Jersey Unreported Judgments

[2006]JRC171

royal court

(Samedi Division)

28^th November 2006 

Before     :

M. C. St. J. Birt, Esq., Deputy Bailiff, and Jurats de Allo and Le Cornu.

 

Advocate P.C. Sinel for the Plaintiff.

Advocate S. A. Franckel for the Defendant.

judgment

deputy bailiff:

1.        This is an application by the defendant, who is a resident of Jersey, to stay the proceedings brought against him on the grounds of 'forum non conveniens''.

Factual background

2.        The parties have filed affidavits.  The factual background would appear to be as follows.

3.        At all material times an English company Blackbrook Nominee 46 Limited ("Blackbrook") was the owner of a property in Hampshire known as the Walled Garden ("the Property").  The single issued share of Blackbrook was owned by Aceport Property Limited, another English company.  We have not been given any details of that company but we assume that the plaintiff, who resides in the Isle of Wight, was either the owner of Aceport or had a beneficial interest therein. 

4.        On 25^th August 2002 the plaintiff agreed with the defendant to sell the Property.  The plan was that a company called McBain Holdings Inc, a company incorporated either in Gibraltar (according to the defendant) or BVI (according to the plaintiff) would purchase the entire issued share capital of Blackbrook, thereby acquiring indirect ownership of the Property.  McBain is apparently owned by the Madeleine Trust.  The Court has no details of that trust but one can probably assume that the defendant is a beneficiary under that trust. 

5.        One might have thought that any agreement for the purchase of the share capital of Blackbrook would be between Aceport as vendor and McBain as purchaser.  In fact the plaintiff and the defendant personally entered into a homemade written agreement between them dated 25^th August 2002 ("the August agreement").  By that agreement the defendant agreed to purchase the Property from the plaintiff for a total purchase price of £900,000 of which £450,000 was to be paid on completion and £450,000 before the end of November 2003. 

6.        The agreement went on to provide that the structure of the deal was that McBain would purchase the entire share capital of Blackbrook for £3,500 and that the balance of the first instalment in the sum of £446,500 would be paid to a client account in Gibraltar or otherwise as the plaintiff might direct. 

7.        Completion duly took place on 29^th October 2002.  A formal share sale agreement, drawn up by English solicitors, was entered into and completed that same day concerning the purchase of the share capital of Blackbrook by McBain for £3,500.  That agreement was expressed to be governed by the law of England and the parties (i.e. McBain and Aceport) submitted to the non-exclusive jurisdiction of the English courts.  There was no governing law or jurisdiction clause in the August agreement.  The sum of £446,500 was also paid on completion in accordance with the August agreement. 

8.        It followed that a balance of £450,000 was outstanding and this was due to be paid by the defendant before the end of November 2003.  In fact the defendant failed to pay it at that time.  There were numerous subsequent requests for payment by e-mail from the plaintiff to the defendant.  No valid excuse for non-payment was put forward by the defendant and eventually, one year later in December 2004, he paid the sum of £150,000 to the client account in Gibraltar, leaving £300,000 outstanding. 

9.        There followed considerable e-mail correspondence between the plaintiff and the defendant whereby the plaintiff pressed for the balance and the defendant made various promises that payment would be forthcoming shortly.  To give but one example, he sent an e-mail on 23^rd December 2004 referring to the payment of £150,000 and stating that he would make two more payments in January to complete the outstanding balance. It became clear that the defendant was hoping to fund the balance by selling the Property.  Eventually on 14^th February 2006 (i.e. some 14 months after the last payment and over two years after the second instalment of £450,000 should have been paid) the defendant sent an e-mail stating that the proposed purchaser of the Property had raised a question on the 'planning and building' on the orangery at the Property.  He asked if the plaintiff could provide any background or knowledge that he might have on the issue in order to speed the matter along.  The plaintiff replied by e-mail on 16^th February to the effect that the orangery was already built when he had purchased the Property and all he had done was fit out the internal work of the orangery.  By now the plaintiff was threatening to institute proceedings against the defendant in Jersey and the defendant was indicating that the agreements were governed by English law with jurisdiction in the English courts.  There was subsequently further e-mail correspondence with the defendant again asking for assistance in the planning query but without giving any further clarification as to what the problem was.  The plaintiff said that he was unaware of any planning problem and could not help if he was not informed exactly what the alleged problem was. 

