"Hurley-Burly": Anti-Suit Injunctions and "a right to be sued" in your own domicile under Article 4 of the Judgments Regulation?

In Gray v Hurley [2019] EWHC 1972 (QB) (23 July 2019) Mr Justice Lavender was asked to grant an anti-suit injunction to stop proceedings in New Zealand on the basis that Art 4(1) of the Brussels I (Recast) Regulation ("the Judgments Regulation") obliged the defendant not to sue an English domiciled claimant in any other jurisdiction than England and Wales.

Art 4(1) of the Judgments Regulation provides that:

"Subject to this Regulation, persons domiciled in a Member State shall, whatever their nationality, be sued in the courts of that Member State".

It is well-established that Art 4 is both mandatory in nature and the "fundamental rule of jurisdiction": Owusu v Jackson [2005] QB 801, at [37] and [45].

But does it confer a "right" not to be sued which can and should be protected by anti-suit injunction?

The facts

In or about March 2013, the claimant, Ms Mandy C. Gray, a 44-year-old American born wife of a successful investment manager, left the family home and started a relationship with her physical therapist, Mr Hurley, a 41-year-old New Zealander, whom she had met at her gym in Chelsea. For almost six years the couple enjoyed a lavish lifestyle, that included travel to many different locations around the world, all of which was paid for by Ms Gray, as Mr Hurley had no source of income.

During the relationship:

(1)        substantial sums (the "Investment Monies") totaling US$9,151,988 were paid to Mr Hurley and others in various investments, ("the Investments"), including a proposed advertising software business, a proposed skincare business and a proposed business selling powdered juice known as "Zuma Juice"), and

(2)       a number of valuable assets ("the Assets") were acquired: These included a property in Italy, a farm in New Zealand, four cars (namely a Ferrari 458 Speciale, a Pagani Huayra Coupe, a Pagani Zonda R and a Ferrari F1) and deposits were also put down of two more luxury cars (a Pagani Huayra Roadster, and a Ferrari 488 Pista).

The relationship lasted until 18 January 2019, at which date Ms Gray ended it.

The New Zealand Proceedings

On 25 March 2019, Mr Hurley, commenced proceedings against Ms Gray in New Zealand ("the New Zealand Proceedings") seeking an order under the New Zealand Property (Relationships) Act 1976. Under that Act, where parties to a relationship separate their property is classified as either relationship property or separate property. Once classified, the general rule of New Zealand law is that relationship property will be divided equally between the parties.

The English Proceedings

The following day, Ms Gray issued a claim from in England and obtained an order for alternative service, serving the claim form on Mr Hurley by Whatsapp.

In her English action, Ms Gray claimed that each of the Assets was purchased with her money and that the Investment Monies were paid from her money. None of these payments were made by way of gift, and all were made as a result of Mr Hurley exercising undue influence over her. In relation to the actual Investments which were made, Ms Gray claimed that Mr Hurley acted as her advisor, despite having no ability to do so, but she did not make a claim for negligent advice. The relief sought in the English action included various declarations that Ms Gray was absolutely beneficially entitled to the Assets under resulting trusts (though no change in the legal ownership of any of the Assets was sought in the English action), as well as claims in restitution, based on undue influence. These claims are disputed by Mr Hurley.

The applications

In England, a series of overlapping applications were filed by both sides.

First, Mr Hurley challenged the jurisdiction under the Court under CPR Part 11 and applied for setting aside of the order for alternative service and a stay of the English proceedings.

In response, Ms Gray contended that the English Court had jurisdiction pursuant to Art.4(1) of the Judgments Regulation on the grounds that Mr Hurley was domiciled in England on the date proceedings was issued (26 March 2019), and as such permission to serve Mr Hurley out of the jurisdiction was not required. Mr Hurley denied that he was domiciled in England and Wales and asserted that he was in fact domiciled in New Zealand, but in any event contended that:

(a)        Ms Gray's claim was outside the scope of the Judgments Regulation by virtue of Art.1(2)(a), which excludes form the scope of that Regulation "rights in property arising out of a matrimonial relationship or out of a relationship deemed by the law applicable to such relationship to have comparable effects to marriage"; and / or

(b)        part of Ms Gray's claim was subject to the exclusive jurisdiction of the Italian courts, pursuant to Arts 24 and / or 25 of the Judgments Regulation

Second, if contrary to her primary contention, she needed permission to serve the claim form out of the jurisdiction, Ms Gray claimed that the English court should assume jurisdiction pursuant to CPR 6.36 and the jurisdictional gateways set out in sub-paragraphs (1), (15), (16) and / or (4A)of paragraph 3.1 of PD6B, and thus, contingently applied for:

(a)        permission to serve out; and

(b)        an order retrospectively validating the service that had already been made on Mr Hurley.

