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The areas of work in which we have particular expertise, experience and excellence.
Articles, News | Mon 14th Nov, 2022
As well as the Deka Legal Bake, last week witnessed the publication of the updated ASHE and a further judgment on the subject of jurisdiction, which seems to be a growth area in satellite litigation, perhaps unsurprisingly given the effect of Exit Day. For those on tenterhooks, the best themed cake award was a tie between Laura Johnson KC, with her Double Deka Rocky Roads, and Adam Dawson, whose Dekadent Cake brought the house down; the best cupcake award went to Amy Seingier; the best looking cake award was won (once again) by Dominique Smith; and the coveted overall Best Cake 2022 shield goes to Andrew Spencer, both for his indomitable spirit and his unsurpassable spirits (brandy, on this occasion). All of which goes to show, as indeed do the two cases featured this week, that it may sometimes be possible to have your cake and eat it too.
Transworld Payment Solutions UK Limited (in liquidation) v First Curacao International Bank NV [2022] EWHC 2742 (Ch)
A helpful reminder of the court’s approach to forum non conveniens.
The English court was the proper forum to determine claims against a bank incorporated in Curacao arising out of a missing trader intra-community fraud carried out in England and Wales, by English and Welsh companies, to defraud HMRC of substantial amounts of VAT, even though related proceedings by the bank had been underway for some years in Curacao.
The first defendant applied to set aside an order granting permission to the claimant to serve proceedings on it out of the jurisdiction, and the second defendant applied to stay the proceedings pending determination of proceedings in Curacao.
The facts
The Claimants’ case was that the English Proceedings arise out of an alleged “Missing Trader Intra-Community fraud” or “VAT carousel fraud”, carried out in England and Wales, by English and Welsh companies (referred to as a shorthand only as “English companies”) to defraud HMRC of substantial amounts of VAT. The fraud was facilitated by FCIB, which provided banking services to the companies involved in the fraud (described in these proceedings as the “MTIC Companies”, referring to Missing Trader Intra-Community, used to refer to companies participating in such a fraud) and by TWPS, which was responsible for onboarding new clients to FCIB. The allegation was that TWPS, FCIB and Mr Deuss dishonestly assisted in a UK tax fraud and knowingly participated in the fraudulent trading of UK companies.
The companies involved in the fraud had been left with undischarged VAT liabilities which they sought to recover from the first claimant. The first claimant and its liquidator, the second claimant, sought to pass on those liabilities to the defendants, and sent them a letter before action. The defendants issued proceedings in Curacao seeking negative declarations in relation to the threatened English proceedings. There were numerous proceedings in Curacao over the following six years, but they had not been concluded. The claimants issued proceedings in England under the Insolvency Act 1986 s.213 for a contribution to the first claimant’s assets, a contribution to its liabilities in respect of claims in dishonest assistance, and breach of fiduciary duty against the second defendant in causing it to trade fraudulently and to participate in or facilitate the fraudulent trading. The s.213 claims could only be litigated in England and the second defendant was a party only to the English proceedings.
The defendants submitted that the Curacao court was seized as to the issue of whether the companies were parties to a number of settlement agreements which were subject to Curacao law and the fraud claims would be determined as part of the applications for negative declarations.
Judgment
It was held that the relevant factors include:
The forum argument failed.
About the Authors
Gaurang Naik was called in 1985 and specialises in complex and high value personal injury and professional negligence claims, including clinical negligence. He is also an accredited mediator and undertakes mediation in civil and commercial disputes including partnership disputes, co-ownership disputes, professional negligence including clinical negligence, and personal injury. He is on the executive committee of the Professional Negligence Bar Association.
Amelia Katz was called in 2018. She has a busy practice across all of chambers’ specialisms and has a particular interest in costs, having completed her LLM with a dissertation on the subject. She has built up a wealth of experience in the County Courts and is looking forward to applying this experience in travel related cases.
Does Agreeing to Accept Service within the Jurisdiction amount to Submission to the Jurisdiction?
One of the many changes in law and practice brought about when the UK Brexited the EU involved the removal of the ability to serve European road traffic insurers within the jurisdiction as of right. This ability arose from insurers’ obligation to nominate representatives in each Member State on whom proceedings could be served with a minimum of delay and expense, and was confirmed by the Court of Justice of the European Union in Spedition Welter GmbH v Avanssur, SA, Case C-306/12. Following Exit Day, foreign insurers must now (presumptively) be served at their registered offices, unless the Claimant can bring him- or herself within one of the exceptions set out in CPR Part 6. Insurers may choose to stand on their right to be served at their registered office, but this is a costly affair, requiring translation of documents and involvement either of agents or of the Foreign Process Section, and can delay proceedings considerably. Some insurers, particularly in cases in which liability has been admitted, will therefore nominate solicitors or agents within the jurisdiction on whom proceedings may be served more expeditiously and cheaply. When they choose to take this option, does this amount to submission to the jurisdiction of the courts of England and Wales?
