ON APPEAL FROM THE HIGH COURT, CHANCERY DIVISION
His Honour Judge Purle QC
HC-2014-000284
Royal Courts of Justice
Strand, London, WC2A 2LL
Before :
LORD JUSTICE MOORE-BICK VICE PRESIDENT OF THE COURT OF APPEAL, CIVIL DIVISION
LORD JUSTICE LEWISON
and
SIR TIMOTHY LLOYD
Between :
NANCY JONG | Appellant |
- and - | |
HSBC PRIVATE BANK (MONACO) SA | Respondent |
MR RICHARD HANDYSIDE QC & MISS MARIANNE BUTLER (instructed by Olswang LLP ) for the Appellant
MR DAVID QUEST QC & MISS LAURA JOHN (instructed by DLA Piper UK LLP ) for the Respondent
Hearing date : 13 October 2015
Judgment
Lord Justice Lewison:
The question on this appeal is whether HHJ Purle QC was wrong to have set aside an order permitting Ms Jong to serve proceedings on HSBC Private Bank (Monaco) SA (“HSBC (Monaco)”), a company domiciled in and carrying on business in Monaco. Between May 2007 and March 2009 HSBC (Monaco) placed a number of trades in foreign currency on her behalf, almost all of which were effected in Monaco and were governed by Monegasque law. Ms Jong claims that HSBC (Monaco) placed some trades that she had not authorised; and conversely that it failed to place others that she had instructed it to do. The contract between Ms Jong and HSBC (Monaco) contained a jurisdiction clause by which Ms Jong agreed that any litigation between her and HSBC (Monaco) would be submitted to the exclusive jurisdiction of the competent Monaco courts at the offices of the bank where the account was open. The complication comes about because Ms Jong has sued two other HSBC companies both of which are domiciled in England and Wales. Her complaint against them is that they failed adequately to consider her complaints about HSBC (Monaco) when she raised complaints in 2008. As a result she went on placing trades through HSBC (Monaco) for longer than she would have done if her complaint had been properly investigated. She claims damages against the English companies for negligence. She wishes to sue HSBC (Monaco) in the same action in England in order to avoid the risk of inconsistent judgments.
It is common ground that Ms Jong has a sufficiently arguable case against HSBC (Monaco); that at least one of the “gateways” specified in paragraph 3 of PD 6B is open; and that the burden was on Ms Jong to satisfy the court that England was “clearly and distinctly” the more appropriate forum in which to try her claim against HSBC (Monaco).
The Judgments Regulation in force when the claim was issued was Council Regulation (EC) 44/2001. Among the recitals to the regulation were the following:
“(11) The rules of jurisdiction must be highly predictable and founded on the principle that jurisdiction is generally based on the defendant's domicile and jurisdiction must always be available on this ground save in a few well-defined situations in which the subject-matter of the litigation or the autonomy of the parties warrants a different linking factor.”
“(14) The autonomy of the parties to a contract, other than an insurance, consumer or employment contract, where only limited autonomy to determine the courts having jurisdiction is allowed, must be respected subject to the exclusive grounds of jurisdiction laid down in this Regulation.”
Article 2.1 provided:
“Subject to this Regulation, persons domiciled in a Member State shall, whatever their nationality, be sued in the courts of that Member State.”
Monaco is not a member state. Article 4. 1 provided:
“If the defendant is not domiciled in a Member State, the jurisdiction of the courts of each Member State shall, subject to Articles 22 and 23, be determined by the law of that Member State.”
Article 23 in turn provided:
“If the parties, one or more of whom is domiciled in a Member State, have agreed that a court or the courts of a Member State are to have jurisdiction to settle any disputes which have arisen or which may arise in connection with a particular legal relationship, that court or those courts shall have jurisdiction. Such jurisdiction shall be exclusive unless the parties have agreed otherwise.”
In (Case C-281/02) Owusu v Jackson [2005] QB 801 the CJEU decided that in a case to which article 2.1 of the Judgments Regulation applied the courts of the member state in which the defendant was domiciled do not have any discretion to decline jurisdiction to try the case, even if the court of a non-member state would be a more convenient forum. The principal reason for that decision was the importance of the principle of legal certainty. It is thus common ground (as it was before the judge) that Ms Jong is entitled to proceed to trial in England against the two HSBC companies domiciled in England and Wales, even though they are willing to be sued in Monaco. The risk of inconsistent judgments and the potentially increased cost of parallel proceedings clearly point in favour of HSBC (Monaco) being sued together with those two HSBC companies.