In response, Mr Hurley contends that (i) on parts of Ms Gray's claim there was no serious to be tried; (ii) there was no good arguable case that her claim fell within any of the jurisdictional gateways in paragraph 3.1 of PD 6B; and (ii) England was not clearly or distinctly the appropriate form for the case to be tried.

Third, Ms Gray also applied for:

(a)        an anti-suit injunction; and

(b)        a freezing order.

When the matter came before Lavender J. it was agreed that he should initially only deal with the jurisdictional issues, leaving the other matters to be dealt with subsequently.

The Jurisdiction Judgment [2019] EWHC 1636 (QB)

The initial judgment was given by Lavender J. on 25 June 2019. The Court rejected the argument that Ms Gray's claims were excluded from the scope of the Judgments Regulation, and then considered whether Ms Gray had been entitled to sue Mr Hurley in England on the basis of domicile. On the evidence, the Judge found that:

(1)        There was a good arguable case that Mr Hurley was domiciled in England from 2014 down to the middle of January 2019;

(2)        But by 26 March 2019, the date proceedings were issued, Mr Hurley had ceased to be resident in England and therefore had ceased to be domiciled in England.

(3)        But neither was he domiciled in New Zealand on 26 March 2019: Mr Hurley had not returned there by that date after the end of the relationship with Ms Gray. Therefore, Ms Gray had a good arguable case that he was not domiciled in New Zealand at that date.

In such circumstances, the Court concluded that Ms Gray was entitled to serve the claim form on Mr Hurley out of the jurisdiction on the basis that England was his last known domicile, pursuant to Art. 4 of the Judgments Regulation "as extended in the manner set out" in the judgment of the CJEU in Case C-327/10 Hypotecni banka a.s. v Lindner [2011[ ECR I-11543 ("Lindner"). This was a consumer jurisdiction case, in which the CJEU held that were a consumer's current domicile was unknown, the courts of the place where he had his last known domicile may have jurisdiction to deal with proceedings against him. Lavender J. believed this interpretation of domicile extended to cover a situation under Art. 4(1). In the alternative, the Court would have granted permission to serve out for most, but not all of the claims.

The anti-suit injunction judgment [2019] EWHC 1972 (QB)

In this second stage of the hearing of the applications, Ms Gray argued that the Court should grant an anti-suit injunction in her favour because:

(1)        This was right to protect her rights under Art. 4(1) of the Judgments Regulation not to be sued outside England, where she is domiciled;

(2)        It was "the right thing to do" in the exercise of the Court's discretion, as the New Zealand proceedings were unconscionable in the sense explained in Midland Bank  Ltd v Laker Airways [1986] 1 QB 689; and / or

(3)        It would be contrary to s.6 of the Human Rights Act 1988 for the Court to do otherwise.

The Claimant's Argument

Ms Gray's primary argument was based on the controversial decision of the Court of Appeal in Samengo-Turner v J & H Marsh & McLennan (Services) Ltd [2007] EWCA Civ 723 [2008] ICR 18, a case which arose in the context of the employment jurisdiction provisions that are now found in Art 22 (1) of the Judgments Regulation. Art. 22(1) provides that:

"An employer may bring proceedings only in the courts of the Member State in which the employee is domiciled".

In Samengo-Turner, the Court of Appeal had found that this created a right capable of being protected by injunction. The issue for Lavender J. was whether the ratio of the decision in Samengo-Turner extended to cover Art 4(1)?

The answer to this question hinged on three paragraphs in that judgment.

In paragraph 25 of Samengo-Turner, Tuckey LJ, with whom Longmore and Lloyd LJJ agreed said (emphasis added) that:

"It is well established that the terms used in an instrument such as the Regulation have to be given an autonomous (European) meaning so that each Member State will apply it consistently and not interpret it in accordance with its own national law. So what are the objectives of the Regulation? Those which are relevant can be gleaned from recitals 11–15. Thus the Regulation is obviously designed to avoid jurisdiction disputes. To this end it aims to achieve certainty and avoid multiplicity of proceedings. Jurisdiction is allocated to the court with the closest connection to the dispute. The general rule is that a party is entitled to be sued in the courts of his or her own domicile, but there are exceptions to this rule, for example where the parties have agreed otherwise (Article 23). In matters relating to contracts of employment however, the employee can only be sued in the court of his domicile (Article 20) unless he has agreed to some other jurisdiction after the dispute has arisen (Article 21(1)). These special provisions meet one of the objectives of the Regulation which is to protect employees who are regarded as the weaker party in the employment relationship from a socio-economic point of view. So much is common ground between the parties in this case, as is the principle that if section 5 is engaged the fact that the employer is not domiciled in a Member State is irrelevant (see General Insurance v Group Josi [2001] QB 68 )."

