Potts v Holmes (CL-AP 30 of 2016) [2018] TCACA 14 (25 April 2018)

Case summary

Appeal Allowed. Per Stollyemer JA: Applications for leave to serve a Writ out of the jurisdiction fall under the provisions of Order 11 of the Civil Rules 2000, which is headed "Service of Process, etc., Out of the Jurisdiction". [14] The initial application for leave was grounded on any one or more of these five sub-rules, or "gateways" as they are often referred to, but on appeal Mr. Griffiths indicated that Mr Potts was not pursuing those under sub-rules 1.(1)(d) and 1.(1)(f), so that it is therefore only necessary to examine the application for leave under the provisions of sub-rules 1.(1)(b), 1.(1)(h), and 1.(1)(i). [17] It is important to note that the principal claim in the Writ centres on the enforceability of the MOU. Mr. Potts specifically seeks a declaration that in effect it is a nullity, or alternatively not a binding agreement, or in the further alternative that Mr. Holmes is estopped from relying upon it. These claims are separate from the claims in deceit and forgery which if proven could lead to an award of damages. [18] Turning to the law, Conducive Inkjet Technology Ltd v Uni-Pixel Inc [2013] EWHC 2968 (Ch) and in particular, paragraphs [46] and [47] of that judgment, are of assistance when examining the burden on a litigant applying for leave to serve a writ out of the jurisdiction. At paragraph [46] Roth J points out that the test for service out involves three requirements, as set out by Lord Collins JSC delivering the advice of Privy Council in AK Investment CJSC v Kyrgyz Mobile Tel Ltd [2011] UKPC 7, [2011] 4 All ER 1027, [2012] 1 WLR 1804. Lord Collins said: "71. On an application for permission to serve a foreign defendant (including an additional defendant to counterclaim) out of the jurisdiction, the claimant (or counterclaimant) has to satisfy three requirements: Seaconsar Far East Ltd. v Bank Markazi Jomhouri Islami Iran [1994] 1 AC 438, 453-457. First, the claimant must satisfy the court that in relation to the foreign defendant there is a serious issue to be tried on the merits, i.e. a substantial question of fact or law, or both. The current practice in England is that this is the same test as for summary judgment, namely whether there is a real (as opposed to a fanciful) prospect of success: e.g. Carvill America Inc v Camperdown UK Ltd [2005] EWCA Civ 645, [2005] 2 Lloyd's Rep 457, at [24]. Second, the claimant must satisfy the court that there is a good arguable case that the claim falls within one or more classes of case in which permission to serve out may be given. In this context “good arguable case” connotes that one side has a much better argument than the other: see Canada Trust Co v Stolzenberg (No 2) [1998] 1 WLR 547, 555-7 per Waller LJ, affd [2002] 1 AC 1; Bols Distilleries BV v Superior Yacht Services [2006] UKPC 45, [2007] 1 WLR 12, [26]-[28]. Third, the claimant must satisfy the court that in all the circumstances the Isle of Man 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." [24] Roth J (at paragraph 47 of his judgment) also refers to paragraph 88 of Kyrgyz Mobile where Lord Collins said in relation to the question of forum: "88. The principles governing the exercise of discretion set out by Lord Goff of Chieveley in Spiliada Maritime Corp v Cansulex Ltd [1987] AC 460, at 475-484, are familiar, and it is only necessary to re-state these points: first, in both stay cases and in service out of the jurisdiction cases, the task of the court is to identify the forum in which the case can be suitably tried for the interests of all the parties and for the ends of justice; second, in service out of the jurisdiction cases the burden is on the claimant to persuade the court that England          is clearly the appropriate forum ..." [25]   I turn now to the issue to be decided, namely whether this three-fold test has been satisfied. [26] It is clear that Mr Potts is seeking to protect his ownership of land, building and business in TCI. That lies at the heart of writ action and it is clearly a serious issue to be tried on its merits. There are substantial issues of both law and fact to be determined. [31]  It is also clear that ownership of land within TCI is at stake, howsoever the claim may be worded, and the claim is to have a contract - the MOU - either declared a nullity or construed as to its terms and conditions. [32] The declaration sought and the issues it seeks to have determined are sufficient to bring the claim within the ambit of Order 11 r.1 (1)(h). Additionally, it is apparent from the evidence that there is a good arguable case to be tried. [33]    As to the issue of forum non conveniens, the property and business are both within TCI; Mr Potts carries on business here and most, if not all, of the witnesses would be here; a receivership would necessarily be performed here; any enforcement of an arbitral award would have to be effected here. Additionally, although the MOU provides for arbitration in the United States, that of itself does not necessarily determine the applicable law. That is more likely to be the law of TCI. [34]         Consequently, the Appellant has satisfied the test of there being sufficient presence and connection with TCI and that the case is suitable for trial here in the interests of all the parties and for the ends of justice. The TCI courts have the necessary jurisdiction. [35]         The Appellant has therefore satisfied the requirements of Order 11 r.1(1) and r.(1)(h) in particular. [36]. That being so, there is no need to examine whether the Appellant has satisfied the provisions of r1.(1)(b) or (i). [37]     

---