28
Jun
21
Articles, Travel & Cross Border Claims
The Weekly Roundup: the Are You Being Served? Edition

Some six months after Exit Day, Brexit continues in its role as the gift that keeps on giving, and we suggest that the cases we precis in this week’s Weekly Roundup will be of particular interest to those litigating the pre-Exit Day tsunami of claims, many of which (terrifyingly) have yet to be served. Those representing Defendants are especially motivated to challenge jurisdiction and extensions of time for service of proceedings now that the recast Brussels Regulation is no longer in force and these challenges, if successful, have the effect of depriving a Claimant entirely of the right to bring proceedings within the jurisdiction. One thing seems certain: we’re going to be seeing a lot of these challenges in the coming months.

 

I’m Free! (ly Disclosing Material Prejudicial to My Case): Formal Holdings and others v Frankland Assets Inc and others [2021] EWHC 1415 (Comm)

The decision of HHJ Klein (sitting as a High Court Judge) in Formal Holdings and others v Frankland Assets Inc and others [2021] EWHC 1415 (Comm) provides a salutary reminder of the importance of full and frank disclosure in without-notice applications for extensions of time for serving claim forms.

The claimant sought an extension of time because the defendant was in Switzerland; the claimant had (incorrectly) understood service could be effected in Switzerland by fax; and when the mistake came to light there was insufficient time for the Foreign Process Section to effect service before the claim form expired. This was granted on a without-notice application.

The defendant challenged jurisdiction contending that the claimant had failed to give full and frank disclosure when making the application, and that the order should be set aside as a result.

On the ‘fair presentation’ obligation, the judge referred to Popplewell J’s judgment in Fundo Soberano de Angola v. Dos Santos [2018] EWHC 2199 (Comm) at [50-53] (in turn quoting Ralph Gibson LJ’s summary in Brink’s Mat Ltd. v. Elcombe [1998] 1WLR 1350 at 1356F to 1357G), which makes the following points:-

  1. The duty of the applicant is to make “a full and fair disclosure of all the material facts”;
  2. The material facts are those which it is material for the judge to know in dealing with the application as made, materiality is to be decided by the court;
  3. The applicant must make proper inquiries before making the application. The duty of disclosure applies not only to material facts known to the applicant but also to any additional facts which he would have known if he had made such inquiries;
  4. The extent of the inquiries necessary will depend on all the circumstances of the case including (a) the nature of the case (b) the order for which application is made and the probable effect of the order on the defendant; and (c) the degree of legitimate urgency and the time available for the making of inquiries;
  5. If material non-disclosure is established the court will be “astute to ensure that a plaintiff who obtains [an ex parte injunction] without full disclosure…is deprived of any advantage he may have derived by that breach of duty”;
  6. Whether the non-disclosure is of sufficient materiality to justify or require immediate discharge of the order depends on the importance of the fact to the issues which were to be decided by the judge on the application. Whether or not the non- disclosure was innocent (i.e. the fact was not known to the applicant or its relevance was not perceived) is important but not decisive.
  7. The duty is necessary to enable the court to ensure a fair process. It is what is required if the court is to depart from usual practice and only hear one side before making an order. The court must be able to rely on the applicant to present the evidence and argument in a fair and even-handed manner. It is a duty owed to the court to ensure the integrity of the court process;
  8. The ultimate touchstone is whether the presentation of the application is fair in all material respects;
  9. The applicant themselves, as well as the legal advisers, are under this duty;
  10. Even where there is material non-disclosure which justifies or requires the immediate discharge of the ex parte order, the court has a discretion to continue the order, or to make a new order on terms.

In the particular (very complicated) circumstances of the case, the judge held that the claimant had failed to make full and frank disclosure of no less than 9 material matters. These were highly relevant to whether the overriding objective would be advanced by making the extension order. The judge held that he would likely not have made the order he did, had he been aware of them. The order was liable to be discharged.

The judge then went on to consider whether he should exercise his discretion to continue the order notwithstanding. The judge noted that this discretion should be exercised sparingly, to uphold the public interest in providing full and frank disclosure; and to proportionality between the ‘punishment’ and the ‘offence’.

He concluded that the order should be discharged, noting that this would be to follow the general rule; that the failure was serious and that the order was at risk of facilitating abusive conduct by the claimant; that the matters that had not been disclosed were well known to the claimant who cannot have forgotten or overlooked them; and the earlier order would not have been made had the disclosure been made. Discharging the order would be proportionate – the impact on the claimant was significantly less serious than it might otherwise have been because there was no limitation problem and in fact a second claim against the defendant had already been commenced. Any order other than discharge would (in effect) not apply any sanction for the claimant’s default.

