Noble Caledonia Ltd v Air Niugini Ltd

The claimant Noble Caledonia (“NC”) is a tour operator which operates cruises in various parts of the world. Air Niugini Ltd (“ANG”) is the national airline of Papua New Guinea This claim relates to an ANG flight from Singapore to Port Moresby, which was to carry a number of NC’s clients to embark on a cruise ship at Port Moresby, but which failed to be available for take off in time for them to do so. The flight was arranged by NC through Flight Directors Scheduled Services Limited (“FDL”) , which has an office near Gatwick Airport.

There is a preliminary issue which I deal with in this Judgment, namely whether service has been effected on ANG by NC in accordance with Rule 6.9 of the Civil Procedure Rules. ANG is a company incorporated under the laws of Papua New Guinea. It follows that according to Rule 6.9 service may be effected upon it if it is served at a place within the jurisdiction where the company carries on its activities; or any place of business of the company within the jurisdiction. The defendant has issued an application under CPR Part 11 to strike out this claim in part on the basis that the claim was not validly served. It is the contention of the claimant that service was validly effected under Rule 6.9.

The claim form was purportedly served by Mr Stephen Mason of the solicitors for NC on the 8th November 2016 by way of personal service on the general manager of FDL, Sally Malthouse. On that occasion Ms Malthouse told Mr Mason that she was not accepting service on behalf of ANG but that she would send the documents to them.

It is common ground that ANG did not have an office of its own in the jurisdiction. The issue for this judgment is whether the FDL office is a place at which ANG was conducting its activities.

I shall deal with matters as follows

The nature of the claim

The claimant NC wished to arrange transport of 45 clients from Singapore to Port Moresby in Papua New Guinea, where they were going to join a cruise ship which was due to depart on the 12th February 2016 on a tour of Indonesia. The claimant NC contends that the contracts were formed by a series of requests for tickets made by them of the general sales agent of ANG, namely FDL. FDL have premises at their offices near Gatwick Airport on the Sussex/Surrey border. The claimant contends that it was an express term of the contracts made with ANG through FDL that the flight from Singapore to Port Moresby would take off from Singapore on the 11th February 2016 at 8:35pm and land in Port Moresby on 12th February 2016 at 5:09am, and in any event in good time for the clients of NC to depart on the cruise ship on 12th February 2016. It is also alleged that it was an implied term of the contract that the defendant ANG would take all reasonable steps to ensure that the Singapore to Port Moresby flight arrived on time, and if it did not, that the clients would be transported to Port Moresby to arrive as soon reasonably possible thereafter, and in any event within a reasonable time.

The claimant alleges that ANG was in breach of the contract because the flight, which as I have indicated was meant to leave Singapore at 8:35pm on the 11th February 2016, was repeatedly delayed until it was cancelled at 6:00am on 13th February 2016. The delays were caused by the need to repair the aircraft.

The claimant alleges that the cruise ship’s departure from Port Moresby was delayed. The passengers could not have joined it by the latest time when it could have sailed, namely 14^th February 2016. It could not be delayed until the 45 passengers would have arrived, with the result that the 45 passengers were left in Singapore, never being able to take the flight. It sailed on 13th February 2016. NC has compensated its clients. Its claim in these proceedings amounts to £649,091.79 made up by the amount of refunds and out of pocket expenses paid to their clients, together with the costs of repatriating the clients from Singapore to the United Kingdom and other relevant costs and expenses.

The defendant has indicated that it will seek to contest the claim on various grounds. In particular, it is its case that the delays to the flight were permitted within the contract, because ANG was using its best endeavours to make the aircraft available for use.

The evidence

The claim form was purportedly served by Mr Stephen Mason of the solicitors for NC on the 8^th November 2016 by way of personal service on the general manager of FDL, Sally Malthouse. On that occasion Ms Malthouse told Mr Mason that she was not accepting service on behalf of ANG but that she would send the documents to them.

