JEB Recoveries LLP v Binstock

This application concerns proceedings issued by JEB Recoveries LLP, a limited partnership, on 28 October 2014 by which JEB, as assignee of alleged debts and obligations said to be owed by but not paid by the defendant, Mr Judah Eleazar Binstock, whose address is given as an address in Kent. The debts are said to exceed some £10 million in value. The limited partners are Mr Mark Hardy who, with the court’s permission, represents JEB today; Mr Peter Wilson who is a qualified as a chartered accountant; and Mr Michael Stannard who is or was a barrister. All three men are interested in JEB and all three men are acquainted with Mr Binstock and, at various times over the past 20 or perhaps more years, have had dealings with him.

There are four elements to the claim; each is founded on alleged contract of services to be provided for or for the benefit of Mr Binstock. By agreement between the parties, the claim was served on Mr Binstock’s solicitors, who are Messrs Harcus Sinclair of Lincoln’s Inn Fields.

By this application, Mr Binstock contends, first, that the action should be stayed or the claim struck out on the basis that the English courts do not have or should decline to exercise jurisdiction and, in the alternative, that if the court does find that it has jurisdiction to entertain the claim, an order should be made to strike out the claim on the grounds that it is champertous.

The argument so far has been concerned only with the first contention, jurisdiction, because the second contention is not reached unless and until the court finds that it has jurisdiction in respect of the claims or any of them.

As a preliminary issue, Mr Binstock asked the court to conduct the hearing in private pursuant to CPR 39.2(3)(c). In the event, that was not necessary because the information that Mr Binstock was concerned about, the terms of what is now a former will and the content of a transcript of a conversation between Mr Stannard and Mr Binstock, did not need to be referred to openly in court. This material has not been has not entered the public domain and the hearing has continued in public.

The jurisdiction issue is posed by Mr Vineall QC, who appears with Mr Wright of counsel as his junior, raises four pointss for consideration: (1) whether Mr Binstock is domiciled in England and Wales, as to which Mr Vineall submits the answer, as the court should find, is no; (2) whether Mr Binstock is domiciled in a state other than a member state, in relation to this second point Mr Vineall points to the fact that no party says that Mr Binstock is domiciled in a state other than a member state; (3) whether there is any sufficient basis for a conclusion that Mr Binstock is domiciled in a member state other than England and Wales, as to which Mr Vineall submits that there is none; and (4) if that is so whether, in the light of the nature of the allegations, which are essentially based on the alleged provision of services pursuant to agreements, in other words founded in contract, is this court in a position to entertain the litigation by reason of it passing through one of the gateways under Article 5 of the Brussels Convention, which concerns matters relating to a contract. Mr Binstock volunteers, for the record, that his place of domicile in the context of such litigation is Spain but that is contested by the partnership.

The approach to a jurisdiction problem in a contract action is to start with the question of whether the defendant’s domicile is within this jurisdiction; that is the jurisdiction of England and Wales. If so, the proceedings cannot be stayed or struck out for want of jurisdiction. If not, the claim may nevertheless be brought in England and Wales if the defendant’s domicile is in another member state and one of the gateways under Article 5 is applicable.

Mr Vineall correctly points to the fact that although a person, every person, will have a domicile of origin, a domicile of origin is not the test of domicile for these purposes. Domicile for these purposes is to be determined for the purposes of the Brussells Convention. By Article 1, the Convention applies to civil and commercial matters, whatever the nature of the court or tribunal, but does not extend in particular to revenue, customs or administrative matters; so that first Article notes that different rules may apply to tax or administrative matters than apply to civil and commercial matters. Article 2 provides that, subject to the provisions of the Convention, persons domiciled in a member state shall, whatever their nationality, be sued in the courts of that member state. Then, Article 3 provides that persons domiciled in a member state may be sued in the courts of another member state only by virtue of the rules set out in the Convention, which rules include the provisions of Article 5, which I shall come to.

The test of domicile for this purpose requires the court to look at the alleged country and decide whether the individual is resident in that country and, having regard to the nature and the circumstances of the residence, whether those circumstances and their nature indicate that he has a substantial connection with the country. So, what I have to look at first it is whether Mr Binstock is technically resident within this jurisdiction and whether he has, if so, a substantial connection with this country.

The evidence drawn to my attention by Mr Binstock all points to his having as his domicile for these purposes, that is his place of residence and the country with which he has a substantial connection, Spain. He is said to spend a substantial part of the year in Spain (something of the order of 5 months) spending other time in other jurisdictions, in particular, Argentina and France for the majority of the rest of the year and England for a limited part of the year; and, his business interests are said to be centred in Spain, although he has property elsewhere and although there may be corporate structures which create control elsewhere, the centre of his interest in business, he says, is in Spain and that is, on his evidence, part of the nature and the circumstances that go to his connection with Spain.

