Dooley v Castle. On Gibraltar, the Brussels Convention and trust management as consumer contracts.

After Eastern Pacific Chartering Inc v Pola Maritime Ltd, judgment in Dooley & Ors v Castle Trust & Management Services Ltd [2021] EWHC 2682 (Comm) is the second recent case to apply the 1968 Brussels Convention in relations between the UK and Gibraltar. This time it is the consumer section of the Convention which is at the core of the jurisdictional discussion.

Defendant is a company registered in Gibraltar which operates as a professional trustee company. The litigation concerns overseas pension schemes, promoted principally by Montegue Smythe, a Cypriot firm which operated from an English address. The court did not have before it any contractual terms evidencing the relationship between Castle and Montegue Smythe [66].

Common law negligence or breach of regulatory or statutory rules are the claim. Applicable law [15-16] is announced to be a contested issue at trial but not one that featured in the current jurisdictional challenge.

Readers may be aware that prior to the Brussels I Regulation (2001) amendments to the consumer section, requirements to trigger it were quite different. Defendants argue that the consumer section is not engaged for claimants have not shown that the conclusion of the contract was preceded in the consumer’s domicile by a specific invitation addressed to them or by advertising. In support of their case that the requirement of A13.3(b) Brussels Convention was satisfied, claimants plea an extract from Castle’s website which was said to be an act of advertising in the UK.

CJEU Kalfelis, Engler, Gabriel and Pammer (the latter mutatis mutandis and with focus on the CJEU’s view as to its own previous authority under the Convention; for Pammer Alpenhof is a Brussels I case) were the core cases discussed. At [64] Russen J rejects ia Petruchova and Reliantco as relevant authority given their Brussels I(a) context.

The judge emphasises the restrictive interpretation of the consumer section and holds that Castle’s obligations to claimants rested fundamentally upon its trusteeship of the QROPS rather than any separate contract for the provision of financial administration services. There is no plausible evidential basis for saying a contract was concluded for the supply of services outside those which were identified by the Deeds and the Rules which were incorporated by Castle [68].

Any claim against Castle based upon non-performance of services would have to be based upon the Trust Deeds and the Rules incorporated by them. Any such claim would fall within Article 5.6 (equivalent to A7(6) BIa) which would lead to the same court – the Gibraltar court – having jurisdiction as it would under the general rule of A2 Brussels Convention [70].

The judge also held that even on the assumption that a particular claimant read the extract on the website before investing in the QROPS, the fact is that there is no evidence to suggest that the territorial requirement identified in  CJEU Gabriel was satisfied.

The tort gateway under A5(3) Brussels Convention was not much entertained for claimants did not put much weight on it. At [73] the judge located locus delicti commissi in Gibraltar and did not hold on locus damni possibly being in England or the UK (the signing away of the transfer of the funds in the UK potentially qualifying as locus damni. With interesting potential discussion of course of the EU v the E&W approach on same per UKSC Brownlie I and II.

The jurisdictional challenge succeeds.

Geert.

EU Private International Law, 3rd ed. 2021, Heading 2.2.9.2.1 and 2.2.9.2.2.

On the temporal scope of Brussels I, and the notion of ‘counterclaim’ in Art.6(3) Brussels I Regulation. Kokott AG in C-185/15 Kostanjevec.

In Case C-185/15 Kostanjevec, Kokott AG (not available in English at the time of writing) advised on a number of issues in relation to a counterclaim under Article 6(3) Brussels I (now 8(3) of the Recast). At the core of the dispute lies a leasing contract and the consumer counterclaiming for restitution per unjust enrichment, of the sums she had transferred to counterparty. The counterclaim follows the annulment of the contract between the two, even though Marjan Kostanjevec had initially been ordered to pay.

The first relates to the temporal scope not of the Recast Brussels I Regulation viz Brussels I, but rather simply of Regulation 44/2001, in particular with respect to a Member State (Slovenia) which joined the EU on 1 May 2004. The Brussels Convention had never applied to Slovenia. The proceedings between parties  go back to 1995, prompting the EC among others to suggest that per Article 66 of the Regulation (This Regulation shall apply only to legal proceedings instituted…after the entry into force thereof) it simply does not apply. Kokott AG however suggests first of all that the new claim in restitution, followed the use of a separate means of redress under Slovenian law, instituted after the initial claim by the leasing company had been wrapped up in its entirety. Moreover, other language versions refer not to ‘proceedings’ but rather to a claim (defined in C-341/93 Danvaern Production as claims by defendants which seek the pronouncement of a separate judgment or decree. It does not apply to the situation where a defendant raises, as a pure defence, a claim which he allegedly has against the plaintiff (at 18)

Regulation 44/2001 applies therefore, in the view of the AG. I would agree that it should: this is particularly relevant where parties have a long and complex history of litigation. (Similarities here may exist with Nikiforidis, which is in my blog pile). Applying Danvaern Production however for the interpretation of Article 66 I think may be problematic. The raison d’être of Article 6(3) is to help avoid conflicting decisions in cases that are closely related. Even if, per Danvaern, they seek a separate pronouncement, they do essentially relate to reciprocal commitments which are part of the same bundle of facts. (See also Kokott AG herself, in para 44 of her Opinion with reference to the Jenard Report and to Léger AG in Danvaern). It feels a little inconsistent to call upon arguments developed viz inseparable claims (under Art.6(3): Danvaern) to support a thesis of separability (viz the application ratione temporis: they are separate claims even if they have a common history in fact and in contractual liaison).

With reference to C-297/14 Hobohm, the AG subsequently also advises that the counterclaim is covered by the Regulation’s consumer contracts title as having a ‘close link’ with the consumer contract, and, for the sake of completeness, and with reference to Profit SIM, that claims for restitution are covered by (now) Article 7(1) ‘s forum contractus even if they are grounded in a claim arguing that the contract at issue did not actually exist.

I am curious how the Court will approach the temporal application issue.

Geert.

(Handbook of) European Private International law, 2nd ed. 2016, chapter 2, Heading 2.2.11.1.a, Heading 2.2.21.3, Heading 2.1.1

 

 

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