Arc Systems Ltd v Atradius Credit Insurance NV

• Jurisdiction: Jamaica
• Judge: Harris JA
• Judgment Date: 27 March 2014
• Neutral Citation: JM 2014 CA 34
• Court: Court of Appeal (Jamaica)
• Docket Number: SUPREME COURT CIVIL APPEAL NO 47/2013 APPLICATION NO 93/2013
• Date: 27 March 2014

[2014] JMCA App 9

JAMAICA

IN THE COURT OF APPEAL

SUPREME COURT CIVIL APPEAL NO 47/2013

APPLICATION NO 93/2013

Between

ARC Systems Ltd

Applicant

and

Atradius Credit Insurance NV

Respondent

Miss Jacqueline Cummings instructed by Archer Cummings and Company for the applicant

Miss Stacey Mitchell and Courtney Smith instructed by Foga Daley for the respondent

CIVIL PROCEDURE - Stay of execution - Application for stay of execution of Order - Whether applicant's appeal will be rendered nugatory if the application for the stay is refused

IN CHAMBERS

Harris JA

1 In this application, the applicant seeks a stay of execution of an order by the learned Master in which she struck out the applicant's defence and entered summary judgment for the respondent.

2 The applicant is a company, duly incorporated under the laws of Jamaica, carrying on business as a manufacturer and distributor of building materials. The respondent is a Swedish company carrying on the business of trade credit insurance.

3 On 25 January 2011, the respondent brought a claim against the applicant to recover a sum of US$5,634,829.95, being a debt of $3,425,000.00 with interest thereon, at the rate of 30% per annum from 8 December 2008 to 10 January 2011, as well as the sum of J$12,000.00 for attorney-at-law's costs and court fees. The respondent's claim relates to a contract between Elof Hansson AB (‘Elof’) and the applicant for the supply of deformed steel bars on terms of credit to the applicant. The steel bars were supplied. The respondent claims that the debt, which was assigned to it by Elof, is due and owing. The applicant contends that the despatching of the goods by Elof was as a result of a collateral agreement between the applicant and Elof, and that it is not indebted to the respondent.

4 It will be useful to outline such paragraphs of the particulars of claim and the defence as are necessary for the purpose of this application. Paragraphs 3 to 10 of the particulars of claim are as follows:

‘3. On May 21, 2008 the Defendant ordered a quantity of Deformed Steel Bars on credit terms from Elof Hansson AB (“Elof Hansson”) at a total cost of US$6,665,545.68. Elof Hansson, a company incorporated in the Kingdom of Sweden, accepted the Defendant's order and provided the requested credit facilities. Said credit facilities were insured by Elof Hannson [sic] under a Policy of Insurance with the Claimant.

4. The said goods were shipped to the Defendant CFR Incoterms 2000 Kingston Jamaica, with the effect that delivery was effected by Elof Hansson when the goods passed the ship's rail in the port of shipment. Upon said delivery, all risks in the goods were transferred to the Defendant as buyer.

5. On July 10, 2008, Elof Hansson issued Invoice numbered 486–7589/01 to the Defendant in relation to the shipped goods, supported by three (3) concomitant Bills of Exchange. The Invoice provided that the Defendant was to make the following payments: US$2,221,848.56 to be paid on October 8, 2008; US$2,221,848.56 to be paid on November 7, 2008; and US$2,221,848.56 to be paid on December 7, 2008. The invoice also provided for the payment of interest at a rate of 30% per annum if payment was delayed. The three Bills of Exchange issued to the Defendant on July 10, 2008 were for the total sum of US$6,665,545.68, with maturity dates of October 8, 2008, November 7, 2008 and December 7, 2008 respectively. All three Bills of Exchange were accepted by the Defendant.

6. Notwithstanding receipt of the goods and acceptance of the Bills of Exchange, the Defendant failed to make any payments to Elof Hansson in accordance with the agreed payment schedule. Accordingly, on October 9, 2008, November 10, 2008 and December 9, 2008 respectively, Elof Hansson protested each of the three Bills of Exchange.

7. The Defendant has to date made the following payments to Elof Hannson [sic]:

DATE	AMOUNT (US$)
March 9, 2009	1,403,511.24
March 11, 2009	600,000.00
June 4, 2009	220,000.00
July 2, 2009	220,185.88
September 10, 2009	221,848.56
December 1, 2009	200,000.00
February 5, 2010	100,000.00
March 10, 2010	100,000.00
May 3, 2010	100,000.00
September 2, 2010	75,000.00
TOTAL PAYMENTS	3,240,545.68

8. The Defendant has failed and/or neglected to make any further payments since September 2, 2010 and the sum of US$3,425,000.00 remains outstanding.

