Tag: consumer agreement

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Dooley v Castle: Court of Appeal overturns jurisdictional objections, claims over alleged offshore pension scam can continue.

Dooley & Ors v Castle Trust & Management Services Ltd [2022] EWCA Civ 1569  is the successful appeal against Russen HHJ’s first instance judgment which I discussed here – readers best consult that post for context, before reading on. For reasons I explain in that post, judicial relations between the UK and Gibraltar pre-Brexit engaged the Brussels 1968  Convention.

Carr LJ wrote the reasons for overruling the judgment, and the Court of Appeal does find there is jurisdiction in E&W. [35] she reminds us of the evidentiary burden at the jurisdictional stage

For the purpose of the evidential analysis, the standard lies between proof on the balance of probabilities and the mere raising of an issue. On contentious factual issues, the court takes a view on the material available if it can reliably do so; if a reliable assessment is not possible, there is a good arguable case for the application of the gateway if there is a plausible (albeit contested) evidential basis for it. The test is context-specific and flexible, and if there is an issue of fact the court must use judicial common sense and pragmatism, making due allowance for the limitations of the material available at an early point in the proceedings.

[41] ff the judge is held to have wrongly treated the relationship between Article 5 (mostly known for forum contractus and forum delicti reasons but also including a trust forum: A5(6) concerning trust-related claims in the courts of the trust’s domicile) and Article 13 (the forum consumptoris). [43] Articles 13 to 15 make up an entirely separate and self-contained section and there is no need or indeed allowance to first check whether Article 5’s conditions apply (including on the conditions for a ‘contract’ to exist), subsequently to check whether A13 ff (including the conditions for a ‘consumer contract’ to exist) apply with a consequence of disapplying A5. Both Opinion AG and judgment in CJEU C-96/00 Gabriel are called upon in solid support.

[48] Jurisdiction under Article 13 is thus a self-standing lex specialis and derogation from the general rule in Article 2. If jurisdiction is not established under Article 13, it may nevertheless arise under Article 5(1). But it is not necessary to establish jurisdiction under Article 5(1) in order to make it out under Article 13.

[49] The Judge’s error on this issue was material, in the light of his conclusion that any claim against Castle would fall within Article 5(6) (and so could not fall within Article 5(1)).

Continuing then on A13, the contentious issue is whether the Judge was wrong to conclude that the pensioners did not have the better of the argument for the purpose of A13:  i) that the proceedings were “proceedings concerning” contracts between the pensioners and Castle for the supply of services; and, if so, ii) that in England and Wales the conclusion of the contracts was preceded by specific invitations addressed to the pensioners.

Re i), [55] the Judge appears to have concluded that there was no contract, by reference to the lack of clarity as to the services to be provided by Castle beyond the contents of the Welcome Letter. On appeal Castle concede that a contract for services did exist between each pensioner and Castle, however that the services to be provided by Castle under each contract were limited to the technical execution of the relevant Deed of Adherence in each case and that therefore the proceedings, which made no complaint about the technical execution of the Deeds, were not “proceedings concerning a contract”.

Carr LJ [57ff] insists that the existence of a trustee-beneficiary relationship does not preclude the co-existence of a contract between the same parties, and, referring to language with strong ‘contract’ echo in the marketing, holds that there was indeed a contract between each of the pensioners and Castle, a relationship that went beyond mere technical execution of the deeds.

[61] ff then deals with ii), with the Court holding there is a good arguable case that each pensioner received (in the State of their domicile) a specific invitation addressed to them, such invitation crystallising at the moment that Management Services sent or handed them an application form. Carr LJ suggest that such an invitation might be sufficient for A13(3) purposes without more: A13 does not contain any express requirement for a connection between the invitation and the trader; the focus is on the existence of a sufficiently strong connection between the contract and the country of domicile of the consumer. However the claimants concede that there was a further requirement, namely that the invitation had to be made on behalf of the trader, here Castle. Arguendo, [66] Carr LJ holds 

there is a plausible evidential basis for the proposition that there was some sufficient connection between MS and Castle, including the possibility that MS was acting for Castle as a “middleman” of the type envisaged in the Schlosser Report (by cross-reference to the Giuliano/Lagarde Report). It is, for example, not in dispute that MS obtained Castle’s application forms and provided them to the pensioners. It appears that MS procured or facilitated production of all the complex documentation and declarations as required by Castle from the pensioners in the build-up to the application forms and transfers themselves.

[68] ff are the proceedings then “proceedings concerning” the contracts in question? The Court holds they are, at a general level for the proceedings are not about mismanagement of the trusts once established, but rather that the pensioners should never have entered the Schemes in the first place, and at a more specific level for the claims to relate to specific issues in the services agreement.

The claims can now proceed to trial where, as I noted before, applicable law will be one of the contested issues.

Geert.

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

 

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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.

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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