NABB Brothers Ltd v Lloyds Bank International (Guernsey) Ltd

Permission to serve proceedings out of the jurisdiction requires the claimant to establish three matters: a cause of action with a reasonable prospect of success, a good arguable case within a jurisdictional gateway, and that England is clearly the appropriate forum. The claimant bears the burden on forum conveniens. A constructive-trust claim may fall within CPR rule 6.20(14) even where the defendant received the money abroad, if the principal fraudster’s instructions caused funds in England to be transferred to the defendant. A proprietary equitable claim may also arguably fall within the restitution gateway in rule 6.20(15), although the point was left tentative. The jurisdictional issue should not ordinarily determine difficult mixed questions of fact and law concerning trusts or limitation.

The claimant alleged that its former managing director misappropriated company funds held in London bank accounts and transferred about £700,000 into a Guernsey discretionary trust administered by the defendant trustee. It obtained an order permitting service of the proceedings out of the jurisdiction from Master Bowman.

The defendant applied to set that order aside, contending that the evidence did not establish a serious issue on the merits, that the relevant acts occurred in Guernsey, that limitation provisions applied, and that Guernsey was the appropriate forum because the trust was governed and administered there. The central issues were whether the claimant satisfied the service-out thresholds and whether England was clearly the proper place for the claim.

1. The order permitting service out was set aside. The claimant failed to show that England was the appropriate forum. The trust was governed by Guernsey law, subject to Guernsey jurisdiction, and the Guernsey court was the natural forum to give directions concerning the trustee, beneficiaries, minors and unborn beneficiaries. The claimant’s convenience, possible English witnesses and proposed non-party disclosure application carried little weight.
2. Under Civil Procedure Rules 1998, rule 6.21, the claimant had to establish: a cause of action with a reasonable prospect of success; a good arguable case within a rule 6.20 gateway; and that England was the appropriate forum. The burden of showing that England was clearly appropriate rested on the claimant.
3. The evidence originally placed before Master Bowman materially overstated the transfers said to have entered the trust. Only the transfer of about £700,000 remained live, and the evidence did not sufficiently connect it with suppliers’ payments. The merits threshold was therefore not met on the material then available.
4. The court considered, but did not decide, the difficult questions concerning proprietary claims, constructive trusts, restitution and limitation. A proprietary claim may fall within the concept of a constructive trust in rule 6.20(14), even though liability is not necessarily based on knowing receipt. The court tentatively considered that an equitable proprietary claim might also fall within “restitution” in rule 6.20(15).
5. For the territorial requirement, the acts need not be those of the foreign defendant. A sufficient link would exist where the principal fraudster instructed that money in English accounts be transferred abroad to a knowing recipient. On the pleaded case, the alleged misappropriation occurred in England. That conclusion did not alter the forum conveniens decision.