England and Wales High Court (Commercial Court) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT

		Royal Courts of Justice Strand, London, WC2A 2LL
		05/04/2011

Mr Justice Beatson :

1. This is an application by the defendant, Mr Sarang Wadhawan, to set aside service of the proceedings out of the jurisdiction. The "gateway" to jurisdiction relied on by the claimant, Global 5000 Ltd, a Jersey company, in the application for permission to serve out was that set out in CPR PD6B 3.1(6)(c): the claim is made "in respect of a contract" and the contract "is governed by English law". It is submitted that the claimant has no sufficiently arguable case on the jurisdictional gateway or on the merits. The defendant also maintains that England is neither the natural nor the appropriate forum, and relies on a non-disclosure of material facts. Permission pursuant to CPR 6.36 to serve the claim out of the jurisdiction was granted by Flaux J on 6 September 2010. The claim form was issued on 8 September 2010. The defendant was served in Mumbai on 13 October 2010, and this application was made on 2 December 2010.
2. The underlying dispute arises out of a transaction concerning the sale by the claimant on 14 August 2008 of a Bombardier DB 700-1A11 Global 5000 aircraft, serial number 9271, to Privilege Airways Pvt Ltd ("Privilege") for US$55.5 million. The defendant in these proceedings, Mr Wadhawan, is the Managing Director of Privilege. He and his father each own 50% of its shares. He signed the Purchase and Sale agreement ("the PSA") on behalf of Privilege.
3. Clauses 1.2(a) and (b) of the PSA required Privilege to pay a non-refundable deposit of US$5.5 million to an escrow agent by 21 August 2008 and the balance of the price, US$49.5 million by 30 August 2008. Clauses 3.12 and 3.13 provided that any dispute was to be settled by arbitration in England according to English law, which was chosen as the applicable law.
4. The PSA was terminated by a letter dated 19 January 2009 sent to Privilege by Ince and Co, the claimant's solicitors. The letter alleged that Privilege had repudiated the contract (a) by failing to pay sums due under it and (b), in an email dated 28 November 2008, notifying the claimant that it had decided not to purchase the aircraft. The claimant instituted arbitration proceedings on 24 September 2009 and Privilege filed its defence on 11 November 2009.
5. The claim against the defendant was launched on 6 August 2010. It is formulated in two ways. The first is that a letter dated 9 August 2008 from the defendant to Mr Bass, the managing partner of Avpro Inc, which managed the sale of the aircraft on behalf of the claimant, contained an offer to procure and/or see to it that Privilege complied with its obligation to pay US$55 million to the claimants by 31 August 2008 as the purchase price for the aircraft. It is the claimant's case that the offer was accepted by conduct when the claimant entered into the PSA with Privilege. The second formulation is in paragraph 21 of Ms Marsh's first statement. It is that the defendant undertook to procure and/or see to it that Privilege complied with its obligation to pay the purchase price for the aircraft by 31 August 2008 or personally to perform Privilege's contractual obligation by paying for the aircraft in full by the end of August 2008. The claim is thus for damages for breach of an alleged contract of guarantee which was collateral to the PSA.

The issues:

6. The principal issues are:-

(1) Is there a "good arguable case" that "the claim is made in respect of a contract" which "is governed by English law" and thus within the gateway to jurisdiction in CPR PD6B 3.1(6)(c)?

(2) Does the claimant's claim against the defendant have "a reasonable prospect of success"?

(3) Has the claimant shown that England is clearly the most appropriate forum?

(4) Did the claimant make adequate disclosure when seeking permission to serve the proceedings out of the jurisdiction?

7. The evidence before me in support of the defendant's application consists of a statement dated 1 December 2010 of Mr Whipp, a partner of Gates and Partners, the defendant's solicitors; two statements of Mr Wadhawan, respectively dated 27 November 2010 and 16 February 2011; and three expert reports of Mr Kapadia, a Senior Advocate of the High Court of Bombay and President of the Bombay Bar Association, respectively dated 27 November 2010, and 16 February and 4 March 2011. The evidence on behalf of the claimant consists of three statements by Ms Marsh of Ince & Co, the claimant's solicitors, respectively dated 6 August 2010, and 25 January and 8 March 2011, and two reports of Mr Bharucha, an Advocate of the High Court of Bombay, respectively dated 24 January and 7 March 2011.
8. I have been assisted by clear and cogent written and oral submissions by Mr Hapgood QC, on behalf of the claimant, and Mr Lawson QC, on behalf of the defendant.

The factual background:

