Percival v Motu Novu LLC

This is an appeal by Mr John Kenneth Percival against the order of Master Cook dated 12 April 2018 and sealed on 13 April 2018 (“the Order”) registering three Italian judgments specified in the Order (“the Italian Judgments”) under chapter III of Council Regulation (EC) 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters [2001] OJ L12/1 (“the Regulation”) for enforcement in England and Wales. The effect of registering the Italian Judgments under the Regulation is to declare them enforceable in England: Article 38 of the Regulation.

The Italian Judgments are:

As should be apparent from the foregoing summary, the three Italian Judgments all arise out of the same dispute, the Tribunal Judgment being a first instance decision in favour of the Original Claimants, the CA Milan Judgment and the Italian SCC Judgment being successive appellate judgments in the same case.

The dispute arose out of an aborted property transaction in Italy. Mr Teruzzi and Ms Puthod are husband and wife. La Fattoria was a “pass-through” company incorporated under Italian law and owned by Mr Teruzzi and Ms Puthod through which the property at the centre of the dispute was temporarily owned. It has since been dissolved. Mr Percival’s co-defendant, PLC Holdings srl, an Italian company, has also since been dissolved, leaving the appellant, Mr Percival, as the sole judgment debtor.

By an Assignment of Rights of Judgment dated 28 March 2011 (but signed by the parties on 29 June 2011) and governed by the laws of the Commonwealth of

In the 2011 Assignment Mr Teruzzi covenanted and warranted that no appeals from the Tribunal Judgment and the CA Milan Judgment were pending and that the time for appeal had expired. It is common ground, however, that the proceedings leading to the Italian SCC Judgment were served on the Original Claimants on 17 January 2011, pre-dating the 2011 Assignment by over two months. There is a dispute between the parties as to whether this fact is relevant to the effectiveness of the registration of the Italian Judgments by the Order.

Section 2 of chapter III of the Regulation sets out a scheme intended to enable a claimant who has obtained a judgment from a court in one member state of the European Union (“EU”) to enforce that judgment in another EU member state relatively quickly and with a minimum of formality. The scheme is helpfully described in paragraphs 7.04 and 7.26 to 7.29 of Adrian Briggs, Civil Jurisdiction and Judgments (6th edn 2015) (“Briggs CJJ”). Further references in this judgment to a “foreign judgment” mean a judgment given by a court of an EU member state other than the one in which registration for enforcement under chapter III of the Regulation is sought.

The scheme involves two stages:

In England and Wales, the application for registration is made to the High Court (subject to an exception not relevant to this case), under Annex II to the Regulation, and the appeal against the decision on the application is also made to the High Court, under Annex III to the Regulation. Accordingly, as noted by Professor Briggs (Briggs CJJ at paragraph 7.28), the order for registration having been made ex parte, the “appeal” under Article 43 might more naturally be described in domestic terms as an application to set aside the order, rather than as an appeal against the order, although, in the words of Professor Briggs, “the principle is clear enough”.

Under Article 44 of the Regulation, the order made on appeal under Article 43 is subject to a single further appeal on a point of law, which in England and Wales would be to the Court of Appeal.

The ex parte stage of the registration process is governed by Articles 38 to 42 of the Regulation. The inter partes stage is governed by Articles 43 to 47. The remainder of section 2 of chapter III of the Regulation, Articles 48 to 52, deals with miscellaneous points that do not arise in this case, other than in relation to Article 48, to which I will revert in due course.

Although the Regulation was recast in the form of Regulation (EU) No 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters [2012] OJ L351/1 (“the Recast Regulation”), under article 66(2) of the Recast Regulation the Regulation continues to apply to judgments entered into prior to 10 January 2015, which is the case for all three of the Italian Judgments. Accordingly, I do not need to consider the Recast Regulation.

The ex parte stage of registration is intended to be no more than a check of the documents. Recital 17 of the Regulation makes this clear:

“(17)

By virtue of the … principle of mutual trust [in the administration of justice in the Community], the procedure for making enforceable in one Member State a judgment given in another must be efficient and rapid. To that end, the declaration that a judgment is enforceable should be issued virtually automatically after purely formal checks of the documents supplied, without there being any possibility for the court to raise of its own motion any of the grounds for non-enforcement provided for by this Regulation.”

