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England and Wales High Court (Chancery Division) Decisions |
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You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Mussa v Issa & Ors [2024] EWHC 763 (Ch) (04 April 2024) URL: http://www.bailii.org/ew/cases/EWHC/Ch/2024/763.html Cite as: [2024] EWHC 763 (Ch) |
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BUSINES AND PROPERTY COURTS
BUSINESS LIST (ChD)
33 Bull Street Birmingham, B4 6DS Claimant Defendants |
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B e f o r e :
____________________
| MR ZAKIR HAROON MUSSA |
Claimant |
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-and- |
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| (1) MR ZUBAIR OSMAN GANI ISSA (2) THE VICTORIA FOREX BUREAU LIMITED (3) MR ARIF GABA (4) MRS MUNIRA ARIF GABA (5) MR SOHAIL ARIF GABA |
Defendants |
____________________
James Morgan KC and Mr Mohammed Hay (instructed by Samuel Louis Solicitors) for the Defendants
Hearing dates: 9 January and 4 April 2024
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Crown Copyright ©
His Honour Judge Richard Williams:
Introduction
a. D1 and D2, who do not reside/operate in England, have not been validly served with the proceedings.
b. There are parallel court proceedings brought by the Claimant in Malawi, and the Claimant is required to make an election, since he cannot pursue both.
c. The court should in any event decline to exercise its jurisdiction over the Defendants because Malawi is clearly the more appropriate forum to resolve the dispute.
d. In the alternative, there should be a case management stay in the present proceedings until the existing proceedings in Malawi have been concluded.
Background
a. The Claimant previously resided in Malawi where he ran several businesses, which were sold when the Claimant moved to the UK in 2005.
b. However, due to currency restrictions in Malawi, the Claimant could not transfer all his monies to the UK.
c. Therefore, the Claimant instructed D1 and D2 to manage the funds on his behalf. This included (i) receiving payments from various third parties who owed money to the Claimant and (ii) making payments to various third parties on the Claimant's instructions.
a. It was agreed with D1 that the Claimant would pay the loan monies to the Mussa Defendants via D2.
b. D1 was not willing to give an account of the funds received from the Claimant.
"[10.] In this matter, one would think that when the funds, which by the way, are not a small amount by any standards, were being sent to the [Mussa] Defendants, if such was the case, through [D1], there must have been documentation which was executed between [D1] and the Claimant evidencing the deposit of the funds to [D1]. Copies of such documents as well as copies of the instructions issued to [D1] should be available to both the Claimant and [D1]. Assuming the funds were transferred from the UK, as seems to be the suggestion when one reads the sworn statement filed earlier by the Claimant…. And copies of the purported loan agreements executed between the parties….., there must be approvals which were granted by the fiscal authorities in both the UK and Malawi as such transmission of such a large sum has to be through such authorities. There certainly should be exchange control approvals that must have been granted. So in my opinion, even if the intended 5th Defendant were to deny ever having received funds from the Claimant for his onward transmission to the [Mussa Defendants], the Claimant does not have to bring him as a party to prove that point. The Claimant can prove that point by bringing documentary evidence which was exchanged between him and the intended 5th Defendant and also documentation relating to exchange control formalities issued by the relevant fiscal authorities either Malawi or the UK or in both jurisdictions. I therefore find that it is unnecessary to bring in [D1] a party for purposes of proving the transmission of the funds to the [Mussa Defendants].
[11.] Further, ….. [it] is absolutely unnecessary to add [D1] as a party merely to facilitate his giving of an account of the funds which he purportedly received from the Claimant. There is nothing to suggest that he is not a compellable witness. He can be called to come and testify. He can also be compelled to produce certain documents which are in his possession…."
a. At no time was D1 acting in his personal capacity, since on the Claimant's own case he was always transacting with D2.
b. If, which was denied, any such monies passed through D2, it was the correct defendant.
c. D1 did not receive any instructions or money from the Claimant and was not aware of any business arrangements between the Claimant and the Mussa Defendants.
"… the Claimant is clearly stating that [D1] never played his role of making money available to the [Mussa Defendants]. Simply put, the [Claimant] is making the assertion that the [Mussa Defendants] never got the money because [D1] denied receiving money from him. The question then is why is the [Claimant] suing the [Mussa Defendants]? On this note I must agree with the observations of Justice Msungama (in his ruling of 10th September 2021) that the [Claimant] is being uncertain and inconsistent by making an additional or alternative claim against [D1]……..