On the other hand the existence of the exclusive jurisdiction clause gives HSBC (Monaco) the contractual right to be sued in Monaco and nowhere else. If the order permitting service out of the jurisdiction is upheld the contract will have been overridden. In Donohue v Armco Inc [2001] UKHL 64, [2002] 1 All ER 749 Lord Bingham said at [24]:
“If contracting parties agree to give a particular court exclusive jurisdiction to rule on claims between those parties, and a claim falling within the scope of the agreement is made in proceedings in a forum other than that which the parties have agreed, the English court will ordinarily exercise its discretion (whether by granting a stay of proceedings in England, or by restraining the prosecution of proceedings in the non-contractual forum abroad, or by such other procedural order as is appropriate in the circumstances) to secure compliance with the contractual bargain, unless the party suing in the non-contractual forum (the burden being on him) can show strong reasons for suing in that forum. I use the word "ordinarily" to recognise that where an exercise of discretion is called for there can be no absolute or inflexible rule governing that exercise, and also that a party may lose his claim to equitable relief by dilatoriness or other unconscionable conduct. But the general rule is clear: where parties have bound themselves by an exclusive jurisdiction clause effect should ordinarily be given to that obligation in the absence of strong reasons for departing from it. Whether a party can show strong reasons, sufficient to displace the other party's prima facie entitlement to enforce the contractual bargain, will depend on all the facts and circumstances of the particular case.”
The existence of the exclusive jurisdiction clause clearly points in favour of the order setting aside service out of the jurisdiction that the judge in fact made.
Given these two powerful factors each pointing in a different direction it was for the judge to weigh their competing merits. As Lord Templeman observed in Spiliada Maritime Corporation v Cansulex Ltd [1987] AC 460:
“The factors which the court is entitled to take into account in considering whether one forum is more appropriate are legion. The authorities do not, perhaps cannot, give any clear guidance as to how these factors are to be weighed in any particular case. Any dispute over the appropriate forum is complicated by the fact that each party is seeking an advantage and may be influenced by considerations which are not apparent to the judge or considerations which are not relevant for his purpose. …
In the result, it seems to me that the solution of disputes about the relative merits of trial in England and trial abroad is pre-eminently a matter for the trial judge. Commercial court judges are very experienced in these matters. …An appeal should be rare and the appellate court should be slow to interfere.”
The judge identified a number of factors which pointed towards the conclusion that HSBC (Monaco) should be sued (if at all) in Monaco. They were:
Ms Jong chose to open a bank account in Monaco.
She conducted her foreign exchange dealings through that account.
The claim against HSBC (Monaco) is governed by Monegasque law.
The existence of the exclusive jurisdiction clause.
Even without the exclusive jurisdiction clause he considered that the claim against HSBC (Monaco) had a much closer connection with Monaco than with England.
On the other hand he also identified factors that pointed towards a trial in England. They were:
The claims against the two English HSBC companies were governed by English law and there was a considerable factual overlap between the claim against them and the claim against HSBC (Monaco).
The claim against the two English HSBC companies required Ms Jong to prove against the English companies the truth of the allegations that she made about the misdeeds of HSBC (Monaco). If the claim against HSBC (Monaco) failed, the claim against the English companies must also fail.
Ms Jong had the right to sue those two companies in England and could not be prevented from doing so on the ground that another forum was more appropriate.
If there were trials both in England and in Monaco there would be a risk of inconsistent judgments.
Mr Handyside QC who presented Ms Jong’s appeal (but who did not appear below) added some more features of the claim against HSBC (Monaco) which he said connected that claim to England.
The contract containing the exclusive jurisdiction clause was made in England in the sense that that was where Ms Jong signed the relevant documents.
The contracts for the individual trades were made in England because that was where Ms Jong was physically situated when she gave her instructions to HSBC (Monaco) by telephone.
Ms Jong was herself resident in England and Wales.
The judge referred to the fact that when the claim was originally issued HSBC (Monaco) was the only defendant. The two English HSBC companies were subsequently added by amendment. He was not given any explanation of the reason why those two companies were omitted from the original claim. He drew the inference that HSBC (Monaco) was the main defendant, and that the two English companies were “in litigation terms, bit-part players having little, if anything, to add to the main claim against HSBC Monaco.” He also found it difficult to see what damages Ms Jong could recover against the two English companies over and above what she could recover against HSBC (Monaco). Mr Handyside accepted that (a) in order to succeed against the English companies Ms Jong would have to prove her allegations of wrongdoing against HSBC (Monaco) in addition to an assumption of responsibility on the part of the English companies and a breach of duty by them (b) the quantum of damages recoverable against the English companies was no greater than (and was probably less than) the quantum of damages recoverable against HSBC (Monaco) and (c) there was no reason to doubt the ability of HSBC (Monaco) to satisfy any judgment awarded against it.
