Jersey Unreported Judgments

Business dispute - application by the first defendant for a stay of proceedings and for leave to amend summons and to set aside order of the Master giving leave to serve proceedings on first defendant out of the jurisdiction

[2014]JRC213B

Royal Court

(Samedi)

7 November 2014

Before     :		Sir Michael Birt, Kt., Bailiff, sitting alone.
Between	Richard Andrew Campbell		Plaintiff
And	Robert Campbell		First Defendant
And	Longton Holdings Limited		Second Defendant
And	Financial Consultants (Jersey) Limited		First Party Cited
And	FCM Limited		Second Party Cited

Advocate J. S. Dickinson for the Plaintiff.

Advocate M. T. Jowitt for the First Defendant.

judgment

the bailiff:

1.        The Plaintiff and the First Defendant are brothers and have been referred to throughout these proceedings as "Richard" and "Robert" respectively.  I shall do likewise. 

2.        This is an application by Robert to stay the proceedings brought against him on the ground of forum non conveniens.  He argues that England is the more appropriate forum.  Advocate Jowitt, on Robert's behalf, also sought leave at the hearing to amend his summons to include an application to set aside the order of the Master giving leave to serve the proceedings on Robert out of the jurisdiction. 

3.        I shall consider that application shortly but, before doing so, I propose to summarise the relevant factual background and consider the difference between an application to stay on the ground of forum non conveniens (referred to hereafter as an 'application to stay' or a 'stay application') and an application to set aside an order for service out of the jurisdiction (referred to hereafter as an 'application to set aside' or a 'set aside application'. 

Factual background

4.        I take this substantially from the amended Order of Justice ("the Order of Justice"), no pleading having yet been filed by Robert.  I have been provided with two affidavits by Richard and one from Robert.  These documents go into some detail about the background but, for the purposes of the present application, the position can be stated quite shortly.  

5.        Richard lives in England and Robert in Thailand.  It is Richard's case that they are equal owners of a jewellery manufacturing, retail and wholesale business.  Their mother ("LC") started the business originally selling antique jewellery in London.  Robert became involved and expanded the business to include the manufacture and sale of precious jewellery.  LC retired from the business in the 1990s although, according to Robert, she has retained a small interest in the limited partnership referred to below. 

6.        The business is said by Richard to comprise of the following elements:-

(i)        A retail diamond and jewellery business operated from 26 New Bond Street, London ("the London Property") under the name of "Lucie Campbell LP", which is a registered UK limited partnership. 

(ii)       A company incorporated in Thailand called R C Jewellery Trading Co. Limited ("RCJL"), which manufactures jewellery in Thailand. 

(iii)      A property holding company called Milling Lock Limited ("Milling Lock") which owns three buildings in Bangkok where RCJL's factory is situated.  Milling Lock is also incorporated in Thailand. 

(iv)      Azure Gold Limited ("Azure Gold"), a company incorporated in the BVI, which purchases jewellery from RCJL and sells it to Lucie Campbell in England, to Lucie Campbell Corporation ("LCC") in the United States and to others. 

(v)       A wholesale jewellery business in the United States which is conducted by LCC, which is registered in the US. 

According to Richard, he and Robert have over the years collectively referred to these entities as "the business" and I shall do likewise for the purposes of this judgment. 

7.        The relationship between Robert and Richard has broken down to the extent that Robert has now given notice of dissolution of Lucie Campbell LP. 

8.        The present proceedings do not relate on their face to the business.  They relate to ownership of the shares of the Second Defendant ("Longton"), a company incorporated in Jersey, together with a loan ("the Longton loan") ostensibly made by Robert to Longton.  Longton's sole asset is the London Property which has a considerable value. 

9.        According to Richard, in about 2001, the lease of the premises in London then occupied by Lucie Campbell LP was shortly to expire.  The brothers identified a property in Curzon Street which they decided to buy.  On advice from tax accountants, it was decided that the purchase of the property should be separated from the business.  It was proposed that the property should be acquired by a Jersey company which would be owned by a Jersey discretionary trust, known as the K Trust, of which Richard and Robert would be the only living beneficiaries.  Longton was duly incorporated on 9^th August, 2001, for this purpose and the K Trust was established. 

10.      The purchase of the property in Curzon Street did not proceed but in due course a substitute property was identified, namely the London Property.  According to the Order of Justice, an oral agreement was reached between Robert and Richard (together with LC where relevant) that the London Property would be purchased by Longton, that Longton would be owned equally by Richard and Robert, so they would be entitled to benefit equally from any revenues derived from the ownership, occupation and use of the London Property or upon any sale of it.  The investment was to be treated as separate from the business.  In order to assist with the funding of the purchase of the London Property by Longton, Robert and Richard would each contribute some of their own money, would borrow money from LC and would also take money out of the business as necessary.  These sums would be loaned to Longton. Longton would also borrow money from Royal Bank of Scotland (RBS) to assist with the purchase.  The London Property would be occupied by Lucie Campbell LP which would pay market rental, thereby enabling the RBS loan to be serviced and LC to be repaid in due course. 

