Ivanishvili v Credit Suisse AG
[2018] NZHC 1755
•17 July 2018
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2017-404-001817
[2018] NZHC 1755
IN THE MATTER of various claims for personal liability as a
constructive trustee, breach of fiduciary duty, breach of duty of care, breach of trust
BETWEEN
BIDZINA IVANISHVILI, EKATERINE KHVEDELIDZE, TSOTNE IVANISHVILI
(by his guardian EKATERINE KHVEDELIDZE), GVANTSA IVANISHVILI and BERA IVANISHVILI
Plaintiffs
AND
CREDIT SUISSE AG
First Defendant
…/2 cont’d
Hearing: 20 March 2018 Appearances:
N W Ingram QC, C A McLachlan QC, J L W Wass and P Kozlova for Plaintiffs
A S Butler, E J Rushbrook, N L Walker and O E Jaques for First Defendant
W Akel and B J Upton for Second and Third Defendants
Judgment:
17 July 2018
JUDGMENT OF VENNING J
This judgment was delivered by me on 17 July 2018 at 11.45 am, pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date……………
Solicitors: Brookfields, Auckland
Russell McVeagh, Wellington Simpson Grierson, Auckland
Counsel: N W Ingram QC, Auckland
C A McLachlan QC, Wellington
IVANISHVILI v CREDIT SUISSE AG [2018] NZHC 1755 [17 July 2018]
LOTA FIDUCIARY (CANADA) INC (as
former trustee of GREEN VALS TRUST) Second Defendant
CREDIT SUISSE TRUST LIMITED (as
sole trustee of GREEN VALS TRUST) Third Defendant
Table of Contents
Para No
Parties [4]
Background [8]
Present proceedings [19]
Approach to the case [20]
Rule 6.29 – good arguable case within r 6.27 [22]Has the proceeding against CSTNZ been properly brought? [24]
Are the Bank and LOTA necessary or proper parties? [44]
Rule 6.27(k) [52]
Application of r 6.28(5)(b) to (d) [71]
Serious issue – r 6.28(5)(b) [72]
Is New Zealand the appropriate forum – r 6.28(5)(c)? [102]Convenience and expense [107]
The law governing the relevant transactions – place of business [124]Choice of jurisdiction [135]
Other proceedings [137]
Is New Zealand or Switzerland in the best position to provide effective
relief? [138]
Enforcement [151]
Other relevant circumstances – r 6.28(5)(d) [154]
Clause 6.29(1)(b) [158]
CSTNZ – 6.29(3) [164]
Is Switzerland an available forum for the plaintiffs’ claim against CSTNZ? [167]
Result/orders [171]
Costs [173]
[1] The plaintiffs have sustained significant financial losses on investments. They claim the defendants are responsible for the losses. They seek to recover the losses in these proceedings.
[2] Credit Suisse AG (the Bank) and Lota Fiduciary (Canada) Inc (LOTA) were served outside New Zealand without leave. They have protested jurisdiction and have applied to dismiss and, in the case of LOTA, to stay the proceedings.
[3] Credit Suisse Trust Limited (CSTNZ) was served within New Zealand but has applied to stay the proceedings on grounds New Zealand is not the appropriate forum.
Parties
[4] Bidzina Ivanishvili is an ultra-high net worth individual and a former Prime Minister of Georgia. Ekaterine Khvedelidze is his wife. Tsotne Ivanishvili, Gvantsa Ivanishvili and Bera Ivanishvili are their children. Ekaterina Khvedelidze has been appointed as litigation guardian for Tsotne Ivanishvili who is a minor.
[5] The Bank is incorporated under the law of Switzerland. It has its head office in Zurich. It provides private banking services from various locations but not including New Zealand. It is a wholly-owned subsidiary of Credit Suisse Group AG, a financial services company with its headquarters in Zurich, Switzerland.
[6] LOTA is a body corporate incorporated in Prince Edward Island, Canada. LOTA is a wholly-owned subsidiary of Credit Suisse Trust AG, a company which provides trust foundation, corporate trustee and underlying company services. LOTA was the initial trustee of the Green Vals Trust (the GV Trust).
[7] CSTNZ is a company duly incorporated in New Zealand. It has its principal place of business at Auckland. It is the current trustee of the GV Trust. CSTNZ is also a wholly-owned subsidiary of Credit Suisse Trust AG.
Background
[8] The Bank has provided banking and investment services to Mr Ivanishvili for some time. In 2012, on the Bank’s recommendation and advice, Mr Ivanishvili settled the GV Trust with LOTA as trustee.
[9] On 10 August 2012 LOTA resolved to accept trusteeship of the GV Trust. The beneficiaries were Mr Ivanishvili, his wife and family. The Bank was appointed banker/custodian of the GV Trust. Mr Ivanishvili reserved the right to act as Investment Manager.
[10] In accordance with the acceptance documentation LOTA subscribed to the entire share capital of Sandcay Investments Limited (Sandcay), a company
incorporated in the Bahamas. Sandcay is a special purpose vehicle funded by loans from the GV Trust.
[11] Sandcay invested the money it borrowed from the GV Trust in a variety of investments, including:
·Investments in accounts with the Bank in Switzerland.
·A life policy issued by Credit Suisse Life (Bermuda) Ltd (CS Life) in Bermuda.
·Shares in a Cayman Island private equity fund, Lullaby Investments Ltd (the Lullaby Fund) with the Bank as Investment Manager.
·Shares in a Luxembourg Investment Hedge Fund, (the Dream Fund) with the Bank as Investment Manager. The Dream Fund is a sub-fund of Premium SICAV SIF Incorporated under Luxembourg law.
[12] In November 2013, Mr Ivanishvili authorised LOTA to discuss all matters relating to the GV Trust with his advisor and confidante Mr Bachiashvili.
[13] The Bank via its employee, Mr Patrice Lescaudron, reported the performance of the investments to Mr Bachiashvili.
[14] On 31 March 2014 Credit Suisse Trust AG advised Mr Ivanishvili that the company no longer intended to offer Trust services under the laws of Prince Edward Island and proposed LOTA transfer the trusteeship to CSTNZ and at the same time change the governing law of the GV Trust to the laws of New Zealand. On 1 July 2014 LOTA was replaced by CSTNZ as trustee of the GV Trust. The proper law and forum for administration of the GV Trust was changed from Prince Edward Island to New Zealand.
[15] In September 2015 CSTNZ, Mr Ivanishvili and Mr Bachiashvili were alerted to the possibility that Sandcay’s investments had been mismanaged and that Mr Lescaudron may have falsified investment reports. The Bank sent Mr Ivanishvili
investment reports for the accounts in the name of Sandcay and CS Life. The reports indicated that the value of the GV Trust Fund had dropped from USD 417 million to USD 294 million in nine months. The reports disclosed that earlier reports had been fabricated to present a misleading picture.
[16] Following criminal complaints by the Bank and others, the Swiss authorities arrested Mr Lescaudron. He was subsequently convicted on a number of offences and sentenced to five years’ imprisonment. The Swiss criminal court also ordered the surrender and repatriation of certain assets held by Mr Lescaudron (as well as assets received by third parties) to the Bank.
[17] Mr Ivanishvili and his family have taken a number of steps to pursue recovery of the losses. The plaintiffs and CSTNZ entered a representation agreement with Sandcay in October 2016 which gave the plaintiffs conduct of Sandcay’s “claims” which included rights of civil action against the Bank to recover losses arising from breach of contract, wilful misconduct or other causes of action related to accounts with the Bank in the name of Sandcay or CS Life. The New Zealand agreement was approved by this Court in November 2016 (in CIV-2016-404-2775).
[18] Relying on the representation agreement, the plaintiffs have directed Sandcay to issue proceedings in Bermuda against CS Life and to lay a criminal complaint in Switzerland. The plaintiffs have not as yet directed Sandcay to take any civil claims against the Bank.
Present proceedings
[19]The plaintiffs plead five causes of action in these proceedings:
(a)A claim against the Bank as constructive trustee and/or trustee de son tort.
(b)A derivative claim through LOTA and CSTNZ against the Bank for breach of fiduciary duty.
(c)A derivative claim through LOTA and CSTNZ against the Bank for breach of a common law duty of care.
(d)A claim against LOTA for breach of trust.
(e)A claim against CSTNZ for breach of trust.
Approach to the case
[20] The Bank and LOTA were served out of New Zealand without leave. As they have protested jurisdiction under HCR 5.49, r 6.29 applies. It provides:
6.29 Court’s discretion whether to assume jurisdiction
(1)If service of process has been effected out of New Zealand without leave, and the court’s jurisdiction is protested under rule 5.49, the court must dismiss the proceeding unless the party effecting service establishes—
(a)that there is—
(i)a good arguable case that the claim falls wholly within 1 or more of the paragraphs of rule 6.27; and
(ii)the court should assume jurisdiction by reason of the matters set out in rule 6.28(5)(b) to (d); or
(b)that, had [the plaintiffs] applied for leave under rule 6.28,—
(i)leave would have been granted; and
(ii)it is in the interests of justice that the failure to apply for leave should be excused.
…
[21] CSTNZ accepts that service has been validly effected on it within New Zealand but relies on r 6.29(3). It argues New Zealand is not the appropriate forum for trial of the action. It applies for the proceeding to be stayed under r 15.1.
