England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

		Court 54 Royal Courts of Justice The Strand London WC2A 2LL
		19th July 2004

RULING
1. MR JUSTICE LEWISON: Three applications have been called on this morning. Two of them are challenges to the jurisdiction of the court made by Bambino Holdings Limited and by Monsieur and Madame Argand. The third is a Part 24 application by the claimants seeking summary judgment.
2. The two challenges to jurisdiction were made on 14th April and 7th May respectively and directions for the hearing of those challenges were given on 11th May. The Part 24 application was issued on 28th May and by consent was adjourned to be heard with the challenges to jurisdiction.
3. Although I say it was adjourned by consent to be heard with the challenges to jurisdiction, the solicitors for Bambino and the Argands have made it clear throughout that the position they take is that the jurisdictional challenges must be decided first before any question of Part 24 arises. I do not consider that there has been any waiver of their ability to challenge the procedural aspects of the Part 24 application.
4. The relevant rules are now contained in the Civil Procedure Rules. Part 10 deals with the acknowledgment of service. Rule 10.1, sub Rule 3(b) enables a defendant to file an acknowledgment of service if he wishes to dispute the court's jurisdiction. Part 11 deals with disputing the court's jurisdiction. The application may be made under Part 11.1, and 11.2 says that a defendant who wishes to apply to dispute the court's jurisdiction must first file an acknowledgment of service in accordance with Part 10.
5. The next sub Rule goes on to provide that a defendant who files an acknowledgment of service does not, by doing so, lose any right that he may have to dispute the court's jurisdiction.
6. Sub Rule7 provides:

"If, on an application under this Rule, the court does not make a declaration (a) the acknowledgment of service shall cease to have effect and (b) the defendant may file a further acknowledgment of service within 14 days or such other period as the court may direct."

7. Sub Rule 8 provides:

"If the defendant files a further acknowledgment of service, in accordance with paragraph 7(b), he shall be treated as having accepted that the court has jurisdiction to try the claim."

8. Lastly, I must refer to Part 24, which deals with applications for summary judgment.
9. Part 24.4(1) provides as follows:

"A claimant may not apply for summary judgment until the defendant against whom the application is made has filed (a) an acknowledgment of service or (b) a defence unless (i) the court gives permission or (ii) a practice direction provides otherwise."

10. There is one significant difference between the procedure for applying for summary judgment under the Civil Procedure Rules and the former procedure under the rules of the Supreme Court which enabled applications to be made for summary judgment under Order 14. The difference is that, whereas under Order 14 a plaintiff was unable to apply for summary judgment until a defendant had given notice of intention to defend, a claimant under the Civil Procedure Rules may make such an application if the court gives permission. There is, therefore, no absolute procedural bar to the making of such an application.
11. Mr Rosen Queen's Counsel, who appears on behalf of the relevant defendants, has taken me to the judgment of Mr Justice Rix in European Capital Trade Finance Limited v Antenna Hungria RT, 27th March 1995. As the date shows, that was a case decided under the rules of the Supreme Court rather than the Civil Procedure Rules.
12. The case was a money claim in which the defendant issued a challenge to the court's jurisdiction, which was followed by an application by the plaintiff for summary judgment under Order 14. Mr Justice Rix discussed the philosophy underlying the rules of the Supreme Court in force at that time. I think I can quote a few passages only from his judgment. Having referred to the previous procedure, he then turned to the rules then in force. On page 2 of the transcript, he said this:

"Under the current Order 12, however, that previous procedure has been changed, and one of the purposes of the change was to give a foreign defendant who wished to challenge the jurisdiction a real opportunity to decide whether or not to submit to the jurisdiction of the English court after his challenge to the jurisdiction had been heard and decided."

13. He went on to explain this as follows, on page 3:

"When, therefore, a challenge to jurisdiction fails, if it does, the defendant has another 14 days to decide whether it wishes to submit to the jurisdiction by lodging a further acknowledgment of service. At that point, the defendant may prefer (as the Philadelphia Chewing Gum Corporation had sought to do) to allow the action to proceed against it by default on the basis that it has no assets within the jurisdiction and no intention of bringing assets within the jurisdiction and that without its submission to the jurisdiction a default judgment rendered against it in England cannot be enforced against it in its home jurisdiction."

