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Jersey Unreported Judgments |
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You are here: BAILII >> Databases >> Jersey Unreported Judgments >> Monteagle International Limited and Anor v Grocery Market Research Limited and Ors [2022] JRC 216 (14 October 2022) URL: http://www.bailii.org/je/cases/UR/2022/2022_216.html Cite as: [2022] JRC 216 |
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Companies - application to set aside an order of the Master
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Before : |
Sir Michael Birt, Commissioner |
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Between |
(1) Monteagle International Limited Company 1 (2) Monteagle International (UK) Limited |
Plaintiffs |
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And |
(1) Grocery Market Research Limited (2) Anthony Dumas |
Defendants |
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And |
(1) Monteagle Consumer Group Limited (2) Marshall Monteagle Plc (3) Monteagle Merchant Group Southern Holdings 2 Limited |
Third Parties |
Advocate J. Harvey-Hills for the Plaintiffs.
Advocate M. L. A. Pallot for the Defendants.
Advocate P. O. J. Lewis for the First and Third Third Parties
judgment
the COMMISSIONER:
1. In these proceedings, the Plaintiffs have brought claims against the Defendants alleging breach of contract and misuse of confidential information for the purposes of the Defendants setting up a rival business. In their answer and counterclaim, the Defendants have, amongst other matters, asserted an ownership interest in the First Plaintiff and in other companies in the group of which the Plaintiffs form part.
2. By Act dated 17 February 2022, for the reasons set out in a judgment dated 28 February 2022, (Monteagle Int'l Ltd and Anor v Grovery Market Research Ltd and Anor [2022] JRC 051) the Master granted the Defendants' application to file an amended answer and counterclaim and to join the First to Third Third Parties to the amended answer and counterclaim and also gave leave to serve the First and Third Third Parties out of the jurisdiction (the Second Third Party being a Jersey company).
3. There are two summonses before me. The first is an appeal by the Plaintiffs against the Master's decision. They assert that he was wrong to join the First and Third Third Parties and wrong to allow service on them out of the jurisdiction. The second is a summons issued by the First and Third Third Parties seeking to set aside the decision of the Master giving leave to serve them outside the jurisdiction. No challenge is made to the decision to join the Second Third Party (being a Jersey company) and that company has played no part in the proceedings before me.
4. As can be seen, the two summonses raise the same issues. The conventional procedure when a party served outside the jurisdiction wishes to challenge that decision is for the party concerned to apply to set aside the order, which has of course invariably been made in that party's absence. On such an application, the Court considers the matter afresh and reaches a decision as to whether to maintain the original order or set it aside having had the benefit of adversarial argument from the non-resident party. It is less common for one of the other parties to appeal the original decision.
5. The two summonses have been heard together and I have treated them both as an application to set aside the Master's order. I have therefore considered the matter afresh in the light of the arguments addressed to me, although I have of course had the benefit of the Master's judgment, which was issued after adversarial argument, albeit by the Plaintiffs rather than the Third Parties.
6. The broad background can be summarised as follows.
7. The First Plaintiff ("MIL"), a company incorporated in Jersey, and the Second Plaintiff ("MUK"), a company incorporated in the United Kingdom, are both subsidiaries of the Second Third Party ("MM"), a company also incorporated in Jersey. The shares in MM are listed on the Johannesburg Stock Exchange. MM and its subsidiaries (together the "MM Group") are a large multi-jurisdictional group of companies which carry on business in (amongst other things) the trading of fast moving consumer goods ("FMCG"). MM and its subsidiaries are ultimately controlled by the Marshall family, of whom the two key members for present purposes are Warwick Marshall ("Warwick") and his father David Marshall ("David").
8. The Second Defendant ("Mr Dumas") is a South African resident and is presently the chief executive officer of the Omni Group ("Omni"). Omni is also engaged in the FMCG business and is a rival of the MM Group.
9. The First Defendant ("GMR") is incorporated in Jersey and is the ultimate owner of Omni. GMR is in turn owned by a Jersey discretionary trust established for the benefit of Mr Dumas and his family.
10. The First Third Party ("MCG") is a company incorporated in South Africa. The Third Third Party ("Southern 2"), also incorporated in South Africa, is MCG's immediate parent. Both companies form part of the MM Group with MM as the ultimate parent.
11. According to the Order of Justice, MUK is the entity which deals with FMCG trading where sales are in multiples of containers, whereas MCG is the entity that deals with South Africa/African FMCG trading, where products are not sourced in South Africa and sales are of less than one container of product, as well as being the entity which deals with trading within South Africa. MIL provides financing to both MUK and MCG. It owns and maintains the network of agents underpinning the FMCG trading and receives licence fees from MUK and MCG for the use of this network. It also provides the necessary financing to MUK and MCG for which it receives a percentage fee based on their sales together with interest at 6% per annum.
12. In circumstances described in more detail below, Mr Dumas began to work in the FMCG business of the MM Group in the 1990s. Subsequently he rose to become the chief operating officer of MIL and MCG and was effectively the sole person in the FMCG division with a senior decision-making and management role. An indication of his senior position can be seen from an email Warwick sent to Mr Dumas on 24 July 2018 in which Warwick said:
"You are my partner and COO of the FMCG business and this has not changed and I certainly have never seen you as being on the same level as any other person in the group. As my partner I have always seen you on the same level as myself and always will...."
13. In November 2017, Mr Dumas approached Warwick with the suggestion that the MM Group should acquire Omni, which was for sale. Although Omni also operated in the FMCG market, it apparently operated in markets in which MM did not operate and traded in product types which MM did not. After discussion, Warwick decided that MM would not acquire Omni. However, after further discussion, it was agreed that Mr Dumas, through GMR, should acquire Omni. Agreement to that effect was reached in about June 2018 and completion occurred on 1 November 2018.
14. Thereafter, relations between the parties deteriorated. The Defendants assert that this is because Warwick, David and the MM Group reneged on the agreement they had reached with Mr Dumas concerning his interest in the MM Group, but this is denied by the Plaintiffs. In any event, Mr Dumas resigned from his various directorial and management roles in the MM Group in February 2019 and since then has worked full-time at Omni. Following his resignation, various other staff members of the MM Group also resigned and followed Mr Dumas to Omni.
15. The litigation which has followed since then consists essentially, on the one hand, of allegations by the MM Group that Mr Dumas and GMR have acted in breach of their duties and have used confidential information of the MM Group for the benefit of Omni as a competitor and, on the other, allegations by Mr Dumas and GMR that the MM Group has failed to honour the agreement in respect of Mr Dumas' interests in the MM Group.
16. The Order of Justice is dated 9 December 2019. It asserts that Mr Dumas was remunerated for his work by way of a 28% net profit share in two divisions of two companies within the MM Group, namely a division of MIL (part of which was subsequently transferred to MUK so that Mr Dumas was thereafter entitled to a 28% profit share of both MIL and MUK in relation to that division) and a division of MCG.
17. The Plaintiffs assert that these arrangements were reflected in two agreements dated 25 February 2003.
(i) The first was between MIL (under its then name) and Mr Dumas ("the MIL DSA"). Warwick signed on behalf of MIL.
(ii) The second was between MCG and Mr Dumas ("the MCG DSA"). Warwick also signed on behalf of MCG.
18. On 4 February 2013, the terms of both these agreements were varied by two rectification agreements, namely the MIL Rectification Agreement in respect of MIL and the MCG Rectification Agreement in respect of MCG. David signed these agreements on behalf of MIL and MCG. The key amendment in the MIL Rectification Agreement was to provide that, from 6 September 2005, the parties to the MIL DSA were deemed for all purposes to be MIL and GMR rather than MIL and Mr Dumas. Thereafter the 28% profit share was paid to GMR.
19. The Order of Justice referred also to two other agreements. First, it stated that in about 2005 Mr Dumas and Warwick had agreed that Mr Dumas would leave some portion of his profit share entitlements in MIL and MCG respectively in the business by way of loans to MIL and MCG ("the Loan Accounts"). In about November 2012, MIL and GMR entered into an agreement ("the Loan Agreement") setting out the fact that, if repayment of the Loan Accounts were to be requested by GMR, the repayment date would be discussed and, in the absence of any other agreement, repayment would be made by MIL in twenty-four months.