It is to be accepted that a litigant has to be given his day in court. That is a matter of his right. However, it is also the duty of the court to guard against its abuse and not to entertain frivolous and vexatious claim or actions. Uncertainty in terms of who to sue is a clear indication of a frivolous and vexatious action. I would thus opine that asking for security for costs when it comes to such actions, cannot be considered to be stifling the action. This is especially in the context of this matter which has now been going on for almost three years without any real headway. Further as noted by [Justice Msungama], for a transaction of the magnitude that the claimant is asserting, there seems to be no proof (in terms of fiscal documents) that the alleged funds were transferred from the UK to Malawi.
From the foregoing and having considered the court record as it now stands, and further considering that the claimant is resident outside the jurisdiction, I must find that the application for security for costs is well grounded and I do proceed to grant the same. Clearly the [Claimant] is not in a position to pay the costs should [he] be called upon to do. After all it has not been disputed that he is impecunious! It also stands to doubt as to whether it is the actions of the [Mussa Defendants] that caused the [Claimant's] impecuniosity since by the [Claimant's] sworn statement, the person who was supposed to have transferred the alleged sums to the [Mussa Defendants], is denying that he received the alleged money!"
"[82.] The first point is that hearings concerning the issue of appropriate forum should not involve masses of documents, long witness statements, detailed analysis of the issues, and long argument. It is self-defeating if, in order to determine whether an action should proceed to trial in this jurisdiction, the parties prepare for and conduct a hearing which approaches the putative trial itself, in terms of effort, time and cost. There is also a real danger that, if the hearing is an expensive and time-consuming exercise, it will be used by a richer party to wear down a poorer party, or by a party with a weak case to prevent, or at least to discourage, a party with a strong case from enforcing its rights.
[83.] Quite apart from this, it is simply disproportionate for parties to incur costs, often running to hundreds of thousands of pounds each, and to spend many days in court, on such a hearing. The essentially relevant factors should, in the main at any rate, be capable of being identified relatively simply and, in many respects, uncontroversially. There is little point in going into much detail: when determining such applications, the court can only form preliminary views on most of the relevant legal issues and cannot be anything like certain about which issues and what evidence will eventuate if the matter proceeds to trial."
The overriding objective
"The overriding objective
1.1
(1) These Rules are a procedural code with the overriding objective of enabling the court to deal with cases justly and at proportionate cost.
(2) Dealing with a case justly and at proportionate cost includes, so far as is practicable –
(a) ensuring that the parties are on an equal footing and can participate fully in proceedings, and that parties and witnesses can give their best evidence;
(b) saving expense;
(c) dealing with the case in ways which are proportionate –
(i) to the amount of money involved;
(ii) to the importance of the case;
(iii) to the complexity of the issues; and
(iv) to the financial position of each party;
(d) ensuring that it is dealt with expeditiously and fairly;
(e) allotting to it an appropriate share of the court's resources, while taking into account the need to allot resources to other cases; and
(f) enforcing compliance with rules, practice directions and orders.
……….."
a. whenever exercising any power given to it under the rules or when interpreting any rule – CPR r.1.2; and
b. by actively managing cases – CPR r.1.4.
D1 and D2 have not been validly served with the English proceedings?
a. A defendant, who is an individual, shall be served at his "usual or last known residence".
b. A defendant, which is a company that is not registered in England and Wales, shall be served within the jurisdiction at any place where the company carries on its activities/business.
D1
a. The legal test to be applied is whether the claimant is able to satisfy the court that there is a "good arguable case" that the English property was the defendant's "usual residence" when the proceedings were served.
b. The first instance judge explained that a "good arguable case" is a lower test than proof "on a balance of probabilities" but, because the issue is determined, effectively finally, at the interlocutory stage, a "good arguable case" requires the claimant to establish that he has a much better argument on the available material than the defendant. The first instance judge's description of the persuasive burden was not challenged on the appeal.
c. A defendant can reside in more than one place at the same time.
d. The term "usual residence" means that which is in ordinary use. There is a notion of regularity about it but not necessarily comparative intensity of use.
e. The test to be applied in determining a defendant's usual residence is their pattern of life, taking into account the nature of the use of the premises as well as the duration of the periods of occupation.
a. He was born in Malawi and has lived there his whole life. When Malawi gained independence in 1964, D1 was entitled to apply for a British passport and did so, although he continues to have permanent residence status in Malawi.
b. He conducts his main business in Malawi, although he travels internationally in the course of that business including to the UK.
c. He is the director of 3 limited companies registered in England and Wales and incorporated variously during the period 3 May 2021 to 24 January 2022. The companies comprise (i) a corporate vehicle used to acquire an investment property in the UK and (ii) two other companies established with friends.
d. D3, D4 and D5 live in Leicester in rented accommodation. Since 2015, D1 has visited and stayed with them 2-3 times a year, staying typically for around 1-2 weeks at a time.
e. D1's other sister, who is not a party to the English Proceedings, also lives in Leicester in another rented property.
f. D1's family are permanent residents of Malawi, although his 2 children (aged 19 and 15) are currently living in Leicester at a property rented by D1 for their use under a tenancy agreement dated 14 July 2021. Once his 2 children have completed their education in the UK, they will return to Malawi.