14. At the end of his judgment, Mr Justice Rix said this:

"For these reasons, the philosophy and the language of the new post-1979 Order 12 are at one. Judgment cannot be obtained against a defendant who has unsuccessfully challenged jurisdiction under Order 12, Rule 8 until that defendant has been given a further opportunity to decide whether he wishes to submit to the jurisdiction by lodging a further acknowledgment of service, and that is equally so of summary judgment as of default judgment. Indeed, if it were otherwise, the defendant who was challenging the jurisdiction of the court would be compelled to prepare not only submissions but also evidence to meet a claim for summary judgment at a time when he was saying that the court had no jurisdiction over him. That might not be unacceptable where the challenge to jurisdiction fails, but it is plainly contrary to principle where the challenge is a valid one and, at the time when preparations would have to be put in hand, it would not be known whether the challenge would succeed or fail. It may seem unfortunate to a plaintiff with an unanswerable claim that a foreign defendant may hold up summary judgment first by a challenge to the jurisdiction and then by insisting on a further period to lodge his second acknowledgment of service. That, however, is the price such a plaintiff must pay out of regard for all those foreign defendants who, for reasons of comity, are to be allowed to challenge the jurisdiction of these courts without prejudicing or pre-empting their defence on the merits or their decision as to whether, if their jurisdictional challenge fails, they wish nevertheless to submit to the jurisdiction of the English courts."

15. I was also taken by Mr Rosen to a passage in Briggs and Rees on Civil Jurisdiction and Judgments. At paragraph 5.31, the authors pose the question whether a claimant may seek to obtain summary judgment in the face of a challenge to jurisdiction. The authors are discussing the Civil Procedure Rules, and their answer to the question posed is as follows:

"The answer ought to be, in general at least, that is not open to him. Although it is obvious that if the defendant feels compelled to put in evidence in answer to the application for summary judgment this cannot be seen as submission on his part, it is contrary to principle that a defendant who contends that the court has no jurisdiction over him should be drawn into an investigation of, or a contest in relation to, the merits of the claim. There is nothing clear in the rules to prevent an application from being made on these grounds. Although as the acknowledgment of service -- the finding of which is a precondition of seeking summary judgment under Part 24 -- will certainly lapse at the determination of the application to dispute the jurisdiction, and it would be a welcome step for a court to rule that an acknowledgment of service which has been followed by an application under CPR Part 12 is not to be seen as an acknowledgment of service for the purposes of an application for summary judgment, at the very least the court will presumably be obliged to hear the jurisdictional challenge before the application for summary judgment, even if the claimant has contrived to have his application listed earlier or at the same time."

16. It seems to me that the authors are wrong in saying that the filing of an acknowledgment of service is a precondition of seeking summary judgment under Part 24, since, as Miss Jones Queen's Counsel points out, the court can give permission.
17. But nonetheless the philosophy underlying Mr Justice Rix's decision is repeated in the textbook, although without reference to that case, and it seems to me to be the right philosophy.
18. Although, therefore, I accept that the court does have the power to permit an application for summary judgment to be made before an outstanding challenge to the jurisdiction has been determined, it seems to me that it will be a very rare case in which the court exercises that power. In general terms, as Mr Justice Rix says, the price that a claimant must pay for being able to bring foreign defendants before the court is that they have a real opportunity to decide whether or not to submit to its jurisdiction.
19. I consider also that the court should not go into the details or the nature of the claim. That would, in my view, be contrary to the philosophy espoused both by Mr Justice Rix and by Briggs and Rees.
20. Although, therefore, I consider that I do have the power to allow the summary judgment application to proceed, I have not been persuaded that it is a power I should exercise.
21. First of all, as Mr Rosen says, no formal application for permission had been made before Miss Jones made her submissions this morning, and no particular grounds had been advanced for the grant of that permission.
22. The proceedings have not, thus far, been proceeded with at speed and, indeed, a lot of the evidence is directed towards explaining why it has taken so long for the proceedings to be issued.
23. In my judgment, a further delay of two weeks if the jurisdictional challenge fails, to enable the defendants to decide whether or not to file acknowledgment of service, even when coupled with the inevitable further delay that would be required to re-list the summary judgment application, does not tip the balance.
24. Consequently, I decide that the summary judgment application will not be heard concurrently with the jurisdictional challenges.
25. Lastly, there is philosophy to which I have referred, which would be undermined if the application for summary judgment were to be heard immediately after the jurisdictional challenge.