[JUDGMENT
Lord Justice Tuckey:
Introduction
1 Is a constructive trust claim based on dishonest assistance a matter
"relating to tort, delict or quasi delict" for the purpose of Article 5(3) of
the Brussels Convention? This question arises on appeal from Anthony
MannQ.C. sitting as a Deputy High Court Judge, who held that it was,
and that the harmful event alleged by the claimants (C.) against the
sixth defendant (K.) who is domiciled in Spain, occurred in England. He
also held that the English courts had jurisdiction over the claim against
K. under Article 6(1) of the Convention because it was connected to a
claim against a domiciled defendant, Mrs P.. K. challenges each of these
decisions.
The claim
2 These issues of jurisdiction fall to be determined by reference to the
allegations made in the original statement of claim served in July 1998.
I take the facts from this pleading and gratefully adopt the judge's
summary of them as follows:
C. is the well-known Japanese manufacturer and supplier of electronic
goods. S., the first defendant, was a manager at its Tokyo office;
Hasegawa, the second defendant, was a friend or associate of S. and
resident in, or frequently posted to, New York. T., the third defendant,
was a friend or associate of Hasegawa, and the fourth defendant, Cr., is
a company incorporated in a United States jurisdiction and is controlled
by T.. It is alleged that S. conspired with Hasegawa and T. to get control
over a substantial amount of C.'s assets and, pursuant to that conspiracy,
in February 1997 S. got control of $30 million of C.'s money which he was
supposed to invest for the purposes of C.. T. got control of the money
pursuant to a power of attorney which is alleged to have been forged and,
having passed the money through various U.S. bank accounts, in March
1997 he procured its transfer to an account at Barclays, Knightsbridge, in
C.'s name but on which S. and T. were signatories. $25 million was then
transferred by or at the behest of T. in April 1997 to a second account at
the same branch, this time under the control of T. alone. The remaining
$5 million remained in the first Knightsbridge account until $4.52 million
was transferred into the second Knightsbridge account, but that is not
germane to the issues I have to consider. T. is said to have become
constructive trustee and to owe fiduciary duties to C..
At this point Mr K. and some associated defendants come into the
story. The fifth defendant is O. V. marketing Ltd ("OVM"), an Isle of
Man company. Mr K. is said to be its President and Mr W., the seventh
defendant, is said to be its managing director. It is alleged that the acts
of OVM complained of in this statement of claim were procured and
directed by Mr K. and/or W. and they were therefore personally liable
for them. On 1 May 1997 T. entered into an agreement described as the
Los Frailes Contract, which provided for investment of the $25 million in
the second Knightsbridge account in a project to construct a golf course
on Gran Canaria. The agreement provided inter alia for the $25 million
to be transferred by T. into an account in London at A. C. Bank AE, (the
14th defendant to this litigation, joined for discovery purposes only)
called "H. Bank International Ltd New York, Ref [OVM] ... Account No. …";
and it provided for the return of the money in a year and a return in the
meanwhile. An agreement entered into four days later is said to provide
for an additional secret profit to be made by Mr K. and/or W. by their
being allocated an equity share in the Los Frailes Project. On 6 May the
money was transferred by T. from the second Knightsbridge account to
the A. account on which the signatories were T. and W.. In paragraph 8 it
is pleaded that this is an OVM account notwithstanding that T. was a joint
signatory on it. From the A. account in London money was moved on to
an OVM account in the Isle of Man on 23 May, and on 6 June it was moved
to an account in the name of OVM and/or Ch. at the N. T.t Company in
Illinois.