Rule 6.29 – good arguable case within r 6.27
[22] I deal first with the position of the Bank and LOTA. The plaintiffs must satisfy the Court they have a good arguable case their claims against the Bank and LOTA fall within one or more of the paragraphs of r 6.27. It is a gateway or threshold which
must be passed before going on to consider the stage two issues under r 6.29(a)(ii). The good arguable case test in this context does not relate to the merits of the case but rather to whether the claim satisfies one or more of the circumstances in r 6.27.1
[23] In serving the process out of New Zealand on the Bank and LOTA the plaintiffs relied on r 6.27(2)(h). Rule 6.27(h) provides:
(h)when any person out of the jurisdiction is—
(i)a necessary or proper party to proceedings properly brought against another defendant served or to be served (whether within New Zealand or outside New Zealand under any other provision of these rules), and there is a real issue between the plaintiff and that defendant that the court ought to try; or …
Has the proceeding against CSTNZ been properly brought?
[24] CSTNZ has been served within New Zealand. The plaintiffs must establish the proceedings have been properly brought against CSTNZ as the anchor defendant and that there is a real issue between the plaintiffs and CSTNZ that ought to be tried.
[25] The plaintiffs’ claim against CSTNZ is based on the duties a trustee owes the beneficiaries of the Trust. The general duties alleged are not contentious. The plaintiffs alleged CSTNZ breached those duties by:
(a)failing to acquaint itself with the terms of the Trust;
(b)failing to review and/or monitor the investments;
(c)failing to review, monitor, and/or intervene in the delegation of the trustees’ investment and management functions;
(d)failing to act in good faith;
(e)failing generally to take reasonable steps to safeguard the Trust assets.
1 Wing Hung Printing Co Ltd v Saito Offshore Pty Ltd [2010] NZCA 502, [2011] 1 NZLR 754 at [32]–[33].
[26] Prima facie the plaintiffs’ claim against CSTNZ raises a real issue that ought to be tried. The defendants and CSTNZ seek to raise a number of challenges to the plaintiffs’ case against CSTNZ, to support the contrary submission that the proceedings have not been properly brought against CSTNZ and do not disclose a real issue.
[27] The Bank argues the plaintiffs are seeking to use LOTA and CSTNZ in particular as an improper jurisdictional hook to bring proceedings against the Bank in New Zealand. The Bank notes CSTNZ has applied to stay the proceedings against it. But the fact CSTNZ has applied to stay the proceedings is not relevant to whether the proceedings have been properly brought. CSTNZ’s application for stay is primarily pursued on forum grounds rather than on the basis of no reasonable claim. The forum ground is addressed later in this judgment.
[28] LOTA argues that once the necessary bona fides and chance of success against CSTNZ is scrutinised, the claim against CSTNZ is not properly brought. CSTNZ also challenges the plaintiffs’ bona fides in bringing the claim against it in New Zealand.
[29] The plaintiffs’ motivation for suing CSTNZ in New Zealand is not directly relevant at this point. Provided there is a good arguable (not contrived) claim against the anchor defendant the fact that the decision to sue the anchor defendant is predominantly due to a desire to reach a better funded foreign defendant is no answer to the plaintiffs’ claim on this point. Put another way, if CSTNZ were sued only for the purpose of bringing the Bank and LOTA to New Zealand that could be a factor in the exercise of the discretion as to forum but it is not a relevant consideration on the issue of whether the proceeding has been properly brought against CSTNZ,2 provided the plaintiffs have a viable claim against CSTNZ.
[30] Although CSTNZ’s objection is largely based on forum grounds it also raises a number of substantive challenges to whether the claim can be said to be properly brought, arguing that there is no real issue to be tried.3
2 Altimo Holdings and Investment Ltd v Kyrgyz Mobil Tel Ltd [2011] UKPC 7, [2012] 1 WLR 1804 at [79].
3 Tyne Improvement Commissioners v Armement Anversois S/A (The Brabo) [1949] AC 326 at 340.
[31] CSTNZ notes that it took over administration of the Trust on 1 July 2014. During its trusteeship the administration of the Trust was conducted out of Switzerland, and, later, Guernsey. But while those issues are relevant to consideration of the appropriate forum, they are not relevant to whether the claim against CSTNZ raises a real issue in terms of r 6.27(h).
[32] Next, it is submitted that the representation agreement sanctioned by the Court in November 2016 provides a pathway for the plaintiffs to conduct Sandcay’s claims against the Bank in Switzerland.4 Mr Akel submitted the plaintiffs had failed to explain why, in light of that agreement, it was necessary to sue LOTA and CSTNZ. In response, Adam Rooney, the plaintiffs’ London solicitor, has noted that the plaintiffs reserved their position against CSTNZ when entering the representation agreement. He refers to correspondence at the relevant time which identified the potential conflict in CSTNZ’s position, and which referred to the beneficiaries as well as Sandcay having claims arising from the losses. Marc Blumenfeld, Credit Suisse Trust AG’s head of legal trusts and Konrad Friedlaender of Guernsey, an adviser to LOTA and CSTNZ have responded to Mr Rooney’s evidence. While accepting that the plaintiffs reserved their position against CSTNZ, their evidence is that even the plaintiffs’ advisers considered any claim against CSTNZ as very much a “top-up” claim. The plaintiffs’ focus was always on the claim against the Bank.
[33] Again, while that may be a relevant consideration to the forum issue, it does not detract from the plaintiffs’ ability to pursue CSTNZ in New Zealand.
[34] Next, CSTNZ argues the claim against CSTNZ (and LOTA) proceeds on the mistaken apprehension that the trustees’ delegated investment and/or asset management functions to the Bank (via Sandcay). Mr Akel submitted that was factually incorrect. LOTA as the initial trustee of the Trust purchased shares in Sandcay. The shares of Sandcay were the assets of the Trust. Sandcay, acting independently of the trustees, invested in the Bank’s products.
4 The representation agreement provided for the following claims:
(a)Criminal complaint against Mr Lescaudron and the Bank (and others) for breaches of the Swiss Criminal Code and any permitted ancillary civil claims;
(b)Civil action against the Bank in Switzerland for breach of contract or wilful misconduct for losses relating to Sandcay or CS Life;
(c)Civil action against CS Life in Bermuda.
[35] While it is correct the Trust Deed and the documents executed when the GV Trust was initially established could be said to have envisaged and sanctioned the arrangements and structure counsel referred to, there is force in the plaintiffs’ response that it cannot be said that the arrangements and structure envisaged the funds, and ultimately the beneficiaries, would sustain multimillion dollar losses. The arrangements are discussed in more detail later, and are relevant to the forum issue. For present purposes, the issue is whether the trustees have any responsibility for those losses and, in the case of CSTNZ particularly, whether it failed to act appropriately after its appointment as trustee. They are real issues for the purposes of r 6.27(h).
[36] The defendants also refer to Mr Ivanishvili’s reservation of investment powers. But as counsel for the plaintiffs submit, the reservation of certain powers by Mr Ivanishvili cannot entirely reduce or abridge the duty CSTNZ as trustee owed to beneficiaries to act honestly and in good faith.5 Whether those duties have been breached is again an issue for trial.
[37] Finally there is the exculpatory clause in the Trust Deed. Clause 17 of the Trust Deed provides:
17.(a) In the execution of the trusts and powers hereof, no Trustee shall be liable for any loss to the Trust Fund arising in consequence of the failure, depreciation or loss of any investment made in good faith or by reason of any act or omission made in good faith or of any other matter or thing except wilful and individual fraud or dishonesty on the party of the Trustee whom it is sought to make liable (or, in the case of a corporate trustee, any of its officers).
[38] A properly drafted exoneration clause may be effective to exclude trustee liability.6 It will be a question of construction in each case.
[39] Counsel for the plaintiffs submitted that CSTNZ had acted in such a way that no honest person with its knowledge would have acted and in doing so acted with at least gross negligence and an exculpatory clause is not capable of excluding such failures.7 Counsel also submitted that the trustee cannot rely on the exculpation clause
5 Clayton v Clayton [2015] NZCA 30, [2015] 3 NZLR 293 at [51]–[52].
6 Armitage v Nurse [1998] Ch 241 (CA).
7 Tucker, Le Poidevin, and Brightwell Lewin on Trusts (19th ed, Sweet & Maxwell, London, 2015) at [39-132].
in this case to escape liability for the fraud of an employee of its agent the Bank. That of course assumes the Bank was acting as the trustee’s agent. Finally, it was submitted that the exculpatory clause was not drawn to the attention of Mr Ivanishvili and therefore the trustees could not rely on it.8 I place little weight on that suggestion. Despite Mr Ivanishvili’s assertion to that effect, it is an extraordinary proposition to suggest that a sophisticated and experienced businessman such as Mr Ivanishvili would not be aware of the documents he was signing.
[40] In Wong v Burt the trustees sought to rely on both an exoneration clause and s 73 of the Trustee Act 1956 to avoid liability.9 The Court of Appeal noted that on any question of liability the trustees bore the onus of establishing that they were protected by one or both of those exemptions, and that an exemption clause is construed narrowly against trustees seeking to rely on it. The essential question is whether objectively it could be said the trustees acted dishonestly. The Court cited with approval the following comments from Lord Nicholls of Birkenhead from the Royal Brunei Airlines Sdn Bhd v Tan:10
… [A]cting dishonestly, or with a lack of probity, which is synonymous, means simply not acting as an honest person would in the circumstances. This is an objective standard.
[41]The Court then went on to observe that:11
Although at first sight the word “honest” may point to a state of mind, its scope is not so limited. A person can be acting dishonestly, according to the ordinary use of language, even though he or she genuinely believes that his or her actions are morally justified.
[42] Whether CSTNZ can rely on the exculpatory clause in this case will depend on the Court’s findings about its obligations and its actions in the context of the particular circumstances of this case. That is not a matter which can be determined at this interlocutory stage.
