013 |
| Neutral Citation | [2013] CSOH 162 |
| Date | 09 October 2013 |
| Docket Number | CA38/13 |
| Published date | 09 October 2013 |
| Year | 2013 |
| Court | Court of Session (Outer House) |
| OUTER HOUSE, COURT OF SESSION | |
| [2013] CSOH 162 | |
| CA38/13 | OPINION OF LORD HODGE in the cause SERVICE TEMPS INC Pursuer; against (1) INNES NICOLSON MACLEOD and (2) DONALD McCORQUODALE Defenders; ________________ |
Pursuer: McBrearty and E Campbell; Wright, Johnston and Mackenzie LLP
First Defender: Cowan, Solicitor Advocate; Simpson & Marwick LLP
Second Defender: Davies; Drummond Miller LLP
9 October 2013
[1] In this action Service Temps Inc ("STI") seeks a joint and several decree for $3,505,848.21 against the defenders ("Mr MacLeod" and "Mr McCorquodale" respectively). STI wishes to enforce in Scotland a decree of the district court in the 68th Judicial District of Dallas County, Texas dated 14 February 2012 ("the final judgment") for $2,804,678.57, together with $701,169.64 in respect of attorney's fees. STI seeks decree de plano. The defenders seek dismissal of the action.
The factual background
[2] STI is a personnel company which provided HDL International Inc ("HDL") with temporary personnel to allow HDL to perform a contract with Motorola Inc.. STI raised proceedings against HDL in the Tarrant County District Court, Texas seeking payment of sums due under a contract. In its defence HDL asserted that STI was in breach of contract and STI responded by pleading that HDL was in breach of anti-trust legislation. On 16 February 2010 the court issued a final default judgment against HDL in the sum of $4,285,128.21. The final default judgment stated that that sum:
"consists of the principal amount of $1,428,376.07 (one million, four hundred and twenty-eight thousand, three hundred and seventy-six dollars and seven cents) in connection with its claims for breach of contract and claims for violation of the Texas Free Enterprise and Antitrust Act of 1983 ('the Act') [Tex. Bus. & Comm. C. section 15.001 et. seq.], trebled pursuant to the Act for defendant's wilful conduct."
[3] Mr MacLeod and Mr McCorquodale are the directors and shareholders of HDL. STI alleged that they had instructed payments from HDL's United States bank account to various bank accounts in Scotland in order to defeat its claims. In 2011 STI raised proceedings against the defenders in the District Court in the 68th Judicial District of Dallas County, Texas. In those proceedings STI pursued a claim against the defenders under the Texas Uniform Fraudulent Transfer Act ("UFTA"). In substance it alleged that HDL had transferred funds to or for the benefit of insiders or affiliates with the intention of hindering, delaying or defrauding STI or without receiving a reasonably equivalent value in exchange. STI sought judgment against the defenders up to the full amount of the judgment it had obtained against HDL.
[4] The Dallas court asserted its jurisdiction based on the place of commission of a tortious act. On 24 October 2011 it granted a partial interlocutory judgment against Mr MacLeod, whom it treated as having failed to appear, for $2,804,678.57, together with the sum of $701,169.64 in respect of attorney's fees. On 14 February 2012 the court granted a final judgment ("the final judgment") which incorporated the partial judgment and decreed that STI was entitled to payment by Mr MacLeod and Mr McCorquodale of those sums. On 5 February 2013 the Fifth Circuit Court of Appeals of the State of Texas gave a default judgment refusing the defenders' appeals against the judgment of the district court.
The defences to the action
[5] Mr MacLeod and Mr McCorquodale raised three principal defences against STI's claim to enforce the final judgment in this jurisdiction. First, they submitted that the Dallas District Court did not have jurisdiction in the international sense against them because they had not been resident in Texas and had not submitted to its jurisdiction. Secondly, they submitted that the decree was not enforceable against them because the decree against HDL was a judgment for multiple damages within the meaning of section 5 of the Protection of Trading Interests Act 1980 ("the 1980 Act"). Thirdly, they submitted that, in any event, it was contrary to public policy to enforce that judgment. Mr Cowan for Mr MacLeod advanced a further submission under the third defence that enforcement of the judgment would be contrary to his rights under Article 1 of Protocol No 1 of the European Convention on Human Rights ("AIPI"). I consider each defence in turn.
(i) Submission to the jurisdiction of the Dallas District Court
[6] It was not disputed that under the rules of Scottish public international law the only basis on which STI could assert the international jurisdiction of the Dallas District Court was that the defenders had submitted to its jurisdiction.
[7] STI's case was that the letters which the defenders wrote to the Dallas District Court amounted to a submission to its jurisdiction. The first letter, on which STI founded, was from Mr McCorquodale and was dated 23 May 2011. It was addressed to the deputy clerk of Dallas District Court. It stated:
"Case No; DC-10-16304-C
I refer to the above case number.
I received a copy of some papers relating to the above case on the 21st April 2011.
For the record, I totally refute all allegations made against me in this case.
All transactions relating to the business of "Texas HDL" were carried out in line with instruction and approval of Weaver and Tidwell.
At no time did I receive any monies from HDL Texas, other than those declared in a proper manner, for which all taxes in the USA were paid.