10.      Eventually the parties agreed to meet in order to try and settle the position.  They met in Jersey at the Grand Hotel on 9^th March 2006 and the plaintiff alleges that they came to terms.  He has exhibited a written document which he says is, for the most part, in the defendant's handwriting and reads as follows:-

"Robert, to confirm that in order to settle the outstanding payment on Walled Garden, as per our agreement I am currently in the process of organising a mortgage which will enable me to complete the payments.

If this is not able to be completed in a timely manner then I shall arrange for payment to be completed in three instalments over April, May and June [2006].  My preference is to finalise the payments in one tranche in the next few weeks however the above shall be the backstop solution. 

I shall keep you updated as to progress.

Regards

Russell King

9 March 2006"

The plaintiff says that he wrote in the figure 2006 referred to in square brackets above.  He also inserted the date of 9^th March 2006 and added two lines at the foot of the document which read "I confirm that I owe Robert Ball the sum of £300,000 plus interest and I will discharge this debt as detailed above."  He handed the document back to the defendant who then initialled the change concerning 2006 but added "the figure to be agreed" after the two lines which the plaintiff had added at the foot of the document.  He initialled those changes

11.      In his affidavit the defendant says that this does not evidence an agreement between him and the plaintiff.  He admits that some of the letter is in his handwriting but says that it does not amount to an agreement and was never signed by him.  He says that he did not sign after the additional passage handwritten by the plaintiff and he did not agree that any interest was owed. 

12.      In early May 2006 a further sum of £65,000 was paid by the defendant to the client account in Gibraltar.  The plaintiff protested that the payment should have been for £100,000 in accordance with the March 2006 agreement and the defendant subsequently assured him in e-mails dated 15^th and 22^nd May that the correct instalments would be sent in May.  Despite this, no further payments have been made.  In an e-mail dated 5^th June the defendant blamed this on the fact that he had lost three purchasers because of 'the situation on the property'.  The plaintiff therefore asserts that the sum of £235,000 remains due. 

13.      On 6^th June 2006 the defendant issued proceedings in the Southampton County Court seeking a negative declaration to the effect that he is not liable to the plaintiff in the sum of £200,000 or any other sum.  The Particulars of Claim are brief and not specific.  After reference to an agreement (of which no particulars are given) between the plaintiff and defendant the two key paragraphs read:-

"3    There was a representation that material development at the property complied with the terms of planning permission permitting such material development.  It was accordingly an express alternatively an implied term of the said sale that material development at the property complied with the terms of planning permissions permitting such material development.

4   The said material development does not comply with the terms of such conditions.  The claimant has suffered loss.  Full particulars of such planning permissions and the non-compliance will be provided on disclosure.  The claimant is entitled to damages for non disclosure representation and/or breach of contract."

14.      On 15^th June 2006 the plaintiff issued the current proceedings in this Court by way of summons claiming £235,000 pursuant to the August agreement and the March 2006 agreement, together with interest.  The matter came before the Court for the first time on 23^rd June at which time it was placed on the pending list with the defendant's advocate giving notice that the defendant proposed to challenge the jurisdiction. 

15.      As far as the English proceedings are concerned, it appears that, due to an error in the court office, the wrong procedure was followed.  The plaintiff entered an appearance by returning the acknowledgment of service and his solicitors did not tick the box to indicate that he intended to dispute that court's jurisdiction.  Indeed Messrs Turners, the plaintiff's English solicitors, wrote on 20^th June saying that they had advised Sinels that the Jersey proceedings should be withdrawn or discontinued leaving the parties to litigate their dispute in the Southampton County Court.  On that aspect we were shown a late affidavit from the plaintiff in which he said that he had not authorised his English solicitors to take that stance.  Be that as it may, the parties have agreed through their respective solicitors that the defendant will amend his particulars of claim in the English proceedings so as to be in the correct form but that this need not take place until the outcome of the application before us in respect of the Jersey proceeding is known. 