8 Bogg v Raper [1988] EWCA Civ 661 at [53].
9 Wong v Burt [2005] 1 NZLR 91.
10 At [51]-[52] citing Royal Brunei Airlines Sdn Bhd v Tan [1995] 2 AC 378, and Walker v Stones
[2001] QB 902 (CA).
11 At [53].
[43] In summary, CSTNZ may have a number of substantive defences to the plaintiffs’ claims. But for present purposes, I am satisfied that their claims against CSTNZ are bona fide such that for the purposes of r 6.27(h) there is a real issue between the plaintiffs and CSTNZ that ought to be tried.
Are the Bank and LOTA necessary or proper parties?
[44] The next issue under r 6.27(h) is whether the Bank and LOTA are necessary or proper parties to the claim which has been properly brought against CSTNZ.
[45] The plaintiffs allege the Bank’s conduct was a proximate cause of the losses and that the trustees unlawfully abdicated their responsibility to manage the Trust Fund to the Bank and failed to monitor the Bank’s conduct. They say the defendants, namely the Bank, and LOTA are necessary and proper parties to the claim against CSTNZ because had they been within the jurisdiction it would have been proper to sue them together.12 The plaintiffs note that the defendants accept that it would be convenient for all three defendants to be sued together.
[46] The plaintiffs allege that in the case of the Bank, LOTA and CSTNZ appointed the Bank as their agent and delegated to it the investment management responsibilities in relation to the GV Trust. The plaintiffs’ claims against the Bank are factually and legally inter-related with the plaintiffs’ claims against LOTA and CSTNZ and the Bank is a necessary and proper party to these proceedings.
[47] Insofar as LOTA is concerned the plaintiffs say that their claims against LOTA and CSTNZ are factually and legally inter-related and LOTA is a necessary and proper party to the proceedings brought against CSTNZ.
[48] There is a good argument for the defendants that LOTA may not be a necessary party to the plaintiffs’ proceeding against CSTNZ given that there is no overlap in time between their actions. CSTNZ succeeded LOTA to the position of trustee on 1 July 2014. The claim against CSTNZ can be resolved without determination of the claim against LOTA. There may be a degree of factual overlap in relation to consideration
12 Altimo Holdings and Investment Ltd v Kyrgyz Mobil Tel Ltd v Kyrgyz Mobil Tel Ltd, above n 2, at [87].
of the circumstances the investments were made in while LOTA was trustee when determining the allegation that CSTNZ breached its duty as trustee by failing to review those investments. That factual overlap does not mean however, that LOTA is itself a necessary party to the plaintiffs’ claim against CSTNZ.
[49] But it is important to note the use of the disjunctive “or” in r 6.27(h). Either consideration will suffice. Defendants may be proper parties to the action even though they may not be necessary parties. There is nothing magical in the term “proper party” in the context of the rule. Had the person to be served been within the jurisdiction and if so could have been properly sued in the proceedings in this Court then they are a proper party within the meaning of the rule.13
[50] On that basis, LOTA can be said to be a proper party to the proceeding against CSTNZ. The claim against it is a tenable claim for breach of trust. If LOTA was within jurisdiction the claim against it could have been brought in New Zealand. It is a proper party within the meaning of the rules.14
[51] The Bank is both a necessary and proper party to the plaintiffs’ claim against CSTNZ. It is a necessary party as it was the Bank’s servant who committed the fraud which arguably has led to the losses the plaintiffs seek to recover. It is also a proper party to the plaintiffs’ claim against CSTNZ. If the Bank was within jurisdiction the claims against it could have been brought in New Zealand. The causes of action are recognised in New Zealand.
Rule 6.27(k)
[52] The plaintiffs also now seek to rely on the defendants’ submission to jurisdiction to satisfy r 6.29(a)(i). They submit r 6.27(2)(k) applies and that by cl 2(a) of the Trust Deed LOTA and CSTNZ submitted to the jurisdiction of New Zealand for determination of this claim.
13 Equiticorp Industries Group Ltd (in stat man) v Hawkins [1991] 3 NZLR 700 at 714 citing Pratt v Rural Aviation (1963) Ltd [1969] NZLR 46l. See also Altimo Holdings and Investment Ltd v Kyrgyz Mobil Tel Ltd v Kyrgyz Mobil Tel Ltd, above n 2, at [87].
14 Massey v Haynes (1999) 21 QBD 330.
[53] Clause 2(a) of the Trust Deed as amended by the Deed of Appointment and Retirement of Trustees and Change of Proper Law and Forum for Administration dated 1 July 2014 (Deed of Appointment and Retirement) provides for the proper law for the Trust Deed:
This Declaration is established under the laws of New Zealand and subject to any change in the Proper Law duly made according to the powers and provide numbers hereinafter declared, the Proper Law shall be the law of New Zealand and the Courts of New Zealand shall be the forum for the administration hereof.
[54] Mr Akel noted the plaintiffs had not relied on r 6.27(k) when serving LOTA or, for that matter, the Bank. He is correct but where, as here, the issue arises on the basis of the interpretation of a clause in a deed which was raised in the notice of opposition, and the defendants have had the opportunity to respond to the point both with expert evidence and in submission, the defendants are not prejudiced by the plaintiffs raising the point.
[55] The issue only arises in relation to LOTA. The plaintiffs do not need to rely on r 6.27(k) to serve CSTNZ in New Zealand. The clause cannot apply to the Bank. Although counsel submitted that there is a good case the Bank was bound by the clause given it was sued as a constructive trustee/trustee de son tort, the Bank is not a party to the Deed and the consequences of any fiduciary obligations it may owe as a constructive trustee or trustee de son tort cannot extend to the Bank being fixed with the terms of such an express clause which is not directly relevant to the assumed fiduciary obligations.
[56] The defendants consider that Prince Edward Island is the relevant jurisdiction for the plaintiffs’ claim against LOTA (although LOTA has agreed to submit to the jurisdiction of the Swiss Courts). The defendants have led expert evidence on this issue. Donovan Waters QC, a barrister of British Columbia, Canada and a Professor Emeritus expressed the opinion that a Prince Edward Island Court would not construe the language of cl 2(a) as an exclusive jurisdiction clause. He considered the Court would approach the language of the Trust instrument on the basis of Crociani v Crociani and would not find it to be an exclusive jurisdiction clause.15
15 Crociani v Crociani [2014] UKPC 40.
[57] The plaintiffs responded by leading evidence from Professor Daniel Girsberger, a Professor of Law at the University of Lucerne. On this issue it was his view that cl 2(a) of the Trust Deed would be interpreted by a Swiss Court as a valid jurisdiction (forum) clause constituting agreement that disputes falling within its scope would be heard in New Zealand.
[58] Another of the experts called by the defendants, Professor Thevenoz, a Professor of Law at the University of Geneva, confirmed that in his opinion clause 2(a) of the Trust Deed did not apply to disputes and claims such as in the present proceedings. In his opinion the clause was directed to Trust administration at most and was not exclusive as to jurisdiction. He considered it likely to be regarded by a Prince Edward Island Court as having less weight than an exclusive jurisdiction clause in a contract.
[59] The plaintiffs say the clause is to be construed according to New Zealand law and that, when read with cl 1(k) of the Trust Deed, it was a jurisdiction clause which conferred jurisdiction on the New Zealand Court and applied to all disputes including the present claim by the plaintiffs against LOTA for maladministration of the Trust. Clause 1(k) of the Trust Deed provides:
“Proper law” means the law to the exclusive jurisdiction of which the rights of all parties and the construction and effect of each and every provision hereof are subject and by which such rights, construction and effect are construed and regulated.
[60] Counsel for the plaintiffs emphasised the reference to the Courts of New Zealand in the amended cl 2(a) and noted the observations of Lord Neuberger in the Privy Council in Crociani v Crociani:16
[I]f the stipulation was intended to indicate the country whose courts were to determine disputes, rather than the country in which the trust was to be managed, one would have expected the draftsman to refer to the courts of the country, as opposed to the country simplicter, as being the forum.
[61] Counsel submitted that citation supported the plaintiffs’ argument the clause was intended to cover claims of the present nature. It is, however, necessary to put the
16 Crociani v Crociani, above n 15, at [20].
above citation in context. In Crociani the Privy Council rejected the appellant’s submissions that the reference to “the forum for the administration of the trusts,” was a reference to the jurisdiction of the Courts of the country. The comments regarding courts were made in that context. The comments do not directly address the issue in the present case, namely whether LOTA has submitted to New Zealand jurisdiction. There are two issues concerning the clause. First, whether the correct jurisdiction is Prince Edward Island or New Zealand and second, whatever the jurisdiction, the scope or ambit of the clause.
[62] On the first issue, as Lord Neuberger in the Privy Council observed in Crociani there is obvious force, and at least on an initial reading, very considerable attraction in the notion implicit in the argument that a phrase which states that all rights and issues under a Trust “shall be subject to the exclusive jurisdiction” of a particular country is intended to confer exclusive jurisdiction on the courts of the country in question. But there are other issues of relevance here. The Deed of Appointment and Retirement which provided for the proper law to be the law of New Zealand itself contains a provision confirming that “this Deed shall be governed by and construed in accordance with the laws of Prince Edward Island, Canada”. That supports an argument that the Deed itself, including the amended clause, is to be construed in accordance with the laws of Prince Edward Island. If the clause had the effect that the plaintiffs argued for, namely that it was an exclusive jurisdiction clause, then there is a strong case for argument on LOTA’s behalf (and the Bank’s) that the causes of action fall to be dealt with in terms of the proper law of Prince Edward Island as discussed by Professor Waters.