Given the fact of the second claim, the discharge of the order did not deprive the claimant of a remedy against the defendant, so the impact of the discharge of the order was far less than it would have been if (say) the limitation period had already passed. Clearly, if discharge of the order would have deprived the claimant of a claim, this would be a very important factor in the balance when weighing the proportionality of the sanction against the default. But, in such a case, claimants cannot expect the court to grant them an indulgence, particularly given the judicial emphasis on complying with rules and court orders, and the important public interest which is at stake. Applications to extend time for service where there are or may soon be limitation issues are particularly high risk and it is essential to make sure such applications are presented fairly in all material respects.

About the Author

Andrew Spencer was called to the Bar in 2004, and is listed in the Legal 500 as a Band 1 practitioner in travel law. He acted for the Claimant in the seminal case of Japp v Virgin Holidays Limited [2013] 11 WLUK 131, in which the Court of Appeal considered the time at which applicable local standards should be determined for the purposes of liability under Regulation 15(2) of the Package Travel Regulations; but he is equally comfortable acting for Claimants and Defendants in all travel related claims.

 

Going Up (to the Court of Appeal)?: Stait v Cosmos Insurance Limited of Cyprus, unreported, 24th June 2021

Stait v Cosmos Insurance is the latest in a line of authorities dealing with habitual residence in a jurisdictional context. It is also the first, at least the first known to the author, to grapple with the position of members of the British Armed Forces in this context (as opposed to their position under the Rome II Regulation relating to applicable law).

The facts

Mr Stait is a British national and a member of the Royal Air Force. There is no doubt that until 2016 he and his family were habitually resident in England. In October 2016, however, he was posted to the British Sovereign Base in Cyprus for a five year posting; he intends to return later this year. In October 2017 he was involved in a road traffic accident whilst cycling along the main public highway from Limassol to Paphos, as a result of which he sustained significant life-changing injuries. In due course, in October 2020 his solicitors issued proceedings against the insurer of the car which had collided with him. The Defendant insurer applied for a declaration that the courts of England and Wales do not have jurisdiction to hear the claim, and that therefore service of the proceedings should be set aside.

The application

The Defendant’s application was founded on the assertion that at the time the claim form was issued (which is the critical date for these purposes – cf Canada Trust Co v Stolzenberg (No.2) [2000] 3 WLR 1376) Mr Stait was not domiciled within the jurisdiction within the meaning of Article 62 of Regulation (EC) No.1215/2012 (‘recast Brussels’). The Claimant accepted that if this had been the case, the Defendant’s application would have been well founded, but disputed the assertion as a matter of fact.

the law

Pursuant to paragraph 9 of Schedule 1 to the Civil Jurisdiction and Judgments Order 2001 (SI 2001/3929):

An individual is domiciled in the United Kingdom if and only if—

(a) he is resident in the United Kingdom; and

(b) the nature and circumstances of his residence indicate that he has a substantial connection with the United Kingdom.

The Defendant accepted that the Claimant had a substantial connection with the UK, but contended that he was not resident there at the time proceedings were issued.

The principles relevant to this issue were helpfully summarised at paragraph 44 of Sang Youl Kim v Sungmo Lee [2020] 8 WLUK 82 (references are to defendants, but are equally applicable to claimants):

“(1) It is possible for a defendant to reside in more than one jurisdiction at the same time.

(2) It is possible for England to be a jurisdiction in which a defendant resides even if it is not his principal place of residence (ie even if he spends most of the year in another jurisdiction).

(3) A person will be resident in England if England is for him a settled or usual place of abode. A settled or usual place of abode connotes some degree of permanence or continuity.

(4) Residence is not to be judged according to a ‘numbers game’ and it is appropriate to address the quality and nature of a defendant’s visits to the jurisdiction.

(5) Whether a defendant’s use of a property characterises it as his or her ‘residence’, that is to say the defendant can fairly be described as residing there, is a question of fact and degree.

(6) In deciding whether a defendant is resident here, regard should be had to any settled pattern of the defendant’s life in terms of his presence in England and the reasons for the same.

(7) If a defendant visits a property in England on a regular basis for not inconsiderable periods of time, where his wife and children live, in order to see his wife and children (including where the centre of the defendant’s relationship with his children is England), such property has the potential to be regarded as the family home or his home when in England, which itself is evidence which may go towards supporting the conclusion that England is for him a settled or usual place of abode, and that he is resident in England, albeit that ultimately it is a question of fact and degree whether he is resident here or not, having regard to all the facts of the case including any discernible settled pattern of the defendant’s life or as it has also been put according to the way in which a man’s life is usually ordered.”

