Rawlinson & Hunter Trustees SA v ITG Ltd

A novation deed must be construed by reference to what it substantively does and to the language and structure of the instrument as a whole. A general jurisdiction clause referring to disputes relating to the deed does not displace an existing jurisdiction clause governing the underlying agreement unless that intention is sufficiently clear. On an ex parte application for permission to serve out of the jurisdiction, material non-disclosure gives the court a discretion as to the appropriate order. Permission need not be set aside where the omission was not deliberate, did not affect the substantive answer, and setting it aside would cause unnecessary duplication.

The claimant appealed against an order of the Chief Master setting aside permission previously granted to serve proceedings out of the jurisdiction. The underlying claim concerned a loan made by the former trustee of a trust to trustees of another trust, and a later novation under which the claimant became entitled to enforce the loan.

The principal issue was whether the novation deed’s Guernsey jurisdiction clause displaced the English jurisdiction clause in the loan agreement. A further issue was whether material non-disclosure on the ex parte application required the permission to serve out to be set aside.

1. Construction of the novation deed. The substantive effect of the deed was to substitute the claimant for the former trustee in the loan arrangements and loan agreement. It did not indicate an intention to alter the underlying rights, obligations or relations of the parties.
2. The words “the subject matter of this Deed” in the deed’s jurisdiction clause referred to that substitution, rather than to all claims arising under the loan arrangements or loan agreement. The clause’s position at the end of the deed, and the absence of an express amendment to the loan agreement’s jurisdiction clause, reinforced that conclusion.
3. A claim concerning the borrowers’ obligation to provide security under the loan agreement was not a dispute as to the liability of one party to the deed to another party which related to the substitution. It therefore remained subject to the English exclusive jurisdiction clause. The defendants were precluded from arguing that England was not the appropriate or convenient forum.
4. Fiona Trust. The general principle that commercial parties ordinarily intend disputes arising from one relationship or transaction to be determined in one forum did not overcome the language and structure of the deed in this case.
5. Non-disclosure. The failure to disclose the novation deed and the full significance of related Guernsey proceedings was material, but not deliberate. Applying the discretion recognised in NML Capital Ltd v Republic of Argentina [2011] UKSC 31, it was unnecessary to set aside permission because the non-disclosure had not affected the answer on the loan claim and requiring fresh proceedings would cause unnecessary duplication. The Chief Master’s costs order remained undisturbed.
6. The appeal was allowed.

• High Court (Chancery Division): The appeal from the Chief Master’s order dated 25 February 2014 was allowed. Permission to serve the claim out of the jurisdiction was maintained, subject to the existing costs order.