It is common ground between the parties that service could only be effected if the activities carried on by FDL are to be attributed to ANG. I have therefore received witness statements from the parties which address that issue. Much of the evidence concerns the activities of Ms Vikki Joyce, who is the Head of Sales and Marketing at FDL, a post which she has held for 18 years. She is also the Head of Sales in relation to the general sales agency operated by FDL on behalf of the defendant ANG. Much of the claimant’s case depends upon its contention that Ms Joyce was effectively carrying on the activities of ANG in the United Kingdom. However to put those matters in context it is necessary to understand first what the legal relationship was between ANG and FDL.

Ms Benneth Kome is the company secretary of ANG, a position which hse has held for six years. She works at the offices of ANG in Papua New Guinea (“PNG”). In her evidence she states that ANG is a company incorporated under the laws of PNG and operates its business as the national airline of PNG. ANG also carries on business in Australia and operates sales offices in Sydney, Brisbane and Cairns, and also maintains a sales office in Manila in the Philippines. Ms Kome says in her evidence that

“ANG does not, however, maintain any offices or carry on any business in the United Kingdom. Instead passengers around the world can book tickets on ANG flights through various different general sales agents located in a number of locations”

which she then lists, and includes the United Kingdom as well as many other countries.

The relationship between ANG and FDL is governed by a General Sales Agency Agreement dated 20^th January 2011, with an addendum dated 21^st April 2015, but effective from 1^st April 2015.. According to that agreement;

It is the belief of Ms Kome that FDL is carrying on its own business rather than the business of ANG in jurisdiction. She also states that FDL had no authority to negotiate any refunds in connection with the Noble Caledonia flight.

Mr Paul Argyle is the owner and managing director of FDL. He has held that position for 29 years. In his evidence he describes how FDL acts as a General Sales Agent (“GSA”) to a number of airlines including Air Malta, Air Calin, Aerolineas Argentinas, Tianjin Airlines, RwandAir, Blue Air and Atlantic Airways as well as ANG. FDL commenced it relationship with ANG in 2003. The contract helps ANG generate revenue from customers in the United Kingdom market without the need for it to establish or maintain a place of business in the United Kingdom nor any requirement to employ staff in the United Kingdom. Mr Argyle states that FDL carries on the business on its own behalf so as to earn commission on sales. Mr Argyle resists the suggestion that ANG carries out its own business from FDL’s offices in the United Kingdom and denies that anyone working at FDL’s office holds a “senior position” in ANG. He states in his evidence that all of the staff working in FDL’s office were employed by FDL and were carrying on FDL’s business at all times. While there is one sales executive at FDL that works exclusively on the account of another airline, he states that all other sales managers, executives, and reservation personnel work on the promotion or servicing of more than one airline.

He describes in his evidence how the reason for an airline entering into a GSA contract is to avoid the need to set up and carry on business within the country in question. He states that the GSA contract between FDL and ANG was no exception to that principle. While it is true that GSA contracts sometimes provide for an airline to establish an office and appoint a manager of that office for ceremonial purposes, that is less common and the GSA contract between FDL and ANG was not of that type. There was such a contract between FDL and another airline but none with ANG. Mr Argyle states that the provisions of the GSA contract between FDL and ANG allowed FDL to act in accordance with “standard practices and procedures followed by the GSA in accordance with its own operations.” He contends that that means that ANG does not impose its own practices or procedures on FDL nor does ANG require FDL to carry out its business in any particular way. He denies that there was any significant degree of monitoring and control by ANG over the business conducted by FDL. While it was true that ANG would provide promotional material for FDL to distribute, it was FDL that would decide what would be put out on social media along with what events would be attended. He states that FDL did not negotiate prices and was not authorised to agree rates on behalf of ANG. He states that in particular, FDL has no general authority on behalf of ANG to negotiate fares, sign contracts or agree to allocation of seats on ANG services without receiving permission from the airline. On any fare, other than an advertised or published fare, FDL must obtain authorisation from the airline prior to making that fare available to any party in the United Kingdom market.

