Plaza BV v The Law Debenture Trust Corporation Plc [2015] EWHC 43 (Ch)

Case No HC 2014 000518[2015] EWHC 43 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 16/01/2015
Before
MRS JUSTICE PROUDMAN
Between
PLAZA BVClaimantTHE LAW DEBENTURE TRUST CORPORATION PLCDefendant
Gabriel Moss QC and Robert Ham QC (instructed by Harcus Sinclair) for claimantRichard Snowden QC, Andrew Clutterbuck QC and Sharif Shivji (instructed by Eversheds LLP) for defendantHearing Hearing dates: 29 and 30 October 2014
JudgmentMrs Justice Proudman :
[1]The defendant The Law Debenture Trust Corporation PLC (“LDTC”) seeks an order pursuant to CPR Part 11 r 11 (1) staying proceedings brought by Plaza BV (“Plaza”). If it should be unsuccessful, it seeks an order under CPR Part 24 granting summary judgment or, in the alternative, striking out the whole claim.[2]Mr Moss QC and Mr Ham QC appeared for the claimant and Mr Snowden QC, Mr Clutterbuck QC and Mr Shivji appeared for the defendant. Background[3]LDTC is the trustee of five subordinated bond issues issued by an Australian Group of companies, the Bell Group. There are, briefly, two categories of subordinated bond issues:• Three bond issues (“the BGNV bonds”) issued by Bell Group NV (in insolvent liquidation in Curaçao (the place of the principal liquidation) and Australia (the place of the ancillary liquidation)), a Dutch Antilles Curaçao company. The BGNV bond issues (and also the BGF bond issue- see below) were guaranteed by the Bell Group’s holding company, The Bell Group Ltd, (“TGBL”) on a subordinated basis. TBGL’s obligations under its subordinated guarantee rank equally with TBGL’s other present and future subordinated indebtedness.• There are two other bond issues, one issued by TBGL and one issued by Bell Group Finance Pty (“BGF”). Both TBGL and BGF are Australian companies in insolvent liquidation in Australia. The Insurance Commission of Western Australia (“ICWA”) is the sole bondholder but not the sole beneficiary under the trust deeds. The senior creditors of TBGL and BGF including BGNV are also beneficiaries and they rank in priority to ICWA.[4]All the trust deeds are governed by English law, all have a non-exclusive English jurisdiction clause and all expressly authorise LDTC to act as trustee in relation to bond issues by other companies in the Bell Group.[5]The claimant (“Plaza”) was incorporated in the Netherlands but its address is in Curaçao. It is a substantial holder of BGNV bonds. BGNV lent on the proceeds of the bond issues to TBGL and BGF. TBGL is also a guarantor of the BGNV and BGF bond issues. The loans have not been repaid and BGNV is a senior unsubordinated creditor of TBGL and BGF.[6]Plaza, as beneficiary under the BGNV trust deeds, has brought proceedings in England against LDTC and contends that its claim is both meritorious and appropriately brought in this country.[7]The way the bonds work has been treated in detail by Owen J in his judgment in Western Australia in The Bell Group Ltd (in liquidation) v. Westpac Banking Corporation (No 9) [2008] WASC 239 at [2574] and following. However, at the risk of repetition, I propose to explain briefly:(i) the structure of the Bell group financing arrangements,(ii) the disputes which have arisen from the insolvency of the Bell Group,(iii) distribution issues arising after what has been termed the Main Action, namely an action described in more detail below and(iv) Plaza’s current claim with which I am concerned. The structure of the Bell Group Financing Arrangements[8]TBGL undertook to the BGNV bondholders not to create, have outstanding or guarantee any other indebtedness for borrowed money other than the BGNV bonds convertible into the equity of TBGL unless such indebtedness was subordinated and ranked equally in all respects with or junior to the BGNV bonds or TBGL’s subordinated guarantee of the BGNV bonds.[9]Accordingly, TBGL could only issue or have outstanding the TBGL bonds or guarantee the BGF bonds if those bonds and guarantee ranked at all times equally with or junior to TBGL’s subordinated guarantee of the BGNV bonds. Thus ICWA’s rights as bondholder of the TBGL and BGF issues are contractually subordinated through the trust deeds.[10]Further, as one of the senior creditors of TGBL and BGF, BGNV also benefits from a turnover trust. The trust deeds require LDTC to hold any moneys paid to it in the winding up of TGBL and BGF on trust to pay out the claims of, inter alia, the senior creditors of TBGL and BGF. Owen J in Western Australia has held that these provisions create “a presently constituted trust”: see the Bell Group case (cited above) at [3326].[11]Thus Plaza, through BGNV, stands in priority to ICWA as a creditor of the Bell Group under these arrangements. Collapse of the Bell Group[12]The Bell Group collapsed in 1991 and BGNV, TBGL and BGF all went into liquidation. On 18 December 1995 the liquidators of the principal companies in the Bell Group commenced proceedings in Western Australia (CIV 1464 of 2000, “the Main Action”) challenging security taken prior to the liquidation by two groups of banks which were at that time senior creditors benefiting from the same turnover trust subordination provisions in the TBGL and BGF trust deeds as BGNV.[13]It seemed at the time that the Bell Group’s unsecured creditors would recover nothing unless the Main Action was successful. Two of those major unsecured creditors were Plaza and ICWA (as the principal bondholders of BGNV, TBGL and BGF) and they therefore largely (with the Commonwealth of Australia) funded the Main Action to the tune of hundreds of millions of Australian dollars. Without such funding it was doubtful whether the Main Action would have proceeded at all and there would be no recovery for the BGNV, TBGL and BGF bondholders.[14]The funding arrangements proceeded on the basis that the parties would receive a preferential share of any recoveries by the liquidators under the provisions of s.564 of the Australian Corporations Act 2001 (“s.564”), which provides as follows:
“Power of Court to make orders in favour of certain creditors Where in any winding up: (a) property has been recovered under an indemnity for costs of litigation given by certain creditors, or has been protected or preserved by the payment of moneys or the giving of indemnity by creditors; or (b) expenses in relation to which a creditor has indemnified a liquidator have been recovered; the Court may make such orders, as it deems just with respect to the distribution of that property and the amount of those expenses so recovered with a view to giving those creditors an advantage over others in consideration of the risk assumed by them.”

