QUEEN'S BENCH DIVISION
Strand, London, WC2A 2LL
B e f o r e :
|EURASIA SPORTS LIMITED||Claimant|
- and -
|(1) LAN-CHUN TSAI (KNOWN AS MARTIN TSAI)
(2) YUEH-RU TSAI (KNOWN AS DOMINIC TSAI)
(3) JOSE ROBERTO DE ROMAŅA LETTS
(4) ALBERTO CARLOS MALDONADO VALDERRAMA
(5) SERGIO RIPAMONTI MANGINI
(6) GONZALO CABRERA NIERI
(7) ROBERTO NICOLAS BRONSTEIN AUBERT
(8) RICARDO ANTONIO VASSALLO GJURINOVIC
(9) I WA LOU
(10) JUAN CARLOS ROMAN CARRIOŅ
(11) OMAR MACHI AGUAD
Chris Smith (instructed by Healys LLP) for the 3rd, 6th and 11th Defendants
Hearing dates: 21st and 22nd July 2016
Crown Copyright ©
Mr. Justice Edis:
a) Damages for conspiracy to defraud by procuring online betting services from the claimant by falsely representing that money by way of security for credit accounts had been or would be transferred to the claimant from Peru, and by falsely submitting a worthless cheque for $10,000,000 for such security which was dishonoured, That cheque was signed by Letts.
b) Damages for breach of an agency/security agreement in relation to introducing customers to the claimant who would have betting accounts ("sub-accounts"). The fourth-tenth defendants became sub-account holders.
a) Is said to have been party to the conspiracy to defraud by becoming one of the sub-account holders who incurred betting services on credit and lost large sums.
b) Damages for fraudulent misrepresentation which occurred when the first defendant sent false bank transfer forms purporting to show that Nieri had made a transfer to the claimant when he had not. He is said to have been complicit in this. The money was never received. On the strength of it the claimant extended further credit to the first three defendants which they bet and lost.
iii) Aguad is said to have been involved in the conspiracy because he has revealed his close links with the first defendant by falsely claiming that he discharged his debt to the claimant by paying him. Aguad was not party to the agency agreement and never had a sub-account governed by it. His knowledge of the relationship between the claimant and the first defendant is therefore evidence of an improper relationship between them.
The applicable law
i) That there is a serious issue to be tried in respect of each claim. In this context the claimant must show that there is a real as opposed to fanciful prospect of success, see Altimo .
ii) That it has a good arguable case (as explained above) that each of the claims falls within one of the jurisdictional gateways set out in CPR 6 PDB paragraph 3.1. The claimant contends that
a) The claim under the agency agreement against Letts is a claim in respect of a breach of contract committed within the jurisdiction, so that CPR Part 6 PDB 3.1(7) applies.
b) The debt claims against each of the three relevant defendants are either a claim in respect of a breach of contract committed within the jurisdiction or a claim under a contract made within the jurisdiction, so that CPR Part 6 PDB 3.1 (6)(a) or (7) applies. This also applies to the claim against Letts under the agency/security contract.
c) The claim against Nieri for fraudulent misrepresentation is a claim in tort where the damage was sustained within the jurisdiction, so that CPR Part 6 PDB 3.1(9)(a) applies.
d) The claim for conspiracy against all three relevant defendants is a claim in tort where the damage was sustained within the jurisdiction, so that CPR Part 6 PDB 3.1(9)(a) applies.
e) The general grounds in CPR Part 6 PDB 3.1(3) are met in relation to each relevant defendant in that they are necessary and proper parties to the claims against other defendants. This applies to all claims which have not so far passed through a gateway, and in any event to the claim on the dishonoured cheque against Letts which is not said to be capable of passing through any other gateway, because the cheque was drawn, delivered and presented in Peru.
f) The claim against Letts on the dishonoured cheque is a claim which arises out of the same facts as the claims mentioned above, so that CPR Part 6 PDB 3.1(4A) applies. This is also said to be so in respect of any other claim which has not passed through a gateway, contrary to the claimant's primary case.
iii) That in all the circumstances England is clearly or distinctly the appropriate forum for the trial of the dispute, and that in all the circumstances the court ought to exercise its discretion to permit service of the proceedings out of the jurisdiction.
The alleged transactions
i) Martin Tsai and Letts would refer customers to the claimant who would open accounts with Matchbook. This would be handled on behalf of the claimant by Mr. Osei-Amoaten and his team in London. The process importantly involved "Know Your Client" or "KYC" formalities of proof of identity and so on, and the more people who could be proffered who could have accounts in their name, it is to be inferred, the more credit might be allowed and the greater would be the reassurance for the claimant. The claimant took steps to ensure that it only opened accounts for real people who were required to participate in the process.
ii) Martin Tsai and Letts would have a risk share of 50% of winnings and losses of the customers they introduced.
iii) Martin Tsai would deal with the formal requirements for customers who wished to open an account and would make sure they paid their debts.
iv) Letts would provide a cheque for $10,000,000 payable to the claimant as security for the accounts of Martin Tsai, Dominic Tsai and himself and for the sub-accounts opened for their clients. This was provided shortly after the meeting, together with the KYC documents required for the opening of Letts' own personal betting account.