In his evidence he describes the payment of commission by ANG to FDL, in two ways:

FDL does not receive any additional remuneration or income from ANG other than commission and there is no regular fixed payment from ANG to FDL, nor any contribution to its office or overheads from ANG. ANG does not reimburse any part of the costs incurred by FDL in employing Ms Joyce or anyone else working on the ANG account. All of the overheads are paid for by FDL. Occasionally FDL would be requested by ANG to place advertisements in a newspaper or otherwise on its behalf, that occurring about once every two or three years. The cost of placing those advertisements was subsequently reimbursed by the airline.

He confirms that Ms Joyce was employed as Head of Sales and Marketing for FDL and had been in the employment of the company for almost 19 years. He also refers to another employee, Dawn Green, who was employed by FDL as a group sales executive, and had been so for 23 years. He gives detailed evidence of how Ms Joyce had direct responsibility for GSA contracts with various airlines and oversaw the work of the sales executives within the sales team of FDL. She was also the principal account manager for three airlines, including ANG. She held business cards for a number of airlines who were clients of FDL for use when promoting their services. He describes Ms Joyce as being well known through the UK travel industry for her work on all airline GSA accounts held by FDL, and that a major part of her role was to encourage agents to support services of all airlines and to do so by placing their business through FDL so that they could earn commission. He denies that Ms Joyce had any position other than as holding her role in FDL. In particular she was neither a senior manager nor a director of ANG, and received no salary or remuneration from ANG. I shall refer shortly to her evidence on the matter.

He refers to the fact that FDL had set up a website “airniugini.co.uk” and its associated email address “@airniugini.co.uk”. That website was owned by FDL, and customers that clicked on it would be redirected to the website of a sister company of FDL called “Alternative Airlines” and not ANG’s website. Emails sent to the email address would be received in FDL’s general inbox. However ANG did maintain a site on the internet, which was “www.airniugini.com.pg” i.e. it had a web address based in PNG. Mr Argyle refers to the fact that FDL promoted the airline through a number of social media channels, and with the agreement of the airline would sometimes use the name of the airline (e.g. “Air Niugini UK”). According to Mr Argyle they do the same for other airlines as well for whom they hold the GSA agreement. So far as he is concerned this was a way of promoting the business of FDL because the promotion of ANG would lead to increased sales and therefore commissions for FDL.

Before turning to the evidence of Vikki Joyce herself, I should refer to the way in which the case is put by the claimant. The case of the claimant is essentially that the activities of Vikki Joyce of FDL were the activities of ANG. Mr Timothy Cochranee is the Managing Director of NC. I was referred in his evidence to business cards distributed by Ms Joyce. They bear the name and logo of ANG, and refer to Ms Joyce as “Head of Sales and Marketing” and give an address “Air Niugini GSA…”, the remainder of the address being that of FDL. . The card gives a telephone number, which is also an FDL telephone number, but gives an email address which is “VJoyce@airniugini.co.uk”, and a website “www.airniugini.co.uk.” I was also provided with copies of Facebook entries for Air Niugini UK and Ireland which shows Ms Joyce wearing a uniform bearing the ANG logo and running a stall at an exhibition promoting ANG.

Ms Roslyn Reynolds is the Client Manager (Process) of NC. She was instructed in 2013 to find flights to and from Papua New Guinea as part of a new program which NC was going to start which would include trips to that country. As a result of her research she was given the contact details of Mr Robin Russell-Pavier, who is the account director of PNG Tourism Promotion Authority, based in London. According to Ms Reynolds, Mr Russell-Pavier plays a very active role in promoting Papua New Guinea at various trade shows and events throughout the UK. He recommended ANG to NC. He directed their enquiries to “Vikki from Air Niugini” and gave her email address as “VJoyce@flightdirectors.com.”