20. The second agreement referred to was an agreement dated 4 February 2013 between MIL and GMR. The Order of Justice says that this was in respect of the provision of consultancy services by Mr Dumas (through GMR) to MIL ("the Consultancy Agreement").
21. The Plaintiffs allege that Mr Dumas and GMR owed duties to MIL and MUK both under the Consultancy Agreement and in equity. These included a duty not to disclose any secret or confidential information. The Order of Justice alleges that both Mr Dumas and GMR have acted in breach of their various duties by, inter alia, using confidential information for the purposes of furthering the business of Omni and soliciting employees within the MM Group to resign in order to take up employment with Omni. The Order of Justice claims damages by reference to the loss and damage suffered by MUK and MIL respectively. It is said that MUK has lost customers / product lines to Omni. This has in turn caused loss to MIL because MIL has lost the financing fees on sales and loan interest which it would otherwise have been able to charge both MUK and MCG to finance the purchase of goods which MUK and MCG have now lost to Omni. The Order of Justice states specifically that to the extent that the breaches have caused loss to MCG, these losses are being claimed in the context of proceedings in South Africa.
22. In their original answer and counterclaim dated 14 July 2020, the Defendants denied any liability to MIL or MUK. Importantly, for present purposes, they brought a counterclaim which they said should be set off against any liability (which was denied) in respect of the Plaintiffs' claims. In essence, the counterclaim alleged as follows:
(i) In 1993, a company called New Century Trading CC ("NCT") was incorporated in South Africa. It was owned equally by four individuals, of whom Mr Dumas was one. He therefore held a 25% interest in NCT which was also engaged in the FMCG market.
(ii) In about 1995, a joint venture agreement was entered into between the MM Group and NCT. MCG was incorporated in August 1995 and NCT held a 50% interest in MCG with the consequence that each owner of NCT effectively held a 12.5% interest in MCG.
(iii) In about 2001, two of the owners of NCT sold their 25% interest in NCT to the MM Group.
(iv) At the same time, it was agreed between Warwick and Mr Dumas that Mr Dumas would also relinquish his 25% shareholding in NCT in exchange for a 28% interest in MIL and MCG. Mr Dumas resigned as managing director of NCT in order to dedicate himself entirely to developing the business of MIL and MCG.
(v) The Defendants therefore claim that, from the date in 2001 when Mr Dumas relinquished his shares in NCT and resigned as managing director of NCT:
(a) Mr Dumas, alternatively subsequently GMR, were 28% shareholders in MIL and MCG;
(b) Alternatively, Mr Dumas or alternatively subsequently GMR, held equitable rights in MIL and MCG equating to those of a 28% shareholder;
(c) Alternatively, the holding company of MCG held a 28% shareholding, or equitable rights equivalent to a 28% shareholding, in MCG as nominee for Mr Dumas, alternatively subsequently GMR;
(d) Alternatively, the parent company of MIL held a 28% shareholding, or equitable rights equivalent to a 28% shareholding, in MIL as nominee for Mr Dumas, alternatively subsequently GMR.
The rights at (a)-(d) above were defined in the counterclaim as the 'Shareholding Interest'.
(vi) The counterclaim goes on to plead that Mr Dumas was informed by Warwick that it was preferable for tax and other reasons that Mr Dumas was not formally registered as a shareholder of MIL or MCG and that instead, various sub-agreements were entered into as a means of documenting payments to be paid to the Defendants and their interests in certain entities in the trading divisions. These agreements are:
(a) The MIL DSA and the MIL Rectification Agreement referred to above.
(b) The MCG DSA and the MCG Rectification Agreement referred to above.
(c) An agreement in December 2010 ("the Logistics Agreement") between MCG and Mr Dumas in respect of Monteagle Logistics Limited ("Monteagle Logistics") whereby:
(1) MCG would have a 50% interest in Monteagle Logistics;
(2) Mr Dumas was entitled to 28% of any dividends received by MCG from Monteagle Logistics;
(3) Mr Dumas was entitled to receive 28% of any amount received by MCG from the sale of its shares in Monteagle Logistics (less the acquisition cost paid by MCG);
(4) On termination of his employment or death, Mr Dumas (or his estate) was entitled to receive 28% of the value of the shares held by MCG in Monteagle Logistics.
The Logistics Agreement was expressly governed by the law of South Africa but there was no jurisdiction clause.
(d) An agreement dated 1 October 2014 between GMR and MIL in respect of Monteagle India ("the India DSA"). This provided that GMR was entitled to a 50% interest in both the division of MIL known as Monteagle India and an Indian company called Monteagle International (India) Pvt Limited ("the Indian Company"). There was no governing law clause nor any jurisdictional clause in that agreement.
(e) In about 2015, the Monteagle Minerals Division ("the Minerals Division") of the MM Group was formed. MIL has a 90% interest in the Minerals Division.
(f) MCG had a 50.1% interest in a South African company called Monteagle Africa Limited ("MAL"). MCG sold its shareholding in MAL to a third party on 3 October 2019 for a sum of US$11.8 million. Pursuant to the overriding agreement referred to above, alternatively pursuant to a separate agreement between the Defendants and MCG, Mr Dumas and/or GMR is entitled to 28% of the net proceeds received by MCG from the sale of MAL ("the MAL Agreement").
(vii) The Defendants' primary claim is for the Shareholding Interest as defined at (v) above. As an alternative, the Defendants claim what they describe as the 'Defendants' Interests' based upon the MIL DSA, the MCG DSA, the India DSA, the Logistics Agreement, the MAL Agreement and the agreement in place in respect of the Minerals Division. This claim is for a continuing and enduring interest and a continuing share in the profits of the following:
(a) The FMCG Division of MIL pursuant to the MIL DSA as amended by the MIL Rectification Agreement.
(b) The FMCG Division of MCG pursuant to the MCG DSA as amended by the MCG Rectification Agreement.
(c) 28% of MCG's interest in Monteagle Logistics pursuant to the Logistics Agreement.
(d) 28% of MIL's interest in the Minerals Division.
(e) A 50% interest in both the Indian Company and the profits of the Monteagle India Division pursuant to the India DSA; and
(f) 28% of the proceeds of the sale of MAL received by MCG.
23. In the prayer to the original answer and counterclaim, it was requested that MCG and MM should be joined as parties to the Defendants' counterclaim. The counterclaim also sought payment from MIL under the Loan Agreement of US$5.4m together with interest. The Defendants also sought declaratory relief confirming the Shareholding Interest (which covered both MIL and MCG) and the Defendants' Interests and payment of all outstanding amounts ("the Outstanding Amounts") under the Shareholding Interest and the Defendants' Interests. It was only in the amended answer and counterclaim that relief was specifically sought against MCG and Southern 2 as well as MIL and MUK, although the declaratory relief sought in the original answer and counterclaim as to the Shareholding Interest included the alleged 28% interest in MCG as well as MIL.
24. These proceedings have been before the Master on a number of occasions although it is not necessary to recount these in detail. Suffice it to say that the Plaintiffs filed a summons on 23 September 2020 seeking further information in relation to the answer and counterclaim. The Master found the majority of these requests to be unnecessary and disproportionate.
25. On 19 March 2021, the Defendants filed a summons seeking summary judgment against MIL on the claim under the Loan Agreement in the sum of US$5.4m. Proceedings were then stayed from 26 April 2021 to 16 June 2021 for mediation, but this was unsuccessful. Following a hearing on 28 July 2021, the Master gave a judgment on 20 October 2021 (Monteagle International Limited and Anor v Grocery Market Research Limited and Anor [2021] JRC 260). There was no dispute that the sum of US$4.7m was due to the Defendants under the Loan Agreement, but the Master held that the sum should continue to be held in the account of the Plaintiffs' Jersey advocates on the basis that any liability of the Defendants to the Plaintiffs under the Order of Justice (if proved) could be set off against the amount due under the Loan Agreement and that accordingly release of such monies should only occur following trial.