Where in any winding up:

[15]However ICWA’s main interest in the Bell Group liquidation was as bondholder and under the terms of the TBGL and BGF issues, it was LDTC as trustee and not ICWA as beneficiary, which had the legal right to prove in the liquidations. There was thus a risk that the court might take the view that ICWA was not a creditor within the meaning of s. 564. Its funding was therefore provided through LDTC as trustee for the TBGL and BGF bonds. Likewise, Plaza provided its funding through BGNV.[16]This did not solve ICWA’s problems; since the banks being sued in the Main Action were senior creditors of TBGL and BGF, there was still a risk that a s.564 award would primarily benefit them rather than ICWA.[17]It was therefore decided to amend the TBGL and BGF trust deeds by supplemental deeds (“the Second Supplemental Deeds”) disapplying the subordination provisions to the extent of any award pursuant to s.564. This has been referred to before me as the “Partial Desubordination” strategy.[18]The Second Supplemental Deeds were executed by LDTC on 20 March 1995, but were not executed by TBGL and BGF, whose liquidators sought the approval of the Supreme Court of Western Australia (“the Western Australian Court”) before doing so. That approval was not forthcoming because of the intervention of the Other Action referred to and defined below. However Plaza and BGNV were kept informed of these developments at the time and indeed ICWA, LDTC and BGNV entered into an agreement dated 4 July 1997 whereby BGNV specifically agreed (by Clauses 1 and 5) that it would not challenge Partial Desubordination.[19]It is notable that Mr R. Paul Griese has been closely affiliated with both BGNV and Plaza throughout, and executed documents as a representative of both. It is fair to assume that in practice BGNV and Plaza make common cause.[20]The banks who were defendants in the Main Action launched separate proceedings, CIV 2061 of 1996 (“the Other Action”), challenging the propriety of Partial Desubordination and the Second Supplemental Deeds. ICWA and LDTC counterclaimed for declaratory relief upholding that propriety.[21]In 1999 Plaza ceased to fund the liquidators. However BGNV was to remain entitled to a share of any recoveries made against the banks. Plaza agreed that the liquidators would apply for a s.564 award resulting in BGNV receiving 37.5% of 2/3 of net recoveries, the Commonwealth of Australia receiving 9% and ICWA and LDTC 53.5%. An agreement has been approved by the court in Curaçao whereby Plaza is to receive 70-80% of BGNV’s net bankruptcy estate. Thus Plaza will receive most of any recoveries that may enure to BGNV. Mr Snowden pointed out that Plaza’s expectation of receiving recovery through LDTC as BGNV trustee in consequence of its status as BGNV bondholder is very small by comparison.[22]The trial of the Main Action commenced on 22 July 2003. On 7 April 2004 the banks were permitted to amend their claim (and thus extend the trial) raising some of the issues already raised in the Other Action. Rather than face this prospect, the liquidators of the Bell Group Companies invited ICWA to withdraw its proposal to effect Partial Desubordination and ICWA and LTDC agreed. Thus the liquidators of TGBL and BGF, ICWA, LDTC and BGNV agreed to suspend the Partial Desubordination strategy. ICWA also obtained BGNV’s express consent to this change, a fact of which Plaza was aware.[23]On the same day, 7 October 2004, the banks discontinued their claims in the Other Action. ICWA and LDTC also dropped their counterclaim as to the validity of the Second Supplemental Deeds but maintained the counterclaim against the TBGL and BGF senior creditors (including the banks) that a s.564 award would not be caught by the subordination provisions of the TBGL and BGF trust deeds.[24]Also on the same day, 7 October 2004, undertakings were given to the Western Australian Court. In the Main Action the liquidators of TGBL and BGF (personally and on behalf of TBGL and BGF) gave undertakings not to allow Partial Desubordination; andin the Other Action, both the liquidators and LDTC in its capacity as trustee of the TBGL and BGF bonds gave similar undertakings. The undertakings were, in the Main Action, that the liquidators would not enter into the Second Supplemental Deeds or any similar deeds. They also undertook that they would not otherwise consent to any amendment of or modification having the same effect. In the Other Action, there were similar undertakings save that there would be no consent to any amendment or modification to the trust deed without notice being given to the plaintiffs in the Other Action. However both sets of undertakings were expressly given on the basis that:
“there be liberty to apply to be released or to vary the undertakings if any amendment sought to be made… does not in any way adversely affect the rights, interests or position of [Senior Creditors of the Bell Group Ltd or Bell Group Finance Pty Ltd]”
[25]Thus it was decided not to proceed with the Second Supplemental Deeds. They were returned to LDTC on 24 September 2011 unsigned by the liquidators.[26]LDTC says it regards the Second Supplemental Deeds as being of no effect and that it has no present intention of implementing them or of taking any step to effect Partial Desubordination. ICWA has also accepted that LDTC is not now bound by its execution of the Second Supplemental Deeds. ICWA has made no formal request to LDTC to effect Partial Desubordination. LDTC has undertaken to Plaza that it will not perfect the Second Supplemental Deeds without notice to Plaza and it says that if ICWA were to request it to do so, it would consider whether to do so in accordance with its trustee obligations at the date of such request.[27]In 2008 judgment in the Main Action was given at first instance in favour of the liquidators. The judgment was upheld on appeal in 2012. The banks appealed to the High Court of Australia. While that appeal was pending, the Main Action was settled by a Deed of Settlement dated 17 September 2013. On satisfaction of sundry conditions (the Deed of Settlement was conditional on third party approvals) it came into full force on 27 June 2014. The parties to the Deed of Settlement were not only the parties to the Main Action but also LDTC as trustee for the TBGL and BGF bondholders and, importantly for present purposes, Plaza.[28]The Deed of Settlement’s principal purpose was to resolve the issues between the plaintiff Bell Group companies and the defendant banks by disposal of all the proceedings. The banks dropped their claims as creditors in the liquidation so, as I have said, they are not now senior creditors for the purposes of the subordination provisions of the TBGL and BGF trust deeds. However, the Deed of Settlement also contains other important provisions set out below. Distribution issues[29]After entering into the Deed of Settlement, the liquidators of TBGL and BGF received 1.7 billion Australian dollars.[30]In the absence of Partial Desubordination Plaza retains priority because BGNV is a senior creditor, ahead of LDTC as trustee for ICWA. As the banks were removed as creditors, Plaza is a very significant creditor.[31]However, the Deed of Settlement envisages implementation of the Partial Desubordination strategy. Two clauses provide for steps to be taken to remove the undertakings to the Western Australian Court which block Partial Desubordination: Clause 6(h) provides that (inter alios) TBGL and BGF (but excluding LDTC as BGNV trustee):
“…severally (and not jointly or jointly and severally) will take any and all steps reasonably necessary to facilitate [release of the undertakings in the Main Action]…”
And Clause 20(a)(vii) provides:
“Each party to this deed that is a current or former party to [the Other Action] (except for BGNV), will severally (and not jointly or jointly and severally) promptly take any and all steps reasonably necessary to facilitate the release of any current or former party to that proceeding from any undertaking given in the proceeding to the Supreme Court of Western Australia… ”
Another relevant provision of the Deed of Settlement is the exclusive jurisdiction clause contained in Clause 33 (a) and (b), which subclauses are in the following form:
“GOVERNING LAW. (a) This deed is governed by the laws of the State of Western Australia. (b) Each party submits to the exclusive jurisdiction of the courts of that State and of any courts that may hear appeals from any of those courts, over any proceedings in connection with this deed.”
