Henry Alexander Brompton Gwyn – Jones v Richard William McDonald

• Jurisdiction: Ireland
• Judge: Mr. Justice Murray
• Judgment Date: 23 July 2021
• Neutral Citation: [2021] IECA 206
• Court: Court of Appeal (Ireland)
• Docket Number: Court of Appeal Record No. 2020/205

In the Matter of an Application Pursuant to Articles 45, 46 and 51 Of Regulation No. 1215/2012 and Pursuant to Order 42A of the Rules of the Superior Courts (Jurisdiction, Recognition and Enforcement Of Judgments) 2017

and

In the Matter of a Judgment of the Sofia City Court, Republic of Bulgaria

Between

Henry Alexander Brompton Gwyn – Jones

Appellant/Applicant

and

Richard William McDonald

Respondent

[2021] IECA 206

Whelan J.

Costello J.

Murray J.

Court of Appeal Record No. 2020/205

High Court Record No. 2018/14 FJ

THE COURT OF APPEAL

CIVIL

Service – Public policy – Arbitration – Appellant seeking orders refusing recognition and/or enforcement of a judgment – Whether enforcement of the judgment would be contrary to public policy

Facts: The appellant, Mr Brompton Gwyn-Jones, advanced three grounds in support of his application for orders refusing recognition and/or enforcement of a judgment of the Sofia City Court, Republic of Bulgaria. First, he said that the proceedings on foot of which that judgment was obtained were never properly served upon him, and that he therefore was not aware of the action when the Bulgarian court decided to make the order in question. Second, he contended that enforcement of the judgment would be contrary to public policy because, he said, the claim underlying the judgment was so inter-connected with a fraud perpetrated upon him by the respondent that the courts of this jurisdiction should not give effect to it. Third, he asserted that the claims giving rise to the Bulgarian proceedings were the subject of an arbitration before the ICC Court of Arbitration (ICC) and that this afforded a separate basis in law for not recognising or enforcing the judgment. Each of these contentions was rejected by the High Court (Meenan J): [2020] IEHC 240. The appellant appealed to the Court of Appeal from the judgment delivered and order made by Meenan J.

Held by Murray J that the Court could not be satisfied that the appellant’s asserted lack of knowledge of the proceedings was such as to engage or infringe his ‘rights of defence’; this conclusion reflected the concern expressed by Meenan J at para. 13 of his judgment. Murray J held that the appellant’s case insofar as it was based upon Article 45(1)(b) of the Recast Brussels I Regulation (Regulation (EU) No. 1215/2012) must fail. Murray J held that to succeed in the public policy aspect of his claim the appellant must say that whatever the principles governing the vitiation of contracts for fraud may be in Bulgarian law (this being the law chosen by the parties to govern their relations), if that law and the consequent order of a Bulgarian court enforcing it did not meet the requirements imposed by Irish public policy (presumably as embodied in the Irish law of deceit or allied contractual claims or defences), the order could not be enforced. Murray J held that this would not represent the enforcement of Irish public policy as reflected in statute law over a limited and defined category of transaction, but the extra-territorial application of Irish law of deceit and allied contractual claims or defences across a broad and indeterminate terrain irrespective of the law governing the relevant arrangements. Murray J found it impossible to see how such a principle can be deduced from a generalised claim that ‘fraud’ is contrary to public policy; without proper explanation and definition, this is too vague a criterion to constitute a valid head of public policy for the purposes of the provision. Murray J held that while the arbitration to which the appellant referred in his submissions did not commence until January 2020, it was difficult to see how he could ground any objection to the enforcement of the judgment without establishing that the claim itself was captured by a binding arbitration agreement. Irrespective of whether such a contention falls within the concept of public policy in Article 45(1)(a), Murray J could not on the evidence before him so conclude; the only evidence before the Court germane to that question was the loan agreement itself. In the absence of some reasoned explanation as to how those provisions were superseded by the provisions on foot of which the ICC arbitration was to take place (and there was none) the Court held that it must give effect to the agreements before it.

Murray J held that the appellant must fail in his contention that Meenan J erred in the judgment delivered and order made by him. Murray J held that he would affirm both. Murray J’s preliminary view was that, the appellant having thus been entirely unsuccessful in this appeal, the costs of the respondent, Mr McDonald, should follow.