Ch. is a Barbados company. I need to follow the money on from there,
in general terms, in order to show how Miss P. is said to be implicated
and the basis on which she is sued. Missing out one or two events which
are not germane to the purpose of this narrative, on 19 August the $25
million was moved into an account at Cra. Ltd, the 10th defendant, in
Jersey, from where it was moved to an account in New York in the name
of Cra. and/or Ch. on 9 September. Cra. is an Isle of Man company in
which a Mr Ke. (the 11th defendant) and Miss P. are said to be directors,
and it is said that the acts of Cra. complained of in the statement of claim
were authorised, directed or procured by Ke. and Miss P. and that they
are personally liable for them. From Cra. there were further disposals of
the money in various detailed ways; I omit the detail here. On and after
19 September there were further movements of money which are said
to have been orchestrated by T., details of which are not important save
to note that they are alleged to have been paid to his order for his own
benefit and/or the purposes of (inter alia) OVM, K. and Cra.. As a result of
all this the C. money was dissipated.
3 As well as being liable for conspiracy, T. is alleged to have become
a constructive trustee of C.'s money by his participation in the fraud
and because after obtaining the money he exercised dominion over it,
expressly informing OVM, K. and P., among others, that it belonged to C..
4 The legal basis for the claims against K. appear in paragraphs 8 and 9 of
the pleading. The relevant parts say:
8. ... C. infers that neither OVM or K. or W. intended at any stage that
the C. monies they obtained from T. would be applied towards investment
in the or any Los Frailes Project (which did not in fact exist) and their
representations to T. to induce him to participate therein and then
the steps they took to induce him to relinquish control over the funds
were fraudulent. Further, at the latest by about August 1997 they had
been informed by T. that the monies in fact belonged to C. and in the
circumstances they knew or had they made the enquiries that an honest
and reasonable person would have made, would have realised that
T.'s transfer of the $25 million was a breach of fiduciary or equitable
duties owed by him to C. or was a transfer of monies impressed with a
constructive trust and/or equitable charge and/or equity. Accordingly, on
receipt of the monies into their control by the transfer to the OVM account
at A., or at latest on being informed by T. that the monies were C. monies
they each owed C. duties as constructive trustee ...
9. In breach of their duties to C. as constructive trustee ... OM and/or K.
and/or W.:
(1) Failed to take any or any adequate or proper steps to preserve the
$25 million ...
(2) Fraudulently induced T. to invest the same in the Los Frailes Project
which was bogus and induced him to transfer the sums to their control
outside the jurisdiction at their account at Barclays Bank, Isle of Man;
(3) On about 6 June 1997 transferred the said sum from OVM's account at
Barclays Bank, Isle of Man, to an account ... in the name of OVM and/or
Ch.;
(4) Thereafter and by 29 July 1997 relinquished control over the $25
million of C. monies to Ch..
5 The claim against Ch., Ma., Cra., Ke. and P. is put in much the same
way. They are alleged to have known that the money was C.'s from
about late July and in any event by 21 August 1997 because they were
so informed by T. and/or OVM. They are alleged to have been in breach
of their duties as constructive trustees for failing to preserve the $25
million and by making various transfers, deposits and investments with
it between August and December 1997. These transactions included
payments totalling not less than $8.1 million by Cra. to OVM and/or K..
6 The claims for relief against OVM and K. are the same as those against
Cra. and P., namely "equitable damages and/or equitable compensation
for breach of trust and/or fiduciary duty" and accounts.
7 The first point taken on this appeal is that the statement of claim only
alleges knowing receipt and that the judge was wrong to conclude that
dishonest assistance was also being alleged. The judge said:
Overall the factual allegations are similar to claims based on constructive
trusteeship. They purport to be based on knowing receipt, but that cannot
be right for W. or K. who did not technically receive them. (OVM did). As
against the individuals the claim would be more appropriately put on a
knowing assistance basis.
At paragraph 20 he said:
It is ... open to (C.'s counsel) to say that as a matter of pleadings he has
alleged that Mr K. procured the receipt by OVM of the money within the
jurisdiction and procured or directed its payment out again knowing that
the money was C.'s and that Mr T. was acting in breach of his own duties.
That could be described as an act of dishonest assistance.
8 Mr Doctor Q.C., for K., submits that the judge's conclusion is unclear.
The claim was pleaded as one of knowing receipt. That is what paragraph
8 says, and for that reason no acts of dishonest assistance are pleaded
against Mr K.. An allegation of knowing (dishonest) assistance was only
added by amendment.