[32]The remaining disputes relating to the Bell Group insolvency are being managed together in the Western Australian Court in a specialist list by a single allocated judge, Pritchard J. These include:(a) An application under s.564 filed on 4 August 2014 by the liquidators of TBGL and BGF (the liquidators of the principal Bell companies had previously applied for s. 564 relief on 7 April 1995 but that application had been dismissed on 13 November 1996 as premature);(b) Two applications by ICWA filed on 17 September 2014 asking for resolution of matters including,• Whether ICWA can benefit from an award under s.564 without Partial Desubordination and whether the subordination provisions in the TBGL and BGF trust deeds are an obstacle to receipt of such an award;• Whether those trust deeds could be amended as envisaged in the Second Supplemental Deeds and• Whether BGNV can challenge such amendments. Plaza’s current claim[33]After about six months of pre-action correspondence, Plaza served its claim form and particulars of claim on LDTC in England on 3 June 2014, that is to say, before the applications mentioned above made by the liquidators and by ICWA, but after 17 September 2013, the date of the Deed of Settlement.[34]Plaza is mistrustful of LDTC and fears(a) that ICWA is controlling it and(b) that LDTC intends to implement the Second Supplemental Deeds. It says that LDTC is in an impossible position of conflict between its position as trustee for the BGNV bondholders and as trustee of the TBGL and BGF bonds and it has “undertaken an engagement in which it owes conflicting duties to parties with conflicting interests”, namely ICWA as sole holder of the TBGL and BGF bonds on the one hand, and the BGNV bondholders on the other.[35]In the action, Plaza seeks to restrain LDTC from acting contrary to Plaza’s interests in alleged breach of trust and in alleged conflict of interest. If effective, Plaza says that the Second Supplemental Deeds will adversely affect the rights of the senior creditors of TBGL and BGF, including BGNV. TBGL’s indebtedness will be desubordinated so that the obligations do not rank equally with TBGL’s subordinated obligations in respect of the BGNV bonds. The Second Supplemental Deeds will have the effect that any s.564 award paid to LDTC will be held for the benefit of ICWA, currently a subordinated bondholder, rather than for the benefit of the senior creditors of TBGL and BGF, including BGNV. If the Second Supplemental Deeds are not brought into effect, Plaza can take steps to restrain LDTC from participating in proposed scheme meetings, but if they are, Plaza will be deprived of the opportunity to do so.[36]By its pleading Plaza alleges that LDTC has put itself in a position where its duties under the BGNV trust deed and the TBGL and BGF trust deeds conflict and is in breach of trust in effecting Partial Desubordination. Plaza alleges that LDTC intends to take steps to effect Partial Desubordination by:• Facilitating the release of the undertakings given by LDTC in the Other Action;• Facilitating the release of the undertakings given by TBGL, BGF and their liquidators in that action and in the Main Action;• Supplying TBGL, BGF and their liquidators with either the Second Supplemental Deeds or deeds to similar effect for execution;• Otherwise seeking to bring about Partial Desubordination.[37]Plaza claims injunctive relief restraining LDTC from implementing the Second Supplemental Deeds (or deeds to similar effect), claiming that all such deeds should be delivered up, that LDTC’s execution of the Second Supplemental Deeds should be annulled and also claiming declaratory relief that the steps outlined above would (among other things) constitute breach of trust.[38]Plaza now seeks to amend its particulars of claim so as not to plead relief with respect to the alleged wrongdoing from the 1990s, on the ground that it would be likely to be time-barred.[39]LDTC applies for a stay under CPR Part 11 r. 11 (1) (b) and under the Court’s inherent and CPR case management powers. CPR Part 11[40]Two questions arise. First, is the exclusive jurisdiction clause in Clause 33 (b) of the Deed of Settlement engaged? Secondly, what is the effect of article 2 of Council Regulation (EC) 44/2001 (“the Brussels Regulation”) in the light of Owusu v. Jackson and Ors [2005] QB 801. I propose to deal with these two questions in turn. Clause 33 (b)[41]In considering the scope of the jurisdiction clause contained in Clause 33 (b) of the Deed of Settlement, the words “any proceedings in connection with”, fall to be given a broad and purposive construction: see Sebastian Holdings Inc v. Deutsche Bank AG [2010] EWCA Civ 998 [2010] 2 CLC 300 at [39] in which Thomas LJ (with whom the other members of the Court of Appeal agreed) cites Lord Hoffmann in Fiona Trust & Holding Corporation v. Privalov [2007] UKHL 40 [2007] 2 CLC 553 at [7] and [13], “If, as appears to be generally accepted, there is no rational basis upon which businessmen would be likely to wish to have questions of the validity or enforceability of the contract decided by one tribunal and questions about its performance decided by another, one would need to find very clear language before deciding that they must have had such an intention.”[42]Clause 6 (h) of the Deed of Settlement requires the banks and the Main Respondents (an expression which excludes BGNV) other than LDTC as BGNV trustee, to take all steps reasonably necessary to facilitate the release of the Liquidators, TBGL and BGF, from their undertakings in the Main Action.[43]Plaza indirectly cites this obligation at [44.2], [49] and [49.3] of its particulars of claim when pleading that LDTC proposes to engage in conduct bringing about the implementation of Partial Desubordination, considering such conduct to be inconsistent with the duties that it is owed. Incidentally the language of the pleadings (“facilitating the release”) mirrors the language of the obligation at clause 6 (h) of the Deed of Settlement. Since Plaza pleads at [52.14] of the Particulars of Claim that it would be a breach of trust for LDTC not to take steps to prevent TBGL, BGF and their liquidators from implementing the Second Supplemental Deeds it seeks injunctive and declaratory relief both in effect to prevent LDTC from complying with clause 6(h) and to take positive action to breach the obligation therein contained.[44]Clause 20 (a)(vii) requires all the parties to the Other Action (including LDTC), except BGNV, to take all steps reasonably necessary to facilitate the release of the Liquidators, TBGL and BGF, and also LDTC as the TBGL and BGF trustee, from their undertakings in the Other Action. Again Plaza avoids directly citing this clause but, again, obliquely cites it in [44.1], [44.2] and [49.3] of its particulars of claim.[45]At [52.7] Plaza pleads that it would be a breach of LDTC’s obligations for it to “take steps to bring into effect, approve or implement the Second Supplemental Deeds”. One major such step would be to seek the release of the undertakings in the Main Action and the Other Action as provided for in the Deed of Settlement itself.[46]The substance of Plaza’s claim is thus that it would be in breach of trust for LDTC to comply with its obligations under the Deed of Settlement. Such a claim is in my judgment squarely “in connection with” the Deed of Settlement and the pleadings advanced by Plaza also refer indirectly to matters that are clearly “in connection with” the Deed of Settlement. In my judgment the exclusive jurisdiction of Clause 33 (b) is therefore engaged and the form in which Plaza’s complaint is expressed cannot detract from the substance of the dispute.[47]Plaza disavows any intention to stand in the way of LDTC fulfilling its obligations under the Deed of Settlement. It says that it did not seek in its prayer any relief preventing LDTC from performing such obligations. That is too narrow an approach. An injunction awarded by this Court preventing LDTC from modifying the TBGL and BGF trust deeds to achieve Partial Desubordination would frustrate the purpose underlying LDTC’s obligations in the Deed of Settlement regarding the release of the undertakings given to the Western Australian Court.[48]This Court must consider a wide range of material, including all the pleadings and the circumstances directly or indirectly referred to in the pleadings. That wider assessment exposes the connection between these proceedings and the Deed of Settlement.[49]Plaza also says that LDTC’s obligations under the Deed of Settlement arose on and from Completion, i.e. 27 June 2014, and it has not taken any steps to comply with them. However that seems to me to be immaterial.[50]A trial of the issues in the current action would be bound to require detailed evidence as to whether and how LDTC intends to comply with the Deed of Settlement. In the light of this it is irrelevant that the Deed of Settlement is not directly referred to on the face of the Particulars of Claim. The claim requires consideration of the Deed of Settlement and LDTC’s obligations under it.[51]Again, in my judgment it does not matter that Plaza now seeks to remove (from [49.3]) the explicit reference in its pleadings to LDTC’s intention to seek the release of the undertakings given in the Main Action and the Other Action. The strongest point in support of the imminence of Partial Desubordination is the fact that LDTC is contractually obliged to seek the discharge of the undertakings that currently debar Partial Desubordination.[52]Further, I am told that LDTC’s defence to the claim would be, in part, that Plaza cannot challenge LDTC’s compliance with the Deed of Settlement because Plaza is subject to an implied obligation under Australian law not to stand in the way of other parties’ performance of their obligations under the Deed of Settlement. The dispute is thus focused, at least in part, on both parties’ obligations under the Deed of Settlement. The exclusive jurisdiction clause is therefore firmly engaged.[53]I reach this conclusion expressly without deciding whether or not the defendant is right in saying that “engagement” in [49] of the Particulars of Claim means engagement with the Deed of Settlement, a matter staunchly denied by Plaza.[54]It seems to me plain therefore that the issue of release of the undertakings is “in connection with this Deed” for the purposes of Clause 33 (b) within the test propounded by Lord Hoffmann in Fiona Trust.[55]I now turn to the question whether the operation of this exclusive jurisdiction clause is ousted by application of Council Regulation (EC) 44/2001 (“the Brussels Regulation”) and whether any of the provisions of the Brussels Regulation can be applied reflexively. The Brussels Regulation (sometimes called “the Judgment Regulation”)[56]Article 2(1)of the Brussels Regulation provides:
“Subject to this Regulation, persons domiciled in a Member State shall, whatever their nationality, be sued in the courts of that Member State.”