The test on a forum application

16.      This is a case where the plaintiff is suing the defendant in Jersey as of right because the defendant resides in Jersey.  The approach in such cases was authoritatively established by the House of Lords in Spiliada and Maritime Corp v Cansulex Limited [1986] 3 All ER 843, and in a number of local cases it has been held that Jersey law is to like effect.  The principle is that a stay should only be granted where the Court is satisfied that there is some other available forum which is the appropriate or natural forum for trial of the action.  Where the plaintiff sues as of right, the burden rests upon the defendant to show not just that Jersey is not the natural or appropriate forum but to establish that there is another available forum which is clearly or distinctly more appropriate than Jersey.  In seeking to ascertain which is the appropriate or natural forum the court will consider the forum with which the action has the most real and substantial connection.  It will consider all relevant factors including the governing law, the residence of the parties, the whereabouts and availability of witnesses etc. 

17.      If the Court concludes that there is some other available forum which is clearly or distinctly more appropriate for the trial of the action, it will ordinarily grant a stay unless there are circumstances by reason of which justice requires that a stay should nevertheless not be granted.  On this aspect of the enquiry, the burden of proof shifts to the plaintiff. 

The parties' submissions

18.      Mr Franckel submitted that almost all the factors which fell to be considered under Spiliada pointed towards England as the natural forum.  We would summarise his submissions briefly as follows:-

(i)        The agreement was concerned with the sale of shares in an English company (Blackbrook) by another English company (Aceport) to an overseas company (McBain).

(ii)       In reality, the underlying transaction which was at the heart of this agreement was the sale of English real property situated in Hampshire. 

(iii)      The proper law of the October 2002 agreement was expressly stated to be the law of England and the parties to that agreement submitted to the non-exclusive jurisdiction of the English courts in relation to that agreement.  Although the August agreement was silent as to its proper law, it was overwhelmingly probable that any court would find that it was governed by English law given that it was concerned with the sale of English real property owned by an English company and that one of the parties resided in England.  The only connection at that stage with Jersey was that the defendant resided in Jersey.  Furthermore the August agreement clearly had to be read in conjunction with the October agreement where there was an express choice of English law and submission to the English courts. 

(iv)      The real dispute between the parties was whether the defendant has a counterclaim for damages for misrepresentation on the issue of whether planning permission for the Property had been complied with.  That will clearly be an English planning permission and has no connection with Jersey. 

(v)       Apart from the defendant, it seemed likely that all of the witnesses will be based in England.  Thus any expert witnesses necessary to deal with the planning permission issue will almost certainly reside in England.  As to witnesses of fact, apart from the plaintiff and the defendant, the likely witnesses are the English solicitors who acted for the parties at the time of the agreement in 2002. 

(vi)      To the extent that the plaintiff relied on the March 2006 agreement, it was probable that this agreement too was governed by English law because it arose entirely out of the August agreement in 2002 and was simply concerned with the timing of payments due under that original agreement.  The mere fact that it was made in Jersey on a brief visit to the island by the plaintiff was insufficient to lead to it being governed by the law of Jersey.  Even if, contrary to his primary submission, the March 2006 agreement was governed by Jersey law, this did not affect the position as the underlying dispute was still concerned with whether the defendant had a counterclaim because of misrepresentation and this related entirely to English property and what was said or done by the parties at the time of the original agreement in 2002, which had no connection with Jersey. 

(vii)     In addition there were proceedings in existence in the alternative forum namely England.  Mr Franckel accepted that the existence of proceedings in the alternative forum was not determinative but it was nevertheless a highly relevant factor when considering the various Spiliada factors.  It was contrary to the interests of justice for there to be parallel proceedings in separate jurisdictions with the accompanying expense and the risk of inconsistent findings between different courts. 

(viii)    In summary, apart from the fact that the defendant resided in Jersey and that the March 2006 agreement was made in Jersey during a short visit to the island by the plaintiff, all the other factors pointed towards England as the natural forum and the fact that there were existing proceedings in that forum, where the matters in dispute could be resolved, was an additional factor supporting the application for a stay in Jersey. 