[63] Further, there are other relevant provisions of the Trust Deed and the Deed of Appointment and Retirement. The Trust Deed provides for the ability to change the proper law from time to time. Importantly the recitals in the Deed of Appointment and Retirement confirm that the retiring trustee wishes to declare that “from the date of the Deed” the proper law of the Trust shall be the law of New Zealand and the forum for the administration of the Trust shall be the Courts of New Zealand. Clause 2 of the Deed of Appointment and Retirement also expressly provides that, “from the date hereof, the proper law of the trust shall be that of New Zealand … .” The Deed was executed on 1 July 2014.
[64] That express wording supports the argument that the law of New Zealand is only to apply to acts in relation to the administration of the Trust and claims arising from 1 July 2014. Counsel for the plaintiffs relied on the decision of Helmsman Ltd v Bank of New York Trust Co (Cayman) Ltd where, in a short comment without citing authority, the Court dismissed a submission that the original trustees were not bound by a change to the forum of the Trust.17 The issue was considered in more detail in Crociani. In Crociani the Privy Council noted the wording of cl 12(6) of the deed in that case which provided:18
[T]hereafter the rights of all persons and the construction and effect of each and every provision hereof shall be subject to the exclusive jurisdiction of and construed only according to the law of the said country which shall become the forum for the administration of the trusts ....
and then concluded:19
In the light of the way in which cl 12(6) is drafted, there are powerful grounds for saying that, at least as matter of language, all aspects referred to in cl 12(6) are to be assessed by reference to the date on which the breach or abuse occurred. If the “rights” of any party and the “construction” of the 1987 Deed are to be fixed by reference to the law applicable at the date the rights in question were allegedly infringed, it seems to accord with the language of the clause that the “exclusive jurisdiction” should also be determined by reference to that date.
[65] Applying that reasoning to the present case, and bearing in mind the wording used of “from the date of this deed” the plaintiffs’ claims against LOTA should be determined on the basis the proper law was that of Prince Edward Island.
[66] For those reasons I conclude that the change of proper law to New Zealand only applies to acts after 1 July 2014. Prior to that date the applicable law was that of Prince Edward Island. LOTA has not submitted to the jurisdiction of New Zealand Courts.
[67] Although it is unnecessary to decide it, there is also a strong argument that, despite the reference to the “courts of New Zealand” the reference to the forum for the administration of the Trusts is limited to the administration of the Trusts and
17 Helmsman Ltd v Bank of New York Trust Co (Cayman) Ltd [2009] CILR 490.
18 Crociani v Crociani, above n 15, at [13].
19 Crociani v Crociani, above n 15, at [28].
application for directions (such as provided for under Part 18 of the High Court Rules) and does not extend to claims for breaches of trust. Counsel for the plaintiffs referred to the cases of Koonmen v Bender, Green v Jernigan, and Re A Trust to support the submission that the clause covered clauses of the nature pleaded.20 But in Crociani Lord Neuberger made the point that the decisions in the cases of Green v Jernigan, Koonmen v Bender, Helmsman Ltd v Bank of New York Trust Co (Cayman) Ltd, Re Representation of AA, Re A Trust, and EMM Capricorn Trustees Ltd v Compass Trustees Ltd were not mutually consistent.21 Some involved concessions and the remainder depended on the arguments advanced and ultimately each turned on the precise wording of the clause in question. Lord Neuberger concluded that there was no well established, judicial consensus that either or both expressions relied on by the appellants in the case before it had the meaning for which they contended.
[68] The Privy Council also made the point that in the case of a trust deed the weight to be given to an exclusive jurisdiction clause is less than the weight to be given to such a clause in a contract. Put another way the strength of the case that needs to be made out to avoid the enforcement of such a clause is less great where the clause is in a trust deed.22
[69] For the above reasons I do not consider the plaintiffs can rely on r 6.27(k) in relation to either the Bank or LOTA.
[70] However, it is unnecessary for the plaintiffs to rely on r 6.27(k) as I have already found the plaintiffs satisfy r 6.27(h) in relation to both the Bank and LOTA.
Application of r 6.28(5)(b) to (d)
[71] That then leads to the next consideration under r 6.29(1)(a) namely whether the plaintiffs can establish that the Court should assume jurisdiction by reason of the matters set out in r 6.28(5)(b) to (d). The plaintiffs must satisfy the following criteria:
20 Crociani v Crociani, above n 15, at [31] citing Koonmen v Bender (2002) 6 ITELR 568; Green v Jernigan (2003) 6 ITELR 330; and Re A Trust [2012] Bda LR 72.
21 Green v Jernigan, above n 20; Koonmen v Bender, above n 20; Helmsman Ltd v Bank of New York Trust Co (Cayman) Ltd, above n 17; Re Representation of AA, (2010) 13 ITELR 690, Re A Trust, and EMM Capricorn Trustees Ltd v Compass Trustees Ltd [2001] JLR 205.
22 Crociani v Crociani, above n 15, at [35].
…
(b)there is a serious issue to be tried on the merits; and
(c)New Zealand is the appropriate forum for trial; and
(d)other relevant circumstances support an assumption of jurisdiction.
Serious issue – r 6.28(5)(b)
[72] The test for the serious issue to be tried has been described as whether, “at the end of the day, there remains a substantial question of law or fact or both, arising on the facts disclosed by the affidavits, which the plaintiff bona fide desires to try”.23 It has been accepted as imposing a less stringent test than the good arguable case criterion.24 The test is said to be the same as the “bound to fail” test applied under English law.25 In determining whether the plaintiffs satisfy the Court there is a serious issue to be tried, the Court will not attempt to resolve disputed questions of fact.
[73] The Bank submits that the plaintiffs cannot establish there is a serious issue to be tried against it. First, it argues that New Zealand law does not apply to the claims against the Bank. Next, to the extent it could be said the claims are governed by New Zealand law Mr Butler argues there is no serious question to be tried on the merits. The background to the relationship between Mr Ivanishvili and the Bank is a comprehensive contractual framework entered into by sophisticated parties. Mr Butler submitted the plaintiffs’ claims are an attempt to sidestep that framework by bringing duty based claims when the reality is that the claims concern the Bank’s alleged failures pursuant to relationships governed by Swiss law.
[74] The plaintiffs’ pleadings against the Bank raise three causes of action. The constructive/trustee de son tort cause of action is well known at common law. It applies where an agent is in receipt of trust money and acts as trustee by dealing with
23 Wing Hung Printing Co Ltd v Saito Offshore Pty Ltd, above n 1, at [42] citing Seaconsar Far East Ltd v Bank Markazi Jomhouri Islami Iran[1994] 1 AC 438 (HL) at 452D per Lord Goff.
24 Wing Hung Printing Co Ltd v Saito Offshore Pty Ltd, above n 1, at [40] citing Seaconsar Far East Ltd v Bank Markazi Jomhouri Islami Iran, above n 23, at 454C and 456–457.
25 Altimo Holdings and Investments Ltd v Kyrgyz Mobil Tel Ltd, above n 2, at [82].
the trust money without referral back to the trustees. Such an agent will be accountable as if a trustee.26 Where a trustee abandons the trust money to the agent both trustee and the agent may be jointly and severally liable.27
[75] The second and third causes of action against the Bank are more novel.28 They are derivative claims through the trustee against the Bank for breach of fiduciary duty and breach of duty of care owed to the trustee by the Bank as agent.
[76] The Bank argues that the complaints at issue are self-evidently governed by Swiss law. Mr Butler submitted the first cause of action is not a trust claim as such. It is properly characterised as a claim for breach of duties owed pursuant to an underlying contractual relationship. The second and third causes of action are duty based claims which again, must be governed by the law of the underlying relationships, namely Swiss law.
[77] The parties’ experts’ views differ on the applicability of Swiss law to respond to such claims. Taking a somewhat novel approach, the plaintiffs and the Bank both rely on aspects of the evidence of the other parties’ experts’ witnesses to make their point on this particular issue. Mr Butler notes that Professor Girsberger (the plaintiffs’ witness) opines that the claims under Swiss law would fail in order to support his submission that, if the plaintiffs’ claims are governed by Swiss law, there is no serious issue to be tried on the merits. To counter that, the plaintiffs submit that the Bank’s own expert evidence, that of Professor Thevenoz, is that the trustee de son tort claim at least would be governed by New Zealand law.
[78] Mr Butler referred to Belhaj v Straw a decision of the English Court of Appeal.29 The Court of Appeal confirmed that it was necessary for the plaintiffs to show the alleged torts in that case existed under the law of the place where it was said they were committed. I do not consider the Belhaj case to be of particular relevance or assistance in the present case. It was not a case of challenge to jurisdiction. The focus of the case was on the strike out application based on sovereign immunity.
26 Lewin on Trusts, above n 7, at [7–017] and [42-116].
27 Cowper v Stoneham (1893) 68 LT 18.
28 Cowan v Martin [2014] NZCA 593, (2014) 3 NZTR 24-021 at [53].
29 Belhaj and Straw [2014] EWCA Civ 1394.
[79] Of more relevance is the case of Erste Group Bank AG London Branch v JSC ‘VMZ Red October’ .30 In that case one of the grounds on appeal was that the plaintiff Bank had failed to demonstrate a serious issue to be tried on the merits because, although Russian law was plainly the applicable law, Russian law had not been pleaded. The Court approved the Judge’s reliance on the cases of Kuwait Oil Tanker Co SAK v Al Bader and VTB Capital v Nutritek International in dismissing that submission. The Court said that where the facts alleged disclose a serious issue to be tried as a matter of English law, it is for a party alleging that foreign law applied, and was fatal to the claim, to plead and prove it.31 The Bank claimed that English law was the applicable law. It was the defendants who wished to assert the applicable law was Russian law. All that had been suggested was the Bank might obtain an advantage if the case were tried in England rather than in Russia. There was no obligation on the plaintiff Bank to plead foreign law as an alternative to its primary case.
