Law Report: Writ can be served on bank abroad: Polly Peck International plc v Nadir and others - Chancery Division (Mr Justice Knox), 28 July 1992

It was not necessary for a plaintiff, when seeking leave to serve a writ out of the jurisdiction on a defendant as a constructive trustee, pursuant to Order 11, rule 1(1)(t) of the Rules of the Supreme Court, to show that all the acts constituting the alleged constructive trust were committed within the jurisdiction, so long as some of them were.

Mr Justice Knox dismissed an application by the fourth defendant, the Central Bank of the Turkish Republic of Northern Cyprus, to discharge leave to serve a writ on it outside the jurisdiction.

Leave was granted by Mr Justice Millett on 21 October 1991, on the ex parte application of the plaintiff, Polly Peck International plc, acting through its administrators.

David Oliver QC, and Leslie Kosmin (Alsop Wilkinson) for Polly Peck; Philip Heslop QC, and Richard Millett (Theodore Goddard) for the bank.

MR JUSTICE KNOX said that Polly Peck's claims against the bank included a claim based on a constructive trust said to arise out of transactions allegedly in breach of fiduciary duty by the first defendant, Asil Nadir, when chairman and chief executive of Polly Peck.

The issue on which the action against the bank would turn was its actual, imputed or possibly constructive knowledge of any such breaches of duty.

Order 11, rule 1(1) provided that: 'Service of a writ out of the jurisdiction is permissible with the leave of the court if in the action begun by writ . . . (t) the claim is brought for money having been received or for an account or other relief against the defendant as a constructive trustee, and the defendant's alleged liability arises out of acts committed whether by him or otherwise within the jurisdiction'.

The question of construction which arose from that somewhat inelegant piece of prose was whether, as the bank submitted, the paragraph only applied if all the 'acts', including the acquisition of the requisite knowledge by the defendant, upon which the claim to enforce the alleged constructive trust was based, had been committed within the jurisdiction; or whether, as Polly Peck submitted, it sufficed if some, at least, of the acts which gave rise to the claim, not including the acquisition of knowledge, had occurred within the jurisdiction.

There was, unfortunately, a difference of judicial opinion on the question, Mr Justice Millett having adopted the former view in ISC Technologies v Radcliff (unreported, 7 December 1990), and Mr Justice Hoffmann having preferred the latter in ISC Technologies v Guerin (17 March 1992).

His Lordship agreed with Mr Justice Hoffmann that Mr Justice Millett had construed the rule too narrowly. A construction of rule 1(1)(t), which required all the acts constituting the alleged constructive trust to have been committed within the jurisdiction, would empty the paragraph of very nearly all its practical utility, having regard to the prevalance of foreign corporations whose officers were very likely to be resident abroad and, therefore, only likely to acquire the necessary knowledge to establish the claimed constructive trust by events occurring abroad.

Moreover, to include the acquisition of knowledge among 'acts committed whether by him or otherwise within the jurisdiction' involved brutality to the English language on a scale that his Lordship would hesitate to ascribe to the draftsman of the Rules.