Adams and Others v Cape Industries Plc and Anor
[1991] 1 All ER 929Between: Adams and Others
And: Cape Industries Plc and Another
Judges:
Scott J
Slade LJ
Mustill LJ
Ralph LJ
Gibson LJ
Subject References:
Conflict of Laws
Foreign debt
Action in England to recover foreign debt
Debt created by judgment in personam of foreign court of competent jurisdiction
Presence in foreign jurisdiction
Corporate defendant
English corporation trading in United States through subsidiary and independent marketing representative
Default judgment in damages suit entered against English corporation in United States
English corporation having no assets in United States
Plaintiffs seeking to enforce United States judgment against English corporation in England
Whether English corporation having presence in United States
Criteria for determining whether corporate defendant having presence in foreign jurisdiction
Foreign judgment
Enforcement
Breach of rules of natural justice
Foreign court acting in breach of natural justice
Default judgment in damages suit entered against English corporation in United States
United States judge awarding global amount for division among 205 plaintiffs
English corporation not challenging method of assessment because it did not wish to submit to jurisdiction
Whether contrary to natural justice to award global amount for division among plaintiffs instead of assessing defendants' liability to individual plaintiffs
Whether defence of breach of procedural natural justice restricted to requirements of due notice and opportunity to put a case
Whether English corporation prevented from relying on breach of natural justice because of failure to challenge award in United States court
Case References:
Abouloff v Oppenheimer & Co - (1882) 10 QBD 295; [1881-5] All ER Rep 307, CA
Albazero, The - [1975] 3 All ER 21; [1975] 3 WLR 491, CA; rvsd [1976] 3 All ER 129; [1977] AC 774; [1976] 3 WLR 419, HL
Bank of Tokyo Ltd v Karoon - [1986] 3 All ER 468; [1987] AC 45; [1986] 3 WLR 414, CA
Baroda (Maharanee) v Wildenstein - [1972] 2 All ER 689; [1972] 2 QB 283; [1972] 2 WLR 1077, CA
Bethlehem Steel Corp v Universal Gas and Oil Co Inc - (1978) Times, 3 August, HL.
Blohn v Desser - [1961] 3 All ER 1; [1962] 2 QB 116; [1961] 3 WLR 719
Bossiere & Co v Brockner & Co - (1889) 6 TLR 85
Bulova Watch Co Inc v K Hattori & Co Ltd - (1981) 508 F Supp 1322, US DC EDNY
Burnet v Francis Industries plc - [1987] 2 All ER 323; [1987] 1 WLR 802, CA
Busfield, Re, Whaley v Busfield - (1886) 32 Ch D 123, CA
Canada Enterprises Corp Ltd v MacNab Distilleries Ltd - (1976) [1987] 1 WLR 813, CA
Carrick v Hancock - (1895) 12 TLR 59
Castrique v Imrie - (1870) LR 4 HL 414; [1861-73] All ER Rep 508
Chaplin v Boys - [1969] 2 All ER 1085; [1971] AC 356; [1969] 3 WLR 322, HL
Cie Generale Transatlantique v Thomas Law & Co - [1899] AC 431, HL; affg sub nom La Bourgogne [1899] P 1, CA
Colt Industries Inc v Sarlie - [1966] 1 All ER 673; [1966] 1 WLR 440, CA
Crawley v Isaacs - (1867) 16 LT 529, DC
DHN Food Distributors Ltd v Tower Hamlets London Borough - [1976] 3 All ER 462; [1976] 1 WLR 852, CA
Dunlop Pneumatic Tyre Co Ltd v AG fur Motor und Motorfahrzeugbau vorm Cudell & Co - [1902] 1 KB 342; [1900-3] All ER Rep 195, CA
Emanuel v Symon - [1908] 1 KB 302, CA
Employers' Liability Assurance Corp Ltd v Sedgwick Collins & Co Ltd - [1927] AC 95; [1926] All ER Rep 388, HL
Erie Railroad Co v Tompkins - (1938) 304 US 64, US SC
Firestone Tyre and Rubber Co Ltd v Lewellin (Inspector of Taxes) - [1957] 1 All ER 561; [1957] 1 WLR 464, HL