[80] Similarly in the present case the plaintiffs’ primary case is that the applicable law is New Zealand law. It has pleaded its case that way. The onus is on the defendant Bank to prove that only Swiss law can apply and that the plaintiffs’ claim would fail. Of course, in the present case, it is the Bank’s argument that the plaintiffs can pursue their claims against the bank in Switzerland. It is just that the claims would have to be restructured.
[81] There is a conflict between the experts. For the reasons that follow later in this judgment I prefer the evidence of Professor Thevenoz’s analysis as to how a Swiss Court would deal with the claims, but even he does not go so far as to suggest that Swiss law would be fatal to the plaintiffs’ claim, rather, his evidence is that the plaintiffs could bring their claims against the Bank in Switzerland, but they would be structured in a different way. Whether they succeed or not will depend on the evidence adduced in the course of the proceeding. The strength of the plaintiffs’ case is relevant to forum issues, but does not assist the bank with its argument there is no serious question to be tried.
30 Erste Group Bank AG London Branch v JSC ‘VMZ Red October’ [2015] EWCA Civ 379 at [109]– [112].
31 Kuwait Oil Tanker Co SAK v Al Bader [2000] EWCA Civ 160, [2002] 2 All ER (Comm) 271 and
VTB Capital v Nutritek International [2012] EWCA Civ 808, [2012] WLR(D) 181.
[82] The Bank does not satisfy the Court that the plaintiffs’ present claims do not disclose a serious issue to be tried on the basis Swiss law must apply, and would be fatal.
[83] I next address whether there is a serious issue to be tried in relation to the Bank based on New Zealand law. The Bank alleges that there is no serious issue to be tried on the plaintiffs’ claims given the comprehensive contractual framework entered into by sophisticated parties, which govern the relationships at issue.
[84] Mr Ivanishvili and the Bank have had a relationship since November 2004 when a company of which Mr Ivanishvili was the beneficial owner opened an account with the Bank in Geneva, Switzerland. Rolf Schnydrig, the Bank’s Swiss legal counsel, confirms the Bank maintained 25 separate account relationships in Switzerland with Mr Ivanishvili, the other plaintiffs and their associated entities. The primary accounts are Swiss banking accounts, which are governed by Swiss law. Mr Ivanishvili’s initial relationship manager at the Bank was a Ms Daria Mihaesco. In around August 2006 she was replaced by Mr Patrice Lescaudron.
[85] The GV Trust was one of the off-shore structures established by Mr Ivanishvili. The Bank put Mr Ivanishvili in touch with Credit Suisse Trust AG for the purposes of establishing trusts, including the GV Trust. The Bank’s general conditions governed the relationship between the Bank and its clients at all relevant times. The Bank’s general conditions, which Mr Ivanishvili accepted, and which applied at the time the GV Trust was established through Credit Suisse Trust AG included:
Art 14 Applicable law in place of jurisdiction for legal proceedings
All legal relations between the client and the Bank are governed by Swiss law. The exclusive place of jurisdiction for any kind of legal proceedings is Zurich or the place of business of the Swiss branch of the Bank with which the contractual relationship exists. The Bank also reserves the right to take legal action against a client before any other competent court. Mandatory places of jurisdiction prescribed by law remain reserved.
[86] In response, the plaintiffs’ say, as noted above, that whatever the arrangements were put in place at the time the GV Trust was established they cannot have envisaged that multi-million dollar losses would arise through the alleged abdication by the
trustees of their responsibilities regarding the investments, thus creating the opportunity for the fraud and the losses by the bank or Mr Lescaudron.
[87] In general terms it could be said the Bank’s conduct or the conduct of its employee was the proximate cause of the losses which, through Sandcay, the plaintiffs or GV Trust have sustained. It is not for the defendants at this stage to effectively recast the plaintiffs’ claim. While the Bank may have substantial defences and the issue as to the applicability of Swiss law is undoubtedly relevant to the forum issue, the causes of action are recognised at law and are supported by the plaintiffs’ pleading. The merits are not matters the Court can or should seek to resolve at this preliminary stage. The allegation that the trustees unlawfully abrogated responsibility to manage the Trust Fund to the Bank and the Bank caused loss by Mr Lescaudron’s fraud or was itself grossly negligent raises a serious issue to be tried as between the plaintiffs and the Bank on each of the three causes of action as pleaded (or, if advanced in Switzerland, on the basis of a restructured claim in that jurisdiction).
[88] Mr Akel also submitted that the plaintiffs could not establish a serious issue to be tried against LOTA and CSTNZ.
[89] Mr Akel argued that the claims mistakenly proceeded on the basis that LOTA and CSTNZ delegated investment and/or asset management functions to the Bank via Sandcay as nominee of the trustees. Again the issue raises factual and legal matters which cannot be resolved at this stage.
[90] Next, LOTA relies on provisions of the Trust Deed which authorise investments which would otherwise not be authorised. But it must at least be arguable such provisions could not permit Mr Lescaudron’s actions in the present case.
[91] Mr Akel next noted the imposition of Mr Ivanishvili as investment manager. He submitted that raised the distinct possibility that Mr Ivanishvili and/or Mr Bachiashvili will need to be joined as LOTA and/or CSTNZ will look to him for indemnity or contribution.
[92] In response, the plaintiffs say Mr Ivanishvili’s role was limited by provisions in the Fifth Schedule to the Trust Deed to providing advice and, if he wished, exercising limited powers. On Mr Ivanishvili’s evidence he was not actively involved in managing the assets. The issue cannot be resolved at this interlocutory stage. But in any event, LOTA accepts the issue is not dispositive. Even if Mr Ivanishvili and/or Mr Bachiashvili may have been contributory negligent, that does not detract from LOTA or CSTNZ’s principal liability.
[93] Mr Akel also submitted that any unauthorised and/or imprudent trades were made by the Bank, not by LOTA and the Exoneration clause is an answer to the plaintiffs’ claim against LOTA.
[94] In Professor Waters opinion the exoneration clause, cl 17(a) would be enforceable in Prince Edward Island. In addition a Prince Edward Island Court might read s 3(6)(d) of the LOTA Act (a private act applying to LOTA) as subject to the common law liability because the section does not express any intention to change the common law nor indeed does it refer to the common law.
[95]Section s 3(6)(d) of the LOTA Act states LOTA:
shall be exculpated for anything done or omitted to be done by it or any authorized delegate in the professed execution or in the execution of a trust to the extent provided by any trust deed, settlement or instrument.
[96] In Professor Waters’ opinion a Prince Edward Island Court would be likely to follow Armitage v Nurse32 rather than Poche v Pihera.33 He considers it likely that a Prince Edward Island Court would conclude liability for gross negligence could be excluded. He suggested LOTA could rely on the clause unless the plaintiffs were able to bring forward reasonable evidence that LOTA exercised its selection of delegates and agents in bad faith towards its duty and the Trust beneficiaries.
[97] Paul Michael QC, a Barrister of Prince Edward Island, who practises in the area of Trusts, Wills and Estates, Civil Litigation, Real Property, Corporate and Commercial, and Administrative Law was also of the opinion that the Exoneration
32 Armitage v Nurse [1998] Ch 241,[1997] EWCA Civ 1297.
33 Poche v Pihera (1983) 6 DLR (4th) 40, 16 ETR 68 (Alta. Surr. Ct).
clause would be enforceable. He considered Prince Edward Island law would follow the approach in Fattal v Walbrook Trustees (Jersey) Ltd34 as advised by the Ontario Court of Appeal in Ernst & Young Inc v Chartis Insurance Co of Canada35 as to the scope of the clause.
[98] The plaintiffs led evidence in reply from Professor Albert Oosterhoff from Ontario, Canada. In his opinion the Canadian case law differs sufficiently from English cases so that a Prince Edward Island Court may well decline to follow the English cases. The Prince Edward Island Court would consider the context and would apply the contra proferentem principle. On his analysis of the pleading, even if a Prince Edward Island Court adopted the broader English view of the permissible scope of exculpation clauses the conduct alleged in the statement of claim might well not be excused by the exculpatory clauses in 17(a) and s 3(6)(d). Further, in his opinion a Prince Edward Island Court would be likely to conclude that the reservation of powers by Mr Ivanishvili could not affect LOTA’s irreducible obligations to manage and oversee the portfolio and LOTA would remain subject to the duties prescribed by the Trustee Act. Further, LOTA’s failure to exercise necessary prudence in selecting agents to manage the portfolio in establishing the terms of the authority delegated and monitoring performance of the agents, would be a breach of s 3.5(3) of the Trustee Act. He considers the Court would be likely to conclude the reservation did not absolve LOTA of responsibility and the exculpatory clause did not relieve it of liability.
[99] In response Professor Waters confirmed his opinion that the Prince Edward Island Court would follow Armitage as clarified in Walker v Stones because that was how the Ontario Court of Appeal expressed the trust law on the point, in Ernst & Young Inc v Chartis Insurance Co of Canada. He also was of the view that Professor Oosterhoff was mistaken in referring to LOTA as being responsible as effective principal of Mr Lescaudron as that overlooked the established legal relationship between Mr Lescaudron as an employee of the Bank. However, as to that, I note a trustee that is guilty of misconduct may be liable for loss even if the immediate cause of loss is the fraud of another.36
34 Fattal v Walbrook Trustees (Jersey) Ltd [2010] EWHC 2767 (Ch) at [81].
35 Ernst & Young Inc v Chartis Insurance Co of Canada 2014 ONCA 78, 118 OR (3d) 740.
36 Youyang Pty Ltd v Minter Ellison Morris Fletcher [2003] HCA 15, 212 CLR 484.
[100] Again, the expert evidence on the point is dependent to a large degree upon the factual background. It is not conclusive on whether there is a serious issue to be tried. The defendants effectively conceded as much in their written submissions. While Mr Akel identified a number of issues with the plaintiffs’ claims against LOTA and CSTNZ and characterised the claims as very weak, ultimately he accepted there could be room for improved pleading and particularisation.