9 I do not accept these submissions. The pleading is not a model of
clarity, but it alleges that T. held the monies on constructive trust; that
K. had the requisite knowledge that this was so; and that K. (on his own
behalf or by procuring OVM to do so) assisted in a breach of that trust by
dishonestly procuring the receipt by OVM of C.'s money for the purported
Los Frailes Project and then paying that money away. Thus all the factual
matters necessary to establish a claim for dishonest assistance against K.
were pleaded.
Article 5(3)
10 This Article says:
A person domiciled in a contracting state may, in another contracting
state, be sued ...
(3) In matters relating to tort, delict or quasi delict in the courts for the
place where the harmful event occurred.
Like Article 6, it is part of the special jurisdiction section of the
Convention. The general provision in Article 2 is that persons are to be
sued in the courts of their domicile. In Case 189/87, Kalfelis v. Bankhaus
Schroder and Others, the European Court of Justice said that the special
jurisdiction provisions, as exceptions to the general principle, should be
interpreted restrictively. In the interests of uniformity and equality Article
5(3) has to be given an autonomous Convention meaning.
11 What is the scope of Article 5(3)? The European Court of Justice has
given little general guidance. The judge found some guidance in what
was said in the House of Lords in Kleinwort Benson Ltd v. Glasgow City
Council (No. 2). In that case the House rejected the argument that a
claim for unjust enrichment fell within Article 5(3) because, other than
in exceptional circumstances, such a claim did not pre-suppose either a
harmful event or a threatened wrong. The judge continued:
The same cannot be said of constructive trust claims, or at least those
based on knowing assistance. in those cases there is scope for describing
what happened as amounting to or involving a harmful event within the
meaning of Article 5(3). Such a conclusion is supported by the fact that
even though the English law of tort is not operating where equity imposes
a constructive trust, one can see parallels. A wrong is being committed
and loss can be said to be caused or at least contributed to.
12 Mr Doctor says the judge was wrong. A claim for knowing assistance
arises where A assists B's breach of fiduciary duty owed to C. A's liability
is accordingly accessory to that of B. The harmful event is therefore B's
breach of duty, and the place where this happens cannot properly provide
a connection between A and the relevant jurisdiction. Secondly, Mr Doctor
submits that Article 5(3) requires there to be a causal connection between
the harmful event and the damage claimed. As A's act of assistance to B
need not itself cause any damage, this requirement is not met.
13 In support of his second submission, Mr Doctor relies on Case 21/76,
Handelskwekerij C.J. Bier BV v. Mines de Potasse d'Alsace SA. In that case
the Dutch plaintiff claimed that the water supply to its nursery had been
polluted by the French defendant's discharge of waste into the Rhine in
France. The Court held that the meaning of the expression: "Place where
the harmful event occurred" must be established in such a way as to
acknowledge that the plaintiff has an option to commence proceedings
either at the place where the damage occurred or the place of the event
giving rise to it.
14 Mr Doctor, however, relied on paragraph [16] of the judgment where
the Court said:
Liability in tort, delict or quasi delict can only arise provided that a causal
connection can be established between the damage and the event in
which that damage originates.
15 I think Mr Doctor's approach is over analytical. He is right that the
nature of A's liability is accessory and that B's breach of trust can be
characterised as a harmful event, but it does not follow that A's unlawful
act of assistance cannot also be so characterised. It may be a harmful
event as well. Just as a principal and his accessory may both be guilty of
criminal offences, so it seems to me in this context that the accessory's
dishonest act of assistance can be a harmful event. Liability depends upon
establishing a wrongful act. In Grupo Torras SA v. Al Sabah (No. 5), this
Court said:
Dishonest assistance can therefore be described as equitable wrongdoing
(the expression used by Auld L.J. in Macmillan v. Bishopsgate [1996]
W.L.R. 387 at page 407, citing Charles Harpum's article, "Accessory
Liability for Procuring or Assisting a Breach of Trust" (1995), 111 LQR
545, 546). The notion that dishonest assistance could be regarded as
a tort was firmly rejected by this Court in Metal und Rohstoff AG v.
