Judgments - Phillips and Another (suing as administrators of the estate of Christo Michailidis) V Symes and Others

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36.  So much for the court’s power to dispense with service under r.6.9. Should the court in its discretion exercise such power? That the court would do so in a purely domestic context is surely clear beyond argument, and this notwithstanding that the exercise of the power would operate to defeat a prospective Limitation Act defence. Is it, however, appropriate to make an order which has the effect of altering the priority of the seisin of proceedings under an international Convention?

37.  On any view the power is one to be exercised sparingly and only in the most exceptional circumstances. It is difficult to suppose, for example, that it could ever properly be exercised if there had been no process of service whatever. Consider in this regard article 27(2) of the Lugano Convention:

“A judgment shall not be recognised...(2) where it was given in default of appearance, if the defendant was not duly served with the document which instituted the proceedings or with an equivalent document in sufficient time to enable him to arrange for his defence.”

There can be no question here but that the respondents were served with “an equivalent document": they had not only the German translation of the omitted claim form but the detailed particulars of claim (in both English and German) as well.

38.  In my judgment the circumstances here were indeed exceptional, the call on the exercise of the court’s discretion compelling. As stated, the respondents plainly suffered no prejudice whatever by the failure to serve the original claim form but rather sought to exploit it, to steal a march on the appellants. And the essential faults here were those of the Swiss authorities: of the judge or his clerk at the Zurzach court (however well-intentioned) in mistakenly removing the form from the package of documents for service and the Swiss Post Office in failing to find Nefer’s post-box (in each case substantially delaying notification of the problem to the appellants). If, moreover, the respondents are correct in their arguments under articles 21 and 22 of the Lugano Convention that, if the Swiss court here is properly to be regarded as first seised of the proceedings as between the appellants and the respondents, then neither the English court (in respect of the appellants’ claim against the English defendants) nor the Swiss court (in respect of the respondents’ claim against the appellants) has even a discretion to stay those respective claims, that would provide yet a further compelling reason for declaring the English court to be first seised of the whole action.

39.  In short, the facts of this case could hardly be further from those of Knauf UK GmbH v British Gypsum Ltd [2002] 1 WLR 907 which involved a naked attempt to use CPR r.6.8 to subvert the Brussels Convention. I for my part have no doubt that discretion under r.6.9 should (if necessary) be exercised here in the appellants’ favour and that the service effected on the respondents on 19 January 2005 should be declared valid and effective. If your Lordships share my view, it follows that none of the other issues needs to be considered. Given, moreover, that a completely new regime has now been put in place both by the EU (see the Jurisdiction and Judgment Regulation No. 44/2001 of 22 December 2000) and by the Lugano Convention states (see the new Lugano Convention signed on 30 October 2007 and expected shortly to be ratified)—whereby the time of seisin is defined autonomously instead of by the member states themselves—it is surely inappropriate to review cases like Dresser and The Sargasso which will imminently lose all relevance.

40.  In the result I would allow this appeal, set aside the judgment of the Court of Appeal, restore paragraphs 1 and 4 of the order of the judge at first instance, and order that the questions of costs in this House be adjourned for the parties to make written submissions within 14 days.

LORD MANCE

My Lords,

41.  I have had the benefit of reading in draft the opinion of my noble and learned friend, Lord Brown of Eaton-under-Heywood. For reasons appearing in his opinion, I agree with him that, for the purposes of both English law and the Lugano Convention, effective service of the proceedings out of the jurisdiction was, and falls to be regarded as, made on Mrs Nussberger on 19th January 2005 without any retrospective validation. The English court was thus on any view definitively seised of the proceedings as served on her on that date.

42.  I would, for my part, also be prepared to go further and review the decisions of the Court of Appeal in Dresser v. Falcongate Freight Management Ltd. [1992] QB 502 and Neste Chemicals SA v. DK Line SA (The Sargasso) [1994] 2 Ll. R. 6. I would conclude, having done so, that the English court was definitively seised of the whole proceedings from a still earlier date, being the date either of issue (16th December 2004) or of the freezing order (15th December 2004). In deciding whether to review those previous Court of Appeal decisions, the imminent replacement of the Lugano Convention would seem to me at best a neutral factor, once permission was given, as it was, to appeal to this House. I would not be deterred from such a review by the suggestion that it might affect any other current cases where jurisdiction in one state or another had been accepted on the basis of Dresser and The Sargasso. If such cases exist, then, unless they are at a sufficiently early stage for issues of jurisdiction to be raised and argued in the ordinary course, it would probably be too late to raise them at all, but, even if not, it could well be possible for any decision by the House on this appeal to be so framed as to ensure that the settled course of such other cases was not disturbed.

