WWRT Ltd v Carosan Trading Ltd
| Jurisdiction | British Virgin Islands |
| Judge | Pereira CJ |
| Judgment Date | 20 July 2022 |
| Judgment citation (vLex) | [2022] ECSC J0720-1 |
| Docket Number | BVIHCMAP2022/0002 |
| Court | Court of Appeal (British Virgin Islands) |
| Year | 2022 |
THE EASTERN CARIBBEAN SUPREME COURT
IN THE COURT OF APPEAL
The Hon. Dame Janice M. Pereira, DBE Chief Justice
The Hon. Mr. Mario Michel Justice of Appeal
The Hon. Mr. Paul Webster Justice of Appeal [Ag.]
BVIHCMAP2022/0002
Mr. Nathan Pillow, QC with him Ms. Sophia Hurst and Dr. Alecia Johns for the Appellant
Mr. Brian Lacy for the First Respondent
Mr. Richard Morgan, QC with him Mr. Richard Brown and Ms. Rowena Page for the Second Respondent
Interlocutory appeal — Appellate interference with exercise of trial judge's discretion — Order setting aside permission to serve defendant outside jurisdiction — Whether learned judge erred in setting aside service-out order — Test for service outside the jurisdiction — Serious issue to be tried — Whether learned judge erred in holding no serious issue to be tried — Construction of foreign documents and laws — Locus Standi — Whether on a proper construction of the Star Assignment and article 514 of the Civil Code of Ukraine (“CCU”) the appellant had standing to bring the claims against the respondents — Role of expert evidence in construing foreign documents and laws — Absence of expert evidence as to rules of construction of foreign documents — Whether in absence of rules of construction of the Star Assignment the learned judge erred in construing it according to its plain, ordinary meaning — Rejection of expert evidence as to foreign law — Whether learned judge erred in the construction of article 514 of the CCU by disregarding the evidence of the appellant's expert witness as fanciful — Forum conveniens — Order granting stay of proceedings in the BVI on ground of forum non conveniens — Whether learned judge erred in the exercise of discretion by holding that Ukraine was the more natural and appropriate forum for trying the claims — Application to adduce fresh evidence — Principles in Ladd v Marshall — Time of availability of evidence — Whether evidence of the ongoing Ukrainian conflict should be adduced when such evidence became available after the hearing on forum in the lower court
The appellant (“WWRT”), a company incorporated in England and Wales, claimed to be the indirect assignee of various tortious claims of the Ukrainian Bank, JSC Platinum Bank (the “Bank”) against the first respondent (“Carosan”), a company incorporated in the Territory of the Virgin Islands (the “BVI”) and second respondent (“Mr. Kaufman”), a Ukrainian businessman. In the lower court, WWRT alleged that the Bank had been the victim of a complex fraud for which Carosan and Mr. Kaufman were responsible. Under the scheme, the Bank disbursed monies under loan agreements (the “Loans”) to various Ukrainian borrowers. These Ukrainian borrowers then transferred the monies received to various offshore companies, including Carosan, which in turn, recycled the monies between the borrowers and the offshore companies. WWRT's claim was that the Loans were not legitimate commercial loans and that the majority of the money borrowed had never been repaid. Furthermore, WWRT alleged that the fraud was carried out under the direction of and/or for the benefit of Mr. Kaufman and that Carosan played a central role in receiving and ‘spiriting away’ the proceeds of the fraud.
The Bank was declared insolvent in 2017 and was placed under the supervision of the Deposit Guarantee Fund (the “DGF”). In 2019, the DGF sold the Bank's rights in respect of the Loans to Star Investment One LLC (“Star Investment”) under an agreement (the “Star Assignment”). In 2020, Star Investment then assigned its rights under the Loans to WWRT by a Loan and Property Rights Sale Agreement (the “WWRT Assignment”).
It is by virtue of these assignments that WWRT has claimed to be the indirect assignee of the Bank's claims against the respondents and that such claims included the Bank's rights to causes of action in tort against the respondents by operation of Article 514 of the Civil Code of Ukraine (the “CCU”). WWRT therefore commenced proceedings in the BVI courts against Carosan as of right, and against Mr. Kaufman pursuant to rule 7.3(2)(a) of the Civil Procedure Rules 2000 (the “CPR”), asserting that he was a necessary or proper party to the claim. WWRT claimed compensation under BVI law against Carosan and also claimed damages against both respondents pursuant to article 1166 of the CCU.