General Steam Navigation Co v Guillou - (1843) 11 M & W 877; 152 ER 1061
Godard v Gray - (1870) LR 6 QB 139, DC
Grant v Anderson & Co - [1892] 1 QB 108, CA
Guaranty Trust Co v York - (1945) 326 US 99, US SC
Haggin v Comptoir d'Escompte de Paris - (1889) 23 QBD 519, CA
Holdsworth (Harold) & Co (Wakefield) Ltd v Caddies - [1955] 1 All ER 725; [1955] 1 WLR 352, HL
Holstein, The - [1936] 2 All ER 1660
Istituto Chemioterapico Italiano SpA and Commercial Solvents Corp v EC Commission - Joined Cases 6 and 7/73 [1974] ECR 223
Jabbour v Custodian of Absentee's Property of State of Israel - [1954] 1 All ER 145; [1954] 1 WLR 139
Jacobson v Frachon - (1928) 138 LT 386, CA
Jeannot v Fuerst - (1909) 100 LT 816
Jet Holdings Inc v Patel - [1989] 2 All ER 648; [1990] 1 QB 335; [1988] 3 WLR 295, CA
Jones v Lipman - [1962] 1 All ER 442; [1962] 1 WLR 832
Lalandia, The - [1933] P 56; [1932] All ER Rep 391
Littauer Glove Corp v F W Millington Ltd - (1928) 44 TLR 746
Littlewoods Mail Order Store Ltd v McGregor - [1969] 3 All ER 855; [1969] 1 WLR 1241, CA
Local Government Board v Arlidge - [1915] AC 120; [1914-15] All ER Rep 1, HL
Merchandise Transport Ltd v British Transport Commission - [1961] 3 All ER 495; [1962] 2 QB 173; [1961] 3 WLR 1358, CA
Miller v BC Turf Ltd - (1969) 8 DLR (3d) 383, BC SC
Mississippi Publishing Corp v Murphree - (1946) 326 US 438, US SC
Moore v Mercator Enterprises Ltd - (1978) 90 DLR (3d) 590, NS SC
Newby v Von Oppen and Colt's Patent Firearms Manufacturing Co - (1872) LR 7 QB 293
Ochsenbein v Papelier - (1873) LR 8 Ch App 695, LC and LJ
Okura & Co Ltd v Forsbacka Jernverks AB - [1914] 1 KB 715, CA
Omni Capital International Ltd v Rudolf Wolff & Co Ltd (1987) 484 US 97, US SC; affg sub nom Point Landing Inc v Omni Capital International Ltd - (1986) 795 F 2d 415, US Ct of Apps, 5th Cir
Pemberton v Hughes - [1899] 1 Ch 781, CA
Prima Paint Corp v Flood and Conklin Manufacturing Co - (1967) 388 US 395, US SC
Princesse Clementine, The - [1897] P 18
Rein v Stein - (1892) 66 LT 469, CA
Revlon Inc v Cripps & Lee Ltd - [1980] FSR 85, CA
Reynolds v Fenton - (1846) 16 LJCP 15
Roberta, The - (1937) 58 Ll L Rep 159
Robinson v Fenner - [1913] 3 KB 835
Rousillon v Rousillon - (1880) 14 Ch D 351
Russell v Smyth - (1842) 9 M & W 810; 152 ER 343
SA Consortium General Textiles v Sun and Sand Agencies Ltd - [1978] 2 All ER 339; [1978] 1 QB 279, QBD and CA
Saccharin Corp Ltd v Chemische Fabrik von Heyden AG - [1911] 2 KB 516, CA
Salomon v A Salomon & Co Ltd - [1897] AC 22; [1895-9] All ER Rep 33, HL
Schibsby v Westenholz - (1870) LR 6 QB 155; [1861-73] All ER Rep 988
Scottish Co-op Wholesale Society Ltd v Meyer - [1958] 3 All ER 66; [1959] AC 324; [1958] 3 WLR 404, HL; affg 1957 SC 110, Ct of Sess (Inner House); earlier proceedings 1954 SC 381, Ct of Sess (Inner House)
Sfeir & Co v National Insurance Co of New Zealand Ltd - [1964] 1 Lloyd's Rep 330
Sirdar Gurdyal Singh v Rajah of Faridkote - [1894] AC 670, PC
South India Shipping Corp Ltd v Export-Import Bank of Korea - [1985] 2 All ER 219; [1985] 1 WLR 585, CA
Thames and Mersey Marine Insurance Co v Societa di Navigazione a Vapore del Lloyd Austriaco - (1914) 111 LT 97; [1914-15] All ER Rep 1104, CA
Theodohos, The - [1977] 2 Lloyd's Rep 428
Tournier v National Provincial and Union Bank of England - [1924] 1 KB 461; [1923] All ER Rep 550
Vogel v R & A Kohnstamm Ltd - [1971] 2 All ER 1428; [1973] QB 133; [1971] 3 WLR 537
Wallersteiner v Moir - [1974] 3 All ER 217; [1974] 1 WLR 991, CA
Williams v Jones - (1845) 13 M & W 628; 153 ER 262
