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||Neutral Citation Number:  EWCA Civ 175
||Case No: B4/2006/2580
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE FAMILY DIVISION
MR JUSTICE KIRKWOOD
FD06D02697, FD06P00981 & FD06F00522
||Royal Courts of Justice
Strand, London, WC2A 2LL
B e f o r e :
LORD JUSTICE THORPE
LORD JUSTICE WALL
LORD JUSTICE LAWRENCE COLLINS
Mr B Singleton QC & Mr R D N Castle (instructed by Mayer, Brown, Rowe & Maw LLP) for the Appellant
Mrs R J Bailey-Harris (instructed by Messrs Payne Hicks Beach) for the Respondent
Hearing dates: 20th February 2007
HTML VERSION OF JUDGMENT
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Lord Justice Thorpe:
- Baron Bentinck, who I will hereafter refer to as the husband, appeals the order of Mr Justice Kirkwood of the 24th November 2006. On its face the order appealed is no more than a case management order directing preparations for contested hearings scheduled for March and October 2007. However, in reality the appeal raises the fundamental question of whether this court should countenance wasteful competitive proceedings in two jurisdictions subject to the controls imposed by the Lugano Convention.
- The respondent to this appeal is Baroness Bentinck, who I will hereafter call the wife. Little of the family background is necessary for the purposes of this appeal. The husband's origins are Dutch but he has permanent residency rights within Switzerland. The wife is Irish. They married on the 29th May 1998 in Klosters, where the husband has his principal home. On the 20th May 1998, in preparation for marriage, they entered into a premarital agreement providing for separation of estates and mutual renunciation of inheritance. It seems to be common ground that Swiss law does not permit premarital agreements as to maintenance obligations. The premarital agreement expressly provides that the contract and the marital relationship between the parties shall be governed by Swiss law and conflicts arising from the contract are subject to Swiss jurisdiction at the Klosters court 'providing there is no compulsory competence of another tribunal'.
- There are three children of the marriage aged respectively 8, 6 and 5. There is a dispute as to the precise date of separation but it is agreed that it occurred either in 2004 or 2005. The parties also had a home in this jurisdiction and at the date of separation the wife and the children remained in the English home, the husband thereafter principally residing in Klosters.
The Litigation Chronology.
- In international family litigation governed by an international instrument an analysis of the litigation chronology is generally crucial to outcome. Both parties filed a litigation chronology. The events recorded are common ground, although not of course their legal effect. I extract the principal steps from the chronology submitted by Mr Singleton QC for the husband.
- The first significant date is the 25th January 2006 when the husband issued conciliation proceedings for divorce and ancillary matters in the Klosters court. Two days later the husband applied for a stay to enable the parties to mediate. That application was granted on the 13th February and the parties proceeded to unsuccessful mediation.
- On the 19th May the wife petitioned for divorce in the Principal Registry in London. Purely strategic applications were then issued on the 23rd and 24th May in London, the first for child periodical payments under Section 15 of the Children Act 1989, the second for maintenance under Section 27 of the Matrimonial Causes Act 1973. On the 24th May the wife also filed her Form A seeking all forms of ancillary relief, including child maintenance and school fees. There is no evidence that the husband was aware of these steps when on the 1st June he applied to the Klosters court to lift the stay on the conciliation proceedings. On the 7th June the court sent notice of the conciliation hearing fixed for 3rd July.
- In preparation on the 14th June the husband filed his application in Klosters for 'pronouncement of interim measures'. They were defined as:
i) Determination that the parties had lived separately since the beginning of 2004.
ii) Custody of the children to the wife.
iii) Reasonable access to the husband.
iv) An order of 6,000 Swiss Francs per month for the wife's maintenance.
v) An order of 2,000 Swiss Francs per month for the maintenance of each child plus school fees.