11.      The London Property was purchased on 29^th August, 2002, by Longton for a purchase price of £3.3m.  This was funded by a loan from RBS, by money provided by LC and by contributions from the business. 

12.      Subsequently, according to Richard, he was told by Robert that the shares in Longton had not been placed into the K Trust but were held by Robert.  It is pleaded that Robert agreed that he would hold 50% of the shares on behalf of Richard.  It appears that monies were initially paid to an account which Robert held with HSBC in Hong Kong ("the HSBC account").  It further appears that monies transferred from the HSBC account to Longton's bank account in Jersey and had been treated as a loan from Robert. 

13.      The Order of Justice refers to a fax from Robert to his Thai lawyer on 11^th October, 2002, in connection with drawing up his will which stated:-

"I am the sole beneficiary of a trust (Longton Holdings Limited - registered in Jersey).  Although I am the sole beneficiary my brother is entitled to 50% of this trust. 

I would like to leave 50% of this trust to my wife and children and the other 50% of the assets of this trust are be left to my brother Richard Andrew Campbell."

14.      In 2007, Robert and Richard agreed that Robert would enter into a new loan arrangement with Longton in connection with the monies which had been advanced and which, according to Richard, had originated from Robert, Richard, LC and the business.  A written loan agreement was entered into on 27^th July, 2007.  The amount loaned was £2,919,019, the term was for five years, the loan was expressed to be governed by the law of Jersey and the parties submitted to the non-exclusive jurisdiction of this Court.  According to Richard, this loan agreement did not change the underlying agreement, which was that Richard was entitled to 50% of the shares in Longton and 50% of the Longton loan and any amounts paid thereunder. 

15.      The shares in Longton are in fact registered in the names of the Parties Cited as nominees for Robert under standard declarations of trust which state that they hold the shares on trust for Robert absolutely. 

16.      In 2013, LC instituted proceedings against Richard, Robert and Lucie Campbell LP claiming, amongst other matters, repayment of the amounts which she had lent to Richard and Robert in connection with Longton's purchase of the London Property.  Robert has consented to judgment against him in respect of this claim and has apparently repaid LC.  He says that he alone was indebted to her whereas Richard claims that the loan was to both of them. 

17.      Rent for the London Property has been paid by Lucie Campbell LP to Longton.  It has been used to make capital and interest payments in respect of the RBS loan and the loan from LC.  Richard contends that any monies paid to Robert pursuant to any loan agreements entered into between Robert and Longton that have not been used to make capital or interest payments in respect of the RBS loan or the loan from LC are held for his benefit as to 50%. 

These proceedings

18.      The Master gave leave to serve the Order of Justice out of the jurisdiction on Robert by Act dated 5^th February, 2014.  Richard relied on paragraphs (a) (relief is sought against a person domiciled within the jurisdiction), (c) (the claim is brought against a person duly served within or out of the jurisdiction and a person out of the jurisdiction is a necessary or proper party thereto) and (j) (the claim or application is brought within the terms of Article 5 of the Trusts (Jersey) Law 1984) of Rule 7 of the Service of Process Rules 1994.  The proceedings were placed on the pending list by Robert on 28^th February, 2014. 

19.      On 25^th March, 2014, Robert issued the summons which is presently before me seeking an order that the proceedings be stayed on the grounds that the Royal Court was not the appropriate forum to determine the subject matter of the dispute, i.e. a stay application.  The hearing of that summons was in due course fixed for 16^th June. 

20.      On 9^th June, Advocate Jowitt sought an abridgment of time in which to seek to amend his summons so as to include an application that the Master's order dated 5^th February be set aside on the ground that the Royal Court was not the appropriate forum to determine the subject matter of the dispute.  On 13^th June I abridged time to allow that application to be heard on 16^th June, 2014.  Accordingly the first matter I must consider is whether to grant leave for Robert's summons to be amended to include a set aside application. 

Applications to stay and applications to set aside leave for service out

21.      Where an order has been made granting leave to serve a defendant out of the jurisdiction, the defendant may apply to set that order aside.  Both on the original application for leave and on the hearing of any application to set aside, the burden lies on the plaintiff to show that Jersey is clearly the natural or appropriate forum in which the case can be suitably tried for the interests of all the parties and for the ends of justice.  (See Spiliada Maritime Corporation v Cansulex Limited [1987] 1 AC 460 per Lord Goff at 481D).  

22.      Conversely, in cases of an application to stay proceedings on the grounds of forum non conveniens, the burden lies on the defendant to show that there is another available forum which is clearly or distinctly more appropriate than the Jersey forum - see Lord Goff in Spiliada at 477E. 