[101] The plaintiffs’ claim cannot be said to be bound to fail. I accept there is a serious issue to be tried against both the Bank and LOTA.
Is New Zealand the appropriate forum – r 6.28(5)(c)?
[102] This is the principal issue. The plaintiffs must establish that New Zealand is the appropriate forum for the trial against the Bank and LOTA. In Wing Hung Printing Co Ltd v Saito Offshore Pty Ltd the Court of Appeal confirmed that, with the change to the High Court Rules, the burden of proving New Zealand as the appropriate forum lies on the plaintiffs.37 In considering that issue the Court will be guided by existing authority, including the matters canvassed by the House of Lords in Spiliada Maritime Corp v Cansulex Ltd bearing in mind the difference in relation to the onus of proof.38
[103] The burden of proof issue is somewhat complicated by the position of CSTNZ in this case. Counsel for the plaintiffs argued that as New Zealand was clearly an available forum for the plaintiffs’ claim against CSTNZ the practical consequence was that the defendants had to show that Switzerland, not New Zealand, was the appropriate forum, given that the defendants agreed it would be best if all three claims were heard together.
[104] I do not accept that the position of CSTNZ should affect the onus or burden of proof in relation to the plaintiffs’ claims against the Bank and LOTA. The jurisdiction of domestic courts is essentially territorial in nature. The Court will not lightly exercise its discretion to assume jurisdiction over foreign parties. Even if it is determined that Switzerland is the appropriate forum for the plaintiffs’ claims against
37 Wing Hung Printing Co Ltd v Saito Offshore Pty Ltd, above n 1, at [44].
38 Spiliada Maritime Corp v Cansulex Ltd [1987] AC 460 (HL).
the Bank and LOTA, CSTNZ still has the onus of establishing that New Zealand is not the appropriate forum for the claim against it. At that stage an important consideration will be whether Switzerland is available as a forum for the plaintiffs’ claims against CSTNZ. (The onus in relation to that rests with CSTNZ). If Switzerland is an available forum for the plaintiffs’ claim against CSTNZ, then the burden will shift to the plaintiffs to show there are special circumstances which support the trial being held in New Zealand.
[105] But in any event, for the reasons that follow, I do not consider the onus of proof to be determinative or material in the present case.
[106] In determining the appropriate forum the Court will look for the forum with which the proceeding has the most real and substantial connection. The following factors are particularly relevant in the present case:
(a)convenience and expense, which will include consideration of where the parties and witnesses reside;
(b)the law governing the relevant transaction(s), which includes consideration of the place(s) where the parties carried on business and any choice of jurisdiction previously agreed by the parties;
(c)whether there are other related proceedings pending elsewhere;
(d)whether the New Zealand Court or a foreign court is in the best position to provide the most effective relief;
(e)other relevant circumstances.
Convenience and expense
[107] The plaintiffs are French Nationals. There is no evidence they have any connection to New Zealand. (There is a suggestion Mr Ivanishvili may have limited ability to travel, but I place little weight on that).
[108] The Bank is a Swiss Bank with its headquarters in Zurich. It has offices and principal branches throughout the world but it does not have a presence in New Zealand.
[109] LOTA is incorporated in Canada. The GV Trust was established on 10 August 2012 pursuant to advice given to Mr Ivanishvili by Credit Suisse Trust AG, the parent company of LOTA and CSTNZ. Credit Suisse Trust AG is based in Switzerland. While a separate entity from the Bank, it shares the same ultimate holding company, Credit Suisse Group AG.
[110] There will be language issues for the witnesses. English is not Mr Ivanishvili’s first language. He is fluent in French. The Bank’s witnesses are based outside New Zealand with most in Switzerland. English is not their first language.
[111] LOTA has no witnesses in New Zealand. They are mainly in Switzerland but also possibly in Guernsey, Georgia and, potentially, Liechtenstein.
[112] Although David Wills, a director of CSTNZ lives in New Zealand, at relevant times two of the three directors of CSTNZ have been off-shore and are not based in New Zealand.
[113] The defendants submit a related issue arises, namely the ability of a New Zealand Court to compel the attendance of Swiss witnesses and to require the disclosure of documents. The potential difficulty surrounding the presentation of evidence and documents from Switzerland to a New Zealand Court was discussed by the experts called by the parties. Dr Cereghetti, an Attorney of Zurich, who specialises in banking law, succession law and estate planning, gave evidence about the Swiss criminal procedure involving Mr Lescaudron and civil adhesive proceedings, and the procedure for the taking of evidence under Swiss law for the purposes of foreign court proceedings.
[114] In his opinion the only way for Swiss based witnesses (including Mr Lescaudron) to be questioned and give evidence in New Zealand proceedings would be through a Swiss Judge in response to a request for assistance. He made the further
obvious observation that an additional hurdle would be imposed by Mr Lescaudron’s incarceration.
[115] Professor Lorenz Droese, an Attorney at Law and Professor of Law at the University of Lucerne gave evidence for the plaintiffs about the use of documents obtained in Swiss criminal proceedings, and the mechanisms available under Swiss law for the collection of evidence in support of New Zealand proceedings. He agreed that a request procedure is available but considered it would not be necessary if the refusal to co-operate only led to consequences of a procedural nature. But he did accept that the taking of evidence of witnesses physically located in Switzerland would be considered to be an act by a foreign authority on Swiss territory and would need to be authorised. The taking of evidence could be conducted by video conference. He considered a Swiss Court would permit evidence to be taken from Mr Lescaudron while in detention. The issue of his incarceration was a practical matter which could be dealt with by the Swiss Court handling the request for judicial assistance.
[116] The plaintiffs submitted the defendants had overstated the issue in relation to the evidentiary difficulties and in any event the location of the witnesses was only one factor.
[117] There is the additional issue of the availability of relevant documents. The principal documents are located in Switzerland in the Bank’s data bases. Many are in French.
[118] In Professor Droese’s opinion the documents could be provided in response to a letter of request from the New Zealand Court to compel production of the documents. He considered that the use in foreign proceedings of information and documents obtained lawfully in Swiss proceedings (the criminal proceedings against Mr Lescaudron) would not be restricted by Swiss law in this case.
[119] In response Dr Cereghetti confirmed his opinion that judicial assistance proceedings would be necessary to facilitate the gathering of both oral and documentary evidence. He pointed out a number of practical difficulties, including:
·limits on pre-trial discovery in Switzerland;
·questioning of witnesses in Switzerland would have to be done by a Swiss Judge submitting questions to the witness in French;
·the rights of all parties affected by the judicial assistance request to be heard before the letter of request was issued and executed;
·rights of appeal;
·grounds for refusal, in particular Mr Lescaudron’s; and
·difficulties arising the fact of Mr Lescaudron’s imprisonment.
In his opinion a number of those matters would self-evidently fall away if the proceedings were issued in Switzerland.
[120] Counsel for the plaintiffs submitted that a number of the defendants’ objections were illusory or overstated. CSTNZ was incorporated in New Zealand. It should hold the documents formerly held by LOTA. The Bank’s documents would be held electronically. The relevant underlying documents and correspondence currently as noted are in English. Counsel also suggested the Court could rely on Mr Lescaudron’s admissions in his statements.
[121] I accept aspects of the plaintiffs’ submissions on this point, namely that the Court could require a party to proceedings before it in New Zealand to comply with orders for discovery. In the event the party failed to comply with the orders then the ultimate sanction would be for defences to be struck out. Further, obviously a number of the key documents are before the Court for the purposes of this application. But that does not address the other issues raised by the defence and Dr Cereghetti which I consider have practical force.
[122] Mr Schnydrig confirmed that the Bank does not have a centralised electronic document management system. The Bank’s document systems are set up on a
jurisdictional basis. Further as Mr Schnydrig noted, Mr Lescaudron’s evidence was given in French and changed from time to time. Importantly, Mr Lescaudron was acquitted on some charges relating to some of the investments made on behalf of Sandcay. His evidence will be important and it is likely will need to be given orally.
[123] In summary, and taking account of the above, the considerations of convenience and expense strongly support Switzerland as the appropriate forum for the plaintiffs’ claim against the Bank in particular.
The law governing the relevant transactions – place of business
[124] From 2004 Mr Ivanishvili’s account relationship with the Bank has been managed out of Switzerland.
[125] In 2012 Mr Ivanishvili caused approximately USD279 million to be settled on the GV Trust. Further amounts were settled during the following years. Upon the establishment of the GV Trust LOTA acquired the shares in Sandcay. The funds were paid to Sandcay’s accounts with the Bank in Switzerland and accounted for as loans from the trustee to Sandcay. Sandcay is incorporated in the Bahamas and was first administered out of Switzerland and then out of Guernsey. Sandcay maintained an account relationship with the Bank in Switzerland, the terms of which confirm the relationship between the Bank and Sandcay are governed by Swiss law. GV Trust’s financial statements for the year ended December 2014 record shares in Sandcay and a loan to Sandcay as the GV Trust’s sole assets. Sandcay itself has no New Zealand assets. Neither LOTA nor CSTNZ maintain an account relationship with the Bank.
