Eurasia Sports Ltd v Tsai (k/a Martin Tsai) & Ors

This is an application by the third, sixth and eleventh defendants (Letts, Nieri and Aguad hereafter for clarity and brevity where it is necessary to refer to them individually and “the relevant defendants” where they are referred to as a group). They seek to challenge the jurisdiction of the court to try the proceedings against them. It is opposed by the claimant.

The claimant is a company incorporated in Alderney which operates as a betting agency. All defendants including the relevant defendants were resident in Peru at the time of the relevant events, although of the other eight defendants one now apparently lives in Taiwan, two in Hong Kong and one in the United States of America. The claimant alleges that it was defrauded by the defendants, acting together. There are claims against all of them for debts due under the terms of a gambling account opened with the claimant in the name of each of them. In addition, damages for fraudulent misrepresentation and/or conspiracy to injure are claimed against some. The claims against Letts, Nieri and Aguad which do not relate to the indebtedness on their accounts are

The claim form was issued on 30^th September 2015 and amended on 22^nd February 2016 when the Particulars of Claim were filed. Permission to serve out of the jurisdiction was granted by Master McCloud on 23^rd March 2016. The second and ninth defendants have served defences to the claim on the merits thereby submitting to the jurisdiction of the court. The fifth defendant served a defence but was debarred from defending the claim by Master McCloud on 31^st May 2016. The tenth defendant served an Acknowledgement of Service indicating an intention to dispute the jurisdiction but did not issue an application and under CPR 11(1)(5) he is treated as having accepted the jurisdiction of the court. Letts, Nieri and Aguad issued this application on 2^nd June 2016.

The evidence consists of witness statements from Francis Osei-Amoaten and Stephen Peter Michael Skrein dated 19^th February 2016 which were the basis on which permission to serve out of the jurisdiction was granted. Mr. Osei-Amoaten is the head of global acquisitions for Xanadu Consultancy Limited (“Xanadu”) which supplies services, including staff on a consultancy basis, to the claimant. Mr. Skrein is the claimant’s solicitor who has conduct of these proceedings. There is a second witness statement of Mr. Osei-Amoaten dated 6^th July 2016 in response to this application and a third dated 18^th July 2016 from him. There is also a statement from Kimberley Rachel Beilin, who is a colleague of Mr. Skrein and also acts on behalf of the claimant. Her statement primarily produces evidence about the suggested corruption affecting the courts in Peru. Mr. Albert Badia is a solicitor who acted on behalf of Letts, Nieri and Aguad and is the author of a witness statement dated the 2^nd June 2016. Mr. Nicholas Jamieson Taylor took over conduct of their case after the date of that statement and made his own statement on the 14^th July 2016. This addresses some issues including the standard terms and conditions on which the claimant is said to trade. This document is the basis of an application to discharge the ex parte grant of permission to serve out of the jurisdiction on the ground of non-disclosure.

The claimant is registered in Alderney and licenced there so that it is regulated by the Alderney Gambling Control Commission. It identifies new betting customers and procures accounts for them with Matchbook, which is an online betting exchange. Matchbook is the trading name of Triplebet Limited which was, at the relevant time, part of the same corporate structure as the claimant. It appears that the claimant actually operates through employees of Xanadu, including Mr. Osei-Amoaten and a colleague named Paul McGuinness. They are said to work for the claimant on a consultancy basis. Xanadu is incorporated in Ireland. Mr. Osei-Amoaten is based in Xanadu’s London office and Mr. McGuinness in London or Cork. The evidence is silent on the identities of almost anyone other than these two men who carry on any business for or on behalf of the claimant. Mr. Andrew Pantling was a director of Triplebet Limited who was also involved in some of the events, and is described by Mr. Osei-Amoaten as a “colleague”. He is based in Canada. His dealings with Aguad in Peru in September 2014 suggest that he had full authority to deal on behalf of the claimant.

Counsel helpfully cited a number of authorities in order to assist me, but in the end there was little real dispute about the law, and it will not be necessary to cite the cases at length. First, it is agreed that although the three applicants have made the objection to the jurisdiction, it is for the claimant to establish that the court has jurisdiction to try the case. To do this, the claimant must show that it has “much the better of the argument” that the relevant jurisdictional tests under CPR 6 BPD paragraph 3.1 are met, Altimo Holdings and Investment Ltd. v. Kyrgyz Mobil Tel Ltd [2012] 1 WLR 1804 PC [71]. In respect of the other aspects of the test the requirement is somewhat less stringent. This is the law that I apply.

The claimant must show that each of the following tests is met:-

The communication between the claimant and the defendants was either by telephone, WhatsApp or face to face meeting in Peru. The claimant was acting by Mr. Osei-Amoaten, Mr. McGuinness or Mr. Pantling. The leading figure was Mr. Osei-Amoaten.

Mr. McGuinness and Mr. Pantling were in Peru in early September 2014 and met the eleventh defendant, Aguad. He is the owner of a Casino called Atlantic City in Lima and became a client of the claimant as a result of that meeting. He was introduced by an agent called Leo Fernandez and a meeting took place between Mr. McGuinness, Mr. Pantling and Mr. Fernandez in Peru on 2^nd September 2014 at which Mr. Pantling agreed to offer Aguad $1,000,000 credit against a $500,000 deposit. At a later meeting directly with Aguad on the same day the requirement for a deposit was removed at his request and a test transaction of $5,000 was the only financial stipulation for the extending of the credit which Aguad required. This was to enable the claimant to test his banking arrangements. He lost his whole allocation of credit of $1,000,000 by the end of the first day of the NFL season on 4^th September 2014 and arranged for a further credit of $500,000 with Mr. Pantling which he had lost by the 7^th September. Mr. McGuinness asked him to settle his balance on 8^th September by WhatsApp which he did not do. Instead, he arranged another person to send $500,000 which resulted in a further amount of credit being allowed in that sum which he also lost. He then transferred a sum of $375,000 by direct transfer which resulted in credit in that sum being allowed, which he immediately used and lost. This leaves a balance of $2,049,991 owing on his personal account with the claimant which is now claimed.