- Meanwhile in this jurisdiction on the 16th June the wife's solicitors wrote to the Foreign Process Office seeking service of the wife's divorce and other proceedings under the Hague Convention. Four days later the documents to be served were received by the Foreign Process Office. Bizarrely on the 20th June the wife's solicitors sent a trainee to Klosters in an unsuccessful attempt to serve the husband personally with the London proceedings. Swiss law does not permit personal service of foreign process. As I shall demonstrate, service could only be lawfully achieved under the Hague Convention.
- Equally bizarrely, on the 26th June the wife's solicitors obtained from the District Judge on a without notice application an order for substituted service of the wife's proceedings on the husband's Swiss lawyer, who received the papers two days later.
- In Klosters the conciliation appointment of the 3rd of July was frustrated by the wife's failure to attend. Nor did she attend the adjourned hearing on the 7th July. The hearing is, however, significant for the fact that it marks the wife's first challenge to the jurisdiction of the Klosters court. The order issued by the court was a Leitschein, translated as an Approval to Commence Proceedings. The recitals preceding the order include: -
"Prior to the start of the Second Conciliation Hearing Mr Müller, Lawyer, informed the District Court Office that Mrs Lisa Bentinck- Hogan disputed the jurisdiction of the court and was not entering an appearance in proceedings before the Klosters District Court."
The order also recites the respondent's prayer: -
"On account of the lack of jurisdiction of the Klosters District Court the Petitioner's application should not be entertained and should be dismissed."
- It is to be noted that the challenge was to the jurisdiction; there was no application for a stay nor any assertion that the court in London was first seised.
- The order of the 7th July approving the commencement of proceedings transferred "the matter in dispute…to the competent court."
- In this jurisdiction on the 14th July, the husband applied to set aside the order of the 26th June for substituted service together with service in accordance with that order. On the 31st July the husband was served with the London petition pursuant to the Hague Convention.
- On the 2nd August, the District Judge transferred the husband's application of the 14th July to the High Court and required any answer to the petition by 9th August, a direction that the husband complied with. On the 7th August the husband issued his second application for an order that the wife's application for maintenance pending suit and under Section 27 be stayed in accordance with the Lugano Convention. A consent order was made on the 21st August and fixed the wife's application for maintenance pending suit for the 11th October when directions would be given on the husband's application for a stay. His application to set aside the order for substituted service was adjourned to be heard by a judge of the Division with a time estimate of one day. This consent order seems to me bizarre. The husband's application for a stay in accordance with the Lugano Convention needed to precede, or at least be listed with, the wife's application for maintenance pending suit. Equally, allowing a full hearing before a judge for the husband's attack on the substituted service order seems unjustified. He had by then been duly served in accordance with the Hague Convention and, insofar as the date of due service retained importance, it was short and not difficult to decide.
- On the 31st August the husband's lawyer filed his pleading in the Swiss proceedings. His applications had become more hostile. He sought custody of the children, a child maintenance order against the wife and an order for her maintenance at the rate of only 1,000 Swiss Francs per month. The pleading is full rather than formal, running to some ten pages in translation. The wife's pleading bears the same date and is even more substantial running to some twenty-two pages in translation. By her first prayer she sought the dismissal of the husband's application of the 14th June. Alternatively she sought extensive protective measures in the event that the husband's application was entertained. Her challenge to the jurisdiction was based upon the assertion that "at the time the petition for divorce was lodged the parties had not yet lived apart for two years." An English lawyer would characterise that as a defence to the petition rather than a challenge to jurisdiction.
- On the 6th October the husband filed his third application in this jurisdiction, an application for a discretionary stay under the Domicile and Matrimonial Proceedings Act 1973.
- I come now to a very significant hearing before District Judge Berry on the 11th October. First he transferred all applications to the High Court. Second he directed that the husband's application under the Lugano Convention be listed for determination as a preliminary jurisdictional issue with the hearing of the wife's application for maintenance pending suit to follow if required. He allowed two days for that listing and further set up a two hour directions hearing for a Family Division Judge on the 24th November. He directed the attendance of the parties. Subsequently that hearing was fixed for 28th and 29th March 2007. Third he fixed the husband's two other applications (for a stay and to set aside the order for substituted service) for a five day hearing before a judge of the Division. Subsequently a date in October 2007 was obtained for the longer hearing.