The Claimant contended that the first and second principles were of particular relevance in this case; it is perfectly possible for a person to be resident in more than one place. The Claimant sought to frame the question as one of abandonment of residence: by the time the claim form was issued on 29th October 2020, had Mr Stait abandoned his residence in England and Wales?

the judgment

The judge rejected this characterisation, but instead approached the question of residence afresh as at the date of issue. He held that the Claimant must positively satisfy him that he was residing within the jurisdiction as at the date of issue, without reference to what had gone before. Thus the evidence of the Claimant’s nationality, his immigration status, his family connections and so forth all fell away, leaving only the evidence that at the time of issue he was physically present in Cyprus and had not been able to return to England more than once in 2020. As a result, so the judge found, he could not establish habitual residence within the jurisdiction at the time of issue.

comment

It is ventured that this decision is harsh indeed. Considering the Claimant’s residential status as at the time of issue, without giving due regard to his life and intentions before and after that time, places him at a significant disadvantage, and appears to be inconsistent with the authorities, in particular those on dual residence, and with the decision in Chowdhury v PZU SA, unreported, 5th January 2021, currently under appeal, in which the court accepted that it should turn its mind to whether or not the Claimant had abandoned his place of habitual residence at the time the claim was issued.

Furthermore, the effect of the decision is that servicemen and women posted abroad when serving in the British Armed Forces lose the jurisdictional rights associated with their British residence. Neither counsel was able to find any authority for this surprising proposition, or indeed any authority that assisted with the issue. As a matter of policy, however, it seems to the author that there is considerable force in the argument that if Mr Stait is not resident in England for jurisdictional purposes, his membership of the Armed Forces deprives him of the very jurisdictional protections recast Brussels is designed to provide. This would be a disadvantage associated with service which ought to be examined at a higher court level; and the Claimant is seeking permission to appeal the decision.

About the Author

Called to the Bar in 1997, Sarah Prager has been listed in the legal directories as a Band 1 practitioner in travel law for many years. Together with her colleagues at 1 Chancery Lane, Matthew Chapman QC and Jack Harding, she co-writes the leading legal textbook in the area, and has been involved in most of the leading cases in the field in the last decade. Last year she was named Best Lawyers’ Travel Lawyer of the Year 2020/2021 and the Lawyer Monthly Women in Law Awards 2020: Personal Injury, and she has recently been invited to join the Consultative Group of Experts to the UNWTO Committee for the Development of an International Code for the Protection of Tourists.

 

…And Finally…

In the latest in our occasional series of Scottish cases, we can reveal that lying down drunk in the road at 5am wearing clothes the same colour as the surface of the highway is no bar to recovery of damages. In fact, it is, so the Inner House of the Court of Session has held, only to be expected. In Cameron v Swan [2021] 6 WLUK 131 the Lord Ordinary assoilzied the driver of a bakery van (have we mentioned before how much we love Scottish legalise – from now on we’re using the word ‘assoilzie’ instead of ‘absolve’) on the basis that the van driver, going about his business at the beginning of his day, was not to blame for running over the drunken pedestrian. He had been charged with, and pleaded guilty to, careless driving, and this, pursuant to s.10(2) of the Law Reform (Miscellaneous Provisions) (Scotland) Act 1968, gave rise to a rebuttable presumption of negligence, which the appeal court found had not been rebutted. The reclaiming motion (appeal, to you and me) was therefore allowed. In doing so the Lord President of the Inner House excluded much of the Defendant’s expert evidence, given by a psychologist specialising in visual perception and situation awareness, on the grounds that it did not assist the court (applying Kennedy v Cordia (Services) LLP [2016] 1 WLR 597, and ignoring Griffiths v TUI [2019] 9 WLUK 576, which does not seem to have been cited), and stated that:

“A driver has a duty to take reasonable care for other persons using the highway; even persons who are lying on it in a drunken stupor. Drivers are not entitled to assume that other users of the road will do so with reasonable care. Common experience is that many do not. The erratic behaviour of intoxicated persons in the early hours of the morning in town centres is something which requires to be guarded against. Coming across the intoxicated, whether vertical or horizontal, in the middle of an urban street is something which can and does happen.”

Having regard to all the circumstances, the Claimant was found to have contributed significantly to the accident, and his damages were reduced by 65% as a result, but the team can’t help but wonder whether it is really reasonably foreseeable that a driver making early morning deliveries might encounter a pedestrian lying down drunk in the road at 5am. Does the fact that the road in question was located in central Paisley and the night in question a Saturday sufficiently distinguish the case from the tranquil scene to be found outside 1 Chancery Lane at the weekend, we wonder?

Written by or involving: Sarah Prager, Andrew Spencer

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