Stevens & Bolton successfully challenges the jurisdiction of the English courts in a claim against a Spanish motor racing team

Stevens & Bolton successfully challenges the jurisdiction of the English courts in a claim against a Spanish motor racing team

Axon Limited v Drivex Business Solutions SL

Stevens & Bolton LLP has acted on behalf of Drivex Business Solutions (Drivex), a small motor racing team headquartered in Spain, in applying to set aside a default judgment that had been entered against it and challenging the jurisdiction of the English courts to hear the claim.

A dispute arose between Axon Limited (Axon) and Drivex concerning monies received by Drivex that Axon asserted were to allow them to display advertising on Drivex’ cars. Drivex disputed that this was the purpose for the payments and Axon issued proceedings in England against Drivex, ultimately obtaining a judgment in default.

Alongside an application to set aside the judgment in default, Drivex challenged the jurisdiction of the English court and in July 2020 the court (Master Davison) held that Axon had erred by starting proceedings in England. The court also found that, because a mechanic on whom proceedings had been served was not “a person holding a senior position” within Drivex, CPR 6.5(3)(b) requiring service on an appropriate individual in order to bind the recipient company, had not been met, and therefore service had not in any event been affected.

Whilst the facts in this case are somewhat unique, it is one in a long line of cases showing how service on a company can go wrong if the claim documents are served on the wrong person (see our recent update on some other recent service cases here).

The nature of Drivex’ business was such that it did not have an address in England upon which to effect service, and so Axon was obliged to personally serve on someone who it thought was a suitable representative of Drivex whilst in England. In such situations, it is of critical importance to any claim to ensure in advance that the individual will be sufficiently senior to accept documents on behalf of the company.

Furthermore, this case highlights the general point that it is important for parties who receive claims to take prompt action, including instructing solicitors, to avoid default judgment being entered against them. It should also serve as a reminder to overseas companies without a base in England, but who undertake business activities here, that they may (or in this case, may not) come within the jurisdiction of the English courts.

The Stevens & Bolton team was led by managing associate Michael Stocks, supported by Joe Armstrong.

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Case summary: Axon Limited v Drivex Business Solutions SL

Background

Drivex is a small motor racing team headquartered in Spain. Axon Limited (Axon), a company registered in the Cayman Islands, provides (amongst other services) funding to drivers who are looking for the opportunity to race with motor racing teams.

A dispute arose between Axon and Drivex concerning monies received by Drivex that Axon asserts were to allow them to display advertising on Drivex’ cars. Drivex disputed that this was the purpose for the payments. Axon issued proceedings in England against Drivex on 4 July 2019 on the basis that Drivex had been unjustly enriched as a consequence of Axon’s payment.

Axon purported to personally serve proceedings on Drivex by hand-delivering the claim documents on a Drivex contractor whilst at a race meeting at Silverstone in September 2019. Drivex ultimately failed to file an acknowledgment of service, and a default judgment was entered against Drivex on 20 November 2019. In December 2019 Drivex (at this point acting without legal representation) applied to the court to set aside the default judgment but made no reference to a challenge to jurisdiction. Only when Drivex instructed Stevens & Bolton some months later was a further application made to challenge the jurisdiction of the English courts and to set aside the default judgment on the grounds that it had a real prospect of successfully defending the claim. 

In relation to the challenge to jurisdiction, Axon submitted that:

(i) Jurisdiction had been established by service on the Drivex contractor (a mechanic contracted by Drivex) at its “place of business” in England and

(ii) In any event, Drivex had submitted to the jurisdiction by filing its application to set aside the default judgment in December 2019 

Decision

On 26 July 2020 the court (Master Davison) held that Axon had erred by starting proceedings in the English courts.

The general rule is that a defendant domiciled in an EU Member State must be sued in the courts of that Member State (article 4(1) of Regulation (EU) No 1215/2012 (the “Judgment Regulation (Recast)”)). Although there are derogations from this general principle set out at Article 7, it is established that such derogations do not apply to claims for unjust enrichment.[1]

The court agreed that Axon had attempted to evade these principles, and create jurisdiction in England by relying on service on an individual working for Drivex at a race weekend at Silverstone on the basis that this was where Drivex had been “carrying on its business”. Stevens & Bolton on Drivex’ behalf successfully argued that jurisdiction could not be established because Drivex had not been carrying on its business in England. To do this it applied the principles set out in SSL International plc v TTK LIG Ltd to argue that Drivex was not present for a “sufficiently substantial period of time”; nor was there a “fixed place of business” and the mechanic was not “an agent who does the corporation's business for the corporation in this country”.[2]

The court also found that, because the mechanic was not “a person holding a senior position” within Drivex, CPR 6.5(3)(b) requiring service on an appropriate individual in order to bind the recipient company, had not been met and therefore service had not in any event, been affected.

In response to Axon’s argument that Drivex’ application in December 2019 served as submission to the jurisdiction, the Court relied on the decision in Winkler v Shamoon that, “[i]t would be … absurd if a defendant who wished to challenge jurisdiction was unable to set aside a judgment in default which had been obtained against it without submitting to the jurisdiction.[3]

Although largely academic in light of the finding that the English courts did not have jurisdiction to hear Axon’s claim, the court also determined that, had that jurisdiction argument failed, it did consider that:

  • Drivex had a real prospect of successfully defending the claim and
  • Despite its delays in responding to Axon’s pre-action correspondence and subsequent claim, it would have set the default judgment aside

[1] Kleinwort Benson Ltd v Glasgow City Council [1999] 1 AC 153.

[2] [2012] 1 WLR 1842.

[3] [2016] EWHC 217 (Ch).

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