9. The claim form does not contain or append Particulars of Claim. For the purposes of this application, I have relied on the contract asserted by the claimant in the claim form and in paragraph 21 of Ms Marsh's first statement, and on the evidence in the witness statements submitted on behalf of the claimant and the documents before me.
10. Berger Motorsport AG, which is effectively managed by Gerhard Berger, has a 50% stake in the claimant. I have referred to the fact that the sale of the Bombardier aircraft was managed on behalf of the claimant by Avpro Inc. Jahid Fazal-Karim and Nick Houseman are brokers who assisted Don Bass in the negotiations. Brian Knop, an employee of Avpro's, was also involved.
11. The individuals with whom Mr Houseman and others in Avpro dealt on a day-to-day basis during the negotiations were Messrs Thampi and Romani. Mr Thampi took his instructions from the defendant, who was kept informed of what was happening and made any final or important decisions involving the purchase of the aircraft: Wadhawan, second statement, paragraphs 5(3) and 6; Marsh, second statement, paragraph 12. Mr Thampi had his own business, Executive Airways. Mr Wadhawan's evidence (second statement, paragraph 6) was that Mr Thampi acted as Privilege's Chief of Operations through Executive Airways. He signed at least one letter (see [22]) on Privilege's headed paper on behalf of Privilege and describing himself as its "Chief of Operations", and he also used a "privilegeair" email address: see [13], [15], [18] and [19] of this judgment. There is a difference between Mr Wadhawan's evidence and that of Ms Marsh (as to what she was informed of by Mr Houseman), about the extent of Mr Wadhawan's involvement.
12. For the purposes only of this application, it was accepted by Mr Lawson that I should make certain assumptions. First, that the aircraft was new. Secondly, in July 2008 when negotiations between the parties started, it was the only new aircraft of that type available for delivery in August 2008. Thirdly, as a result the claimant was able to offer it for sale at a substantial premium: see Marsh, second statement, paragraph 7, and third statement, paragraphs 5 – 9. Mr Lawson reserved the defendant's position on these matters in other stages of these proceedings. He also accepted that for the purpose of this application I should take the claimant's evidence at its highest, and only rely on such evidence adduced on behalf of the defendant which is uncontroverted.
13. On 1 August 2008 Privilege and the claimant entered into a letter of intent ("the LOI"). It was signed by Mr Romani, on behalf of Privilege, and Mr Bass, on behalf of the claimant, and set out the terms upon which Privilege offered to purchase the aircraft from the claimant. Mr Thampi sent the LOI to Mr Houseman as an attachment to an email from his "privilegeair" address dated 31 July 2008. At the end of the email Privilege's name and corporate address are to be found underneath Mr Thampi's name.
14. Clause 2(a) of the LOI provided that Privilege "shall place within one business day a non-refundable deposit…to secure the acquisition in the amount of [US$1 million]" with a nominated escrow agent. Clause 2(b) provided that both parties would "on or before August 6 2008" sign "a mutually agreed Purchase agreement". Ms Marsh (first statement, paragraph 9) states that "the purpose of the LOI deposit was to secure the acquisition of the aircraft by Privilege and to provide the claimant with an assurance that Privilege intended to purchase the aircraft".
15. Despite assurances from those acting on behalf of the purchasers, the deposit remained unpaid on 7 August 2008. An email on that date timed at 3:24am from Mr Houseman to Mr Thampi at his "privilegeair" email address stated the deposit had not been received. Mr Thampi's reply, timed at 9:30am and from his Executive Airways email address, stated that "we are facing certain legal difficulties in sending $1m to your account" because the Reserve Bank of India has revised its schedule of allowing remittances of up to $1 million for non-scheduled operators. Mr Thampi's email also stated that "after detail[ed] discussions with our client, we extend our apologies for not meeting the deadline" and that, if the aircraft can be held, "the first instalment of $1m should be in your account around 20^th of this month and balance between 25^th and 30^th of this month". In her third statement, Ms Marsh states that she was informed that Mr Fazal-Karim, Mr Matthews, the claimant's lawyer, and Mr Knop had made it clear to Mr Houseman "that the claimant would need something further, beyond the assurance that had already been given, to convince the claimant to proceed with the sale to Privilege". She states that "Mr Houseman therefore informed Privilege, via Mr Thampi, that if they wished the claimant to continue with the sale of the aircraft then they would need Mr Wadhawan, as the man standing behind Privilege, to confirm his personal commitment to the transaction".
16. On 7 August 2008 Mr Thampi sent Mr Houseman a draft of a letter to be sent by Mr Wadhawan to Mr Berger. Mr Thampi's draft stated:

"I am in touch with Mr Nick Houseman of M/S Zenith Jet through Mr Pradeep Thampi of my operations team for purchase of your GLOBAL 5000 having SI#9271.

The LoI for USD 55.5m has been signed and due to a revised regulation imposed by our government, the initial payment of $1m cannot be wire transferred til all my paperworks, including receipt of No Objection Certificate to import GLOBAL 5000 is issued by the Ministry of Civil Aviation, India. Our request for import of GLOBAL 5000 is already considered by the Ministry and awaiting written permission. By considering a long weekend coming up between 14^th to 19^th August the initial payment can be sent to you only after 20^th of August. Also assure the balance payment can be sent by the end of this month to close the transaction and take the delivery of the aircraft.

Mr Berger, I have a Falcon 2000 currently in India and on the way to add a GLOBAL 5000 and EC135 helicopter into my fleet.

I have received a draft copy of your purchase agreement which can be executed immediately with payment scheduled as stated above."

The draft was signed by Mr Wadhawan as Managing Director of Privilege Airways Pvt Ltd.

17. Mr Houseman replied that day, stating that he thought that permission from the government to import the aircraft had been granted and asking when this would be obtained. He also stated: "I would add at the end of the letter that Mr Sarang would like to talk to Mr Berger personally to assure him that he wants to buy the aircraft". Ms Marsh's evidence is that Mr Houseman told Mr Fazal-Karim that Mr Wadhawan had a desire to explain the situation to Mr Berger personally. In an email to the claimant's lawyer, Mr Matthews, Mr Fazal-Karim stated:

"my guy spoke to them and in fact they learned today that the Central Bank held the transfer as there was an approval step that was missed. Mr Sarang Wadhawan, who is the principal, wants to send Gerhard an email directly to explain and re-confirm that he will buy this aircraft. He said he will sign the PA immediately but the process of fund transfer from India, due to new rules cd take up to Aug 20^th. He said he wants the aircraft and wd like to explain to Gerhard personally the situation.

I believe it is a good idea and I will have the email sent to you and Gerhard directly from them.

I believe we are still good and have a real buyer."

