Gunn & Ors v Diaz & Ors

Permission to serve a foreign defendant out of the jurisdiction under the necessary or proper party gateway requires a lawfully served anchor defendant. Service obtained under an impermissible gateway cannot be used merely because the anchor defendant later submits, or is deemed to submit, to the jurisdiction.

The anchor claim must involve a real issue which it is reasonable for the English court to try. A claim subject to default judgment, with no substantive issue remaining, will ordinarily fail that requirement. The target defendant must also be a proper party, and England and Wales must be clearly or distinctly the appropriate forum.

A party seeking an extension of time for service without notice must disclose a subsequent higher-court decision which clarifies that the original jurisdictional basis was misconceived. Culpable non-disclosure may justify refusing the alternative gateway and depriving the claimant of any forensic advantage gained from it.

The claimants brought proceedings arising from a road accident in Costa Rica against the alleged driver, the vehicle hirer and owner, and INS, a Costa Rican state-owned insurer. INS applied to set aside service out of the jurisdiction and sought a declaration that the English court had no jurisdiction over it.

Permission to serve all defendants had originally been granted under the tort gateway in Practice Direction 6B. After the Court of Appeal’s decision in Brownlie v Four Seasons Holdings Inc [2015] EWCA Civ 665, the claimants accepted that the tort gateway could not support the claims. They sought instead to rely on the necessary or proper party gateway, using Sixt as the anchor defendant. Sixt had been served, failed to defend, and judgment in default had been entered.

The issues were whether the claimants could rely on the alternative gateway, whether Sixt or Citi could be an anchor defendant, whether INS was a proper party, whether England was the appropriate forum, and what consequences followed from non-disclosure.

1. Application granted. The order permitting service of the claim form and Particulars of Claim on INS out of the jurisdiction was set aside, and declaratory relief was granted.
2. The court could not permit reliance on the necessary or proper party gateway where, at the date of the original order, no defendant could lawfully have been served under the tort gateway. Brownlie v Four Seasons Holdings Inc [2015] EWCA Civ 665 clarified the law rather than changing it. The original permission had therefore been granted on a mistaken interpretation of the rules.
3. Service on Sixt could not provide the necessary anchor. For the purposes of Practice Direction 6B paragraph 3.1(3), service had to be legally permissible, not merely procedurally regular. In any event, Sixt’s default judgment meant that there was no real issue to be tried and no useful trial for the English court to conduct.
4. INS was not a proper party to the claim against Sixt. The claim against Sixt concerned liability under Costa Rican tort and traffic law, whereas the proposed claim against INS was a subrogated contractual claim under Costa Rican insurance policies. The connection was insufficient.
5. Even if the gateway requirements had been met, Costa Rica was the natural and appropriate forum. The accident, relevant parties, policies, governing law, documents and most legal issues were connected with Costa Rica. The claims against INS involved novel and complex questions of Costa Rican law.
6. The claimants’ solicitors had culpably failed to disclose Brownlie v Four Seasons Holdings Inc when seeking a without-notice extension of time for service. The court would independently refuse to allow the claimants to obtain a forensic advantage from that non-disclosure.
7. The court invited further submissions concerning the consequential orders affecting Citi and the default judgments.