D2
Giving effect to the overriding objective
Election
a. The Claimant chose first to commence and prosecute the 2nd Malawi Proceedings against D1, but now attempts to bring proceedings against him (and others) in England. The circumstances are therefore unusual in that the same party is the claimant in both actions (as opposed to being an unwilling or reluctant defendant in one).
b. In Australian Commercial Research and Development Ltd v ANZ McCaughan Merchant Bank Ltd [1989] 3 All ER 65, Sir Nicolas Browne-Wilkinson V-C held that a claimant who initiated proceedings against the same defendant in two separate jurisdictions in respect of the same subject matter was required to elect which set of proceedings he wished to pursue.
c. That approach reflects the general point that it is an abuse to bring vexatious proceedings, i.e. two or more sets of proceedings in respect of the same subject matter which amount to harassment of the defendant in order to make them fight the same battle more than once with the attendant multiplication of costs, time and stress - David Shaw Silverware North America Ltd v Denby Pottery Company Ltd [2013] EWHC 4458 (QB) (at para [40]).
d. D1 has no jurisdictional objection to the continuation of the 2nd Malawi Proceedings and for the Claimant to discontinue the English Proceedings against him. The Claimant is not apparently willing to do that. There has been some suggestion that he might be willing to elect to end the 2nd Malawi Proceedings, but there is no evidence to that effect. Further, this court would need to be certain that this had actually happened before it allowed the English Proceedings to continue.
a. The nature of the 2nd Malawi Proceedings and the English Proceedings may be the same, but the substance of the claims is different.
b. Some of the sums under the banking agreement were received by D1 in Malawi, but other sums were received by D3, D4 and D5 in the UK acting as agents of D1.
c. As a complex international transaction, it is therefore right and proper that the Claimant be allowed to execute his case strategy as he sees fit in this complex case.
d. Forcing the Claimant to make an election is therefore tantamount to imposing a case strategy on the Claimant, which would deliberately sabotage the Claimant's case.
e. Under the law of principal and agent, where the principal is in Malawi (D1) and the agent is in the UK (D3, D4 and D5), the English court will have jurisdiction over both the principal and agent.
"[1.] THE CLAIMANT STATES THAT:
a. The Defendant is an owner/shareholder/director or manager of a certain forex bureau styled Victoria Forex Bureau. He is therefore in the local and international forex transmittance business.
b. In the year 2015 or thereabouts, the Claimant deposited various sums of money with the Defendant in the knowledge that the Claimant would need the money in Malawi for purposes of lending out same to Mahomed, Moshin Mussa, Phazi Industries Ltd and Mussa Nurmahomed (the Debtors).
c. The Defendant agreed to receive instructions from the Claimant and to release the said monies to the Debtors as and when instructed to do so pursuant to the loan agreements between the Claimant and the Debtors under the Claimant and Debtors' business arrangement, of which the Defendant was aware of.
d. On diverse states, the Claimant instructed the Defendant to release and deliver the loan sums to the Debtors and the Debtors stated then that they received the money through the Defendant who owns/runs or manages Victoria Forex Bureau and whose staff and agents at the said bureau collected and delivered the money to the Debtors upon the instructions of the Claimant to the Defendant.
e. When the debts fell due for repayment, the Debtors failed to settle the debts when the Claimant demanded payment through court action, the Debtors have stated that they never received the money from the Defendant or at all.
f. When asked to provide an account of how and when he paid the monies to the Debtors, the Defendant refused to provide such an account and also refused to come to court to testify to that effect, leading the Claimant to believe that the Defendant may have failed to pay the money to the Debtors.
g. On account of the failure by the Defendant to pay the loan sums to the Debtors as and when instructed by the Claimant, the Claimant has suffered loss and damage.
Particulars of Loss and Damage
i. Loss of use of the money
ii. Loss of the business earnings of 4% per month ($15,000 per month).
h. On account of the failure by the Defendant, the Claimant was forced to commence court proceedings against the Debtors and has therefore suffered special damage and loss.
Particulars of Special Damage
i. Loss of use of the money which would have been earned on a monthly basis;
ii. Cost of various trips to Malawi to demand repayment of the debt;
iii. Costs of Legal Proceedings (solicitor and own client and party and party costs) against the Debtors;
iv. In making the demands for payment of the debts, the Claimant was put under constant threats on his life by the Debtors and therefore suffered anxiety."
