ZUMAX NIGERIA LTD v FIRST CITY MONUMENT BANK PLC (2016)

A Nigerian bank appealed against the dismissal ([2014] EWHC 2075 (Ch)) of its applications for an extension of time in which to challenge the jurisdiction of the English court and for relief from sanctions.

 

The company, which was incorporated in Nigeria, claimed that between 2000 and 2002 monies had been transferred from its London bank account to the London bank account of its main banker (IMB). It claimed that instead of holding them trust, IMB had wrongfully and fraudulently retained them. IMB denied receiving the monies. After 2002, the Nigerian bank assumed IMB’s liabilities and the company brought claims against it in the UK as IMB’s successor in title, obtaining permission to serve the claim form out of the jurisdiction. When redacted documents disclosed that monies had been transferred from the company’s account to IMB’s, the bank applied under the Bankers’ Books Evidence Act 1879 for disclosure of the unredacted records. Two months after service of the proceedings and one day after the expiry of an informal 28-day extension, it applied for an extension of time in which to apply to challenge the jurisdiction of the court. Five days later it made a substantive application to challenge jurisdiction and sought relief from sanctions. The judge refused its applications, holding that the delay was not trivial and was without good reason. He also held that the bank’s 1879 Act application constituted submission to the jurisdiction and that the company had a good arguable case that its claim fell within the classes of case for which permission to serve out of the jurisdiction could be granted under CPR PD 6B para.3.1.

 

The bank submitted that the judge erred in (1) his approach to its applications for an extension of time and relief from sanctions; (2) holding that its 1879 Act application constituted submission to the jurisdiction; (3) failing to take proper account of three fundamental impediments to the claim; (4) holding that the company had a good arguable case on service out.

 

HELD: (1) Under CPR r.11, a jurisdictional challenge had to be made within 14 days of the acknowledgement of service. However, the court could grant a retrospective extension of time where appropriate, Texan Management Ltd v Pacific Electric Wire and Cable Co Ltd [2009] UKPC 46 applied. Although an application for a retrospective extension was not an application for relief from sanctions, Altomart Ltd v Salford Estates (No.2) Ltd [2014] EWCA Civ 1408, [2015] 1 W.L.R. 1825 established that it would fall to be decided in accordance with the principles in Mitchell v News Group Newspapers Ltd [2013] EWCA Civ 1537, [2014] 1 W.L.R. 795 and Denton v TH White Ltd [2014] EWCA Civ 906, [2014] 1 W.L.R. 3926, Salford Estates,Mitchell and Denton followed. In refusing to extend time, the judge had erred. He should have considered whether the breach was serious or significant instead of focusing on what he considered to be the non-trivial nature of the delay and the absence of good reason. More importantly, he had failed properly to engage with Denton’s third stage and determine whether relief should be granted having regard to all the circumstances. While that was understandable given that his decision preceded Denton, his errors meant that the instant court had to consider the matter afresh (see paras 24-28, 35-36, of judgment). The delay was not serious or significant and had not delayed the disposal of the challenge, and while the bank’s explanation was not entirely satisfactory, justice demanded that it be granted an extension. Given that the transactions had taken place 12-14 years before the issue of proceedings, during which time a series of mergers had seen the bank assume IMB’s liabilities, it was unsurprising that it had had some difficulty preparing its jurisdictional challenge (paras 37-43).

 

(2) The 1879 Act application was not a submission to the jurisdiction. In order to amount to a submission, conduct occurring while a jurisdictional challenge was outstanding had to be wholly unequivocal, SMAY Investments Ltd v Sachdev [2003] EWHC 474 (Ch), [2003] 1 W.L.R. 1973 applied. The bank’s application was not unequivocal: the documents sought were relevant to the jurisdictional challenge, which also sought to strike out the claim as being abusive or disclosing no reasonable cause of action (paras 44-51).

 

(3) The bank’s contention that the judge failed to take account of three fundamental impediments to the claim failed. The company had a good arguable case on the first two matters, and the third was not an impediment (paras 66, 69, 72).

 

(4) The judge was right to conclude that the CPR PD 6B para.3.1 gateway requirements were met and the court had jurisdiction to hear the company’s claim. Permission to serve out had been granted on the basis that the claim related to property within the jurisdiction, that the company was claiming against the bank for restitution and as constructive trustee, and that liability arose from acts committed within the jurisdiction. It was plainly arguable that IMB had received the monies, and given that it had not explained what had become of them, it was arguable that there had been some fraud on its part. It was also arguable that the monies had been transferred subject to the stipulation that they should be remitted to the company; that the company had a right, enforceable in equity, to prevent them being used for any other purpose; that the company retained a beneficial interest constituting a proprietary security; that the bank was liable for a breach of trust arising from acts committed within the jurisdiction; and that IMB had been unjustly enriched as a result of acts committed within the jurisdiction (paras 73-82).

 

Appeal dismissed

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