23.      I must confess that I had always understood that the House of Lords in Spiliada was contrasting the situation where a plaintiff serves a defendant as of right within the jurisdiction (in which case the court is concerned with an application for a stay on the ground of forum non conveniens) with the situation where a plaintiff has to serve the defendant out of the jurisdiction (in which case the court is concerned with an application to set aside).  Thus at 464, Lord Templeman says this:-

"Where the plaintiff is entitled to commence his action in this country, the court, applying the doctrine of forum non conveniens, will only stay the action if the defendant satisfies the court that some other forum is more appropriate.  Where the plaintiff can only commence his action with leave, the court, applying the doctrine of forum conveniens will only grant leave if the plaintiff satisfies the court that England is the most appropriate forum to try the action."

24.      Similarly Lord Goff, in beginning his discussion about staying proceedings on the ground of forum non conveniens says this at 474:-

"In cases where jurisdiction has been founded as of right, i.e. where in this country the defendant has been served with proceedings within the jurisdiction, the defendant may now apply to the court to exercise its discretion to stay the proceedings on the ground which is usually called forum non conveniens. 

..."

25.      Later on, while still discussing a stay on the grounds of forum non conveniens he says this at 476F:-

"The question being whether there is some other forum which is the appropriate forum for the trial of the action, it is pertinent to ask whether the fact that the plaintiff has, ex hypothesi, founded jurisdiction as of right in accordance with the law of this country, of itself gives the plaintiff an advantage in the sense that the English court will not lightly disturb jurisdiction so established. 

..."

26.      Having posed that question he answers it at 477D as follows:-

"I can see no reason why the English court should not refuse to grant a stay in such a case, where jurisdiction has been founded as of right.  ... In my opinion, the burden resting on the defendant is not just to show that England is not the natural or appropriate forum for the trial, but to establish that there is another available forum which is clearly or distinctly more appropriate that the English forum.  In this way, proper regard is paid to the fact that jurisdiction has been founded in England as of right...".[emphasis added in all the above passages]. 

27.      Lord Goff then turns at 478 to consider the position where a court has granted leave to serve out of the jurisdiction.  Having confirmed that the ultimate question is still the same, namely to identify the forum in which the case can be suitably tried for the interest of all the parties and for the ends of justice, he nevertheless goes on to point out that, because a plaintiff is seeking to persuade a court to exercise its discretionary power to permit service on a defendant outside the jurisdiction and for other reasons, the burden of proof in such cases rests on the plaintiff.  He summarises the position at 481E as follows:-

"The effect is, not merely that the burden of proof rests on the plaintiff to persuade the court that England is the appropriate forum for the trial of the action, but that he has to show that this is clearly so.  In other words, the burden is, quite simply, the obverse of that applicable where a stay is sought of proceedings started in this country as of right."  [Emphasis added]

28.      It seems to me that both Lord Templeman and Lord Goff were considering an application for a stay only in the context of where a plaintiff has a right to bring proceedings in England against the defendant.  The underlying logic of the difference in the burden of proof was that in the one case a plaintiff was suing as of right whereas in the other case, a plaintiff had to persuade the court that it was right to serve a defendant who was out of the jurisdiction.  I had always assumed from this that, if a defendant who had not been served as of right and who had been served out of the jurisdiction, chose not to apply to set aside service but, perhaps at a later stage, instead to apply for a stay of the proceedings on the ground of forum non conveniens, the burden would still rest on the plaintiff because this was not a case where the plaintiff had the right to bring the proceedings against the defendant.  The fact that the nature of the application was to seek a stay rather than to set aside service seemed not to be a substantial distinction which should lead to a switch in the burden of proof.  However I accept that practical difficulties could arise in such cases where proceedings were brought against a resident defendant and a non-resident defendant.  In such cases, on an application for a stay on the ground of forum non conveniens, on whom would the burden lie?  It could hardly be that it lay on the resident defendant in relation to him, and on the plaintiff in relation to the non-resident defendant in circumstances where there is a joint cause of action against both defendants. 

29.      Be that as it may, both Advocate Jowitt and Advocate Dickinson in this case submit that the position is not as I have suggested in the preceding paragraph and that the question of the burden depends entirely on the nature of the application.  If it is an application to set aside, the burden rests on the plaintiff; if it is an application for a stay, the burden rests on the defendant even if the defendant has been served outside the jurisdiction. 

30.      They draw support for this submission from the case of Gheewala v Compendium Trust Company Limited [2003] JLR 627, a decision of the Privy Council.  That case concerned the division of various family assets.  The plaintiff brought an action against a Jersey trust company and nine members of the family, none of whom resided in Jersey.  The nine defendants were served out of the jurisdiction and did not challenge the order giving leave to serve out.  However, they (or rather some of them) did shortly afterwards issue a summons seeking a stay on the ground of forum non conveniens.  One of the arguments raised by the plaintiff was that, if the defendants had wished to challenge the jurisdiction, they should have applied to set aside the service out; allowing it to proceed was an implied acceptance of Jersey as an appropriate forum.  In response, the defendants replied that, although it would have been preferable to apply to set aside the service out, failure to do so did not disentitle the defendants from applying for a stay of proceedings but merely transferred the burden of proof to them to prove that Jersey was not the appropriate forum in which to hear the action.  The headnote records the decision of the Privy Council on that argument as follows:-

"(4)     The failure to apply for an order setting aside the service out did not disentitle the defendants from applying for a stay if no further active steps had been taken in the proceedings.  It was, however, in the best interests of those defendants who strongly opposed the proceedings in Jersey to apply to set aside the order for service out, as the burden of proof at that stage would be on the plaintiff to show that Jersey was the appropriate forum in which to hear the action rather than, as in this case, on the defendants to show that it was not."