43.  The Court of Appeal in Dresser was faced with a choice, which it resolved in a different way to Hobhouse J at first instance who had taken the issue of the writ as the moment of seisin. In my view, the choice made by Hobhouse J is, and would have been, preferable on several grounds.

44.  First, the Court of Appeal’s contrary solution in Dresser was influenced by a view of the Advocate General’s reasoning in Zelger v. Salinitri (Case 129/83) [1984] ECR 2397 and of the significance of the European Court’s use in its judgment in that case of the word “definitively", which were the subject of a, to my mind convincing, critique in the judgment of my noble and learned friend Lord Hoffmann in Canada Trust Co. v. Stolzenberg (No. 2) [2002] 1 AC 1, 18B-19F.

45.  Second, the Court in Dresser never contemplated the rigid rule later laid down by the Court in The Sargasso - indeed, one may even speculate that, if it had, then the advantages in this respect of issue over service might have prevailed. The important qualification which Bingham LJ stressed in his leading judgment in Dresser in 1991 was that it would be wrong, at so early a stage in the life of the Convention, “to attempt to formulate any rule which will govern all problems which may arise in the future", and in this regard Bingham LJ said at p.523F that “the most obvious exception is where an actual exercise of jurisdiction (as by the granting of a Mareva injunction or the making of an Anton Piller order or the arrest of a vessel) precedes service: plainly the court is seised of proceedings when it makes an interlocutory order of that kind". Yet in The Sargasso in 1994 the Court of Appeal was prepared to re-examine this qualification and to reject the existence of “any genuine exceptions to the rule that the date of service marks the time when an English court becomes definitively seised of proceedings” (per Steyn LJ at pp 11-12; and see per Peter Gibson LJ and Sir Tasker Watkins at pp 12-13). It adopted the argument (with which I would respectfully disagree) that the power, under article 24 of the former Brussels and present Lugano Convention, to give interim relief in aid of foreign proceedings militates against Bingham LJ’s view in Dresser that an English court giving such relief in aid of its own substantive proceedings is definitively seised of such proceedings.

46.  Third, Bingham LJ in Dresser (at p.523A-C) indicated seven respects in which service had possible significance in English procedural law. These were that:

“(1) the court’s involvement [in the issue of a writ is] confined to a ministerial act by a relatively junior administrative officer; (2) the plaintiff has an unfettered choice whether to pursue the action and serve the proceedings or not, being in breach of no rule or obligation if he chooses to let the writ expire unserved; (3) the plaintiff’s claim may be framed in terms of the utmost generality; (4) the defendant is usually unaware of the issue of proceedings and, if unaware, is unable to call on the plaintiff to serve or discontinue the action and unable to rely on the commencement of the action as a lis alibi pendens if proceedings are begun elsewhere; (5) the defendant is not obliged to respond to the plaintiff’s claim in any way, and not entitled to do so save by calling on the plaintiff to serve or discontinue; (6) the court cannot exercise any powers which, on appropriate facts, it could not have exercised before issue; (7) the defendant has not become subject to the jurisdiction of the court.”

47.  Even under English procedural rules as they stood in 1991, I cannot share the Court of Appeal’s view that these constitute clear pointers towards service rather than issue as the appropriate moment for the purposes of seisin under the then Brussels regime. Hobhouse J’s choice provided, as Steyn LJ said in The Sargasso, “a perfectly defensible solution, which yielded a readily comprehensible point of time when the Court becomes seised” (p.10). And, if the qualifications stressed by the Court of Appeal in Dresser are rejected (as the Court in The Sargasso considered that they should be), this alone affects several of the pointers.