Under article 41 of the Regulation the party against whom registration is sought is not entitled to make submissions on the application. Article 41 also provides that the judgment to be registered shall be declared enforceable immediately upon the completion of the formalities in Articles 53 and 55, without any consideration of the grounds under Articles 34 and 35 of the Regulation on which the registration of a judgment may be appealed.

The formalities are:

The order effecting the registration of the judgment constitutes the declaration of the enforceability of the judgment referred to in Chapter III of the Regulation. In this case, that is the Order.

Schedule 1 to the Civil Jurisdiction and Judgments Order 2001 provides that a judgment registered under the Regulation shall, for the purposes of its enforcement, be of the same force and effect as a judgment given by an English court. As Professor Briggs points out (Briggs CJJ at footnote 269), this equivalence is limited to the basis for measures to enforce the judgment. For other purposes, a foreign judgment registered under the Regulation does not necessarily have the same legal consequences as an English judgment.

Article 42 introduces the inter partes stage of the registration process by requiring the party against whom enforcement is sought to be served with a copy of the declaration of enforceability, together with a copy of the relevant judgment, if not already served on that party. Article 43 permits either party to appeal against the decision on the application for a declaration of enforceability. The appeal must be lodged within one or two months of service of the declaration, depending on where the party against whom enforcement is sought is domiciled. In this case the one-month period applied, although nothing turns on that.

Under Article 45(1) of the Regulation, the only grounds on which an appeal may be brought are those set out in Articles 34 and 35 of the Regulation, which are the grounds on which recognition of a judgment may be refused. Professor Briggs states (Briggs CJJ at page 672):

“[Article 45(1)] cannot be read literally. After all, if the appellant were not entitled at this stage to submit that the judgment is not within the domain of the Regulation at all, or that he is protected from enforcement by a bilateral treaty to which Article 72 refers, or on any other ground is not within the ambit of this rule, it must come up at this point or not be raised at all. It follows that all grounds and every ground of opposition to the enforcement of the judgment may be raised at this stage, though, of course, the substance of the judgment may not be reviewed. Article 45(1) must be taken to be referring to grounds which are internal to and expressly provided by the Regulation for judgment which fall within its scope, and not those which go to define its outer edges.”

Professor Briggs in the passage above from Briggs CJJ says that “all grounds and every ground of opposition to the enforcement of the judgment may be raised at this stage”, other than grounds requiring a review of the substance of the judgment. In a more recent work, Private International Law in English Courts (2014), in a passage dealing with the same provisions of the Regulation, Professor Briggs provides some further examples of the types of objection that may be raised beyond those in Articles 34 and 35 of the Regulation:

“It is provided [in Article 45(1) of the Regulation] that the order can be refused or revoked only on the grounds specified in Articles 34 and 35 of [the Regulation], but this cannot be quite right. A court hearing the appeal must be entitled to conclude that the judgment was not given in a civil or commercial matter, or was for a periodic payment which had not been quantified, or was of a measure which should not have been granted because it did not fall within Article 31 [which deals with provisional, including protective, measures], or in respect of which there was a bilateral treaty providing for nonrecognition. If Article 45 directs the court to ignore all such facts and matters, it cannot be taken to mean what it says.”

Other possible grounds of objection would be that:

The requirement in Article 55(1) that the applicant provide an Annex V Certificate, an “equivalent document” or other “sufficient information” in respect of enforceability is, of course, intended to forestall objection (i) arising in the vast majority of cases. Mr Percival says that objection (i) arises in this case in relation to the Tribunal Judgment and the Italian SCC Judgment because no Annex V Certificate was produced, there was no equivalent document and the Master did not have sufficient information on which he could properly conclude that he could dispense with the requirement for an Annex V Certificate or equivalent document. I will return to the question of whether the applicant is an “interested party” in due course.

Professor Briggs’s view as to the proper interpretation of Article 45(1) of the Regulation is supported by the following passage in Dicey, Morris and Collins on the Conflict of Laws (15th edition 2012) at paragraph 14-240:

“According to Art.45(1), the appeal against registration may only be founded on the grounds listed in Arts 34 and 35, but this must be an error on the part of the drafters: an appellant must be entitled to question whether the judgment falls within the scope of the Regulation …, or that the provisions of some other law or international treaty preclude its recognition.”

