Satfinance Investment Ltd v Inigo Philbrick & Ors

Permission to serve a foreign defendant out of the jurisdiction under the necessary or proper party gateway requires a real issue to be tried against the anchor defendant, it being reasonable for the court to try that issue, a good arguable case that the foreign defendant is a necessary or proper party, and England being the proper forum.

On an application to set aside permission, the court assesses whether permission was rightly granted by reference to the circumstances then existing. Later events may illuminate those circumstances, but a change of circumstances alone cannot justify setting aside the order. Where it is clear that the anchor defendant will not contest the claim and there will be no trial of issues concerning that defendant, the gateway is not satisfied. A default-judgment hearing seeking declaratory relief is not a trial on the merits.

Satfinance Investment Ltd claimed declarations, injunctions and other relief concerning a Basquiat painting. It alleged that Inigo Philbrick and Inigo Philbrick Ltd had misrepresented the painting’s purchase price and that Athena Art Finance Corp had obtained an ineffective security interest in the painting under New York law.

Roth J granted permission to serve Athena out of the jurisdiction under CPR PD 6B para 3.1(3), relying on Philbrick and IPL as anchor defendants. Athena applied to set aside that order, arguing that there was no real issue to be tried against the anchor defendants and that England was not clearly the appropriate forum.

1. Application allowed. The order granting permission to serve Athena out of the jurisdiction was set aside.
2. The necessary or proper party gateway in CPR PD 6B para 3.1(3) requires the claimant to establish, in sequence: a real issue to be tried against the anchor defendant; that it is reasonable for the English court to try that issue; that the foreign defendant is a necessary or proper party; and that England is the proper forum, or that substantial justice would not be obtained in the alternative jurisdiction. The first two requirements concern only the anchor defendants and are prerequisites to the later stages.
3. On an application to set aside permission, the court does not rehear the application afresh. It asks objectively whether permission was rightly granted, assessing the circumstances existing when permission was granted. Subsequent evidence may be considered only insofar as it sheds light on those circumstances. A later change of circumstances, such as the anchor defendants’ failure to participate or an application for default judgment, is not itself a ground for setting aside permission.
4. In the unusual circumstances of this case, the subsequent evidence showed with reasonable certainty that, at the date of Roth J’s order, Philbrick had disappeared or was about to disappear and that neither he nor IPL would contest the claim. SIL therefore could not show that there would be a trial of a real issue concerning the anchor defendants. The gateway failed at its first stage.
5. A hearing of an application for default judgment, even where declaratory relief is sought and the foreign defendant may attend, is not a trial of the claim on the merits.
6. It was unnecessary to decide forum conveniens. The court nevertheless observed that New York had strong connections with the dispute, including the painting’s location, Athena’s New York base, the contractual choice of New York law and jurisdiction, and the residence of relevant witnesses. The need for a unitary English judgment was not decisive.

First-instance decision. The judgment records that Roth J had granted permission to serve Athena out of the jurisdiction on 1 November 2019. The order was set aside by the High Court (Chancery Division).