Donaldson Lufkin & Jenrette Inc. [1990] 1 Q.B. 391, 474. But that was
in the limbed context of the old RSC Ord. 11, Rule (1)(1)(f). In Dubai
Aluminium Co. Ltd v. Salaam [1999] 1 Lloyd's Rep. 415, page 467, Rix J.
recognised that equitable wrongdoing, although not a tort in the eyes of
English law, has marked similarities to it:
It is true that liability in dishonest assistance is not a liability in tort:
General Bank Nederland NV v. Ecgd [1998] 1 Lloyd's Rep. 19. Rather it is
a liability in equity to pay damages based on fault as Mr Justice Chadwick
said in Arab Monetary Fund v. Hashim (July 29th, 1994, unreported) at
page 42B:
... the defendant is held liable in equity not because he is, or has been,
a trustee of trust property, but because his conduct in relation to trust
property has been such that he ought to be liable in damages for its
loss as if he were a trustee who had disposed of the trust property from
breach of trust. The claim is a claim for monetary compensation based on
fault ...
16 Grupo Torras also establishes that in a claim for dishonest assistance
it is not necessary to show a precise causal link between the assistance
and the loss. Loss caused by the breach of fiduciary duty is recoverable
from the accessory. This is the relevant causal connection for this
purpose. In the absence of such a connection the accessory would be
under no liability. So this type of claim does depend on there being "a
causal connection between damage and the event in which the damage
originates".
17 For these reasons I agree with the judge's conclusion that a
constructive trust claim based upon dishonest assistance is within the
scope of Article 5(3).
18 So the next question is whether the harmful event or the damage
occurred in England. The judge expressed his conclusion about this as
follows:
The knowing assistance type of constructive trusteeship arises where
there are acts of assistance with the relevant knowledge. In this case,
even if one assumes that Mr K. was outside the jurisdiction when he
acquired knowledge, conceived any necessary plans and gave any
necessary instructions, nevertheless the actual act of assistance was in
my view done in this jurisdiction. The act of assistance was the use of
the A. account. Without that act the more abstract notions of authority
and procurement would be of no use. The company account was the
instrumentality by which (on the factual hypothesis of the statement of
claim) Mr K. achieved his assistance. The company account into which the
money was paid (the A. account) so as to come within OVM's sphere for
the first time was in this jurisdiction, and that was the account from which
it left to come under OVM's sole control in the Isle of Man. I therefore
find that the place of the event giving rise to damage for the purposes of
Article 5(3) (as interpreted in the Bier case) was England.
He then went on to consider where the damage had occurred. He decided
that it had either occurred when the $25 million was first abstracted
by the first three defendants from C.'s proper accounts or when it was
dispersed after it had left the A. account. Neither of these events occurred
within the jurisdiction.
9 Mr Doctor submits firstly that the judge was wrong to conclude that K.
had any responsibility for payment of the C. money into or out of the A.
account. It is not alleged that this account was an OVM account or that he
was signatory on or in control of the account.
20 I do not accept these submissions. The pleading sufficiently alleges
that the A. account was an OVM account and specifically alleges that the
acts of OVM were procured and directed by K.. This obviously includes
the payments into and out of the A. account even though he was not a
signatory on that account.
21 Next, Mr Doctor contends that on a proper analysis the mere presence
of the A. account within the jurisdiction does not result in an act of
assistance taking place here. Allowing the use of the account did not
assist T.'s breach of duty because it had already occurred by the time the
money was paid into the account. Anyway the relevant act of assistance
was the agreement to use the account which was not made in England. It
is not permissible to look for tenuous connections with the jurisdiction. A
broad view must be taken and the Court is looking for strong connecting
factors. In any event, it is not alleged that K. had the requisite knowledge
at the time the money was in the jurisdiction.