LDTC is incorporated under English law and registered in England and is therefore domiciled in England under article 60 of the Brussels Regulation.[57]Plaza says that the mandatory effect of the Brussels Regulation is that, as LDTC is domiciled in England, it must be sued in England. In C-281/02 Owusu v. Jackson and others [2005] QB 801 the European Court of Justice held (at [35]) that article 2 applies to circumstances involving relationships between the courts of a single contracting state and those of a non-contracting state. Although Owusu is a case on the Brussels Convention (which the Brussels Regulation replaced) there is “no doubt that the same conclusion applies in the case of [the Brussels Regulation]”: Dicey, Morris and Collins on the Conflict of Laws 15th (2012) Ed at [11-028].[58]Mr Moss submitted that not only has Owusu ousted the common law jurisdiction of the court of any member state to stay its proceedings on forum non conveniens grounds, but both exclusive jurisdiction clauses and the principle of lis alibi pendens are no more than constituent factors in the wider principle of forum non conveniens. Accordingly, notwithstanding the exclusive jurisdiction clause and the fact that an action may be proceeding in the Western Australian Court, the Brussels Regulation does not merely permit but positively requires Plaza to bring proceedings in England to obtain a remedy for breaches of trust by an English domiciled trustee.[59]Owusu considered the impact of article 2 on the ability of the English court to stay proceedings in its discretion on the grounds of forum non conveniens, that is to say that it would be more appropriate for a court in a jurisdiction outside the European Union to resolve the dispute. The ECJ considered (at [41]-[44]) that allowing such discretion to override the otherwise mandatory effect of article 2 would undermine the principles of legal certainty and the legal protection of persons domiciled in Member States and affect the uniform application of the rules of jurisdiction across member states Accordingly at [46] it concluded:
“the Brussels Convention precludes a court of a contracting state from declining the jurisdiction conferred on it by article 2 of that Convention on the ground that a court of a non-contracting state would be a more appropriate forum for the trial of the action, even if the jurisdiction of no other contracting state is in issue or the proceedings have no connecting factor to any other contracting state.”
[60]It is not therefore open to LDTC to say that it would be more appropriate for the Western Australian Court to resolve the dispute, in other words, to make submissions on the basis of forum non conveniens. It would be wrong to allow those of Mr Snowden’s submissions which can properly be characterised as forum non conveniens submissions, that is to say, his submissions about the “obvious advantages” of staying Plaza’s claim on the ground that the underlying dispute is an overwhelmingly Australian one.[61]There is however a separate issue whether one can glean the wider principle from Owusu for which Mr Moss contends, that is to say that the court should not undermine the mandatory effect of article 2 through means other than forum non conveniens in the strict sense.[62]Mr Snowden points out that there are exceptions to art 2 in arts 23 and 28. Article 23 provides for a contractual jurisdiction provision to have effect where the jurisdiction is that of the court of a member state. Article 28 provides for jurisdiction to stay where related actions (actions where there is a risk of irreconcilable judgments arising from separate proceedings) are pending in the courts of different member states.[63]Article 23 (1) provides:
“If the parties, one or more of whom is domiciled in a Member State, have agreed that a court or the courts of a Member State are to have jurisdiction to settle any disputes which have arisen or which may arise in connection with a particular legal relationship, that court or those courts shall have jurisdiction.”
And article 28(1) and (3) provides:
“Where related actions are pending in the courts of different Member States, any court other than the court first seised may stay its proceedings. … For the purposes of this article, actions are deemed to be related where they are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings.”
[64]Mr Moss is of course right that these provisions do not apply directly because Western Australia is not a member state. However, Mr Snowden submits that these provisions should be applied reflexively. He says that, despite Owusu, the Court may apply articles 23 and 28 reflexively if it determines(a) that the exclusive jurisdiction clause should operate and(b) that the existence of the proceedings in the Western Australian Court renders it expedient that Plaza’s arguments be heard there.[65]Reflexive application is a term of art in the field of conflicts of law, allowing the court to apply by analogy provisions of European law by treating non-member states as if they were member states. It was given extensive consideration by Andrew Smith J in Ferrexpo at [125]-[127]. The court’s vehicle for analogous application is via a purposive use of its discretion to stay proceedings under the CPR. As Andrew Smith J said in Ferrexpo at [127]:
“…this is required in order to give effect to the purpose (albeit not the letter) of the Regulation.”
[66]I therefore turn separately to article 23 and article 28. Article 23(1)[67]There are first instance decisions (see Konkola Copper Mines plc v. Coramin Limited [2005] EWHC 898 (Comm), Winnetka Trading Corporation v. Julius Baer International Limited [2008] EWHC 3146 (Ch) and the analysis by Andrew Smith J in Ferrexpo v. Gilson Investments [2012] EWHC 721 Comm) [2012] 1 Ll Rep 588) in which the court has held that Owusu does not prevent the English court from enforcing exclusive jurisdiction clauses. As Norris J said in Winnetka, “The parties in [Owusu] were advancing arguments concerning forum non conveniens,not exclusive jurisdiction clauses. The court did not therefore have to consider what role an agreement between the parties might play, and compare the weight to be given to the agreement between the parties with the mandatory terms of art 2. …My own view is that the terms of art 2 cannot deprive the parties of their autonomy in agreeing which court shall have the jurisdiction to determine their disputes.” [He then cites Briggs and Rees’s Civil Jurisdiction and Judgments (4th edn para 2.102 p.128, (also cited in the later 5th edition), mentions r 32 (2) in Dicey, Morris and Collins on the Conflict of Laws (14th edn 2006) Vol 1 p.513 and the obiter comments of Colman J in Konkola to the same effect and continues:] “I therefore do not think that art 2…provide[s] a compelling reason for departing from the first choice made by the parties in the exclusive jurisdiction clause… Nor do I think that it constitutes an independent factor which in its own right militates against recognising the jurisdiction of the Guernsey court and the force of its order.”[68]A reflexive approach to article 23 (1) was thus applied in Winnetka, in which Norris J relied on the obiter dicta of Colman J in Konkola in confining Owusu to its terms.[69]In Ferrexpo, Andrew Smith J said at [131] and [133], “…para 37 of the judgment in Owusu v. Jackson…is not to be understood to prevent the national court declining jurisdiction in all circumstances unless they are expressly recognised by the Brussels Regulation. A basic principle of the Regulation emphasised by the ECJ in Owusu itself is that a well-informed party should be able to predict where he might be sued and where he is entitled to sue, and it would not promote this principle to interpret the Regulation so as to defeat the parties’ express agreement for exclusive jurisdiction, an agreement that is generally designed to achieve just such certainty…. Accordingly, the defendants submit, once it is recognised that the mandatory effect of article 2 of the Brussels Regulation is subject to the exception of an exclusive jurisdiction clause whereby the parties have chosen to resolve their disputes in the courts of a non-member state, there is no reason to interpret the judgment in Owusu v. Jackson as requiring the courts of member states to exercise jurisdiction over matters covered by article 22. There is support for this conclusion in Choudhary v. Bhatter [2009] EWCA Civ 1176, in which Sir John Chadwick said this (at para 52): ‘…Properly understood, the decision in Owusu provides no direct authority on the question whether a court of a contracting state is precluded from declining the jurisdiction (if any) conferred on it by art 22 of the [Brussels] Regulation in respect of a person not domiciled in a member state on the ground that a court of a non-contracting state would be a more appropriate forum for the trial of the action.’” ‘…Properly understood, the decision in Owusu provides no direct authority on the question whether a court of a contracting state is precluded from declining the jurisdiction (if any) conferred on it by art 22 of the [Brussels] Regulation in respect of a person not domiciled in a member state on the ground that a court of a non-contracting state would be a more appropriate forum for the trial of the action.’”[70]Andrew Smith J then went on to cite Lawrence Collins LJ in Masri v. Consolidated Contractors International Co SAL [2008] EWCA Civ 303; [2008] 2 Lloyd’s Rep 128 in which Lawrence Collins LJ recognised the similarity of questions about declining jurisdiction in favour of non-member states in relation to articles 22 and 23, saying (at [125]), “…article 23 provides that if the parties, one or more of whom are domiciled in a Regulation State have agreed that the courts of a Regulation State are to have jurisdiction to settle any disputes which may arise between them. What if they have designated the courts of a State which is not a Regulation State, such as the courts of New York and an action is brought in England in breach of the jurisdiction agreement? In such cases it would be odd if the [Brussels Regulation] did not permit the English court to stay its proceedings.”[71]Mr Moss submitted that if any part of article 23 was applicable, it was article 23 (4):
“The court or courts of a Member State on which a trust instrument has conferred jurisdiction shall have exclusive jurisdiction in any proceedings brought against a settlor, trustee or beneficiary, if relations between these persons or their rights or obligations under the trust are involved.”