Meanwhile Ms Reynolds had visited the website airniugini.co.uk, owned by FDL, and had filled out its online enquiry form requesting further details and the availability of charters. She received an email back from a Sharon Scott-Fairweather using the email address “Airniugini@flightsdirectors.com.” The email stated that

“We do not deal with charter flights from this office but, if you are looking at a group booking, we do have a groups department who would be able to quote you on a group but we cannot quote anything more than one year ahead. With regards to chartering a plane, this would need to be dealt with by the head office in Papua New Guinea on (telephone number given)”

The email concluded with the name of Sharon Scott-Fairweather and underneath was written “Air Niugini UK - General Sales Agent”. On the 9^th October 2012 Ms Reynolds received an email from Vikki Joyce from the address “VJoyce@flightdirectors.com,” reading

“…I hope you don’t mind me stepping in here, I am the Sales Manager at Air Niugini. ANG can occasionally offer charters but not on the Long Haul route due to aircraft utilisation. We do however fly three times a week between Singapore and Port Moresby and we can accommodate group bookings and allocations of these flights. How many pax are we talking about and will it be a turn around in Rabaul, or are you just looking for ad hoc seats? Do you have dates in mind? If you can give me some more info, then I can assist you in reaching the correct person at Head Office.” (“pax” means passengers)

That was signed by Ms Joyce at the foot of the email. She described herself as coming from “Flight Directors - setting the standards for GSA’s (sic) worldwide”

I was also taken to material on the website at “www.alternativeairlines.com/air-niugini”. That included links to various airlines. It gave a description of ANG, its operations and a description of its fleet and merits as an airline. It includes this passage:

“Vikki Joyce, UK representative of Air Niugini, recently spent 3 days at the world famous British Birdwatching Fair…held at Rutland…she was part of a dedicated team from Papua New Guinea which included: Vikki Joyce-Air Niugini, (various names of other persons associated with tourism to Papua New Guinea are then provided)…and Alice Kuaningi-PNG Tourism Promotion Authority.”

In the next paragraph it states:

“Air Niugini is proud to work with the PNG Tourism Authority to promote PNG as one of the world’s most exciting destinations for bird watchers. Vikki Joyce said

“This is my favourite fair of the year…it’s an experience second only to a bird watching holiday in PNG!”

A Twitter feed was also operated by FDL under the name of Air Niugini UK. It was not disclosed to me whether anyone had tweeted about birdwatching.

After the plane had been delayed and the trip by the passengers had therefore been cancelled, Mr Cochranee of NC emailed Air Niugini in Papua New Guinea. He received an email from Mr Boyacii on 16^th February 2016, who described himself as the Executive Manager Customer Experience for ANG. Having expressed his apologies, he asked for further information. It is apparent from the reply which Mr Cochrane sent back to Mr Boyacii on the 19^th February 2016 that meanwhile he had received a visit from Vikki Joyce. His email reads

“Your UK representative Vikki Joyce has visited our office and is fully appraised of the situation and our position. Vikki informed me that she has sent a report to your CEO and expects to meet him this weekend during your conference in Hong Kong to discuss the situation.”

Ms Joyce had sent an email to Mr Cochranee on 16 February 2016 from “VJoyce@flightdirectors.com on behalf of Vikki Joyce (VJoyce@airniugini.co.uk)” she described herself in the email as “The UK representative of ANG.” According to Mr Cochranee, Ms Joyce described herself as “UK representative of Air Niugini.” They had a meeting. She also provided him with a copy of the business card to which I have already referred. He describes Ms Joyce as presenting herself as a “senior executive of Air Niugini.” She always referred to ANG as “her company” and to its CEO as “her CEO.”

In her first witness statement, Ms Joyce describes how FDL also acted under a GSA with a number of different airlines. She described how sales and reservations were made by employees of FDL using the ANG system “Mercator” but that they played no part in the arrangements for the flight, airport, ground handling or pricing. She also describes how FDL were unable to bind ANG to different terms than those dictated by the reservation system. According to Ms Joyce, FDL was unable to undertake negotiations as to the ticket price with any of the clients. ANG provided a group pricing structure and the criteria which had to be applied. Her evidence is that the employees of FDL were able to sell tickets within their structure, but only if the requisite criteria were met. FDL had no input with regard to the terms applied to the sales, and if a customer wanted to obtain a more competitive price or did not meet the criteria, FDL had to obtain specific authority from ANG employees working outside the United Kingdom. She states that there was no separate office space within the office of FDL devoted to ANG’s services, nor were any sales agents solely dedicated to selling tickets on flight operated by ANG. She describes how there was a dedicated telephone line with regard to ANG flights. However her evidence is that it was the practice of the employees to say when answering the telephone that they worked for FDL as the GSA of ANG. She also stated that calls from trade operators were dealt with by a different telephone number which was answered “airline sales”.