18. Mr Berger preferred that matters be dealt with through his agent, Mr Bass. After being told this, Mr Houseman made substantial revisions to the draft letter that Mr Thampi had provided, including addressing it to Mr Bass, and inserting a reference to "my personal assurance" and stating "I will pay for the aircraft…". An email dated 8 August and timed at 10:05pm from Mr Houseman to Mr Thampi at his "privilegeair" address attached Mr Houseman's revised draft.
19. Mr Houseman stated that "I have written below a letter that I would ask that you ask Mr Wadhawan to email Don Bass from Avpro". Mr Houseman's draft was unaltered by Mr Thampi or Mr Wadhawan. The letter, on Privilege's headed notepaper, was sent on 9 August as an attachment to an email from Mr Thampi's "privilegeair" email address. Its material parts stated:

"I am Mr Sarang Wadhawan, Managing Director of HDIL, one of Indian foremost company. We currently operate a Falcon 2000 aircraft and we are interested in expanding our fleet in the near future with a long range aircraft and a large helicopter.

I have been working with Mr Pradeep Thampi from my operations team and Mr Nick Houseman and Mr Jahid Fazal-Karim from Zenith Jet on an aircraft purchase. I recently signed a Letter of Intent for the purchase of Global 5000 serial number 9271 for a purchase price of $55.5M. Due to some unforeseen circumstances with new Indian government regulations we were unable to make the $1M non refundable deposit as we had expected. I want to express my sincere interests in the aircraft and my intent to purchase the aircraft. However, I must comply with Indian government regulations and have outlined terms in the agreement that I can achieve and I also hope can bring us to a mutually satisfactory sale. As I outlined in the purchase agreement I will pay for the aircraft in full by the end of August.

I would be happy to discuss this matter with you and give you my personal assurance that I want to proceed with the transaction and I am ready to sign an agreed upon purchase agreement in advance.

If this proposal is not satisfactory then we will proceed with other purchase opportunities that exist in the marketplace today."

The letter was signed by Mr Wadhawan. Underneath his signature were the words "Managing Director, Privilege Airways Pvt Ltd".

20. Mr Wadhawan's second statement (paragraphs 10 and 11) states that by 9 August he was aware from Messrs Thampi and Romani that Mr Houseman had been "pressing them aggressively to progress Privilege's purchase" and "especially to pay a US$1 million deposit for it" but that he had no direct contact with Mr Houseman on this point. He states that Mr Romani told him that Mr Houseman had drafted and forwarded to Mr Thampi a letter that he needed Mr Wadhawan to sign and send back in order to keep the purchase of the aircraft on track and shortly after that the letter, on Privilege's letterhead, was brought to him. He states that Mr Romani told him that the letter had been drafted by Mr Houseman and explained to him that it was the letter that Mr Houseman said "we needed to send to salvage the transaction", that he read the letter, did not object to the content, and therefore signed it and gave it back so that it could sent.
21. During this period the parties were exchanging drafts of the PSA with minor amendments. Mr Knop sent one such draft to Mr Thampi, attached to an email dated 6 August, and Privilege provided a revised version on 8 August. Mr Wadhawan's evidence is that at no time before the letter dated 9 August, on which the claim is based, was sent, had he been asked by anyone to undertake a personal obligation of any nature in relation to the aircraft: first statement, paragraphs 16 – 19; second statement, paragraphs 4, 10 – 11, 13 and 17 – 21. Mr Lawson QC relied (skeleton argument, paragraph 44(3)) on the fact that Ms Marsh's third statement does not suggest that a conversation between Mr Houseman and Mr Thampi included a suggestion that Mr Wadhawan enter into any obligation in a personal capacity, only that he "confirm" his "personal commitment to the transaction".
22. There is also no suggestion in any of the exchanges between 9 August 2008 and the institution of these proceedings on 6 August 2010 that Mr Wadhawan was under a personal obligation to pay for the aircraft. The second affidavit of Ms Tadros of Ince & Co, served by the claimant in support of a freezing order sought and obtained in July 2009 over a Falcon 2000 jet operated by Privilege, invited the court to conclude that the Wadhawan family maintain the assets of Privilege at a low level which enabled them to continue running that aircraft without exposing them to a significant risk of having to satisfy any adverse award of damages. It does not state that Mr Wadhawan has any personal obligations. Ms Tadros stated (paragraph 5) that "we" have "been conducting detailed investigations regarding the corporate structure of [Privilege] and…have also considered Privilege's links to individual members of the Wadhawan family, in particular…Mr Sarang Wadhawan…" and (paragraph 9) that "the lack of free realisable assets of [Privilege] does not appear to reflect the wealth of the Wadhawan family themselves".
23. On 14 August 2008 the claimant and Privilege entered into the PSA. A letter dated 5 September 2008, signed for Privilege by Mr Thampi as "Chief of Operations", acknowledged that the aircraft met the conditions in the PSA. However, on 15 September Mr Thampi emailed the claimant and informed it that "the management of Privilege Airways Pvt Ltd has decided to differ [sic] induction of the Global 5000 for another six months". Mr Thampi, on behalf of the management of Privilege, "extend[ed] our sincere apologies for the deferment of the purchase agreement". In a letter dated 25 September the claimant asked for payment of the outstanding deposit, and reserved its rights. I have referred to the email dated 28 November from Privilege to the claimant. Privilege stated that "we have expressed our decision of not purchasing your Global 5000 aircraft and the email is self-explanatory". The reference to "the email" is apparently a reference to Mr Thampi's email dated 15 September.
24. I have referred to the without notice freezing order restraining Privilege from removing the Falcon 2000 jet operated by Privilege obtained by the claimant on 12 July 2009. This order was set aside on 14 July because the aircraft was owned by GE Capital Services India. On 24 September 2009 the claimant filed its submissions in the arbitration. Privilege filed its defence on 11 November 2009, denying liability. Since then no formal steps have been taken in the arbitration by either party.

