Chen Young (Paul) v Eagle Merchant Bank Jamaica Ltd and Crown Eagle Life Insurance Company Ltd

• Jurisdiction: Jamaica
• Judge: DOWNER, J.A. , HARRISON, J.A. , PANTON. J.A. , DOWNER. J.A.
• Judgment Date: 23 July 2002
• Neutral Citation: JM 2002 CA 33
• Judgment citation (vLex): [2002] 7 JJC 2302
• Court: Court of Appeal (Jamaica)
• Date: 23 July 2002

IN THE COURT OF APPEAL

BEFORE:

THE HON. MR. JUSTICE DOWNER, J.A THE HON. MR. JUSTICE HARRISON, J.A THE HON. MR. JUSTICE PANTON, J.A

BETWEEN

PAUL CHEN YOUNG

1 ^ST DEFENDANT/APPELLANT

AJAX INVESTMENT LTD

2 ^ND DEFENDANT/APPELLANT

DOMVILLE LTD

4 ^TH DEFENDANT/APPELLANT

AND

EAGLE MERCHANT BANK JAMAICA LTD

1 ^ST PLAINTIFF/RESPONDENT

AND

CROWN EAGLE LIFE INSURANCE CO. LTD

2 ^ND PLAINTIFF/RESPONDENT

Emil George, Q.C. & Conrad George instructed by Roderick Gordon for the appellant Paul Chen Young

Abe Dabdoub & J.S. Dabdoub for the appellants Ajax Investment Ltd and Domville Ltd instructed by Dabdoub, Dabdoub & Co.

Michael Hylton, Q.C, Debbie Fraser and Michele Champagnie instructed by Myers, Fletcher & Gordon for the respondents Eagle Merchant Bank Jamaica Ltd & Crown Eagle Insurance Co Ltd

CIVIL PROCEDURE - Statement of claim - Leave to set aside - Claim for further and better particulars

DOWNER, J.A.

1 (i) Introduction

2 These important interlocutory appeals from the orders of Ellis J, the Senior Puisne Judge, are concerned with claims by the appellants Paul Chen Young ("Chen Young"), Ajax Investment Ltd ("Ajax"), and Domville Ltd ("Domville") to set aside the orders made in the Court below. The appellants seek to free the relevant properties of the Mareva Injunctions imposed on the three appellants and set aside the Statement of Claim as well as make a claim for Further and Better Particulars. The three claims are closely connected. If there are serious issues to be tried which is the basis for granting the Mareva Injunction, the Statement of Claim cannot be set aside. If the pleadings are properly drafted and the particulars are already supplied, the claim for Further and Better Particulars is superfluous. This is the logic of a conjoint hearing in this Court, and the reason for the assignment to one Judge in the Court below the management of the interlocutory proceedings. It is helpful to give a short description of the appellants, so as to understand the relationship between the parties on appeal.

3 Chen Young the first appellant is a financier who was a large shareholder as well as Chairman and Chief Executive of Eagle Merchant Bank Jamaica Ltd. He was also the Chairman and Director of Crown Eagle Life Insurance Co Ltd. There is affidavit evidence from Todd Shoalts, a forensic accountant at pages 226–227 of the Record, which states that Chen Young was a large shareholder and director of a number of companies, which he described as the Eagle Financial Network. The pivot of these companies was Jellapore Investment Ltd ("Jellapore") a miniscule but powerful company registered in the Cayman Islands. The bank ("Eagle") failed and the majority shareholding was taken over by Financial Sector Adjustment Company Ltd ("Finsac") which is a company incorporated pursuant to the Crown Property (Vesting) Act with the Accountant General as the shareholder. Its purpose was to rescue a number of failed banks and insurance companies by protecting depositors and policy-holders so as to prevent the total collapse of the financial system. Crown Eagle is a life insurance company of which Chen Young was also a shareholder. It too has been taken over by Finsac. These two companies are the respondents on appeal.

4 Apart from Chen Young, the other appellant Ajax is a Provident Society incorporated pursuant to the Industrial and Provident Societies Act. Chen Young is a shareholder of Ajax which owns 51% of Domville Ltd. These two companies are Chen Young's secret holdings, seemingly outside the Eagle Financial Network. They are substantial real estate ventures and the respondents fear that by adroit share transfers Chen Young will realize his assets and remove his profits out of the jurisdiction. So close is the relationship between Ajax and the Merchant Bank that Chen Young's management fees earned by his employment to the Bank, were paid directly to Ajax. See page 494 of the Record.