In her second statement, filed in response to the evidence provided by the claimant, she gives further details of her activity. She refers to the relationship between ANG and FDL to which I already have referred, including the agreement between the parties. She reiterates that FDL had no power to negotiate the prices for ANG tickets. However because FDL was a GSA it was given more favourable rates, which could then be quoted to customers. She reiterates that any other adjustment of price or booking had to be made with ANG direct. Thus, if ANG was offering 20 seats on a particular flight at the “special rate” (and the rest of the seats at full rate) FDL would only be able to offer those 20 seats at the special rate, but if the tour operator wanted more seats FDL would approach ANG and ask for the extra five seats at the special rate. If, but only if, ANG agreed to that, those extra seats could be offered, and indeed in the case of this contract NC requested 18 seats but were informed that only eight were available at the favoured rate and the remainder would be requested from ANG. In the end ANG did offer the more favourable rate for the extra ten seats. Ms Joyce describes that as standard practice with all the airlines whom FDL represented.

So far as her promotional activities were concerned, she accepted that she had taken part in various activities including a presence at stalls, conventions and travel fairs, and also in promoting the airline through social media. She described the use of social media as an opportunity to connect with a broader range of people. As to her business cards, she has a number of different business cards for the various airlines for which FDL is the GSA. Similarly, she uses varying email signatures according to the airline whose business she is promoting. The company also has separate telephone numbers for the various airlines, so that the reservations team know which airline a customer is calling about. The telephone number on all her business cards was, she said, the GSA sales number not a number specific to an airline. She has attached various photographs of herself and others from FDL promoting various airlines, not restricted to ANG. According to Ms Joyce, various meetings she had with NC involved the promotion of ticketing sales for various airlines.

Ms Joyce makes the point in her evidence that the concept of a GSA was well known through the travel industry, and she would have expected it to be understood by NC. She stated that when she referred to herself as “sales manager at ANG” in an email to Ms Reynolds, that was “loose language.” It is to be noted that appeared in an email sent from FDL’s email address and over an email signature associating Ms Joyce with FDL. She refers in her evidence to a number of emails where NC and herself had liaised over booking seats on other airlines.

Ms Joyce refers also to her dealings with NC after the problems with the flight had occurred. She stated that she was concerned about FDL’s continuing business relationship with NC, given the number of different airlines for which they had booked tickets through FDL. She wished to maintain that relationship. She accepts that she introduced herself in the email as the UK representative of ANG, and that she referred to their CEO as “our CEO.” She described that as “slightly loose language (in the way emails sometimes encourages)” but she points out that the relevant email came from her FDL email address, and she expresses surprise if Mr Cochrane was not well aware that she was not an employee of ANG but in fact an employee of FDL. She also attaches an email from Ms Harris of the claimant NC sent to her colleague Dawn Green on the day before the meeting, addressed to Ms Green, who works for FDL. The terms of that email suggest, says Ms Joyce, that NC were under no doubt that FDL was not acting as ANG, but as their agent. The main email of 15^th February 2016 reads as follows

“…just to let you know the PX” (another reference to ANG) “flights didn’t go on the 11^th, PX kept advising us of a departure time that kept getting moved back and never ended up going! !We therefore had to bring all our passengers home and abandon the trip which is obviously a decision we ever want to make. We are speaking to PX directly but we will obviously need to refund all the tickets. Can you advise how we do this? Do you have a contact at PX we can speak to as well as we are also seeking compensation.”

The reply that came from Ms Green at FDL reads as follows:

“I am very sorry to hear that, and send my sincere apologies on behalf of (ANG )for the cancellation of this tour. Vikki has advised that the email address you need is “cs.duty.mgr@airniugini.com.pg.” We do not have a name or telephone number of the actual person to talk to I am afraid.”

The case for the Defendant

Mr Allen’s case was in essence that FDL never did anything more than act as ANG’s agent for the sale of tickets, and that nothing it did could be described as the “activities” of ANG.

