George v AVA Trade (EU) Ltd

• Jurisdiction: Ireland
• Judge: Mr. Justice Denis McDonald
• Judgment Date: 29 March 2019
• Neutral Citation: [2019] IEHC 187
• Court: High Court
• Docket Number: [2018 No. 3858 P.]
• Date: 29 March 2019

BETWEEN

SHANE GEORGE

AND

MARY GEORGE

PLAINTIFFS

AND

AVA TRADE (EU) LIMITED

DEFENDANT

[2019] IEHC 187

McDonald J.

[2018 No. 3858 P.]

THE HIGH COURT

COMMERCIAL

Abuse of process – Striking out – Res judicata – Defendant seeking an order pursuant to the inherent jurisdiction of the court striking out the proceedings – Whether the proceedings constituted an abuse of process

Facts: The plaintiffs, Mr and Ms George, commenced proceedings by plenary summons issued on 1st May, 2018, in which they sought damages for breach of contract, negligence and breach of duty (including breach of statutory duty) under the European Communities (Markets in Financial Instruments) Regulations, 2007 (S.I. No. 60 of 2007) and/or the European Communities (Distance Marketing of Consumer Financial Services) Regulations, 2004 (S.I. 853 of 2004). A statement of claim was subsequently delivered on 13th June, 2018. However, prior to delivering a defence, the defendant, AVA Trade (EU) Ltd, applied to the High Court seeking to dismiss the proceedings on res judicata and Henderson v Henderson (1843) 3 Hare 100 grounds. Essentially, the defendant said that the claims made in the proceedings replicated the grounds on which the plaintiffs sought to set aside the statutory demands in proceedings before the courts of England and Wales. Insofar as there was any additional claim made in the proceedings, the defendant argued, by reference to the rule in Henderson v Henderson, that such claim could and should have been brought in the English proceedings seeking to challenge the statutory demands. In moving this application, the defendant relied on the Recast Brussels I Regulation (namely Regulation (EU) No. 1215/2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (recast)) and/or on the Recast Insolvency Regulation (namely Regulation (EU) 2015/848 of 20th May, 2015 on insolvency proceedings (recast)). The defendant also relied on common law principles.

Held by McDonald J that he would make an order striking out the plaintiffs’ claim other than the claim based on the Distance Marketing Regulations; to that extent, the defendant’s application succeeded.

McDonald J held that he would refuse that part of the defendant’s application which sought to strike out the plaintiffs’ claim based on the Distance Marketing Regulations. In his view, the further prosecution of that issue would not give rise to an abuse of process.

Application granted in part.

JUDGMENT of Mr. Justice Denis McDonald delivered on 29 March, 2019

The application before the court

1 In this application, the defendant seeks an order pursuant to the inherent jurisdiction of the court striking out the proceedings on the grounds that the claims made by the plaintiffs are (a) res judicata or (b) caught by the rule in Henderson v. Henderson (1843) 3 Hare 100 such that the proceedings constitute an abuse of process.

2 In broad terms, the defendant contends that the claims now made by the plaintiffs in these proceedings were previously raised in proceedings before the courts of England and Wales or are claims that ought to have been raised in such proceedings.

3 As described in more detail below, the proceedings in question were taken by the plaintiffs to set aside the statutory demands served on them by the defendant in respect of a debt of £1,306,035.70 sterling together with interest in respect of the first named plaintiff and a debt of £1,025,063.05 sterling together with interest in respect of the second named plaintiff. The demands in question was a precursor to bankruptcy proceedings in England and Wales. The demands were served on 10th February, 2015. In March 2015, the plaintiffs made an application to set aside the statutory demands. Those proceedings were resisted by the defendant and ultimately on 20th December, 2016, District Judge Jones sitting in Slough County Court, in a written judgment, ordered that the application to set aside the statutory demands be dismissed.

4 The plaintiffs applied for leave to appeal to the High Court of England and Wales from the order of District Judge Jones. That application was initially refused in a written decision of Barling J. dated 22nd May, 2017. There was subsequently a further hearing before Ms. Amanda Tipples Q.C. (sitting as a deputy judge of the English High Court) but Ms. Tipples, in a decision of 30th June, 2017, reached the same conclusion as Barling J. In those circumstances, the decision of District Judge Jones was undisturbed by the English courts. On 22nd May, 2018 the defendant filed bankruptcy petitions in the English courts in which they requested the court to adjudicate each of the plaintiffs bankrupt for failure to comply with the statutory demand.

