United Film Distribution Ltd & Anor v Chhabria & Ors

Permission to serve a claim outside the jurisdiction must rest on a gateway specifically identified in the application. Permission obtained under one gateway cannot support different claims which were not covered by that application.

The contractual gateway is available where there is a good arguable case that an agency contract was made in England. It cannot be used to pursue breach of contract claims by a person who was not a party to the contract.

A foreign defendant is a proper party where, if all parties were within the jurisdiction, joinder would be proper. Common factual issues and claims arising from the same series of transactions may satisfy that requirement. The court must also be satisfied that England and Wales is the proper forum.

UFD, an English company, and UPIE, an Indian company, brought claims concerning a joint venture for the acquisition and exploitation of Indian film distribution rights. They alleged that the second defendant and Fairdeal, an Indian company, had acted as their agents and had breached contractual and agency obligations.

Master Ungley gave permission to serve the proceedings on those defendants outside the jurisdiction. Master Leslie refused their applications to set aside that permission. Eady J dismissed their appeal, principally on the basis that there was a good arguable agency case and that the foreign defendants could be necessary or proper parties.

The second defendant and Fairdeal brought a second-tier appeal. The central issues were the permitted scope of the contractual service-out gateway and whether the foreign defendants were proper parties to the remaining claims.

1. The appeal was unanimously dismissed. Blackburne J gave the judgment, with which Laws and Aldous LJJ agreed.

2. An applicant for permission to serve outside the jurisdiction must identify the gateway relied on. Permission granted on a particular basis cannot be used as a means of pursuing other claims outside that basis. The contractual gateway under Order 11 rule 1(1)(d) was relied on only for UFD’s agency claims and its claims concerning the June 1998 agreement.

3. There was a good arguable case that UFD’s agency agreements with the second defendant and Fairdeal had been made in England. The pleaded agreement and supporting evidence placed the relevant discussions in England. UPIE could not rely on the contractual gateway for its agency claims, since that basis had not been advanced in the original application and UPIE did not exist when the alleged agency relationship was formed.

4. Neither claimant could enforce the joint venture agreement or the June 1998 agreement where it was not alleged to be a party to that agreement. Those claims could not independently sustain service outside the jurisdiction.

5. Applying Massey v Heynes 1881 21 QBD 330 and the procedural analysis in Barings plc (in administration) v Coopers & Lybrand, a foreign defendant is a proper party if that defendant could properly have been joined had all parties been within the jurisdiction. The broad power to add parties under the Civil Procedure Rules confirmed that the service-out gateway was not narrower.

6. UPIE’s claims against the foreign defendants and the claims against the defendants already served raised common factual questions, including the terms and operation of the joint venture and alleged agency. They also arose from the same series of transactions. England and Wales was plainly the proper place for all the connected claims. Permission to serve out was therefore correctly maintained for UPIE’s agency claims. The second and fifth defendants were ordered to pay the claimants’ summarily assessed costs of £18,000.

• Court of Appeal (Civil Division) Dismissed the second-tier appeal in [2001] EWCA Civ 416.
• High Court, Queen’s Bench Division Eady J dismissed the defendants’ appeal from Master Leslie’s order, while directing that the precise effect of his judgment on the particulars of claim be resolved by agreement or restoration.
• Master Master Leslie dismissed the second and fifth defendants’ applications to set aside permission for service outside the jurisdiction and the service effected under it.
• Master Master Ungley granted permission on 11 October 1999 to serve the proceedings outside the jurisdiction.