Discussion:

25. CPR 6.36 provides that, in proceedings to which CPR 6.32 or 6.33 do not apply, "the claimant may serve a claim form out of the jurisdiction with permission of the court if any of the grounds set out in paragraph 3.1 of Practice Direction 6B apply". In the present proceedings the material sub-paragraph of paragraph 3.1 of the Practice Direction is (6) "claims in relation to contracts". This provides:

"A claim is made in respect of a contract where the contract –

(a) was made within the jurisdiction;

(b) was made by or through an agent trading or residing within the jurisdiction;

(c) is governed by English law; or

(d) contains a term to the effect that the court shall have jurisdiction to determine any claim in respect of the contract."

In these proceedings, reliance is only placed on (c).

26. By CPR 6.37(1)(b) an application for permission to serve out of the jurisdiction must state that "the claimant believes that the claim has a reasonable prospect of success" and CPR 6.37(3) states "the court will not give permission unless satisfied that England and Wales is the proper place in which to bring the claim". There are therefore three requirements; a jurisdictional gateway, a merits requirement and a forum conveniens requirement. I consider the first two together and then the third.

(1) Does the claim fall within the gateway to jurisdiction in CPR PD 6B 3.1(6)(c)?

(2) Does the claim raise a serious issue to be tried on the merits?

27. The test and the standard of proof to satisfy the gateway requirements in the rules is conveniently summarised in paragraph 31 of Mr Hapgood's skeleton argument. It is:

"Global is required to show that the claim against Mr Wadhawan falls within sub-paragraph (6) of paragraph 3.1 of Practice Direction B of CPR Part 6; CPR 6.36 and 6.37(1)(a). The standard to be applied in considering whether the jurisdiction of the English court has been sufficiently established on the facts is that of "good arguable case": Seaconsar Far East Ltd v Bank Markazi Iran [1994] 1 A.C. 438, 454 – 455 (Lord Goff). This requires the court to be satisfied that Global's contentions provide a better argument in favour of there being the ground of jurisdiction alleged than of there not being one: see Cecil v Bayat [2010] EWHC 641 (Comm) at [30] – [36] (Hamblen J explains why the test can be expressed as "who has the better of the argument" rather than "who has much the better of the argument"). The required standard is less stringent than proof on the balance of probabilities; it is considering the relative strengths of the arguments, bearing in mind the limitations of the interlocutory process: see Cherney v Deripaska (No. 2) [2008] EWHC 1530 (Comm) [2009] 1 All ER (Comm) 333 at 344 at [41] – [44] (Christopher Clarke J expresses his conclusions on the test after review of the relevant authorities)."

28. In Cherney v Deripaska at [41] Christopher Clarke J stated that:

"in granting permission to serve out of the jurisdiction the court is exercising an exorbitant jurisdiction over those who are not within its ordinary reach. In those circumstances the court is, as it seems to me, justified in applying the good arguable test in that manner in order to avoid the risk of compelling individuals or companies to submit to a jurisdiction to which they ought not in truth to be made subject".

Having regard to the indication in Canada Trust v Stolzenburg and others (No. 2) [1998] 1 WLR 547 (CA); [2002] 1 AC 1 that the court ought to consider which side has "much the better" of the argument (the "Canada Trust gloss"), his Lordship stated that the court "ought ordinarily to require that, when [it] looks at the material, it finds the points in favour of the ground for jurisdiction alleged to be more than just evenly balanced by those which point the other way".