"[1.] The Claimant is a UK resident who previously resided in Malawi, whereupon he ran several businesses. In July 2005 the Claimant moved from Malawi to the UK and sold his said businesses. However, because of certain currency restrictions in Malawi at the time the Claimant could not transfer all his monies to the UK. Instead, the Claimant instructed the First Defendant and the First Defendant's company, the Second Defendant, to manage his funds on his behalf. This included payments from various parties to whom the Claimant had made loans to and likewise making loan payments out to various parties under the Claimant's instructions.
…….
[7.] It is the Claimant's case that the First and Second Defendants have essentially acted as his agents and bankers in Malawi by receiving payments from the Claimant and from various loanees to whom the Claimant had made loans to and by making various payments out under the Claimant's Instructions.
[8.] From August 2015 to February 2019 the Claimant entered into several loan agreements with a Mr Mahomed Mussa and Mr Moshin Mussa and their companies Mussa Nurmahomed and Phazi Industries Limited ("the loanees") for sums totalling £750,000 and $750,000 USD plus interest.
…….
[10.] In addition to the First and Second Defendant retaining monies from the Claimant when he left Malawi from 2015 to 2018 the Claimant made various payments to the First and Second Defendant directly or via the Third to Fifth Defendants in the UK in order for the First and Second Defendant to make payment to the loanees. During the currency of this period the First Defendant has produced various statements of accounts confirming that the loan payments had been made to the loanees or their nominees.
[11.] Unfortunately, the loanees have reneged on their loan obligations by failing to make any loan repayments to the Claimant. As a result of which the Claimant issued civil proceedings in Malawi against the loanees ….. for repayment of the loans and interest …….
[12.] The loanees' defence in the Malawi proceedings was that in fact no payments had been made by the First and/or Second Defendant to them.
……
[14.] Accordingly, it is contended that the Claimant has been subjected to a significant fraud in the UK whereby the First and Second Defendant have made dishonest representations to the Claimant that his Instructions were being followed and that his monies were being properly paid to the loanees. It now transpires that none of the Claimant's monies were paid to the loanees and indeed the First Defendant is now completely denying any actual knowledge of the loanees.
[15.] In the premises the Claimant claims damages from the First and/or Second Defendant in the sum of £1,815,702….. plus £76,300 …. From the Third to Fifth Defendants, which has been paid to them in the UK and which they have never account[ed] for."
a. Did D1 represent to the Claimant that D1 would, via D2, manage the Claimant's money by making loans to third parties in Malawi; and
b. If so, what, if any, payments were made by or on behalf of the Claimant to D1/D2, whether directly or indirectly through agents, for that purpose?
a. The vast majority of funds were deposited directly with D1/D2.
b. D3, D4 and D5, acting as agents, received relatively modest sums totalling £76,300, which represents only 4% of the overall value of the claim. As argued on behalf of the Defendants, D3, D4 and D5 are at best minor players in the litigation.
a. additional time, expense and inconvenience;
b. duplication and thereby disproportionate allocation of court resources; and
c. the potential for inconsistent findings of disputed facts, which would be disastrous for the fair and efficient administration of justice.
Forum conveniens
Applicable legal framework
[27.] There is no dispute between the parties as to the relevant law that the Court needs to apply with respect to this application. Following the EU UK Withdrawal Agreement, the Brussels (Recast) Regulations no longer apply to fresh claims against parties domiciled in England. Rather, the principles set out by the House of Lords in Spiliada Maritime Corporation v. Cansulex Ltd. [1987] 1 AC 460 ("Spiliada") apply both to D1 and D2 (they are defendants domiciled in England, where service is of right: "service in" cases) and D3 (a defendant in respect of whom permission to serve abroad has been obtained: "service out" cases). In both types of case, the question for the Court is "to identify the forum in which the case can be suitably tried for the interests of all the parties and for the ends of justice": Spiliada at p480G. 28. With respect to "service in" cases, the burden of proof rests on the defendant to show that England is not the natural or appropriate forum and that there is another available forum which is clearly and distinctly more appropriate: Stage 1. If so, then the burden shifts to the claimant to show that there are special circumstances such that justice requires the trial to take place in England: Stage 2.
[29.] With respect to "service out" cases, the burden of proof is on the claimant at Stage 1 to show that England is the appropriate forum for the trial of the action, and that it is "the proper place in which to bring the claim" (CPR rule 6.37(3)). According to Lord Goff in Spiliada at p481D the claimant must show that this is "clearly so". If the claimant fails to establish that England is the proper forum, then Stage 2 will apply.
[30.] The instant case involves a mix of both "service in" (D1 and D2) and "service out" (D3) cases. In these circumstances, "the court is looking for a single jurisdiction in which the claims against all the defendants may most suitably be tried": per Lord Briggs JSC in Lungowe v. Vedanta Resources plc. [2020] AC 1045 ("Vedanta") at §68. A jurisdiction in which a claim against some of the multiple defendants could not be tried can still qualify as a proper place. In Vedanta at §69, Lord Briggs JSC explained that the inability to try a claim against some of the multiple defendants is "only one factor, albeit a very important factor indeed, in the evaluative tasks of identifying the proper place". A trial involving only some of the defendants "would risk multiplicity of proceedings about the same issues, and inconsistent judgments".