[72]However, the BGNV trust deed provides at clause 28 as follows:
“…nothing in this Clause contained shall hinder or prevent the Trustee from taking proceedings in any other jurisdiction as the Trustee shall decide and from exercising all rights and powers under the laws for the time being in force in any such jurisdiction which it would have been entitled to take or exercise but for the inclusion of this Clause in these presents…” 73. And each of the Issuer (BGNV) and the Guarantor (TBGL): “…hereby submits for all purposes of or in connection with these presents to the non-exclusive jurisdiction of the English courts… ”
[73]I do not consider article 23 (4) to be applicable. Clause 28 makes it plain that LDTC does not accept the jurisdiction of the English court in all circumstances.[74]I also agree with Mr Snowden that article 23 (4) does not contain any magic which elevates a non-exclusive jurisdiction clause into an exclusive one. The reference to “exclusive jurisdiction” simply means that the parties’ choice of forum should take effect to the exclusion of jurisdictions identified by the other articles of the Brussels Regulation: see per Hoffmann J in Kurz v. Stella Musical Veranstaltungs GmbH [1992] Ch 196 at 203-204. Jurisdiction is a question of the intention of the parties.[75]I agree with Norris J’s decision in Winnetka and Lawrence Collins LJ’s observations in Masri. The parties’ autonomy to choose the forum in which to settle their disputes is an important one which exists in European law as well as national law as can be seen from article 23 (1) itself. The court should not lightly override that principle.[76]I note that article 23 (1) is a mandatory exception to article 2, unlike forum non conveniens. In my judgment Owusu does not bar a reflexive application of article 23 (1). A mandatory exception to a rule does not have the same potential to undermine legal certainty as a discretionary exception. Article 28[77]If I am wrong about article 23 (and I do not think I am) I go on to consider article 28, relying on lis alibi pendens on the basis that discretion is given to the English court to stay proceedings where another court is already seised of a dispute which is so closely connected to the proceedings that there is a risk of irreconcilable judgments. The aim of article 28 is thus to avoid parallel proceedings and conflicting decisions.[78]There are two first instance decisions in which the court has declined reflexively to apply provisions that involve discretionary considerations.[79]One is Catalyst Investment Group Limited v. Lewinsohn [2009] EWHC 1964 (Ch); [2010] Ch 218, in which Barling J decided that a reflexive application of article 27 of the Brussels Regulation (article 27, like article 28, is also based on lis alibi pendens) was not available. Barling J considered (at [65]) that under Owusu legal certainty and uniform application of jurisdictional rules were central to the Convention and, latterly, the Brussels Regulation. At [99] he commented on the reflexive approach:
“it is not open to me to interpret and apply article 27 reflexively so as to enable me to exercise a discretion to stay proceedings which have been properly founded on article 2, on the grounds that the same dispute is pending between the same parties in the Utah courts and that the latter and not this court is the natural and appropriate forum. Such an interpretation would introduce the wide forum conveniens discretion by the back door, contrary to the ruling of the ECJ in Owusu’s case.”
[80]Barling J was thus persuaded that the question whether there is a lis alibi pendens is no more than a constituent factor within the doctrine of forum non conveniens.[81]Again, in Skype Technologies SA and another v. Joltid and Kasesalu and others [2009] EWHC 2783 (Ch) (incidentally an exclusive jurisdiction clause case, but one where exclusive jurisdiction was given to the English court), Lewison J said (at [22]):
“I am inclined to agree…that the decision of the ECJ in Owusu has now removed discretionary considerations (such as those relating to forum non conveniens) from playing any part in the decision of a court in a Member State from staying its own proceedings. I am also inclined to agree that the court should not, under the guise of case management, achieve by the back door a result against which the ECJ has locked the front door.”
[82]These two cases, Catalyst and Skype, run counter to other first instance decisions which allow for a reflexive application of the Brussels Regulation on lis alibi pendens grounds.[83]In JKN v. JCN [2010] EWHC 843 (Fam) Miss Lucy Theis QC (sitting as a Deputy Judge of the Family Division) refused to follow Catalyst in applying Owusu to cases where there are parallel proceedings in a non-Member state, citing four main reasons (at [149]) for the following conclusion:
“It is neither necessary nor desirable to extend the Owusu principle in cases where there are parallel proceedings in a non-member state.”
[84]It is instructive to note the observations of Lewison LJ when he cited JKN with approval in Mittal v. Mittal [2013] EWCA Civ 1255; [2014] Fam 102 at [41], “Accordingly in my judgment it is not appropriate to extend the reasoning in the Owusu case [2005] QB 801 to the very different circumstances of our case, which concerns a stay in favour of prior competing proceedings in a non member state (lis alibi pendens). I therefore agree with both the decision and the reasoning of Ms Lucy Theis QC, sitting as a deputy judge of the Family Division, in JKN v JCN (Divorce: Forum) [2011] 1 FLR 826, para 149(ii). It is not necessary for us to be drawn into a wider debate (which Ms Theis also considered) on the extent to which the Owusu case applies to the [Brussels Regulation]; and anything I might say on that topic would be simply obiter.”[85]Ferrexpo was concerned with an application to stay proceedings in England in favour of proceedings in the Ukraine. Andrew Smith J’s view was that there was an undeniable connection between the principles of forum non conveniens and lis alibi pendens. However he had no difficulty in giving effect to the ECJ’s finding in Owusu that because of article 2 a defendant cannot pray in aid the former principle while deciding that Owusu did not apply to the latter. The court retained its inherent and also its CPR case management powers: see Ferrexpo at [200] and Blue Tropic Limited v. Chkhartishvili [2014] EWHC 2243 (Ch) at [32].[86]Andrew Smith J considered the decision of the Court of Appeal in Lucasfilm v. Ainsworth [2009] EWCA Civ 1328. He contrasted the decision of Barling J in Catalyst but preferred (consistently with it being the later decision) JKN. He was willing (at [167]) reflexively to apply articles 27 and 28. He considered (at [187]) that article 27 applied to the exclusion of article 28 because the English court had first been seised of the issue. However, if that had not been the case he said (at [191]) that he would have ordered a stay on the basis of a reflexive application of article 28.[87]I am therefore faced with two older first instance decisions that go one way and two more recent first instance decisions that go the other. LDTC invites me to follow one route and Plaza the other.[88]The Brussels Regulation does not say that this Court has lost its discretionary powers to stay proceedings where a non-Member state has been first seised of the issue. Indeed article 28 suggests that the discretion exists as a matter of principle in European law. Importantly, not only did the ECJ in Owusu not rule out a stay of proceedings (otherwise falling within article 2: pace Lewison J’s decision in Skype) on the basis of lis alibi pendens, but at [47]-[52] it expressly declined to answer the question.[89]One way of reconciling Catalyst and Skype with Ferrexpo is simply to say that forum non conveniens submissions cannot be dressed up as lis alibi pendens in order to avoid Owusu. The fear expressed by both Barling J and Lewison J was that to allow circumvention of Owusu would be to reintroduce judicial discretion based on forum non conveniens which would undermine the principle of legal certainty.[90]I believe it may be open to me to apply article 28 reflexively, but the question is whether in all the circumstances of the case I should do so.[91]When writing this judgment I came across the decision of the Supreme Court in The Alexandros T [2013] UKSC 70; [2014] Bus LR 873. As it had not, I believe, been cited to me and it is a leading case of the highest authority on the (direct) application of article 28, I invited written submissions on it which I received from both parties. This judgment takes those submissions into account.[92]The Alexandros sets out three stages of the test for the application of article 28:(i) To identify which set of proceedings were commenced first: at [75] per Lord Clarke (with whom Lord Sumption and Lord Hughes agreed) quoting with approval FKI Engineering Ltd v Striborg Ltd [2011] Bus LR 1410, at [119]–[120] per Rix LJ. However the proceedings must still be pending. If they have been finally concluded by way of dismissal or discontinuance they cannot be regarded as pending although a stay does not mean that the action does not remain pending: see [77]–[90] per Lord Clarke.(ii) Secondly, the proceedings must be related to the current action, in the sense that they are, to quote article 28(3):