31.      That headnote is based on the statement of Lord Walker of Gestingthorpe at para 28 as follows:-

"There was also some discussion before the Board as to the burden of proof, especially as it may be affected by the interrelation between an application to set aside an order for service out of the jurisdiction (on the one hand) and an application for a stay on the ground of forum non conveniens (on the other hand).  This discussion was prompted by the fact that although none of the family defendants is resident in Jersey, none applied to set aside the Royal Court's orders for service out.  It may be that those defendants who strongly opposed the action proceeding in Jersey missed a tactical advantage in not applying to set aside the order for service out, since then it would have been for [the plaintiff] to show that Jersey was an appropriate forum (see the speech of Lord Goff of Chieveley in Spiliada...).  But it was not suggested that a defendant's failure to apply for an order setting aside the service out disentitled him from applying for a stay (provided, of course, that he had not taken further active steps in the proceedings).  Moreover, it is doubtful whether the tactical disadvantage would be serious, since as Lord Goff of Chieveley observed in Spiliada (ibid at 855):-

If, in any case, the connection of the defendant with the English forum is a fragile one (for example if he is served with proceedings during a short visit to this country), it should be all the easier for him to prove that there is another clearly more appropriate forum for the trial overseas.

That observation seems to apply with at least equal force to a defendant who has not been served as of right."

32.      Faced with the authority of Gheewala, I accept that the question of the burden of proof depends entirely on the form of the application, not on whether the defendant has been served of right.  Thus, if what the Court is considering is an application to set aside, the burden rests on the plaintiff; if, on the other hand, the Court is dealing with an application for a stay (even by a defendant who has not been served as of right), the burden rests on the defendant.  If a defendant brings applications under both headings together, it seems to me that the Court will have to consider first the application to set aside, where the burden rests on the plaintiff.  If the defendant fails on that, he can hardly succeed on an application for a stay.  If the defendant succeeds on that, there is no need to consider the question of a stay. 

33.      It follows from this that, if I grant leave for Robert to amend his summons so as to include an application to set aside the order granting leave to serve out of the jurisdiction, this will shift the burden of establishing the appropriate forum from Robert to Richard. 

Should leave to amend the summons to add a set aside application be granted?

34.      RCR 6/7 provides as follows:-

"...

(3)       Any party (in this Rule referred to as "the applying party") who wishes to dispute the jurisdiction of the Court in the proceedings by reason of any such irregularity as is mentioned in paragraph (1) or on any other ground must:-

(a)       if a return date for appearance before the Court has been fixed:-

(i)        ask the Court to order that the proceedings be placed on the pending list, and

(ii)       not later than 28 days thereafter apply to the Bailiff in chambers for a date to be fixed for the hearing of one or more of the applications mentioned in paragraph (4);

...

(4)       The applications referred to in paragraph (3) are applications by the applying party for an order:-

(a)       setting aside the proceedings or service of the proceedings on that party;

...

(c)       discharging any earlier order giving leave to serve the proceedings on that party out of the jurisdiction.

...

(8)       A party who fails to make an application in accordance with paragraph (3) within the time specified in sub-paragraph (a) or sub-paragraph (b) thereof (whichever is applicable) shall be deemed to have submitted to the jurisdiction of the Court in the proceedings. 

..."

35.      It follows that Robert should have applied within 28 days of 28^th February to set aside the decision of the Master to permit service out of the jurisdiction.  In fact, he did not make any such application until shortly before the hearing on 16^th June.  The Court has power under RCR 1/5 to extend any period contained in the Rules (including the 28 day period in Rule 6/7) but good reason needs to be shown as to why this should be permitted. 

36.      The draft amending summons does not in fact seek leave to extend the 28 day period; it merely seeks to amend to include a set aside application.  This is incorrect but I have taken it as implicit in the application that an extension of time is also requested. 

37.      Advocate Jowitt gave two reasons for wishing at this late stage to apply to set aside the decision to allow the proceedings to be served out of the jurisdiction.  The first, which he gave during the course of the hearing, was that he was concerned that he could not argue for a stay on the grounds of forum non conveniens if he had not challenged the Master's decision to permit service out, because that decision implicitly held (albeit on a provisional and ex-parte basis) that Jersey was the appropriate forum. 