Against that, my attention has been drawn to evidence which includes a will made in 2007 said by Mr Binstock’s solicitor on, it would appear, information from Mr Binstock, to have been revoked, in which Mr Binstock declares himself to be domiciled (not of origin, but of choice) in England. In context though, this is a statement for the purposes of organising his affairs and his estate and having in mind, of course, the disposition of that estate, but no less importantly, a jurisdictional basis for taxation of his estate. Other documents drawn to my attention and exhibited by Mr Hardy to his witness statement include corporate filings of directorships where, in periods subsequent to 2007, Mr Binstock has given his address and his country of residence as elsewhere including Argentina and France and also Ireland. What this goes to in the submissions made by Mr Hardy is that Mr Binstock is a nomad who really did not surrender his domicile of origin and it also goes to Mr Hardy’s further submission that Mr Binstock’s usual residential address has not even once been said, in his corporate filings, to have been in Spain, but rather to have been in various countries elsewhere.

The material that has been put before me, including that by Mr Hardy, does not point, on the balance of probabilities, to Mr Binstock having as his place of residence the United Kingdom or, specifically within the United Kingdom, England and Wales because there is very little in the material before me that shows a continuing (in the sense of day to day living) connection on the part of Mr Binstock with this jurisdiction and this country.

That is not the end of the matter because the court then, if Mr Binstock is domiciled in a member state and, for these purposes, either France or Spain would certainly suffice, and there is evidence that in both France and Spain there are addresses at which Mr Binstock spends a significant amount of time, would cause Article 5 to be invoked. All I have to be satisfied is that Mr Binstock is domiciled in a member state and aggregating his residence in France and Spain that is undoubtedly where he spends (on the evidence before me) the majority of his time. Which of the two does not matter for present purposes.

So, the court next has to consider the position under Article 5 which provides that in matters relating to a contract, a person domiciled in a member state may be sued in the courts for the place of performance of the obligation in question; where the contract is one for the provision of services, the place of performance is placed in a member state where, under the contract, the services are provided or should be provided.

Returning to the pleadings in this case, the allegations relating to the provision of services in the first claim is for those services to be provided entirely outside the jurisdiction of this court. In the second claim, there is no suggestion that services were or were intended to be provided inside the jurisdiction of this court and similarly for the fourth claim. The positon is different though in connection with the third claim, which is for the provision of services by Mr Wilson for the attainment of a reverse takeover by which Mr Binstock’s business interests would be reversed into a company not active but having cash which had to be located. For this purpose, Mr Wilson located himself largely in the Paris flat of Mr Binstock, but it is alleged at paragraph 41 of the particulars of claim that Mr Wilson worked with BDO, a well-known firm of accountants, in London to source a clean company with cash and no trading history and that talks went on for several months in or around 2010. What the paragraph in the particulars of claim leaves at least as a matter of ambiguity is whether the work on the part of Mr Wilson with BDO actually took place in London or whether the reference to London was to the particular office of BDO with which Mr Wilson dealt.

That is clarified, to an extent, at paragraph 51 where the allegation is that Mr Wilson met with BDO in London and arranged to set up a new English limited liability partnership in offices of their London address, but ultimately aimed and controlled through a company to be registered or already registered in Bermuda. That certainly points to the performance of services within this jurisdiction and the procurement of an English corporate vehicle for the reverse takeover seems to have been the intention of Mr Binstock. True it is that that could have been undertaken remotely from and without coming within this jurisdiction, but it is not surprising that there was some activity within the jurisdiction. Whether that is sufficient or not, and Mr Vineall submits that that is not sufficient, is another matter. It is not possible, on the allegations as they stand before me, to discern the importance or otherwise of the work undertaken leading up to and at the meeting in London.

Nevertheless, it seems to me that there is, on this aspect of the claim alone, a sufficient connection with this jurisdiction for the court, at this stage and in principle, to entertain that claim which is the third claim in this action.

In terms of the outcome of the jurisdiction challenge, I reject the contention that the first, second and fourth claims are capable of properly being the subject of proceedings justiciable within the jurisdiction of this court. On the application, Mr Vineall succeeds in relation, at least, to those claims in the action; however, in relation to the third claim, there is, it seems to me, a sufficient connection for that claim to proceed in this jurisdiction.