Article 36 of the Regulation provides that “[u]nder no circumstances may a foreign judgment be reviewed as to its substance.” It is common ground that the objections raised by Mr Percival to the registration of the Italian Judgments do not fall within the scope of Articles 34 and 35. Motu Novu maintains that some of Mr Percival’s grounds go beyond the permissible scope of objections to registration, even bearing in mind the passages quoted above from Briggs CJJ and Dicey, Morris & Collins, which I understand are not disputed by Motu Novu.

On 20 March 2018 the respondent applied to the High Court to register the Italian Judgments under chapter III of the Regulation. The matter came before Master Cook

Mr Percival was served with the order on 25 April 2018, and he filed his Appellant’s Notice on 25 May 2018.

Mr Percival also filed an application dated 16 May 2018 for the Order to be set aside. On 18 June 2018 Master Cook vacated the hearing of the application, which had been listed for 19 June 2018, on the basis that the matter was proceeding as an appeal under CPR Part 52.

On 8 June 2018 Mr Percival applied to amend his Grounds of Appeal. That application was granted by May J by order dated 21 June 2018.

On 25 July 2018 the court approved a consent order adjourning the hearing of the appeal originally listed to take place on 26 or 27 July 2018 in order to allow Motu Novu to adduce further evidence. Motu Novu applied on 14 January 2019 for permission to rely on the witness statements of Mr Alberto Spangaro dated 25 September 2018 as to matters of Italian law and of Mr Michael Bonner dated

In its application of 14 January 2019 Motu Novu had also sought permission to rely on an Affirmation of Assignment of Rights of Judgments dated 5 December 2018 (“the 2018 Affirmation”), a document governed by Massachusetts law, in which Mr Enrico Teruzzi and Ms Carmen Puthod purported to confirm that at the time Mr Teruzzi executed the 2011 Assignment he was in a position to transfer all right, title and interest in and to the Italian Judgments, including the interests of Ms Puthod and La Fattoria. Cheema-Grubb J in her order of 25 January 2019 deferred that question to be considered at the hearing of the appeal.

Mr Percival’s Amended Grounds of Appeal (“the Grounds”) are, in summary:

I can take Grounds (i) and (ii) together. The principal submissions made by Mr Philip Ahlquist of counsel for Mr Percival were, in summary:

The principal submissions made by Ms Elaine Palser of counsel for Motu Novu were, in summary:

In my judgment, Master Cook was entitled to form a view at the time of Motu Novu’s original application, on the basis of the evidence presented to him, as to the authenticity of the Italian Judgments and as to whether he had sufficient information to justify dispensing with a requirement for an Annex V Certificate. The registration is intended to be a straightforward verification of documentation. It is not disputed that the Italian Judgments are authentic. I am not persuaded that the Master was clearly wrong to conclude that he had sufficient information to justify dispensing with the requirement of an Annex V Certificate.

Mr Ahlquist submitted that the Order did not record that Master Cook had considered the issue of whether he could dispense with the requirement of an Annex V Certificate, and therefore we cannot determine whether he considered the issue and, if so, on what basis he determined that he had “sufficient information” justifying dispensing with the Annex V Certificate. I do not consider that Master Cook is required by Article 55(1) to give reasons for dispensing with the production of an Annex V, and I reject Mr Ahlquist’s submission that there was no “proper evidence” before the Master enabling him to reach that view. It must be the case that something short of an Annex V Certificate or equivalent document will suffice in certain circumstances, otherwise the reference to “sufficient information” in Article 55(1) would be otiose. It was a matter for the judgment of the Master registering the judgment. If a Master errs in their determination of whether there is “sufficient information”, the respondent has the opportunity at the inter partes stage to raise their objection.

Mr Percival also disputes that Motu Novu has more than a one-third interest in the judgment debt represented by the CA Milan Judgment, as I discuss further in connection with Grounds (iii), (iv) and (v) of his appeal.

