Zumax Nigeria Ltd v First City Monument Bank Plc

A court may retrospectively extend the time for a jurisdiction challenge under Civil Procedure Rules 1998 Part 11. The application is determined by the three-stage Denton approach. The court must assess the seriousness of the default, its cause, and all the circumstances. Enforcement of procedural rules is not punitive.

A defendant submits to the jurisdiction only by conduct which is wholly unequivocal. A disclosure application made while a jurisdiction challenge remains pending does not amount to submission where it is relevant to that challenge or to an alternative strike-out application. At the service-out stage, an arguable proprietary, constructive-trust or restitution claim may satisfy the relevant jurisdictional gateways where the alleged misappropriation occurred in England.

Zumax alleged that funds transferred from a London dollar account to the London correspondent accounts of its Nigerian bank and its subsidiary were to be remitted to Zumax, but were fraudulently retained or misapplied. It sued FCMB as successor to the bank.

Permission had been granted to serve FCMB in Nigeria. FCMB applied out of time to challenge jurisdiction and later sought bankers’ records. The deputy judge dismissed its applications, held that the records application was an irrevocable submission to the jurisdiction, and found that the service-out gateways were satisfied: [2014] EWHC 2075 (Ch).

FCMB appealed. The central issues were whether it should receive a retrospective extension, whether it had submitted to the English jurisdiction, and whether prior Nigerian proceedings, a debenture, or the pleaded gateways prevented the claim from proceeding.

1. Appeal dismissed unanimously. The deputy judge erred in refusing FCMB a short retrospective extension of time for its Part 11 jurisdiction challenge. The Court of Appeal nevertheless dismissed the appeal after determining the substantive jurisdiction challenge itself.

2. An extension for compliance with the relevant procedural time limit had to be assessed by the three-stage approach in Denton v TH White Ltd [2014] 1 WLR 3926. The deputy judge wrongly focused on whether the default was non-trivial and failed to evaluate all the circumstances. The one-day delay in seeking an extension, the prompt substantive application, the lack of effect on the proceedings, and the practical difficulty of investigating historic transactions meant that the breach was not serious or significant. Justice required an extension to 11 December 2013. As Salford Estates (No 2) Ltd v Altomart Ltd [2015] 1 WLR 1825 confirmed, procedural compliance is not enforced for punitive purposes.

3. FCMB had not submitted to the jurisdiction. The applicable test, accepted from SMAY Investments Ltd v Sachdev [2003] 1 WLR 1973, required conduct which was wholly unequivocal. FCMB’s application for bankers’ records was made while its jurisdiction challenge was pending. The records were relevant both to that challenge and to its alternative strike-out application. Its conduct was therefore consistent with maintaining the challenge.

4. The asserted Nigerian proceedings and consent order did not provide an unanswerable bar. A foreign judgment obtained by fraud may be impeached. Zumax had a properly arguable case that it had been induced by fraudulent misrepresentation to enter the settlement and consent order. The debenture argument also raised unresolved, arguable questions concerning the nature and later treatment of the charge and whether the secured debt had been discharged.

5. Each service-out gateway in CPR Practice Direction 6B was met to the required good-arguable-case standard. The funds or their traceable proceeds were arguably still in England. The written direction to remit the funds to Zumax arguably created an equitable proprietary interest and supported a constructive-trust claim arising from acts in England. The alleged wrongful retention or diversion in England also arguably supplied the acts giving rise to the restitution claim.

• Court of Appeal (Civil Division): FCMB’s appeal was dismissed: [2016] EWCA Civ 567.
• High Court of Justice, Chancery Division: Mr Charles Hollander QC, sitting as a deputy judge, dismissed FCMB’s applications for an extension of time, to challenge jurisdiction, and for relief from sanctions: [2014] EWHC 2075 (Ch).