The defendant's submissions
i) The agency contract was not between the claimant and the defendants but between Matchbook and the defendants. They say that the agency agreement, according to the recap email, was between Matchbook and the defendants and they, reading it, would not conclude that they were contracting with the claimant at all.
ii) The claim against Nieri for fraudulent misrepresentation is weak.
iii) The claim in conspiracy against Letts, Nieri and Aguad is weak.
i) The obligation which is said to have been breached was the obligation to ensure that the 4th-10th defendants paid their accounts, and any such breach must have been in Peru since that is where they all were at all material times.
ii) The claimant's reliance on the rule that a debtor must seek out his creditor is misplaced because the contract provided for settlement of the accounts by payment to the claimant's bank in Malta and this, not London, was the place for payment and therefore the place where the breach occurred. Alternatively, the claimant was based in Alderney, not London, and the fact that its agent Xanadu had an office in London was irrelevant. If the location of Xanadu was relevant, that company was incorporated in Ireland and not London.
i) They submit that the contract between Nieri and the claimant was not made in London because the evidence that Mr. McGuinness was not in London when Nieri accepted the terms on the telephone is weak.
ii) They repeat their submission that the contracting party was Matchbook and not the claimant.
iii) The argument that the breach occurred in London because the debtor had to find the creditor and the place for payment (in default of agreement) was London is addressed in the same way as above.
i) That the damage usually occurs where the representation is heard and relied on; but
ii) The courts should scrutinise with care any claim that the damage occurred where the claimant is domiciled because otherwise claimants would invariably be able to select the jurisdiction of their choice because it would be the office at which they make decisions.
iii) In the case of an investment obtained by fraud, the funds came from Switzerland and that was where the damage occurred although the decision to invest was made in London (ABCI). Where a boat was scuttled in Scotland and the conspiracy to make a false insurance claim happened there, this was the place where the damage occurred despite the fact that the decision to pay the claim was made by insurers in London (the Seaward Quest).
i) That the claimant cannot show that England is clearly the appropriate forum for the trial of the action;
ii) That the ex parte order permitting service out of the jurisdiction should be set aside because the claimant failed to disclose its standard terms and conditions which provide that any contracts with the claimant are governed by the laws of Alderney and are subject to the jurisdiction of the Guernsey courts. In the alternative, the relevant defendants submit that these terms exclude the jurisdiction of the court of England and Wales and, leaving disclosure aside, should result in the court here declining jurisdiction.
iii) That the court should grant an extension of time for filing an acknowledgement of service of one week because this was when that step was taken. No objection to this was raised by Mr. White QC on behalf of the claimant and I grant the extension.
The claimant's response
Serious issue to be tried.
The claimant's submissions about the paragraph 3.1 gateways
i) The contracts between the Tsai brothers and the claimant in relation to their personal accounts.
ii) The sub-account contracts between, among others, Nieri and the claimant. In his case the acceptance was said to be by telephone to Mr. McGuinness either in London or Cork. In the other cases they accepted by email when replying to an email sent by Mr. McGuinness from London.
"The reality of the case is that the defendants acted in concert to procure the claimant to provide online gambling services to the defendants without security, and then used those services and did not pay the debts they ran up. The facts cry out for one investigation of all the ways that the claimant can put its claims."
The claimant's submissions: forum and disclosure
"Unless otherwise provided for in this Regulation, the law applicable to a non-contractual obligation arising out of a tort/delict shall be the law of the country in which the damage occurs irrespective of the country in which the event giving rise to the damage occurred and irrespective of the country or countries in which the indirect consequences of that event occur."
i) There is no other jurisdiction where all the claims against all the defendants can conveniently be brought. At this point it does become relevant that two defendants are contesting the claims against them on the merits in London.
ii) Ms. Beilin's witness statement sets out reasons why the case may be improperly dealt with by the Peruvian civil justice system.
Discussion and conclusion
The gateways: CPR 6 BPD paragraph 3.1
i) In the case of Letts, the contractual claim on his own betting account and on the agency/security agreement and the claim on the cheque.
ii) In the case of Nieri the contractual claim on his own betting account.
iii) In the case of Aguad, the contractual claim on his own betting account.
Is England clearly the most appropriate forum for the trial of the action?
i) The governing law
ii) The place of commission of the tort
iii) The factual connection which the events have with the countries where the trial might take place.
iv) The convenience and expense associated with the location of witnesses and documents. This is at the "core of the question of appropriate forum", see VTB v. Nutritek at .
i) I am not persuaded by Mr. Osei-Amoaten's third witness statement that the standard terms and conditions never have any relevance to the conduct of betting agency business by the claimant. That is not what they say; but
ii) I consider that if it were arguable that the terms and conditions had been incorporated into any contract their existence should have been disclosed. Since no-one suggests that they were ever mentioned in any dealings between the parties to these transactions I cannot see that there was any obligation to disclose them. They are simply irrelevant.
iii) I therefore see no basis on which to set aside the grant of permission to serve out of the jurisdiction on this ground.