Very soon after the events concerning Aguad had occurred, Mr. Osei-Amoaten set up four betting accounts for the first and second defendants, Martin and Dominic Tsai. These were created at the end of September 2014. The terms were that they would be allowed $1,000,000 in credit on the four accounts if (1) they provided that sum by way of security and (2) the accounts were settled on the first day of each month by the payment of any debit balance. On 1^st and 2^nd October 2014 Martin Tsai sent copy documents to Mr. Osei-Amoaten by WhatsApp which appeared to show that $500,000 had been sent from Peru by bank transfer to the claimant. Credit was therefore allowed. The photographs were, it would seem, of genuine documents and this sum was received. On 3^rd October a second copy document was sent which appeared to show an instruction to the bank to transfer $500,000 and this was accompanied by messages saying “I will have swift on Monday morning” and “Can just credit it please”. Believing that the letter of instruction to the bank was genuine, Mr. Osei-Amoaten allowed a further amount of credit. This second sum of money was not received. At this stage there was some uncertainty about whether or not it had been paid, but the accounts were in credit so the issue of security was not immediately crucial. Mr. Osei-Amoaten trusted the Tsai brothers and they told him that they would be able to introduce him to their associates who would also use the claimant’s services. In particular Martin Tsai mentioned Letts, the third defendant, and said that he was extremely wealthy and well connected in Peru. It was proposed that there would be an agency agreement whereby Martin Tsai would introduce clients to the claimant in Peru. All of this took place when Mr. Osei-Amoaten was in London, as Martin Tsai knew, either by phone or WhatsApp.

Mr. Osei-Amoaten then travelled to Peru with Mr. McGuinness intending to discuss Aguad’s account and to discuss the agency and security agreement with Martin Tsai and Letts. An agreement was reached with Martin Tsai and Letts (according to Mr. Osei-Amoaten although Letts denies this) whereby Martin Tsai would introduce clients to the claimant and Letts would provide security. The betting operations would be conducted on behalf of the claimant in London by Mr. Osei-Amoaten. This agreement was concluded orally in Peru, and confirmed by an email sent by Mr. Osei-Amoaten from London on 17^th October 2014 after his return. This important document has been called “the recap email” and I will use that term. The first meeting took place on 13^th October 2014 at the Hilton Hotel in Lima and in addition to those named above, the sixth defendant, Nieri, was also present who said he was the legal representative for the Tsai brothers and Letts. The second, eighth and the brother of the tenth defendants were also present, although the eighth defendant left early. The meeting was followed by dinner and further meetings at which a number of people were introduced to Mr. Osei-Amoaten and expressed interest in using the claimant’s services. Given the volume and size of the bets which were contemplated by this group, Mr. Osei-Amoaten asked Letts to provide security in the sum of $10,000,000. Mr. Osei-Amoaten and Mr. Pantling agreed that Martin Tsai and Letts would receive 50% of any losses made by their clients, and contribute 50% to their winnings. It was also agreed that the security would be provided by cheque. A meeting took place by Skype between Martin Tsai and Mr. Pantling on 15^th October 2014 after which the agreement was finalised at lunch between Martin Tsai, Letts and Mr. Osei-Amoaten at which Nieri was present. The principal terms were

These terms were set out in the recap email sent by Mr. Osei-Amoaten to Martin Tsai, Letts and Nieri on 17^th October 2014. This stipulated that the accounts should all be settled on the first day of each month but allowed some flexibility about how that would be done. This document confirmed that the finance, legal and commercial aspects of the operation were based in London, which was a point which Mr. Osei-Amoaten had made during the meetings also. The email barely refers to the claimant and describes the service as being provided by “Matchbook”. It does however refer to the cheque (which had been made payable to the claimant) and says that it would be sent to the claimant’s bank in Malta on the following Monday.

After the 17^th October 2014 and without any response from Letts which suggested that the terms in the email were not agreed, or that a cheque had been misappropriated by Martin Tsai. Martin Tsai arranged for the creation of a number of sub-accounts on behalf of his clients, including one for Nieri. These accounts were arranged on behalf of the claimant by Mr. Osei-Amoaten and Mr. McGuinness. The terms on which they were operated were agreed, in the case of Nieri, orally over the telephone in a telephone call with Mr. McGuinness. Mr. McGuinness is not able to say whether he was in the office in London or in Cork when that call was made, but an email sent to other account holders by him at about this time says “we are back in London” and it is suggested that this means he was there.

A meeting also took place during that trip between Mr. Osei-Amoaten, Mr. McGuinness and Aguad at which Nieri was also present. Aguad agreed to pay his debt which then stood at $2,049,991 but said that he would have to sell some shares to do so. He has not done so but now claims that he has settled the debt with Martin Tsai. The claimant disputes that in fact and has asked for proof, but in any event contends that settlement with Martin Tsai would not amount to a discharge of the debt owed to it. In Mr. Badia’s evidence on behalf of Aguad the assertion of payment to Martin Tsai (as the claimant’s representative in Peru) is repeated, but no evidence of it is provided.

In November 2014 Martin Tsai persuaded Mr. Osei-Amoaten to extend further credit to his sub-account holders by sending photographs of wire transfer forms for four transfers including one from Nieri. The total sum was $2,600,000 and Nieri’s personal contribution was said to be $400,000. Nieri’s case is that he knew nothing about this. The money did not arrive. When Mr. McGuinness messaged Nieri about this he responded “I am in a meeting, it seems strange about the wire transfer. When I finish I will request the bank confirmations.” Calls to one other sub-account holder received a similar response and to a third received no reply at all. The wire transfer was in fact never processed by the bank, and the stamp on the photographed document sent by Martin Tsai to Mr. McGuinness is not genuine.

The cheque for $10,000,000 payable to the claimant and signed by Letts was not paid. The bank on which it was drawn eventually informed the claimant’s bank in Malta on 10^th December 2014 that there were insufficient funds in the account and that the account was closed. The sub-account holders (the 4^th-10^th defendants) did not pay their accounts and the Tsai brothers and Letts did not ensure that they did so.

Although as I have noted the burden lies on the claimant the defendants made the application and Mr. Smith on their behalf made his submissions first. I will summarise the submissions of both parties, having regard to how they developed during the hearing. At the stage of drafting skeleton arguments each side took the other’s case from their witness statements which did not entirely reflect the final arguments as presented. What follows is a summary only. I shall give a somewhat fuller summary of the contentions in relation to the jurisdictional gateways than the more open-textured submissions about the serious issue to be tried, the most appropriate forum and the non-disclosure issue. Without undermining the clarity and moderation with which those latter submissions were expressed, their substance can easily be inferred from my conclusions.