38.      In my judgment there is nothing in this point.  It is clear from Gheewala and also from the decision of the Court of Appeal in Leeds United Football Club Limited v Weston and Levi [2012] JCA 083 that, even if a defendant has not challenged the decision to grant leave to serve out of the jurisdiction, he is perfectly entitled to seek a stay of proceedings on the ground of forum non conveniens at a later stage.  In the latter case the Court of Appeal did not agree with Lord Walker's passing observation in Gheewala (quoted at para 31 above) that a stay could only be sought by a defendant who had not taken further active steps in the proceedings. 

39.      The second reason was that Robert would be prejudiced by not being allowed to argue that the order for service out should be set aside because the burden would be on Richard in relation to such an application whereas the burden would be on him (Robert) in relation to the application to stay the proceedings. 

40.      I decline to exercise my discretion to extend the time for challenging the decision to permit service out.  Rule 6/7 is an important provision and imposes clear timescales so that, within a short period of the commencement of litigation, the parties will know whether the Court has jurisdiction to deal with the matter or not.  Paragraph (8) of Rule 6/7 specifically provides that, if a party does not apply to set aside within the 28 day period, he is deemed to have submitted to the jurisdiction of the Court.  No good reason has been given for the failure to comply with the 28 day deadline. 

41.      Furthermore Advocate Dickinson is entitled to say, as he does, that he prepared for the hearing on the basis that the burden of proof lay upon Robert whereas the effect of allowing this amendment would be to switch the burden of proof to Richard at the very last moment.  He very properly drew my attention to one previous case where such an extension of time had been granted.  That was the case of Ball v King [2006] JLR N 28, [2006] JRC 143.  But the circumstances in that case were very different.  The defendant did there issue a summons within the 28 day limit challenging the jurisdiction but mistakenly issued the summons before the Master rather than the Bailiff.  When the error was discovered, the defendant forthwith sought leave to issue a new summons out of time.  That is very different from the present case where there was no indication that Robert intended to apply to set aside the order of the Master until just before the hearing of the stay application. 

42.      In my judgment, the time limits in Rule 6/7 must be adhered to unless there is good reason to do otherwise.  I do not find there is good reason for the failure to apply in time in this case.  Furthermore, I do not consider that the desire of Robert to switch the burden to Richard is sufficient reason for allowing a set aside application to be brought out of time. 

43.      I turn therefore to consider whether these proceedings should be stayed on the ground of forum non conveniens, the burden of establishing that resting on Robert. 

Nature of the claim

44.      Although the essential claim - namely that it was agreed between Richard and Robert that Robert would hold 50% of the shares in Longton and of the benefit of the Longton loan for Robert - is fairly simple, Richard put forward the following legal bases for his claims.  In outline, the key claims are as follows:-

(i)        The Parties Cited hold 50% of the Longton shares on constructive trust (which is defined in the Order of Justice to include an implied or resulting trust) for Richard. 

(ii)       Alternatively, Robert holds 50% of his beneficial interest in the Longton shares on constructive trust for Richard. 

(iii)      Robert holds 50% of the benefit of the Longton loan on constructive trust for Richard. 

(iv)      Robert holds 50% of any capital of the Longton loan already repaid to him on constructive trust for Richard (subject to allowance for any payments made in reduction of the obligations owed to RBS and LC). 

(v)       Robert is also constructive trustee of any amounts paid to him by way of interest in respect of the Longton loan (subject to the same allowance as above). 

(vi)      Alternatively, there is a claim for unjust enrichment against Robert and Longton in respect of all sums wrongfully retained by either of them. 

What is the appropriate forum in this case?

45.      The doctrine of forum non conveniens only comes into play where there is an alternative available forum.  Richard cannot sue Robert as of right in England as Robert resides in Thailand.  In his affidavit, Robert said he would submit to the jurisdiction of the English Court.  Following the hearing, he has undertaken in writing that he will submit to the jurisdiction of English courts for the resolution of the dispute arising between him and Richard that arises in the context of the present proceedings.  It is clear from the decision of the Privy Council in Gheewala that an undertaking to submit to an alternative jurisdiction may be taken as sufficient to show that that jurisdiction is an available alternative forum (see the judgment of Lord Walker at [24]).  I therefore proceed on the basis that England is an alternative forum in this case. 

46.      The question therefore is whether this case can be tried more appropriately in England or Jersey.  The test is well established and I sought to summarise it in Brazil (Federal Republic) v Durant International Corporation [2010] JLR 421 at para 19 as follows:-

"The Court is concerned to establish which is the appropriate forum for the trial of the action, i.e. that in which the case may be tried most suitably in the interests of all the parties and the ends of justice.  Lord Goff also approved use of the expression "the natural forum" as being that with which the action had the most real and substantial connection.  Thus, one is looking for connecting factors which will include matters such as convenience or expense (such as availability of witnesses); the law governing the relevant transaction; and the places where the parties respectively reside or carry on business."

That is of course not an exhaustive list of factors which may be relevant in any particular case. 