22 I think the judge's analysis of the position was correct. These cases
are all about the movement of money. C.'s money moved into and out
of a bank account in England and those movements were, it is to be
assumed, procured and directed by K.. In the process T. lost all control
over the money. Taking a broad view, if one is looking for the place
where the harmful event giving rise to the claim for dishonest assistance
occurred, I think it is where this bank account was located. I do not think
there is anything in the pleading point the allegation is that K. required
the knowledge "at latest by about August 1997". The judge treated the
relevant date as 23 April 1997 since K. admitted that he was told by T. on
that date that the money he had to invest was C.'s.
23 For these reasons I think the judge was right to decide that C.'s
claim against K. that he became a constructive trustee of their money
by providing dishonest assistance fell within Article 5(3). This makes it
unnecessary to consider C.'s respondent's notice which says that the
judge was wrong to decide that the damage did not occur within the
jurisdiction and that the knowing receipt claim did not fall within the
scope of Article 5(3). As to the former, I am not at all sure that the judge
was right to say that the damage to C. only occurred when the money
was abstracted from their accounts. There must be a strong argument
for saying that damage was also caused when it was finally wrested from
the T.'s control by the payment out of the A. account. As to the latter, as
I understand his judgment, the judge did so simply on the basis that the
receipt was OVM's and not K.'s. All I need say is I think this is a debatable
point. The judge did not go on to consider whether the claim would have
been within Article 5(3) if there had been a receipt and that question is
best left to be answered in a case where it really has to be decided.
24 However, in his reply this morning Mr Doctor submitted that unless
we decided the knowing receipt point in its favour, C. could not advance
their claim against K. on this basis because in Kalfelis the European Court
of Justice made it clear that a court which has jurisdiction under Article
5(3) over an action in so far as it is based on tort or delict "does not have
jurisdiction over that action in so far as it is not so based" even if that
means that different aspects of the same dispute have to be adjudicated
upon by different courts. This was referred to by Lord Goff in his speech in
Kleinwort Benson as being one of the applicable principles underlying the
provisions of the Convention.
25 I accept that Mr Doctor is right about the effect of Article 5(3) on C.'s
claim in knowing receipt, but in view of the conclusion I have reached
about the applicability of Article 6, the point is academic.
26 Mr Doctor sought to expand upon this late submission to suggest
that the English courts should also only be concerned with events which
happened here. At least, he said, to the extent that anything which
happened outside the jurisdiction could be characterised as a harmful
event, the English courts would have no jurisdiction to consider it.
27 I do not agree. If the Court concludes that K. did provide dishonest
assistance, it will be able to consider all the consequences of the breach of
trust to which he provided such assistance wherever they occurred.
28 This Article says:
A person domiciled in a contracting state may also be sued:
(1) Where he is one of a number of defendants in the courts for the
places where any one of them is domiciled.
29 It is common ground that P. is domiciled in England and that C. has a
genuine claim against her and a good arguable case on the merits against
K.. For Article 6(1) to apply there must also:
Exist between various actions brought by the same plaintiff against
different defendants a connection of such a kind that it is expedient
to determine those actions together in order to avoid the risk of
irreconcilable
judgments resulting from separate proceedings.
30 Having referred to Kalfelis and the decisions of this Court in Gascoine
v. Pyrah, and the House of Lords in Sarrio SA v. Kuwait Investment
Authority, to which I will return, the judge said:
The fact that the claims against Miss P. and Mr K. are similar is not
enough for these purposes. Nor is the fact that they have the same
background in the sense that Miss P. is in the same flow of money as Mr
K. albeit downstream. Of more significance is whether there is anything in
those upstream facts or legal issues which might be decided differently in
different proceedings so as to affect the end result. It seems to me that
there clearly is. At the heart of these claims are the claims that the first
three defendants, and in particular Mr T., were doing what they ought
not to have done, and that what they did was a breach of duty. That
lies at the heart of the constructive trust claims. Without it there is no
constructive trust claim. If those points were decided differently in two
different actions if separate actions were brought against each of Mr K.
and Miss P., then the results of those actions would, or could, be different.