Donald McCorquodale"
It seems that the Texas Court treated this letter as an appearance in court as the initial partial interlocutory judgment for non-appearance was directed only against Mr MacLeod.
[8] The second letter followed the final judgment against both defenders. It was written by Mr McCorquodale to the clerk to the Dallas district court and was dated 7 March 2012. It stated:
"Case number: DC-10-16304-C
I refer to the above case.
It is my understanding that default judgement was passed against me on 14th February 2012.
I wish to appeal to the court in the strongest possible terms against the said judgement.
The grounds for this appeal are as follows;
1 I was not given notification from the court of the hearing on 14th February. I was therefore unable to attend the court and plead my defence.
Failure to file an answer or appear was not intentional or the result of conscious indifference.
2 The transactions in question were not of a fraudulent nature as evidenced by the submitted documents of Weaver and Tidwell and the continuing willingness on our part to provide any documentation requested by the court.
3 In granting this appeal, the other parties in this case will not be treated prejudicially.
General
This appeal is submitted in this format directly to the court as I can not afford to pay $40,000 up front fees as requested by all attorneys in Texas, with whom we have discussed this matter.
A copy of this letter has been mailed to the court from Scotland by Registered Post.
Signed
Donald McCorquodale"
[9] The third letter, which was dated 9 March 2012, was from Mr MacLeod and was substantially in the same terms as the second letter which Mr McCorquodale had sent.
Counsel's submissions
[10] Mr Davies for Mr McCorquodale submitted that there had been no voluntary submission to the Texas court because (i) Mr McCorquodale did not appear before and make submissions go the court, (ii) he as a party litigant was not aware that the Texas court did not have jurisdiction in the international sense and so could not have waived his right to challenge its jurisdiction and (iii) the Texas courts never addressed the contents of the defenders' letters when they pronounced decree by default or refused the appeal.
[11] He referred to the Australian case of De Santis v Russo (2001) QCA 457, William & Glyns Bank plc v Astro Dinamico Compania Naviera SA [1981] 1 WLR 438, Adams v Cape Industries plc [1990] 1 Ch 433, Akai Pty Ltd v People's Insurance Co Ltd [1988 1 Ll Law Rep 90, Advent Capital plc v GN Ellinas Imports-Exports Ltd [2005] 1 CLC 1058, and Rubin v Eurofinance SA [2013] 1 AC 236. He accepted that the lodging of an appeal on the merits could amount to a submission to jurisdiction: Guiard v De Clermont [1914] 3 KB 145, S.A. Consortium General Textiles v Sun and Sand Agencies Ltd [1978] 1 QB 279 and Dicey, Morris and Collins at para 14.069. But the cases which vouched that proposition involved appeals in which the court considered the merits.
[12] He submitted that in Scotland it was not enough to enter appearance or give notice of intention to defend; until defences were lodged a decree against a defender would be a decree in absence. He equated Mr McCorquodale's second letter with the mere entering of an appearance if it had been in the correct form, which it was not. He cited the Rules of the Court of Session, rules 17, 18 and 19, the Sheriff Court Ordinary Cause Rules, rules 7.2, 9.2 and 16.2 and the Court of Session Fees etc. Order 1997, para 3.3. More generally, he referred to the leading textbooks on private international law: Anton (3rd ed.) at paras 9.16 - 9.22; Dicey, Morris & Collins (15th ed.) Rule 43 and its commentary; and Cheshire, North & Fawcett (14th ed.) at p 521.
[13] Mr Cowan for Mr MacLeod argued that Mr MacLeod also had not submitted to the jurisdiction of the Texas court. He submitted that STI had failed to meet the burden of showing that the Texas court had jurisdiction in the international sense. He generally adopted Mr Davies's submission, commented on certain of his cases and also referred to Desert Sun Loan Corp. v Hill [1996] 2 All ER 847 CA at 861-862. It was necessary for STI to show by reference to the Scottish rules that the defenders had voluntarily submitted to the Texas court. The question was whether they had acted in a way which would constitute a voluntary appearance in Scotland. The defenders had written informal letters and...
To continue reading
Request your trial
-
Swiss Life Ag (a Company incorporated in Switzerland) v Moses Kraus (aka Moses Krausz)
...jurisdiction. I am fortified in this conclusion by the position adopted by the Outer House Court of Session in Service Temps Inc v Innes Nicholson MacLeod et Ors [2013] CSOH 162 per Lord Hodge (" Service Temps"). In that case the Court had to consider whether there was sufficient evidence o......
-
Hangzhou Jiudang Asset Management Company Ltd v Kei Kin Hung (a Protected Party by Zhu Lei his litigation friend)
...States of America under the Clayton Act”. ii) Lord Hodge, sitting in the Outer House, Court of Session in Service Temps Inc v Macleod [2013] CSOH 162, stated in the context of a consideration of the scope of Section 5 of the PTIA that (at [27]): “ This remarkable Act was enacted to discoura......
-
SAS Institute Inc. v World Programming Ltd
...competition and consumer welfare. (4) Fourth, following the decision of Lord Hodge in the Scottish case of Service Temps Inc v MacLeod [2013] CSOH 162, [2014] SLT 375, enforcement of the UDTPA element of the judgment, including the compensatory damages awarded in respect of that claim, was ......