Williams & Glyn's Bank plc v Astro Dinamico Cia Naviera SA - [1984] 1 All ER 760; [1984] 1 WLR 438, HL
Woolfson v Strathclyde Regional Council - 1978 SC 90, HL
World Harmony, The - [1965] 2 All ER 139; [1967] P 341; [1965] 2 WLR 1275
X Bank Ltd v G - [1985] LS Gaz R 2016, CA
A-G for Alberta v Cook - [1926] AC 444; [1926] All ER 525, PC
A/S Dampskib 'Hercules' v Grand Trunk Pacific Rly Co - [1912] 1 KB 222, CA
Badcock v Cumberland Gap Park Co - [1883] 1 Ch 362
Bank of Australasia v Nias - (1851) 16 QB 717; 117 ER 1055
Beguelin Import Co v SAGL Import Export - Case 22/71, [1971] ECR 949
Bergerem v Marsh - (1921) 91 LJKB 80
Berliner Industriebank AG v Jost - [1971] 2 All ER 117; [1971] 1 QB 278; affd [1971] 2 All ER 1513; [1971] 2 QB 463, CA
Calvin's Case - (1608) 7 Co Rep 1a; 76 ER 377
Casdagli v Casdagli - [1919] AC 145; [1918-19] All ER Rep 462, HL
Deverall v Grant Advertising Inc - [1954] 3 All ER 389; [1955] Ch 111, CA
Elefanten Schuh GmbH v Jacqmain - Case 150/80, [1981] ECR 1671
Europenballage Corp and Continental Can Co Inc v EC Commission - Case 6/72, [1973] ECR 215
Fender v St John-Mildmay - [1937] 3 All ER 402; [1938] AC 1, HL
Ferguson v Mahon - (1839) 11 Ad & El 179; 113 ER 382
Gatty v A-G - [1951] P 444
Gray v Formosa - [1962] 3 All ER 419; [1963] P 259, CA
Henderson v Henderson - (1844) 6 QB 288; 115 ER 111
Houlditch v Marquess of Donegall - (1834) 2 Cl & Fin 470; 6 ER 1232, HL
Imperial Chemical Industries Ltd v EC Commission - Case 48/69 [1972] ECR 619
Joyce v DPP - [1946] 1 All ER 186; [1946] AC 347, HL
Local Government Board v Arlidge - [1915] AC 120; [1914-15] All ER Rep 1, HL
Macalpine v Macalpine - [1957] 3 All ER 134; [1958] P 35
Meyer, Re - [1971] 1 All ER 378; [1971] P 298
Price v Dewhurst - (1837) 8 Sim 279; 59 ER 111; affd (1838) 4 My & Cr 76; [1835-42] All ER Rep 442, LC
R v Chief Registrar of Friendly Societies, ex p New Cross Building Society - [1984] 2 All ER 27; [1984] QB 227, CA
Secretary of State for Foreign Affairs v Charlesworth Pelling & Co - [1901] AC 373, PC
Smith Stone & Knight Ltd v Birmingham Corp - [1939] 3 All ER 116
Syal v Heyward - [1948] 2 All ER 576; [1948] 2 KB 443, CA
Trottier v Rajotte - [1940] 1 DLR 433, Can SC
Vadala v Lawes - (1890) 25 QBD 310; [1886-90] All ER Rep 853, CA
Vervaeke v Smith (Messina and A-G intervening) - [1982] 2 All ER 144; [1983] AC 145, HL
Wahl v A-G - (1932) 147 LT 382; [1932] All ER Rep 922, HL
Weiss Biheller & Brooks Ltd v Farmer - [1923] 1 KB 226, CA
COURT OF APPEAL, CIVIL DIVISION - SLADE, MUSTILL AND RALPH GIBSON LJJ - 5, 6, 7, 10, 11, 13, 14, 17, 18, 20, 21, 24, 25, 27, 28 APRIL, 2, 3, 24 MAY 1989
Judgment date: 27 JULY 1989
ORDER
The defendants, two associated United Kingdom companies, owned South African companies which mined asbestos and a United States company through which the asbestos was marketed in the United States. The 205 plaintiffs brought actions in the United States against the defendants and others claiming damages for injury caused by exposure to asbestos dust emanating from an asbestos insulation factory to which the defendants had supplied raw asbestos. On 12 September 1983 the plaintiffs were awarded damages by a federal district judge sitting in the Tyler Division of Texas (the Tyler court). The judge, accepting a proposal of the plaintiffs' attorneys, awarded a global amount which would produce an average of $75,000 for each plaintiff, the actual amount received by each individual plaintiff being left to the plaintiffs' attorneys. The defendants took no part in