[31.] In Tugashev v. Orlov [2019] EWHC 645 (Comm), Carr J observed at §261 that the courts will often take into account the desirability of all related claims being tried together, and that may be a powerful factor outweighing factors connecting the claim to another jurisdiction. In her review of the case law, Carr J. noted that in JSC BTA Bank v. Granton Trade Ltd. [2010] EWHC 2577 (Comm), Christopher Clarke J had considered that a distinction should be drawn between major and minor players in the litigation stating that "a decision as to appropriate forum must necessarily take account of the relative importance in the case of different defendants". In Vedanta at first instance, Coulson J. referred to the concept of the tail not wagging the dog: see [2016] EWHC 975 (TCC) at §168.
[32.] The two stages envisaged by Spiliada should not be regarded as totally rigid. It has been held that the line dividing these two stages is "neither completely impermeable nor drawn in such a way that there are no factors which do not appear on both sides of it": Municipio De Mariana v BHP Group (UK) Ltd. [2022] 1 WLR 4691. 33. The exercise to be carried out by the Court is not the exercise of a discretion but an evaluative or a balancing exercise: see Lords Wilson and Neuberger in VTB Capital Plc. v. Nuritek International Corp [2013] 2 AC 337 ("VTB") at §§96, 156.
[34.] In carrying out this exercise, the Court "must start by seeing what are likely to be the issues between the parties in the proposed action": per Lord Diplock at p66 in Amid Rasheed Shipping Corp. v Kuwait Insurance Co. [1984] AC 50; and Lord Clarke in VTB at §192-3.
[35.] At Stage 1, the Court examines the connecting factors between the case and one or more jurisdictions in which it could be litigated. Lord Goff in Spiliada described this at p478A as being the forum "with which the action had the most real and substantial connection". In assessing this, Lord Briggs JSC observed in Vedanta at §66 that: "Those include matters of practical convenience such as accessibility to courts for parties and witnesses and the availability of a common language so as to minimise the expense and potential for distortion involved in translation of evidence. Although they are important, they are not necessarily conclusive. Connecting factors also include matters such as the system of law which will be applied to decide the issues, the place where the wrongful act or omission occurred and the place where the harm occurred."
[36.] The place of commission of a tort is a relevant starting point when considering the appropriate forum for a tort claim. Viewed by itself, and in isolation, "the place of commission will normally establish a prima facie basis for treating that place as the appropriate jurisdiction. . . . The significance attaching to the place of commission may be dwarfed by other countervailing factors": see VTB at §51, per Lord Mance (in a case concerning an international commercial transaction).
[37.] Where defendants domiciled in England (commonly known as "anchor defendants") have agreed to submit to a foreign jurisdiction, but the claimant has made a deliberate choice to sue in this forum and has thereby engendered the risk of irreconcilable judgments, it "would offend the common sense of all reasonable observers to think that the proper place for this litigation to be conducted was England": see Lord Briggs in Vedanta at §87.
[38.] Where (as in the instant case) foreign law applies, it has been said that "if the competing fora have domestic laws which are substantially similar, the governing law will be a factor of little significance": Navigators Insurance Company and Ors v Atlantic Methanol Production Company LLC [2003] EWHC 1706 (Comm) at §48 (citing Dicey, Morris & Collins, The Conflict of Laws (13th Edition) (now 16th Edition at §12-033)).
[39.] In VTB, Lord Mance explained at §46 that:
'The governing law, which is here English, is in general terms a positive factor in favour of trial in England, because it is generally preferable, other things being equal, that a case should be tried in the country whose law applies. However, that factor is of particular force if issues of law are likely to be important and if there is evidence of relevant differences in the legal principles or rules applicable to such issues in the two countries in contention as the appropriate forum.'
[40.] At Stage 2, having concluded that a foreign jurisdiction is the proper place in which the case will be tried, the Court will look to see if there are "circumstances by reason of which justice requires that a stay should nevertheless not be granted", and "all the circumstances of the case" will be considered: per Lord Goff in Spiliada at p478D-E. One relevant factor may be if "there is a real risk that substantial justice will not be obtainable in that foreign jurisdiction": per Lord Briggs JSC in Vedanta at §88. That will require "cogent evidence", but "Cogent evidence does not mean unchallenged evidence": per Lord Briggs in Vedanta at §96.