This question has been vexing practitioners for over a year, and it is perhaps surprising that until recently we did not have an answer. In Charlton v Deffert [2022] EWHC 2378 (KB) Master McCloud, who seems to be snaffling all the cross border cases in the King’s Bench Division at the moment, provided it.
The facts
The Claimant in Charlton was domiciled in England. He was involved in a road traffic accident which occurred in France; the other driver, the Defendant, was French. Mr Charlton wished to bring his claim in England, and his solicitors asked the Defendant to nominate solicitors to accept service within the jurisdiction so that he could do so. Presumably mindful of the fact that if solicitors were not nominated the Claimant would apply for permission to serve the proceedings in France (on the basis of the indirect damage tort gateway to be found in CPR PD6B, paragraph 3.1(9)), the Defendant acceded to the request, but reserved the position in respect of jurisdiction. The Claimant duly served proceedings on the nominated solicitors, and the Defendant duly challenged jurisdiction.
The Claimant’s case
The Claimant asserted that in nominating solicitors for service the Defendant had submitted to the jurisdiction of the English courts. In the alternative, if it was necessary to determine the appropriate forum, the claim having been served within the jurisdiction, it was for the Defendant to show that there was a more appropriate forum in which to hear proceedings.
The Defendant’s case
The Defendant submitted that had he not acted reasonably in nominating solicitors, the Claimant would have had to apply for permission to serve proceedings outside the jurisdiction, and the court should therefore treat the jurisdictional challenge as if the Claimant were doing so, with the effect that it was for the Claimant to show not only that he came within one of the jurisdictional gateways in PD6B, but also that England and Wales was the appropriate forum within which to hear the claim. The Defendant relied on the following factors as indicating that the appropriate forum was in fact France:
a) nationality and domicile of the Defendant;
b) location of the alleged wrongdoing;
c) application of French rules of the road;
d) witnesses located in France, and whose first language is French;
e) inability to summons French police officers at an English trial;
f) the need to consider and analyse investigation documents in French;
g) the application of French law (in VTB v Nutritek [2013] UKSC 5 the Supreme Court commented that it is generally preferable, other things being equal, that a case should be tried in the country whose law applies);
h) the case raised complex issues of French law involving the proper application of the loi badinter and the question of inexcusable fault, with inconsistency in the caselaw of the Cour d’Appel and the Cour de Cassation, making it appropriate for a French court to determine the issue (Master McCloud does not seem to have been impressed with this argument, and in any event there was no French law evidence in support of it).
The judgment
The Master concluded that where a Defendant has been served on nominated solicitors within the jurisdiction, but has reserved its position as to jurisdiction, it has not submitted to the jurisdiction, but merely to service. The procedure for challenging jurisdiction available under CPR Part 11 therefore remains open to it.
In these circumstances the Defendant has been properly served, and the proceedings will therefore continue ‘as of right’ unless it convinces the judge that the court should exercise its inherent power (reinforced in s.49(3) of the Senior Courts Act 1981 and amplified in Spiliada Maritime Corporation v Cansulex [1987] 1 AC 460) to decline jurisdiction on the basis that the Defendant has demonstrated that there is another more appropriate forum within which the claim ought to be heard.
In this case the Defendant was unable to satisfy the court that France was clearly the more appropriate forum, notwithstanding that the accident had occurred and been investigated there, and the Defendant was domiciled there. The reason for this was that the questions around quantum, and in particular the care and loss of earnings claims, were ‘the biggest evidential area’ between the parties.
Comment
The author believes that the logic of the judgment is unimpeachable; it must be right that where a Defendant nominates solicitors for service but reserves its position on jurisdiction, it can then challenge jurisdiction in accordance with its conditional agreement to make service easier for the Claimant. If this were not so it would be necessary in every case where jurisdiction was not conceded for the claim to be delayed whilst service was effected abroad, with all the difficulty and expense that entails. And it must also be right, as a matter of interpretation, that where service has in fact been effected within the jurisdiction it is for the Defendant to show that the courts should not exercise their de facto jurisdiction arising from this fact, even if this does have the unwanted side effect of making foreign Defendants less likely to nominate solicitors to accept service within the jurisdiction.
For that is the effect of this judgment; foreign Defendants wishing to maximise their prospects of successfully challenging the jurisdiction of the courts of England and Wales should not nominate solicitors within the jurisdiction to accept service, because this has the effect of reversing the burden of proof in any subsequent jurisdictional challenge. In borderline cases this might well make all the difference.
And Charlton does seem to have been a borderline case. Not only was the Defendant French, the accident took place in France, and the documents relating to liability were largely in French. French rules of the road and French law applied, and there was some dispute over the application of the loi badinter to the claim. The Master found that these factors were outweighed by the factors relating to quantum; but the parties’ cases on jurisdiction appear fairly evenly balanced, and had the Defendant not been served within the jurisdiction it is difficult to say whether the court would have made the same finding.