In June 2021, the trial judge granted WWRT permission to serve Mr. Kaufman outside the jurisdiction at an address in Ukraine (the “service-out order”). In September 2021, Mr. Kaufman applied, inter alia, to set aside the leave granted to serve him outside the jurisdiction. He based his application on the grounds that (i) WWRT had not taken a valid assignment of the Bank's claims and therefore had no standing to bring the claims and (ii) the BVI court was neither the appropriate nor convenient forum for determining the claim against him. In October 2021, Carosan applied to stay the proceedings against it in the BVI on the ground of forum non conveniens. As it pertained to Mr. Kaufman's application, the judge set aside the service-out order and declared that the BVI had no jurisdiction to try the claim against him. He determined that there was no serious issue to be tried on the merits since all the Bank's tortious claims had not been assigned under the Star Assignment. As a result, these claims had not been subsequently assigned under the WWRT Assignment and WWRT had no standing to pursue the claims against the respondents. On Carosan's application, the judge declared that the BVI court would not exercise its jurisdiction to try the claim on the ground of forum non conveniens and that Ukraine was the more natural and appropriate forum for trying the claim. The learned judge accordingly ordered that WWRT's claim against Carosan be stayed.
Being dissatisfied with the judge's ruling, WWRT appealed. WWRT only advanced two grounds of appeal and consequently, only two issues arose for determination, namely (i) whether the learned judge erred in setting aside the service-out order by finding no serious issue to be tried on the merits; and (ii) whether the learned judge erred in displacing the BVI with Ukraine as the forum conveniens for trying the claims against the respondents. At the hearing of the appeal, WWRT also sought to introduce fresh evidence in relation to the ongoing armed conflict in Ukraine which began in February 2022. Counsel for WWRT argued that the evidence to be adduced demonstrated that the conflict rendered Ukraine an unavailable forum and that the Court should have this in mind when reviewing the judge's decision as to forum. Counsel for the respondents countered that the Court could only admit evidence that existed at the time of the trial in the lower court, that being December 2021 and not evidence that came to light after. The Court refused to admit the new evidence.
Held: dismissing the appeal and awarding costs on the appeal and on the application to the respondents, to be assessed by a judge of the Commercial Division if not agreed within 21 days, that:
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1. An appellate court should be cautious in interfering with the decision of the trial judge. An appellate court should only interfere with a trial judge's decision if the court is satisfied that the judge erred in principle and as a result his or her decision exceeded the generous ambit of reasonable disagreement or was blatantly wrong.
Dufour and Others v Helenair Corporation Ltd and Others (1995) 52 WIR 188 applied.
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2. On an application for permission to serve out of the jurisdiction, the claimant or counter-claimant has to satisfy three elements, namely (i) that there is a serious issue to be tried on the merits; (ii) 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; and (iii) that the local jurisdiction must be clearly or distinctly the appropriate forum for the trial of the dispute and that it is appropriate to permit service out. A failure to establish even one of these elements would be grounds for the court to deny an application for leave to serve outside the jurisdiction or for the court to set aside the leave as granted.
Altimo Holdings and Investment Limited and Others v Kyrgyz Mobil Tel Limited and Others [2011] UKPC 7 applied; Mitsuji Konoshita et al v JTrust Asia Pte Ltd BVIHCMAP2018/0047, BVIHCMAP2018/0020 (delivered 18th December 2018, unreported) applied.
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3. In determining whether there is a serious issue to be tried for the purposes of a service-out order, a judge is not required to conduct a mini trial. Rather, the judge must assess the claim and evidence before him and determine whether it met the threshold of a serious issue. The trial judge in determining whether the case at bar met this threshold was cognisant of the relevant case law and engaged in a sound evaluative process, assessing the claim and the evidence before him. The learned judge began his analysis at the correct starting point, that is, whether the Bank's rights to tortious claims had been transferred under the Star Assignment, employed the correct approach in considering an English translation of the Star Assignment and was entitled to reject the evidence of an expert witness opinion as it pertained to article 514 of the CCU. The learned judge having come to these conclusions, did not err in determining that, as a matter of construction of the Star Assignment and by operation of article 514 of the CCU, there was no real prospect of showing that the Star Assignment had been effective to transfer to WWRT the right to sue in respect of tortious claims under article 1166 of the CCU. The tortious claims made against the respondents were bound to fail and accordingly WWRT had failed at the first stage of the process for service-out. Therefore,...
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