“so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings”
. The answer as to relatedness should be reached applying a “broad and commonsense approach…refraining from an over-sophisticated analysis of the matter”: Sarrio SA v Kuwait Investment Authority [1999] 1 AC 32, at 41 per Lord Saville, cited with approval in The Alexandros at [88] per Lord Clarke.[93]Following satisfaction of the first and second stages (and it does not matter in which order those stages are addressed: see [76]), the third stage (iii) is to consider the exercise of the court’s discretion.[94]As to the first stage, the s.564 Application and the ICWA Applications were commenced after Plaza’s current claim. Thus the only proceedings that remain to be considered for lis alibi pendens are the Main Action and the Other Action, both of which started some considerable time before Plaza’s present claim.[95]As regards the Main Action, Mr Moss submitted that it was in no sense “pending” following the Deed of Settlement, which, by clause 13, placed the parties to the Main Action under obligations to discontinue the appeal to the High Court of Australia. However this overlooks the fact that those proceedings remain current for the purposes of the undertakings which still bind the parties. Any application for the release of those undertakings under the liberty expressly set out in them, would not constitute fresh proceedings but rather an application within the existing actions: see per Lord Clarke in The Alexandros at [78]-[79]. The liberty to apply is the key: instead of starting a fresh action, the old one can be utilised.[96]Mr Moss submitted that the Other Action was also no longer pending. The counterclaim launched by ICWA and LDTC was amended in 2004 to remove the application for declaratory relief as regards the validity of the Second Supplemental Deeds. The banks similarly dropped their challenge to Partial Desubordination. Only the application by ICWA and LDTC about s. 564 remained and, on the issue of the ICWA Applications, counsel for ICWA has informed the Western Australian Court that it proposed to abandon that remnant because the Other Action was no longer an appropriate vehicle for the determination of the relevant issues which fall to be dealt with in the ICWA applications instead. Mr Moss submitted that a common sense approach meant that the Other Action was now dead. However, as before, I consider that the Other Action remains pending to the extent that the undertakings remain in force because of the liberty to apply. Citing Lord Clarke in The Alexandros at [89]:
“…it seems to me that it would be very odd indeed if a court which is seised of proceedings and stays those proceedings by way of a Tomlin order on the express terms that it retains jurisdiction to take further steps by way of implementation or policing of the order were prevented from exercising that jurisdiction, either by lifting the stay or otherwise, on the ground that it was no longer seised of the proceedings….to treat the enforcement action as something entirely new seems to me to be wrong.”
[97]The heart of Plaza’s claim is that LDTC, amongst others, is contractually obliged under the Deed of Settlement to facilitate the release of its own and others’ undertakings to the Western Australian Court in both the Main Action and the Other Action. That court has been seised of all issues relating to those undertakings for some ten years.[98]It is true that there is no risk of an irreconcilable judgment otherwise arising from the Main Action because proceedings have been discontinued, and there is no risk of an irreconcilable judgment arising from the Other Action because the pleadings have been amended to remove the dispute with respect to the Second Supplemental Deeds. It is appropriate that this court take such amendments into account: see The Alexandros at [75] per Lord Clarke.[99]However, what remains live in the Main Action and the Other Action is so closely connected to Plaza’s claim that it is expedient to hear and determine them together to avoid the risk of the following irreconcilable judgments. Severe difficulties might arise if this Court determined that, say, LDTC could not seek a release of the undertakings while the Western Australian Court (for example on an application by TBGL, BGF and their liquidators) decided that the undertakings could now be released. The entire matter should be heard by the court to which the undertakings have been given.[100]Mr Moss further submitted that the proceedings in Australia could not be regarded as “live” as no steps have yet been taken to apply to the Western Australian Court for release of the undertakings. This misses the point. The critical position is not that of the parties but that of the relevant court. From the perspective of the Western Australian Court, the position for the last ten years has been that an application must be made to it, and no other court, were any party to breach or seek to release the undertakings. The Western Australian Court is therefore still seised of the issue.[101]Mr Moss also submitted that there was no relatedness between the actions because Plaza was not a party and LDTC was only a party qua TBGL and BGF trustee and not as BGNV trustee. However, such considerations are irrelevant to the test for related actions: the focus is on the risk of irreconcilable judgments. Nowhere in article 28.3 is there any requirement that the parties be the same in both actions. Mr Moss’s submission does not reflect the law and I note that Andrew Smith J took the same view in Ferrexpo (at [167]).[102]Mr Moss also said that the undertakings were not themselves actions and therefore could not be considered in the test for relatedness. The conclusion does not in my view follow. In FKI Engineering, Mummery LJ stressed the correct question is whether the court concerned is seised of an action and not of a particular issue in an action (at [40]–[44] noted in the The Alexandros at [75]). However, as I have already said, I consider that the undertakings exist within actions that must be considered still to be pending. The case is similar to a stay by way of Tomlin Order.[103]It was also submitted that any seisin on the part of the Western Australian Court was conditional and limited such that it could not be regarded as related to the present proceedings. Two conditions must be met before the liberty to apply could be invoked: first, an amendment must be proposed to the trust deeds; secondly, that amendment must not adversely affect the rights, interests or position of the senior creditors. At present, no amendment had been proposed and any amendment seeking to effect Partial Desubordination would necessarily prejudice the senior creditors. As these conditions have not yet been met, the Western Australian Court is not currently seised.[104]In my view, this is a narrow, technical and over-sophisticated approach of the type that Lord Saville warned against in Sarrio. It is not for this court to police the boundaries of the Western Australian Court’s seisin. On Lord Saville’s “broad and commonsense” approach the Western Australian Court is seised of all issues relating to the undertakings. Plaza would be entitled to raise the same argument in the Western Australian Court in opposition to an application by LDTC or indeed others.[105]I therefore consider that the first two requirements of The Alexandros are satisfied. The question therefore arises whether I should (iii) exercise the court’s discretion to stay these proceedings.[106]The leading authority remains Advocate General Lenz’s opinion in C-129/92 Owens Bank Ltd v Bracco [1994] QB 509, [74] – [79], as Lord Clarke made clear in The Alexandros (at [92]). There is a strong presumption in favour of a stay but three important factors are also mentioned.[107]The first factor is the extent of the relatedness between the actions and the risk of mutually irreconcilable decisions. The extent of relatedness is very great in the present case. At the heart of Plaza’s claim lies the obligation under the Deed of Settlement to seek the release of the undertakings. The Western Australian Court is seised of all issues relating to those undertakings and their release. The obligations under the Deed of Settlement require that an application to release the undertakings will be made in the near future. In deciding whether or not to release the undertakings, the Western Australian Court will have to deal with the question of the propriety of any release given the potential prejudice that Plaza and others may suffer. It could well be that an English court and an Australian court would arrive at different responses. I therefore consider this first factor to weigh heavily in favour of a stay.[108]The second factor is the stage reached in each set of proceedings. Mr Moss submitted that Plaza’s present claim is well advanced as the facts are not in dispute and the matter could proceed to trial in the near future. By way of contrast, the proceedings in the Western Australian Court are either more recent than these proceedings (the s.564 Application and the ICWA Applications) or substantially at an end (the Main Action and the Other Action).[109]However Plaza’s claim in England is not significantly advanced. The only substantial step that has happened is the issue and service of the claim form and particulars of claim. There is, as yet, no defence. I therefore consider that this second factor also weighs in favour of a stay.