19.      Mr Sinel concentrated on the merits of the case.  He pointed out that the claim arose from a simple agreement made as long ago as 2002, since when the defendant, through the relevant company, had been in possession of the Property.  The outstanding balance of £450,000 should have been paid in full by November 2003 at which time, even on the defendant's case, there was no question of any problem with the planning permission. 

20.      He pointed out that, according to his own affidavit, the defendant had first raised the planning problem approximately 18 months ago.  Yet, he had continued on many occasions thereafter to assure the plaintiff that he would pay the outstanding amount in full.  Indeed, even after the correspondence referred to at para 9 above, the defendant had made further promises of payment and had gone as far as to enter the March 2006 agreement when he agreed to pay the outstanding amount of £300,000 in three monthly instalments in April, May and June, although he had in fact only paid £65,000.  All of this was completely inconsistent with a belief that he had a counterclaim by reason of a misrepresentation in relation to the planning permission. 

21.      Indeed Mr Sinel poured scorn on the alleged planning problem.  He pointed out that the particulars of claim in the English proceedings were completely deficient of detail and were wholly inadequate as a pleading.  Furthermore, he pointed out that, in his affidavit for this application, the defendant had given no more detail about the alleged planning problem.  Everything was in vague generalities and it was impossible to tell either from the correspondence or from anything stated in any of the proceedings exactly what the alleged planning problem was.  It was, he submitted, simply a smokescreen and a further attempt to delay payment.  During his submissions on this topic, when commenting on the lack of detail in the defendant's affidavit, he went so far as to say that Mr Franckel must have advised the defendant that he ought to put in an appropriate level of detail about the alleged planning problem in order to satisfy the Court that there was a genuinely arguable defence.  This provoked Mr Franckel to jump to his feet and assert that, as Mr Sinel had speculated about his legal advice, he could say to the Court that he had in fact advised the defendant that no great level of detail was required in his affidavit because this was a forum application, where the Court would not be considering the merits of the case but only where the case should be tried.  It was for that reason that there was not much detail in the affidavit.  Mr Sinel's response was to say that this did not explain the lack of particularity in either the correspondence or the English proceedings. 

22.      As to the English proceedings themselves, Mr Sinel submitted that they were clearly a tactical manoeuvre designed to cause further delay and expense to the plaintiff.  The proceedings did not even set up a counterclaim for damages for misrepresentation.  They simply asked for a negative declaration that the defendant did not owe the plaintiff money.  He referred to Dicey & Morris, Conflict of Laws (13^th Edition) at paras 12-003 and 004 where it is stated that great caution must be exercised before placing any weight on proceedings for a negative declaration as such proceedings lend themselves to improper attempts at forum shopping.  In short, Mr Sinel submitted that the English proceedings should be ignored.  There was no real defence to the plaintiff's claim, the alleged defence of misrepresentation was bogus and the English proceedings themselves were not genuine; if there was an arguable defence, it could as easily be raised in the Jersey proceedings.

23.      Turning to the various points concerning the appropriate forum, Mr Sinel argued that this was essentially a simple case of debt under a written agreement with a potential defence of misrepresentation in relation to planning matters.  He said that it was entirely a factual dispute which would turn on what was or was not said or implied about planning matters.  Nothing would turn on any specific provisions of English law.  The answer under Jersey law would be the same as under English law.  This Court was well used to trying cases governed by English law in such circumstances.  Furthermore, even if most of the witnesses came from England, this was not a difficulty given the short distance between the island and England.  He submitted that the March 2006 agreement (which the plaintiff relied upon as well as the August agreement) was governed by the law of Jersey, having been made here.  In the circumstances he submitted that the defendant had failed to discharge the burden of showing that England was clearly or distinctly the more appropriate forum. 

