The Weekly Roundup: The Alliterative Edition

Published date23 December 2021
Subject MatterCorporate/Commercial Law, Litigation, Mediation & Arbitration, Corporate and Company Law, Contracts and Commercial Law, Arbitration & Dispute Resolution, Trials & Appeals & Compensation, Personal Injury
Law Firm1 Chancery Lane
AuthorRobert Parkin, Henk Soede and Sarah Prager

Busy practitioners will be delighted to hear that the courts have issued fresh guidance on the compilation of e-bundles, to be found here: Electronic Bundles-nte. This new guidance is very like the previous incarnation, containing as it does the usual exhortations to align the pagination with that of the PDF document and to ensure that the bundle ends up in a size and format able to breach the court service's security systems. In the team's recent experience, however, even the most meticulously prepared bundles are regularly finding themselves lost in the system, with judges seemingly presented at the last minute with a smorgasbord of documents from various case files, and often not very happy as a result. Really, it makes us quite nostalgic for the days when the court only lost paper bundles. This week's Roundup, brought to you in handily electronic form, features cases considering the forum conveniens contractual gateway, Covid-19 and holiday refunds, and the pitfalls of e-filing at the last moment (or possibly thereafter).

Ditto v Drive-Thru Dispute

In Ditto Ltd v Drive-Thru Records LLC & War Road Music Inc [2021] EWHC 2035 (Ch), Deputy Master Francis was asked to consider an application by the Defendants under CPR 11(1) to set aside an order permitting service on them out of the jurisdiction. This note focuses, in particular, on the court's analysis of the contractual gateway in CPR PD6B para 3.1 and the issue of forum non conveniens.

Background

Ditto Limited ("Ditto") is a limited company incorporated in England. It is one of a number of corporate entities which operate under the Ditto Music brand worldwide, including Ditto Inc., a Tennessee registered company. The exact relation between the companies was unclear, but what was clear was that Ditto Music operated as a global operation. Drive-Thru Records LLC ("Drive-Thru") is a limited partnership registered in California and War Road Music Inc. ("War Road") is a Californian corporation, both of which were owned and managed by the same persons.

So far as the underlying claim is concerned, it suffices for present purposes to say that the claim concerns alleged breaches of contract and/or misrepresentations. On 11th August 2020 Ditto issued the present claim in London, without notifying the Defendants of that action. Quite separately Drive-Thru and War Roads prepared a draft complaint against Ditto and a Mr Mooney, the Head of Operations of Ditto's sister company, which was to be filed in New York. A copy of this complaint was provided to Ditto on 8th September 2020. Ditto then provided the Defendants with a copy of the issued claim in London after an unsuccessful mediation. Four days later the Defendant filed their complaint in the Supreme Court of the State of New York rather than (as had originally been suggested) the United States District Court. There was a dispute as to whether Ditto had been successfully served with the New York claim - specifically, whether personal service on Mr Mooney was sufficient for service on Ditto. Ditto asserted that it had no idea that service had even been attempted on it until it was notified on 15th January 2021 of a motion for default judgment against it.

On 3rd December 2020, Ditto was granted permission pursuant to CPR r6.36 to serve a claim on the Defendants out of the jurisdiction. The Defendant subsequently applied to set aside that order under CPR r11(1). Deputy Master Francis' judgment was handed down on 17th November 2021.

Judgment

It was common ground between the parties that in determining whether the order for permission should be set aside, Ditto would need to satisfy the Court that (in brief) a) there was a serious issue to be tried; b) there was a good arguable case that the case falls within the jurisdictional gateways; c) and England was the appropriate forum for the trial in the dispute.

Deputy Master Francis found that there was a serious issue to be tried on the face of the pleadings. So far as the jurisdictional gateways were concerned, Ditto's principal submission was that both of the relevant agreements were made within England via email exchange, thus meeting the gateway requirement at CPR PD6B para 3.1(6)(a). The competing submissions were as follows:

  • Ditto submitted the contracts had been sent to the Defendant's owners by email on 13th June 2019; the Defendant's owner signed the offer and returned them to Ditto by email on 14th June 2019; and then acceptance took place upon receipt of the email in England, when the documents were countersigned. In other words, the contract was made in England.
  • The Defendants argued, in turn, that the relevant agreements would only be complete after the person with the requisite authority for each party had signified their acceptance, so the agreements were only included when the countersigned documents were remitted back to the Defendant's owner in California on 17th June 2019.

Deputy Master Francis found it "disconcerting" that the question whether the claim gets through the contractual gateway might depend upon the arbitrary order in which the agreements were signed. The Master's comments reflected Lord Sumption's (obiter) complaints at para 16 in Brownlie v Four Seasons Holdings Inc [2017] UKSC 80. Much like Roth J in Conductive Inkjet Technology Ltd v Uni-Pixel Displays Inc [2013] EWHC 2968 (Ch), Deputy Master Francis held that "it would be wholly artificial in this case to determine the place the contract was made upon the happenstance of the order of signing." Ditto only needed to show that it had a good arguable case that the contract was made in England and Deputy Master Francis concluded ("with some hesitation") that "Ditto does cross that threshold in respect of the contractual gateway on the basis that the two agreements were made in both England and California": [54]. Ditto also successfully argued that it sustained damage in England for the purposes of the tort gateway: see [65]-[71].

Deputy Master Francis nevertheless found that England was not the appropriate forum to hear the dispute and that the appropriate forum was the State of California. The relevant points were that a) the Defendants are based, and carried on business, in California; b) the disputes which are the subject of the London claim centred on the conduct of the Defendants; c) the claims against Ditto in the New York proceedings could not be said to involve Ditto's conduct in England - "in the largely digital world in which Ditto operates there is nothing which clearly ties their performance to England"; d) the Defendant's alleged losses were closely connected with their place of business in California, whereas it was less clear that Ditto's losses (being a global business) had a close connection to England; and e) the governing law of the agreements is likely to be that of the State of California.

Non-disclosure

The Defendants further submitted that, even if those grounds were made out, the order should be set aside in any event on grounds of non-disclosure on the part of Ditto, specifically:-

  1. The failure by Ditto to inform the Master that the New York proceedings...

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