the proceedings in the Tyler court because they had no assets in the United States, and judgment was given against them in default. The plaintiffs then brought proceedings against the defendants in England to enforce the judgment of the Tyler court under the common law rule that a judgment in personam of a foreign court of competent jurisdiction could be sued on in England as creating a debt between the parties. The plaintiffs contended that the Tyler court was a court of competent jurisdiction because the defendants, as the judgment debtor, had been resident in the United States at the time the proceedings in the Tyler court had been commenced by virtue of being then present and carrying on business in the United States by marketing asbestos from a place of business in Illinois by or through their United States subsidiary, which was incorporated in Illinois, and another Illinois corporation which was not a subsidiary but which acted as a marketing agent for the defendants. The defendants contended that under English law presence in Illinois did not suffice to give the Tyler court jurisdiction to hear a claim in tort against the defendants governed by the law of Texas, and even if there were grounds on which the Tyler court could claim jurisdiction the judgment of the Tyler court ought not to be enforced in England because it had been obtained by fraud and furthermore it would be contrary to natural justice to enforce it having regard to the circumstances in which and the procedure by which it had been obtained. The judge held, inter alia, that the presence in Illinois of the defendants' subsidiary and the independent Illinois corporation through which they marketed asbestos could not be treated for jurisdiction purposes as the presence of the defendants themselves in Illinois at the time the proceedings were commenced but, if the defendants had been present in Illinois, that would have provided sufficient basis for the Tyler court to exercise jurisdiction. The judge further held that the judgment in the Tyler court had not been procured by fraud but it would be contrary to natural justice and public policy to enforce the judgment because the procedure adopted by the judge in the Tyler court offended against English principles of substantial justice because the Tyler judge did not make his own assessment of the defendants' liability to each individual plaintiff but instead awarded all plaintiffs a global amount based on an average of $75,000 per plaintiff. The judge accordingly dismissed the plaintiffs' claim. The plaintiffs appealed against the judge's findings that the defendants had no presence in Illinois through their subsidiary and marketing activities and that it would be contrary to natural justice and public policy to enforce the judgment.
Held - The appeal would be dismissed for the following reasons -
- (1)
- English courts would only be likely to treat an overseas trading corporation as being present within the jurisdiction of the courts of another country either if it had established and maintained at its own expense (whether as owner or lessee) a fixed place of business of its own (ie a branch office) in the other country and had for more than a minimal period of time carried on its own business at or from such premises by its servants or agents, or if a representative of the overseas corporation had for more than a minimal period of time been carrying on the overseas corporation's business in the other country at or from some fixed place of business.