[126] Sandcay is also a policy holder and sole beneficiary of a life insurance policy held with CS Life. (Mr Ivanishvili is the insured). The premium is invested in an account maintained by the Bank which is linked to the policy. Again the relationship between CS Life and the Bank concerning the custody and management of assets held by CS Life on behalf of Sandcay is governed by Swiss law.
[127] Other fund investments in the Lullaby and Dream Funds were made in the Cayman Islands in the case of the Lullaby Fund and the Credit Suisse Fund Services (Luxembourg) in the case of the Dream Fund.
[128] The GV Trust was itself administered by Credit Suisse Trust AG in Switzerland until 1 June 2015 and since then has been administered by a separate subsidy of Credit Suisse Trust AG, Credit Suisse Trust Ltd, in Guernsey. The GV Trust has never been administered in New Zealand.
[129] Mr Lescaudron, the Bank’s ex-employee, who has been convicted of fraud, worked out of the Bank’s Geneva branch. His wrongdoing occurred there. The alleged losses occurred in Switzerland and arise primarily from direct misappropriation or imprudent investments by Mr Lescaudron in Switzerland using moneys from Swiss bank accounts.
[130] The plaintiffs submit the fact the GV Trust was administered out of New Zealand is not as relevant as the seat of the proper law of the GV Trust which is now New Zealand. They refer to the decision of the Court of Appeal of England and Wales in Gomez v Gomez-Monche Vives.39 In that case the Court of Appeal accepted that apart from a governing law clause there was no connection between the trust and England but nevertheless noted the connection between trust and its proper law is in every sense real and close. It distinguished a trust from commercial contracts, and held the judge was correct to find the trust was domiciled in England.
[131] It is important to put the case in context. The settlor had been domiciled in Spain. The first defendant was the widow of the settlor. She was domiciled in Spain. The claimants were three of the sons. They lived in Spain, Portugal and the United States of America. The trust was administered in Liechtenstein where all decisions in relation to the trusts and its bank account and accounting books were located. As the Court observed, the case involved an important point of principle as to the domicile of a trust for the purposes of art 5(6) of the Council Regulation (EC) involving proceedings between persons domiciled in member states. It required the Court to consider s 45, an express provision providing for the domicile of trusts under the Jurisdiction and Judgments Act 1982 as to the application of the law of the trusts. The issue before the Court was whether income earned by the trust was subject to a resulting trust which arose on the death of the settlor as he died intestate. There was
39 Gomez v Gomez-Monche Vives [2009] Chd 245, [2008] EWCA Civ 1065.
a dispute about the effect of a clause of the trust providing for distributions at the end of the trust period. The essence of the dispute was entirely about the operation of the trust rather than the actions of the trustees or third parties.
[132] The focus in the present case is on the actions of the third parties: the Bank, Sandcay and Mr Lescaudron, and on the actions of the trustees.
[133] The issue regarding domicile in Gomez arose in the context that it was a necessary pre-condition of the exercise of jurisdiction under art 5(6) that the trust be domiciled in England. In the present case the proper law of the Trust involves different considerations. Further, as far as LOTA was concerned the proper law of the Trust was Prince Edward Island. New Zealand is the proper law of the Trust but only as from 1 July 2014.
[134] The place of business and where the relevant transactions (and actions) took place in the present case is predominantly Switzerland. There are no business connections or relevant transactions involving New Zealand. The jurisdiction with the most relevant and direct connection with the factual issues that arise in this case is overwhelmingly Switzerland.
Choice of jurisdiction
[135] Apart from the Trust Deed and Deed of Appointment and Retirement all the other relevant documentation provided for Switzerland to be the agreed jurisdiction for resolution of issues.
[136] The law to be applied to the claim against LOTA would be Prince Edward Island law. The alleged breaches of the Trust against LOTA relate to decisions made around the establishment and direction of the GV Trust and its later administration. All those events took place outside of New Zealand. As Mr Akel submitted, LOTA is a foreigner, has no connection to New Zealand and has no business and no property here. It has agreed to submit to the jurisdiction of the Swiss Courts.
Other proceedings
[137] There are no other relevant proceedings in either Switzerland or New Zealand. The plaintiffs have taken other proceedings against the Bank in Singapore (the Bank is a registered bank in Singapore) and the Bahamas.
Is New Zealand or Switzerland in the best position to provide effective relief?
[138] The natural forum with which the proceeding has the most real and substantial connection is Switzerland. But the plaintiffs submit that if the Court were to find the natural forum was overseas, the plaintiffs may nevertheless show that there were special circumstances justifying the refusal of the dismissal or stay, particularly if the plaintiffs were unable to obtain justice in the foreign jurisdiction.40
[139] The plaintiffs submit that if they are forced to litigate in Switzerland there is a serious risk their claims would not be recognised. On the basis of their experts’ evidence they submit the Swiss Courts would not recognise the beneficiaries’ claims against the Bank. If Swiss law would not recognise a plaintiff’s standing to sue it cannot be said to be an available forum, or put another way, there is a legitimate advantage for the plaintiffs to proceed in New Zealand.
[140] The experts disagree as to the extent the plaintiffs’ claims could be advanced in Switzerland.
[141] The Bank called evidence from Professor Thevenoz. Professor Thevenoz has published numerous articles on many topics, including the recognition of foreign trusts in Switzerland and by Swiss Courts. In his opinion Swiss Courts could exercise jurisdiction over the same or similar claims as made in the statement of claim if they were pursued in Switzerland against the defendants, assuming submission by the defendants to the jurisdiction of the Swiss Courts (unnecessary in the case of the Bank). LOTA and CSTNZ have confirmed they would submit to the jurisdiction of Swiss Courts.
40 Exportrade Corp v Irie Blue New Zealand [2013] NZCA 675, [2014] NZAR 495 at [38]–[39] citing Spiliada Maritime Corp v Cansulex Ltd, above n 38, at 476.
[142] In Professor Thevenoz’s opinion the substance of the claims in the statement of claim could be litigated in Switzerland. The plaintiffs would be able to seek analogous remedies. That would be so whether the Swiss Court held that the claims were governed by Swiss law or by foreign law (e.g. that of Prince Edward Island or New Zealand).
[143] The plaintiffs led evidence from Professor Girsberger in response. He referred to the Hague Convention on the Law Applicable to Trusts and on their Recognition of 1985 (HTC). He acknowledged specific Swiss conflict of law rules exist with regard to trust matters and that Switzerland has ratified the HTC. The Swiss legislature has also created additional domestic statutory rules dealing with foreign trusts but he made the point that Swiss substantive law does not know the institution of the trust and that the concept of constructive trust is unknown to Swiss law.
[144] In Professor Girsberger’s opinion there would be difficulties with the current pleaded causes of action being applied by the Swiss Courts. The first cause of action relies on the status of the plaintiffs as beneficiaries of the Trust. In his view, in all likelihood, the Swiss Courts would not recognise the standing of the plaintiffs. The standing to sue or to defend in relation to trust assets is only recognised in the trustee. If, in the alternative it was pursued as a constructive trustee claim, it would be treated as an unjust enrichment claim. The second cause of action is a derivative breach of fiduciary duty. There is no equivalent cause of action in Swiss law. The most similar type of cause of action would be a reliance claim characterised for conflict of law purposes, either as contractual, tortious or something in between. It would still face the issue of Swiss substantive law not recognising the conceptual position of beneficiaries. Professor Girsberger also considered it uncertain whether the derivative claim for breach of duty in the third cause of action would be accepted at all under Swiss law.
[145] Professor Girsberger acknowledged the fourth and fifth causes of action for breach of trust against the trustee, fall within the scope of the HTC and a Swiss Court would determine the law governing the Trust on the basis of the HTC, which would lead to the application of the laws of PEI and New Zealand respectively.
[146] In reply Professor Thevenoz confirmed his opinion that Swiss Courts are obliged to recognise express trusts such as the GV Trust and to recognise claims against trustees (including trustee de son tort claims) under the HTC. Such claims must be determined by reference to the applicable foreign law. He considers Professor Girsberger’s opinion to the contrary on the first cause of action is merely an assertion that is not based on a proper consideration of the nature of a trustee de son tort claim.
[147] In respect of the other claims it remains Professor Thevenoz’s opinion that the Swiss Courts would apply foreign or Swiss law depending on the characterisation of the claim and choice of law analysis. He remained of the view that the substance of the claims could be litigated in Switzerland. In his opinion the classification of such claims, as contract, tort, unjust enrichment reliance etc is less important than the ability to bring the claims in an appropriate form in the Swiss Courts. In his opinion there can be no serious doubt that the claims and alleged wrongdoing asserted in the New Zealand proceedings could be advanced in the Swiss Courts. In his opinion Professor Girsberger is wrong in relation to the derivative claims as he has failed to understand the pleaded derivative claims entail two steps. He considers Professor Girsberger has ignored the effects of the law applicable to the GV Trust and representation agreement. The two steps are:
(a)whether the Bank is liable to the trustee; and
(b)if so, whether the plaintiffs (as beneficiaries) can step into the shoes of the trustee to pursue the claims.
In his opinion the Swiss Courts would accept the pleaded derivative claims either because the governing law of the Trusts (both PEI and NZ law) so permits in appropriate (although limited) circumstances, or the representation agreement is valid in any event.