29. Paragraph 31 of Mr Hapgood's skeleton argument (see [27]) refers to Hamblen J's summary of the test in Cecil v Bayat. Hamblen J returned to this issue in AstraZeneca UK Ltd v Albemarle International Corp [2010] EWHC 1028 (Comm). He stated (at [24]) that in order to show that a claim comes within a jurisdictional gateway "the standard of proof is to establish a single 'good arguable case'" which "connotes more than a serious issue to be tried or a real prospect of success, but not as much as balance of probabilities". After considering the Canada Trust gloss and the decisions in Cherney v Deripaska and Sharab v Al-Saud [2009] 2 Lloyd's Rep 160 as to whether the test is who has the "better of the argument" or who has "much the better of the argument" he stated that it "would probably be clearer and simpler" to apply the former test, "not least because it avoids the uncertainty of exactly what the word "much" adds to it. But, in the absence of an authoritative determination, he assumed that he was bound to apply the test of who has "much the better" of the argument. He understood (see [28]) that meant that it must be shown "not merely that on balance they have the better of the argument, but that they clearly do so".
30. The standard for the "reasonable prospect of success" merits test in CPR 6.37(1)(b) is lower. In Cherney v Deripaska (No. 2) [2008] EWHC 1530 (Comm) at [12] Christopher Clarke J described it as a "relatively low threshold". In Swiss Reinsurance Co. Ltd v United India Insurance Company [2002] EWHC 741 (Comm) at [27], Gross J said that "reasonable prospect of success" is synonymous with the "real prospect of success" test in CPR Parts 3 and 24, where "real" is to be contrasted with "fanciful". Any higher test would, he stated, "doom parties in such applications to unwarranted mini-trials on the merits". Accordingly, the threshold is the same as if the claimant was resisting an application by the defendant for summary judgment: see Islamic Republic of Pakistan v Zadari [2006] EWHC 2411 (Comm) at [136] per Lawrence Collins J. Where one of the ingredients of a cause of action is also part of what has to be established for the purpose of CPR 6.36 and CPR PD 6B, the lower standard of proof for the merits test in CPR 6.37(1)(b) is (see Hamblen J in Cecil v Bayat at [19]) subsumed into the higher requirement for jurisdiction and is irrelevant. Accordingly, in such a case the merits test does not have to be addressed separately.
31. In this case there is a dispute as to which contract the gateway to jurisdiction test must be applied, and whether it is in this case appropriate to decide the gateway issue at the application stage. The defendant accepts that, if there is a contract of guarantee, it is sufficiently arguable that that contract is governed by English law to pass the jurisdictional gateway. Mr Lawson, however, submitted that the relevant contract for the purpose of the gateway to jurisdiction test in sub-paragraph 3.1(6) of the Practice Direction is the alleged contract of guarantee and that there is no good arguable case that such a contract exists.
32. The contrary submission, by Mr Hapgood, is that since sub-paragraph 3.1(6) refers to "a claim made in respect of a contract" rather than a claim "under" a contract, its claim falls within the contractual gateway. This, he argued, is because (see skeleton argument, paragraph 35) "it is a claim made in respect of the PSA, which is a contract which is expressly governed by English law". The PSA has "a very close connection to the claim because the PSA contains the primary obligation guaranteed by Mr Wadhawan, the entry into the PSA amounted to acceptance by Global of Mr Wadhawan's offer to give the guarantee, and Global is a party to it". He relied on the judgment of Longmore LJ in Greene Wood and Mclean LLP v Templeton Insurance Ltd [2009] 1 WLR 2013 at [17] – [20] ("the Greene Wood case"). Longmore LJ stated that, while the paradigm case falling within the contractual jurisdictional gateway is where the relevant contract is one between the intended claimant and the intended defendant "under" which the claim is made, the gateway is not limited to such claims and extends to claims made "in respect of" a contract governed by English law to which only one of the intended parties is a party.
33. The consequence, according to Mr Hapgood, is it follows that, as long as the claim has a close connection with a contract governed by English law, it will satisfy the gateway to jurisdiction. If there is an issue as to the remoteness of the connection between the claim and the English law contract, it will be dealt with when considering whether England is the proper forum for the trial. Mr Hapgood accepted, in the light of Cecil v Bayat at [49], that a mere "factual connection" between the claim and the contract governed by English law is insufficient and that there must be a relevant legal connection between the two. But he submitted this is a case which satisfies the requirement of a "relevant legal connection" between the claim and the contract governed by English law. This is because the alleged contract of guarantee is a collateral contract to the PSA contract, and the latter needs to be referred to and relied upon in order to assert the relevant cause of action under the alleged guarantee.
34. Mr Lawson submitted that the Greene Wood and the Cecil cases do not mean that because the PSA is governed by English law the alleged guarantee necessarily satisfies the gateway requirement. The Greene Wood case; (a) dealt with the position in which the intended claimant wished to bring a claim for a contribution under the Civil Liability (Contribution) Act 1978, and (b) the basis of the alleged liability of the intended defendant for "the same damage" as the claimant was a liability the intended defendant had to the relevant third pursuant to contract between those two parties. It was held that the claim was "in respect of" the contract and Longmore LJ also contemplated (at [18]) that this would be the position where the intended claimant is a third party making a claim as a result of the Contracts (Rights of Third Parties) Act 1999.
35. Although Longmore LJ stated (at [20]) that he doubted the position would be different if it was the intended claimant rather than the intended defendant who was a party to the contract "in respect of which" the claim is brought, Mr Lawson submitted that he was correct to leave open the question in such a case. He argued that the position of an intended claimant differs in principle from that of an intended defendant. Where the intended defendant is a party to a contract which qualifies within the gateway, there is a clear juridical hook on which jurisdiction over that defendant can be based. Where it is the intended claimant who is the party, there is no such juridical hook to bring the intended defendant within the scope of the gateway. The fact that the claimant is a party is not, he submitted, a reason for assuming a jurisdiction over a foreign defendant which is recognised (see e.g. Christopher Clarke J in Cherney v Deripaska at [41]) to be "exorbitant".