47.      I also remind myself of the well-known passage from the speech of Lord Templeman in Spiliada (subsequently approved by Lord Walker in Gheewala at [26]) where Lord Templeman said at 465:-

"I hope that in future the judge will be allowed to study the evidence and refresh his memory of the speech of my noble and learned friend Lord Goff of Chieveley in this case in the quiet of his room without expense to the parties; that he will not be referred to other decisions and other facts; and that submissions will be measured in hours and not days.  An appeal should be rare and the appellate court should be slow to interfere."

48.      I propose therefore to summarise the arguments and reasons for my decision fairly briefly but I have considered the lengthy and detailed material put before me. 

49.      I would summarise the arguments of Advocate Jowitt on behalf of Robert as follows:-

(i)        The main witnesses would be Richard (who lives in England) and Robert (who lives in Thailand).  It did not seem likely that any of the professionals involved in the establishment and subsequent administration of Longton would be able to give material evidence.  Other potential witnesses would be LC and an employee of Lucie Campbell LP, both of whom reside in England. 

(ii)       Similarly, it did not seem likely that there was any relevant documentary evidence in Jersey bearing in mind that the relevant agreements and conversations were between Richard and Robert, neither of whom reside in Jersey. 

(iii)      The only connection with Jersey was that Longton is incorporated in the Island.  That was done merely for tax reasons.  Although the Longton loan was expressed to be governed by Jersey law, it was not the provisions of that loan which were in contention; it was whether Robert was holding the benefit of 50% of that loan for Richard and that did not depend upon the terms of the loan itself, so that the governing law of the loan was not relevant. 

(iv)      As to the governing law, this was not entirely straightforward but what lay at the heart of the dispute was the oral agreement(s) made between Richard residing in London and Robert residing in Thailand.  There was no reason to think that Jersey law should govern those agreements.  As to the declarations of trust by the Parties Cited, it was accepted that they were probably governed by Jersey law but that was again irrelevant.  The question was whether Robert held half of his interest under those declarations of trust on constructive trust for Richard. 

(v)       As to the governing law in relation to constructive trusts, this was a somewhat uncertain area but he submitted that, where a constructive trust was said to arise out of events related to an enforceable contract, it was likely that the law applicable to the contract would also determine the claim to a constructive trust (Dicey, Morris and Collins, Conflict of Laws 15th Edition, Volume 2 at 29-079).  The most likely proper law of the agreements was English law and it followed that English law was also likely to be applicable to the constructive trust claims.  The same argument applied in relation to the claim of unjust enrichment.  In the event this was not a particularly significant matter as Jersey law and English law were very similar in relation to such matters. 

(vi)      As to enforcement, there would be no difficulty in enforcing any English judgment in Jersey.  The Parties Cited had made it clear that they would be content to be bound by any decision of a court of competent jurisdiction.  Even if, for some reason, enforcement in the Island were to become necessary, this would be a simple matter given the submission of Robert to any English proceedings. 

(vii)     The strongest reason for considering England to be the appropriate forum, submitted Advocate Jowitt, was the fact that proceedings would be taken there in any event and it was necessary to avoid the risk of conflicting decisions.  This was because Robert had given notice of dissolution of Lucie Campbell LP and there was a dispute as to the parties' shares in the partnership and what assets were constituted in the partnership.  Thus ownership of RCJL, Milling Lock, Azure Gold and LCC would fall to be considered in any such English proceedings.  Whilst it was accepted by Robert that it had always been intended that ownership of Longton (and therefore the London Property) was to be outside Lucie Campbell LP and the assets in dispute (ie the shares in Longton and the Longton loan) were therefore undoubtedly not part of that partnership, nevertheless the overall relationship between Robert and Richard would fall to be considered in dissolution proceeding in England and it would be far more effective and economical for the dispute in relation to Longton and the Longton loan to be considered as part of those proceedings, so as to avoid duplication of costs and the risk of inconsistent decisions.  In essence, Robert and Richard were in dispute over almost everything and one court should hear that dispute and resolve ownership of all the assets in which they had interests.  This would avoid having more sets of lawyers than was necessary.  At present Robert was having to instruct lawyers in both England and Jersey. 

50.      I would summarise Advocate Dickinson's arguments as follows:-

(i)        As to the residence of the parties, Longton and the Parties Cited were resident in Jersey, Richard in England and Robert in Thailand.  This did not therefore point in favour of England. 

(ii)       The underlying assets which were in dispute were situated in Jersey.  The shares in Longton were located here as being the place of incorporation and where the share register was kept.  It was true that the shares were registered in the names of the Parties Cited who held as nominees under declarations of trust.  Dicey at para 22-048 indicated that if a beneficiary is given a beneficial interest in the trust property, then his interest under the trust is located in the country where the trust property is situated and if a beneficiary is given merely a right of action against the trustees, then his interest under the trust is located where the action may be brought, which is the trustees' place of residence.  Whichever of these tests was applied, the interest in the shares was an asset situated in Jersey.  Similarly, the Longton loan was situated in Jersey as being the place of residence of the debtor (Longton). 