He then went on to consider whether this was a real or theoretical risk. He
noted that T. had filed a defence in which he asserted that he had acted
with C.'s authority and had done nothing wrong throughout, a defence
which Mr Justice Neuberger was not prepared to reject summarily as
being incredible, and continued:
No defendant (including Mr K.) has yet admitted that T. was acting
improperly. Presumably those that ultimately seek to defend the claims
will try to show that he was not, or might not have been, and the chances
of their succeeding are not negligible. They might or might not succeed;
and if proceedings take place in two different courts on two different
occasions, the evidence, or even the view of the court of the evidence,
might be different. All this means that two different courts approaching
the matter in the future might come to two different conclusions on the
point, and I think that the risk is real and substantial for these purposes.
In my view that, by itself, is enough to entitle C. to invoke Article 6(1)
as against Mr K.. So far as the common background of claims and the
other common elements of the claims, can be taken into account, then
the picture is even clearer--there is a clear and close link between the
claims. Taking the broad common sense view that I am obliged to take
of these matters, I think that it is clear that the claims in the unamended
writ as against Mr K. and Miss P. are sufficiently closely linked to bring K.
within Article 6(1).
31 Mr Doctor submits that the judge applied a test of irreconcilability
which was too broad and that the issue as to whether the first three
defendants were in breach of their duties did not bring the case within
Article 6(1). Something more than a common issue of this kind was
required. Here there was no common issue of fact or law which involved
the actions, omissions or legal duties of both K. and P.. The fact that they
were
in a chain of wrongdoers is not enough.
32 So how should the Court approach the question of the irreconcilability?
It is accepted that the European Court of Justice cases on Article 6(1)
do not provide any real answer to this question. we were referred to a
number of cases where Article 6(1) was held not to apply, but the reasons
for this are fairly self-evident from the facts and I do not really find them
helpful.
33 However, Mr Doctor relied heavily on Case C-51/97, Reunion
Europeenne SA and Others v. Spliethoff's Bevrachtings Kantoor BV and
Another. In that case French consignees of a shipment of peaches sued in
France the Australian issuers of the Bill of Lading under which the goods
were carried (a contract claim) and the Dutch carriers and master of the
ship in which they were carried (tort claims). There was no jurisdiction
under Article 6(1) because none of the defendants were domiciled in
France. The court, however, went on to refer to what was said in Kelfelis
in paragraphs [8], [9], [13], [19] and [20], to which I have already
referred, and said:
It follows that two claims in one action for compensation directed against
different defendants and based in one instance on contractual liability and
in the other on liability in tort or delict cannot be regarded as connected.
I can see nothing in this judgment which cuts down, qualifies or explains
what was said in Kalfelis. Rather, the court specifically endorses and
follows the principles laid down by the court in that case. Their application
to the facts of that case (which was strictly unnecessary) is no more than
that.
34 The principal issue between the parties, as I see it, is whether the
cases on Article 22 shed any light on the approach to Article 6(1). Article
22 gives any court, other than the court first seized, the discretion to stay
an action "related" to an action brought in a different contracting state.
For the purposes of this Article, actions are deemed to be related:
Where they are so closely connected that it is expedient to hear and
determine them together to avoid the risk of irreconcilable judgments
resulting from separate proceedings.
So the language of Article 22 is almost identical to the language used
by the European Court of Justice in Kalfelis to which I have referred.
Such an approach had been described as "the most logical" by the
Advocate General in that case who "did not see any good reason for not
transporting the purpose related criterion of Article 22 to cases where
there are several claims". I think it is an inescapable conclusion that
this is what the European Court of Justice intended. Mr Doctor's detailed
analysis of the facts in Kalfelis did not I think in any way undermine
this conclusion. One has of course to bear in mind that Article 22 does
not itself confer jurisdiction, whereas Article 6 (which does) has to be
interpreted restrictively. Nevertheless, I see no reason why the test of
irreconcilability should not be broadly the same under each Article. If the
European Court of Justice had not intended this to be so, I think they
would have made this clear in Kalfelis itself or in the more recent cases in
which they have had to consider Article 6(1). They have not done so.