- Both parties were represented by counsel at that hearing and it is common ground that it was a pressurised hearing that had to be taken at speed. The husband did not appeal the order and that is understandable given that he had achieved a listing of his application for a stay under the Lugano Convention to precede the hearing of the wife's application for maintenance pending suit. Furthermore the validity of the order had to be judged in the context of the Swiss proceedings as they then stood. The pleadings of the parties, simultaneously filed on the 31st August, raised only the issue of the jurisdiction of the Swiss court.
- Subsequently lengthy pleadings were filed in Klosters. The wife's answer of the 23rd October sought a stay of those proceedings under Article 21 of the Lugano Convention. On the 8th November she filed a further statement, essentially written submissions in substantiation of her answer. Pleadings were closed by the filing of the husband's written submissions on the 13th November. In his final pleading the husband challenged the wife's application for a stay under the Lugano Convention, predictably asserting that the Klosters court rather than the London court was first seised. Thus between the order of District Judge Berry and the directions appointment on the 24th November the landscape had changed. Issue was now pending in both courts as to which was first seised.
- The directions hearing on the 24th November found its way into the list of Kirkwood J. It is common ground that again there was insufficient time to deal with an endeavour by the husband's counsel to prevent the making of further directions and to persuade the judge to impose an immediate stay on the wife's application for maintenance pending suit under the provisions of the Lugano Convention. Mr Justice Kirkwood rejected that submission and gave directions, specified in paragraph 2 of his order, for the filing of evidence on the issues listed for March 2007, including expert evidence as to Swiss law. He also attached a penal notice to the previous direction requiring the attendance of the parties.
- Kirkwood J also refused the husband's application for permission to appeal and an appellant's notice was filed on the 8th December. On the 17th January I ordered an oral hearing on notice with appeal to follow if permission granted fixed for 20th February.
- Between the hearing on the 24th November and the hearing of the appeal the landscape has changed again and more profoundly. On the 21st December the Klosters court issued a notice fixing the hearing on jurisdiction in divorce and ancillary matters for 1st February 2007. That hearing proceeded and judgment is reserved. Counsel's understanding of when a judgment will be given predictably diverged. Mr Singleton suggests that the judgment will be given next month. Mrs Bailey-Harris, for the wife, suggests that it will some months in coming, perhaps May, perhaps later.
- Before recording the submissions in our court it is convenient to set out the relevant provisions of the Lugano Convention. In relation to procedural matters the relevant provision is to be found in Protocol 1 Article IV which provides: -
"Judicial and extrajudicial documents drawn up in one Contracting State which have to be served on persons in another Contacting State shall be transmitted in accordance with the procedures laid down in the conventions and agreements concluded between the Contracting States."
- The effect of this provision is that the provisions for service contained in the Hague Convention are incorporated within the Lugano Convention: see Phillips v Nussberger  1 WLR 2598 at paragraph 25 in the judgment of Neuberger LJ.
- Article 1 of the Lugano Convention contains the following provision: -
"The Convention shall not apply to:
1. the status or legal capacity of natural persons, rights in property arising out of a matrimonial relationship, wills and succession; …"
- However the application of the Convention to maintenance comes fundamentally from Article 1 and additionally from Article 5 paragraph 2 which provides: -
"2. in matters relating to maintenance, in the courts for the place where the maintenance creditor is domiciled or habitually resident or, if the matter is ancillary to proceedings concerning the status of a person, in the court which, according to its own law, has jurisdiction to entertain those proceedings, unless that jurisdiction is based solely on the nationality of one of the parties;…"
- For the purposes of this appeal the crucial provisions of the Convention are Articles 21 and 22 which provide: -
Where proceedings involving the same cause of action and between the same parties are brought in the courts of different Contracting States, any court other than the court first seised shall of its own motion stay its proceedings until such time as the jurisdiction of the court first seised it established.
