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Cifal Groupe SA & Ors v Meridian Securities (UK) Ltd & Ors (2013)

Summary

An order for service of a claim out of the jurisdiction was set aside where the claimants failed to demonstrate that their claim for breach of an alleged oral contract had a real prospect of success. In cases concerning oral contracts the court expected the claimant to adduce evidence identifying the individuals who made the agreement, and to give some account of what happened at the meeting in question.

Facts

The second and fourth defendants (D2 and D4) challenged the court's jurisdiction to hear a claim for breach of contract.

C were a group of companies registered in France and the United Arab Emirates. The first three defendants were companies registered in the United Kingdom, Kazakhstan and the Netherlands Antilles. D4 was a Kazakh national appointed by the other defendants to act as their agent. C claimed that they had been appointed by the defendants to project manage the construction of a large shopping centre in St Petersburg. C claimed that an oral agreement was concluded in St Petersburg in December 2005 following a series of meetings. They also claimed that a consulting services agreement was concluded between the parties in November 2005 containing similar terms to the oral agreement. A draft consulting services agreement was produced six months later but was unsigned. C claimed that the defendants had wrongly repudiated the contract, denying them a contractual success fee and share of profits. Their claim was estimated to be worth $20 million. They had been granted permission to serve the claim out of the jurisdiction on the basis that the alleged contract was governed by English law. The defendants denied that a binding agreement existed.

Held

(1) The court had a discretionary power under CPR r.6.36 and r.6.37 to grant permission to serve a claim form out of the jurisdiction if the claimant could show, first, that there was a serious issue to be tried which had a real prospect of success, second, that it was arguable that the claim fell within one of the jurisdictional gateways in CPR PD 6B and third, that England was the most appropriate forum for the trial. The principal issue in the instant case was whether C could satisfy the court that it had a real prospect of being able to establish that a binding agreement was concluded entitling them to payment of a success fee and a share in the profits of the development (see paras 6-7 of judgment). (2) In a case which turned on an alleged oral agreement, the court expected a claimant to adduce evidence identifying the individuals who made the agreement, and give some account of what happened at the meeting in question. C's application was supported by evidence from their solicitor who clearly had no personal knowledge of what transpired at the meetings in question. She identified no individual who was the source of her information. Her statement referred to the pleading, but C's pleading fell far short of the requirements of CPR PD 16 para.16.7(4). Similarly, there was no evidence from anyone who had been a party to the draft consulting services agreement. The draft agreement was unsigned, and there was no evidence that the defendants ever agreed to its terms. It was only produced some five or six months after C said that its terms were agreed. It was thoroughly implausible to suggest that two parties, negotiating through an interpreter, would agree orally on all of the detailed terms contained in the written draft. If the agreement had been concluded it would have provided a degree of certainty as to the success fee and profit share to which C would be entitled. It would have been extremely important to C. It was therefore extraordinary that there was no contemporary record of any meeting at which the agreement was made. There was no evidence from C's representative who was alleged to have been present, no record of any report by him to his colleagues in the group, nor was the agreement confirmed in writing with the defendants. Those matters cast grave doubt on C's case that an oral agreement was made in those terms in December 2005. C's conduct thereafter was difficult or impossible to reconcile with the existence of the agreement which they say was concluded. The communications between the parties did not provide any support for a suggestion that detailed agreement on the terms for a success fee and profit share had been agreed in the December 2005 meetings. C had no real prospect of being able to establish that an oral agreement was concluded on the terms alleged, Easyair Ltd (t/a Openair) v Opal Telecom Ltd [2009] EWHC 339 (Ch) applied. C's case based on the draft unsigned consulting services agreement also had no real prospects of success. Accordingly, the order for service out of the jurisdiction on D2 and D4 was set aside (paras 12-13, 17-20, 34, 37, 50-59, 74-76, 110). (3) Unless C made an application within 28 days to show cause why their claim against the first and third defendants should proceed, summary judgment would be entered in favour of those defendants (para.109).

Order for service out of jurisdiction set aside

Queen's Bench Division
Males J
Judgment date
15 November 2013
References

LTL 22/11/2013 : [2013] EWHC 3553 (Comm)

Practice areas