S.G.B. Finance S.A. v The Owners and all Persons Claiming an Interest in the M.v ‘Connoisseur’
 IEHC 699
THE HIGH COURT
[2018 No. 7533 P]
Jurisdiction – Forum non conveniens – Grounds of arrest – Defendants seeking to challenge jurisdiction – Whether the Irish Courts had jurisdiction to hear and determine the claim of the plaintiff
In substance, this is an application brought by the owner of the M.V. Connoisseur (‘the vessel’) challenging jurisdiction. The owner of the vessel is a company incorporated in England namely Conway Club Limited (‘CCL’). The principal ground of challenge is the contention that the Irish Courts have no jurisdiction to hear and determine the claim of the plaintiff by reference to the Recast Brussels Regulation (i.e. E.U. Regulation No. 1215/2012 on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial matters) (‘the Recast Regulation’).
As an alternative to the relief claimed by reference to the Recast Regulation, CCL argues that even if the Recast regulation is not applicable, the court should nonetheless dismiss the proceedings on the grounds of forum non conveniens. CCL contends that the dispute in question should be determined by the courts of England & Wales in circumstances where (so CCL argues) those courts are manifestly the most appropriate forum in which to hear and determine the dispute between the parties.
If the court is not prepared to dismiss the proceedings, CCL seeks, in the further alternative, an order staying the proceedings so that the dispute can be determined by the courts of England & Wales.
In addition to contesting jurisdiction (as set out above), CCL also seeks an order setting aside the warrant of arrest issued on 21 st August, 2018 pursuant to an order of the court made on the same date under which the Admiralty Marshall was ordered to arrest the vessel until further order of the court. In support of this element of the application, CCL contends that the claim made in the proceedings does not give rise to a valid ground for arrest. CCL also contends that there was non-disclosure of material facts in the ex parte application seeking the arrest of the vessel such that the order of arrest should be set aside on that basis.
For reasons which I discuss in more detail below, the issue as to whether there was a proper basis to seek the arrest of the vessel is also at the heart of the challenge to jurisdiction. CCL contends that the claim of the plaintiff in these proceedings does not fall within any of the grounds of arrest permitted under the Brussels Convention Relating to the Arrest of Seagoing Ships, 1952 (‘the 1952 Convention’) which was given the force of law in Ireland by the Jurisdiction of Courts (Maritime Conventions) Act, 1989 (‘the 1989 Act’). If CCL is correct in this contention, the Irish courts would not have jurisdiction over the claim made in these proceedings. The plaintiff accepts that the arrest of the ship is the foundation for the jurisdiction of the court in this case.
The vessel is a motor pleasure boat. She is 17.29 m. long with a gross tonnage of 47.22 tonnes which, according to the affidavit evidence before the court, was purchased by CCL for commercial purposes. The vessel was built in 2017 and is registered in London. The vessel is currently moored in the port of Dún Laoghaire.
CCL is a private limited company incorporated under the laws of England & Wales on 9 th February, 2017. The registered office of CCL is located in London. The legal and beneficial owner of the entirety of the share capital in CCL is Mr. Kevin Conway. Mr. Conway is an Irish-born but English resident (for more than 20 years) tax lawyer. Mr. Conway was a director of CCL up to 6 th November, 2017 not long after he was adjudicated a bankrupt in the English courts on the petition of UK Revenue & Customs.
In 2017, CCL agreed to purchase the vessel from MGM Boats of Dún Laoghaire for €1,265,000.00 exclusive of VAT. The plaintiff (which is a French entity) part-financed the purchase of the vessel pursuant to a loan agreement under which the plaintiff agreed to lend €822,250.00 to CCL to assist in the purchase. The loan agreement was accepted by CCL on 21 st March, 2017 and was executed by the plaintiff on 22 nd March, 2017. With the exception of a number of provisions concerning the protection of personal data (which are governed by French law) the loan agreement is governed by the laws of England & Wales and the parties also agreed to the non-exclusive jurisdiction of the English courts.
