Elek v Bar Tur Anor

For an application concerning service out of the jurisdiction, the claimant must show a serious issue to be tried, expressed in current practice as a real rather than fanciful prospect of success.

Where communications objectively show an immediate voluntary withdrawal from a contractual collaboration, and the other parties accept it, private intentions and later unsuccessful negotiations cannot realistically establish a conditional withdrawal, a continuing contract or a later repudiatory breach. The court may decide the application on the facts without determining wider questions about repudiatory breach or quantum meruit.

Mr Thomas Elek entered a collaboration arrangement with the defendants concerning a student-accommodation joint venture. After raising concerns about the joint-venture company’s principals, he emailed on 5 November 2009 stating that he wished to terminate his involvement immediately. Later discussions did not restore his equity participation.

He brought a claim principally in quantum meruit and sought permission to serve the defendants out of the jurisdiction. The Deputy Judge held that the claim had no real prospect of success, set aside the service-out orders, declared that the court lacked jurisdiction and dismissed the action. The appeal concerned whether the pleaded or proposed amended claims could realistically establish a continuing contract or repudiatory breach.

1. Disposition. The appeal was dismissed, subject to correcting the order below. The proper result was to set aside the orders permitting service out of the jurisdiction, rather than dismiss the action itself.
2. Applicable threshold. The only issue was whether the claim had a real prospect of success. The court referred to the service-out requirements described in Seaconsar Far East Limited v Bank Markazi Jomhouri Islam [1994] 1 AC 438 and Altimo Holdings and Investment Limited v Kyrgyz Mobil Tel Limited [2012] WLR 1804. The serious-issue requirement was treated as the same as the summary-judgment threshold: a real, rather than fanciful, prospect of success.
3. Objective construction. The correspondence, surrounding events and pleaded case had to be construed objectively. The relevant question was what a reasonable person in the defendants’ position would have understood. The claimant’s uncommunicated private intentions, including any wish to improve his negotiating position, could not alter the meaning of his immediate termination.
4. Effect of the withdrawal. The material objectively established that the claimant voluntarily withdrew from the collaboration and contractual arrangements on 5 November 2009. The defendants accepted and acted on that withdrawal, and the claimant’s interests in Safeharbor were returned. There was no realistic prospect of proving that the withdrawal was conditional, that the contract continued, or that the defendants later repudiated it. Later offers of payment, which the claimant rejected, did not restore the contractual relationship.
5. Quantum meruit. The court did not decide the underlying restitutionary law. For the purposes of the application only, it was prepared to assume that an innocent party may elect to recover by quantum meruit following premature termination caused by the other party’s repudiatory breach. That assumption could not assist this claim because the facts gave no realistic prospect of establishing such a breach or a continuing contract.

• Court of Appeal (Civil Division): Appeal dismissed, subject to the agreed correction that the action itself should not have been dismissed.
• High Court of Justice: David Donaldson QC, sitting as a Deputy Judge, set aside the order permitting service out of the jurisdiction, declared that the court had no jurisdiction and dismissed the action. Permission to appeal was initially refused but later granted by Aikens LJ.