The defendants challenge the assertion that there is a serious issue to be tried in that

The submissions on the jurisdictional tests are somewhat more elaborate and I will set them out below.

First Mr. Smith submitted that the claimant’s case on breach of the agency agreement against Letts was flawed.

Secondly, the relevant defendants address the claim for the debts owed on their individual accounts as follows:-

The fraudulent misrepresentation claimed against Nieri did not cause damage in England. It is submitted that the fact that Mr. Osei-Amoaten was in London when he made the decision to allocate credit to the 1^st-3^rd defendants following the representation that Nieri had transferred funds to the claimant is not sufficient in law to show that the loss was caused in London. The credit was allocated in Cork, not London, and the credit was used by the 1^st-3^rd defendants in Peru. The defendant cites Domicrest v. Swiss Bank Corporation [1999] QB 548, London Helicopters Ltd v. Heliportal LDA-INAC [2006] EWHC 108 (QB), Seaward Crest [2007] EWHC 1460 (Comm) and ABCI v. Banque Franco-Tunisienne (Costs) [2003] EWCA Civ 205 [43]. These authorities are said to show

Thirdly, the claimant submits that the conspiracy claim against all three relevant defendants is subject to precisely the same argument as set out at 22 above in relation to the misrepresentation claim.

Fourthly, the relevant defendants deny that they are necessary and proper parties to the other claims. It is submitted (and agreed) that conduct of other defendants after issue of the proceedings which brings them within the jurisdiction is not capable of prejudicing those who dispute the jurisdiction, Amanuel v. Alexandros Shipping Co [1986] QB 464. That fact may acquire relevance at the later stage of assessing whether England is clearly the most appropriate forum, if that is reached. The relevant defendants therefore argue that the claimant must show that the court has jurisdiction over other defendants and relies on the same arguments on their behalves as are relied upon above in respect of the same claims when made against the relevant defendants. An additional argument relates to the claim against the Tsai brothers under their betting account contract concluded by WhatsApp and phone when they were in Peru and Mr. Osei-Amoaten was in London. This was concluded in the place where the acceptance was received by the offeror. They say on this basis the contract was concluded in Peru because no binding agreement is evident from the WhatsApp conversation of 23^rd September 2014. The offer and acceptance which created the contract was therefore the offer by the Tsai brothers to transact with the claimant on the terms set out on 23^rd September when they told Mr. Osei-Amoaten on 1^st October 2014 that they had transferred $500,000 to the claimant’s bank account. This offer was accepted by the allocation of credit to the Tsai brothers and the contract concluded when that was communicated to them in Peru. Alternatively it is submitted that the claimant accepted the Tsai brothers’ offer to transact when they opened their accounts at the end of September and communicated that this had happened. If that was the acceptance which formed the contract, it was received in Peru. On behalf of Aguad so far as the claim on the account is concerned it is submitted that he is not a necessary or proper party to the claims against the other defendants because the claim against him is entirely separate from the other claims because his account was set up separately from the others and not as part of the agency agreement discussions between Martin Tsai and Mr. Osei-Amoaten.

Fifthly, the claim against Letts on the $10,000,000 cheque is parasitic on the assertion that the court has jurisdiction over the claim against Letts under the agency agreement because this is the only one which arises out of the same or closely connected facts to the issue of the cheque. This is the only basis on which the claimant can establish jurisdiction, and in this respect relies on CPR Part 6 PDB paragraph 3.1(4A). The cheque was issued as compliance with a term of that agreement which required Letts to provide it as security for the credit extended to the sub-account holders. Letts therefore repeats his submissions in respect of that claim against him.

If the court has jurisdiction over some or all claims against one or more of the relevant defendants, they submit further

Nieri and the fraudulent misrepresentation. The claimant submits that a representation made by Martin Tsai (that four payments totalling $2,600,000 would be made including one by Nieri of $400,000) was made on his own behalf and on behalf of Nieri. Nieri denies that he knew of it. The claimant relies on the response italicised at [15] above as constituting a serious issue to be tried on this question, on its own.

In relation to reliance on the representation about Nieri’s transfer of $400,000, the claimant relies on the evidence of Mr. Osei-Amoaten that he did rely on this, and that he regarded it as part of a series of promises made on behalf of a number of conspirators and that he regarded them together as constituting a promise of security of $2,600,000. Mr. White points to the fact that Martin Tsai represented that four defendants (Nieri and the second, seventh and eighth defendants) would make transfers. No-one did. Each gave dishonest explanations when asked where the money was. This all happened at the same time and must therefore have been concerted activity. The court may infer that each had given his consent to the representation being made on his behalf, especially since KYC documentation (including copy passports) was required before sub-accounts could be opened.

There is something of a pleading point in relation to the conspiracy and the claimant simply says that its case is pleaded in that the facts from which the alleged conspiracy is to be inferred are set out. Mr. White submits that the case is adequately pleaded. I do not think it necessary to rule on this at this stage. The claimant’s case is clear enough now from its evidence and submissions. If it proceeds the claimant will have to decide whether to apply for an amendment to its pleading to remedy any defect. I will approach the case on the substance. This is because I do not think that any defect is irremediable or fatal to the claim. In answer to the submission that Nieri, Letts and Aguad acted on their own behalves only and that there is no evidence of any concerted action involving them, the claimant makes the same point as at [28] above. Within a few weeks 11 accounts were set up from Peru by a group of men and women who knew each other. All accounts went rapidly into debt which has not been paid. In most cases (not Aguad) security was promised, either by wire transfer of money or by Letts’ cheque, which did not materialise. The fact that so many people of apparent wealth and reputation were involved was a further reassurance to the claimant and a direct benefit of joint action. The cheque was in such a large sum because it was intended to cover the betting of Letts, the Tsai brothers and all the sub-account holders under the agency agreement. It is submitted that Letts’ explanation that the cheque was given to Martin Tsai in respect of an unrelated real estate transaction and purloined by him is obviously false because it does not explain why Letts made it out to the claimant having been asked to do that by Mr. Osei-Amoaten in a text message. Neither does it explain the references to the cheque in the recap email which was copied to Letts. Nieri gave the same explanation for the dishonoured cheque as does Letts, see paragraph 33(iv)(5) of the witness statement of Mr. Skrein in which he sets out Nieri’s response to the claim against him as given to a Peruvian lawyer acting for the claimant after service. This is further evidence of concerted action, if the explanation is false.

