Deutsche Bank Ag v Vik & Anor

Permission to serve proceedings out of the jurisdiction should not be sustained unless the claimant shows that each cause of action has a reasonable prospect of success. The court may assess the evidence available at the jurisdiction stage; a bare assertion of a mistake is insufficient. For restitution, the claimant must show a causative mistake, namely that it would not have made the payment had it known the true facts, and that the recipient was not entitled to receive it. A constructive trust claim based on knowing receipt or retention additionally requires evidence of the recipient’s knowledge of the mistake. Where the claimant has deliberately chosen not to provide evidence and the existing case has no realistic prospect of success, an adjournment should ordinarily be refused.

Deutsche Bank sought to recover three payments made to Mr Vik and Millahue, alleging that the payments had been made under a mistake of fact and that the recipients were constructive trustees. Both defendants were outside the jurisdiction, so permission had been granted for service out under Practice Direction B of CPR Part 6.

The defendants applied to set aside that permission and the service. The central issue was whether the claimant had shown a serious issue to be tried, or a reasonable prospect of success, on the alleged mistake and on the additional knowledge required for the constructive trust claim.

1. Service out and merits threshold. The court applied the threshold described in Seaconsar Far East Ltd v Bank Markazi [1994] 1 AC 438, and in the later authorities cited at paragraphs [6]–[8]. The claimant had to establish, on the evidence before the court, that each cause of action had a reasonable prospect of success. The test required more than an assertion of a cause of action, particularly after extensive evidence had been exchanged.
2. Restitution. The claimant’s evidence established only that an employee believed that sufficient available cash existed to make the payments. The alleged error in the DBX system was unexplained and unsupported. The court found no realistic evidential basis for concluding that a causative mistake existed or that the payments would not have been made if the true position had been known.
3. Constructive trust. The constructive trust claim depended on the mistake claim and additionally required evidence that Mr Vik knew of the mistake. The material relied upon did not establish such knowledge. The claim therefore had no serious issue to be tried.
4. Adjournment and order. An adjournment was refused. The claimant had consciously declined to provide the requested evidence for nearly a year, and there was no limitation prejudice requiring an opportunity to amend or supplement the case. The order granting permission for service out was discharged, service on both defendants was set aside, and the proceedings were dismissed on jurisdictional grounds.