The Court of Appeal has given a wide interpretation to the interaction between the “necessary or proper party” gateway and the relatively new gateway permitting claims against the same defendant arising out of the same or closely connected facts (gateway 4A): Eurasia Sports Ltd v Mahchi Aguad  EWCA Civ 1742.
The court in this case had jurisdiction over debt claims against a number of defendants based on a separate gateway. Further claims in conspiracy could therefore be brought against those defendants, relying on gateway 4A. The issue in the case was whether a further defendant, Mr Mahchi Aguad, could be joined as a necessary or proper party to those claims.
The Court of Appeal held that he could be joined. This was not precluded by the wording of the rules and it was eminently sensible that relevant claims against all defendants should be tried together.
This case follows the recent trend of construing the common law jurisdictional gateways widely, given that where there is no sufficient connection with England the court can refuse jurisdiction on the basis that England is not the appropriate forum.
The claimant operates a betting agency. It alleges that the defendants, all of whom were resident in Peru at the time, conspired to defraud it by procuring it to provide online gambling services without security. It also has claims based on the indebtedness under the defendants’ betting accounts. The sums outstanding under the defendants’ accounts is said to exceed US$12 million.
In order to establish jurisdiction against Mr Mahchi Aguad, it was necessary to establish a serious issue to be tried against him, a good arguable case that the claims fall within one of the jurisdictional gateways set out in CPR Practice Direction 6B, and that in all the circumstances England is clearly or distinctly the appropriate forum for the trial of the dispute.
The judge at first instance held there was a serious issue to be tried in respect of both the conspiracy and the debt claims and that England was the appropriate forum. So far as gateways were concerned, he held that the conspiracy claim satisfied the tort gateway (which requires damage within the jurisdiction) as damage was sustained in London. The debt claim against Mr Mahchi Aguad did not fall within a relevant contract gateway, as his contract was made in Peru, but the debt claims against a number of the other defendants did as those contracts were made in England. The judge found that Mr Mahchi Aguad was a necessary or proper party in respect of the debt claim as it was so closely bound up with the action against him and others in conspiracy. In any event, in light of the admissibility of the tort claim, the debt claim against him fell within gateway 4A.
Mr Mahchi Aguad appealed all of the judge’s findings against him.
The Court of Appeal (Lord Justice Floyd giving the lead judgment) upheld the judge’s decision but by a different route.
It rejected the arguments advanced on serious issue to be tried. It did not consider, however, that the tort gateway was satisfied on the facts. The judge held that damage was suffered in London as that is where the act of allowing betting took place. The Court of Appeal disagreed, holding that the steps taken in London were merely prefatory and the actual damage took place where the security money was to be received, which was Malta.
The claimant could however rely on the necessary or proper party gateway. The contracts governing the betting accounts of a number of defendants were made in England. The claimant was therefore able to rely on a contract gateway in respect of those defendants. The conspiracy claims against those defendants therefore fell within gateway 4A. Mr Mahchi Aguad could then be joined as a necessary or proper party to both the contract and conspiracy claims.
The court rejected the argument that this was an unjustified broadening of the rules and not permitted under the wording of the necessary or proper party gateway. The gateway requires that “a claim has been made against a person….. on whom the claim form has been or will be served (otherwise than in reliance on this paragraph)”. There was no reason to interpret this as excluding a further claim brought in by gateway 4A. If the draftsman had intended to limit it in this way then the words “or paragraph 4A” could have been added to the words in brackets.
The court commented that the necessary and proper party gateway and gateway 4A were complementary in their operation. Their common thread was that claims arising out of the same or closely related facts should be tried together, whether by adding defendants to an existing claim or adding claims to an action against an existing defendant. The effect of allowing the necessary or proper party gateway to build on the 4A gateway did not cut across that common purpose. All the claims remain bound together because they are based on closely related facts.
With regard to concerns expressed in the case law about the width of the necessary or proper party gateway, the court acknowledged that they applied with equal force when a party sought to build gateway upon gateway as in the present case, but that wasn’t a sufficient reason to give the words of the gateway a strained construction. The appropriate stage to give effect to those concerns was at the stage of considering whether England was the proper place to bring the claim.
The court saw no reason to disturb the judge’s finding that England was the appropriate forum, based on factors such as the fact that proceedings would be continuing here against other defendants (who had submitted to the jurisdiction) in any event.