COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
THE HONOURABLE MRS JUSTICE GLOSTER
Strand, London, WC2A 2LL
B e f o r e :
THE RIGHT HONOURABLE LORD JUSTICE LONGMORE
THE RIGHT HONOURABLE LORD JUSTICE MUNBY
| RELATIONAL LLC
|- and -
|ROBERT ADRIAN HODGES
Mr D Wolfson QC & Mr Henry Forbes Smith (instructed by Addleshaw Goddard LLP) for the Respondent
Hearing dates: 17th June 2011
Crown Copyright ©
Lord Justice Longmore:
"Hodges simply failed to persuade the court that he was telling the truth"
1) the US judgment is not a final judgment on the merits;
2) the US court had no jurisdiction over Mr Hodges, despite his apparently express submission to the jurisdiction;
3) the US proceedings were never served on him, despite the finding of Judge Coar to the contrary;
4) his liability under the guarantee was extinguished by an order of the Florida Bankruptcy Court in 2008.
"(2) The conditions are –
(a) the claimant is –
(i) resident out of the jurisdiction; but
(ii) not resident in a Brussels Contracting State, a State bound by the Lugano Convention or a Regulation State, as defined in section 1(3) of the Civil Jurisdiction and Judgments Act 1982."
It is agreed that Relational is resident out of the jurisdiction and is not resident in a Brussels Contracting State, a State bound by the Lugano Convention or a Regulation State as defined in s 1(3) of the Civil Jurisdiction and Judgments Act 1982.
"61. Returning to rules 25.15(1) and 25.13(1) and (2)(a) and (b), if the discretion to order security is to be exercised, it should therefore be on objectively justified grounds relating to obstacles to or the burden of enforcement in the context of the particular foreign claimant or country concerned. The former principle was that, once the power to order security arose because of foreign residence, impecuniosity became one along with other material factors: see the Thune case  1 WLR 562 cited above. This principle cannot in my judgment survive, in an era which no longer permits discrimination in access to justice on grounds of national origin. Impecuniosity of an individual claimant resident within the jurisdiction or in a Brussels or Lugano state is not a basis for seeking security. Insolvent or impecunious companies present a different situation, since the power under CPR Part 25.13(2)(c) applies to companies wherever incorporated and resident, and is not discriminatory.
62. The justification for the discretion under rule 25.13(2)(a) and (b) and 25.15(1) in relation to individuals and companies ordinarily resident abroad is that in some - it may well be many - cases there are likely to be substantial obstacles to or a substantial extra burden (e.g. of costs or delay) in enforcing an English judgment, significantly greater than there would be as regards a party resident in England or in a Brussels or Lugano state. In so far as impecuniosity may have a continuing relevance, it is not on the ground that the claimant lacks apparent means to satisfy any judgment, but on the ground (where this applies) that the effect of the impecuniosity would be either (i) to preclude or hinder or add to the burden of enforcement abroad against such assets as do exist abroad, or (ii) as a practical matter, to make it more likely that the claimant would take advantage of any available opportunity to avoid or hinder such enforcement abroad.
63. It also follows, I consider, that there can be no inflexible assumption that there will in every case be substantial obstacles to enforcement against a foreign resident claimant in his or her (or in the case of a company its) country of foreign residence or wherever his, her or its assets may be. If the discretion under rule 25.13(2)(a) or (b) or 25.15(1) is to be exercised, there must be a proper basis for considering that such obstacles may exist, or that enforcement may be encumbered by some extra burden (such as costs or the burden of an irrecoverable contingency fee or simply delay)."
1) it was irrelevant to compare the status of Relational and of an EU claimant because neither the Brussels nor the Lugano Convention nor the Regulation applied to the enforcement of foreign (non-EU) judgments, even if it was, in fact, an order of a Convention State which was sought to be enforced. It therefore followed that there would be no discrimination if a full order for security for costs was made;
2) the exercise of a right of set-off was, in any event, an obstacle to enforcement of the kind envisaged by Nasser;
3) if it was not an obstacle to enforcement, it was accurately to be categorised as an obstacle to execution which was also outside the Convention;
4) the judge's reliance on the absurd consequences of Relational's argument, namely that Relational would have been better advised to abandon any attempt to rely on the agreed Illinois jurisdiction clause and to pursue Mr Hodges in this country was entirely irrelevant.
Application of the Brussels/Lugano Convention or the Regulation
1) whether the Brussels Convention applied to proceedings (or issues arising in proceedings) in a contracting state concerning the recognition and enforcement of judgments given in non-contracting states;
2) whether Articles 21-23 applied to proceedings (or issues arising in proceedings) brought in more than one contracting state to enforce a judgment given in a non-contracting state.
The European Court of Justice decided that neither the Convention in general nor Articles 21-23 of the Convention in particular applied to proceedings to enforce judgments of non-contracting states. The defendants had sought to argue that, even if that were so, the Italian courts were seised of a separate and severable issue namely whether the St. Vincent judgment had been obtained by fraud. The European Court of Justice rejected that argument saying:-
"29. First, the essential purpose of a decision given by a court of a contracting state on an issue arising in proceedings for the enforcement of a judgment given in a non-contracting state, even where that issue is tried inter partes, is to determine whether, under the law of the state in which recognition is sought or, as the case may be, under the rules of any agreement applicable to that state's relations with non-contracting states, there exists any ground for refusing recognition and enforcement of the judgment in question. That decision is not severable from the question of recognition and enforcement."
Set-off an Obstacle?
Execution rather than enforcement?
Consequences of Mr Millett's argument
Lord Justice Munby:
Lord Justice Thorpe: