Cybervale Ltd v Cable & Wireless Jamaica Ltd

JurisdictionJamaica
CourtSupreme Court
JudgeMangatal J
Judgment Date16 Sep 2013
Neutral Citation[2013] JMCC Comm 13
Docket NumberCLAIM NO. 2012 CD 00091

[2013] JMCC Comm. 13

IN THE SUPREME COURT OF JUDICATURE OF JAMAICA

IN COMMERCIAL DIVISION

CLAIM NO. 2012 CD 00091

Between
Cybervale Limited
Claimant
and
Cable & Wireless Jamaica Ltd
Defendant

CIVIL PRACTICE AND PROCEDURE — SECURITY FOR COSTS APPLICATION-SECTION 388 OF COMPANIES ACT — COURT'S POWER TO STIPULATE TIME-PART 24 OF THE CPR — DELAY IN MAKING APPLICATION — RELEVANCE OF RELATIVE IMPECUNIOSITY OF CLAIMANT COMPANY TO MORE PROSPEROUS DEFENDANT — AVOIDANCE OF BOTH OPPRESSIVE USE OF SECURITY FOR COSTS APPLICATION AND OF STATE OF IMPECUNIOSITY — WHETHER CLAIM ONLY OR WHOLE OF PROCEEDINGS STAYED — APPROPRIATE ORDER FOR COSTS ON SUCCESSFUL APPLICATION FOR SECURITY FOR COSTS

Mangatal J
1

The Applicant/Defendant by way of an amended Notice of Application filed April 24, 2013 seeks the following orders:

  • 1. That the Respondent/Claimant do within fourteen (14) days of the date of this Order give security for the Applicant/Defendant's costs of and occasioned by these proceedings and this application in the sum of $6, 612, 213.80 inclusive of General Consumption Tax.

  • 2. That the said sum of $6, 612, 213.80 inclusive of GCT representing security for costs is to be paid into an interest bearing account at First Global Bank Limited, New Kingston Branch in the joint names of Grant Stewart Phillips & Co. and the legal representative of the Respondent/Claimant pending the outcome of this action or further Order by the Court within FOURTEEN (14) days of the date of this Order.

  • 3. Should the Respondent/Claimant fail to pay such security (for) costs within the stipulated period the claim is to be struck out without further Order with costs to the Applicant/Defendant to be agreed or taxed.

  • 4. Liberty to Apply.

  • 5.

  • 6. Further or other relief.

2

The grounds on which the Applicant/Defendant is seeking the above orders are:

  • 1. The Application is made pursuant to section 388 of the Companies Act and Rule 24.2(1) of the Civil Procedure Rules (CPR).

  • 2. The Respondent/ Claimant is a limited liability company which no longer trades within the jurisdiction of Jamaica.

  • 3. There is reason to believe that the Respondent/Claimant will be unable to pay the Applicant/Defendant's costs if ordered so to do.

  • 4. The Respondent/Claimant has taken steps with a view to placing its assets beyond the jurisdiction of this Honourable Court.

3

The Application for Security of Costs was supported by the Affidavit of Derrick Nelson, Vice President of the Defendant's Carrier Services, filed April 12, 2013, while the Affidavit of Rohan Pottinger, one of the Claimant company's directors, filed April 24 th , 2013 opposed the Application.

4

For ease of reference the relevant Section of the Companies Act and the Civil Procedure Rule have been set out below:

388. Where a limited company is plaintiff in any action or other legal proceeding, any judge having jurisdiction in the matter may, if it appears by credible testimony that there is reason to believe that the company will be unable to pay the costs of the defendant if successful in his defence, require sufficient security to be given for those costs, and may stay all proceedings until the security is given .

Civil Procedure Rule: 24.3 : The Court may make an order for security of costs under rule 24.2 against a claimant only if it is satisfied, having regard to all the circumstances of the case, that it is just to make such an order, and that-

  • (a) the claimant is ordinarily resident out of the jurisdiction;

  • (b) the claimant is a company incorporated outside the jurisdiction;

  • (c) the claimant-

    • (i) failed to give his or her address in the claim form;

    • (ii) gave an incorrect address in the claim form; or

    • (iii) has changed his or her address since the claim was commenced ,

    with a view to evading the consequences of the litigation;

    (d) the claimant is a nominal claimant, other than as a representative claimant under Part 21, and there is reason to believe that the claimant will be unable to pay the defendant's costs if ordered to do so;

    (e) the claimant is an assignee of the right to claim and the assignment has been made with a view to avoiding the possibility of a costs order against the assignor ;

    (f) some person other than the claimant has contributed or agreed to contribute to the claimant's costs in return for a share in of any money or property which the claimant may recover; or

    (g) the claimant has taken steps with a view to placing the claimant's assets beyond the jurisdiction of the Court .

