Swiss Life AG v Kraus (aka Moses Krausz)

On an appeal from summary judgment, the court must decide whether the claim is plainly unsustainable or whether there is a real issue requiring trial. A person may arguably be treated as the real plaintiff where nominal claimants are merely nominees or ciphers and the person devised, funded, controlled and stood to benefit from the litigation. The court must examine the whole relationship, including the lawyers’ appointment and payment, litigation strategy, day-to-day conduct, and the nominal claimants’ knowledge and interest.

Submission to a foreign court may extend to claims concerning the same subject matter or sufficiently related claims, assessed by reference to fairness and the factual nexus. An informal letter is not submission merely because it asks the foreign court to act. The foreign court’s treatment of the step and its status under foreign procedural law are important considerations.

Swiss Life AG appealed against Deputy Master Eyre’s decision of 16 December 2014, which struck out its claim and gave summary judgment to Moses Kraus. Swiss Life sought to enforce in England the costs element of a New York default judgment arising from third-party proceedings under the Racketeer Influenced and Corrupt Organisation Act.

The issues were whether Kraus was the real plaintiff behind related New York proceedings brought by nominal policyholders; whether that conduct amounted to submission to the jurisdiction in the third-party proceedings; whether a letter sent by Kraus to a New York judge constituted submission; and whether abuse of process, non-severability or the Protection of Trading Interests Act 1980 provided a complete defence.

1. Appeal allowed. Swiss Life had an arguable case and the claim should not have been disposed of by summary judgment.
2. The question whether Kraus was the real plaintiff in the Main Action was fact-sensitive. The court should examine who chose and paid the lawyers, decided strategy, directed negotiations and expected to benefit, together with the nominal plaintiffs’ knowledge, participation and expectations. The evidence was sufficient to make it arguable that Kraus had devised, funded and controlled the litigation and that the nominal plaintiffs were passive nominees.
3. Submission in the Main Action did not automatically establish submission in the third-party proceedings. The correct approach was to ask whether there was a sufficient connection between the proceedings, considering matters including their origin, motivation, timing and subject matter. It was arguable that the connection was sufficient, although much of the third-party complaint concerned conduct unrelated to the Main Action.
4. The letter of 22 January 2013 did not constitute submission. The New York court treated it as an informal communication, not a procedural step. No evidence showed that it had formal procedural effect under New York law. Objectively, the letter was also ambiguous and was substantially a complaint about service and alleged misconduct.
5. The possible defences remained arguable. The trial judge would need to consider whether staged enforcement was abusive, whether recoverable and irrecoverable costs could be severed, and whether section 5 of the Protection of Trading Interests Act 1980 prevented enforcement of the costs component of a judgment containing RICO treble damages. Those issues were not sufficiently clear to justify maintaining summary judgment.

• High Court (Queen’s Bench Division): the appeal from Deputy Master Eyre’s decision of 16 December 2014 was allowed. The claim was held to raise serious issues requiring trial.