[41.] In assessing whether there is a "real risk" that substantial justice will not be obtainable, the Court is not conducting a trial and, although there must be evidence that the risk exists, the Court does not need to be satisfied on the balance of probabilities that facts have been established or that the risks will eventuate: see Cherney v Deripaska [2009] 2 CLC 408, per Waller LJ at §29.
[42.] "Substantial justice" will not be available if there is a real risk that the claimants will be denied access to justice in the foreign jurisdiction. This may be because of the lack of independence or competence of the relevant judiciary or, in the context of large group claims, the lack of a fair civil procedure suitable for handling large group claims. It may also be because of the practicable impossibility of funding such group claims, or the absence of "sufficiently substantial and suitably experienced legal teams to enable litigation of this size and complexity to be prosecuted effectively, in particular against a defendant . . . with a track record which suggested that it would prove an obdurate opponent": per Lord Briggs JSC, describing at §89 the analysis of Coulson J at first instance in Vedanta (see [2016] EWHC 975 (TCC)).
[43.] Caution should be applied when considering whether "substantial justice" can be obtained in the foreign jurisdiction for a number of reasons. First, it has been observed that there have been "judicial warnings of undoubted authority that the English court should not in this context conclude, other than in exceptional cases, that the absence of a means of funding litigation in the foreign jurisdiction, where such means are available in England, will lead to a real risk of the non-availability of substantial justice": see Lord Briggs JSC in Vedanta at §93 referring to Connelly v RTZ Corpn plc (No 2) [1998] AC 854 ("Connelly"), 873 per Lord Goff, and Lubbe and Others v Cape Plc [2000] 1 WLR 1545 ("Lubbe"), 1555 per Lord Bingham.
[44.] Second, as Lord Goff noted in Connelly at p874D, "seeking to take advantage of financial assistance available here to obtain a Rolls Royce presentation of his case, as opposed to a more rudimentary presentation in the appropriate forum" would not be sufficient to justify such a refusal.
[45.] Third, and more generally, Lord Briggs warned in Vedanta at §11 that the "conclusion that a foreign jurisdiction would not provide substantial justice risks offending international comity. Such a finding requires cogent evidence, which may properly be subjected to anxious scrutiny"."
Spiliada – Stage 1 – Connecting factors
Place(s) where (i) the wrongful acts/omissions occurred and (ii) the harm occurred
a. The following events alleged by the Claimant must have taken place in Malawi –
i. D1 and D2 acting as his "agents and bankers in Malawi" (emphasis added) pursuant to the alleged oral agreement and retaining monies on his behalf in Malawi (see paras 7 and 10 of the Particulars of Claim quoted earlier in this judgment);
ii. The Claimant entering into the loan agreements with, or on behalf of, the Mussa Defendants (see paras 8 and 9 of the Particulars of Claim quoted earlier in this judgment);
iii. The commencement of the 1st Malawi Proceedings (see paras 11 and 12 of the Particulars of Claim quoted earlier in this judgment); and
iv. The commencement of the 2nd Malawi Proceedings and the filing of D1's defence therein.
b. The Claimant alleges that other events took place "in the UK", which is not jurisdictionally the same thing as England, although the pleading is vague and not properly particularized. The Claimant's witness evidence scarcely makes things any clearer.
c. It is entirely unclear where other events, such as the making of the alleged representations, are alleged to have taken place. But the alleged representations arise out of the relationship created by the alleged banking agreement, which is alleged to be a contract to be performed in Malawi.
d. It is apparent that the weight of the relevant events occurred in Malawi and that this is, in truth, a "Malawi case". That is no doubt why the Claimant first issued proceedings in that jurisdiction.
"[26.] The Claimant either made payments directly to the First and/or Second Defendant to their Client's UK bank accounts from his Client's UK bank account.
[27.] In addition to which the Claimant also paid cash, on instruction from the First Defendant, to the First and/or Second Defendant's agents in the UK, the Third to Fifth Defendants…"
[1.] … In July 2005 the Claimant moved from Malawi to the UK and sold his … businesses. However, because of certain currency restrictions in Malawi at the time the Claimant could not transfer all his monies to the UK. Instead, the Claimant instructed the First Defendant and the First Defendant's company, the Second Defendant, to manage his funds on his behalf. This included receiving payments from various parties to whom the Claimant had made loans to and likewise making loan payments out to various parties under the Claimant's instructions."
a. D2 operates under the supervision of the Reserve Bank of Malawi under the Exchange Control (Foreign Exchange Bureau) Regulations 2007.
b. D2 is not licensed to operate as a bank and cannot (i) collect or receive loans or (ii) maintain a bank-type account for customers.
c. In Malawi, loans with a foreign/overseas component have to be registered with the Malawi authorities after getting approval from the Reserve Bank of Malawi.