Appeal dismissed.

UNAPPROVED

NO REDACTION NEEDED

JUDGMENT of Mr. Justice Murray delivered on the 23 ^rd day of July 2021

The application

1 . The appellant advances three grounds in support of his application for orders refusing recognition and/or enforcement of a judgment of the Sofia City Court, Republic of Bulgaria. First, he says that the proceedings on foot of which that judgment was obtained were never properly served upon him, and that he therefore was not aware of the action when the Bulgarian court decided to make the order in question. Second, he contends that enforcement of the judgment would be contrary to public policy because, he says, the claim underlying the judgment is so inter-connected with a fraud perpetrated upon him by the respondent that the courts of this jurisdiction should not give effect to it. Third, he asserts that the claims giving rise to the Bulgarian proceedings are the subject of an arbitration before the ICC Court of Arbitration (‘ICC’) and that this affords a separate basis in law for not recognising or enforcing the judgment. Each of these contentions was rejected by Meenan J. ( [2020] IEHC 240).

The background

2 . The facts relevant to the first of these propositions are few and to all intents and purposes undisputed, but the overall context relevant to the second and third questions is involved. While it will be necessary to return to some of the details later, the appellant's basic complaint is that in 2007 he was induced by fraudulent misrepresentation of the respondent to invest in a (then incomplete) shopping mall in Bulgaria known as Burgas Plaza. He says that on foot of those representations he caused an initial sum of €15M to be advanced for the acquisition, this being subsequently supplemented by further but smaller investments. He says that he caused these advances to be made on foot of assurances by the respondent that he would invest €5 in the project, the agreement being that the interests would be held as to 60% by the appellant or his nominated company, and 40% by the respondent or his nominated corporate vehicle. As further funds were required, it is said that the parties agreed that they would be invested in the same proportion as the original advances.

3 . The resulting joint venture was effected via a Maltese special purpose vehicle, Burgas Holdings Limited (‘BHL’), the respective investments and interests of the appellant and the respondent in BHL being made and to be held in the case of the former by a Guernsey registered company Gort (Holdings) Limited (‘Gort’), and in respect of the latter by an Isle of Man entity, Bridgewater (IOM) Ltd, later substituted by Balkan Holdings Limited (‘Balkan’) (later renamed MRP Brazil Limited). The appellant is the ultimate beneficial owner of Gort. He describes the respondent as a director and ‘ substantial shareholder’ in Balkan.

4 . The appellant contends that the respondent failed to advance the monies as he had promised to do. The respondent, in reply, adopts the position that he never told the appellant that he would or had invested €5M of his own funds in the project, saying that he borrowed from the company that ultimately held the interest in Burgas Plaza which loan was then applied by it as part consideration against the sum payable. The appellant, in response, contends that these loans were a sham allowing the respondent to acquire an equity interest in Burgas Plaza which far exceeded his minimal contribution. He says that had the respondent not represented to him that he would and did make this investment, the appellant would not have recommended to the board of directors of Gort that it become involved in the project and would not have given in connection with it (as he did) a personal guarantee to Piraeus Bank (Bulgaria) in the amount of €20M. The project was not a success and the appellant says that he has lost all or a substantial part of his investment (which, with interest, he most recently values at €26M). He also has an exposure on foot of the personal guarantee.

5 . The appellant having in September 2014 become aware of the facts of this deceit (as he alleges it to be), a number of legal actions have followed. In November 2014 Gort obtained ex parte from the High Court of Justice of the Isle of Man a worldwide freezing order against the assets of Balkan and for reasons explained in a lengthy and detailed judgment of 22 February the following year, Deemster Gough J. refused an application by Balkan to discharge that order. That interim relief was granted on foot of an intended arbitration proceeding before the ICC, that arbitration commencing in December 2014 and being subsequently compromised on terms set out in an order of the Manx High Court the following October. The settlement followed the appointment of a receiver over the assets of Balkan when it failed to discharge 60% of the interim costs awarded against it in the Manx proceedings. The appellant has not recovered anything from Balkan. He says, accordingly, that he remains at a loss in respect of the funds of which – he claims – he was thus defrauded.

6 . On January 28 2020 the appellant and Gort commenced a second ICC arbitration against the respondent and ten...