[110]The third factor is the proximity of each of the courts to the matter. On the one hand, the underlying dispute relates to the distribution of moneys in the insolvency proceedings of the Bell Group. That is, as Mr Snowden put it, “fundamentally a Western Australian affair: it is the further resolution of 20 year old Western Australian litigation and is the working out of the Western Australian liquidation of a Western Australian corporate group.”[111]Further, the dispute raised issues in connection with the Deed of Settlement which is governed by the law of Western Australia and contains an exclusive jurisdiction clause. In The Alexandros Lord Clarke, when exercising his discretion not to stay proceedings, placed weight (at [94]) on the fact that proceedings elsewhere had been brought in breach of an exclusive jurisdiction clause in favour of the English courts. Similar weight should be given in favour of a stay in the converse situation where proceedings have been brought in England in breach of an exclusive jurisdiction clause.[112]On the other hand, the dispute involves a trust domiciled and administered in England, governed by English law, raising questions of English trust law subject to a non-exclusive jurisdiction clause in favour of the English courts, and is against a English trustee. I note that in The Alexandros, Lord Clarke considered (at [96]) that the “natural court” to consider issues raised in contracts governed by English law is an English one.[113]However, the balancing factor is that Plaza’s claim for breach of trust involves(i) the question of the undertakings given to the Western Australian Court and(ii) the question of compliance with obligations relating to those undertakings under the Deed of Settlement, which is governed by an exclusive jurisdiction in favour of the Western Australian Court.[114]Although I have to be careful not to bring in forum non conveniens by the back door, I note both the presumption in favour of a stay and also the weight in favour of a stay given by the first two factors specified in Owens v. Bracco.[115]Finally, the three factors identified in Owens v. Bracco are not an exhaustive statement as to what the court can take into account when considering whether to exercise its discretion. I therefore add that I have also taken into account the fact that Plaza’s complaint that it will be materially prejudiced by Partial Desubordination is likely to be heard by the Western Australian Court before any amendments of the trust deeds can take place.[116]Far from rebutting the presumption that a stay will be ordered, all the circumstances of the case weigh in favour of LDTC.[117]However, it seems to me that the question of the nature of lis alibi pendens (that is to say, whether it is merely a constituent factor of forum non conveniens and, if so, the effect of Owusu) is one that merits full argument. While I tend to agree with Andrew Smith J in Ferrexpo that the Court is not bound by Owusu to reject the lis alibi pendens argument, I can and do limit my decision to the fact that the Deed of Settlement contains an exclusive jurisdiction clause and that, following the decision of Norris J in Winnetka, it should be applied. Article 5 (6)[118]Before leaving the Brussels Regulation, I should consider a submission raised very late in the day by Mr Moss and Mr Ham.[119]They submitted that article 5(6), applied reflexively, may be relevant to refusing a stay. This reads:
“A person domiciled in a Member State may, in another Member State, be sued … as settlor, trustee or beneficiary of a trust created by the operation of a statute, or by a written instrument, or created orally and evidenced in writing, in the courts of the Member State in which the trust is domiciled.”
[120]However, article 5(6) is irrelevant because it is concerned with bringing an action against a trustee in another Member State to the one in which it is domiciled. Here, Plaza seeks to sue LTDC in the Member State in which it is domiciled. Further, even were it engaged, I am not convinced that, as an apparently permissive rather than mandatory provision, it could override the mandatory effect of article 23(1), considered at length above.[121]Mr Moss submitted that article 5(6) was mandatory on the basis of a passage in Gomez v Gomez-Monche-Vives [2008] EWHC 259 (Ch) at [111] – [113] per Morgan J. I do not consider this passage to support Mr Moss’s submission and, in any event, I am not bound by it as it is obiter dicta at first instance in a case that was later reversed in part by the Court of Appeal: see [2008] EWCA Civ 1065; [2009] Ch 245.[122]Further, even were Mr Moss right as to the relevance of article 5(6), I do not believe (and I do not think that Mr Moss suggested) that it would be determinative of the case. It is not therefore necessary to consider it any further. Case management powers[123]Mr Snowden submitted that this court could also order a stay on the basis of its case management powers, either by reference to the court’s inherent power or under CPR rule 3.1(2)(f).[124]In Reichhold Norway ASA v Goldman Sachs International [1999] 1 All ER (Comm) 40, 47, Moore-Bick J held that case management powers might be used when two sets of proceedings are being, or could be, pursued concurrently:
“not only because the existence of concurrent proceedings may give rise to undesirable consequences in the form of inconsistent decisions, but also because the outcome of one set of proceedings may have an important effect on the conduct of the other.”
[125]In the Court of Appeal, Moore-Bick J’s decision was affirmed but Lord Bingham CJ stressed ([2000] 1 WLR 173, at 186) that, “stays should only be granted in cases of this kind in rare and compelling circumstances”.[126]What amounts to such rare and compelling circumstances? In Reichhold, there were parallel arbitration and court proceedings about the purchase of a company. The arbitration between buyer and seller would have implications for the claim in the English courts against the financial adviser. It was therefore appropriate to stay the court proceedings. In Ferrexpo (at [200]), Andrew Smith J indicated that, had he not stayed proceedings through a reflexive application of the Brussels Regulation, he would have stayed proceedings on case management grounds. The same compelling circumstances that had led him to consider that the proceedings were an abuse, as they had no other purpose than to replicate the Ukrainian proceedings, also led him to consider that the case management powers could be exercised.[127]He made it clear that the stay was not on the basis of anything that might introduce considerations of forum non conveniens. In Blue Tropic Ltd v Chkhartishvili [2014] EWHC 2243 (Ch), Newey J recognised that a stay could be granted but at [30]–[33] refused to order one as he too said, citing Lewison J in Skype, that forum non conveniens arguments were being advanced. Mr Moss took this court to a number of authorities about the unavailability of forum non conveniens arguments (such as Jefferies International Limited v Landisbanki Islands HF [2009] EWHC 894 (Comm), [24]–[37] per Cooke J and Lornamead Acquisitions Ltd v Kaupthing Bank HF [2011] EWHC 2611 (Comm), [116]–[121] per Gloster J), but I do not consider that they take the matter any further.[128]Even having discounted those of Mr Snowden’s submissions which are or may be dressed up forum non conveniens points, I would still be inclined to use the court’s case management powers to stay these proceedings because of the undertakings at the heart of this dispute and because of LTDC’s obligations under the Deed of Settlement engaging the exclusive jurisdiction clause. For those reasons, the propriety of LDTC taking steps to secure the release of the undertakings is properly resolved through the proceedings in the Western Australian Court. This is not introducing forum non conveniens by the back door; the point is squarely focused on party autonomy or alternatively on lis alibi pendens.[129]I observe that it seems relatively clear that, should Plaza fail in these proceedings, it will simply re-litigate them in Australia, either by opposing any application to release the undertakings or in the other proceedings now commenced in Australia. It is therefore within this court’s discretion not to allow Plaza two bites at the cherry and order a stay of these proceedings.[130]Had I not ordered a stay by reflexive application of article 23 of the Brussels Regulation, I would therefore have ordered a stay on case management grounds. Singularis Holdings Limited v. PricewaterhouseCoopers [2014] UKPC 36 (“Singularis”)[131]On 19 November 2014 the Privy Council gave judgment in Singularis and Mr Moss and Mr Ham made submissions in writing to the effect that Article 28 of the Brussels Convention could not be applied by analogy. It was decided in Singularis that the court cannot apply legislation by analogy if it does not apply directly according to its terms. Such application would be, said Lord Collins at [108], an impermissible usurpation of the legislative function:
“…wholly inconsistent with established principles governing the relationship between the judiciary and the legislature and therefore profoundly unconstitutional.”
