Last week in commercial law: Spar Wars, Groundhog Day, and very exciting news from New Zealand

Spar Wars! Your friendly local Spar is most likely a franchise, and if your summarist has learnt one thing, it’s that the only things certain in life are death, taxes, and disputes between franchisors and franchisees. The Spar mothership supplies the things that Spars sell, usually on credit secured by notarial bonds over, well, the things that the mothership supplies Spars to sell. This Spar, owned by Velvetcream, misses a few payments [your summarist notes that it appears to be a rule of the Spar franchise handbook that franchisees must have exotic names]. Spar perfects its bond. Velvetcream puts itself in business rescue. Enter (a literal) Golden Goose, which wants to buy Velvetcream’s Spar [see above re. exotic names]. Spar asks the BRP to confirm that its rights under s.134 of the Companies Act will be recognised. BRP refuses, arguing that Spar’s right to vote on the business rescue plan is protection enough. Spar goes to urgent court. Northern Cape Division [making its debut in this newsletter]: no sale to the Golden Goose for now.

The City of Cape Town hires builder Pro-Khaya for a project. Many disputes later, they land up in an adjudication. The adjudicator’s determination is largely favourable for Pro-Khaya, which applies to enforce the determination. The City counter-applies to have the determination set aside, arguing that the adjudicator decided issues that weren’t part of the referral. Western Cape Division: the adjudicator decided three claims that weren’t part of the notices of disagreement, so he exceeded his jurisdiction (and the bad parts of the determination can’t be severed from the surviving parts). And if all that excitement isn’t enough, the High Court notes a split in the cases about whether Rule 67A applies prospectively only, ultimately siding with the prospective-only side of the split but not deciding it.

Summit Crane Hire borrows money from Da Silva. Summit Crane Hire does not pay. Da Silva serves a s.345 demand. Da Silva gets provisional and final liquidation orders unopposed, which are later rescinded. Western Cape Division: Da Silva’s second try at liquidation is less successful because there’s not much evidence of the loan. [Fun fact: based on your summarist’s diligent searches, this is just the second appearance of Groundhog Day in the (unreported) law reports].

From England, your summarist’s favourite topic: jurisdiction! Azerbaijan’s state-owned oil company gets arbitration awards against several companies in the Palmali group. Azerbaijan alleges that the Palmali group then asset-stripped the debtors under the arbitration awards, leaving empty shells and frustrating enforcement of the awards. Azerbaijan now wants to sue several defendants in the Palmali group organogram for three things: a claim under s.423 of the Insolvency Act (transactions at an undervalue to defraud creditors); a new and exotic thing called a Marex tort (a species of unlawful interference: knowingly inducing a party to act in wrongful violation of a claimant’s rights under a judgment); and unlawful means conspiracy. The Palmali group are all outside England, so Azerbaijan needs permission to serve out of the jurisdiction—which is how English law deals with personal jurisdiction. There are three requirements for permission: (1) a serious issue to be tried on the merits of each claim; (2) a good arguable case that each claim falls within one of the jurisdictional grounds in Practice Direction 6B [known as “gateways” to its friends]; and (3) England is the proper place, which means England is clearly and distinctly the appropriate forum where the case as a whole may be tried most suitably for the interests of all parties and the ends of justice (a forum non conveniens analysis under the Spiliada framework). English lawyers love a good wordy test, so you might need to take a big sip of strong coffee before reading the next sentence: a serious issue to be tried means a claim has a real, as opposed to fanciful, prospect of success, which is very different from a good arguable case which means something more than a serious issue to be tried but much less than a balance of probabilities, and a good arguable case requires a plausible evidential basis but if there is a dispute of fact then a court must take a view on the available material but if no reliable assessment can be made on that material then it is enough if there is a plausible (albeit contested) evidential basis [no, your summarist does not know the difference between a plausible evidential basis and a plausible (albeit contested) evidential basis]. Commercial Court: there’s a serious issue to be tried on the s.423 claim and the unlawful means conspiracy claim, but not on the Marex tort because even if it applies to arbitration awards, the asset-stripping restructuring happened long before the arbitration awards. As for the gateways, gateway 20 applies to the s.423 claim (“[a] claim is made – (a) under an enactment which allows proceedings to be brought and those proceedings are not covered by any other grounds referred to in this paragraph"), and gateway 3 and gateway 4A apply to the unlawful means conspiracy claim (gateway 3 applies if there’s an anchor defendant over which the court already has jurisdiction and the claimant wants to sue other, necessary and proper defendants; and gateway 4A applies to other claims against the same defendant if the court already has jurisdiction over that defendant)—there’s a reason the gateways are said to be “almost impossible not to satisfy” and “long-armed and loose-limbed”. And England is the proper place because, amongst other reasons, the claims are about attempts to frustrate England-seated arbitration awards.  

And breaking news from New Zealand! The Supreme Court of New Zealand delivered its reasons in Kea Investments, upholding extremely rare anti-suit and anti-enforcement injunctions in the absence of an exclusive choice of court agreement [your summarist shares your shock, awe, and childlike wonder]. The facts are complicated but Kea Investments alleged that it was the victim of a big ol’ fraud by the defendants, which included the defendants obtaining default judgment against Kea Investments in Kentucky based on a forged contract (the forged contract had a Kentucky choice of court agreement, which was the only connection between anyone and Kentucky). Supreme Court: the contract is a fraud, the Kentucky default judgment was procured by fraud, and New Zealand was the convenient forum to decide the fraud; comity is usually a brake on courts granting anti-suit injunctions but fraud is different.

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