36. As to the Cecil case, Mr Lawson pointed to Hamblen J's use of the word "may" in [44] and the statement in [49] that if the contract governed by English law "needs to be referred to and relied upon in order to assert the relevant cause of action" the requirement "is likely to be satisfied" (emphasis added). However, neither of these necessarily indicates a relevant qualification. In [44] Hamblen J stated that a claim by a third party may be within paragraph 3.1(6) "for example, if it is governed by English law". In [49], while Hamblen J did not express himself in absolutely unqualified words, it is clear that he considered, while a mere factual connection between the two contracts is not enough, a "relevant legal connection" between them will generally suffice.
37. Mr Lawson also submitted that the judgments in the Greene Wood and Cecil cases should be read in the light of the fact that neither case addressed the position where there was either more than one contract or a layer of contracts. He argued that since what has to be sufficiently proved is, in Lord Goff's words in Seaconsar Far East Ltd v Bank Markazi Iran [1994] 1 A.C. 438 at 454 – 455, "the relevant contract", that must mean the alleged contract of guarantee. But while what Lord Goff said is a pointer in favour of Mr Lawson's submission, it is not conclusive. Seaconsar was itself a case in which the court did not consider the position where there was more than one contract, and Lord Goff was concerned only with the contract constituted by the defendant bank's letter of credit: see 447B – E, G – H, 448C – D and 457D. That was the only "relevant contract".
38. Moreover, the Cecil case does in fact address the position where there is more than one contract. As well as what was known as the "Cecil and Bentham" contract, Hamblen J considered another contract, the "Lehmkuhl" contract, and a quantum meruit claim by Cecil and Bentham in respect of services performed in anticipation of the "Cecil and Bentham" contract. Hamblen J was satisfied (see [109]) that the claimants had made out a good arguable case as to the existence of the "Lehmkuhl" contract. But he concluded (see [110]) that the Lehmkuhl contract, which did not itself satisfy a gateway requirement, was not "sufficiently legally connected" to the Cecil and Bentham contract to be "a claim in respect of" the Cecil and Bentham contract.
39. Mr Lawson also suggested that the fact that permission had been sought on the basis that the alleged guarantee contract was itself within the gateway and was granted by Flaux J on this basis, rather than on the basis now put, that is that the claim under the alleged guarantee contract was "in respect of" the PSA, which was undoubtedly governed by English law, is a factor to be taken into account. I reject this suggestion: see Cecil v Bayat case at [83], where Hamblen J stated that where reliance is placed at the time of the application for permission on the jurisdictional gateway that the contract was governed by English law "the fact that other matters are now relied upon to support that gateway does not make it a new basis of jurisdiction".
40. There is undoubtedly force in Mr Lawson's submission (see [32]) about the difference in the position where it is the intended claimant who is a party to the contract "in respect of which" the claim is brought and that where it is the intended defendant who is a party to that contract. He submitted that if the guarantee and the fact of its acceptance is part of the connection required to get through the gateway, unless there is a need to show a good arguable case in respect of the guarantee, the jurisdictional gateway will be sidestepped. But it is noteworthy that there is no difference made in the relevant provisions of Practice Direction 6B between the position of an intended claimant and an intended defendant. Moreover, in the Greene Wood case, Longmore LJ doubted that the position of an intended claimant and an intended defendant differed.
41. The treatment by Hamblen J in the Cecil case of the claims based on the Lehmkuhl contract and quantum meruit, however, supports the approach for which Mr Lawson contended. Hamblen J applied the good arguable case test to the existence of the Lehmkuhl contract and only after concluding that the claimants had made out a good arguable case as to its existence did he directly turn to the other jurisdictional gateway issues. Because the Lehmkuhl contract was not itself governed by English law and because a claim under it was not a claim "in respect of" the Cecil and Bentham contract which did qualify under 6B PD3.1(6), he was (see [110]) not satisfied that any jurisdictional gateway was established. In the case of the quantum meruit claim, he concluded that the claimants had made out a good arguable case for the claim which in itself fell within the contractual gateway to jurisdiction (see [115(2) – (4)]) and also (see [115(1)]) that it was a claim "in respect of" the Cecil and Bentham contract and qualified in that way.
42. It would thus appear that in the case of a contractual claim three questions may arise in relation to the jurisdictional gateway, and those questions must be each answered by reference to the "good arguable case" test. First, does the contract on which the claim is brought exist? Secondly, if it does, does a claim under that contract satisfy one of the jurisdictional gateways? Thirdly, if the answer to the second question is "no", is a claim under that contract a claim "in respect of" a contract which falls within a jurisdictional gateway? In the present case, the PSA agreement is the agreement that stands in the position of the Cecil and Bentham contract in Cecil's case. A claim under that contract would satisfy the jurisdictional gateway in 6B PD6.3(6)(c). The alleged guarantee in the present case is in the position of the Lehmkuhl contract in that case. The first question Hamblen J asked was whether there was a good arguable case that the Lehmkuhl contract existed. The first question for me is whether the claimants have made out a good arguable case as to the existence of the guarantee contract.
43. Leaving aside the issue of to which contract the gateway to jurisdiction test must be applied, there was substantial common ground between the parties as to the approach to be used in determining the jurisdictional gateway issue. A classic contract of guarantee is one under which the guarantor promises to "see to it" that the principal debtor performs its obligations: see Moshi v Lep Air Services Ltd [1973] A.C. 331 at 347 – 348 per Lord Diplock. Here it is necessary to determine whether the claimants have made out a "good arguable case" that the letter sent by the defendant to Mr Bass was an offer to guarantee Privilege's obligations and, if it was, whether that offer was accepted by the claimant. The starting point is the true construction of the words in that letter. The approach was usefully summarised in paragraph 45 of Mr Hapgood's skeleton argument:

