Noble Caledonia Limited and Air Niugini Limited – case commentary

Claim No. HQ16X03698

IN THE HIGH COURT OF JUSTICE

QUEEN’S BENCH DIVISION

BETWEEN: –

NOBLE CALEDONIA LIMITED

Claimant / Appellant

-and- 

 

AIR NIUGINI LIMITED

(a company incorporated under the laws of Papua New Guinea)

Defendant / Respondent

  CASE COMMENTARY

  1. In two recent judgments handed down on 12.5.17[1] and 16.6.17[2] respectively, Gilbart J struck out C’s claim on the ground that they had not been validly served within the jurisdiction, and then refused C permission to serve D out of the jurisdiction. Permission to appeal both judgments was granted by the Judge.

 

  1. On 8.11.16 C served D at the offices of Flight Directors Scheduled Services Ltd (“FDL”) near Gatwick from where, C alleged, D carried on its activities. D applied to set aside service and contest the court’s jurisdiction; and C subsequently applied for permission to amend the Particulars of Claim and (if so required) to serve D out of the jurisdiction.

 

  1. By his orders the Judge (1) set aside service on ANG within the jurisdiction on the grounds that it was invalid (No 1) and (2) held that the court did not have jurisdiction to hear the claim, and accordingly refused C permission to serve D out of the jurisdiction (and to amend the POC).

 

Background

  1. In essence, C’s claim was that by a contract or a series of contracts between it and D, D agreed with C to fly 45 of C’s clients from Singapore to Papua New Guinea (“PNG”), to arrive on 12.2.16, in time to depart on a cruise holiday they had booked with C. The contracts were formed by C booking the flights through FDL, D’s UK General Sales Agent (“GSA”) and representative, who operate out of premises near Gatwick. Due to D’s breach of contract the flight was delayed for so long that C’s passengers were unable to arrive in PNG prior to the departure of the cruise, despite the ship being delayed to wait for them. C claimed damages in respect of the losses it suffered by reason of D’s breach of contract.

 

  1. The essence of D’s defence was that it contracted not with C but directly with each of C’s clients, that any claim had to be brought under the Warsaw Convention, and that there was no breach of contract or liability under the Convention. In the light of D’s assertion that the Convention applied C sought permission to amend its Particulars of Claim to plead that case in the alternative.

 

  1. D’s application contesting jurisdiction and the validity of service on D at the offices of FDL was based on the arguments that: the Warsaw Convention applied to the claim, it is an exclusive regime, and none of the grounds within Article 28 of the Warsaw Convention (the jurisdiction provision[3]) was made out.

 

  1. If the Warsaw Convention did not apply and the claim was validly brought in contract, D contended that it did not carry out activities in the UK such that service on FDL was invalid; or, if it had been validly served, the proceedings should be stayed on the grounds that the forum conveniens was Singapore.

 

  1. C’s primary case was that the claim was validly brought in contract (i.e. the Warsaw Convention did not apply).

(1) D did carry out activities in the UK through FDL’s offices, and had been validly served there. It contended that one Ms Joyce (employed by FDL) was effectively carrying on the activities of D in the UK from FDL’s offices by, for example, holding herself out as D’s Head of Sales and Marketing, attending travel fairs in D’s uniform, and by operating Facebook and Twitter accounts in D’s name, a website and her own email using D’s name. Her conduct generally showed that she was acting as far more than a mere GSA for D.

(2) Further, the forum conveniens was England.

(3) Alternatively, if the Warsaw Convention applied, D nonetheless had “an establishment by which the contract has been made” in the UK (i.e. FDL’s offices) within the meaning of Article 28 such that C could elect to sue D in this jurisdiction.

(4) If the court found that proceedings had not been validly served on D within the jurisdiction but that this jurisdiction was the forum conveniens, C applied for permission to serve proceedings on D out of the jurisdiction.

 

Judgment in No.1

  1. The initial judgment in No. 1 addressed only the validity of service on D at FDL’s offices. The Judge found that D did not carry on its activities in the UK. It followed that “proceedings were not properly served, and that if ANG is to be served, it will have to be served out of the jurisdiction”.[4]  The Judge identified the critical issue as “whether FDL has been a representative of [D], carrying on its [D’s] business for more than a minimal period, from the FDL offices, or have the activities of FDL been those of its own business?”[5] He found that “the terms of the agreement between D and FDL limited FDL’s ability to enter into contracts, and deprived them of any realistic discretion in terms of pricing or contractual terms. FDL was only paid on commission, based on the number of sales it had made.”[6]

 

  1. Addressing the list of criteria in Adams v Cape Industries,[7] he found: “a) the FDL premises were not acquired by ANG for its purposes; b) ANG has not reimbursed FDL for the cost of its staff; c) ANG made no contributions to the financing of the FDL business; d) ANG pays FDL by commission and in no other way; e) little control is exercised by ANG over the running of FDL; f) no members of FDL staff are reserved to ANG business; g) the representative does display ANG’s name on stationery relevant to acting as an agent for its flights. The business cards of Ms Joyce, and her conduct at the promotional events, does suggest to potential clients that she is a representative of ANG; h) FDL sells flights for ANG, but the bookings are made by the ANG “Mercator” system; i) FDL has very limited authority to offer lower prices, but only by using a block of tickets assigned for that purpose by ANG; j) FDL requires authority to make any bookings otherwise.”[8]

 