26. Subsequently, the Defendants issued their summons seeking to join MCG, MM and Southern 2 to the counterclaim. Although the Defendants had indicated in their original answer and counterclaim that they intended to seek to join MCG and an entity referred to as Monteagle Merchant Group Limited ("MMGL"), they understood at that time that MCG was owned by MIL and that MIL was owned by MMGL. However, it transpired subsequently that MIL was owned by MM and MCG was owned by Southern 2. Accordingly, the summons as amended on 22 October 2021 and as subsequently re-amended on 8 December 2021 sought to join Southern 2 and MM (as the respective owners of MCG and MIL) as well as MCG. It was in response to that summons that the Master issued his judgment of 28 February 2022 referred to above.
27. On 15 May 2019, MCG instituted proceedings in the High Court of South Africa against three individuals who had left their former employment with MCG to take up positions at Omni. The proceedings alleged that the individuals were in breach of certain restraint of trade clauses in their contracts of employment with MCG. One of the Omni companies was also a defendant.
28. In a judgment dated 3 October 2019, the court injuncted the employees from continuing in their employment with Omni for a period of nine months from the date of their departure from MCG and also ordered two of them to deliver up their laptops to permit an expert to analyse the hard drives for confidential or proprietary information belonging to MCG.
29. The judge was critical in passing of Mr Dumas and found that he had acted to solicit and divert customers and suppliers away from MCG. Advocate Pallot pointed out that Mr Dumas was not a party to those proceedings and had not given any evidence. In response, Advocate Harvey-Hills pointed out that one of the Omni companies was a party to the proceedings and Mr Dumas could easily have provided evidence had he wished to do so. Furthermore, the laptops were wiped of information by two of the employees in order to frustrate the court's order.
30. In all the circumstances, I do not consider that I can draw much assistance from these employment proceedings in South Africa.
31. However, there are also proceedings in South Africa between some of the parties to the present proceedings. On 27 August 2019 (i.e. prior to the commencement of any proceedings in Jersey), Mr Dumas issued proceedings against MCG and Monteagle Logistics in the Regional Court of Kwazulu, Natal, seeking payment of 350,000 SA Rand (approximately £17,500) in respect of his 28% share of a dividend payment received by MCG from Monteagle Logistics.
32. On 18 December 2019, MCG issued a claim in reconvention (counterclaim) against Mr Dumas in those proceedings which exceeded the jurisdiction of the Regional Court. As a result, the proceedings were transferred to the High Court of South Africa and recommenced, with MCG as plaintiff. MCG issued its claim in the High Court on 8 June 2020 seeking damages equivalent to approximately £2,500,000 for breach of fiduciary duty and misuse of confidential information. Mr Dumas has filed a claim in reconvention (counterclaim) for 28% of a dividend received by MCG from Monteagle Logistics as well as payment of the value of 28% of MCG's shareholding in Monteagle Logistics.
33. Pleadings have closed in the South African proceedings and Mr Dumas has sought a stay of those proceedings pending the outcome of the Jersey proceedings on the basis of the substantial overlap between the claims made in the two sets of proceedings and the fact that the proceedings for the breach of confidence claims in Jersey were commenced prior to MCG filing its counterclaim alleging similar breaches in the South African proceedings. That issue remains to be determined.
34. After the hearing, but before I circulated any draft judgment, I was informed by Advocate Lewis that Mr Dumas had instituted proceedings in the South African High Court on 31 August 2022 against MCG and Southern 2 ("the New Proceedings"). In those proceedings Mr Dumas seeks relief against MCG and Southern 2 as follows:
(i) a declaration that Mr Dumas is a 28% shareholder of MCG and correction of the register of shareholders in MCG;
(ii) payment by MCG and Southern 2 of dividends and/or profit share due which arises from Mr Dumas' 28% alleged shareholding in MCG, alternatively a 28% profit share; and
(iii) payment by MCG and Southern 2 of 28% of the proceeds of sale of MCG's interest in MAL.
35. Following receipt of the letter from Advocate Lewis, I gave directions on the filing of further submissions. Advocate Pallot emphasised that the New Proceedings had been issued only as a protective measure in case the present application for joinder should be refused by me. Thus, paras 53 and 54 of the summons commencing the New Proceedings state as follows:
"53. The plaintiff institutes this action against the first and second defendants for the purposes of avoiding prescription and otherwise securing his ability to pursue his claims as against the first and second defendants in South Africa, should the application to join the first and second defendants as parties to the Jersey action be finalised on the basis that joinder is refused.
54. The plaintiff avers in this regard that it would be in the parties' interests that proceedings in this action accordingly be stayed pending the finalisation of the application to join the first and the second defendants as parties to the Jersey action."
36. There have also been proceedings in England. On 15 May 2019, MUK instituted proceedings against Bridgette Baker, a former employee of MUK, who left her position within the MM Group in order to take up a position at Omni. According to Advocate Pallot, MUK claimed the same losses against Ms Baker in the English proceedings as are currently being claimed against the Defendants by MUK in the present proceedings. The English proceedings were settled without any admission of liability on the part of Ms Baker or any other party.
37. The approach of the Court on applications to serve proceedings out of the jurisdiction is well-established and was authoritatively confirmed by the Court of Appeal in Maywal Limited v Nautech Services Limited [2014] (2) JLR 527 at [23]. In order to grant leave, the Court must be satisfied of the following three matters:
(i) that there is a good arguable case that the claim meets the requirements of at least one of the permissible gateways set out in the Schedule to the Service of Process Rules 2019 ("the 2019 Rules");
(ii) that, on the merits of the claim, there is a serious issue to be tried; and
(iii) that Jersey is the suitable forum for the trial of the claim.
38. With reference to the meaning of 'good arguable case' for the purposes of determining whether requirement (i) above is satisfied, the Court of Appeal in Maywal referred to the observation of Lord Collins in the Privy Council in AK Investment CJSC v Kyrgyz Mobil Tel Limited [2012] 1 WLR 1804 at [71], where he approved the observation of Waller LJ in Canada Trust Co v Stolzenberg (No 2) [1998] 1 WLR 547 at [555], to the effect that the expression connotes 'that one side has a much better argument on the material available'.
39. However, since the decision in AK Investment, the UK Supreme Court has revisited what is meant by the expression 'good arguable case' and has discouraged the use of the word 'much'. With the agreement of Morrison and Moses JJA, I endeavoured to summarise the present position in the Cayman Islands Court of Appeal in the case of the Scully Royalty Limited v Raiffeisen Bank International AG (CICA) (Civil) Appeal No 21 of 2020, 30 December 2021 at [48] - [52] in the following terms:
40. The Privy Council refused leave to appeal against the decision of the Cayman Islands Court of Appeal in Essar Global Fund, which is mentioned at [51] of the above extract. As a result, I regard it as reasonable to assume that the Privy Council was content with the use of Mustill J's observation in The Niedersachsen as a suitable description of what is meant by 'good arguable case'.
41. Although it is always a little embarrassing to refer to a judgment of one's own in support, I consider that the above summary is equally applicable under Jersey law.
42. With that introduction, I turn to consider each of the above three issues in turn.
43. Pursuant to Rule 3 of the 2019 Rules, a plaintiff must bring himself within one of the gateways specified in the Schedule to the 2019 Rules if he wishes to obtain leave to serve proceedings out of the jurisdiction. In this case, it is the Defendants GMR and Mr Dumas who wish to obtain leave and are deemed to be plaintiffs for these purposes as they are bringing a counterclaim.
44. The paragraph of the Schedule relied upon in this case is paragraph 1(3) which is in the following terms:
"1. General Grounds
......
(3) A claim is made against a person ("the defendant") on whom the Summons has been or will be served (otherwise than in reliance on this paragraph) and:
(a) there is between the plaintiff and the defendant a real issue which it is reasonable for the Court to try; and
(b) the plaintiff wishes to serve the Summons on another person who is a necessary or proper party to that claim."
45. Applying the wording of para 1(3) to the present case, it is not disputed that GMR/Mr Dumas have a claim (in the counterclaim) against MIL and that there is an issue between them and MIL which it is reasonable for the Court to try. The real question therefore is whether MCG and Southern 2 are necessary or proper parties to that claim in accordance with paragraph 1(3)(b).
