House of Lords
Published January 28, 2008
Phillips and Another v Symes and Others (No 4)
Before Lord Bingham of Cornhill, Lord Rodger of Earlsferry, Baroness Hale of
Richmond, Lord Brown of Eaton-under-Heywood and Lord Mance
Speeches January 23, 2008
A High Court judge was entitled to exercise his discretion to dispense with
service of an English language claim form on defendants abroad in order to
enable a case launched in England to take priority over proceedings in
Switzerland.
The House of Lords allowed an appeal by the claimants, Jonathan Phillips and
Robert Harland, administrators of the estate of Chris-to Michailidis, from
the Court of Appeal (Lord Justice Pill, Lord Justice Neuberger and Lord
Justice Wilson) ( The TimesJuly 17, 2006; [2006] 1 WLR 2598), which
had allowed an appeal by the second and third defendants, Frieda Nussberger
and Galerie Nefer AG, from Mr Justice Peter Smith ([2006] IL Pr 164).
Mr Alan Steinfeld, QC, Mr Richard Millett, QC and Mrs Jessica
Hughes for the claimants; Mr John Martin, QC and Mr Thomas
Lowe for the defendants.
LORD BROWN said that by proceedings issued out of the High Court on December
16, 2004, in connection with the sale of a statue, the claimants claimed
US$3 million against, inter alia, the second and third defendants, a Swiss
national and a Swiss company of which she was the sole proprietor.
On February 3, 2005, the defendants issued proceedings in Switzerland against
the claimants seeking negative declaratory relief in respect of the same
facts.
The question was which court had first been seised of proceedings within the
meaning of article 21 of the Lugano Convention on Jurisdiction and the
Enforcement of Judgments in Civil and Commercial Matters 1988: see the Civil
Jurisdiction and Judgments Acts 1982 and 1991.
The European Court of Justice had held in Zelger v Salinitri (Case
C-129/83) ([1984] ECR 2397) that a court’s obligation under article 21 to
decline jurisdiction in favour of another court only arose if the parallel
proceedings had been definitively brought before a court in another state
(paragraph 14) and that it was for each state to determine when that was.
English law had hitherto determined that proceedings became definitively
pending only when they were served on the defendant: see Dresser UK Ltd
v Falcongate Freight Management Ltd ([1992] QB 502).
Under Swiss law, however, proceedings were definitively pending as soon as
issued. The Swiss court had therefore become seised of the Swiss proceedings
on February 3, 2005.
The first question was, therefore, logically, whether there had already by
then been service of the English proceedings on the defendants.
The day before the English claim form had been issued, the claimants had
sought and obtained from the judge a worldwide freezing order against the
defendants, restraining them from disposing of their assets up to a value of
US$3 million. They had undertaken to issue a claim form and serve it on the
defendants with particulars of claim and various other documents including
the order.
In issuing the claim form on December 16, 2004, the court staff had
erroneously stamped it “Not for service out of the jurisdiction”. That had
been a plain mistake because it had expressly been rendered eligible for
service out of the jurisdiction by a statement on it, verified as true, that
the High Court had power under the 1982 Act to hear the claim and that no
proceedings concerning it were pending in any other relevant country. The
foreign process section of the High Court had none the less accepted the
document for service.
The judge of the Swiss court or his clerk had, because of the words stamped on
it, removed the claim form from the package of documents to be served on the
defendants and it had accordingly not been served.
The documents served, on January 19, 2005, had, however, included both a
German translation of the claim form and particulars of claim setting out in
greater detail the nature of the claimants’ case.
On August 19, 2005, Mr Justice Peter Smith had allowed an application by the
claimants designed to ensure that the English proceedings had priority over
the Swiss proceedings. He had dispensed with service of the claim form on
the defendants, under rule 6.9 of the Civil Procedure Rules, and declared
that the High Court had become seised of the proceedings as against the
defendants on January 19, 2005.
It seemed to his Lordship at least arguable that, even without resort to rule
6.9, the court could simply have ordered under rule 3.10(b) that the
defendants were to be regarded as properly served, certainly for the
purposes of seisin, the error of procedure being the omission of the English
language claim form from the package of documents served. That had
essentially been the view taken by the majority of the Court of Appeal in Golden
Ocean Assurance Ltd v Martin (The Goldean Mariner) ([1990] 2 Lloyd’s Rep
215).
Assuming, however, that it was necessary for the court actually to dispense
with service of the claim form under rule 6.9 before the service in fact
effected could be declared valid, was that within the court’s power?
The Court of Appeal had concluded that it was not, on the basis that an order
under rule 6.9 would by its very nature involve the retrospective validation
of what ex hypothesi would otherwise fall to be regarded as ineffective
service.
There were, however, two complete answers to that argument.
The first was that the judge had not declared valid and effective, service
that had been previously been ineffective; he had, rather, held the previous
service to have been valid and declared that it had been unnecessary to
serve the English language claim form to make it so. It was in that sense
that he had dispensed with service. There was no more question of
retrospective validation than there had been in The Goldean Mariner.
Second, even if that was wrong, it would have been within the court’s power to
make the order. True, its effect would then have been to alter the
jurisdictional precedence under an international convention.
If, however, as was uncontested, the House of Lords could overrule Dresser,
the question of seisin being purely one for the national court, so too could
the English court, applying its own procedural rules, to dispense with
service of a particular document, make an order that was effective
retrospectively to validate what would otherwise have been an invalid form
of service.
That did not involve any exception to the Dresser rule, which was that
the English court was seised of proceedings at the date of effective
service, whatever that date might eventually be declared to have been.
Should the court in its discretion exercise the power under rule 6.9? It would
do so in a purely domestic context even if exercise of the power would
operate to defeat a prospective Limitation Act defence.
On any view, the power to make an order that had the effect of altering the
priority of seisin of proceedings under an international convention was one
to be exercised sparingly and only in the most exceptional circumstances.
The circumstances of the present case were, however, exceptional.
The defendants had suffered no prejudice by the failure to serve the original
claim form but rather sought to exploit it. The essential faults had been
those of the Swiss authorities.
Discretion under rule 6.9 should, if necessary, be exercised in the claimants’
favour and the service effected on the defendants on January 19, 2005, be
declared valid and effective.
It followed that none of the other issues needed to be considered. Lady Hale
and Lord Mance delivered concurring speeches and Lord Bingham and Lord
Rodger agreed with Lord Brown.
Solicitors: Lane & Partners LLP; Withers LLP.
