Wednesday Law Report: Foreign judgment would be enforced

11 November 1998 Murthy and another v Sivajothi and others Court of Appeal (Lord Justice Evans, Lord Justice Morritt and Lord Justice Chadwick) 30 October 1998

A DEFENDANT who submitted to the jurisdiction of a foreign court in respect of a claim made against him also submitted to that court's jurisdiction in respect of other claims arising out of the same subject matter, or related claims. The foreign court was accordingly a court of competent jurisdiction for the purposes of English conflicts of law principles, and a default judgment entered in it could be enforced by the English court.

The Court of Appeal dismissed the defendant's appeal against the enforcement by the English court of default judgments entered against him in the Florida court.

The second plaintiff owned two pieces of real property in the United States which she held for herself and the first plaintiff as tenants-in- common. The defendant, who had previously persuaded the plaintiffs to pay over their savings into an alleged investment trust, asked them to put up both their properties as collateral for a loan he wished to take out.

The second plaintiff signed what she believed to be loan documents, but which were in fact documents conveying the properties to one of the defendant's companies. The defendant then mortgaged the properties as security for an advance. He made no payments on the mortgage, and the mortgagee subsequently foreclosed on both properties in the Florida court, bringing proceedings against the company and the defendant personally.

The plaintiffs were also joined as defendants in the Florida proceedings as "unknown tenants in possession" who might have some interest in the properties. The proceedings were followed by an agreed stipulation for settlement between the mortgagee, the defendant, and his company.

The plaintiffs, as co- defendants in the Florida proceedings, issued a motion to set aside the stipulation for settlement. They later amended their claim to claim that the mortgage agreement under which the mortgagee had claimed forclosure was invalid and void, and that they were the true owners of the properties.

The plaintiffs entered default judgments against the defendants in the Florida court, and successfully applied under RSC Ord 14 to enforce those judgments in the English court. The judge held that the defendant's submission to the jurisdiction of the Florida court in connection with the mortgagee's claim against him also constituted a submission to the court's jurisdiction for the purposes of the claims made against him by the plaintiffs as co- defendants, and that, therefore, under the third case of Dicey & Morris Rule 36, the Florida court was a court of competent jurisdiction by reference to English conflict of laws principles. The defendant appealed.

Stephen Auld (Ferguson Solicitors) for the plaintiffs; Nicholas Stewart QC and John Clargo (Needleman Treon) for the defendants.

Lord Justice Evans said that, when a defendant submitted to the jurisdiction of a foreign court in respect of proceedings taken against him, he could also be taken to have submitted to its jurisdiction in respect of claims arising out of the same subject matter, and to related claims, whether made by the party originally claiming against him or by another party.

Whether or not a claim was a related claim was a matter of fact and degree. It might not be sufficient that its joinder to the original claim was permitted by the rules of the foreign court, nor should a claim be considered to be a related claim if that would be unfair to the defendant.

In the present case, the plaintiffs had been made defendants to the Florida proceedings because of their possible interest in the land. They had claimed that the mortgages were void and that the defendant and the mortgagee had fraudulently conspired to deprive them of their property.

The plaintiffs' claim was thus fully within the definition of "related claims", and they were, accordingly, entitled to enforce in the English court the default judgment entered in Florida.

Kate O'Hanlon

Barrister