46. Furthermore, it is common ground that, as held by the Master at [75], MCG and Southern 2 are not necessary parties to the Defendants' claim against MIL, in that it is possible to determine the Defendants' claim against MIL (and MM) without determining the claim against MCG (and Southern 2). The issue therefore is whether they are proper parties to the claim.
47. Guidance as to the circumstances in which a party is a proper party to a claim against an anchor defendant is to be found in the decision of the Privy Council in AK Investment (supra) which was concerned with the Isle of Man equivalent of paragraph 1(3). I would quote the following passages from the judgment of the Board delivered by Lord Collins:
48. Lord Collins went on to give guidance as to when D2 would be a proper party in the following terms at [87]:
49. Helpful guidance is also to be found in the judgment of Andrews J in Gunn v Diaz [2017] EWHC 157 (QB) at [86] which is based largely on the observations of Lord Collins in AK Investment. Thus at [86(ix)] she said (omitting references):
50. It follows that, when determining whether a party sought to be served out of the jurisdiction pursuant to paragraph 1(3) of the Schedule is a 'proper' party to the claim against the anchor defendant, the Court must consider whether the party would be joined as a proper party if all the parties had been resident within the jurisdiction.
51. One must therefore have regard to the terms of Rule 6/36 of the Royal Court Rules 2004 ("the 2004 Rules"), the relevant parts of which are in the following terms:
52. As already stated, there is no suggestion that it is necessary to join MCG and Southern 2 so as to fall within (b)(i) of Rule 6/36. What is said by the Defendants is that (b)(ii) applies; thus it is said that the question or issue of whether there was an overall agreement between Warwick and Mr Dumas in 2001 to the effect that Mr Dumas would have a 28% interest in both MIL and MCG is one which arises 'out of or relating to or connected with' the claim to a 28% interest in MIL as contained in the existing counterclaim and that it would be just and convenient to determine that issue as between the Defendants and MCG (and Southern 2 as MCG's shareholder) as well as between the Defendants and MIL (and MM as MIL's shareholder).
53. Advocate Harvey-Hills, supported by Advocate Lewis, submitted that, despite the apparently wide wording of (b)(ii), there is binding authority at Court of Appeal level to the effect that a party may only be joined under this provision if the party is both a necessary and a proper party to the claim. The decision upon which he relies is Re The Bastiaan Broere Trust and Cornelis Broere Trust [2003] JLR 509.
54. The circumstances of that case were that the applicant was a beneficiary of the BB Trust but not of the CB Trust. The trustees of the BB Trust and the CB Trust were the same. The applicant brought proceedings against the BB trustees complaining of a number of matters. He joined the CB trustees to the proceedings on the basis that the BB Trust and the CB Trust together owned almost all of a company and he wished certain action to be taken in respect of that company.
55. The CB trustees applied to be discharged on the basis that they were not properly joined. The case raised issues as to whether the CB trustees could be properly joined pursuant to Article 47 of the Trusts (Jersey) Law 1984 ("the Trusts Law") and also whether they were properly joined under Rule 6/29(b) of the Royal Court Rules 1992 (which was in identical terms to Rule 6/36(b) of the 2004 Rules).
56. Advocate Harvey-Hills submitted that, in her judgment, Gloster JA, had held that, whether considering the matter under (b)(i) or (b)(ii) of Rule 6/29, a plaintiff had to show that the party sought to be joined was a proper and necessary party. He relied in particular on [35] of her judgment where she said:
57. I cannot accept this submission for the following reasons:
(i) I accept that in the passage quoted from [35], Gloster JA referred to it being proper and necessary. However, she made that observation by reference to Re Abacus (CI) Limited [2000] JLR 165. That was a case where an issue arose as to whether a company should be convened to a representation by trustees seeking directions under Article 47 of the Trusts Law. It is clear from the judgment of Bailhache, Bailiff, at 168 that he was only considering (b)(i) of Rule 6/29 of the Royal Court Rules together with the inherent jurisdiction of the Court. There is no mention in his judgment of any consideration being given to (b)(ii) of Rule 6/29.
(ii) In [34] of her judgment in Bastiaan Broere, Gloster JA stated expressly that the applicant needed to show either that it was necessary to join the CB trustees under (b)(i) or that the case fell within (b)(ii) so as to be just and convenient to determine an issue as between the applicant and the CB trustees as well as between the applicant and the BB trustees. That paragraph is wholly inconsistent with an assertion that both (b)(i) and (b)(ii) would require it to be proper and necessary to join the relevant party.
(iii) In other parts of her judgment, Gloster JA invariably refers to 'necessary or proper', rather than 'necessary and proper'; see later in [35] and [40]. Apart from [33], where she is referring to the argument by the advocate for the applicant that the CB trustees are necessary and proper parties, it is only in the sentence quoted above from [35] that she refers to joinder being 'proper and necessary'.
(iv) Her conclusion is stated very clearly at [20(c)] where she said:
(v) When she comes to give her overall conclusion in [41], she makes it clear that, consistently with what she said at [20(c)] and [34], the tests in (b)(i) and (b)(ii) are alternative. Thus she said:
(vi) It is inconceivable that, by a single reference to 'proper and necessary' in [35], the Court of Appeal was seeking to depart from the clear wording of Rule 6/29(b) (now Rule 6/36(b)). The wording could not be clearer. There are two alternative routes to joinder. Under (b)(i), joinder has to be 'necessary' whereas under (b)(ii), there simply has to be a question or issue arising out of, or related to or in connection with the relief or remedy claimed which the Court considers it would be just and convenient to determine as between the party to be joined as well as between the existing parties. There is no mention in (b)(ii) of the word 'necessary' or 'proper' and it is not open to any court to ignore the clear wording of (b)(ii) as an alternative to (b)(i).
58. For these reasons, I conclude that Rule 6/36(b)(ii) means what it says and that the decision in Bastiaan Broere did not establish that joinder in a domestic context could only be permitted if it was both proper and necessary for the party to be joined.
59. The Court must therefore consider the circumstances in which (b)(ii) applies. As established in Massey and confirmed more recently in, for example, AK Holdings and Gunn v Diaz, a party may be joined as a proper party in an entirely domestic context if the claims against the original defendant and against the party sought to be joined involve one investigation or are 'closely bound up' or there is sufficient 'common thread' between them.
60. If the requirements of Rule 6/36(b)(i) or (ii) are satisfied (so that the party could properly be joined if it was resident in the jurisdiction), that will be sufficient to establish that it is also a 'proper' party for the purposes of paragraph 1(3) of the Schedule in circumstances where the party to be joined is resident outside the jurisdiction; see Lord Collins at [87] of AK Holdings quoted at para 48 above.
61. I turn therefore to consider the application of these principles to the case at hand; in other words do the claims against MCG (and Southern 2 as shareholder of MCG) and the claims against MIL (and MM as its shareholder) involve one investigation or, put another way, are the claims 'closely bound up' or is there a sufficient 'common thread' between them, all these expressions being different ways of describing the same underlying principle.
62. Advocate Harvey-Hills and Advocate Lewis submitted that these criteria were not satisfied in the present case and that accordingly, if this were an entirely domestic case, MCG and Southern 2 would not be proper parties to join under Rule 6/36(b)(ii). They relied, inter alia, upon the following points:
(i) The claims were entirely different. One involved a claim to a shareholding (or equivalent) of a Jersey company (MIL) and the other involved a similar claim to a South African company (MCG). A decision could quite satisfactorily be reached in relation to the MIL claim without any consideration of the claim against MCG. It was simply not necessary to consider the position in respect of MCG in order to determine the MIL claim.
(ii) The separate nature of the two claims was confirmed by the existence of the various separate agreements. Thus the MCG DSA was between MCG and Mr Dumas, whereas the MIL DSA was between MIL and Mr Dumas/GMR. In relation to the governing law, although there was no express governing law of either agreement, the MCG DSA was almost certainly governed by South African law as both parties were resident there and the agreement related to a South African company. Furthermore, the MCG Rectification Agreement was expressly governed by South African law. Conversely, the MIL DSA, where there was also no express governing law clause, involved a claim to a shareholding or interest in a Jersey company and the MIL Rectification Agreement contained an express choice of English law as the governing law. So far as jurisdiction was concerned, both original DSAs were silent, but the MCG Rectification Agreement expressly conferred non-exclusive jurisdiction on the courts of South Africa, whereas the MIL Rectification Agreement expressly conferred non-exclusive jurisdiction on the courts of England and Wales.
