Commercial Bank—Cameroun Appellant/Defendant v Nixon Financial Group Ltd Respondent/Claimant

• Jurisdiction: British Virgin Islands
• Judge: Bennett J.A. [AG.],Sydney Bennett, QC,Janice M.Pereira,Davidson Kelvin Baptiste,Justice of Appeal [Ag.],Justice of Appeal
• Judgment Date: 06 June 2011
• Judgment citation (vLex): [2011] ECSC J0606-1
• Court: Court of Appeal (British Virgin Islands)
• Docket Number: HCVAP 2011/005
• Date: 06 June 2011

[2011] ECSC J0606-1

IN THE COURT OF APPEAL

On Appeal from the Commercial Division

Before:

The Hon. Mde. Janice M. Pereira Justice of Appeal

The Hon. Mr. Davidson Kelvin Baptiste Justice of Appeal

The Hon. Mr. Sydney Bennett, QC Justice of Appeal [Ag.]

HCVAP 2011/005

Between:

Commercial Bank-Cameroun

Appellant/Defendant

and

Nixon Financial Group Limited

Respondent/Claimant

Appearances:

Mr. Andrew Willins for the Appellant

Mr. Dirk Van Heck for the Respondent

Commercial appeal - Contract - Service out of the jurisdiction - Application to set aside service out of the jurisdiction - Non-disclosure of material facts in application to serve party to claim out of the jurisdiction - Abuse of process and lis alibi pendens - Whether it would be an abuse of process to have proceedings between the same parties brought simultaneously in two different jurisdictions if they are in respect of the same cause of action

The respondent's claim against the appellant bank arose out of a written agreement between the parties, dated 28 ^th December 2008. By that agreement, the respondent, Nixon Financial Group Limited ("Nixon"), agreed to loan a sum of US$4.6 million to the appellant, Commercial Bank - Cameroun ("the Bank"). In particular, the parties expressly agreed that the agreement was to be governed by the law of the British Virgin Islands ("BVI"). By 30 ^th June 2009, the date of maturity of the loan agreement, the Bank had failed to pay the outstanding principal on the loan as had been agreed. Furthermore, the promissory note given to secure payment of the sums advanced had been presented twice and dishonoured on each presentation. Nixon therefore sought to obtain an order for it to garnish amounts standing to the credit of the Bank at any bank in France, in an effort to secure the sums due to it under the loan agreement. On 22 ^nd July 2010, Nixon commenced proceedings in the Paris Commercial Court, on the basis of the Bank's failure to honour the promissory note. A few weeks later, on 11 ^th August 2010, Nixon issued an application in the BVI Commercial Court for permission to serve these proceedings on the Bank at an address in Cameroon. The application in the BVI was heard on 7 ^th October 2010, and was granted. Service out of the jurisdiction was effected on 18 ^th October 2010 and acknowledged. On 1 ^st October 2010 however, judgment was entered in the Paris Commercial Court in favour of Nixon, and the Bank was ordered to pay Nixon the Euro equivalent of US$4,206,000.00 with interest from 30 ^th June 2009, the date when the loan ought to have been repaid. By application issued on 14 ^th December 2010, the Bank asked the Court to set aside service of the claim on two bases; firstly, on the basis that Nixon's failure to disclose details of the proceedings which had been brought in France, amounted to a failure to fulfill its duty to give full and frank disclosure of the facts relevant to the application for permission to serve out of the jurisdiction; and secondly, on the basis that the institution of the instant proceedings in the BVI amounted to an abuse of process since these proceedings involved a claim for the outstanding balance on the same loan for which Nixon had already obtained judgment in the Paris Commercial Court. The trial judge dismissed the Bank's application and the matter was brought before the Court of Appeal.

Held: dismissing the appeal against the refusal to set aside service of the claim form on the appellant, allowing the appeal to the extent that the proceedings in the court below be stayed pending the final decision of the relevant appellate tribunal in France or until further order of the court below, and awarding costs of these proceedings in the court below to the appellants, such costs to be assessed unless agreed within 21 days of the date of this order, that:

• 1. In the case of an application for permission to serve out of the jurisdiction the focus of the inquiry is on whether the Court should assume jurisdiction over a dispute. The relevant questions are whether there is a serious issue to be tried whether there is a good arguable case that the Court has jurisdiction to hear it and whether the Court being asked to grant permission is clearly the appropriate forum. It is with reference to the third question that non-disclosure is relevant in this case. A party whose application satisfies the criterion set out in Rule 7.3 Civil Procedure Rules 2000 does not have an absolute right to permission to serve out. The Court will generally need to be satisfied that the case is a fit and proper one for service out of the jurisdiction, and that the BVI is the appropriate forum for trial of the intended action. The fact that proceedings were already taking place in another jurisdiction with respect to the claim which was the subject of the application for service out of the jurisdiction is highly relevant to the question of whether the BVI Court should assume jurisdiction. Even more relevant is the fact that the applicant had obtained a judgment in the courts of that other jurisdiction for substantially the same relief as was claimed in the process for which permission to serve out was sought. It is therefore clear that, as was found by the Judge in the court below, there was material non-disclosure in this case.