[148] I prefer the reasoning of Professor Thevenoz to that of Professor Girsberger on the issue of whether the Swiss Courts would provide a basis for the plaintiffs to seek a relief for a number of reasons. The Swiss Courts have general jurisdiction over the Bank. The classification of the claims pursued by the plaintiffs against the Bank (be
it contract, tort, unjust enrichment, or reliance) is less important than the ability to bring claims in whatever form in the Swiss Courts to seek recovery of the losses alleged to have been caused by the Bank. While Professor Girsberger makes the point as to the way the Swiss Court might characterise a constructive trust claim, his evidence does not support a conclusion that the claims of the nature advanced in the first cause of action could not be pursued in Switzerland. As to the second and third derivative causes of action Professor Girsberger’s reasoning proceeds on the basis of an assumption of a contractual relationship between the beneficiaries and the Bank. But as noted that overlooks there are effectively two steps to the derivative causes of action. Professor Girsberger is correct there is no privity of contract between the plaintiffs and the Bank but that is, with respect, irrelevant. I prefer Professor Thevenoz’s reasoning that whether the beneficiary can pursue this claim on behalf of the trustee would be a matter for the law governing the Trust. There are provisions of the HTC which could apply. Alternatively, the plaintiffs would also be able to rely on the representation agreement entered into by them, Sandcay and CSTNZ.
[149] Importantly, Professor Girsberger agreed that some of the remedies sought in the statement of claim could be obtained from the Swiss Courts, although the causes of action would have to be analysed in different terms. The expert evidence leads me to conclude that the plaintiffs would be able to pursue their claims against the Bank in Switzerland albeit that the claims may have to be constituted in a different way. While the Bank says the claims cannot be sustained on the facts, it accepts that claims of the nature raised could in theory be brought against it.
[150] I note that LOTA and CSTNZ have agreed to submit to the jurisdiction of the Swiss Courts. Both Professor Girsberger and Professor Thevenoz agree that the fourth and fifth causes of action are for breach of trust and that Swiss Courts would decide those claims in accordance with the law governing the GV Trust. They would apply the HTC and would determine those claims in accordance with the law governing the Trusts.
Enforcement
[151] The place for enforcement of any judgment is also relevant. The enforcement of any judgment against the Bank would be Switzerland and any judgment against LOTA would be in Canada. Clearly, it would be easier to enforce a judgment of a Swiss Court in Switzerland.
[152] The experts again differ on the issue of enforceability in Canada. Professor Janet Walker of Toronto, Ontario, Canada considered a Canadian Court would regard the claim against LOTA as having a real and substantial connection to New Zealand such as to support exercise of jurisdiction sufficient to render a resulting judgment capable of enforcement in Prince Edward Island.
[153] Against that, Professor Waters doubted that the requirements for enforcement would be met if the claims were pursued in New Zealand. In his opinion a real and substantial connection at the time of the alleged trustee breaches may not exist, as the alleged breaches by LOTA do not involve any connection with New Zealand.
Other relevant circumstances – r 6.28(5)(d)
[154] There are no other relevant circumstances that support this Court exercising its discretion to assume jurisdiction over the Bank or LOTA. As noted, the Court will not lightly exercise its discretion to assume jurisdiction over foreign parties, where New Zealand is not the appropriate forum.41
[155] As a general consideration, it is also relevant that CSTNZ, the only party with a connection to New Zealand has only been trustee from 1 July 2014. The investments in issue had been made before CSTNZ’s appointment as trustee. The claims against LOTA are separate to those against CSTNZ and as Mr Akel submitted, the connection between them is tenuous in terms of time and involvement.
[156] A principal allegation against CSTNZ is that it failed to review the investments when it assumed the role of trustee or thereafter. A principal focus of the trial will be
41 Société Générale de Paris v Dreyfus Bros (1885) 29 Chd 239 at 243; and Poynter v Commerce Commission [2010] NZSC 38, [2010] 3 NZLR 300 at [30].
on circumstances surrounding the investments which were put in place before 1 July 2014. There is also the previous acknowledgement on behalf of the plaintiffs that the claims against the trustees are in the nature of “top-up” claims.
[157] Considering the above factors, in summary to this point, the plaintiffs fail to satisfy the Court that New Zealand is the appropriate forum for trial of its claims against the Bank and LOTA. But even if the burden was the other way and it was for the defendants to establish New Zealand was not the appropriate forum I consider they would have satisfied it.
Clause 6.29(1)(b)
[158] Even if, as above, the Court finds against the plaintiffs on the considerations under cl 6.29(1)(a) the Court must also consider cl 6.29(1)(b). Again the Court is directed to dismiss the proceeding unless the plaintiffs establish that, had they applied for leave under r 6.28 leave would have been granted and it is in the interests of justice that the failure to apply for leave should be excused.
[159] The considerations that apply to r 6.28(5)(b) to (d) have been discussed above. The only additional consideration is r 6.28(5)(a), which provides that the Court may grant an application for leave if the applicant establishes the claim has a real and substantial connection with New Zealand. The focus at this point is still on the claim by the plaintiffs against the Bank and LOTA. The Commentary to McGechan at HR6.28.02(1) suggests that the plaintiff will satisfy the Court that the claim has a real and substantial connection with New Zealand if the plaintiffs can show that the claim has some connection with New Zealand that is not fleeting or peripheral and that the New Zealand Court has jurisdiction in respect of the claim.
[160] There is no real and substantial connection with New Zealand in relation to the plaintiffs’ claim against the Bank. In summary, for the reasons given above, the parties have no connection with New Zealand (other than CSTNZ). The events giving rise to the claim occurred in Switzerland. The losses were sustained overseas, primarily in Switzerland. The relevant witnesses are principally located in Switzerland.
[161] Insofar as LOTA is concerned the plaintiffs’ claim against it is at most peripherally involved with New Zealand. The alleged breach of trust by LOTA does not involve any connection with New Zealand. The plaintiffs say that by entering the Deed of Appointment and Retirement which confirmed CSTNZ as the trustee and New Zealand as the proper law for the Trust LOTA accepted a real and substantial connection with New Zealand. I am unable to accept that argument. The Deed of Appointment and Retirement confirmed that the change in the proper law clause was to operate from 1 July 2014. LOTA had no involvement with the Trust funds after that date. Prior to that date the proper law of the Trust was that of Prince Edward Island. There is no real or substantial connection with New Zealand law in relation to the claim against LOTA.
[162] The plaintiffs cannot satisfy the requirements in r 6.28(5)(a). For the reasons given above, while the plaintiffs may satisfy the requirement of r 6.28(5)(b) New Zealand is not the appropriate forum for the trial so the plaintiffs cannot satisfy r 6.28(5)(c). Nor are there any other relevant circumstances which support the claims being brought in New Zealand: r 6.28(5)(d).
[163] I conclude that, had the plaintiffs applied for leave to serve the Bank and LOTA under r 6.28, leave would not have been granted. The issue of whether it is in the interests of justice of the failure to apply for leave should be excused does not arise.
CSTNZ – 6.29(3)
[164] As noted CSTNZ has been validly served within New Zealand. It contends New Zealand is not the appropriate forum and applies for a stay of the proceeding.
[165] The onus is on CSTNZ to show that New Zealand is not the appropriate forum for the claim against it. The reference to forum conveniens does not incorporate any considerations of convenience. The issue is the most appropriate forum.
[166] If the Court is satisfied there is another available forum which is prima facie the appropriate forum for the trial of the proceeding the burden shifts to the plaintiffs to show there are special circumstances indicating that justice requires the trial should take place in New Zealand.
Is Switzerland an available forum for the plaintiffs’ claim against CSTNZ?
[167] For the reasons given above, Switzerland is available as a forum. The plaintiffs’ expert, Professor Girsberger acknowledges the claims against CSTNZ could be pursued in Switzerland. Switzerland is the appropriate forum for the plaintiffs’ claims from the perspective of real connection, comparative costs and convenience.
[168] Given the finding that Switzerland is an available forum, (and prima facie the appropriate forum for the trial against the Bank and LOTA), the burden shifts to the plaintiffs to show special circumstances indicating that justice requires the trial should take place in New Zealand. At that stage the limited connection with New Zealand in terms of the claims against the other defendants, the relevant background to the claims and the limited temporal connection to New Zealand are relevant considerations which all count against directing the trial to take place in New Zealand.
[169] On the basis that Switzerland is an available forum and prima facie is the appropriate forum the Court will ordinarily grant a stay unless there are circumstances indicating that justice requires otherwise. The Court is to consider all the circumstances, including those which go beyond those taken into account when considering connecting factors with other jurisdictions. An important consideration will be if it is established objectively by cogent evidence that the plaintiff would not obtain justice in the foreign jurisdiction,42 but as noted, the plaintiffs’ expert accepts the plaintiffs’ claim against CSTNZ could be pursued in Switzerland.
[170] For the reasons given above, the plaintiffs have failed to establish that New Zealand is the appropriate forum for the trial against the Bank and LOTA. In fact the evidence satisfies me that Switzerland is the most appropriate forum for claims against the Bank and LOTA. Switzerland is also an available and appropriate forum for the claim against CSTNZ. There are no other special circumstances which make Switzerland an inappropriate forum for that claim.
42 Spiliada Maritime Corp v Cansulex Ltd, above n 38; NZ Insurance Co Ltd v NZ Forest Products Ltd (1994) 7 PRNZ 365 at 369; and Longbeach Holdings Ltd v Bhanabhai & Co Ltd [1994] 2 NZLR 28 (CA), (1993) 7 PRNZ 394 at 35.
Result/orders
[171]The plaintiffs’ claim against the Bank and LOTA are dismissed.
[172]The plaintiffs’ claim against CSTNZ is stayed.
Costs
[173] The defendants are to have costs on the application on a 3B basis together with disbursements, including experts’ fees. I allow for second counsel.
Venning J
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