Bellmare Holdings Ltd v Wells

For jurisdiction under Article 5(3) of the Lugano Convention, the place of the harmful event depends on the particular cause of action and its legally relevant elements. In a claim for fraudulent or negligent misstatement, the originating event is the making or communication of the statement to the claimant, not the earlier drafting of a model document by another person.

A claimant must establish a good arguable case that the claim falls within the jurisdictional gateway. The exception to the general rule that a defendant is sued in the courts of domicile is interpreted strictly. One alleged participant’s conduct in a jurisdiction cannot ordinarily found Article 5(3) jurisdiction over another alleged participant who did not act there.

Bellmare Holdings Ltd, a British Virgin Islands company, claimed damages from David Wells for deceit, alternatively negligent misstatement, alleging that he made false representations in loan agreements under which Bellmare lent money to Dorry Holdings Ltd.

Wells was domiciled in Switzerland and had signed and sent the relevant agreements there. Bellmare relied on an earlier loan-note model drafted in London by another person and argued that its creation was the originating event for Article 5(3) of the Lugano Convention. Deputy Master Linwood dismissed Wells’s jurisdiction application. Wells appealed on the proper identification of the harmful event and on the relevance of another participant’s conduct in England.

1. Appeal allowed. The court had no jurisdiction under Article 5(3) of the Lugano Convention. The claim form was set aside.
2. The general rule under Article 2 is that a defendant is sued in the courts of the state of domicile. Article 5(3) is a derogation from that rule and must be strictly interpreted. The claimant bears the burden of showing a good arguable case, meaning more than a prima facie case but less than proof on the balance of probabilities.
3. The place of the harmful event is fact-specific. It must be identified by reference to the nature of the cause of action and the legal elements of the tort alleged. The claimant’s case was a direct allegation that Wells himself made particular false statements to Bellmare with the requisite state of mind. It was not a claim in conspiracy, vicarious liability or joint participation with another tortfeasor.
4. In a claim based on misstatement, the originating event is the making or communication of the alleged misstatement to the claimant. The drafting in London of a model loan agreement by another person was not part of Bellmare’s pleaded cause of action against Wells. The fact that Wells used elements of that model did not alter the location of his alleged tort, which was Switzerland.
5. The analogy with the prospectus in Kolassa v Barclays Bank plc and the newspaper article in Shevill v Presse Alliance SA was of limited value. Those cases concerned identical documents or different causes of action and did not govern a claim alleging that the defendant himself made a misstatement.
6. Even if the earlier drafting in London could be treated as an originating event, Melzer v MF Global UK Ltd prevented jurisdiction being founded in England over Wells on the basis of another alleged participant’s conduct there. The Deputy Master’s conclusion that the claim was potentially within Article 5(3) was therefore legally unavailable.

1. High Court (Chancery Division) — appeal from Deputy Master Linwood allowed. The court declared that it had no jurisdiction and ordered that the claim form be set aside.
2. Deputy Master Linwood — on 13 March 2019 dismissed the defendant’s application under CPR Part 11 for a declaration that the court had no jurisdiction.