So far as Aguad’s involvement in anything other than his own personal betting account is concerned, the claimant contends that there is a serious issue to be tried that he was involved in the conspiracy. This relies on the fact that he told Mr. McGuinness that he had used three of the sub-accounts himself, having been given access details by Martin Tsai. This would mean that he was a beneficiary of the conspiracy and he presumably joined because he had exhausted his own personal credit with the claimant by the time it started. Aguad also explained his indebtedness by reference to a false story involving Martin Tsai, in his case by asserting that he paid his debt to the claimant by paying Tsai. The meeting in Peru between Mr. McGuinness and Mr. Osei-Amoaten and Aguad to discuss his personal account was arranged through Martin Tsai, who was present at it as was Nieri.

Tort. The claimant submits that the claims for fraudulent misrepresentation and conspiracy are claims in tort where the damage was sustained within this jurisdiction and relies on CPR 6 PDB paragraph 3.1(9)(a). The claimant relies on the same line of authority as the defendants at [22] above. Mr. White QC draws attention to the passages in those cases which stress that the enquiry concerns not merely where the financial loss is felt, but where the event giving rise to the damage produced its initial, direct, immediate or physical harmful effect. He also relied on the decision of the Court of Appeal in AMT Futures Ltd v. Marzillier etc mbH [2015] EWCA Civ 143; [2015] QB 699 [50]-[53] distinguishing Dolphin Maritime & Aviation Services Ltd v. Sveriges Angartygs Assurans Forening [2010] 1 All ER (Comm) 473. According to Clarke LJ, who gave the judgments in both cases, the harm in Dolphin Maritime was financial loss which was the “non-payment (in England) of the amount due (in England) which caused (in England) the harm in question namely the non-receipt of that amount”. This grounded jurisdiction in England.

Contract: place of breach. The claimant submits that the payment obligations of the sub-account holders and the security obligation of Letts in relation to the agency agreement arose in England because that is where they all knew their accounts were to be managed by Mr. Osei-Amoaten and that is where they sent notifications of wire transfers and messages promising payment. These were sent, often, to persuade Mr. Osei-Amoaten to extend credit in advance of receipt of the money which was to secure it. The claimant submits that where the contract does not provide for the place of payment the general rule is that the debtor must seek out the creditor. He says that this rule relates to the creditor’s place of business and not the address of his bank. This, as stated in the recap email of 17^th October 2014, was London see [12] above.

Contract: place where contract made. The claimant submits that the following contracts were made in England because of the rule that where an offer is accepted by an instantaneous means of communication, such as telephone, fax, email or WhatsApp, the contract is made where the acceptance is communicated to the offeror, that is where the offeror was when he received the acceptance. This involves deciding in respect of each contract who was the offeror and who the offeree.

Paragraph 3.1(3): necessary or proper party. It is submitted that the issue here is whether a particular defendant is a necessary or proper party to an action in which another defendant has been or will be served with a claim form where there is a real issue to be tried between the claimant and that defendant which it is reasonable for the court to try. This gateway is relied upon against Letts in respect of the cheque and any other defendant against whom a claim under one of the preceding gateways has failed. The test is that explained by Lord Collins in Altimo Holdings and Investment Ltd v. Kyrgyz Mobil Tel Ltd (above) at [87]. Mr. White submits

“The reality of the case is that the defendants acted in concert to procure the claimant to provide online gambling services to the defendants without security, and then used those services and did not pay the debts they ran up. The facts cry out for one investigation of all the ways that the claimant can put its claims.”

Para 3.1(4A). the cheque. There is a claim against Letts in tort under paragraph 3.1(9)(a) and in contract under paragraph 3.1(7) for payment where the obligation to pay arose in England, see above. The cheque was the means by which the payment was to be made under that obligation and was instrumental in securing the agreement of the claimant to the provision of the credit in relation to the agency agreement. Its existence was the instrument of the fraud. Therefore, this gateway is open.

There is agreement as to the origin of the test to be applied and that the applicable law is an important consideration. The claimant relies on VTB Capital plc v. Nutritek International Corporation and others [2013] UKSC 5; [2013] 2 AC 337 in that regard. Article 4(1) of Rome II (EC Regulation No 864 of 2007) governs the present case but did not affect Nutritek which is to be read with that in mind. It says:-

“Unless otherwise provided for in this Regulation, the law applicable to a non-contractual obligation arising out of a tort/delict shall be the law of the country in which the damage occurs irrespective of the country in which the event giving rise to the damage occurred and irrespective of the country or countries in which the indirect consequences of that event occur.”

The claimant submits that the law governing the tort claims is likely to be English law. This submission relies on the same analysis as that identified above in relation to the jurisdictional gateways for tort claims. If right, it is said to be a strong or weighty factor in determining forum and the claimant submits that there are no countervailing considerations of equivalent weight. The claimant relies on Rome 1 (EC Regulation No 593 of 2008) in relation to the governing law of contract, on the basis that no choice of law has been made in the contract. This is because although the defendants submit that the standard terms and conditions are relevant and should have been disclosed, no-one suggests that they were actually incorporated in any of the contracts in this case. In any event, the jurisdiction clause is a non-exclusive jurisdiction clause. Articles 4(2) and 19(2) of Rome 1, taken together, mean that the proper law of contract is that of the place where the relevant branch of the claimant is located, namely London. If that is wrong and the proper law of the contracts is some other law, then expert evidence as to that law can be adduced. The determination of the proper law may be of importance because the approach to the enforceability of gambling contracts varies widely.

The claimant relies on the fact that its principal witness is based here and the documents are also here. Two further submissions are made

In relation to the non-disclosure submission, the claimant points out that no party alleges that the terms were incorporated into any of the relevant contracts and no-one even mentioned the document until the late witness statement of Mr. Taylor of 14^th July 2016, one week before the hearing of the defendants’ application. They also rely on Mr. Osei-Amoaten’s third witness statement which seeks to explain that the terms and conditions do not relate to the business of the claimant as a betting agency, which is inconsistent with the document itself. Finally, they submit that the duty of disclosure does not require the applicant for an order without notice to anticipate all the arguments which might be raised, citing a summary of the law by Lawrence Collins J in Konamaneni v. Rolls Royce Industrial Power (India) Ltd [2002} 1 WLR 1269 at [181]. This paragraph refers to “arguments or points” which might be raised rather than the disclosure of facts. There is an obligation described in the previous paragraph [180] to disclose all facts of which the applicant knows or ought to know which are “material (in the objective sense) for the judge to know in dealing with the application as made”.