d. In order to provide a legal loan in Malawi, a person must have a registered company which is licensed to provide loans with legitimate funds. The loan must also be declared with the Malawi Revenue Authority and tax paid on the resultant profits. It is illegal to withhold tax from the Malawi revenue Authority. Providing illegal loans and not paying tax are also criminal matters in Malawi.
a. Forex bureaus in Malawi are only allowed to exchange currencies under the guidelines of the Reserve Bank of Malawi, but D1 circumvents the guidelines by operating, since 2002, 'Hawala' and 'Safe Keeping' for the benefit of the Malawian Asian community. This illegal activity is D1's main source of income.
b. Hawala (sometimes referred to as underground banking) is a way to transmit money without any currency moving. Hawala networks have been used since ancient times, and today they are widely found among ex-pats sending remittances home.
c. A 'Safe keeping' account is like a current account. D1 and D2 keep the money and for a small fee will transfer as per the account holder's instructions to any business or individuals.
d. In November 2002, the Malawi Government imposed surtax/vat, which triggered significant demand for D1's services. Those who avoided government taxes used him and were able to under value or externalise forex from Malawi very easily without getting in the MRA Tax radar.
e. D1 and D2 have a special task force, who go around to shops, warehouses and factories collecting either cash Dollars, GBP sterling, Euros, South African Rands or Malawi Kwachas. In return they would offer free transfers anywhere in the world on terms of safekeeping the money for 3 to 6 months. If customers requested immediate transfer, they are charged between 5% to 15% on the total amount.
f. In the UK, D1 has a large network and has been using UK high street bank accounts to facilitate these transfers and cash payments through UK agents.
a. According to a source, Max Pathan, D1 uses D2 as a "front for his illegal backstreet bank" by pulling out millions of cash US dollars from local banks to help his clients buy properties in the UK, Dubai, Pakistan, Hong Kong and China, whilst bringing in goods to Malawi at low value to avoid paying customs and duties. In addition, D2 delivers cash for clients from Malawi to the UK, Dubai, Pakistan, Honk Kong, China or South Africa using couriers at 5% of the screen rate. Clients are advised that, if D2 is raided, the resulting losses will be borne equally between the parties.
b. Platform Investigative Journalism became aware of the existence of D2's illicit operations through a lawsuit filed against D1 in the Malawi High Court and in England by another former customer, the Claimant, who was quoted as saying:
"Our first transaction was for £25,000. [D1] asked to make payment in the UK Bank then added another £25,000, making it £50,000….[the Mussa Defendants] would instruct me to pay out their suppliers for purchase of goods… and I would instruct [D1/D2] to release funds from the GBP Account which I held with him."
c. D1 denied any wrongdoing. He claimed that the Claimant, who worked packing shelves at Tesco in the UK, did not have the financial means to lend money to anyone in the sums claimed. Rather the Claimant was seeking to extort D1.
d. Having been made aware in July 2022 of the allegations that D2 was operating as an 'illegal bank', the Reserve Bank of Malawi said that it, alongside other Law Enforcement Agencies, would be investigating the allegations.
"[29] …. [the Mussa Defendants] contend that the Claimant did not release any funds in line with the agreements which the parties may have entered into. The [Mussa Defendants] continue to argue that even if it were true that any funds were paid to them, then the agreements which facilitated that payment were void on [the] ground of illegality in that there was no Ministerial authority to repatriate funds from England to Malawi, contrary to the exchange control laws. It is the humble view of this court that the factual differences cannot be resolved through a summary process like summary judgment. Only a full trial would do justice to such issues. I would hold further that the issue of illegality that has been raised in the defence is also a legitimate triable issue that can only be adequately dealt with through trial. The consequence of this is that I have to dismiss the application for summary judgment."
Governing law
"[46.] The governing law, which is here English, is in general terms a positive factor in favour of trial in England, because it is generally preferable, other things being equal, that a case should be tried in the country whose law applies. However, that factor is of particular force if issues of law are likely to be important and if there is evidence of relevant differences in the legal principles or rules applicable to such issues in the two countries in contention as the appropriate forum. Neither of these considerations here applies."
a. It is clear that the alleged banking agreement is governed by Malawi law as the country where the alleged service providers (D1 and D2) had their habitual residences – Rome I Regulation, Article 4(1)(b).
b. That law is also likely to govern the existence, scope and breach of the fiduciary duties alleged to arise from the alleged banking agreement – Dicey, Morris & Collins on the Conflict of Laws (16th ed) at 12-051.
c. The same applies to any claim in unjust enrichment – Rome II Regulation, Article 10(1); Dicey at 36R-00 et seq
a. The basic rule is that the governing law is that of the country "in which the damage occurs" – Rome II Regulation, Article 4(1).