48.  The procedural significance attaching to issue and service in these pointers is also no longer the same under the Civil Procedure Rules: thus, as to the first respect, the court’s involvement is often not confined to issue, but extends to effecting service, unless the claimant opts to undertake this (cf CPR 6.3); as to the second, fifth and seventh respects, the procedure now generally applicable under CPR 7.4 and 7.5 provides that a claim form must after issue be served on the defendant, and under these rules and CPR 15.4 it is no longer service of the claim form, but only the service of particulars of claim (which need not appear on the claim form and are not required to be served until 14 days after its service), that imposes on a defendant any obligation to defend; as to the fourth respect, the defendant’s potential lack of awareness of English proceedings until service must be seen in the light of the reality that defendants are very often aware of such proceedings and have often (as in the present case) sought to use the inevitable delay in foreign service to try to avoid them (see further the fourth ground below); and as to both the sixth and seventh respects, the corollary of the Court of Appeal’s view in Dresser that issue gave rise to no new powers over a defendant was its view (rejected in The Sargasso) that, where powers were exercised over the defendant before issue, the court was then seised.

49.  Fourth, the decisions in Dresser and The Sargasso have proved to generate considerable scope for pre-emptive forum shopping, and were also reached without consideration of the particular implications for multi-defendant proceedings. These points are evidenced by a number of cases, including Grupo Torras S.A. v. Al-Sabah [1995] 1 Ll.R. 374; [1996] 1 Ll.R. 7 (CA), Tavoulareas v. Tsavlaris [2004] 1 Ll.R. 455 (CA) and the present. Pragmatic considerations of this nature were, in contrast, influential in the House’s decision in Canada Trust Co. v. Stolzenberg (No. 2) to take the date of issue as the relevant date at which to ascertain whether the defendant was domiciled in a contracting state for the purpose of establishing jurisdiction under article 2 of the Brussels Convention: see especially at pp. 9H and 12 B-E per Lord Steyn (with whose speech Lord Cooke of Thorndon, Lord Hope of Craighead and Lord Hobhouse of Woodborough all agreed) and pp.22F-23C per Lord Hoffmann.

50.  Fifth, there is a natural conjunction between the moment of seisin and the date relevant for the purpose of establishing domicile. Yet Dresser and The Sargasso on the one hand and Canada Trust Co. v. Stolzenberg (No. 2) on the other take different dates for these two purposes. Indeed, to reconcile the result reached in Canada Trust Co. v. Stolzenberg (No. 2) with the decisions in Dresser and The Sargasso, article 52 (which, in the case of a party not domiciled in the state “whose courts are seised of the matter", requires such courts to apply the law of state B in order to determine “whether the party is domiciled” in state B) had to be treated as if the word “is” read “was” (cf pp.9H-10A per Lord Steyn). Otherwise, as Lord Steyn said, the “absurd consequence” would follow that the date relevant to domicile depended on various fortuitous consequences. But such consequences are avoided, more convincingly and consistently with the language, by judging both seisin and domicile as at the date of issue of proceedings.

51.  I would therefore, so far as it may be necessary in order to resolve this appeal, adopt a general test of issue as the relevant date for seisin under article 21 of the Lugano Convention. That moment has the advantage, which the Court identified in The Sargasso, of offering a single certain and easily ascertainable date. But, if that were not to be accepted, then I would revert to the more nuanced test of seisin which the Court adopted in Dresser itself, which in the present case would be satisfied by virtue of the interim injunction granted against the respondents in aid of the substantive English proceedings.

52.   Had I accepted neither of those solutions, I would have been prepared to look carefully once again at the principles which should under the present Lugano regime cover a multi-defendant case such as the present once one defendant has been effectively served. If it were possible to treat a court at least as seised of the whole proceedings once one of the parties to, or at least one of the parties common to, the two sets of proceedings had been served, that would recognise that this event and moment have real significance (cf my observations in Grupo Torras [1995] 1 Ll.R. 374, 419); it would assist to ensure the integrity of proceedings and counter the possibility of procedural manoeuvring by co-defendants.

53.  There can be little doubt, and Mr Martin QC for the respondents accepted, that article 22 requires a single date of composite seisin, which would on the basis of Dresser be ascertained by reference to the date when the first party was served in either set of proceedings. For article 21 to apply there must be proceedings in different contracting states between parties at least some of whom are identical on each side, and article 21 then applies, and only applies, as between those who are identical: The Tatry v. The Maciej Rataj (Case C-406/92) [1999] QB 515. It does not necessarily follow that the court should then be regarded as seised by considering, on an identical party to identical party basis, which party was first served. The Tatry did not concern or consider any such situation. But I need not go so far down a chain of hypotheticals as to express any view on any aspect of the area of multi-party litigation, save that it would have merited at least some further thought.

 
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