- In either case presence within the foreign jurisdiction could only be established if the overseas corporation's business (whether or not together with the representative's own business) had been transacted at or from the fixed place of business. In the case of a representative, the question whether he had been carrying on the overseas corporation's business or had been doing no more than carrying on his own business would depend on the functions which he performed and the nature of the relationship between him and the overseas corporation, and in particular whether the overseas corporation had acquired his place of business or financed his business, the method by which he was remunerated, the degree of control exercised by the overseas corporation over his business, the degree to which he transacted business for the overseas corporation and most importantly whether he did so as principal or agent and, if as agent, the degree of authority which he had to bind the overseas corporation. The fact that the representative, whether with or without prior approval, never made contracts in the name of the overseas corporation or otherwise in such manner as to bind it was a powerful factor pointing against the presence of the overseas corporation (see p 987 g, 1014 c to j, p 1015 d and p 1054 g h, post); Littauer Glove Corp v F W Millington (1920) Ltd (1928) 44 TLR 746, Okura & Co Ltd v Forsbacka Jernverks AB [1914] 1 KB 715, and dictum of Pearson J in Jabbour v Custodian of Absentee's Property of State of Israel [1954] 1 All ER 145 at 152 and Vogel v R & A Kohnstamm Ltd [1971] 2 All ER 1428 applied.
- (2)
- Since neither the defendants' subsidiary nor the independent Illinois corporation through which they marketed asbestos in the United States had general authority to bind the defendants to any contractual obligation, and since there was no evidence that the subsidiary or the independent corporation, whether with or without prior authority from the defendants, had ever effected any transactions in such a manner that the defendants had thereby become subject to contractual obligations to any person, the business carried on by the subsidiary and the independent corporation was exclusively their own business, and not that of the defendants. In particular, the defendants and the subsidiary and the independent corporation could not be treated as a single economic unit and although the setting up of the subsidiary and the marketing arrangements made with the subsidiary and the independent corporation were a façade to enable the defendants to continue to sell asbestos in the United States while reducing the appearance of the defendants being involved in such sales and reducing by lawful means the defendants' risk of liability to taxation in the United States or of being made subject to the jurisdiction of the United States courts, there was nothing illegal in the defendants using their corporate structure to ensure that future legal liabilities to third parties would fall on another member of the group rather than on the defendants, and in those circumstances the court would not lift the corporate veil so that the presence of the subsidiary and the independent corporation could be treated as the presence of the defendants. It followed that the defendants had no presence in Illinois through their subsidiary and the independent corporation at any material time (see p 987 g, p 1020 a to d j to p 1021 d f j to p 1022 a, p 1023 j to p 1024 c, p 1025 g to p 1026 h, p 1028 a g to p 1029 a, p 1030 b to d and p 1054 g h, post); Salomon v A Salomon & Co Ltd [1895-9] All ER Rep 33 applied.
- (3)
- The defence of breach of procedural natural justice preventing a judgment of a foreign court being enforced in England was not restricted to the requirements of due notice and opportunity to put a case but depended on whether the proceedings in the foreign court offended the English court's views of substantial justice. It was therefore open to the court to consider whether the lack of judicial assessment of damages by the Tyler court was contrary to natural justice and whether that prevented the judgment of the Tyler court being enforced in England. On the facts, the method by which the Tyler judge awarded all plaintiffs a global amount for division among the plaintiffs by the plaintiffs' counsel instead of making his own assessment of the defendants' liability to each individual plaintiff, although suitable for the purposes of a settlement between the parties, was contrary to the requirements of natural justice under English law. Furthermore, the defendants were not prevented from relying on the defence of breach of natural justice by reason of the fact that they had not applied to the Tyler court to set aside the default judgment, since at the time the judgment was served on them they had no knowledge and were not given notice of the unusual method of assessment of damages which had been proposed by the plaintiffs and adopted by the Tyler judge and accordingly they had no knowledge of any basis for seeking relief from the Tyler court in respect of the defect in the proceedings (see p 987 g, p 1047 f g, p 1048 j to p 1049 c g to p 1050 a, p 1051 c d, p 1052 b, p 1053 e to h and p 1054 d e g h, post); Pemberton v Hughes [1899] 1 Ch 781 and Jacobson v Frachon (1928) 138 LT 386 applied.
Per curiam
- (1)
- As a matter of principle the onus lies on the plaintiff seeking to enforce the judgment of a foreign court to prove the competence of that court to assume jurisdiction over him (see p 1031 c, post).
- (2)
- The voluntary presence of an individual in a foreign country, whether permanent or temporary and whether or not accompanied by residence, is sufficient to give the courts of that country territorial jurisdiction over him under English rules of private international law (see p 1004 h, post).