Pace Europe Ltd & Ors v Dunham & Anor

A foreign judgment containing multiple damages may still be recognised and enforced in respect of a distinct, separable compensatory award arising from different causes of action. The statutory bar applies to the multiple-damages element, not automatically to every part of the judgment. A compensatory element may also be recoverable where it is separately identifiable within a true multiple-damages award, although that issue was not necessary to the decision. A challenge based on denial of natural justice requires more than a party’s non-attendance. Where the foreign court rationally refuses an adjournment in the absence of satisfactory medical evidence, and the party knowingly takes the risk of not attending, the resulting judgment is not contrary to natural justice.

The appellants appealed against the setting aside of statutory demands served on the respondents. The demands were based on part of a final North Carolina judgment obtained after the respondents failed to attend the trial or their scheduled depositions.

The foreign judgment awarded compensatory damages for breach of contract, fraud, breach of fiduciary duty and constructive fraud. It also awarded treble damages for unfair and deceptive trade practices, together with attorneys’ fees and expenses. The issues were whether the compensatory award was unenforceable under the Protection of Trading Interests Act 1980, and whether the respondents’ absence made enforcement contrary to natural justice.

1. Appeal allowed. The statutory demands were based only on the compensatory award and costs, not on the unenforceable multiple-damages element.

2. The court treated the foreign judgment as containing distinct awards. The award for breach of contract, fraud, breach of fiduciary duty and constructive fraud was a freestanding compensatory award. The treble award arose from a separate cause of action under North Carolina legislation. Applying the purposive approach in Lewis v Eliades [2004] 1 WLR 692, the compensatory award was capable of recognition and enforcement. The multiple-damages award itself could not be enforced under the Protection of Trading Interests Act 1980.

3. The judge accepted, as persuasive obiter reasoning, the approach of Lucasfilm v Ainsworth [2009] FSR 2: even in a true multiple-damages case, a separately identifiable compensatory element may be recoverable. That broader point was unnecessary because the present case fell within the ratio of Lewis v Eliades. The costs award was also regarded as compensatory.

4. The natural-justice argument failed. The North Carolina court had rationally refused a further adjournment because there was no satisfactory medical evidence that Mr Dunham could not travel or attend, and no reason prevented Mrs Dunham from attending. The respondents knew the trial date remained effective, failed to attend their depositions, and deliberately accepted the risk that the trial would proceed in their absence.

5. The High Court did not sit as an appellate court over the North Carolina court’s case-management decision. The refusal of an adjournment was justified, so the resulting judgment was not vitiated by a denial of natural justice.

• High Court (Chancery Division): allowed the appeal against the district judge’s decision of 11 January 2012 setting aside the statutory demands.