I propose to deal with the serious issue to be tried question quite shortly. On the evidence of Mr. Osei-Amoaten each defendant (including the relevant defendants) opened an account with the claimant which is now in debit and the agreement was that it would be settled at the start of each month. That is a serious issue to be tried on the debt claim. I do not understand the relevant defendants to dispute this, although individuals may contend that they may not themselves have placed any bets on their accounts, and may have been defrauded by Martin Tsai.

There is clear prima facie evidence of the existence of a conspiracy. There is no scope for doubt about the existence of an agreement. Participation in the agency and security agreement and its exploitation was on its face a concerted act between the Tsai brothers, Letts and all the sub-account holders. The recap email of 17^th October 2014 is strong evidence of the existence of an agreement between the parties to whom it was copied, Martin Tsai, Letts and Nieri. The cheque was referred to in that document, as was the claimant. The claimant was the payee of the cheque, and there is evidence that the claimant’s name had been written on the cheque by Letts because Mr. Osei-Amoaten had asked him to do that by text message. It was the claimant’s bank account to which funds were paid or, more commonly, promised by the use of false documents and not paid. These payments were intended as security for credit. It was obvious therefore that whatever the precise relationship between the claimant and Matchbook (which may be a matter of some complexity and which has not been fully explained in the evidence so far) it was the claimant who wanted security and therefore that the claimant was exposed to a liability if the defendants bet on Matchbook and lost. The security provided was largely worthless but it, together with the appearance of a large number of affluent and reputable customers, persuaded the claimant to expose itself to liability. Whether the claimant was a party to the agency agreement (or whether that was Matchbook) is one thing. The claimant was the party to whom the false security was provided and this is a sufficient basis for inferring that the object of the agreement was to injure the claimant by persuading it to allow bets to be placed for the conspirators without any funds being available to pay them if they lost. The real issue is not whether there was a conspiracy but as to participation. In Letts’ case there is plainly a serious issue to be tried on this question. He received the recap email and had provided the cheque referred to in it. The provision of the bounced cheque was an essential overt act in furtherance of the conspiracy and he did it (subject to his explanation, of course). In Nieri’s case I accept the submission of Mr. White that the response italicised at paragraph [15] above on its own establishes a serious issue to be tried as to his involvement. He plainly knew when challenged that his contribution to the $2,600,000 security was expected and was asserting that there were “confirmations” in existence which he could check to see what had happened. There is evidence to suggest that this was a lie because there were no confirmations. If he had himself been deceived at that stage as to whether money had been transferred, why has it not been paid since? If he knew nothing why did he not say that? In Aguad’s case the evidence is far less direct and I have considered his position with some care. His personal account was opened and his debt accrued before any agreement between Mr. Osei-Amoaten and the Tsai brothers was concluded (or even discussed, I think). There is evidence that Aguad and Martin Tsai were well known to each other and that their connection concerned gambling. In itself that does not imply that they agreed together and with others to place bets on the false promise of security. Aguad runs a casino. On the other hand, Aguad told Paul McGuinness, according to Mr.Osei-Amoaten in his first witness statement at paragraph 57, that he had used three of the sub-accounts (those of the fourth and eighth defendants and another which he could not remember) opened under the terms of the agency agreement to place his own bets. He said that he had settled his losses for that activity with Martin Tsai. This is what he also said in the same conversation on 23^rd January 2015 in relation to his liability on his own account and, given that this is inconsistent with other things he said about that subject and is inherently implausible, there is a proper basis to doubt its truth in relation to his liability on these three accounts also. It is highly unlikely that Aguad would pay his debt to the claimant by making a payment to Martin Tsai when he knew that the claimant was pressing for payment and when he did not have any evidence either that the claimant would accept payment to Tsai or that any such payment to Tsai was ever in fact made. The object of the conspiracy was to enable members to bet at the claimant’s risk rather than their own. If Aguad did that, using the means established by the conspiracy, then there is an inference that he was a member of it.

For the same reasons that there is a serious case against Nieri on the conspiracy there is a serious issue to be tried in relation to the claim in misrepresentation.

In my judgment there is also a serious issue to be tried in relation to the agency agreement in that there is a real prospect that the claimant will establish that it was a party to it and so was Letts. Although the recap email is written as if the contracting party is Matchbook, and the corporate identity behind that brand is identified as someone other than the claimant, I have already pointed out that the document makes it quite clear that the cheque which was provided to the claimant is an essential part of the agreement. The position may perhaps be somewhat more complex than the submissions of either party have so far suggested, but in my judgment there is a real prospect that the claimant will establish a right to sue on an agreement to provide security to it which was not, in the end, provided. The contract is said to have been agreed at meetings where Letts was present, a cheque from him was provided under its terms, and the recap email was copied to him.

As I have explained, the test here is more stringent than the test for a serious issue to be tried. The claimant must show that it has much the better argument on these questions in order to succeed.

Tort. I have set out my conclusions as to the nature of the conspiracy and the misrepresentations above in dealing with whether there is a serious issue to be tried. I take the law from the decision of the Court of Appeal in AMT Futures Ltd v. Marzillier etc mbH [2015] EWCA Civ 143; [2015] QB 699 [50]-[53] distinguishing Dolphin Maritime & Aviation Services Ltd v. Sveriges Angartygs Assurans Forening [2010] 1 All ER (Comm) 473. That distinction is, in my judgment, of importance in this case. This is closely analogous to the Dolphin Maritime position described by Clarke LJ in the passage quoted above at [31]. The harm in Dolphin Maritime was financial loss which was the “non-payment (in England) of the amount due (in England) which caused (in England) the harm in question namely the non-receipt of that amount”. I know that permission to both sides to appeal to the Supreme Court has been granted, but the decision of the Court of Appeal is binding on me, and is also consistent with the line of authority relied on by both sides, namely Domicrest v. Swiss Bank Corporation [1999] QB 548, London Helicopters Ltd v. Heliportugal LDA-INAC [2006] EWHC 108 (QB), Seaward Crest [2007] EWHC 1460 (Comm) and ABCI v. Banque Franco-Tunisienne (Costs) [2003] EWCA Civ 205 [43]. It seems to me that it is important to appreciate that the obligation on the conspirators was not simply to make payments, but to do so in order to provide security and to thus persuade Mr. Osei-Amoaten to arrange credit to be allowed on betting accounts. The object of the payments was not simply to swell a bank account in Malta but to procure a particular result. To summarise, the aim of the conspiracy was to persuade the claimant to arrange for the conspirators to be able to bet with the claimant’s money, rather than their own. They would take any winnings, and the claimant would stand any losses. It is likely that this resulted in a very complex arrangement, given the nature of online betting, and the ramifications have probably been felt by various parties in various places. As I have said, the relationship between the claimant and Matchbook is not fully explained in the evidence and if there are further parties beyond Matchbook I know nothing about who they are. The question is where was the damage to the claimant caused. That, it seems to me, occurred in the place where the claimant allowed bets to be placed by the conspirators in the belief that the risk was less than it truly was because the various offers of security were worth less than they were said to be worth. That act would result in accounting entries being made by Xanadu on behalf of the claimant in London and in Cork and money not being received as promised in Malta and no doubt in arrangements between the claimant and Matchbook and perhaps between Matchbook and other parties beyond. However, the act of allowing the betting to take place happened in London. Mr. Osei-Amoaten was the instrument through which the claimant took the relevant decisions and put them into effect by giving instructions and issuing communications. He did this in London.