5 As for the issues to be decided on appeal, the Notice and Grounds for appeal No. 2/2000 at page 9 of the Record, and No. 3/2000 at page 7 of the Record, concern refusal to grant Further and Better Particulars. Appeal No. 4 of 2000 at page 1 of the Record pertains to a refusal to strike out the Statement of Claim. Appeal No. 5 of 2000 at page 3 of the Record also pertains to a refusal to strike out the Statement of Claim with respect to Ajax and Domville. With respect to Chen Young and the two appellant companies the subject matter of Appeals No. 45/2000 and 46/2000 at pages 11 and 13 of the Record is the refusal to discharge the Mareva Injunctions. These appeals were heard together although there were separate hearings and orders in the Court below. To summarise, the subject matter of these interlocutory appeals, is firstly to secure Further and Better Particulars. Secondly, striking out of the Statement of Claim and thirdly and most importantly to discharge the Mareva Injunctions imposed on the appellants.

6 (ii) Should Cooke, J have awarded the ex parte Mareva Injunctions against the appellants?

7 The origin of this issue was the grant of an ex parte Mareva Injunction against all three appellants by Cooke, J on November 12, 1998. The material terms were as follows at pages 224 – 225 of the Record:

• "1. An injunction is granted restraining the First, Second and Fourth Defendants and each of them, whether by themselves or their servants or agents, or howsoever otherwise from disposing of and/or dealing with their assets wheresoever situate and from withdrawing or transferring any funds from their accounts wheresoever held until Judgment or further order herein;

• 2. The First, Second and Fourth Defendants and each of them do forthwith disclose with full particularity the nature of all such assets and their whereabouts and whether the same be held in their own name or by nominees or otherwise on their behalf and the Sums standing in any accounts such disclosures to be verified by Affidavits to be made by the said Defendants and served on the Plaintiffs' attorneys-at-law within 14 days of service of this Order or notice thereof being given.

• 3. There be liberty to the First, Second and Fourth Defendants and any Third Party affected by the Order to apply on one clear day's notice to the Plaintiffs' Attorneys-at-law to set aside or vary this Order.

PROVIDED THAT this Order is declared to be of no effect against, and is not intended to bind any Third Party outside of the jurisdiction of this Court, directly or indirectly affected by the terms of this Order, unless and until this Order shall be declared enforceable or recognized or is endorsed by any Court of the jurisdiction in which the First, Second and Fourth Defendant's assets are situated."

8 Some such proviso is inserted as a matter of course in Mareva injunctions. This is how Kerr, L.J. put it in Babanaft International Co SA v. Bassatne and another [1989] 1 All E.R. 433 at 438:

"We understand that this is nowadays a standard type of proviso to Mareva injunctions, and it is of course inserted for the benefit of third parties who may be affected by the freezing order. My reason for quoting it is that It Illustrates that, although Mareva injunctions are orders made in personam against defendants, they also have an in rem effect on third parties. It shows that, save to the extent of the proviso, the order is binding on third parties who have notice of the injunction. Although the passage in the judgment of Lord Denning MR in Z Ltd v. A [1982] 1 All ER 556 at 562, [1982] QB 558 at 573 headed 'Operation in rem' may well go too far in a number of respects, there cannot be any doubt that Mareva injunctions have a direct effect on third parties who are notified of them and who hold assets comprised in the order."

9 Neil, L.J. expressed a similar view at pages 449 and 450 as well as Nicholas, L.J. who said at page 453:

"To meet this difficulty I can see no alternative but to grasp the nettle firmly, and write into the order, which applies only to property outside the jurisdiction, an express provision to the effect that nothing in the relevant part of the order is to affect any person other than the defendants personally. This will remove any extra-territorial vice which otherwise the order might have, or be thought to have. The order will be binding only on the conscience of the defendants."

10 The obligatory undertakings of the respondents were in the following terms at page 224 of the Record:

• i. "Forthwith to serve copies of this Order upon the First, Second and Fourth Defendants.

• ii. To abide by any Order of the Court as to damages should the Court hereafter be of the opinion that the First, Second and Fourth Defendants or any third party given notice of this Order have suffered any damages that the Plaintiffs ought to pay.

• iii. To pay reasonable costs and expenses incurred by any third party given notice of this Order in complying with same"

11 The affidavit evidence on which the respondent bank and insurance company relied was from Todd Shoalts, a Chartered Accountant with Lindquist, Avey, McDonald Baskerville Company – a Canadian firm of forensic and investigative accountants. His evidence is to be found at pages 226 – 237 of the Record.

12 The first schedule at page 235 of the Record indicates that the master company in the Eagle Financial Network was Jellapore a company registered in the Cayman Islands. Jellapore Investment Ltd owns 51% of Crown Eagle and 18.5% is owned by Eagle Holdings and Investment. The next company to notice is Eagle Premium Growth Fund of which Crown Eagle Life Insurance Co Ltd the respondent owns 97%. Two other companies are relevant at this stage. The first is the respondent Eagle Merchant Bank of which 97% is owned by Eagle Premium Growth Fund. The other relevant company is Eagle Commercial Bank of which...