The purpose of the two-stage process is to permit the respondent to raise objections to the registration at the second stage. I accept that those objections must necessarily be capable of going beyond the grounds in Articles 34 and 35 of the Regulation, as noted by Professor Briggs in his works to which I have referred and in Dicey, Morris & Collins.

We are now at the second stage, and therefore the questions are, in effect, whether I consider there is any merit in any of the objections raised by Mr Percival and, if so, what the appropriate remedy should be. I will answer those questions after considering the remainder of Mr Percival’s objections. I agree with Ms Palser that this is not an ordinary appeal under CPR Part 52.

I can take Grounds (iii), (iv) and (v) together. Mr Ahlquist’s principal submissions for Mr Percival are, in summary:

Ms Palser’s principal submissions for Motu Novu were, in summary:

In my view, with the benefit of hindsight, it is clear that the only Italian Judgment that should have been registered by Master Cook is the CA Milan Judgment. That is because it is the only judgment that is enforceable under Italian law. Article 38 of the Regulation is limited to judgments enforceable in the Member State in which they are given, and therefore the Tribunal Judgment and the Italian SCC Judgment, which on the agreed Italian law expert evidence are not enforceable in Italy, are not eligible for registration.

In saying this, however, I am not criticising the Master for registering all three Italian Judgments. I have given my reasons for concluding that he was entitled to reach a view on whether there was sufficient information to dispense with the requirement of an Annex V Certificate or equivalent document. I have no reason to doubt that he considered the issue, and I have found that he had evidence on which he could conclude that he had sufficient information. He appears to have accepted the position that it was necessary to register all three Italian Judgments so that the full extent of the judgment debt, including costs, was reflected.

There was no error of law or approach by the Master, bearing in mind the limited nature of the exercise he was tasked with carrying out. The purpose of this second inter partes stage is to address any objections raised by the respondent and, if necessary, make any corrections. I will revert to the question of remedy in a moment.

I reject the contention made on behalf of Mr Percival that anything in the Regulation, or otherwise, limits an applicant’s registration of a foreign judgment to the proportion to which he is entitled. I have seen no authority for that proposition. It is not supported by the commentaries of Professor Briggs or by Dicey, Morris & Collins. All that is required is that the applicant should be an “interested party”.

The term “interested party” is not defined in the Regulation, but a person who is the assignee of a named judgment creditor, even where there are other named judgment creditors, is clearly an interested party. It seems to me fundamentally incompatible with the deliberately limited and mechanical nature of the registration process under chapter III of the Regulation that the registering court or competent authority should be required to enquire into the nature and extent of an applicant’s interest in a judgment, beyond what is necessary to establish prima facie that the applicant is an interested party.

I also do not accept Mr Ahlquist’s submission that Article 48 supports the contention that the Master should have reflected on the face of the Order that Motu Novu had only a one-third interest in the judgment debt, assuming that the Master had accepted Mr Percival’s position on that point. Article 48 is concerned with severability and allows an applicant to seek to register the enforceable part of a foreign judgment, provided it is severable, in a case where some other aspect of the judgment is not enforceable in the registering member state under the Regulation because, for example, it is of a revenue nature and therefore outside the material scope of the Regulation.

It follows from the foregoing analysis that I do not need to reach a view on the conflicting contentions of the parties as to the scope and effect of the 2011 Assignment and, to the extent that I permit Motu Novu to rely on it, the 2018 Affirmation. As to Motu Novu’s application to rely on the 2018 Affirmation, having considered it de bene esse, its intended effect is, in my view, a relevant part of the factual background and so, to that extent, I permit Motu Novu to rely on it. Beyond that, I express no opinion on its content or effect and do not need to rely on it, for the reasons I have given.

It also follows from my analysis that I do not need to resolve the dispute referred to in the last sentence of [6] above.

Leaving aside, for the moment, the question of the costs of the original application seeking the Order and the related set-aside application raised by Ground (vi), I need to consider the appropriate disposal of this matter in light of my conclusions on the first five Grounds. I have already noted that I do not consider that the Master was required to record his reasons for dispensing with the requirement for an Annex V Certificate or equivalent document. Any such requirement would be incompatible with the clear intention of the Regulation that it be a straightforward and essentially mechanical exercise in verifying documents.