Mr Handyside criticised the judge for not stating in terms that he accepted Ms Jong’s evidence that she intended to proceed with her claims against the English companies in England. It is true that the judge did not expressly state that he accepted that evidence. But he clearly recognised that Ms Jong could not be stopped from pursuing those claims; and his reference at [26] to the possibility of a stay of the English proceedings on case management grounds (a point which he did not have to decide) clearly presupposed that there was a case in England to manage.
At [22] the judge described “the starting point” as being “an inclination to enforce the jurisdiction clause.” In his skeleton argument Mr Chapman QC for Ms Jong criticised that as the starting point. The starting point, he said, was Ms Jong’s right to sue the two English HSBC companies in England. Mr Handyside rightly abandoned that argument. The fallacy in the argument, in my judgment, is that it treats the decision about jurisdiction as a sequential exercise. In a sequential exercise in which options are eliminated one by one, it clearly matters where you start. But in a holistic or iterative exercise in which the decision maker must consider a number of different considerations in the round, the starting point is of no real significance. What matters is the finishing point. The judge did not regard any of the factors he identified as individually decisive. He weighed them against each other in coming to his overall conclusion.
Both sides relied on discretionary decisions of first instance judges in deciding whether or not to permit a foreign defendant to be served outside the jurisdiction. It is as well to remind ourselves of what Millett LJ said (in a very different context) in Jaggard v Sawyer [1995] 1 WLR 269, 288:
“Reported cases are merely illustrations of circumstances in which particular judges have exercised their discretion, in some cases by granting an injunction, and in others by awarding damages instead. Since they are all cases on the exercise of a discretion, none of them is a binding authority on how the discretion should be exercised. The most that any of them can demonstrate is that in similar circumstances it would not be wrong to exercise the discretion in the same way. But it does not follow that it would be wrong to exercise it differently.”
Mr Handyside criticised the judge for his statement that the English companies were “bit-part players;” and his metaphorical statement that to allow the claims against the English defendants to govern the choice of forum would be to “allow the tail to wag the dog”. In the context of decisions whether or not to permit service out of the jurisdiction the metaphor first surfaced in the judgment of Blackburne J in Pacific International Sports Club Ltd v Soccer Marketing International Ltd [2009] EWHC 1839 (Ch) at [112] and was taken up (with not much enthusiasm) by Christopher Clarke J in JSC BTA Bank v Granton Trade Ltd [2010] EWHC 2577 (Comm) [2011] 2 All ER (Comm) 542 at [28]:
“A decision that permission should be granted to serve the protagonist out of the jurisdiction because the minor player is domiciled within the jurisdiction would indeed allow the tail to wag the dog. But if the anchor defendant is the protagonist a decision to allow a minor player to be served outside the jurisdiction may be entirely appropriate. That would be, to continue the metaphor, to allow the dog to wag the tail. Just as it may make little sense to have the venue determined by where the claim against the most insignificant player will be heard, so it may make little sense to have the venue where the most significant will be sued passed over in favour of another jurisdiction to whose jurisdiction a lesser player is subject. I do not mean thereby to suggest that whether or not jurisdiction should be exercised against a foreign defendant is necessarily determined by whether the anchor defendant, or the defendant sought to be joined, fits into some particular descriptive category ("major/minor"; "principal/secondary"); only that a decision as to appropriate forum must necessarily take account of the relative importance in the case of different defendants and particularly those against whom proceedings in England are practically bound to continue.”
It is, I agree, not usually helpful to express legal rules in terms of metaphor. But underlying the criticism is a more substantial point. Mr Handyside’s point was that it was wrong to attempt to rank defendants or potential defendants in order of importance. There were no principled criteria by which relative importance could be gauged. Rather he commended the approach of Leggatt J in OJSC VTB Bank v Parline Ltd [2013] EWHC 3538 (Comm) at [13]:
“… it seems to me that more scrutiny needs to be given to what is meant by the distinction between major and minor players, or protagonists and lesser parties, in this context, and why that distinction matters to the extent that it does. I find it difficult to see why the fact that one or another defendant is alleged to be on the facts, to put it colloquially, the person who called the shots should itself be a particularly important consideration in deciding which is the most appropriate forum for the claim.”
Mr Handyside did, however, accept that the nature of both the defendants and the claims were proper factors to take into account in exercising the discretion. Mr Quest QC agreed with him on that point, and so do I. Although his language was colourful, I do not consider that the judge was wrong in considering the nature of the case against the two English defendants. Nor do I consider that he was wrong in seeing the claim against HSBC (Monaco) as being the most important of the claims. Indeed it is difficult to see what practical advantage Ms Jong would gain by suing the two English HSBC companies in addition to HSBC (Monaco) apart from the satisfaction of vindicating her position; and I do not think that Mr Handyside had a convincing answer. That was the essence of the point that the judge made at [23].