9. In October 2010 Elof Hansson claimed against its Policy of Insurance with the Claimant in relation to outstanding monies owed by the Defendant, and on October 22, 2010 assigned to the Claimant all of its rights and interests against the Defendant and granted an irrevocable Power of Attorney to the Claimant to act on its behalf in the recovery of outstanding sums owed by the Defendant.

10. The Claimant, pursuant to the Deed of Assignment and irrevocable Power of Attorney, claims against the Defendant the sums of US$5,634,829.95 and J$12,000.00 plus further interest and costs, being monies due and payable to the Claimant by the Defendant and particularised as follows:-

Amounts Claimed:-

	US$	J$
Principal	3,425,000.00
Interest on Principal at a rate of 30% per annum and a daily rate of US$2,815.07 from December 8, 2008 to January 10, 2011	2,209,829.95
Court Fees	—	2,000.00
Attorney's fixed costs on issue		10,000.00
Total	5,634,829.95	12,000.00

11. The Claimant, by registered letter dated October 29, 2010 sent from its Attorneys-at-Law to the Defendant, demanded payment of the sum of US$3,425,000.00. Notwithstanding this demand, the Defendant has failed, neglected and/or refused to pay the said sum to the Claimant.’

5 Paragraphs 1 to 15 of the defence read:

• ‘1. The Defendant admits paragraph[s] 1 and 2 of the Particulars of claim.

• 2. Save that the Defendant ordered steel bars from Elof Hansson AB of the Kingdom of Sweden paragraph 3 of the Particulars of Claim is not admitted.

• 3. Save that the Defendant received goods from Elof Hansson AB aforesaid paragraph 4 of the Particulars of Claim is also not admitted.

• 4. Save that Elof Hansson AB issued invoice numbered 486–7589/01 to the Defendant paragraph 5 of the Particulars of Claim are [sic] not admitted as the Defendant and Elof Hansson AB merely had this for insurance purposes.

• 5. The Defendant denies that it failed to make any payments to Elof Hansson AB in accordance with their agreement and denies paragraph 6 of the Particulars of Claim.

• 6. The Defendant denies paragraphs 8, 9, 10 of the Particulars of Claim.

• 7. The Defendant says that in 2008 Elof Hansson AB was informed prior to any shipment of the steel bars of the losses being experienced in the Jamaican construction industry and the dramatic and drastic fall in the price, demand and sales of steel and also that they were unable to accept any further shipment of steel.

• 8. Elof Hansson AB asked the Defendant to reconsider its position and accept a shipment and sell the product as the market dictated.

• 9. The Defendant agreed and accepted the shipment that was subsequently sent based on these terms from Elof Hansson AB. The Defendant eventually sold the said steel on the local market after being stuck with same for 12 months and remitted all funds collected thereon to Elof Hansson AB in accordance with their collateral agreement.

• 10. Elof Hansson AB accepted and received these payments in satisfaction and discharge of the Defendant [sic] obligation to them.

• 11. Hence the Defendant denies that there is any debt to Elof Hansson AB which was capable of being assigned to the Claimant herein.

• 12. The Defendant says that had there not been this collateral agreement between Elof Hansson AB and them, they would not have accepted any shipment from Elof Hansson AB in 2008.

• 13. Further the Defendant say [sic] that Elof Hansson AB has wrongfully made a claim on the Claimant or assigned any alleged debt to the Claimant herein.

• 14. Any alleged claim made by Elof Hansson AB on the Claimant herein would lapse or be barred by the passage of time of more than 12 months are [sic] required by any policy of insurance to make such a claim.

• 15. In the premise [sic] the Claimant is not entitled to recover the sum claimed or any at all from the Defendant as they are not liable to the Claimant with respect of [sic] the alleged debt.’

6 Mr Lackie Horne, a director of the applicant, in an affidavit sworn on 30 August 2013, in support of the application, stated in paragraphs 5, 8 and 9:

‘…

5. That the Appellant has been advised by its Attorneys-at-Law and does verily believe that the Defence as put forward by the Appellant/Defendant herein does disclose reasonable prospects of success as subsequent to the agreement to purchase the deformed steel bars when the market price plummeted and we were about to cancel the proposed shipment when the representative of Elof Hannson [sic] asked us and we agreed to sell the product as the market dictated which is the essence of the collateral agreement that we referred to in our Defence herein.

…

8. That there is a serious risk of injustice to the Appellant/Defendant if the stay of execution is not granted as the Appellant/Defendant could face financial ruin as it would not be able to pay this sum and still operate the company and the devaluation of the Jamaica [sic] dollars [sic] has also made this sum out of reach of the company's capabilities.

9. That the Respondent/Claimant is a foreign company with no assets in Jamaica.

…’

7 In an affidavit, sworn on 20 November 2013 by Mr Karl Olsson, the credit manager of the respondent, in opposition to the affidavit of the applicant, stated at paragraphs 3 to 7 and 11 to 14 as follows:

‘…

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