(iii) In summary therefore, the important agreements were between different parties, involved different companies, were governed by different systems of law and conferred jurisdiction on different courts.
(iv) The alternative claims by the Defendants (summarised at para 22(vii) above) involved consideration not only of the two DSAs and Rectification Agreements, but also the Logistics Agreement and the MAL Agreement. These did not involve MIL and accordingly there was no single investigation to be carried out in this regard.
(v) The difference in governing law was important in this case. Given that it was common ground that neither Mr Dumas nor GMR was actually registered as a shareholder in the records of MCG or MIL, the alternative claims of equitable rights equating to a 28% shareholding (see para 22(v)(b) and (c) above) raised novel questions of whether such an interest could exist and be enforced. Even if Jersey law were willing to recognise such an interest in respect of MIL, that would say nothing about whether the law of South Africa would recognise such an interest in respect of MCG, the roots of Jersey law and South African law being very different.
63. I have carefully considered these arguments, but I agree with the Master that, if this were an entirely domestic situation, MCG and Southern 2 would be proper parties to join under Rule 6/36(b)(ii) on the basis that there will essentially be one investigation. There is a common thread in respect of the claims such that they are closely bound up.
64. That is because one has to have regard to what is claimed by the Defendants. The counterclaim, supported by the evidence on affidavit of Mr Dumas, alleges that there was one overarching oral agreement between Mr Dumas and Warwick in 2001 when it was agreed that Mr Dumas would have a 28% interest in both MIL and MCG. Although it is pleaded that aspects of this agreement were then reflected in the various different written agreements, the claim remains of one agreement which covered both companies. I appreciate of course that this is denied by the Plaintiffs and the Third Parties but, in order to decide the issue in respect of MIL, it will be necessary to decide whether there was indeed this overall agreement as alleged by the Defendants. A decision as to whether there was such an agreement in respect of MIL would also determine whether there was such an agreement in respect of MCG and vice-versa.
65. Advocate Harvey-Hills and Advocate Lewis submitted that Warwick was not authorised to act for the then shareholders in MIL and/or MCG, but this goes to the strength of the case and whether the position of Warwick, as one of the ultimate controlling shareholders of the MM Group, was sufficient to allow him to enter into the alleged agreement on behalf of the relevant shareholder. The Plaintiffs' own pleading asserts at paragraph 5 of the Order of Justice that MM and its subsidiaries are ultimately controlled by the Marshall family and this will be a matter for evidence in due course.
66. On the basis of the material before me, there will be one investigation as to whether Warwick and Mr Dumas did or did not reach the overarching agreement relating to both MIL and MCG as pleaded by the Defendants. Furthermore, it seems probable that, if there was only one agreement, there will only be one governing law of such an agreement, which will have to be determined. Applying the alternative expressions used by Lord Collins, the claims in respect of MIL and MCG have a common thread and are closely bound up.
67. I appreciate that there are a number of written agreements between different parties governed by different laws but, on the Defendants' case, these are merely sub-agreements made to give effect to or illustrate specific aspects of the overall agreement.
68. For these reasons, I conclude that, if MCG and Southern 2 were resident within the jurisdiction they would be properly joined as defendants to the counterclaim pursuant to Rule 6/36(b)(ii). That being the case, it follows from the authorities such as AK Investments referred to earlier that they are also 'proper' parties for the purposes of paragraph 1(3) of the Schedule.
69. Accordingly, I find that there is a good arguable case that the requirements of the relevant gateway, namely that contained in paragraph 1(3) of the Schedule, are satisfied.
70. Advocate Harvey-Hills and Advocate Lewis referred to the differences in language between the MCG and MIL DSAs and the suggestion of a Shareholding Interest comprising a 28% interest in MCG and MIL or an equitable interest equivalent to such an interest. However, all their submissions were directed towards issues (i) and (iii) set out in para 37 above, namely whether there was a good arguable case that the gateway at paragraph 1(3) of the Schedule was satisfied and whether Jersey was the suitable forum. Although there was no formal concession that requirement (ii) was satisfied, no submissions were made that it was not.
71. On the basis of the material before me, including the affidavit evidence from Mr Dumas and Warwick, I am satisfied that there is a serious issue to be tried as to whether Mr Dumas has the Shareholding Interest in MCG as he alleges.
72. It is not sufficient to establish that there is a good arguable case that one of the jurisdictional gateways is satisfied so that the Court can properly assume jurisdiction. The Court must go on to consider whether Jersey is the appropriate forum in which the relevant claim should be adjudicated upon.
73. The leading statement of principle in relation to the question of forum is to be found in the well known speech of Lord Goff in Spiliada Maritime Corporation v Cansulex Limited [1987] 1 AC 460. Lord Goff made clear that the court is concerned to establish which is the appropriate forum for the trial of the action i.e. that in which the case may be tried most suitably in the interests of all the parties and the ends of justice. Lord Goff also approved of the expression 'the natural forum' as being that with which the action had the most real and substantial connection. Thus, one is looking for connecting factors which would include matters such as convenience or expense (such as availability of witnesses); the law governing the relevant transactions; and the places where the parties respectively reside or carry on business.
74. A more recent elaboration of some of the relevant factors is to be found in the judgment of the UK Supreme Court in Vedanta Resources Plc v Lungowe [2019] UKSC 20 where, in a judgment agreed by the other members of the court, Lord Briggs said at [66]:
75. Where, as in this case, a party is seeking leave to serve proceedings on another party which is out of the jurisdiction (i.e. so that service is not as of right), Lord Goff made clear at 481 that the burden lies on the party seeking leave to show that Jersey is clearly the appropriate forum for the trial of the action. Thus, in this case, the burden lies upon the Defendants to show that Jersey is clearly the appropriate forum rather than South Africa. That is reflected in Rule 4(6) of the 2019 Rules which provides that the court will not give permission to serve out of the jurisdiction unless satisfied that Jersey is the proper place in which to bring the claim.
76. As explained by Lord Collins in AK Investment in the passage quoted at para 47 above, the 'necessary or proper party' head of jurisdiction is anomalous in that it is the only gateway which is not founded on some connection between the jurisdiction of the Jersey courts and the subject matter of the claim against the non-resident party. Thus, he quoted with approval the observation that caution should be observed in exercising the jurisdiction conferred by the gateway and that it should never become the practice to bring foreign defendants before the court as a matter of course on the ground that the only alternative required more than one suit in more than one different jurisdiction.
77. The protection against it becoming a matter of course lies in the principle discussed above, namely that a party outside the jurisdiction will only be a proper party to proceedings against an anchor defendant if the claims against the anchor defendant and the party outside the jurisdiction involve one investigation or have a common thread and are closely bound up.
78. Once the Court is satisfied that the requirements of this gateway have been met, the question of the desirability of having all matters decided in one jurisdiction is a relevant factor. Thus, in the decision of the Supreme Court in Vedanta Resources, Lord Briggs summarised the position as follows at [68]-[69]:
79. Lord Briggs then referred to earlier cases where, in circumstances where the court has found that in practice the plaintiffs would in any event continue against the anchor defendant in England, the avoidance of irreconcilable judgments had been found to be decisive in favour of England as the proper forum, even in cases where the connecting factors appeared to favour a foreign jurisdiction. He went on to say at [84] that the risk of irreconcilable judgments should not be regarded as a trump card in favour of England although it was a relevant factor.