For that reason, it appears to me that the tort claims against the relevant defendants fall within paragraph 3.1(9)(a), as do these claims against the other defendants against whom they are brought. The justiciability of the claims against the other defendants is relevant to the other claims against the relevant defendants because of paragraph 3.1(3) and 3.1(4A). I shall turn to those after I have dealt with this position in contract under paragraphs 3.1(7) and 3.1(6)(a). These paragraphs require consideration of where the breaches of the contracts for the betting accounts and the agency and security agreement occurred, and where they were concluded respectively.

Mr. Osei-Amoaten makes it clear in his evidence that his preferred means of payment was by transfer to the claimant’s bank in Malta. The cheque signed by Letts was drawn as an exception for particular reasons. Similarly, when Aguad did not pay by transfer as agreed, other payment options were explored with him by Mr. McGuinness, see paragraphs 24 and 54 of Mr. Osei-Amoaten’s first witness statement. Apart from the payment obligation in respect of individual accounts, the only other obligations on Letts under the agency/ security agreement were to ensure that the sub-account holders settled their debts, to meet 50% of their wins and to provide a cheque which was valid. There were no wins (or at least none which left a balance owing to any sub-account holder) so the obligations which remain were, in my judgment, entirely for performance in Peru. The obligation to procure payment by sub-account holders is described by Mr. Osei-Amoaten in his first witness statement at 40(iv) as an obligation to “make sure the customers settled their debts”. It does not appear to be possible to construe this rather vague agreement as a guarantee of payment and any steps which it required obviously had to be taken in Peru which is where Letts and the sub-account holders were. The cheque was handed over in Peru and the bank which refused to honour it was also there.

I accept the submission of Mr. Smith that this contract did specify a place of payment, namely the claimant’s bank by wire transfer. That method of payment was obviously of the essence of the contract because the sums involved were generally required as security to allow betting on credit to take place in the very near future. Payment had, therefore, to be quick and provable. The fraud was perpetrated by the provision of photographs of false documents which purported to show that payments had been made by the stipulated route. The recap email discusses other methods of payment as described by Mr. Osei-Amoaten in his first witness statement at paragraph 44. These would reduce the number of international transfers being made and were “fine so long as ultimately Martin can send me a wire to settle his and any other balances needed.” [emphasis added]. This displaces the general rule that the debtor must find the creditor. For these reasons I consider that the claimant does not have much the better of the argument under paragraph 3.1(7). That gateway is closed to the claimant.

So far as paragraph 3.1(6)(a) is concerned, the claimant’s argument that the betting contracts were concluded in London relies on the rule that a contract is concluded at the place where the offeror is when the acceptance is received. I accept Mr. White’s submission that the proper construction of the WhatsApp conversation in which the Tsai brothers agreed the terms of their personal accounts is that Mr. Osei-Amoaten offered to provide services on terms and the Tsai brothers accepted that offer. This is a somewhat artificial exercise, but this result broadly reflects what actually happened. It was up to the claimant to describe the services it could offer and the terms on which it was prepared to offer them to the Tsai brothers and it was up to the Tsai brothers to say whether they wished to do business in that way. The sub-account holders accepted their terms by email and the same thing applies to them, except for Nieri who accepted the terms which had been offered by telephone. I do not accept that I should find on the evidence that the claimant has much the better of the argument in suggesting that Mr. McGuinness was in London when he had that call. Telephone records and/or flight records could be (or could have been) secured which would show where he was, in the unlikely event that he cannot remember. He can remember the call, apparently, and if that is right it seems more likely than not to me that he can also remember where he was when he had it. I do not think that a hearsay assertion that he cannot remember accompanied by an invitation to infer that he was in London because he was there when he sent an email at (very approximately) the same time is persuasive. It certainly does not suggest that the claimant has much the better argument on this factual question. It seems slightly absurd that the gateway should depend upon such a very fine distinction, but that absurdity arises because of the existence of other claims against Nieri where there is a gateway open and other relevant and connected claims against other defendants where there is a gateway open. The gateways at 3.1(3) and 3.1(4A) exist to take these factors into account. If the claim against Nieri under his own betting account agreement were the only relevant claim it would not be absurd for the English courts to decline jurisdiction. I therefore do decline jurisdiction under this gateway, but go on to consider those further two gateways.

I have held that all the tort claims are justiciable in this country because that is where the damage was caused to the claimant. That is where the claimant incurred liabilities to third parties and where the money to meet those liabilities in whole or in part was not going to be available as promised. That is where the risk was assumed. That was the effect of the conspiracy and the individual misrepresentations which were acts within it. Fraudulent misrepresentation is pleaded against the first, second, sixth (Nieri), seventh and eighth defendants. Conspiracy is pleaded against them additionally and further against the third (Letts) and eleventh (Aguad) defendants. I have also held that the contract claims in relation to their own personal betting accounts against the first, second, fourth, seventh and eighth defendants are justiciable in this country because their acceptance of the claimant’s offer was received in London. I have held that there is a serious issue to be tried where that question has been put in issue by the relevant defendants. Therefore, in the case of each relevant defendant a claim form has been or will be served on more than one person otherwise than in reliance on paragraph 3.1 (3) and there are real issues between the claimant and those persons. It appears to me that whether it is reasonable for the court to try those issues will involve considerations also relevant to the forum issue which I address below. My conclusions on that issue are support for my conclusion that it is reasonable for the court to try the issues between the claimant and the defendants on whom claim forms have been served.

