Satfinance Investment Ltd v Athena Art Finance Corp

Permission to serve a foreign defendant under the necessary or proper party gateway requires a real issue between the claimant and an anchor defendant which it is reasonable for the English court to try. The claimant must also establish the other gateway requirements, including that England is the proper forum.

An undefended claim will ordinarily fail this requirement. However, a claim for a declaration may qualify where the court must consider evidence and argument and a real issue remains, such as the extent of a beneficial interest. The relevant position is assessed when permission was granted. Later evidence may illuminate that position, but a later event cannot validate an earlier grant of permission. England was not clearly the appropriate forum where the substantial dispute was governed by foreign law and centred on a foreign defendant.

Satfinance Investment Ltd claimed ownership or an interest in a valuable painting and obtained, ex parte, permission to serve Athena Art Finance Corp, a foreign defendant, out of the jurisdiction. Permission was granted on the basis of the necessary or proper party gateway, with Mr Philbrick and Inigo Philbrick Ltd as anchor defendants.

Athena applied to set aside the permission and related orders. Chief Master Marsh held that the anchor defendants were not likely to defend the claim and that the gateway was not satisfied. He also considered that, if the gateway were satisfied, England would not be the proper forum. Satfinance appealed, relying additionally on the later joinder of Delahunty Ltd. The central issues were whether gateway 3 was satisfied and whether England was clearly the appropriate forum.

1. Appeal and evidence. The appeal was dismissed. The court admitted Athena’s further evidence under Civil Procedure Rules 1998 r 52.21(2)(b), applying the usual considerations of reasonable diligence, likely influence on the outcome and apparent credibility.
2. Relevant date. An application to set aside permission to serve out must be determined by reference to the position when permission was granted. Later evidence and events may be considered only insofar as they illuminate that earlier position. This followed the approach in Erste Group Bank AG v JSC 'VMZ Red October' [2015] EWCA Civ 379 and ISC Technologies v Guerin [1992] 2 Lloyd's Rep 430.
3. Gateway 3. The requirements identified in Lungowe v Vedanta Resources plc [2019] UKSC 20 applied. The court found, on the evidence, that Mr Philbrick and IPL probably did not intend to defend the proceedings. Applying the guidance in Brownlie v Four Seasons Holdings Inc [2018] 1 WLR 192 and Goldman Sachs International v Novo Banco SA [2018] 1 WLR 3683, that finding could reliably be made.
4. An undefended claim ordinarily does not provide a real issue which it is reasonable for the court to try. A claimant cannot create such an issue merely by choosing a trial on the merits instead of default judgment. A claim for a declaration is different where the declaration is a judicial act requiring evidence and argument. Here, the extent of Satfinance’s beneficial interest, potentially 50%, two-thirds or 100%, required determination. Satfinance therefore established gateway 3 on this limited basis.
5. Forum. The burden remained on Satfinance to show that England was clearly the appropriate forum. The substantial dispute with Athena was governed by New York law, was centred on Athena and was likely to require New York-based evidence. Avoiding parallel proceedings was not decisive. The arguments for New York were appreciably stronger, and England was not clearly the proper forum.
6. Delahunty. The later joinder of Delahunty on 19 May 2020 could not validate permission granted on 1 November 2019. It could support only a fresh application, to be assessed by reference to the later date and fresh evidence. Directions for that application would be given if Satfinance wished to pursue it.

1. High Court (Chancery Division), Morgan J: Appeal against the Chief Master’s order dismissed. Permission to serve Athena out of the jurisdiction remained set aside.
2. High Court (Chancery Division), Chief Master Marsh: On 2 June 2020, the Chief Master set aside Roth J’s ex parte order of 1 November 2019 permitting service out and set aside related orders. Permission to appeal was later granted by Mann J.