I make two further observations. First, if the Master had recorded brief reasons in his Order for his decision to dispense with the requirement, it would have helped to limit the issues arising at this second stage. Secondly, it was open to him to reject the application for lack of an Annex V Certificate or to make a conditional order requiring the applicant to provide the Annex V Certificate by a specified date. Had he done so, the issues at this second stage would, again, have been limited, saving time and cost at the second stage. I say no more than this. Ultimately, it is a matter for the judgment of the Master considering the application.

Having decided that, with the benefit of hindsight, the Tribunal Judgment and the

Finally, I agree with the submissions made by Ms Palser on behalf of Motu Novu that, having surmounted the hurdle of establishing that it is an interested party for purposes of article 38 of the Regulation, it is neither necessary nor appropriate to deal with the question of the nature and extent of Motu Novu’s interest in the judgment debt represented by the CA Milan Judgment. It is neither necessary nor appropriate at this stage to enquire into the effectiveness of the 2011 Assignment and/or the 2018 Affirmation, both as to Italian law, to the extent relevant, as well as to Massachusetts law. Any such enquiry can be dealt with post-registration, when Motu Novu comes to enforce the judgment, to the extent that there is any merit in any such objections.

To deal with these issues at this second stage of the registration process would clearly be incompatible with the deliberately limited nature of this process under the Regulation. I do not accept Mr Ahlquist’s contention that the second stage provides the only opportunity for Mr Percival to raise any objections he has to enforcement of the CA Milan Judgment.

Paragraph 5 of the Order recites that by the 2011 Assignment Mr Enrico Teruzzi legally assigned all of his rights, title and interest in the CA Milan Judgment to Motu Novu. It is a matter, to the extent it remains in dispute now or in the future, for another occasion whether all of Mr Teruzzi’s rights, title and interest in the CA Milan Judgment included the rights, title and interest of his co-claimants or, if it did not, whether the transfer of those rights, title and interest to Motu Novu was successfully effected on a subsequent occasion, pursuant to the 2018 Affirmation, or otherwise.

As to costs, I will consider any submissions on costs that the parties may wish to make, but it may be helpful to indicate my preliminary views. Given that Mr Percival has succeeded in part on this appeal, it seems to me that it is appropriate that he should not be required to pay the costs of the original application and registration fee, as provided in paragraph 9 of the Order. I do not, however, consider it appropriate to award Mr Percival his costs in relation to his set aside application referred to at [27] above.

Mr Percival has, however, raised a number of substantive objections to the enforcement of the Order that I have had to consider, that each party has been required to make submissions on and that I have not accepted. I also consider it relevant to the costs position that Mr Percival’s objections to the registration of the three Italian Judgments are purely technical.

Mr Percival has not suggested that Motu Novu is attempting to recover more than the single judgment debt which, it is now accepted, is wholly enforceable through the CA Milan Judgment, together with relevant costs. He also does not deny that the CA Milan Judgment is enforceable. He objects to the Master having registered the CA

Although I have not considered it necessary, for the reasons I have given, to express a view on Mr Percival’s contention that Motu Novu is only entitled to a one-third share of the judgment debt, it is clear, having regard to all of the evidence and given the close interrelationship of the three original judgment creditors, that the intention was to transfer the entirety of the judgment debt to Motu Novu, whatever technical defects there may have been in doing so as a matter of Italian law. It seems to me that I am entitled to take this into account in considering the appropriate costs order.

I bear in mind that Mr Percival agreed to an adjournment of this appeal hearing to allow Motu Novu to gather additional evidence, as I noted at [29] of this judgment. That accommodation is a point in his favour in relation to costs.

Overall, I am inclined to set aside paragraph 9 of the Order and otherwise to make no order as to costs. I make these observations so that each party can address them in any submissions on costs they wish to make.

I would be grateful for the parties to agree a form of order to give effect to this judgment. The order will vary the terms of the Order so that the Tribunal Judgment and the Italian SCC Judgment are referred to in the recitals of the order, but the only judgment registered is the CA Milan Judgment. Paragraphs 4 and 5 of the Order should be preserved. Paragraph 9 of the Order is, as already noted, provisionally to be set aside.

If a form of order cannot be agreed, I will, of course, consider submissions on the form of order.