On the assumption that it is reasonable for the court to try the tort and contract claims to the extent I have just identified, I have to decide whether the three relevant defendants are necessary or proper parties to “that claim”, which means “that action”: Altimo Holdings Investment Ltd v. Kyrgyz Mobil Tel Ltd [2011] UKPC 7; [2012] 1 WLR 1804 at [64]-[67]. I am here considering the following claims against them (because the other claims against them have passed through gateways under their own steam):-

None of the relevant defendants are “necessary parties” to the action by reason of the desire of the claimant to proceed against them for the claims listed at [51] above. The claims against the other defendants (including the other claims against them) can proceed whether the court entertains these claims or not. In respect of Letts and Nieri the claims under consideration are in the nature of different ways of recovering the same losses as are claimed against them in conspiracy and false representation. Nieri’s personal liability on his own account is smaller than his likely liability in damages for tort if those claims succeed against him and probably recoverable as part of those damages. Letts’ liability on the cheque and liability for breach of the agency/security agreement are probably similar in size and any damages awarded in tort are likely also to be similar. Their personal acts and contractual responsibilities are said by the claimant to be part of the overall scheme. This reinforces the conclusion that they are not necessary parties to the action in respect of these claims. In Aguad’s case the position is different. His liability on his own account (which was entirely dealt with in Peru and which may have been done and dusted before the conspiracy began) is very substantial and it is foreseeable that the claim in conspiracy may succeed against others but fail against him. The existence of the claim in relation to his personal liability does not render him a necessary party to the extant action against him and (for the purposes of this gateway) others. By “extant” I mean extant in this jurisdiction before the application of the present gateway.

Applying the test from Altimo (above) at [87] it appears to me that all these claims involve one investigation. The relevant defendants have each advanced explanations for their conduct which have to be considered alongside those advanced by other defendants in determining not only their liability in tort but also, so far as it is different, in contract. Letts and Nieri are a fortiori cases on this proposition. If Aguad falls within it, so do they because the claims against them are very close to those in the extant action as I have attempted to show. In the conspiracy claim, Aguad has said, it seems, that he placed bets using the accounts of other conspirators and settled his losses with Martin Tsai. This will involve an investigation into the financial transactions at the material time between him and other conspirators and, in particular, with Martin Tsai. In relation to his own betting account, he will say, it seems, that he has discharged his liability to the claimant by paying Martin Tsai. The truth or falsehood of this contention will be revealed by the same investigation which is necessary in respect of the conspiracy. He will also have to explain why he believed that paying Tsai would discharge his debt to the claimant. This will involve consideration of his knowledge of the relationship between Martin Tsai and the claimant during the conspiracy period. That investigation will be relevant both to the claim against him and others in conspiracy and to his liability on his own account. It therefore appears to me that the claim against him on his personal account is closely bound up with the claim against him and others in conspiracy. This would be even more true were it to be alleged and proved that his motive in using the accounts of sub-account holder conspirators was to enable him to continue to bet after his own account became unviable because of the debt which had accrued and which was not discharged on 1^st October 2014. On the face of it, that seems a perfectly reasonable subject for investigation in these proceedings.

I therefore conclude that the relevant defendants are proper parties to the extant action in respect of the claims against them where the court would otherwise lack jurisdiction.

In any event, this new gateway in my judgment inevitably leads to the same conclusion. In each case at least one claim has been made against the relevant defendants in reliance on 3.1(9)(a). The claims presently under discussion are further claims which (for the reasons given above) arise out of the same or closely connected facts. This gateway was introduced with effect from 1^st October 2015 and has not, so far as I am aware, been the subject of any judicial consideration in the appellate courts. It seems likely to me that the words “the same or closely connected facts” have a similar meaning to the “proper party” test as explained by Lord Collins JSC in Altimo at [87] and that if one test is met, the other is likely to be met also. There would be little logic in a provision which allowed a foreign defendant to be drawn into an action because of a connection between the case against him and that against a defendant within the jurisdiction, if a similar connection between claims were not strong enough to enable two claims against the same defendant to be included in the same action here. Whether that is right or not, in my judgment any claims against the relevant defendants which would otherwise not pass through a gateway do so because they arise out of the same or closely connected facts as claims which do. Where the justiciable claim is a claim in conspiracy, the connections between the individual alleged conspirators and the victim involving the same subject matter and existing at or about the same time are highly likely to meet the test and in this case, in my judgment, they clearly do. This is especially so in relation to the claim on the cheque which was, if the allegation is well founded, a major instrument of the conspiracy as well as giving rise to an action in itself and representing performance of a contractual obligation.

For these reasons I consider that the claimant has much the better of the argument in establishing that all the claims which it wishes to pursue fall within one or more of the paragraph 3.1 gateways.

Introduction:- An online betting system is a web in which money moves independently of any other transaction for the sale of goods or the provision of services. Its ultimate destination is determined by events external to the business itself. It need hardly have any physical location at all separately from those who operate machines in order to move the money and keep accounts. Those people may move and can no doubt operate machines and effect transactions anywhere in the world where they are. That is often true of online businesses. However, where a dispute arises it must be resolved somewhere, now that gambling contracts are enforceable in England as well as in other places. A factor in identifying the forum where a trial should take place is likely to be an attempt to identify the place with which the carrying out of the business transaction has its most substantial connection. On the evidence the business was really operated by Mr. Osei-Amoaten and he was based in London where the claimant had a place of business. Accounting and recording functions were carried out in Cork, and the claimant’s bank account was in Malta and its customers all over the world, including Peru. The claimant itself is incorporated in Alderney and what (apart from the technical necessities) it does there is not clear in the evidence. It does not operate this business through any employees, but through consultants employed by another company registered in Ireland, Xanadu. The parties all understood that the business would be conducted in a way which was based in London, and there are several references to that in the documents, including in the recap email. There is something of the grin of the Cheshire Cat about trying to locate any physical reality to a business of this kind but so far as it is possible, I have concluded that the hub which is the essence of a business of this kind was Mr. Osei-Amoaten who was based in London. It is not only that Mr. Osei-Amoaten was based in London, but also that the defendants, who could no doubt have chosen a betting agency based anywhere in the world, chose one based in London, knowing that this is where it did its business. This is relevant, but no more than that, in determining the forum.