It is difficult not to conclude that the Defendant might have a justifiable sense of grievance, having agreed to make service easier for the Claimant’s solicitors; and it is also tempting to conclude that the English procedural rules on jurisdiction are now of such Byzantine complexity that they could usefully be addressed by Parliament in primary legislation rather than piecemeal in a rule, Practice Direction and under the court’s inherent jurisdiction. The author understands that work is currently under way on proposals to rationalise the jurisdictional rules of England and Wales, and wholesale review and reform cannot come soon enough, particularly in the light of the increase in jurisdictional challenges following Brexit.
About the Author
Called to the Bar in 1997, Sarah Prager has been listed in the legal directories as a Band 1 practitioner in travel law for many years. Together with her colleagues at Deka Chambers, Matthew Chapman QC and Jack Harding, she co-writes the leading legal textbook in the area, and has been involved in most of the leading cases in the field in the last decade. Last year she was named Best Lawyers’ Travel Lawyer of the Year and the Lawyer Monthly Women in Law Awards: Personal Injury, and she was a member of the Consultative Group of Experts to the UNWTO Committee for the Development of an International Code for the Protection of Tourists, and is a member of the Admiralty Court Users’ Committee. She undertakes purely domestic high value personal injury work as well as cross border work and has a wealth of experience of difficult and sensitive cases.
The New ASHE Comes with a Caveat and Implications for Linked Periodical Payments Orders
The Annual Survey of Hours and Earnings (ASHE) 2022 has been published. It has also brought reclassification of the Standard Occupational Classification, SOC 2020. From 2021, the ONS has moved the occupation coding to SOC 2020 from 2010. The SOC 2020 applicable to care workers are codes 6135 (care workers and home care workers) and 6136 (senior care workers). The SOC classification in 2010 sub-divided ASHE 6115 into 2 categories: ASHE 6145 (care workers and home carers): and ASHE 6146 (senior care workers). Given the importance of ASHE 6115 for periodical payments, ASHE 6115 continues to be published by combining SOC 2020 codes 6135 and 6136.
The ONS have cautioned that the impact of the pandemic and furlough scheme has made interpretation and collection of data difficult. The ASHE is based on employer response for a 1% sample of employee jobs, using HMRC PAYE records to identify individuals’ current employer. However, over the coronavirus pandemic period earnings estimates were affected by changes in composition of the workforce and the impact of the Coronavirus Job Retention Scheme (furlough), making interpretation difficult; also, data were subject to more uncertainty and should be treated with caution; ONS encourages users to focus on long-term trends rather than year on year changes.
ASHE 6115, reclassification and PPOs
The issue of indexation of periodical payment orders was considered by the Court of Appeal in Tameside & Glossop Acute Services NHS Trust v Thompstone [2008] 1 WLR 2207 and the three conjoined appeals (Thompstone). The Court held that ASHE 6115 was a measure of earning levels of an occupational group that included carers and was able to reflect changes in the level of carers’ earnings over time. It had done so in the past and was likely to do so in the future. The measure was published as a percentile range of earnings. The periodical payments could be linked to the percentile that most closely reflected the likely earnings of the carers to be employed by the claimant. The accepted premise in Thompstone was that earnings tend to rise faster than prices and it was inappropriate to uprate the former by reference to the latter, save in exceptional circumstances.
It was anticipated in Thompstone that upon reclassification the ONS would publish the revised data for the prior year for the previous SOC and the new SOC, but this did not happen. Since then, PPs indexed to ASHE 6115 has now become common place for future care in catastrophic injury cases with the RH amended model.
The ONS have only published revised figures for the previous year 2021, using the new SOC. As a result of the pandemic and the furlough scheme the 2020 and 2021 data should be treated with caution. The ONS say that “we encourage users to focus on long-term trends rather than year-on year changes”.
Whilst the data from the ONS should be treated with caution generally in the light of the warnings given about the pandemic across the median weekly earnings for all full-time employees in April 2022, there was an increase by 5% from a year earlier on the nominal basis. The median weekly earnings for full time care workers have increased by 8.7% carrying on a tend of carer’s earnings increasing at a higher rate than earnings generally. The RPI increased by 11.3% in the year to April 2022 and the CPI rose by 9% in the same period. Although the carer’s wages continue to increase, in reality they are faced with real term decrease.
Application to ASHE linked PPOs
For the percentiles most frequently encountered in periodical payment ordesr the percentage increase needs to be caveated with the decrease in the provisional and revised figures for 2021. The take away is that inflation is higher than wage increase and the furlough scheme has skewed the 2021 figures.
The data can be found on the ONS website.
About the Authors
Gaurang Naik was called in 1985 and specialises in complex and high value personal injury and professional negligence claims, including clinical negligence. He is also an accredited mediator and undertakes mediation in civil and commercial disputes including partnership disputes, co-ownership disputes, professional negligence including clinical negligence, and personal injury. He is on the executive committee of the Professional Negligence Bar Association.
Amelia Katz was called in 2018. She has a busy practice across all of chambers’ specialisms and has a particular interest in costs, having completed her LLM with a dissertation on the subject. She has built up a wealth of experience in the County Courts and is looking forward to applying this experience in travel related cases.