"As with any question of construction, the task for the court is to determine what a reasonable person, having all the background knowledge which would have been available to the parties at the time of the contract, would have understood the relevant words to mean: Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896, 912H. The background includes absolutely anything which would have affected the way in which the language of the document would have been understood by a reasonable man and which was available to the parties at the time of the contract: ibid. at 912H – 913B. That is subject to the 'exclusionary rule' excluding from the admissible background the previous negotiations of the parties and their declarations of subjective intent for the purpose of drawing inferences about what the contract meant, but not for the purpose of establishing a relevant background fact: ibid.; Chartbrook Ltd v Persimmon Homes Ltd [2009] 1 AC 1101 at [42]."

44. In The Technology Partnership v Afro-Asian Satellite Communications (UK) Ltd, Court of Appeal, 12 October 1998, Pill LJ, in the context of construing an oral personal assurance by a director or an officer of a company which was alleged to be a personal guarantee, stated that "it should not be assumed that in negotiations such as these the officer of a company making a statement such as that is giving an assurance that he guarantees the debt personally, rather than stating his personal intentions as a director or officer of the company and giving an assurance in that capacity…". That was a case in which (see Peter Gibson LJ) there was some doubt as to the oral agreement and its terms and Pill LJ did accept that it could not be said to be "unarguable" that the assurances given were given in a personal capacity. Mr Hapgood submitted that the ex tempore judgment in the Technology Partnership case is not authority that there is a presumption that such assurances are given as a director of the company and that every case depends on its particular facts. I approach the present case on that basis.
45. The other difference between the parties is whether in this case the claimant's claim is susceptible to summary determination. Mr Hapgood submitted that it was not, because of disputes about the factual background. Mr Lawson submitted that it is so susceptible, because he, on behalf of the defendant, did not seek to rely on material that depended on the resolution of a relevant factual matter which was at issue. He made his submissions on the basis of the evidence on behalf of the claimant that is before the court and such evidence as Ms Marsh's statements suggested might be before the court at trial. I accept this submission. As I am not able to resolve disputed factual issues, I rely only on the evidence adduced on behalf of the claimant, taken at its highest, and such evidence adduced on behalf of the defendant as is uncontested. I also set aside as irrelevant the defendant's evidence (first statement, paragraphs 10 – 19) that he did not subjectively intend to give any personal undertaking to the claimant in the letter and what his subjective intent in using particular language was. As Mr Hapgood submitted, that evidence falls within what Lord Hoffmann described as "the exclusionary rule" in ICS v West Bromwich and Chartbrook v Persimmon.
46. Emphasis was placed by Mr Hapgood on the surrounding circumstances, in particular (see [14] – [15]) the failure by Privilege to pay the deposit by 2 August, or to enter into the PSA by 6 August. Mr Lawson focused more on the language of the letter sent on 9 August. What needs to be ascertained is the understanding of the relevant words in the document by a reasonable man in the light of all the background knowledge available to the parties subject to the exclusionary rule. Accordingly, I will consider the background and surrounding circumstances before turning to the language of the letter.
47. Mr Hapgood submitted that Privilege's failure to pay the deposit or to enter the PSA as envisaged in the LOI, together with the fact that, as Mr Wadhawan accepted (second statement, paragraphs 10 – 11), Mr Houseman was pressing because the deposit had not been paid showed that the claimant required more than a "comfort" letter. The letter of intent was itself a comfort letter. Mr Hapgood submitted that, given the background, a second comfort letter from the man standing behind Privilege made no commercial sense. He submitted the language of Mr Wadhawan's letter should be construed in the light of this.
48. On this issue I accept Mr Lawson's submissions. First, taken at its highest, the claimant's evidence (see [15] summarising Ms Marsh's third statement) is that Mr Houseman asked that Mr Wadhawan, as the man standing behind Privilege, should confirm his personal commitment to the transaction. Ms Marsh's first statement (see [14]) only said that Privilege had to show it was sincere about the purchase. Her evidence is not that Mr Wadhawan was asked to do more, to give a personal commitment to "see to it" that Privilege paid for the aircraft in full or pay for it himself.
49. Secondly, there is no suggestion by Ms Marsh that at a trial Mr Houseman or any other witness would be in a position to contradict Mr Wadhawan's evidence (see [20]) that at no time was he asked to undertake a personal obligation. Moreover, the negotiations about the terms of the PSA continued in this period (see [20]) with no suggestion in the documents that the transaction itself was to be put "on hold". Finally, Mr Houseman's first response to Mr Thampi's draft was not that a personal guarantee was required from Mr Wadhawan, but (see [17]) merely that he should offer to explain the situation to Mr Berger personally.
50. I turn to the language of the letter. Does it, in the light of the failure to pay the deposit as envisaged, suggest an offer to assume a personal obligation of guarantee? The use of the words "I" and "my" in the letter is undoubtedly not consistent and is confusing, but I have concluded that the use of those words in themselves cannot be seen as meaning that Mr Wadhawan was offering to assume a personal obligation. First, the letter is written on Privilege's notepaper and is signed by Mr Wadhawan over the words "Managing Director, Privilege Airways Pvt Ltd". Both the heading and the form of signature suggest that the letter was written on behalf of Privilege. Secondly, some of the references to "I" and "my" cannot be references to Mr Wadhawan himself or in a personal capacity.
51. Taking the references to "I" first; paragraph 2 of the letter states "I recently signed a Letter of Intent" but that letter was signed (see [13]) by Mr Romani on behalf of Privilege, not by Mr Wadhawan. Paragraph 2 also states "I … have outlined terms in the agreement that I can achieve…", and paragraph 3 states "I want to proceed with the transaction", and "I am ready to sign an agreed-upon purchase agreement in advance". The transaction referred to and the terms in the agreement are references to the draft PSA which at all stages provided that it was to be made between the claimant and Privilege. Paragraph 2 of the letter also states "as I outlined in the purchase agreement, I will pay for the aircraft by the end of August". The reference is to the draft PSA which provided, as did the final agreement, that it was Privilege which was to pay for the aircraft.
52. Turning to the use of "my"; the first reference is to Mr Thampi "from my operations team". One of the matters which Mr Hapgood submitted was at issue and which could not be determined at this stage was the status of Mr Thampi. I, however, accept Mr Lawson's submission that there would be no need to investigate the status of Mr Thampi at a trial, that although Mr Thampi was not employed by Privilege, he purported to act on behalf of Privilege, for example in the email dated 31 July (see [13]), the letter dated 5 September and the email dated 15 September referred to at [22]. Emails were sent to him and by him at his "privilegeair" email address: see [13], [15], [18] and [19]. Moreover, the claimant's own evidence (Ms Marsh, first statement, paragraph 15) describes Mr Thampi as "of Privilege" and there was no evidence that the defendant had a separate "operations team" or that such evidence would be adduced at trial. The second material use of "my" is that in paragraph 2 the defendant refers to "my intent to purchase the aircraft". In context, that appears to be a reference to the purchase by way of the PSA. The preceding sentence referred to "we" being unable to make the non-refundable deposit envisaged by the LOI which, see above, was a payment to be made by Privilege, and the next sentence refers to the "terms in the agreement that I can achieve". It is clear that the word "we" in the letter refers only to Privilege.
53. The letter does not contain the word "obligation" or refer to the defendant assuming a personal obligation. The words used are of the defendant's commitment to the transaction in the draft PSA. Moreover, the structure of the last paragraph of the letter, which states that the defendant would be happy "to discuss the matter" with Mr Bass, does not sit comfortably with construing the document as an offer which is capable of being accepted by conduct. That paragraph also states "I…give you my personal assurance that I want to proceed with the transaction and I am ready to sign an agreed upon Purchase Agreement in advance". That is not consistent with the assumption of a guarantee over the obligations of Privilege.
54. Although it is the substance of the document rather than the terminology that is important, I observe that the words "guarantee" and "guarantor" are not used. As to the substance, there is no reference to Privilege's obligation or to the relationship of what the defendant is proposing and that obligation. In this respect, the letter is markedly distinguishable from the agreement in Jones v Williams (1841) 7 M & W 493; 151 E.R. 860 where the defendant was held to have given a guarantee by stating to RJ that "I should consider it a matter of favour to myself if your brothers will join, and I will see that they come to no harm by it". That statement clearly distinguished the position of the primary debtor (RJ and his brothers) and the guarantor (the defendant).
55. I also take into account the fact that the letter as sent was drafted by Mr Houseman. The letter drafted by Mr Thampi was materially different. It was submitted by Mr Hapgood that Mr Wadhawan, as an experienced commercial man, would have understood that a personal undertaking was required. But Mr Houseman was also an experienced commercial man and his wording can readily be understood as no more than comfort by the managing director and controller of Privilege that he wanted to proceed with the transaction. I do not consider that the claimant "has the better of the argument" that the letter sent on 9 August was an offer of a personal guarantee by Mr Wadhawan.
56. In view of this conclusion it is not necessary to decide whether there is a good arguable case that entering the PSA was unequivocally referable to an offer by Mr Wadhawan. Had I concluded that there was a good arguable case that the letter was an offer of a personal guarantee, I would, with some hesitation, have concluded that there was a good arguable case that entering the PSA constituted its acceptance.
57. I have concluded that it cannot be said that the claimant "has the better of the argument" in relation to the existence of the alleged guarantee contract and has therefore not made out a good arguable case as to its existence. The absence of any reference to a guarantee in the PSA which was entered into five days after Mr Wadhawan's letter is consistent with this conclusion but I have reached it without relying on that, or on the failure by those acting on behalf of the claimant to refer to a guarantee when making their without notice application for the freezing injunction over the Falcon 2000 aircraft. The result of my conclusion is that the first of the three questions that may arise in relation to the jurisdictional gateway must be answered negatively. Accordingly, the second and third questions (see [42], above) do not arise. I add that, if I had been satisfied that the claimants had made out a good arguable case as to the existence of the guarantee contract, I would have concluded that the claim fell within the jurisdictional gateway, either because (as Mr Lawson accepted: see [31]) it is sufficiently arguable that the contract was governed by English law or because a claim under that contract would be a claim "in respect of" the PSA contract which itself falls within the jurisdictional gateway.