24.      Finally he submitted that, even if the defendant had discharged this burden, the interests of justice required that the Court should nevertheless not stay the proceedings.  This was because of the difficulties of enforcement.  Even if the plaintiff were successful before the Southampton County Court, he would not be able to enforce any judgment against the Property as that was owned by a company that was in turn owned by a trust.  The plaintiff would therefore have to return to Jersey in order to enforce the judgment against the defendant here.  Any judgment of the Southampton County Court would not be enforceable by registration under the Judgments (Reciprocal Enforcement) (Jersey) Law 1960 ("the 1960 Law") (see Re Hardwick [1995] JLR 245).  The plaintiff would therefore have to institute original proceedings.  There would be great scope in those circumstances for the defendant to delay matters and force the plaintiff to run up yet further costs.  For those reasons the interests of justice required that the plaintiff should be able to proceed with the present proceedings in Jersey. 

Decision

25.      The Court acknowledges the force of many of the points made by Mr Sinel concerning the apparent weakness of the defence of misrepresentation concerning a planning matter.  However, Mr Franckel's intervention concerning the nature of his legal advice was a salutary reminder that this is not an application for summary judgment; it is a hearing simply to decide whether Jersey or England is the natural forum.  Mr Sinel made it clear that, if the case remained in Jersey, he would be bringing an application for summary judgment.  Such an application could equally well be brought in the English proceedings.  That would be the time (whether in Jersey or England) to decide whether the defendant's defence is not genuine or reasonably arguable as Mr Sinel submits.  It would be wrong, on the basis of the limited evidence put forward for a forum hearing, to decide the case on the basis that the defendant's defence is not genuine.  We therefore proceed on the basis that there is a dispute between the parties over whether the defendant is entitled to set off against the sum of £235,000 (which is admitted to be outstanding) any amount which he recovers by way of damages for misrepresentation concerning the planning position at the Property. 

26.      Not without some reluctance - because we have considerable sympathy for the plaintiff's position - we have concluded that, essentially for the reasons put forward by Mr Franckel, the defendant has satisfied us that England is clearly and distinctly the more appropriate forum.  The dispute is ultimately concerned with an agreement between an English resident and a Jersey resident, very probably governed by English law, concerning English real property and whether there has been a misrepresentation concerning the planning permission attached to such property, which permission was of course issued by an English authority.  Apart from the defendant, the plaintiff and all the witnesses are likely to be resident in England and the court of trial may have to consider the effect and meaning of English planning permissions.  In essence, the only connection with Jersey is that the defendant lives here.  We do not think it a significant factor whether the March 2006 agreement is governed by the law of Jersey or the law of England because, on any view, it was simply an agreement to pay an amount due pursuant to the August agreement.  We would add that we have placed minimal weight upon the existence of the English proceedings.  We note that they were started only a matter of days before the Jersey proceedings, that they have not advanced to any extent and they seek only a negative declaration.  Nevertheless we are satisfied for all the other reasons advanced by Mr Franckel that England is clearly and distinctly the appropriate and natural forum.

27.      Having so concluded we have then considered whether the fact that any judgment in the Southampton County Court could not be enforced in Jersey by registration under the 1960 Law is sufficient to cause us not to stay the proceedings; but we have concluded that it is not.  Although neither counsel was able during the hearing to assist us on this point, it is clear that, although not enforceable under the 1960 Law, any final and conclusive judgment of the Southampton County Court for a sum of money would, be enforceable at common law (see Rule 35 Dicey & Morris at para 14 R-018).  The Southampton County Court would be deemed to have had jurisdiction to resolve the matter and give the judgment under the relevant conflict of law principles because the defendant is the claimant in those proceedings.  This Court would therefore enforce any judgment of the Southampton County Court in this matter without re-examining the merits.  The scope for delay by the defendant would be minimal.  In the circumstances, although it is true that the plaintiff would be put to some extra expense by reason of having to institute new proceedings in Jersey to enforce any judgment of the Southampton County Court, any prejudice would be minimal and certainly not sufficient to cause us to rule that the case should be tried in this forum rather than in the natural forum.

28.      For these reasons we allow this application and stay the proceedings. 

Authorities

Spiliada and Maritime Corp v Cansulex Limited [1986] 3 All ER 843.

Dicey & Morris, Conflict of Laws (13^th Edition).

Judgments (Reciprocal Enforcement) (Jersey) Law 1960.

Re Hardwick [1995] JLR 245.