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Isle of Man Case Fails – Three-Legged Race Over!

Schofield Sweeney’s litigation team has been working with Chris Arrowsmith of Simcocks, advocates of Douglas, Isle of Man, and William Buck of St Philips Stone Chambers in Leeds in proceedings brought against three of its clients by a claimant based in the Isle of Man.  The Claimant had also sued a bank which was the Fourth Defendant to the claim.

In the proceedings the Claimant sought damages of £6.9 million from the failure of a Yorkshire based business in 2009.  The Claimant, the majority shareholder in the company, claimed that Schofield Sweeney’s clients, directors of the company, and the bank, had been involved in a conspiracy to undermine the value of the company so that they could be buy it at a knock down price.  Although that did not in fact happen, the Claimant alleged that the business had been so destabilised that it was sold at a loss to him. 

Whilst the Claimant lives in the Isle of Man, there was only a tenuous connection between the other parties and the island.  One of the Defendants lives in Australia whilst the other 2 individuals live in England.  The Claimant alleged that they had previously had residential addresses in the Isle of Man although they disputed that.  The bank has a branch in the Isle of Man, although that branch had no connection with the facts upon which the claim was based. 

Of particular interest to English lawyers was the fact that the Claimant was able to obtain Legal Aid in the Isle of Man to pursue his claim. 

Schofield Sweeney’s clients contested the Claimant’s application to serve them out of the jurisdiction and the bank made an application to strike out the claim on the basis that the Isle of Man court had no jurisdiction to deal with the case.  Judgment was given by the Deemster in the Civil Division of the Isle of Man High Court of Justice on 27 January 2017.  The Claimant’s claim was dismissed.  The Deemster decided that the proper jurisdiction was England; all of the events about which the Claimant complained had taken place in England, the company was based in Yorkshire.  Save for the First Defendant, all witnesses are based in England and the relevant law to be applied to the situation was English law; Manx law had no application to the case.  There was the possibility that other parties may be joined into the proceedings for contributions or indemnities and all those potential parties were based in England. 

The Claimant argued that the proceedings should be allowed to continue in the Isle of Man because he had Legal Aid which he could not get in England.  The Deemster said he could not conclude that Legal Aid would definitely not be available but there may well be other litigation funding available such as a Conditional Fee Agreement.  The Claimant’s contention that a CFA would not be available to him was rejected by the Deemster.  The Deemster said that because of the Claimant’s professional qualifications (both accountancy and law) and his articulacy and intelligence, he would not be prejudiced from pursuing a claim as a litigant in person in the English jurisdiction.

The Claimant argued that he had suffered damage in the Isle of Man.  Whilst accepting that the Claimant had lived in the Isle of Man at all relevant times the Deemster said the claim related to the alleged substantial diminution in the value of his shareholding in an English company.  Having reviewed various authorities he concluded that there was nothing before him to show that the Claimant had sustained damage within the Isle of Man jurisdiction within the meaning of its rules.  In the circumstances, the Claimant’s claim was dismissed.

In addition to the fact that Legal Aid is still available in the Isle of Man for such cases it was also an interesting case in that Schofield Sweeney’s clients were allowed to contest the application to serve out of the jurisdiction before service had been allowed or taken place.

If you require any further information or would like to speak to one of our litigation lawyers please call 01274 306 000.

About the Author

James Staton

Partner

James is a Partner and Head of the Dispute Resolution team and primarily handles commercial…

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