(iii)      As to documents, those in Richard's possession would be in England and those in Robert's would probably be in Thailand.  However those belonging to Longton or the Parties Cited would be held in Jersey and these would be potentially important, as would documents belonging to the financial institution involved in setting up Longton and the K Trust initially, which also carried on business in Jersey. 

(iv)      As to the location of witnesses, potential Jersey witnesses included those involved in establishing Longton and the K Trust and those who have continued to be involved in its administration.  Potential UK based witnesses included Richard, LC and any employees of the business who could give relevant evidence.  Robert would clearly need to give evidence but it was not material whether he had to travel to England or to Jersey to give evidence.  The same would apply to any other witnesses from Thailand. 

(v)       As to the governing law, Advocate Dickinson agreed that this was not straightforward.  Nevertheless he submitted that the most likely proper law of the oral agreements between Robert and Richard (being the system of law with which the agreements had their "closest and most real connection") was Jersey law, as it had a closer connection than English law.  There was really no connection with England other than the fact that Richard resided there and the London Property was situated there.  However the agreements related to a Jersey incorporated company, and a debt owed by that company.  The agreements therefore related to Jersey situated assets, none of the assets being situated in England.  This pointed to the agreements being governed by Jersey law rather than English law. 

(vi)      As to the various claims to constructive trust, Advocate Dickinson also agreed that these were not straightforward issues, but he nevertheless contended that, on the basis that the proper law of the underlying agreements between Richard and Robert was Jersey law and that the assets which were claimed to be subject to the constructive trust were for the most part situated in Jersey, it was likely that Jersey law governed the claim to constructive trusts. 

(vii)     In summary, the assets in dispute (with the possible exception of some of the interest on the Longton loan which might be in Thailand or wherever else Robert held the money) were situated in Jersey, the legal issues arising were all arguably governed by Jersey law, a significant proportion of the documentation relating to Longton was held in Jersey, three out of the five parties reside in Jersey, there would be Jersey based witnesses, and any enforcement of any judgment would need to take place in Jersey. 

(viii)    Conversely, there were not many links with England.  No proceedings had in fact been issued in England by Robert despite the fact that Robert was seeking to persuade the Court that England was the jurisdiction to resolve all matters in dispute between them.  Robert had resolutely refused or failed to state exactly what his case was in relation to the assets but had merely contented himself with denying Richard's claim.  In the circumstances he could not properly say that he was raising issues which would need to be resolved in England.  Lucie Campbell LP produced regular accounts showing the assets of that partnership and that Richard and Robert were equal partners.  The one thing which was agreed by both parties was that the ownership of Longton (and therefore ultimately the London Property) was to be outside Lucie Campbell LP.  On Richard's case it was also outside the business.  It was hard to see therefore why the two matters needed to be tried together.  In any event, given that a number of the companies referred to earlier were situated outside England in Thailand, BVI or the US, it was hard to see why England was the appropriate forum.  For example, the evidence before the Court suggested that an English judgment would not be enforceable in Thailand in relation to ownership of the two companies incorporated in Thailand. 

(ix)      Given the separation of ownership of Longton and the Longton loan from Lucie Campbell LP and, on Richard's case, the business, there was no risk of inconsistent judgments and the issues could and should be tried separately. 

51.      In my judgment, Advocate Dickinson's submissions are to be preferred largely for the reasons which he gives.  I would summarise my reasons briefly as follows:-

(i)        On the information available at present, it seems strongly arguable that the agreements between Richard and Robert are governed by Jersey law, as being the system of law with which they have the "closest and most real connection".  Apart from the fact that Richard resided in England and that the London Property was situated in England, there seems to be little pointing towards English law as the proper law of the agreements.  Robert has at all times been resident in Thailand and it is not asserted that the agreements were reached while he was physically situated in England.  The agreements relate to assets which are situated in Jersey, whether they are described as the shares in Longton, the rights under the declarations of trust in relation to the shares in Longton or the Longton loan.  The parties were in effect agreeing (on Richard's case) that Robert would hold his interest in assets situated in Jersey for Richard (as to 50%).  The agreements would appear to have more connection with Jersey than with England or any other location. 

(ii)       If that is correct and as the majority of the assets ultimately in dispute are situated in Jersey, that points to the claims in constructive trust also being governed by the law of Jersey rather than by English law. 

(iii)      As to witnesses, I accept that they will come from many different places.  However I am only aware of Richard, LC and one employee of Lucie Campbell LP being witnesses from England at present.  Richard has indicated that he is perfectly willing to come to Jersey to give evidence.  Robert and any witnesses living in Thailand will have to travel across the world to give evidence whether it is in England or Jersey and I do not see that there is any material difference between the two jurisdictions for such witnesses.  It does however seem likely to me that there will be witnesses from Jersey because, although the case will no doubt ultimately turn on what was agreed between Richard and Robert, there may well be oral or documentary evidence from those involved in setting up and administering the various Jersey entities which may assist in ascertaining the nature of the agreement between Richard and Robert.  Those witnesses and those documents are all situated in Jersey. 