The loan agreement was secured by a deed of assignment executed on 30 th April, 2017 (which creates security over, inter alia, any earnings of the vessel). The loan agreement was also secured by a personal guarantee dated 22 nd March, 2017 given by Mr. Conway. In addition, the loan agreement was intended to be secured by a mortgage over the vessel. Mr. Conway signed such a mortgage although the date of his signature on one version of the mortgage is left blank. It appears that there is also another version of this mortgage (which bears a date - namely 20 th July, 2018 - which was registered in the UK Companies House on 20 th July, 2018). There is, however, no suggestion in the affidavit evidence before the court that the mortgage has not been registered at the UK Registry of Shipping and Seamen.
There is no dispute between the parties that CCL fell into arrears in January, 2018 in relation to the payment of the monthly instalments due in respect of the loan. By email dated 16 th March, 2018 CCL demanded payment of the arrears for January, February and March, 2018 and warned that if the arrears were not paid by 29 th March, 2018, the plaintiff would deem the loan agreement to be immediately terminated and would take all necessary action to enforce the mortgage.
A further letter of demand was written on 23 rd April, 2018. Subsequently, in June 2018 discussions took place during which it was intimated that the plaintiff would be willing to enter into a standstill agreement to last until the end of September, 2018. Although a draft standstill agreement was subsequently forwarded by the plaintiff's English solicitors to CCL on 23 rd July, 2018, the evidence before the court shows that, notwithstanding several reminders sent in late July and early August, no such agreement was ever executed.
In the meantime, Mr. Conway made a proposal for an Individual Voluntary Arrangement (‘IVA’) which he hopes will enable his bankruptcy to be annulled. I should explain that, as I understand it, an IVA is very similar to a Personal Insolvency Arrangement entered into by a debtor with his or her creditors under the Personal Insolvency Acts, 2012-2015. A copy of the proposal for the IVA was provided to the plaintiff under cover of a letter dated 6 th July, 2018. The proposal therefore pre-dates the arrest of the vessel. In s. 6 of the proposal for an IVA, Mr. Conway discloses that, among his assets, are the shares in CCL which is the owner of the vessel. He also discloses that he has a liability to the plaintiff under his personal guarantee. In the proposal, it is stated that the vessel is with MGM Boats in Dublin for the purposes of sale and that this sale should enable CCL to repay its indebtedness to Mr. Conway in full after the proceeds of sale have been used to extinguish the amount due to the plaintiff.
On 21 st August, 2018 the plaintiff issued a plenary summons. According to the endorsement of claim on that summons, the claim is described as being for the sum of €797,291.07 due and owing by the defendant to the plaintiff:-
‘… pursuant to a Loan that was advanced by the Plaintiff to the Defendant pursuant to a Loan Agreement dated 21 st March, 2017 and under which the Defendant, in breach of contract and/r (sic) duty has failed, refused and/or neglected to pay the capital and interest payments required to be made thereunder …’.
There was no express reference to a mortgage in the endorsement of claim. However, the endorsement of claim set out the basis on which the plaintiff contends this court has jurisdiction in the following term:-
‘[The] Court has jurisdiction to hear and determine the … claim by virtue of the Inherent Admiralty Jurisdiction of [the] … Court; and/or under the provisions of [the 1989 Act] including inter alia, Article 1 (1) (q) of the [1952 Convention] …’
At this point, it should be noted that, under Article 1 (1) (q) of the 1952 Convention, a ship can be arrested in respect of a claim arising out of ‘ the mortgage or hypothecation of a ship’. When the ex parte application was made to the court on 21 st August, 2018 seeking the arrest of the vessel, I queried whether the claim set out in the endorsement of claim fell within Article 1 (1) (q) in circumstances where, on the face of it, the endorsement appeared to merely seek payment of the amount due on foot of a loan agreement. There appeared to be no claim raised on foot of the mortgage per se. At the time, counsel for the plaintiff argued that the claim made in the endorsement of claim must be distinguished from the right of the plaintiff to arrest the vessel. He argued that it was clear from the grounding affidavit of Helen Noble that the application for the arrest was grounded on the status of the plaintiff as mortgagee; and that accordingly the plaintiff was entitled to invoke Article 1 (1) (q) in order to move the...
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