  MRG (Japan) Ltd v Engelhard Metals Japan Ltd [2003] EWHC 3418 (Comm) applied.

• 2. A distinction should be drawn between non-disclosure which amounts to an attempt to deceive the Court, and a negligent failure to state certain facts which should have been stated. Thus, the first question to be determined is whether the non-disclosure, though material, was innocent in the sense that it occurred in circumstances where there was no intention to deceive the Court. In the instant case, the respondent explained that it was aware of its duty to make full disclosure but considered that this duty had been discharged. In their view, the facts not disclosed were not relevant. The Court below did not make any finding that non disclosure was culpable in the sense that the relevant facts were concealed in a deliberate attempt to mislead the Court.

  Tajik Aluminium Plant v Ermatov and Others [2006] EWHC 2374 cited; MRG (Japan) Ltd v Engelhard Metals Japan Ltd [2003] EWHC 3418 (Comm) cited.

• 3. Whether the matters not disclosed were of such relevance and importance to the issues to be decided on the application that the Court was justified in immediately discharging the order notwithstanding that the non-disclosure had been innocent is a matter of the Judge's discretion on which an appellate court would only interfere if it were demonstrated that he had erred in principle. The present case is not one in which interim relief of a draconian nature was obtained by an applicant in circumstances where evidence relevant to the decision to grant it was not disclosed. Rather, the Court permitted service out of the jurisdiction which had the effect of facilitating the bringing of an action against the appellant in the jurisdiction which it had identified as being the only appropriate one for such an action. The appellant's stance is to challenge the jurisdiction of the Court in which the claim has been brought and at the same time to object to proceedings being brought in the jurisdiction which it asserts is the only appropriate forum on the basis that proceedings are already afoot elsewhere. If it were to succeed in its appeals and/or applications in both jurisdictions, it would be able to delay or frustrate the enforcement of its obligations under the agreement without disputing the claim on its merits. Further, if full facts had been before the Judge, he would have given leave.

  Kuwait Oil Co (KSC) v Idemitsu Tankers KK (The Hida Maru) [1981] 2 Lloyd's Rep. 510 applied.

• 4. The respondent has already obtained judgment against the appellant in the Paris Commercial Court on its claim, which the appellant has not disputed on its merits. It is at liberty to enforce that judgment upon assets which are available in France for the purpose of such enforcement. The only purpose which parallel proceedings in the BVI could serve is as a hedge against the possibility that the Bank might succeed in its challenge to the jurisdiction of the Paris Commercial Court with the consequence that Nixon would lose the benefit of its judgment and of the attachments obtained. This could not justify the inconvenience, effort and expense involved in permitting the two sets of proceedings to be pursued simultaneously in France and in the BVI - effort and expense which, in so far as it was incurred in connection with the BVI proceedings would be entirely wasted if the existing judgment in the respondent's favour in the Paris Commercial Court was upheld on appeal. It is only if the appellant succeeded in its challenge to the jurisdiction of the French courts that the justice of the case would require that it be made to answer in the courts of the BVI.

  The Abidin Daver [1984] A.C. 398 cited.

• 5. As found by the Judge, the extent and degree of non-disclosure by the respondent on its application for permission to serve out was "…material and serious…". Having regard to the policy objectives underlying the exercise of the Court's discretion in cases where there has been material non-disclosure on applications made without notice, it would be appropriate for the respondent to bear the appellant's costs of the application to set aside service in the Court below.

  MRG (Japan) Ltd v Engelhard Metals Japan Ltd [2003] EWHC 3418 (Comm) applied.

Bennett J.A. [AG.]

1 This is an appeal against the decision of Bannister J (Ag) refusing to set aside his order made 7 ^th October 2010, on the ex parte application of the Respondent, Nixon Financial Group Ltd ("Nixon"). By that order Nixon was given permission to serve the instant proceedings upon the Appellant Commercial Bank -...