Where the jurisdiction of the court first seised is established, any court other that the court first seised shall decline jurisdiction in favour of that court.
Where related actions are brought in the courts of different Contracting States, any court other than the court first seised may, while the actions are pending at first instance, stay its proceedings.
A court other that the court first seised may also, on the application of one of the parties, decline jurisdiction if the law of that court permits the consolidation of related actions and the court first seised has jurisdiction over both actions.
For the purposes of this Article, actions are deemed to be related where they are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings."
- The authority of Phillips v Nussberger also demonstrates that for the purposes of Article 21 the Swiss court is seised under Swiss law on the issue of proceedings. By contrast an English court does not become seised of proceedings for the purposes of Article 21 until the defendant has been served with the claim.
- How do those rules affect the present case? The husband asserts that his proceedings seeking to determine maintenance were issued on the 25th January 2006, alternatively on the 14th June 2006. The wife asserts that the husband's maintenance application in Switzerland was not issued until the 31st August 2006, alternatively the 14th June 2006. The foundation for the 31st August rests upon an assertion in the wife's pleading of 23rd October in Switzerland to this effect: -
"Therefore there can only be a question of lis pendens within the meaning of Article 21 of the Lugano Convention, including within the Canton of Grisons, when the petition together with the approval to commence proceedings has been lodged with the court which is competent to rule substantively on the case. This was so in the present case on 31st August 2006."
- As to service of the wife's claims to maintenance the only rival dates are 28th June (substituted service) and 31st July (service pursuant to Hague Convention).
The rival submissions.
- Mr Singleton adopts the skeleton argument of his predecessor Mr Andrew Moylan QC. That skeleton was settled on the 4th December. The essence of the skeleton is to be found in paragraph 17(e) to this effect: -
"As the Swiss court has yet to decide whether it considers it is first seized, the English court should stay its proceedings until such time as that decision is made in Switzerland. Once Switzerland has decided whether or not it is seized of the matter, the English Court can make the necessary directions consequent upon the Swiss decision."
- Of course this submission is considerably fortified by intervening events, namely the fixture and then the hearing in Klosters. Mr Singleton relies upon the decisions in this court in Chorley v Chorley  2 FLR 38, particularly paragraph 36, and Wermuth v Wermuth (No. 2)  1 FLR 1029, particularly paragraph 34.
- Mrs Bailey-Harris rightly submitted that the husband's advisers had participated in the interlocutory process that laid down the timetable for future hearings in October 2006. That timetable had not been the subject of any appeal and the challenge before Kirkwood J was without any foundation. Kirkwood J had properly supported the interlocutory process by giving directions necessary to ensure orderly and economic preparations for the fixture on the 28th March. He had been absolutely right to reject an unprincipled application for a peremptory stay.
- Of course subsequent developments undermine the reality of Mrs Bailey-Harris' approach. When invited to identify what remaining issues justified the expensive procedural steps directed by the order of 24th November, followed by a two day fixture before a judge of the Division, she submitted a note containing the following: -
"1. Does the Swiss court have any jurisdiction to make an award of interim maintenance where there is a fundamental challenge to jurisdiction and substance in the divorce suit in Switzerland? Is there therefore anything of which the Swiss court is currently seised for the purposes of Lugano? The Swiss court to date has made no order for interim maintenance.
2. Maintenance is excluded by Swiss law from the ambit of a premarital contract designating Switzerland as the jurisdiction.
3. Lugano does not contain a provision determining when the Swiss court is seised. It is a matter of cantonal law.
4. When will the Swiss court consider itself seised of interim measures? On 14 June 2006, or on 31 August when the case was referred by the conciliation authority to the ordinary court? It may not consider itself seised for lis pendens purposes until 31 August – see Bundle 2G 174.