(iv)      I consider that Advocate Dickinson's summary as recorded at para 50(vii) is broadly correct.  The assets in dispute (with the possible exception of some of the interest on the Longton loan) are situated in Jersey.  The legal issues are more likely to be governed by Jersey law than by English law.  Documentary evidence concerning Longton will be held in Jersey although there will no doubt also be documentary evidence held by Richard in England or Robert in Thailand.  Of the two main protagonists, one is resident in England and one in Thailand.  The remaining parties reside in Jersey. There are likely to be Jersey based witnesses although I accept that the main witnesses will be Robert and Richard.  As to enforcement, I accept that the approach of the Parties Cited suggests that any English judgment would not need to be enforced in Jersey, but that cannot be assured and ultimately as the assets are here, if there were to be the need for any enforcement, it would have to take place in Jersey (save to the extent that it applied to money held by Robert in Thailand or elsewhere). 

(v)       It seems to me that Advocate Jowitt's strongest point was the suggestion that Richard and Robert will be litigating about everything and that it would be best for there to be one compendium piece of litigation which would resolve everything and which would be in England because of the dissolution of Lucie Campbell LP in that jurisdiction.  However I do not consider on analysis that that point has the force with which Advocate Jowitt sought to imbue it.  One of the few matters which seems to be agreed between Richard and Robert is that ownership of Longton was to be quite separate from Lucie Campbell LP.  The resolution of any dispute over the dissolution of that partnership and which assets are comprised in it will therefore not assist in the resolution of the present dispute.  As to the other assets said by Richard to be comprised in the business as listed at (ii) - (v) at paragraph 6 above, none of them is situated in England; two of them are companies incorporated in Thailand, one is incorporated in BVI and one in the US.  It is therefore not clear to me that England is the natural forum for resolution of any dispute over their ownership when the only matter which will obviously fall within the jurisdiction of the English court is the dissolution of Lucie Campbell LP.  As Advocate Dickinson pointed out, the evidence before the Court suggests that any English judgment in relation to ownership of the two companies incorporated in Thailand would not be enforceable in Thailand, so the matter may well have to be litigated there in any event.  Furthermore the shape of any dispute over these other assets is unclear.  Despite invitations to do so, Robert has not stated his position in relation to these other assets. 

(vi)      Nor do I see a risk of inconsistent decisions.  If the Longton dispute is resolved here, it will not be litigated anywhere else.  Whilst it may in theory be possible for, say, Richard to be believed in relation to the Longton dispute and disbelieved in relation to ownership of other assets such as the Thai companies, that would not be an inconsistent decision.  The same could occur if all matters were litigated in one jurisdiction. 

(vii)     On the case as pleaded at present, ownership of Longton and the Longton loan would appear to be a self-contained dispute and will turn simply on what was or was not agreed between Robert and Richard in relation to Longton and the Longton loan. Longton is clearly one of the most valuable assets and I think it is desirable that the dispute over who is beneficially entitled to it be resolved as simply and as quickly as possible.  That is unlikely to be the case if it gets wrapped up in a dispute about worldwide assets which may or may not have formed part of the business.  In these circumstances, Advocate Jowitt's argument does not lead me to conclude that these proceedings should be stayed in favour of English proceedings which are yet to be brought and the exact scope and nature of which cannot yet be ascertained. 

52.      For these reasons I have come to the clear conclusion that Jersey is the appropriate forum for trial of this action, i.e. the forum in which the case may be tried more suitably for the interests of all the parties and the ends of justice. 

53.      I should add that I was informed during the hearing that Richard would be seeking leave to re-amend the Order of Justice to as to include an application for the just and equitable winding up of Longton in the event of his being successful in his claim to 50% of the shares.  Advocate Dickinson submitted that was an additional pointer towards Jersey.  I have not taken this into account in coming to my conclusion.  Any such application could only be brought in the event of Richard being successful in his claim to 50% of the shares in Longton.  I do not therefore think that it assists on whether that claim should be heard in England or Jersey. 

54.      I should also add that, although I spent time at the beginning of this judgment ascertaining the correct approach as to the burden of proof (because it is always important that a court should be aware of where the burden lies), I do not consider that the question of where the burden lies has affected the outcome of this case.  I have come to the clear conclusion that Jersey is the appropriate forum and I would have done so even had the burden lain upon Richard. 

55.      For the reasons I have given, I reject the application to stay the proceedings. 

Authorities

Trusts (Jersey) Law 1984.

Service of Process Rules 1994.

Spiliada Maritime Corporation v Cansulex Limited [1987] 1 AC 460.

Gheewala v Compendium Trust Company Limited [2003] JLR 627.

Leeds United Football Club Limited v Weston and Levi [2012] JCA 083.

Ball v KingBall v King [2006] JLR N 28.

Ball-v-King [2006] JRC 143.

Brazil (Federal Republic) v Durant International Corporation [2010] JLR 421.

Dicey, Morris and Collins, Conflict of Laws 15^th Edition.