Sarrio, relied on by the judge, was an Article 22 case. The facts do not
matter. In rejecting the view that Article 22 was only concerned with
conflicting judgments about the primary facts necessary to establish the
cause of action, Lord Saville, with whom all other members of the House
agreed, said :
For these reasons I am of the view that there should be a broad common
sense approach to the question whether the actions in question are
related, bearing in mind the objective of the Article, applying the simple
wide test set out in Article 22 and refraining from an oversophisticated
analysis of the matter.
This judgment makes it clear that the Court is not merely concerned with
the risks of conflicting decisions giving rise to mutually exclusive legal
consequences. It also makes it clear that the Court will be concerned with
the risks of conflicting decisions on questions of fact as well as law. This
Court so held in Gascoine where Hirst L.J. at paragraph [45] said:
Conflicting findings of fact, on the other hand, are virtually impossible
to reconcile if different judges in different jurisdictions within the EEC,
hearing and seeing different witnesses, reach different conclusions which
have hinged on an assessment of the reliability of individual witnesses;
and of course the problem may be compounded in cases where there are
different procedures in the different national courts in the way in which
they hear the evidence and assess it. Moreover, different findings of fact
also frequently lead to different conclusions of law.
37 It seems to me that the judge's approach in this case was entirely
consistent with the approach which I have considered above. He did not,
as Mr Doctor suggests, simply identify a common question of fact or law
and say that Article 6(1) applied. He considered the importance of what
he described as the "upstream facts or legal issues" in terms of the end
result and decided that if different courts reached different conclusions
as to the propriety of T.'s conduct in particular, there was a real risk that
for this reason different courts could reach different conclusions as to the
liability of K. and P.. I think the judge's reasoning about this cannot be
faulted. If so, applying the broad common sense approach advocated by
Lord Saville, his decision that Article 6(1) applied to the claim against
K. was entirely justified. I should add that the judge could also have
considered the downstream events to which I have briefly referred, where
it is alleged that K. and P. (through Cra.) were directly involved with one
another in the movement and dissipation of the money.
38 Mr Doctor argues that, whatever the right approach, the risk of
irreconcilable decisions is entirely theoretical in this case. He suggests
that there is no prospect of the first three defendants participating in
the English proceedings because none of them now has solicitors on
the record. Even if they did attend and defend at the English trial, any
Spanish proceedings by C. against K. would be conducted in their absence
and so C.'s allegations against T. would be uncontradicted there. I think
this argument demonstrates that there is a risk rather than that it is
theoretical. At this stage, the Court must consider that in the English
proceedings there is a real possibility that the Court might accept that
T. was not in breach of fiduciary duty. The outcome of the issues about
this are obviously highly dependent on the credibility of T. and the oral
evidence of other witnesses. If such evidence was not available to the
Spanish court, there must be a real risk that it would reach a different
conclusion to that of the English court.
39 I think the judge's conclusion that Article 6(1) gives this Court
jurisdiction over the claim against K. in these proceedings was right.
40 For these reasons I would dismiss this appeal. We were asked by Mr
Doctor to consider referring the issues raised by it to the European Court
of Justice. I do not think this is necessary.
Lady Justice Arden:
41 I agree with my Lord's judgment, and that the appeal should be
dismissed.
42 At a late stage in his reply, Mr Doctor proposed that if the allegation
in paragraph 8 of the statement of claim were to be made in Spain in
Spanish proceedings against Mr K. there, Mr K. would admit that the
transfer to the A. account of the $25 million alleged to belong to C. was
made in breach of trust, and that Mr K.'s defence would be that he did not
know that the transfer was in fact in breach of trust.
43 Miss P. and Mr K. are, however, alleged to be involved in a number of
events consequent upon the transfer to the A. account. In view of the
broad common sense approach set out in the Sarrio case and explained
by my Lord, Lord Justice Tuckey, I do not consider that Mr Doctor's
proposal takes this case outside Article 6(1) of the Convention.
Lord Justice Pill:
44 I also agree for the reasons given by my Lord, Lord Justice Tuckey, and
add a word of my own only on one aspect of the case in relation to Article
5(3).