80. When the matter was before the Master, there was no suggestion that the claims of the Defendants against MCG and Southern 2 might be prescribed under the law of South Africa. Since then, Mr Mullins SC has sworn an affidavit in which he suggests that it is arguable that the claims became prescribed in January 2022. Advocate Lewis therefore submits that this is a strong factor pointing against Jersey being the suitable forum as it would deprive MCG and Southern 2 of the possibility of running the prescription argument under South African law. He referred to Lord Goff's observation in Spiliada at 483 where, having discussed the significance of a time bar in the foreign jurisdiction, he said:
81. That approach was followed in this jurisdiction by the Court of Appeal in Wright v Rockway Limited [1994] JLR 321 where, having quoted the above words of Lord Goff, the Court concluded that, on the facts, the plaintiff had not acted unreasonably in failing to institute proceedings in Thailand within the relevant limitation period of the law of Thailand and upheld the Bailiff's decision that Jersey was the appropriate forum for the claims against non-resident parties where leave to serve outside the jurisdiction had been given under the equivalent gateway to paragraph 1(3) of the Schedule.
82. Finally, it is worth reminding oneself of the limited nature of the exercise which the Court undertakes when carrying out the evaluative task of considering the appropriate forum. As Lord Templeman said in Spiliada at 465:
83. This sentiment was echoed in VTB Capital Plc v Nutriteek International Corporation [2013] 2 AC 337, where Lord Neuberger, whilst accepting that Lord Templeman's observation was perhaps rather optimistic, nevertheless emphasised the limited nature of the role undertaken by the court when he said at [83]:
84. I am not sure that the parties or the Court have been entirely successful in following Lord Templeman's advice in this case. The papers before the Court consisted of eight IXL files, the hearing took two days and this judgment has become much longer than I would wish. Nevertheless, it is important to recall the limited nature of the exercise which the Court can undertake at this stage.
85. Advocate Lewis and Advocate Harvey-Hills made detailed submissions to the effect that Jersey was not clearly the appropriate forum; on the contrary, the courts of South Africa were the appropriate forum. I have carefully considered their very detailed submissions and would summarise their main arguments in outline as follows:
(i) The original counterclaim made no claim against MCG or Southern 2; it only made a claim in respect of a shareholding in MIL.
(ii) The claim introduced by the amended counterclaim was a claim to a shareholding in a South African company (MCG) by a South African resident (Mr Dumas). It had nothing to do with Jersey. If it stood alone, South Africa would clearly be the only appropriate forum.
(iii) All the witnesses were likely to have to come from South Africa as all the relevant events took place in South Africa. Similarly, documents in relation to MCG were likely to be situated in South Africa. Furthermore, the alleged wrong - the failure to recognise Mr Dumas' 28% interest in MCG - took place in South Africa.
(iv) The alleged overarching oral agreement in relation to both MCG and MIL was likely to be governed by South African law as both Warwick and Mr Dumas were residents of South Africa at the relevant time and the agreement related to an interest in a business primarily carried on in South Africa.
(v) As to the various agreements referred to above:
(a) The MCG DSA was silent as to its governing law, but it was likely to be governed by South African law as it was between a South African resident (Mr Dumas) and a South African company (MCG). The MCG Rectification Agreement was expressly governed by South African law.
(b) The Logistics Agreement was expressly governed by South African law.
(c) The MAL Agreement was likely to be governed by South African law as it related to a South African company.
(vi) The question of the governing law was particularly significant in this case as the Defendants' claim raised novel issues as to whether one can have an equitable interest equating to a 28% shareholding under South African law. Novel issues were much better dealt with by the courts of the relevant jurisdiction rather than by a foreign court hearing expert legal evidence.
(vii) The MCG Rectification Agreement contained an express submission (in ambiguous terms but probably non-exclusive) to the courts of South Africa.
(viii) There were existing South African proceedings whereby MCG claimed against Mr Dumas for misuse of confidential information and Mr Dumas counterclaimed for payments pursuant to the Logistics Agreement (which he was also claiming in Jersey). Furthermore, in the New Proceedings, Mr Dumas had now brought an identical claim to that which he wished to bring in Jersey in relation to his alleged 28% interest in MCG. There would thus be a complete duplication in South Africa and in Jersey if the Court did not set aside the Master's decision.
(ix) Enforcement was an important consideration when deciding forum - see Inter-Tel Inc v OCIS Plc [2004] EWHC 2269 (QB) at [25]. Any judgment of this Court in respect of the claim concerning MCG would require enforcement in South Africa where MCG was incorporated and where its share register was situated. Even if MCG and Southern 2 were now to be joined to the Jersey proceedings, any judgment of this Court could only be enforced in South Africa if they chose to participate in the Jersey proceedings and thereby to submit to the jurisdiction of the Jersey court. Advocate Lewis asserted that this was unlikely and that accordingly the Jersey proceedings in respect of MCG would be a waste of time.
(x) It is well-established that questions of prescription are procedural matters which are governed by the lex fori - see Pell Frischmann Engineering Limited v Bow Valley Iran Limited [2007] JRC 105A at [430]-[431]. Under South African law, MCG and Southern 2 had an arguable case that Mr Dumas' claim to a shareholding in MCG was time barred and that they would not be able to run that argument if the matter was litigated in Jersey. They would therefore suffer material prejudice if the matter was litigated in Jersey rather than South Africa.
(xi) The arguments against Jersey being clearly the most suitable forum had become even stronger since the hearing because Mr Dumas (but not GMR) had now instituted the New Proceedings in South Africa claiming a 28% interest in MCG. Thus, there were now proceedings in the correct jurisdiction (South Africa) where the issue could be resolved. It was noted that there was no claim to an equitable interest in the New Proceedings equivalent to the claim in the amended counterclaim in this jurisdiction, but that was a matter of choice for Mr Dumas and perhaps reflected the fact that the claim to an equitable interest equating to a 28% shareholding was a hopeless claim under South African law.
86. I would summarise Advocate Pallot's submissions in response as follows:
(i) Litigating in two jurisdictions (three if one counted the proceedings in England) was part of the MM Group's strategy of putting pressure on the Defendants. There was an inequality of arms. The MM Group was a well funded group with a very substantial business; for example it was willing to instruct two different advocates in the firm of Mourant, Advocate Harvey-Hills for MIL and MUK (and MM) and Mr Lewis for MCG and Southern 2.
(ii) Conversely, the Defendants' main asset to enable them to fund the litigation was the admitted debt of US$4.7m owed by MIL to GMR pursuant to the Loan Agreement. Yet MIL had refused to pay this sum even though admitting that it is due and had persuaded the Master that it should remain in hand as a possible equitable set off against any successful claim by MIL in due course. The Defendants had therefore been denied access to their main source of funds. It was the MM Group's strategy to continue litigating in two jurisdictions thereby increasing the financial pressure upon the Defendants.
(iii) This strategy of the MM Group was indicated by the fact that, when the Master - as described at [107]-[115] of his judgment - invited the parties to agree that the matters in dispute between them should be heard entirely in South Africa, the Plaintiffs did not give him a straightforward answer.
(iv) It was the MM Group's decision to institute proceedings in Jersey. Thus MIL and MUK issued their Order of Justice for breach of confidence against the Defendants on 9 December 2019. Yet, only ten days later, MCG filed a counterclaim in South Africa raising a breach of confidence claim against Mr Dumas based on the same allegations. As the Plaintiffs' own expert witness, Mr Mullins SC, agreed, the evidence to be relied upon in MIL's and MUK's breach of confidence claim in Jersey and MCG's breach of confidence claim in South Africa was similar. The breach of confidence claim by MIL and MUK could have been brought in South Africa at the same time as the breach of confidence claim by MCG, but it was not.
(v) The desire of the Defendants was that all the claims should be heard in one jurisdiction and there was clear authority that this was an important factor in the Court's evaluation of the most suitable forum. To that end, Advocate Pallot confirmed orally during the hearing that he was instructed to accept service of any breach of confidence claims brought in Jersey by MCG against Mr Dumas/GMR. This would then enable all the claims to be heard in Jersey.
(vi) Advocate Pallot accepted that the majority of the witnesses and other evidence (such as documents) would need to come from South Africa. However, this would be the case in any event. Thus, as already mentioned, the evidence concerning the breach of confidence claims by MIL and MUK, on the one hand, and MCG, on the other, was likely to be the same. Similarly, the evidence on the counterclaims in relation to both MCG and MIL was likely to be very similar, on the basis that the Defendants' claim was that the Shareholding Interest arose out of the overarching agreement between Warwick and Mr Dumas in 2001.