5 These proceedings were commenced by plenary summons issued on 1st May, 2018 in which the plaintiffs seek damages for breach of contract, negligence and breach of duty (including breach of statutory duty) under the European Communities (Markets in Financial Instruments) Regulations, 2007 ( S.I. No. 60 of 2007) (‘ the 2007 Regulations’) and/or the European Communities (Distance Marketing of Consumer Financial Services) Regulations, 2004 ( S.I. 853 of 2004) (‘ the Distance Marketing Regulations’). A statement of claim was subsequently delivered on 13th June, 2018. However, prior to delivering a defence, the defendant has now brought the present application seeking to dismiss the proceedings on res judicata and Henderson v. Henderson grounds. Essentially, the defendant says that the claims made in these proceedings replicate the grounds on which the plaintiffs sought to set aside the statutory demands in the English proceedings. Insofar as there is any additional claim made in these proceedings, the defendant argues, by reference to the rule in Henderson v. Henderson, that such claim could and should have been brought in the English proceedings seeking to challenge the statutory demands. In moving this application, the defendant relies on the Recast Brussels I Regulation (namely Regulation (EU) No. 1215/2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (recast)) and/or on the Recast Insolvency Regulation (namely Regulation (EU) 2015/848 of 20th May, 2015 on insolvency proceedings (recast)). The defendant also relies on common law principles.

6 Before addressing the relevant legal issues which require to be considered, it may be helpful to set out the underlying facts in more detail.

Relevant facts

7 The plaintiffs reside in Buckinghamshire in England. The first named plaintiff is an anaesthetist. According to the statement of claim, the second named plaintiff is a homemaker.

8 The defendant is a limited company based in Dublin. The defendant is an online provider of broker services. In April 2014 the plaintiffs opened separate foreign exchange trading accounts with the defendant via its website. According to the statement of claim, each of the plaintiffs entered into the relevant contracts with the defendant in their capacity as consumers. The defendant does not accept that the plaintiffs acted as consumers. However, this is not an issue that requires to be decided by me at this stage of these proceedings.

9 According to the first named plaintiff, he opened both accounts. Both plaintiffs contend that the second named plaintiff had no involvement with or knowledge of the trades that the first named plaintiff conducted on both accounts. Following the opening of the accounts, £200,000 was deposited by the first named plaintiff as a ‘ margin deposit’ to his own account and £300,000 was deposited by him as a ‘ margin deposit’ to his wife's account. Thereafter, the first named plaintiff says that he began to embark upon transactions using both accounts whereby he sold Forex put options to counterparties identified using the defendant's online platform. As I understand it, these Forex put options are a form of contract for difference. In return for the payment of the option price, the counterparty was entitled to require the plaintiffs to purchase the quantity of euros specified in the option at a price of 1.20 Swiss Francs to one euro at any time during the course of the option period. At the time the contracts were put in place, the National Bank of Switzerland had a fixed policy known as the ‘peg’ whereby the Swiss Franc was not permitted to drop below the foreign exchange rate of 1.20 Swiss Francs to one euro.

10 Regrettably, very significant losses were subsequently incurred when the National Bank of Switzerland removed the peg without warning on 15th January, 2015. As a consequence, the value of the euro as against the Swiss Franc dropped suddenly and significantly. In turn, the plaintiffs incurred very significant liabilities. In the case of the first named plaintiff, the total deficit on his account was £1,306,035.70 sterling while the total deficit on the second named plaintiff's account was £1,025,063.05 sterling.

11 By statutory demands both dated 10th February, 2015, the defendant claimed £1,306,035.70 from the first named plaintiff and £1,025,063.05 from the second named plaintiff.

12 On 6th March, 2015 the plaintiffs, acting as litigants in person, submitted an application to the County Court at Slough seeking to set aside the statutory demands on the grounds that the underlying debts were disputed and that the plaintiffs had a cross-claim against the defendant.

13 Although the plaintiffs acted as litigants in person in presenting that application to the Slough Country Court, the first named plaintiff confirmed in para. 26 of his witness statement dated 6th March, 2015 as follows:-

‘I have recently instructed solicitors, Knipe Woodhouse Smith of Chalfont St. Peter and have attended a consultation with counsel. I intend to complain to AVA about the matters raised in this Witness Statement and about my...