The test: I have referred to the law (VTB Capital Plc v. Nutritek and Rome I and Rome II) in setting out the submissions above. The legal test is identified in the judgment of Lord Mance JSC in VTB Capital and involves consideration of

The governing law:- So far as Rome II is concerned, the proper law in the claims in tort/delict is the place where the direct damage occurs. I have already answered this question in dealing with the paragraph 3.1(9) gateway for tort claims. The fact that the proper law applicable to a most important part of the claim is the law of England is a “prima facie starting point”, see Lord Mance in VTB Capital at [18] and [51]. It is no more than that, and could be dwarfed by other countervailing factors.

In relation to contract the position is less clear. There are different contracts involved and different conclusions may be reached in respect of different contracts. I consider that the provisions of Article 4(2) and 19(2) of Rome I point to English law as being the proper law of the contracts, but prefer to deal with this on the basis that the point is open and if the court later concludes that foreign law is the proper law of any contract it will hear evidence about that law and apply it if necessary. On that basis the more open position about the proper law of contract is a factor to be taken into account. It is not a factor which points powerfully towards any other jurisdiction because it is far from clear what the proper law of the contracts would be (if it is not English law) or whether it would be the same for all contracts.

Expense and convenience and location of witnesses and documents. There are extant proceedings against other defendants involving closely connected subject matter because two have served defences and a third is taken to have submitted to the jurisdiction. A fourth has been debarred from defending. The existence of these proceedings is a relevant matter in deciding the forum question and points strongly in favour of all these claims being determined by the same set of proceedings.

The witnesses and documents involved in this case are located in London, Cork, Peru and elsewhere. The conspiracy caused damage in England but was formed and conducted in Peru. The financial and other relationships between defendants will be important to the investigation as I have explained above. The material relevant to that is in Peru. Probably more of the witnesses are there than elsewhere, but that is not certain. None of the relevant defendants (who are in Peru) has made a witness statement explaining the evidence which he will give, but their cases are set out by Mr. Badia in paragraph 6 of his statement.

So far as Letts is concerned, he says that the cheque was issued by him but for some other purpose unconnected with the claimant. He says it was sent to the claimant by Martin Tsai without permission. He does not deal with the recap email which explained the purpose of the cheque except to say that he gets a lot of emails and probably did not read it. He does not say whose name was originally on the cheque or how it was that the claimant’s name came to be on it. The claimant’s case is that this happened because Mr. Osei-Amoaten sent a text to Letts telling him to make out the cheque to the claimant. He says that he did not use the personal account on which he is being sued and did not have access codes for it. None of this is very complex evidence and there appears no reason why it could not be given using an interpreter or by videolink. Some interpreting will probably be required wherever the trial takes place because Mr. Osei-Amoaten makes it clear in his evidence that he communicated in Spanish through an interpreter when he was in Peru.

Nieri also denies using the credit betting account set up in his name. He says that the forged transfer form sent to the claimant showing his purported transfer was not sent by him. He deals with the WhatsApp message italicised at [15] above by saying that it only shows that he intended to enquire about the intended transfer. Mr. Badia says on his behalf that there is “not a shred of evidence in support of the conspiracy allegation” which he says “appears to be being used as a pretext by the claimant to recover the losses originally engaged by his [sic] own representative in Peru, i.e. the 1^st defendant.” In fact, the evidence of the false transfer form and the WhatsApp message about it forms the evidence against Nieri of his complicity in both tortious causes of action. Again, this is simple evidence and the validity of the explanation for the crucial message is a matter which can probably be forensically tested quite quickly.

Aguad says that he paid $2,049,991 to “the claimant’s representative in Peru, i.e. the first defendant” and informed the claimant that he had done so on 23^rd January 2015. He therefore admits communication on the day of the important conversation described by Mr. McGuinness and referred to above. In relation to his use of three other accounts opened by sub-account holders he says he did not do this. This is contrary to what he said in the conversation with Paul McGuinness on 23rd January 2015, according to him, and this is therefore quite a simple question of fact.

Plainly Martin Tsai is an important figure in these defences, but he is not in Peru or London. It appears that he is unlikely to be a witness, or at least that the prospects of his giving evidence are not much affected by the choice of forum.

As Mr. Smith puts it in his skeleton argument “A lot of the documentary evidence is available online, so this is a purely neutral factor.” The documentary evidence relevant to defence cases, concerning payments allegedly made by the relevant defendants, including the other transaction for which the cheque was issued by Letts, is in Peru but is under the control of the relevant defendants and can be disclosed by them in the usual way.

For these reasons I do not consider that the location of the witnesses or documents is a crucial determining factor in this case. This is essentially a pragmatic consideration and the existence of proceedings in England covering the same subject matter is an important factor pointing in the direction of trial here.

The relevance of corruption. I also have regard to the evidence of Ms. Beilin. This is not contradicted by any evidence served on behalf of the defendants and is the only material on which I can reach any conclusion. It contains publicly available documents on the existence of corruption in the Peruvian judiciary and points to the risk that justice may be denied to the claimant if the proceedings take place in that country because the defendants may seek to suborn the judiciary responsible for it. Letts and Aguad are said to be well known and well connected in Peru. Letts has been previously investigated for dishonouring a cheque. Other defendants (first, fourth, tenth) have been the subject of criminal investigations. The subject matter of the claim itself and the amount of money involved is said to support a well-founded fear that the proceedings may be the subject of corruption in Peru. In my judgment this is a factor to which some importance should be given. It should be recorded that I am not finding after a judicial enquiry that there is widespread judicial corruption in Peru. I have considered the evidence which the parties to this case have chosen to adduce and conducted no further enquiry at all. That evidence justifies my conclusion for the purposes of the present application but that conclusion has no wider significance than its application to this case. I do not accept that the facts of the conspiracy are so widely different from bribery and corruption that they lend no weight to the claimant’s fear. There is quite a lot of money involved in this case and the fraud was conducted, if it was, by quite sophisticated means.

For all these reasons weighed together I consider that the claimant has shown that England is clearly the most appropriate forum for this trial.

This can be dealt with shortly.

For these reasons I refuse the application of the relevant defendants.