  1. After finding that both social media and the internet had “been used as a promotional tool by Ms Joyce in her work at FDL to get business for ANG”[9] he concluded: “I find myself quite unpersuaded by [C] that that the activities of FDL and Ms Joyce were [D’s] activities as opposed to those carried out to promote [D] by its agent. [D] was but one of FDL’s clients, and the restricted nature of the authority given to FDL by [D] means that FDL’s activities for [D] do not meet the criteria set in Cape Industrieswhen taken as a whole. I am quite prepared to accept that to the lay visitor to a bird watching fair or a visitor to the Facebook page, Ms Joyce was holding herself out as the personification of [D] in the United Kingdom. But that was not the case with [C]. It knew right from the outset that it was [D] which determined whether or not it could sell the seats as required by [C], as appears from the evidence of Ms Reynolds for [C].” The Judge described this outcome as potentially anomalous.[10]

 

 Judgment in No.2

  1. In No. 2 the Judge determined the issues of jurisdiction and service out, and the application to amend. He held that “there is no doubt that the Warsaw Convention applied to this proposed travel by air”. Consequently, because the Convention was a “complete code”[11] C’s claim in contract could not succeed.

 

  1. The Judge determined that C could not rely on Article 28 of the Warsaw Convention to establish jurisdiction: “I therefore return to the words of Article 28 in the context of the current litigation. I do so in the context also that the words in Article 28 as they appear in the Carriage by Air Act 1961 require “an establishment by which the contract has been made.” Mr Audland contends that I am not required to interpret those words with the same meaning as “a place at which [D] carried on its activities, or a place of business of [D]” – i.e. the test in CPR 6.9 which I addressed in the first judgement. I am unable to accept that submission. On the basis of the findings which I made in the first judgement, I am unable to regard the activities of Ms Joyce and others at FDL as being “an establishment” in the sense used in the Article. Were I to do so, it seems to me that it would deprive carriers of the protection given them by the Convention in return for their giving up the freedom of contract, as noted by Lord Hope in Sidhu, supra…. The effect of Article 28 is therefore, and unequivocally so, that the state with jurisdiction over the claim is PNG. The tickets were issued by [D] through the agency of FDL, so no question can arise of (for example) Singapore being an appropriate venue.”[12]

 

  1. The Judge again made reference to the potentially anomalous nature of the outcome[13] which he found somewhat uncomfortable in reaching.[14]

 

Points of interest on appeal

  1. C’s appeal against both judgments raises a number of interesting issues.

 

  1. First, as to validity of service in. C accepted that for service on D at FDL’s offices to be valid it had to show that it has a good arguable case that D “carries on its activities” through FDL’s offices (within the meaning of CPR 6.9(2) and Category 7 thereunder). Following Adams v Cape Industries plc[15], the judge initially summarised the test in terms suggesting that it was objective,[16] but later adopted a subjective approach. He found that while to any lay person Ms Joyce of FDL was “holding herself out as the personification of [D] in the United Kingdom” that C was not permitted to benefit from that.[17] The question is whether the test is objective or subjective in nature (depending on the subjective knowledge of a claimant). C’s case is that it is, or should be, objective, and is satisfied on the finding that to any lay person Ms Joyce was “holding herself out as the personification” of D in this jurisdiction.

 

  1. Secondly, C’s application for permission to serve out was determined on the basis of the judge summarily deciding both that the claim fell within the scope of the Warsaw Convention, and that C could not bring itself within the scope of Art. 28. C’s case was that pursuant to Altimo Holdings and Investment v Kyrgyz Mobil Tel[18] it only had to show (and could show) a good arguable case that the Convention did not apply to the claim as this in turn involved three substantial and difficult issues of law as to each of which there is no English authority, and on which the leading academic authors offered a variety of views. The three issues are:

(1) Does the Convention apply to a commercial contract between a carrier and a tour operator?

(2) Was this a case of non-performance (which falls outside the Convention) or delayed performance of the contract (which falls within it)?

(3) Were the matters complained of in the course of “carriage by air” such as to fall within the scope of the Convention or not?

 

  1. Thirdly, what is the meaning of the words in Article 28 “an establishment by which the contract was made” and is it the same (as the judge found) as “a place at which [D] carried on its activities, or a place of business of [D] within the meaning of CPR 6.9(2)? There is no English authority on the point, and the words and context of each are clearly different (Art 28 providing for four possible different jurisdictional gateways). C’s case is that on the facts found the case falls within the gateway identified.

 

 

18.07.17                                                                                                                                  WILLIAM AUDLAND QC

 

 

[1] Following the judgment reported at [2017] EWHC 1095 (QB) (“No.1”).

[2] Following the judgment reported at [2017] EWHC 1393 (QB) (“No.2”).

[3] This provides inter alia that an action under the Convention may be brought “before the Court having jurisdiction where the carrier… has an establishment by which the contract has been made…”.

[4] No.1, para 58.

[5] No.1, para 51.

[6] No.1, para 52.

[7] [1990] Ch 433 (CA), 530F-531B. It was not in dispute that these criteria applied.

[8] No.1, para 53. Emphasis added.

[9] No.1, para 54.

[10] No.1, para 56.

[11] No.2, para 14.

[12] No.2, paras 21 – 22.

[13] No.2, para 24.

[14] No.2, para 27.

[15] [1990] 1 Ch 433, 530B – 531F.

[16] No.1, para 51.

[17] No.1, para 57.

[18] [2012] 1 WLR 1904, 1825-6, paras 83-86.