He directed me to several authorities, and in particular Adams v Cape Industries plc [1990] 1 Ch 433 (CA), SSL International PLC v TTK LIG Ltd [2011] EWCA Civ 1170 [2012] 1 WLR 1842 Chopra v Bank of Singapore Ltd [2015] EWHC 1549 (Arnold J), and Bols Distilleries v Superior Yacht Services [2006] UKPC 45 [2007] 1 WLR 12 at [26]- [28].

The exercise of jurisdiction over a company which owes no allegiance to the UK and is not present within it is not to be lightly assumed: per Stanley Burnton LJ in SSL International at [49]. The burden of proof was on the Claimant to show a good arguable case, namely a much better argument on the material available: see Bols Distilleries at [26]-[28} citing Waller LJ in Canada Trust Co v Stolzenberg (No 2) [1998] 1 WLR 547 at [555] with approval.

He then sought to apply the criteria set out in Adams v Cape Industries at 530- 531. He referred the Court also to the passage at 529 D-H per Slade LJ in the judgement of the court:

“Nevertheless, it is a striking fact that with one possible exception (The World Harmony   [1967]  P.  341) in none of the many reported English decisions cited to us has it been held that a corporation has been resident in this country unless either (a) it has a fixed place of business of its own in this country from which it has carried on business through servants or agents, or (b) it has had a representative here who has had the power to bind it by contract and who has carried on business at or from a fixed place of business in this country.

     We do not find this surprising as a matter of principle. Indubitably a corporation can carry on business in a foreign country by means of an agent. “It may be stated as a general proposition that whatever a person has power to do himself he may do by means of an agent:” Halsbury's Laws of England, 4th ed., vol.  1  (1973), p. 420, para. 703. However, though the terms “agency” and “agent” have in popular use a number of different meanings:

     “in law the word ‘agency’ is used to connote the relation[ship] which exists where one person has an authority or capacity to create legal relations between a person occupying the position of principal and third parties: ” Halsbury's Laws of England, vol. 1, p. 418, para. 701.

     Where the representative of an overseas corporation has general authority to create contractual relations between the corporation and third parties and exercises this authority, there may be little difficulty in applying the maxim “qui facit per alium facit per se.” Where no such authority exists, there may be much greater difficulty.”

Slade LJ then went on to list three criteria , with some subsequent comment, at page 530B-531F:

“General principles derived from the authorities relating to the “presence” issue

     In relation to trading corporations, we derive the three following propositions from consideration of the many authorities cited to us relating to the “presence” of an overseas corporation.

(1)

The English courts will be likely to treat a trading corporation incorporated under the law of one country (“an overseas corporation”) as present within the jurisdiction of the courts of another country only if either (i) it has established and maintained at its own expense (whether as owner or lessee) a fixed place of business of its own in the other country and for more than a minimal period of time has carried on its own business at or from such premises by its servants or agents (a “branch office” case), or (ii) a representative of the overseas corporation has for more than a minimal period of time been carrying on the overseas corporation's business in the other country at or from some fixed place of business.

(2)

In either of these two cases presence can only be established if it can fairly be said that the overseas corporation's business (whether or not together with the representative's own business) has been transacted at or from the fixed place of business. In the first case, this condition is likely to present few problems. In the second, the question whether the representative has been carrying on the overseas corporation's business or has been doing no more than carry on his own business will necessitate an investigation of the functions which he has been performing and all aspects of the relationship between him and the overseas corporation.

(3)

In particular, but without prejudice to the generality of the foregoing, the following questions are likely to be relevant on such investigation: (a) whether or not the fixed place of business from which the representative operates was originally acquired for the purpose of enabling him to act on behalf of the overseas corporation; (b) whether the overseas corporation has directly reimbursed him for (i) the cost of his accommodation at the fixed place of business; (ii) the cost of his staff; (c) what other contributions, if any, the overseas corporation makes to the financing of the business carried on by the representative; (d) whether the representative is remunerated by reference to transactions, e.g. by commission, or by fixed regular payments or in some other way; (e) what degree of control the overseas corporation exercises over the running of the business conducted by the representative; (f) whether the representative reserves (i) part of his accommodation, (ii) part of his staff for conducting business related to the overseas corporation; (g) whether the representative displays the overseas corporation's name at his premises or on his stationery, and if so, whether he does so in such a way as to indicate that he is a representative of the overseas corporation; (h) what business, if any, the representative transacts as principal exclusively on his own behalf; (i) whether the representative makes contracts with customers or other third parties in the name of the overseas corporation, or otherwise in such manner as to bind it; (j) if so, whether the representative requires specific authority in advance before binding the overseas corporation to contractual obligations.