DEFENDANT'S SUBMISSION
5

Counsel for the Applicant, Mrs. Kitson Q.C submitted that pursuant to Section 388 of the Companies Act 2004, the Defendant has provided credible evidence that demonstrates that Cybervale will be unable to pay its costs in the event that it is successful at trial. She relies on the affidavit of Derrick Nelson. Mr. Nelson in his affidavit sets out certain happenings which have caused the Defendant to come to this conclusion. At paragraph 6, he made reference to an order made by the Honourable Mr. Justice Dukharan JA in which the Claimant was ordered to lodge the sum of $1, 450,000.00 into an escrow account, failing which the appeal filed in relation to the Judgment of the Honourable Ms. Justice Straw would be struck out and the interim injunction pending appeal discharged. At paragraph 7, he outlined that the Claimant only lodged the sum of $700,000 into the joint escrow account and consequently the appeal was struck out. Mr. Nelson in the said paragraph 7, states that the Claimant continues to be indebted to the Defendant in the sum of $17, 254, 192.20 plus interest as no payments have been made to the Defendant in the interim. He further states that the Claimant had presented several cheques to the Defendant for payment which were not honoured by the Claimant's Bank. Consequently he deponed that it is evident that the Claimant is unable to pay the debts owed to the Defendant. Additionally at paragraph 9 of his affidavit, he referred to a Final Costs Certificate dated 26 th June 2012 that was issued in respect of the abandoned appeal in which costs were taxed and awarded to the Defendant in the amount of $334, 383.07. That Costs Certificate was served on the Claimant's Attorneys on July 3, 2012, but to date it has not been paid.

6

Ms. Kitson, Q.C. relied on the principles extracted from the decisions ofPearson and Another v Naydler and Others [1977] 1 WLR 899 [1977] 1 WLR 899 and Keary Developments Limited v Tarmac Construction Limited and Anor [1995] 3 All ER 534 [1995] 3 All ER 534 to buttress her submission as to why this is an appropriate case for the Court to make an order for security for costs in the amount stated. In applying the principles from the cases, she submitted firstly that the possibility that Cybervale will be deterred from pursuing its claim if an order for security for costs was ordered is not without more, a sufficient reason for the Court not to order it. She argued that Parliament must have envisaged that such an order would be made against a Claimant company that would have difficulty in providing security. She also urged the Court that in weighing the factors, the Court must have regard to the injustice to the Defendant if no security is ordered and at the trial, Cybervale's case fails, and it is unable to recover the costs incurred in its defence of the Claim. Counsel also submitted that whilst the Court is not required to embark on an analysis of the merits of the case, the Claim brought by the Claimant is at most arguable and has a limited prospect of success.

7

Mrs. Kitson Q.C. has also sought to have the order for security for costs made pursuant to Part 24.3(g) of the Civil Procedure Rules on the ground that the Claimant has taken steps with a view to placing its assets beyond the jurisdiction of the Court. At paragraph 10 of the Affidavit of Mr. Nelson, he states that the Claimant has taken steps to put its assets beyond the jurisdiction of the Court by seeking to sell them for $4, 953,301.32 as evidenced by the information contained in the Judgment of Haynes J inCybervale Limited v Infochannel Limited: Claim 2011 CD 00087 . Counsel relied on the decisions of Aoun v Bahri & Anor [2002] CLC 776 and Patrick Harris v Leonard Wallis [2006] EWHC 630 (Ch) [2006] EWHC 630 (Ch) as supporting her argument that this sort of conduct by the Claimant falls within the ambit of the rule. She submitted that based on these authorities, the issue is not Cybervale's motivation, but is rather the effect of the steps which it had taken in relation to the sale of its business. It was Counsel's submission that taking steps to enter into a contract for the sale of its business amounts to a step taken to remove the assets from the jurisdiction of the Court. She further submitted that the fact that that contract is the subject of an appeal by which the Claimant is seeking to enforce the contract is even more compelling evidence of steps taken by the Claimant in accordance with the rule.

CLAIMANT'S SUBMISSION
8

Counsel for the Claimant, Mr. Kayode Smith urged the Court that in deciding whether to make an order for security for costs it must first consider whether the Claimant's circumstances come within Part 24(a)-(g) of the Civil Procedure Rules. If it does, the Court must then go on to consider whether it would be just to make an award for security for costs having regard to all the circumstances of the case. Mr. Smith dissected the substantive grounds as set out in the amended Notice of Application for Court Orders. As it relates to the first ground, Counsel submitted that this ground does not satisfy any of the criteria set out in Rule 24.3 (a)-(g). As it relates to the 2 nd ground, Counsel argued that the Defendant has not put forward any evidence on which this Honourable Court...

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