b. That expression has been the subject of much EU and domestic case law and the basic principle is that the focus is on where "the direct and immediate" damage occurred rather than consequential or secondary damage not directly attributable to the harmful event, e.g. AMT Futures v Marziller [2018] AC 439 at [15].
c. This requires a close focus on the nature of the claim and in particular whether the real complaint is that (i) monies have been lost or paid away from a particular place or (ii) the claimant has not received a sum which he should have received: Dolphin Maritime & Aviation Services Ltd v Sveriges [2009] 1 CLC 460 at [60]. In both cases it is necessary to identify the place where the event occurred or should have occurred.
d. Given the paucity of the pleading in the Particulars of Claim, it is not presently possible to ascertain the precise nature of the Claimant's case and the answers to the above questions. In particular the extent to which the complaint is about monies being misapplied in England and/or Malawi.
e. In any event, where it is clear from all the circumstances of the case that the tort is manifestly more closely connected with a country other than that indicated by Article 4(1), the law of that other country shall apply: Article 4(3).
f. As that provision expressly recognises, such a closer connection might be based on a pre-existing contractual relationship that is closely connected with the tort in question. In Winrow v Hemphill [2014] EWHC 3164 (QB), Slade J referred to the need to identify the "centre of gravity" of the tort.
g. The better argument is that Article 4(3) would in any event result in Malawi law applying to the tort claims.
a. Any alleged payments were made under a banking agreement made in Malawi.
b. The 2nd Malawi Proceedings are proceeding, and have done so for some considerable time, on the basis that they are governed by the law of Malawi.
c. It is likely that the Malawi courts recognise and impose tortious liability for deceit, and for conspiracy to commit a deceit, on bases for material purposes equivalent to those which would be recognised under English law, since the legal system in Malawi is based on the English common law. If that is not the position then it was for the Claimant to evidence this, if he could, but he did not.
d. As already noted, the key issues underlying the claim are in any event factual and not legal - what, if anything, was said, and what, if anything, was paid in reliance of what was said?
D1 is currently the only named defendant in the 2nd Malawi Proceedings
a. It was the Claimant who chose first to commence proceedings in Malawi without naming D2, D3, D4 and D5 as defendants in those proceedings such that any injustice arising in that regard by requiring the Claimant to litigate in Malawi arises solely from the choices made by the Claimant.
b. As already observed, D3, D4 and D5 are minor players in the litigation.
c. In any event, D2, D3, D4 and D5 have all expressed their willingness to be bound by the decision of the Malawi court and indeed they say that they will not object to any application now made by the Claimant to join them as parties to the 2nd Malawi Proceedings.
d. There would be no difficulty in enforcing a Malawi judgment in this jurisdiction by way of registration under CPR r.74.6 pursuant to The Administration of Justice Act 1920.
Convenience, costs and delay
a. The majority of the Defendants' witnesses being key employees of D2 live in Malawi.
b. Whilst D3, D4 and D5 live in England, they will be able to travel to Malawi to give evidence in person or give evidence via video link, which the Malawi courts are able to facilitate.
c. If the Mussa Defendants are required to give evidence, they all live in Malawi.
d. Litigation in the High Court (Commercial Court) in Malawi is conducted in English.
a. Statements of cases have been filed and served.
b. In court mediation was directed, but was unsuccessful in resolving the dispute.
c. Directions were then given for the filing and serving of –
i. documents;
ii. witness statements; and
iii. skeleton arguments.
Those directions have been complied with.
d. A Pre-Trial Conference was held on 5 December 2023 when the judge directed –
i. The Claimant's lawyers rectify anomalies in the trial bundle; and
ii. The matter be set down for trial.
a. There will need to be a direction for the Defendants to file their defences.
b. There will likely be a request made by the Defendants for further information in light of the inconsistencies already identified in the Claimant's Particulars of Claim.
c. There will then need to be a costs and case management hearing to consider and direct a timetable for:
i. Disclosure of documents;
ii. Exchange of witness statements; and
iii. Potentially expert evidence on banking law in Malawi.
Conclusion
Spiliada – Stage 2
a. The legal system in Malawi is based on the English common law and has been modified since 1969 developing its own particular version of the common law relevant to Malawi society.
b. The Malawi Constitution defines the judiciary as a hierarchical system of courts, with the highest court being a Supreme Court of appeal, together with a High Court and a number of Magistrates Courts. The judiciary is totally independent and the rule of law strong in Malawi.
c. Trials are conducted in a similar fashion to those of the English courts and are fair, with great emphasis placed on justice and equity.
Overall conclusion
Note 1 It was alleged that the loans were made to support the Mussa Defendants’ businesses in Malawi being Mussa Nurmahomed and Phazi Industries Limited, which were subsequently added as defendants to the First Malawi Proceedings. [Back]