     This list of questions is not exhaustive, and the answer to none of them is necessarily conclusive. If the judge, ante, p. 476B–C, was intending to say that in any case, other than a branch office case, the presence of the overseas company can never be established unless the representative has authority to contract on behalf of and bind the principal, we would regard this proposition as too widely stated. We accept Mr. Morison's submission to this effect. Every case of this character is likely to involve “a nice examination of all the facts, and inferences must be drawn from a number of facts adjusted together and contrasted:” La Bourgogne   [1899]  P.  1, 18, per Collins L.J.

     Nevertheless, we agree with the general principle stated thus by Pearson J. in F. & K. Jabbour v. Custodian of Israeli Absentee Property   [1954]  1   W.L.R.  139, 146:

     “A corporation resides in a country if it carries on business there at a fixed place of business, and, in the case of an agency, the principal test to be applied in determining whether the corporation is carrying on business at the agency is to ascertain whether the agent has authority to enter into contracts on behalf of the corporation without submitting them to the corporation for approval …”

     On the authorities, the presence or absence of such authority is clearly regarded as being of great importance one way or the other. A fortiori the fact that a representative, whether with or without prior approval, never makes contracts in the name of the overseas corporation or otherwise in such manner as to bind it must be a powerful factor pointing against the presence of the overseas corporation.”

In Mr Allen’s submissions, the activities of Ms Joyce and FDL did not satisfy the criteria. He contends that FDL was in every sense a mere agent of ANG, with no power to make contracts unless made on ANG terms. He points to the fact that FDL had no authority to sell at lower prices than those set by ANG, whether generally, or of those subject to the discount specifically allocated to FDL.

He refers to the evidence that the staff at FDL were all FDL employees and paid by FDL. Vikki Joyce was one such employee.

He also submits that the fact that FDL was also acting for other airlines, and effecting similar arrangements with regard to telephone numbers and business cards points to it being an agent for ANG, rather than its acting as ANG. He refers also to the fact that the booking was made with Dawn Green at FDL, and on emails showing that the discussions were with FDL..

He points also to the fact that FDL was paid by ANG by commission for sales, and not otherwise.

Mr Allen submits that the promotional activities of Ms Joyce (the stalls, Facebook pages and business cards) were no more than the activities of an agent to promote its client, and thereby to drum up business which would result in commission being earned.

So far as the meetings after the problems with the flight are concerned, Mr Allen submits that this was FDL, and in particular Ms Joyce, trying to assist in the resolution of the issue that had arisen. In any event, says Mr Allen, the documents show that FDL was reporting back to ANG, and simply trying to smooth things out.

Thus Mr Allen submitted that FDL was no more than a general sales agent for ANG. It followed that those activities were not those of ANG, but were those of its general sales agent.

The case for the Claimant

Mr Audland QC accepted that the Cape Industries criteria apply. He referred me to Saccharin Corporation Ltd v Chemische Fabrik AG [1911] 2 KB 516 (CA) and Okura and Co Ltd v Forsbacka Jernverks Aktielbolag [1914] 1 KB 715 (CA). He submitted that when an agent has the power to enter into contracts, and displays the principal’s name at the premises, there will be little difficulty in establishing that the agent’s premises are a place of business of the principal (as in Saccharin) unlike the case of an agent trading on his own account and without authority to contract on behalf of the principal without prior approval (as in Okura).