At paragraph 41, Tuckey LJ said (emphasis added)

"We were referred to various English cases which have dealt with these problems in the context of commercial disputes where injunctions have been claimed on the basis of an exclusive jurisdiction clause or forum conveniens. But no case was cited to us where the exclusive jurisdiction of the English court was mandated by statute. Mr Dunning submitted that where that was so, the case for an injunction was at least as strong as a case based on an exclusive jurisdiction clause. I do not necessarily accept this. In general, if parties agree an exclusive jurisdiction clause they should be kept to their bargain; if, as here, the exclusive jurisdiction of the English courts is imposed by statute it can be said that the case for an injunction is not so strong, particularly where the statute has provided that an agreed exclusive jurisdiction clause is of no effect."

Finally, at paragraph 43 of his judgment, Tuckey LJ said (emphasis added)

"Doing nothing is not an option in my judgment. The New York court cannot give effect to the Regulation and has already decided in accordance with New York law on conventional grounds that it has exclusive jurisdiction. The only way to give effect to the English claimants' statutory rights is to restrain those proceedings. A multinational business must expect to be subject to the employment laws applicable to those they employ in different jurisdictions. Those employed to work in the MM group in London who are domiciled here are entitled to be sued only in the English courts and to be protected if that right is not respected. There is nothing to prevent MMC and GC or any other company in the MM group from enforcing their rights under the bonus agreements here."

What was the scope of the ratio in Samengo-Turner? The Court did not find the question an easy one, but concluded that:

"25.  The simple fact is that the court in Samengo-Turner did not have to address the question whether, as [the Claimant's counsel] contends, a "breach" of what is now Article 4(1) ought ordinarily to lead to an anti-suit injunction. I recognise the argument that the reasoning in Samengo-Turner extends beyond Article 22(1) to Article 4(1), but I am not persuaded that I am obliged to conclude that a "breach" of what is now Article 4(1) ought ordinarily to lead to an anti-suit injunction".

The judgments in the subsequent decision of the Court of Appeal in Petter v EMC Europe Limited [2015] EWCA Civ 828 [2015] 2 CLC 178 (in which that Court had considered itself bound by Samengo-Turner) did not persuade Lavender J. to believe that the decision in Samengo-Turner extended beyond a "breach" of Art 22(1).

Accordingly, the learned Judge refused to grant an anti-suit injunction for this alleged breach of a right under Art.4.  In this respect, the Court sided with earlier first instance obiter dicta which had considered that the there no such right: see e.g. Evialis S.A. v S.I.A.T. [2003] 2 Lloyd's Rep. 377, at [139 (ii)] per Andrew Smith J.

Similarly claims for relief under the Court's discretionary powers under s.37 of the Supreme Court Act 1981 were refused. The Court took into account the factors summarized by Toulson L.J.'s judgment in Deutsche Bank v Highland Crusader [2009] EWCA Civ 725, [2010] 1 WLR 1023, and concluded that there was no proper basis for the exercise of the Court's discretion:

(1)        Mr Hurley's claim under New Zealand law would not be determined in England;

(2)        The Court did not consider the New Zealand proceedings to be unconscionable: there were clearly connections between the dispute and New Zealand, and New Zealand law was limited in the scope of property it covered, not extending to immovable    property outside the jurisdiction and only to movable property if one of the parties to the relationship is domiciled in New Zealand and subject to a discretion whether or  not to accept jurisdiction;

(3)        In the circumstances, Mr Hurley's bringing of the New Zealand claim could not be considered to be illegitimate;

(4)        Comity was implicated, as an anti-suit injunction would not require Mr Hurley to   bring his claim under the New Zealand Act in a different jurisdiction, but would in fact prohibit him from bringing the claim at all.

(5)        The prosecution of parallel proceedings in different jurisdictions is undesirable but not necessarily vexatious or oppressive.

Ms Gray's claims s.6 of the Human Rights Act 1988 also failed. It was accepted that it could only apply if Mr Hurley was subject to a statutory obligation not to sue Ms Gray in any jurisdiction other than England. That was not the case. Nor could any claim be maintained on the facts under Art.1 of Protocol 1 to the ECHR which provides that "every natural or legal person is entitled to the peaceful enjoyment of his possessions". The Court:

(a)        did not consider there was any positive obligation inherent in Art. 1 which obliged the grant of an injunction, and doubted whether that obligation could ever oblige the English grants to grant a form of injunction which is unknown in many other   European legal systems; and

(b)        considered that the prospect of the New Zealand proceedings resulting in an unlawful interference with the peaceful enjoyment of Ms Gray's possessions (i.e. her interest in the Assets etc.) was a remote one. The fact that the action was brought did not constitute such an interference. It would only arise if and when Mr Hurly obtained a judgment in his favour in New Zealand and was able to enforce that judgment. Whether a New Zealand declaratory judgment could be enforced abroad was speculative.

An appeal is apparently pending.