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03 July 2012
Moloobhoy v Kanani(1) concerned a dispute over a property development in Dubai in which the defendant argued that he had not been validly served and that, in any event, Dubai was the appropriate forum for the claim to be bought. At the same time, the claimants sought summary judgment.
The claimants - both British citizens - were two distantly related family members who had purchased a plot of land in Dubai. The defendant and his wife purchased the adjoining plot and the parties entered into an agreement that the net proceeds of sale of the two plots be shared equally between the claimants on the one hand and the defendant and his wife on the other. The defendant's primary residence was in Dubai.
The defendant managed the sale of both plots of land, but failed to account to the claimants for all profits. The claimants issued a claim in England seeking an account of all sums received and expenses incurred by the defendant in relation to the sale and development, and payment of all sums found due on the taking of the account.
The defendant's evidence in response to the summary judgment application did not assert a defence to the claim, but challenged the court's jurisdiction on two grounds: that the proceedings were not properly served and that England was forum non conveniens (ie, not the appropriate forum for the litigation).
The court had to consider the following issues:
In respect of the first two issues, the court applied well-established principles. However, in considering the third and fourth questions, the court provided useful guidance on the "very rare" circumstances in which a claimant can obtain summary judgment at the same time as contesting a challenge to jurisdiction.
The defendant contended that the claim form had not been validly served, as the address served was not his usual residence. Applying Varsani,(2) the court held that it was his usual residence on the basis that the quality of the defendant's use and occupation met the required threshold, as there was a "substantial degree of continuity and permanence" in his occupation.
In accordance with the principles set down by the Court of Appeal in Spiliada,(3) the burden was on the defendant, as the applicant, to show that another available forum was clearly more appropriate for the trial of the action. The defendant argued that the more appropriate forum would be Dubai.
In considering the merits of this argument, the court acted on the assumption that the judicial system in Dubai could deal with the dispute. However, the court considered the following factors:
For all these reasons the court was not satisfied that Dubai would be the more appropriate forum for determination of the claim. It also gave weight to the fact that the defendant had a substantial asset in England, against which an English judgment could readily be enforced. Conversely, the court saw no evidence of assets owned by the defendant in Dubai and saw no need to put the claimants to the trouble of enforcing a Dubai judgment in England.
In Speed Investments Ltd(4) the court considered the approach to be taken when a defendant challenges the jurisdiction and the claimant seeks summary judgment under English civil procedure rules. It was decided that only in "very rare" cases will the court allow an application for summary judgment to be made before a challenge to the jurisdiction has been determined. The English rules allow a defendant that has failed in a jurisdictional challenge a further 14 days to decide whether to submit to the jurisdiction or allow the action to proceed by default.(5) Accordingly, a defendant should be permitted to challenge the jurisdiction of the English courts without prejudicing or pre-empting its defence on the merits or its decision as to whether, if the jurisdictional challenge fails, it nevertheless wishes to submit to the jurisdiction of the English courts.
The defendant in this case argued that he should be allowed this extra time, and that accordingly the court should not determine the claimant's application for summary judgment.
The court considered the question of whether the current case merited a summary judgment decision at this juncture. It concluded that the case was one of the "very rare cases" to which Speed Investments Ltd referred, in which it was appropriate for the court to determine an application for summary judgment before the jurisdictional challenge had concluded. The reasons for doing so were as follows:
The decisions on service of claim and forum non conveniens follow previously established principles. However, it is useful to note the application of these principles.
The key point of interest is the decision to allow an application for summary judgment to be heard at the same time as the defendant's jurisdictional challenge. The court found that it was hard to envisage a case that would better fulfil the relevant requirements of the "very rare case" that will merit such a decision.
The repeated criticism of the defendant's failure to set out even the briefest details of a defence also emphasises the need for defendants to provide details of their intended argument when responding to such a summary judgment application, particularly if the claim in question appears to be a factually straightforward claim with strong prospects of success.
In distinguishing this case (on the grounds that the defendant would obtain no benefit from allowing judgment to be obtained by default and then resisting enforcement), the court has also raised the question of whether the same argument could be applied where enforcement would take place in an EU member state, where there should similarly be no ability for defendants to resist enforcement.
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