Mr Handyside argued that this case was analogous to OJSC VTB Bank v Parline Ltd in which Leggatt J refused an application to set aside service on a Russian individual in relation to a claim based on events that took place in Russia and which was governed by Russian law. The reason for his decision was that the Russian individual was a necessary party to proceedings against two English defendants involved in the same alleged wrongdoing whom the claimant was entitled to sue in England under the Judgments Regulation. He said that even though the two other defendants were prepared to submit to the jurisdiction of the Russian courts he did not see why the claimant should be expected or required to give up that right in order to avoid duplication of proceedings. There are three points to be made about that argument. First, there was no exclusive jurisdiction clause in play in OJSC. In our case one could equally well ask: why should HSBC (Monaco) give up its right to be sued in Monaco in order to avoid duplication of proceedings? Second, the claims against each of the defendants were factually interwoven. Third, as I have said in cases involving a discretionary jurisdiction the fact that on a given set of facts a judge exercises his discretion in one way does not show that on a different set of facts a judge was wrong in exercising his discretion in a different way.
The central question comes back to the interplay between Ms Jong’s undoubted right to sue the English companies in England and Wales, and HSBC (Monaco)’s contractual right not to be sued anywhere except Monaco. Mr Handyside pressed us with the decision of the House of Lords in Donohue v Armco Inc in which their Lordships decided that an action in New York would be allowed to proceed despite the existence of an exclusive jurisdiction clause in a contract between some of the parties which gave exclusive jurisdiction to the courts of England and Wales. At [27] Lord Bingham said:
“The authorities show that the English court may well decline to grant an injunction or a stay, as the case may be, where the interests of parties other than the parties bound by the exclusive jurisdiction clause are involved or grounds of claim not the subject of the clause are part of the relevant dispute so that there is a risk of parallel proceedings and inconsistent decisions.”
To the extent that this is a case in which the interests of parties other than those bound by the exclusive jurisdiction clause are involved, those parties (i.e. the English companies) are content to be sued in Monaco. Ms Jong who wants to sue in England is of course bound by the clause. That point therefore carries less weight than it otherwise might. I accept, of course, the point that parallel proceedings should usually be avoided; but I find it difficult to extract further and more detailed guidance from that case. The claims involved in that case were factually complex and concerned many different defendants not bound by the clause; and causes of action which fell outside the exclusive jurisdiction clause. The factual disputes do not appear to have been capable of realistic severance. Here by contrast the claim against HSBC (Monaco) raises issues which are in one sense independent of the claims against the English companies; which chronologically precede those claims, and which must be answered in Ms Jong’s favour if her claims against the English companies are to succeed. If all the claims were to proceed in England it is highly likely that the liability of HSBC (Monaco) would be tried as a preliminary issue. If judgment on such a preliminary issue were to be given in favour of Ms Jong against HSBC (Monaco) and if, as would be expected, HSBC (Monaco) was to satisfy the judgment, it is difficult to see how the time and cost involved in continuing the claims against the English companies could be justified (compare Jameel v Dow Jones & Co Inc [2005] EWCA Civ 75, [2005] QB 946, although the case was not cited to us). The English companies are willing to submit to the jurisdiction of the courts in Monaco in order to be bound by any judgment against HSBC (Monaco) so the claim against HSBC (Monaco) could proceed in Monaco independently of the claim against the English companies.
It is also pertinent to note, as Mr Quest submitted, that if the chosen jurisdiction in the exclusive jurisdiction clause had been a member state (say, France) there would have been no question of a discretion. Article 23 of the Judgments Regulation would have prevailed over article 2.1.
Mr Handyside also pointed to alleged procedural shortcomings in Monaco. These are not weighty matters to set against the exclusive jurisdiction clause. If parties choose a particular jurisdiction in which to litigate they must be taken to have understood the procedure in that jurisdiction in making their choice. The judge was right to place little if any weight on those alleged shortcomings.
The nub of the judge’s decision was his statement at [25] that:
“I should give greater weight to the exclusive jurisdiction clause and the fact that all the trades were carried out through HSBC Monaco in Monaco than to the other connecting factors.”
In short in my judgment the judge took into account the relevant considerations; did not take into account irrelevant ones, and reached a decision that was within the bounds of reasonableness. He did not regard the exclusive jurisdiction clause as trumping all other considerations. He rightly regarded it as an important factor to weigh in the balance. Whether a different judge might have reached a different decision is neither here nor there. I would dismiss the appeal.
Sir Timothy Lloyd:
I agree.
Lord Justice Moore-Bick:
I also agree.