5. If the Swiss court is seised for the purposes of Lugano, are there differences between the scope of the two procedures which require the English court to undertake the characterisation process required in order to allocate the matter to Art 21 or 22? For example, is there power to award a costs allowance for litigation in another State?
6. If the court were persuaded that there are elements of difference, the court would be invited not to exercise its discretion under Art 22 at least in relation to the element (s) of difference, e.g. costs of litigation in another State.
7. Apart from the Lugano issues, does the English court have jurisdiction to order MPS pending the hearing in October 2007 (which includes H's DMPA 1973 forum conveniens, which W will rightfully defend)? DMPA hearing is a matter of status expressly excluded from Lugano. Moses-Taiga urges a pragmatic approach.
8. If there is no English hearing for MPS in March, and the Swiss court's consideration of jurisdiction is protracted and the Swiss court does not order interim maintenance pro tem, W will not be able to obtain an appropriate level of MPS. Inter alia, she will not be able to fund legal representation for the October hearing and will have to appear in person. This would constitute serious unfairness and wholly undermine the principle of equality of arms.
9. It would be necessary, if the English courts accepts jurisdiction in March, to have proper evidence by way of affidavits dealing with means and needs in order for the court properly to determine the substantive issue."
- In my judgment Mr Singleton succeeds in this appeal despite the fact that no single criticism can be made of the judgement of Kirkwood J. He rightly identified in the first paragraph of his judgment that the essential dispute between the parties was as to money. With equal clarity he recorded that he had taken the case in circumstances that were plainly unsatisfactory with no opportunity for pre-reading and precious little time for argument. He noted that the husband's application was supported by a skeleton that required the reading of two hundred and forty-four pages relating to the Swiss proceedings. In those circumstances he refused to allow the husband's counsel "to hijack" the two day fixture directed by District Judge Berry the first purpose of which was to consider the question of the Lugano Convention in the context of the wife's application for maintenance pending suit.
- Had the husband's application been: -
a) that the very issue had been raised in the Swiss proceedings in pleadings which had closed some ten days earlier.
b) that the husband's advisers were seeking a hearing date in Switzerland which was likely to precede the fixture on 28th March.
c) that in those circumstances there should be a halt to preparations for the trial of the husband's Lugano Convention application pending the decision of the Swiss court:
Kirkwood J might have come to a different conclusion.
- Despite the absence of error in the judgment below it is not only open to this court but incumbent upon this court to act to avoid any further wastage of costs and court resources. We were informed that the parties have together spent £330,000 to date in both jurisdictions, the vast majority in London. Even were the Lugano Convention issue only pending in Switzerland, there is the strongest argument for deferring in London for the simple reason that the issue of which jurisdiction was first seised is to be determined there according to Swiss law. The notion of having conflicting expert evidence from Swiss lawyers upon which a London judge then has to determine seisin according to Swiss law makes no sense at all when a Swiss judge is there to determine the very issue. That consideration becomes even more powerful when the issue has been argued out in Switzerland and all that is awaited is the judgment of the court. This court would abandon common sense and responsibility if it permitted the parties to continue to incur costs in this jurisdiction in preparation for a London fixture on the premise that it might precede in time the delivery of the Swiss judgment.
- Of course Mrs Bailey-Harris is right to submit that the Article 22 question (whether the claims are the same or related) falls to be decided by an English court according to the autonomous law of the Convention. However a prior Swiss decision defining the nature and extent of the claims to maintenance in that jurisdiction according to Swiss law is, or may be, a pre-requisite.
- I acknowledge that there may be force in the point raised in paragraph 8 of Mrs Bailey-Harris' note. With all the tactical manoeuvring the wife does not want the benefit of the Swiss maintenance pending suit order that the husband proffers. Thus she might deprive herself and the children for some months. However elaborate hearings in this jurisdiction are not the logical consequence. In granting the husband's application for a stay it is open to us to impose conditions. That may not be necessary since Mr Singleton proffered a signed agreement from his client during the course of the hearing to pay the maintenance that he had first proposed in the Swiss proceedings together with rent for the wife's home.