45 The paragraph provides that:
A person domiciled in a contracting state may, in another contracting
state, be sued.
(3) In matters relating to tort, delict or quasi delict in the courts of the
place where the harmful event occurred.
46 The effect of that Article was recently considered by the European
Court of Justice in Reunion Europeenne. The Court stated at paragraph
[27] having referred to several earlier cases:
The rule of special jurisdiction in Article 5(3) of the Convention, the
choice of which is a matter for the plaintiff, is based on the existence of a
particularly close connecting factor between the dispute and courts other
than those of the state of the defendant's domicile which justifies the
attribution of jurisdiction to those courts for reasons relating to the sound
administration of justice and the efficacious conduct of proceedings.
47 One of the cases referred to was Bier, where the place of the
happening of the event which may give rise to liability in tort delict or
quasi delict and the place where that event results in damage were not
identical. Water courses in the Netherlands were polluted by the discharge
of waste into the Rhine in France. At paragraph [14] the Court stated:
The form of words "place where the harmful event occurred" used in
all the language versions of the Convention leaves open the question
whether in the situation described it is necessary in determining
jurisdiction to choose as the connecting factor the place of the event
giving rise to the damage or the place where the damage occurred or to
accept the plaintiff has an option between the one and the other of those
two connecting factors.
The court's conclusion was:
Thus it should be answered that where the place of the happening of the
event which may give rise to liability in tort, delict or quasi delict and the
place where the event results in damage are not identical, the expression
"place where the harmful event occurred" in Article 5(3) of the Convention
must be understood as being intended to cover both the place where the
damage occurred and the place of the event giving rise to it.
48 In the present case, the event relied upon is that K. had knowledge
of a breach of trust by T., that T. held the monies on constructive trust,
and that K., on his own behalf, or by procuring OVM to do so, assisted
in a breach of that trust by dishonestly procuring the receipt by OVM of
C.'s money for the purported Los Frailes Project and then paying that
money away. Those are the acts of K. relied on to establish a harmful
event within the meaning of Article 5(3).
49 In the course of its reasoning in Bier, the Court, at paragraph [16],
stated:
Liability in tort, delict or quasi delict can only arise provided that a causal
connection can be established between the damage and the event in
which that damage originates.
In my judgment, the Court in that paragraph was doing no more than
stating a general principle of law. Causation was not the issue before the
Court. The Court was not seeking to limit the category of events which
may be harmful within the meaning of the article or the categories of
persons who may perform those acts or be involved in those events.
51 Contrary to the submission of Mr Doctor, in my judgment the allegedly
dishonest acts of assistance by K. are capable of being harmful acts within
the meaning of the Article. The definition does not confine acts to the acts
of the principal actor. In this case it may be difficult to establish when
and where the relevant damage occurred, but in my judgment it is not
necessary to do so for present purposes.
52 I accept that a causal connection must be established in this case, as it
must in all cases of tort. In my judgment it is sufficiently established upon
the facts alleged in this case.
53 What is alleged is a breach of trust by T. in which K. assisted. There
is, in my judgment, no requirement to establish a direct link between
K. and C. without reference to events constituting the breach of trust. I
agree with the acceptance in this Court in Grupo Torras, Court of Appeal,
2 November 2000, of the statement made at first instance by Mr Justice
Mance upon the facts of that case. Mr Justice Mance stated:
The requirement of dishonest assistance relates not to any loss or
damage which may be suffered but to the breach of trust or fiduciary
duty. The relevant enquiry is ... what loss or damage resulted from the
breach of trust or fiduciary duty which has been dishonestly assisted. In
this context, as in conspiracy, it is inappropriate to become involved in
attempts to assess the precise causative significance of the dishonest
assistance in respect of either the breach of trust or fiduciary duty or the
resulting loss.
54 In my judgment the causative connection is sufficiently established for
present purposes, and Article 5(3) covers the facts of this case.
55 I agree that the appeal should be dismissed.
Appeal dismissed.