(vii) Furthermore, in relation to the breach of confidence claims, there was likely to be an overlap of evidence when assessing quantum. Thus, because MIL's income was related to the level of sales by MCG (as described at para 11 above), it would be necessary to bring evidence of MCG's losses as a result of any breach of confidence when assessing MIL's damages.
(viii) As to enforcement of any Jersey judgment, this was a matter for the Defendants. They were aware of the issues but submitted that Jersey was nevertheless the most suitable forum.
(ix) As to prescription, the limitation argument under South African law was said merely to be arguable. Applying Lord Goff's approach, the Defendants had not acted unreasonably in not instituting proceedings in South Africa claiming the 28% interest in MCG prior to January 2019. It was the MM Group's decision to bring the proceedings in Jersey and the original counterclaim dated 14 July 2020 had made it crystal clear that the Defendants were claiming a 28% interest in MCG as well as MIL and were asking that MCG should be joined as a party to the Jersey proceedings and that the Court should give declaratory relief confirming the Shareholding Interest (which included the alleged 28% interest in MCG).
(x) After the filing of the answer and counterclaim by the Defendants, the Plaintiffs had engaged in interlocutory games, some of which had been described by the Master as unnecessary and disproportionate. The parties had also been engaged in the application by the Defendants for summary judgment in respect of the admitted debt of US$4.7m owed by MIL. In all the circumstances it was not unreasonable for the Defendants to have concentrated on the litigation in Jersey and not to have issued proceedings against MCG in South Africa given their expressed intention from the start to join MCG to the proceedings in Jersey. The possible limitation argument in South Africa should not therefore count against Jersey being the most suitable forum. On the contrary, it should if anything count in favour of Jersey.
(xi) The institution of the New Proceedings made no difference to the position. The summons in those proceedings stated expressly that they were only issued as a protective measure. Mr Dumas had been advised that, as a matter of South African law, one of the arguably relevant dates for prescription purposes in respect of Mr Dumas' claims against MCG and Southern 2 was 1 September 2022. If the Defendants were successful in joining MCG and Southern 2 to the Jersey proceedings, the New Proceedings would be discontinued.
(xii) As to the governing law of the claims, Advocate Pallot accepted that it would be necessary to have expert evidence on South African law but submitted that this was only one factor and had to be balanced against the desirability of avoiding a multiplicity of proceedings. He referred particularly to the observation of Calcutt JA in the Court of Appeal in the case of Wright v Rockway Limited (supra). That was a case where it was sought to join parties out of the jurisdiction under the then equivalent of para 1(3) of the Schedule. Those parties contested that they fell within the relevant gateway and also submitted that Jersey was not the suitable forum. One of the matters which they relied upon in the latter connection was that the claim was governed by the law of Thailand. In that respect Calcutt JA said this at 329-330:
Calcutt JA went on to refer to the fact that, on the facts of that case, it would be a 'legal catastrophe' to have one claim litigated in Jersey and the other in Bangkok.
87. The courts have on many occasions emphasised that the avoidance of parallel proceedings in different jurisdictions and the risk of inconsistent judgments as well as unnecessary time and expense is an important factor when considering whether England (Jersey in this case) is the most suitable forum. For example:
(i) In the extract from Vedanta Resources quoted at para 78 above, Lord Briggs made it clear that, although the risk of multiplicity of proceedings and inconsistent judgments was not a 'decisive factor' or a 'trump card', it was a 'very important factor indeed' in the evaluative task of identifying the suitable forum.
(ii) In OJSC VTB Bank v Parline Limited [2013] EWHC 3538 (Comm), Leggatt J said at [4]:
(iii) Donohue v Armco Inc [2002] 1 Lloyd's Rep 425 was concerned with whether Mr Donohue and others should be granted an anti-suit injunction to restrain Armco and others from continuing with proceedings which they had instituted in New York which were said to be in breach of a clause in the relevant agreement conferring exclusive jurisdiction on the courts of England and Wales. The House of Lords refused to grant an anti-suit injunction on the ground that all the matters in dispute should be resolved before one court, which on the facts was the New York court despite the exclusive jurisdiction clause. Thus:
(a) At 434, Lord Bingham of Cornhill quoted with apparent approval an observation of Brandon LJ in Aratra Potato Co Limited v Egyptian Navigation Co [1981] 2 Lloyd's Rep 119 (also a case involving an exclusive jurisdiction clause) where he said at 128:
(b) Lord Bingham went on to say at [33]-[34] that great weight had to be given to the risk of there being litigation both in England and in New York where it would be necessary for each court to form a judgment on the honesty and motives of the relevant parties. He concluded by saying:
88. During their submissions, Advocate Lewis and Advocate Harvey-Hills sought to highlight the separate nature of the areas of dispute. Thus, focusing on the claim to a Shareholding Interest in MCG, they argued that this was a claim by a South African resident to a shareholding in a South African company; thus it clearly ought to be tried in South Africa as the appropriate forum.
89. It seems to me that they placed too much weight on this aspect. Thus:
(i) It will almost invariably be the case that, when a non-resident party is joined as a 'proper' party under para 1(3) of the Schedule (or the English equivalent), the claim against the non-resident party is likely to have little to do with Jersey (or England); otherwise one of the other gateways would be applicable. Thus, if one looks in isolation at the claim against the non-resident party, as they submit, one is invariably likely to find that the factors pointing towards the foreign jurisdiction are greater than those pointing towards Jersey (or England).
(ii) But, as Lord Briggs made clear at [68] in the extract from Vedanta Resources quoted at para 78 above, one must look at the whole case including that against the anchor defendant when considering where it can most suitably be tried, not just the claim against the non-resident party who has been joined as a proper party.
90. Following that guidance and looking at the present case as a whole, it seems to me that there are four main claims:
(i) MIL's (and MUK's) claim for breach of confidence against Mr Dumas/GMR.
(ii) MCG's claim for breach of confidence against Mr Dumas.
(iii) Mr Dumas'/GMR's claim for a 28% shareholding interest in MIL.
(iv) Mr Dumas' (and possibly GMR's although this is not clear) claim to a 28% interest in MCG.
I appreciate that there are subsidiary claims for amounts said to be due in respect of Monteagle Logistics, MAL and others but, on the Defendants' case, these are all consequential upon the overarching agreement between Mr Dumas and Warwick concerning the 28% interest in MCG and MIL.
91. Of these four main claims, (i) is brought in Jersey, (ii) is brought in South Africa, (iii) is brought by way of counterclaim in Jersey and (iv) has just been brought by virtue of the New Proceedings in South Africa, although this is said to be a protective measure pending the outcome of this application. If the Master's decision to give leave to serve out of the jurisdiction on MCG and Southern 2 is maintained, then, of the four heads of claim mentioned above, (i), (iii) and (iv) will be in Jersey, whereas (ii) will be in South Africa.
92. Given the importance of seeking if possible to avoid a multiplicity of proceedings and the risk of inconsistent judgments, it seems to me that one must explore the possibility of all these claims being dealt with in one jurisdiction, whether South Africa or Jersey. Is this something which could be achieved?
93. As to South Africa, there is no evidence before me that there is any likelihood of all the claims being dealt with in South Africa. The Master made enquiries to this effect but did not receive any comfort from the Plaintiffs. In order for the four heads of claim to be heard in South Africa, it would be necessary for MIL/MUK to bring their breach of confidence claim in South Africa (rather than Jersey) and for the Defendants then to counterclaim in those proceedings for a 28% interest in MIL.
94. However, there is no evidence before me, nor was anything said in submissions, to suggest that MIL/MUK would be willing to bring their breach of confidence claim in South Africa. In those circumstances, I cannot find that there is any realistic possibility of all the claims being heard in South Africa.
95. Conversely, if I were not to set aside the decision to grant leave for MCG / Southern 2 to be joined to these proceedings and served out of the jurisdiction, it would be perfectly possible for MCG to bring its claims for breach of confidence against the Defendants in this jurisdiction by way of counterclaim. If that were to occur, all four heads of claim would be before this Court and could therefore be dealt with in one trial.