- In a number of judgments I have emphasised the need for and benefits of direct judicial communication in trans-national family cases. Once the Lugano Convention issue was squarely raised in both jurisdictions there was an obvious opportunity and need for direct communication between the responsible judge in London and the responsible judge in Klosters. Such an exchange would have established when the court in Klosters would list the case and when its decision was likely to be known. If that information had been obtained and factored into case management in this jurisdiction I suspect that this appeal would not have been necessary.
- In conclusion I would grant permission, allow the appeal and set aside all directions leading up to and including the March fixture. The directions for the October hearing can stand for the time being, although once the dispute over which court decides financial issues is resolved, I would assume that other issues will abate.
- Since writing my judgment we have unexpectedly received notification, and later a translation of, the Klosters judgment. Not surprisingly it decides that Switzerland has jurisdiction and is first seised in respect of all matters save custody of and contact to the three children of the family who are, of course, habitually resident here. This development does not cause me to alter my proposals for the disposal of the appeal.
Lord Justice Wall:
- I have had the advantage of reading in draft the judgments of Thorpe and Lawrence Collins LJJ. I agree with both, and do not think there is anything I can usefully add. Accordingly, and for the reasons they give, I too would allow the appeal and make the consequent directions identified by Thorpe LJ in paragraph 41 of his judgment.
Lord Justice Lawrence Collins:
- I agree with the order proposed by Thorpe L.J. It would have been absurd for the English court to have heard evidence by experts on the procedural law of the Canton of Grisons/Graubunden (in particular, as to when the Swiss court was first seised, and as to whether and when the Swiss proceedings contained a claim for maintenance) and for the English court to have resolved any conflict between them, when the very same questions of cantonal law were about to be decided by the court sitting in Switzerland, and have now (at least at first instance) been determined by the Swiss court.
- It is common ground that the question of priority falls to be determined either under the mandatory provision of Article 21 of the Lugano Convention, or the discretionary provision of Article 22.
- The Lugano Convention (by contrast with the the Brussels I Regulation, Article 30) contains no autonomous formula for determining the date of seisin. The court which has to consider whether to order a stay of its proceedings must resolve the question according to the procedural law of each country whose courts are claimed to be seised: Case 129/83 Zelger v Salinitri (No. 2)  ECR 2397.
- The rule in England is that the court is seised on service: see Dresser UK Ltd v Falcongate Freight Management Ltd  QB 502; The Sargasso  3 All ER 180.
- Switzerland is a party to the Hague Service Convention. Article 10 of the Convention allows service through an agent "provided the State of destination does not object." It is notorious that Switzerland has strong objections to private or postal service of foreign process, and service in Switzerland directly by the parties' English solicitors is not only ineffective but also a criminal offence.
- It is not permissible to use an order for service by an alternative method (formerly substituted service) to circumvent the Hague Convention in order to gain priority under Article 21: cf Phillips v Nussberger  EWCA Civ 654,  1 WLR 2598.
- Consequently, the English proceedings were not effectively served until 31 July 2006, when service under the Hague Convention method was effected.
- The 244 pages concerning the Swiss proceedings which were placed at the last minute before Kirkwood J showed that issue had been joined in the Swiss proceedings on the question whether the Swiss court was the court first seised and on the issue of cantonal law which even in England governed the question when the Swiss court was seised. The husband's position was that the Swiss court was seised when the conciliation application was made on 25 January 2006, and the wife's position was that the Swiss court was not seised until August 31, 2006 when the petition and the approval to commence proceedings were lodged with the competent court.
- The Swiss court has now ruled that it was seised on the date of filing of the conciliation request, and there is no point at all in an exchange of expert evidence and the proposed March hearing.
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