Kinsella & Anor v Emasan AG & Anor

On jurisdiction and summary judgment applications, the court must distinguish between claims requiring factual investigation and claims conclusively defeated by the documents. A claimant need show a plausible evidential basis for a jurisdictional gateway and, where possible, the better argument; unresolved factual issues may support a good arguable case. The merits threshold for service out is low and broadly equivalent to a real prospect of success. Summary judgment is inappropriate where a fuller investigation may affect the outcome, but the court should decide a short legal or construction point where the evidence is sufficient. Entire agreement clauses are construed in context and do not necessarily exclude prior rights concerning a subject matter not contemplated when the clause was agreed. A claim based on a clearly separate sale consideration could, however, be summarily dismissed where the contractual documents excluded it.

The claim concerned sums allegedly payable following the sale of the Interoute group. The claimants relied on an alleged 2002 agreement for undilutable interests, later option and share deeds, and 2018 deeds providing consideration for their shares and release of options. They also alleged misrepresentation, estoppel and collateral contractual obligations concerning preference shares and the sale consideration.

Emasan challenged the English court’s jurisdiction. The Foundation challenged jurisdiction on the merits threshold. Both defendants sought summary judgment, and the claimants sought permission to amend their particulars of claim. The central issues were whether the claims had a real prospect of success, whether the documents established jurisdiction, whether the claimed consideration fell within the 2018 deeds, and whether the proposed amendments were legally and evidentially viable.

1. Jurisdiction and merits. The court applied the three-limbed gateway test approved in Goldman Sachs International v Novo Banco SA [2018] 1 WLR 3683 and explained in Kaefer Aislamientos SA de CV v AMS Drilling Mexico SA de CV [2019] EWCA Civ 10. The claimants had a plausible evidential basis, the better argument on the available material, and a good arguable case for English jurisdiction in relation to their share entitlements.
2. The Foundation’s merits threshold was not high. The 2002 Agreement claims and misrepresentation claims were not fanciful and should proceed. The court accepted that the 2003 letters could constitute a sufficient memorandum under s.4 of the Statute of Frauds Act 1677.
3. Summary judgment. The court applied the principles in Easyair Ltd v Opal Telecom Ltd [2009] EWHC 339 (Ch). The entire agreement clauses had to be construed in context. They might replace rights concerning ordinary shares without permitting future dilution in a manner not contemplated when the deeds were executed. The factual background to the preference-share issue and the alleged assurances required investigation. Summary judgment was therefore refused on the 2002 Agreement and misrepresentation claims.
4. The Ordinary Share Total Consideration Claims had no realistic prospect of success insofar as they included bank debt and shareholder debt. The 2018 deeds and the sale documentation distinguished those payments from consideration paid for the issued A shares. Summary judgment was granted on that part of the claims.
5. Amendments and disclosure. Permission was granted for amendments concerning preference-share rights, continuing breach, estoppel and the 2018 deeds. The proposed variation claim concerning the 2006 and 2007 deeds was refused because no circumstances of agreement or variation were pleaded. The court found no sufficient defect in disclosure to discharge permission to serve out.