(3) Has the claimant shown that England is clearly the most appropriate forum?

58. In view of my conclusion on the jurisdictional gateway issue, it is also not necessary for me to reach a decision on this issue. However, had I concluded that there was a strong arguable case that the guarantee contract existed, I would also have also concluded that England is the appropriate forum. The defendant relied on the fact that none of the claimant's witnesses are domiciled in England, that there are no documents here, and no obligations to be performed here, that the defendant is domiciled in India and the documents held by him and by Privilege are in India and that an English forum would not mean that there would be one tribunal because the dispute under the PSA agreement is being resolved in arbitration. I consider that those factors are outweighed by the factors pointing the other way.
59. First, the PSA is governed by English law. The guarantee relates to it and, on the authorities (and as in substance Mr Lawson accepted: see [31]) that is a strong pointer to it also being so governed: see Mitsibushi Corp v Alafouzos [1989] 1 Lloyd's Rep 191 at [196], and Spiliada Maritime Corp. v Cansulex Ltd [1987] 1 A.C. 460 at 481. Liability under the guarantee will in part depend on the construction of the PSA and whether it is breached, questions of construction that have to be determined by the application of English law.
60. Secondly, although the dispute under the PSA will be resolved by English arbitration, the choice of English law and arbitration shows that the defendant, given his controlling interest in Privilege, must be taken to have foreseen that disputes might be determined in England. While there would not be a single set of proceedings, the fact that legal teams are acting for the parties to the arbitration in England and have gained knowledge and experience in the matters relevant to this claim is also a factor pointing to England as the appropriate forum.
61. There is conflicting evidence as to the extent of any delay to the resolution of the dispute in India as a result of endemic delays in Indian proceedings. In view of the conflict, I have not taken account of this factor in reaching my conclusion as to the appropriateness of England as the forum. Nor have I taken account of the difference between English and Indian law as to the recoverability of costs. As Newman J stated in Radhakrishna Hospitality Service Private Ltd v Eurest SA [1999] 2 Lloyd's Rep. 249 at 254, "the difference in the level of recoverability of costs is not something which denies substantial justice to parties in India".

(4) Non-disclosure and conclusion

62. I do not consider that there was material non-disclosure by the claimant. The existence of the arbitration was disclosed in Ms Marsh's witness statement. It was clear that the arbitration had reached the stage of exchange of pleadings and it was stated that the pleadings would not be disclosed without Privilege's consent. Given the nature of arbitration proceedings, that was an adequate reason for not providing further details of the contents of the pleadings. I do not consider that the failure to disclose the fact that the defendant had not expressed an interest in purchasing the aircraft personally was material because it is not inconsistent with the claimant's case. As to the failure to state that the defendant had not been asked to undertake a personal obligation or that prior to launching the claim the claimant had indicated to the defendant that he had such an obligation, I do not consider that these would justify setting aside the order of Flaux J. But in view of my conclusions on the jurisdictional gateway issue, the service of the proceedings on Mr Wadhawan in India must be set aside.