Here, FDL was the sole agent of ANG. In her activities, Ms Joyce holds herself out as Head of Sales and Marketing of ANG, and operates Facebook pages, a website and her own email as being part of, and representing ANG. Her email correspondence is to similar effect. It is not just Ms Joyce and FDL doing so; reference is made to the PNG Tourism Promotion Authority, calling her “Vikki of Air Niguini.” The PNG High Commission does so too.

Her involvement after the problems with the flight showed that she was acting as more than ANG’s sales agent.

Factors (d) to (j) in the third Cape Industries criterion all point in this case to the activities being those of ANG for the purposes of CPR 6.9.

My starting point is to look at CPR 6.9. Was FDL’s office either a place at which ANG carried on its activities, or a place of business of ANG? The argument before me concentrated on the former. It was right to do so. There is no evidence that it was a place of business of ANG.

Counsel informed me that there is no authority on the meaning of the first criterion. However they both addressed me on the basis of the authorities set out above. In my judgement the principles to be applied are much the same.

Noting the observations of Stanley Burnton LJ in SSL International PLC v TTK LIG Ltd [2011] EWCA Civ 1170 [2012] 1 WLR 1842 at [49], I consider the situation here. Looking at the phrase in the CPR, were the activities of FDL to be taken as those of ANG? In other words were they “its (i.e ANG’s) activities ?” The concept of principal and agent is well known. While an agent may bind his principal, it by no means follows that the business of the agent can be described as that of the principal. An agent need not be an agent for only one principal, but may be an agent for many.

If one looks at the Cape Industries criteria, the critical issue is whether FDL has been a representative of ANG, carrying on its business for more than a minimal period, from the FDL offices, or have the activities of FDL been those of its own business ?

Slade LJ in Cape Industries emphasised the importance of context. I regard that as a most important point. One looks at the practice in the airline and general service agency world. On the basis of the evidence from ANG’s senior management and, most significantly from Mr Argyle of FDL, the arrangement between ANG was one of a number of such arrangements made by FDL as a general services agency. The terms of the agreement between the two limited FDL’s ability to enter into contracts, and deprived them of any realistic discretion in terms of pricing or contractual terms. FDL was only paid on commission, based on the number of sales it had made.

If one looks at the suggested list in the third criterion:

It must of course be observed that Cape Industries was decided long before the days of Facebook, and when the Internet and email were in their infancy. In this case both Facebook and the Internet have been used as a promotional tool by Ms Joyce in her work at FDL to get business for ANG.

I note the reference by Mr Audland to the Saccharin case, which concerned an agent with very wide authority to bind his principal. I find it of little assistance in the factual context which obtains here.

It is perhaps an irony that if ANG had installed one of its employees in an ANG leased office at Gatwick, with no authority to offer altered prices or terms and conditions, then that would pass the place of business test. However the authorities adopt the approach that if the business is done via an agent, then the less freedom of manoeuvre the agent has in terms of negotiating contracts, the less likely the test is to be met. But having noted that potential anomaly, I turn to consider the outcome in the instant case.

I find myself quite unpersuaded by the Claimant NC that that the activities of FDL and Ms Joyce were ANG’s activities as opposed to those carried out to promote ANG by its agent. ANG was but one of FDL’s clients, and the restricted nature of the authority given to FDL by ANG means that FDL’s activities for ANG do not meet the criteria set in Cape Industries when taken as a whole. I am quite prepared to accept that to the lay visitor to a bird watching fair or a visitor to the Facebook page, Ms Joyce was holding herself out as the personification of ANG in the United Kingdom. But that was not the case with NC. It knew right from the outset that it was ANG which determined whether or not it could sell the seats as required by NC, as appears from the evidence of Ms Reynolds for the Claimant. As to the post incident dealings, the keenness of NC to make contact with ANG itself, and the subsequent involvement of Mr Boyacii from PNG lend no support to the concept that Ms Joyce was acting as ANG in her discussions. I accept that she gave the impression that she was, no doubt to see if the problem which had arisen could be resolved, to everyone’s mutual benefit. But I am also in no doubt from the conduct of NC that its senior executives were in no doubt that FDL was no more than the UK agent.

I therefore conclude as a preliminary point that the proceedings were not properly served, and that if ANG is to be served, it will have to be served out of the jurisdiction.