[132]However, Singularis was concerned with the scope of the common law power to assist foreign winding-up proceedings, addressing the interplay of common law and statute in English common law jurisdictions. It was focused on Cambridge Gas Transportation Corpn v. Navigator Holdings plc [2007] 1 AC 508, Re African Farms Limited [1906] TS 373, Re HIH Casualty & General Insurance Limited [2008] 1 WLR 852, Rubin v. Eurofinance SA [2013] 1 AC 236, the principle of modified universalism and the existence of a common law power to order the production of information. It is of no assistance in cases concerning the Brussels Regulation.[133]To the contrary there is no doubt that under the English authorities some reflexive application of the Brussels Regulation is available: see Ferrexpo at [126] and [123] citing Dicey Morris & Collins (14th Ed) at [12-021] and Lawrence Collins LJ in Masri, in the passage quoted above.[134]Further, in Singularis at [76] Lord Collins expressly distinguished the issue there arising for decision from the different issue: “whether a statutory rule may be taken into account in the exercise of a discretion”.[135]A reflexive application of the exceptions to article 2 does no more than take into account those exceptions when exercising the discretion. There is nothing in Lord Collins’s judgment to suggest that he was in any way revising his views, expressed in the Court of Appeal in Masri, on the reflexive application of the Brussels Regulation.[136]In any event, Plaza argues only that a reflexive application of article 28 is impermissible. It does not address articles 22 and 23, which the court in England has (see above) accepted can be applied reflexively.[137]As I have said, I therefore stay the proceedings. Summary judgment/strike out[138]If I had determined against LDTC on the first issue, I would have to decide whether or not to give summary judgment for LDTC on the whole claim or strike out the claim.[139]I have decided in favour of LTDC on that issue so the second questions do not strictly arise. However I ought to consider them briefly in any event.[140]Summary judgment should only be given if Plaza’s claim had no realistic prospects of success and there is no other reason for a trial: CPR rule 24.2.[141]In S v Gloucestershire County Council [2001] Fam 313, 342, May LJ held that the court must first:
“be satisfied the all substantial relevant facts relevant to the allegations…which are reasonably capable of being before the court, are before the court; that these facts are undisputed or that there is no real prospect of oral evidence affecting the court’s assessment of the facts.”
[142]Mr Moss submitted that there were significant factual disputes between the parties.[143]The first dispute relates to LDTC’s stated “no present intention” to implement the Second Supplemental Deeds. Mr Moss submitted that this would require examination of the state of mind of the relevant individual decision makers within LDTC, of why this defence was raised only latterly in correspondence and of the time when LDTC first formed the view that the Second Supplemental Deeds ceased to have effect.[144]LDTC’s putative defence does appear to contradict its obligations under clause 20 (a) (vii) of the Deed of Settlement “promptly” to take steps to release the undertakings that currently block the implementation of the Second Supplemental Deeds. More information could be put before a court than the bald assertions as to “no present intention” currently to be found in the witness statements. I observe that LDTC could have given an undertaking (but did not) in the present action not to implement the Second Supplemental Deeds and to destroy the old deeds.[145]Cross-examination with the benefit of disclosure at trial would be the only way for a court to ascertain the true intentions of LDTC with respect to the Second Supplemental Deeds. As Floyd J said in Radiocomms Systems Ltd v Radio Communications Systems Ltd [2010] EWHC 149, [19]:
“It is not unrealistic, as everyone experienced in litigation knows, for evidence … to take on a very different character after being subjected to cross-examination…Where the true facts lie is a matter that can only be determined when the full context is exposed at trial.”
[146]The second factual dispute is whether LDTC acts at the direction of ICWA. That would necessarily involve a historical examination of LDTC’s prior actions in the Bell Group insolvency. Mr Moss submitted that the first factual dispute fed into this second dispute because “no present intention” may leave room for an intention on the part of LDTC that it would implement the Second Supplemental Deeds in the future should ICWA direct it to do so. Mr Moss further submitted that ICWA plainly intends, if possible, to implement Partial Desubordination. Indeed, it has now sought declaratory relief with respect to those deeds in the ICWA Applications.[147]I note that in inter-party correspondence, an admission was made on behalf of LTDC that:
“In relation to the domestic bonds [i.e. the TBGL and BGF bond issues], LDTC exercised no independent trustee discretion when entering into the Deed of Settlement and was directed to do so by the sole bondholder, ICWA.”
[148]Mr Moss submitted that the sole bondholder (ICWA) is not the sole beneficiary under the trust deeds as there is a turnover trust which has been held by the Western Australian Court to be a validly constituted trust. The senior creditors of TBGL and BGF, including BGNV, are beneficiaries under that trust. As such he submits that it was inappropriate not to exercise independent trustee discretion so as to take into account the interests of the senior creditors.[149]LDTC has now sought to revoke this admission in further correspondence. The conflicting correspondence makes it impossible for this factual issue to be conclusively determined in the present application. Indeed it is not clear from the correspondence whether LDTC recognises the senior creditors at all as beneficiaries ranking ahead of ICWA, under the turnover trusts. LDTC is probably therefore in effect reserving the right (in the absence of a stay) to challenge the validity of the turnover trust as part of its defence.[150]There are other unresolved issues relating to this second factual dispute that cannot be determined in the present application. For instance, LDTC previously delegated broad powers to ICWA under a power of attorney to conduct litigation with respect to the Second Supplemental Deeds. However, LDTC refuses now to say when this power of attorney took effect and ceased or, indeed, whether a similar arrangement exists or existed with respect to the present proceedings. Such a refusal could be overcome by disclosure obligations ahead of trial. Until that point, as Mr Moss identified, the documents that the court sees are only those that LDTC has chosen to put before the court: see Microsoft Corporation v P4 Com Ltd [2007] EWHC 746, at [44] per Rimer J.[151]Likewise, the fact that Mr Moss and Mr Snowden disputed the manner in which, and significance of the fact that, LDTC gave ICWA a general proxy to act at a meeting of creditors of BGF on 22 August 2014 leads me to the suspicion that there are factual controversies which are inappropriate to entertain on a hearing for summary judgment.[152]Mr Snowden however said that it was appropriate to strike out or give summary judgment because the claim was no more than a premature quia timet action. In other words, it was an action brought in fear of LDTC’s future conduct where there was no evidence to support the question of immediacy. He reiterated that LDTC had no present intention to take steps to implement Partial Desubordination but that it would consider any request by ICWA to revisit the issue by reference to its obligations as trustee and the circumstances at the time of any such request.[153]He relied on Sir Andrew Morritt C’s summary judgment in CIP Property (AIPT) v TFL [2012] EWHC 259 (Ch), [24] and [28]:
“there must be before the court, before it will entertain a quia timet action, satisfactory evidence that the defendant is threatening or intending to do that which it is said he is not entitled to do, or that which, it is said, will lead to serious damage to the plaintiff…for the grant of a quia timet injunction there must be an immediate threat to do something which requires the intervention of the court to prevent it.”
[154]Mr Snowden said that there was no such immediate threat in the present case because there were a number of hurdles in the way of achieving Partial Desubordination, including the release of the undertakings and the need for the TBGL and BGF liquidators to seek directions on Partial Desubordination.[155]However clause 20 (a) (vii) of the Deed of Settlement requires LDTC “promptly” to seek the release of the various undertakings which currently block Partial Desubordination. On the face of the wording in the relevant clauses of the Deed of Settlement, there may well be some immediacy on the facts.[156]Striking out or giving summary judgment would prevent satisfactory evidence from being put before the court allowing a proper assessment of LDTC’s intentions as to when it intends to comply with the Deed of Settlement and whether and how it will implement Partial Desubordination.[157]Much could turn on the subjective intentions of LDTC as to its position on the Second Supplemental Deeds, Partial Desubordination and compliance with the Deed of Settlement. It may be that satisfactory evidence reinforcing or contradicting LDTC’s position could arise from disclosure of its documents, both internal and with ICWA, and in cross-examination by Plaza’s counsel of the relevant decision makers within LDTC. Conclusion[158]As the claim for summary judgment and strike out is an alternative one, I do not need to express a concluded view because, for the reasons previously given, I order a stay of these proceedings. However, if I had to make a decision, I would neither grant summary judgment nor strike out the claim.

Cited in 6 later judgments