96. In summary therefore, on the material before me, the only way in which there is any realistic possibility of all matters being dealt with in one trial is if leave to serve MCG and Southern 2 out of the jurisdiction is maintained.
97. I appreciate of course that, even if I maintain the order for service out of the jurisdiction on MCG and Southern 2, it is not certain that MCG and Southern 2 will participate in proceedings and submit to the jurisdiction. In that event, it is probable that any Jersey judgment in the Defendants' favour against MCG / Southern 2 would not be capable of enforcement in South Africa without reinvestigation of the merits.
98. But that is almost invariably the case where a party is joined and served out of the jurisdiction pursuant to paragraph 1(3) of the Schedule or its English equivalent. By definition, there is no connection with the domestic jurisdiction except that the non-resident party is a proper party to a claim against an anchor defendant who is within the jurisdiction. In these circumstances, if the non-resident party chooses not to participate and submit to the jurisdiction of the domestic court, it is highly likely that any judgment of that court will not be capable of enforcement in the foreign jurisdiction without reinvestigation of the merits. But that possibility has never of itself been considered a reason not to join the non-resident party and permit service out of the jurisdiction if the domestic court is otherwise the appropriate forum because it offers the best possibility of the case as a whole being heard in one court.
99. For the reasons I have given, the factor of avoiding a multiplicity of proceedings and the risk of inconsistent judgments points strongly in favour of Jersey as the suitable forum. However, that factor, although a 'very important factor indeed' (per Lord Briggs), is only one factor and must be weighed in the balance together with other factors which fall to be considered in the context of ascertaining the most suitable forum.
100. In the present case, those factors would appear to be as follows:
(i) So far as witnesses and documents are concerned, I accept that the majority of them will be situated in South Africa. However, I accept Advocate Pallot's submission that they will have to be called or produced in Jersey in any event in connection with MIL's claim for a breach of confidence and the Defendants' counterclaim for a Shareholding Interest in MIL. The Plaintiffs' own expert agreed that the evidence on the breach of confidence claims by MIL and MCG respectively would be much the same and, on the basis of the material before me, I am satisfied that the evidence and documents relevant for the Defendants' claim to a Shareholding Interest in MCG will be much the same as the claim to a Shareholding Interest in respect of MIL. Thus, I do not see this as being a material factor in this case. The witnesses will need to come to Jersey in any event and the relevant discovery will have to take place for the Jersey proceedings. Indeed, given that, for the reasons mentioned above, Jersey is the only forum at present where all the claims could be heard in one court, the desirability of avoiding witnesses having to give evidence twice and for two sets of discovery to take place point in favour of Jersey.
(ii) As to governing law, I accept that South African law is likely to be the most relevant law and that expert evidence will need to be called. I further accept that, in relation to the claim for an equitable interest equating to a 28% interest in MCG, this may be an uncertain and developing area of South African law. Accordingly, this is a factor which points towards South Africa as the suitable forum.
(iii) As to prescription, there is evidence before me that there is an arguable defence of limitation under South African law in relation to the claim to a 28% Shareholding Interest in MCG. However, for the reasons put forward by Advocate Pallot summarised above, I do not consider that the Defendants acted unreasonably in not issuing proceedings in South Africa before 2019 and accordingly this is not a significant factor in favour of South Africa.
(iv) As to enforcement, I accept that it is a factor to be considered; see International Credit and Investment Company (Overseas) Ltd v Sheikh Kamal Ad ham [1999] I.L.Pr. 302 at [24]-[25]. As already stated, if MCG and Southern 2 do not participate and submit to the jurisdiction of this Court, I accept that any Jersey judgment is likely not to be capable of enforcement (without reconsideration of the merits) in South Africa. But that is likely usually to be the case where a non-resident party is joined as a 'proper' party and chooses not to participate. It cannot of itself be a reason not to permit service out of the jurisdiction on a proper party as otherwise such service would rarely be permitted. As Advocate Pallot submitted, it is more a matter for the Defendants to consider. Much will depend on the course of action which MCG and Southern 2 choose to follow.
(v) In relation to enforcement, Advocate Harvey-Hills and Advocate Lewis placed weight on the observation of Tugendhat J in Inter-Tel at [25] where he said that the issue of enforcement in that case was of 'overwhelming importance'. But that was a very different case. The defendants were resident in England and had therefore been served as of right. The claimants sought an injunction in England restraining the defendants from carrying out acts of harassment. The defendants applied for a stay of the English proceedings on the ground that there were existing US proceedings and that was the more suitable forum. However, the US proceedings were for contempt of court and it was therefore common ground that any US judgment imposing a fine for contempt would not be enforceable in England on the ground that it would be a penalty; and this was so even though the defendants had submitted to the jurisdiction of the US court. It is not surprising therefore that the judge decided that the inability in any circumstances to enforce a US judgment against the defendants was of 'overwhelming importance' and refused to stay the proceedings in favour of the US proceedings. That was a case which turned on its own special facts and I do not accept the submission that the issue of enforcement is always a factor of 'overwhelming importance'. It is simply a factor to be considered along with all the other relevant factors and its significance will depend on the facts of the particular case.
(vi) I do not consider that the institution of the New Proceedings makes any difference. It is clear that they were issued purely as a protective measure and the fact that they exist does not assist on the issue of the jurisdiction in which the whole case may most conveniently be tried. It does not alter the fact that the MIL/MUK breach of confidence claim and the Defendants' counterclaim in respect of the Shareholding Interest in MIL are to be tried in Jersey. The argument that, if possible, all the claims should be heard in one court remains persuasive.
101. The duty of the Court on an application to serve out of the jurisdiction is to consider the relevant factors and reach an evaluative conclusion on whether it has been shown that the domestic forum is clearly the forum in which the case - meaning the whole case, per Lord Briggs - may most suitably be tried for the interests of the parties and for the ends of justice.
102. Like the Master and in accordance with the approach referred to by the Supreme Court in Vedanta Resources, I consider that by far the most important factor in this case is that, if possible, all of the various claims should be tried in one jurisdiction so as to avoid the risk of inconsistent judgments and the incurring of unnecessary time and expense. For the reasons that I have set out above, the most likely jurisdiction in which this can occur is Jersey. I do not consider that the other factors which have been mentioned, whether individually or cumulatively, are sufficient to outweigh the important factor of seeking to ensure that all the matters in dispute are resolved by one court in one jurisdiction. I therefore find that Jersey is clearly the forum where the case can most suitably be tried for the interests of all the parties and the ends of justice.
103. For these reasons, the requirements set out at para 37 above are all satisfied and I dismiss the application of MCG and Southern 2 to set aside the Master's order giving leave to serve the amended answer and counterclaim on those two parties out of the jurisdiction.
104. It follows that I also dismiss the appeal of the Plaintiffs in so far as the appeal relates to paragraphs 1 and 2 of the Master's order. I have to confess to being somewhat bemused at the fact that they have pursued this appeal and that Advocate Harvey-Hills has taken a leading role in the presentation of the case. I can understand why the Plaintiffs made submissions before the Master because at that stage the parties who were sought to be convened were not present. However, in accordance with normal and correct practice, those parties, namely MCG and Southern 2, have now applied to set aside the Master's order. They are in a position to put forward all the arguments as to why they should not be brought before this Court. It is very hard to see what interest the Plaintiffs have in this issue to the extent of maintaining their appeal. Had I found in favour of the application of MCG and Southern 2 to set aside the Master's order (so that the Plaintiffs' appeal would also have been allowed), I would have required very considerable persuasion that the Plaintiffs should be entitled to recover their costs against the Defendants. It would seem to be a case of wholly unnecessary duplication of costs in circumstances where the Plaintiffs have no direct interest in the outcome and those who have a direct interest (namely MCG and Southern 2 as the parties sought to be joined and served out of the jurisdiction) are before the Court to make their own submissions. However, I say no more about it as, in view of my decision, the issue does not in fact arise.
105. The Plaintiffs also appealed against the decision of the Master at paragraph 10 of the Act dated 17 February 2022 whereby he ordered the Plaintiffs to pay the costs of the hearing before him on the standard basis. I shall rule separately on that aspect of the appeal.
