La Micro Group (UK) Ltd & Anor v La Micro Group, Inc & Ors

Permission to serve proceedings out of the jurisdiction requires a serious issue to be tried, a good arguable case within a jurisdictional gateway, and England and Wales to be the proper place for the claim. A previous judgment does not bind a non-party on factual findings which were unnecessary to the earlier decision and did not determine the relevant issue. The court may permit a claim concerning an English trust of shares in an English company to proceed in England even where related proceedings are pending abroad, particularly where the English court is the natural forum for the applicable law and the declaration sought has practical utility. A claim involving a substantial factual dispute should proceed under Part 7 rather than Part 8.

The claim concerned the beneficial ownership of shares in an English company. The claimants contended that they owned the shares beneficially in equal proportions and that the first defendant, a Californian corporation, had no continuing interest. The first and second defendants challenged jurisdiction and sought to set aside permission to serve the claim in California.

The claimants relied heavily on an earlier decision in Frenkel v Lyampert [2017] EWHC 2223 (Ch). That decision had rejected the second defendant’s claim based on the 2004 arrangements, but the first defendant had not been a party. The central issues were whether the earlier judgment determined the effect of events in 2010, whether the claim disclosed a serious issue to be tried, whether England was the appropriate forum, whether the declarations sought had utility, and whether the claim should proceed under Part 7 or Part 8.

1. Jurisdiction and merits. Applying the three requirements summarised in Altimo Holdings and Investment Ltd v Kyrgyz Mobil Tel Ltd [2011] UKPC 7, the claimants failed to show that the earlier judgment was binding on LA Inc. The pleadings in the earlier proceedings did not raise whether LA Inc had lost its beneficial interest after 2010. The earlier findings about later events were therefore unnecessary to the decision and did not create cause of action estoppel or issue estoppel. Nor was it ordinarily abusive for a non-party to contest a factual issue which had not been necessary to the earlier result.
2. That conclusion did not defeat the merits gateway. Evidence that the second defendant had disavowed any interest in the company, that the first claimant relied on that representation, and that the parties thereafter acted as equal owners gave the estoppel and laches case a reasonable prospect of success. The court should not conduct a mini-trial on disputed documentary evidence. The real factual dispute made Part 8 inappropriate.
3. Forum. Applying Spiliada Maritime Corporation v Cansulex Ltd [1987] AC 460, England was clearly and distinctly the appropriate forum. The dispute concerned the beneficial ownership of shares in an English company and the continued existence of an English trust governed by English law. The Californian proceedings were related but did not presently determine the effect of the 2010 events, and fragmentation did not outweigh the strong connection with England.
4. The declarations had real utility. They would clarify the position of the English trustees and company and assist the Californian proceedings, even though they would not resolve every issue there. The applications disputing jurisdiction and seeking a stay or refusal to exercise jurisdiction were dismissed. The proceedings were directed to continue as a Part 7 claim.