Elek v Bar Tur Anor

Factual and Procedural Background

This opinion concerns an appeal by the Plaintiff against a decision of a Deputy Judge of the Chancery Division dated 11 February 2013, which set aside a previous order permitting the Plaintiff to serve the claim form out of the jurisdiction on Defendants located in the United States. The Deputy Judge declared that the Court had no jurisdiction to hear the Plaintiff's claim and dismissed the action, ordering the Plaintiff to pay the Defendants' costs. Permission to appeal was initially refused but subsequently granted on the papers.

The dispute arose from a joint venture agreement relating to the development of student accommodation in the United Kingdom. The Plaintiff, a former solicitor turned businessman, and the Defendants initially collaborated to invest through a company referred to as Safeharbor in a UK development company, Alumno Developments Limited ("ADL"). The Plaintiff worked without payment in expectation of a one-third share and priority payment if the joint venture was established.

Following concerns raised by the Plaintiff about the integrity of ADL's principals, the Plaintiff withdrew from the venture with immediate effect by email dated 5 November 2009. Subsequent communications and conduct indicated that the Plaintiff's withdrawal was accepted by the Defendants, and the Plaintiff renounced his interests in Safeharbor and indirectly in ADL. The Plaintiff later issued a claim seeking restitutionary relief on a quantum meruit basis and alternatively damages for repudiatory breach of contract.

Legal Issues Presented

1. Whether the Plaintiff's claim had a real prospect of success to satisfy the first requirement for permission to serve out of the jurisdiction.
2. Whether the collaboration agreement was terminated by the Plaintiff's withdrawal on or about 5 November 2009 or whether it continued until 25 February 2010.
3. Whether the Defendants committed repudiatory breach of contract entitling the Plaintiff to damages or quantum meruit restitution.
4. The applicability and scope of the quantum meruit remedy following repudiatory breach of contract.

Arguments of the Parties

Appellant's Arguments

• The contractual arrangements continued until 25 February 2010 despite the Plaintiff's 5 November 2009 email, which was a conditional offer to withdraw rather than an absolute termination.
• The Defendants never agreed to terminate the Plaintiff's accrued rights, including his one-third interest in Safeharbor and indirectly in ADL.
• The Defendants were aware that the Plaintiff did not intend to walk away but only to withdraw conditionally based on addressing concerns about ADL's principals.
• The Defendants repudiated the contract on 15 February 2010 by refusing to restore the Plaintiff's status quo or equity interest, entitling the Plaintiff to damages for repudiatory breach.
• Alternatively, the Defendants were in repudiatory breach from 4 November 2009 to 15 February 2010 for failing to address the Plaintiff's concerns, and the Plaintiff accepted this breach by 25 February 2010.
• If the contract ended on 5 November 2009, the Plaintiff was still entitled to damages or quantum meruit for services rendered.
• The Deputy Judge erred by making detailed factual findings inappropriate for a permission to serve out of jurisdiction application and by imposing improper restrictions on the quantum meruit remedy.

Table of Precedents Cited

Court's Reasoning and Analysis

The Court focused on whether the Plaintiff had an arguable case with a real prospect of success on one or more scenarios: (1) that the collaboration agreement was not terminated on or about 5 November 2009 with the Plaintiff giving up his interests and remuneration rights; (2) that if terminated then, it was by acceptance of repudiatory breach by the Defendants; or (3) that if not terminated then, it was terminated on or about 25 February 2010 by acceptance of repudiatory breach.

The Court concluded that the Plaintiff voluntarily withdrew from the collaboration agreement on 5 November 2009, renouncing his benefits, including his equity interests. The subsequent correspondence and conduct objectively evidenced acceptance of this withdrawal by the Defendants without opposition. The Plaintiff's own emails contradicted his later contention that the withdrawal was conditional or that the Defendants understood it as mere posturing.

There was no realistic prospect that the contract continued beyond November 2009 or that the Defendants repudiated it in January or February 2010. The Plaintiff's criticisms related to concerns about ADL principals, not repudiatory breach of contract by the Defendants. The Plaintiff’s later attempts to characterize his withdrawal as conditional or to assert repudiatory breach were found to lack realism.

The Court also rejected the Plaintiff’s arguments that the Deputy Judge imposed improper restrictions on the quantum meruit remedy or made inappropriate factual findings at this stage. The Court found that the Plaintiff’s claims did not meet the threshold for permission to serve out of jurisdiction due to lack of a real prospect of success.

Holding and Implications

The Court DISMISSED the Plaintiff's appeal against the Deputy Judge's order setting aside permission to serve out of jurisdiction and declaring no jurisdiction to hear the claim.

The direct effect is that the Plaintiff's claim cannot proceed in this jurisdiction as it lacks a real prospect of success. The Court noted that the Deputy Judge should not have dismissed the action outright but was correct to set aside permission to serve out of jurisdiction. No new precedent was established by this decision.