Krygger (Peter), Garrie Don and Bradley Johns v F1 Investments Inc., Steve Palmer, Paul Atkinson, Christopher Kelly and Patrice Palmer

• Jurisdiction: Jamaica
• Judge: P.A. Williams, J.
• Judgment Date: 26 November 2010
• Judgment citation (vLex): [2010] 11 JJC 2601
• Court: Supreme Court (Jamaica)
• Date: 26 November 2010

IN THE SUPREME COURT OF JUDICATURE OF JAMAICA

CLAIM NO 2009 HCV 3034

BETWEEN

PETER KRYGGER

1 ^st CLAIMANT

AND

GARRIE DON

2 ^nd CLAIMANT

AND

BRADLEY JOHNS

3 ^rd CLAIMANT

AND

F1 INVESTMENTS INC.

1 ^st DEFENDANT

AND

STEVE PALMER

2 ^nd DEFENDANT

AND

PAUL ATKINSON

3 ^rd DEFENDANT

AND

CHRISTOPHER KELLY

4 ^th DEFENDANT

AND

PATRICE PALMER

5 ^th DEFENDANT

^{st nd th th}

^rd

^{nd th th}

Appearances

CIVIL PROCEDURE - Summary judgment - Real prospect of success - Civil Procedure Rules 2002, Rule 15.2

P.A. Williams, J

1 1. There are four applications before the court so the one first in time which could possible resolve the matter was the first proceeded with.

2 This was an application for summary judgment by the claimant under CPR 15.2 wherein the claimants argued that the defendants had no real prospect to succeeding on the claim and ask therefore that summary judgment be entered in their favour.

3 2. The claimants are representative parties appointed by the court on June 15, 2009 to represent eight-three investors who invested various sums with the 1 ^st defendant which they allege was at all material times under the management control and direction of the other defendants. They are claiming the return of the sum of US$8,145,441.20 being monies invested with the 1 ^st defendant and which have not been returned despite demand. They also seek interest on these monies at a commercial rate.

4 The law

5 This application for summary judgment is under CPR 15.2 which provides inter alia:-

"The court may give summary judgment on the claim or a particular issue if it considers that......the defendant has no real prospect of successfully defending the claim or the issue'.

6 4. The English authority of Three Rivers District Council v. Bank of England (2001) 2 All ER 513 and Swain v. Hillman [2001} 1 All ER 91 remain the leading authorities pronouncing in this area of the law.

7 The dictum of Lord Wolfe MR in Swain v. Hillman and another [supra] provides the useful point to commence consideration in matters of this nature. At page 91 he said

"....the court now has a very salutary power, both to be exercised in a claimant's favour or where appropriate, in a defendant's favour. It enables the court to dispose summarily of both claims and defences which have no real prospect of being successful. The words "no real prospect of being successful or succeeding" do not need any amplification, they speak for themselves. The word "real" distinguishes fanciful prospects of success....they direct the court to see whether there is a "realistic" as opposed to a "fanciful" prospect of success."

8 5. At page 93, he went on to state:

"It is important that a judge in appropriate cases should make use of the powers contained in Part 24. In doing so he or she gives effect to the overriding objective contained in Part 1. It saves expense, it achieves expedition, it avoids the court's resources being used up on cases where this serves no purpose, and I would add, generally that it is in the interests of justice."

9 He cautioned at page 94 that these powers under Part 24 which is similar to CPR 15.2.....

"It is not meant to dispense with the need for a trial where there are issues which should be investigated at the trial."

10 6. Judge L.J at page 95 followed up on this cautionary note in stating:-

"To give summary judgment against a litigant on papers without permitting him to advance his case before the hearing is a serious step. The interests of justice overall will sometimes so require".

11 7. In the submissions on behalf of the claimant, Mr. Hylton referred to a decision from our courts namely Dave Blair v. Hugh Hyman 2005 HCV 2297 unreported delivered May 16, 2008 where Mr. Justice Brooks quoted with approval Potter L.J in E.D & F Man Liquid Products Ltd. V. Patel and Anor. [2003] EWCA Civ. 472

12 In referring to the English rules 13.3 and 24.2 (equivalent to our l5.2) Potter L.J stated:

"It is certainly the case that under both rules where there are significant differences between the parties so far as factual issues are concerned, the court is in no position to conduct a mini-trial: does not mean that the court has to accept without analysis everything said by a party in his statements before the court. In some cases it may be clear that there is no real substance in factual assertions made, particularly if contradicted by contemporary documents. If so, issues which are dependent upon those factual assertion may be susceptible of disposal at an early stage so as to save the cost and delay of trying an issue the outcome of which is inevitable.

13 8. The claim

14 The claimants brought this action for damages for breach of contract, damages for deceit and/or fraud alternatively damages for negligence, damages for conversion, restitution for or by reason of unjust enrichment, an order that the defendants account for the sum received by them or any of them from the investors; interest and cost.

15 They rely only on two (2) of these causes in their assertion that the defendants have no real prospect of successfully defending the claim namely for breach of contract and in negligence.

16 9. The issue identified by the claimants for the court to resolve in this application are:-

• (i) whether the 1 ^st defendant was under the control, management and direction of the 2 ^nd , 4 ^th and 5 ^th defendants.

• (ii) whether the 1 ^st defendant received funds from the claimants who invested those funds with it for the sole purpose of foreign exchange trading.

• (iii) whether the claimants are entitled to the return of their funds invested with the defendants and whether the defendants have failed or refused to return those funds.

17 The submissions

18 For the claimants

19 10. Mr. Hylton in making the submissions for the claimant considered the relevant facts of the case simple and not disputed.

20 Between May 07 and July 08 the claimants invested various sums of money with the l ^st defendant for the purpose of foreign exchange trading on terms that the funds would be repaid on demand. It is not disputed that despite demands, the claimants' funds have not been returned. These facts constitute a breach of contract.

21 11. In the defence stated by the 1 ^st defendant there was admission that the terms of the agreement between the claimant and itself indicated that the funds invested would be used for the agreed purpose of trading on the foreign exchange market; that the funds invested would be returned on demand and that the 1 ^st defendant would maintain the usual and proper books of accounts.

22 Further it was stated that "the l ^st defendant had not been able to repay the said funds to its investors".

23 12. In their defences, the remaining defendants all made similar admissions as relates to the 1 ^st defendant. They argued that the money was invested with the 1 ^st defendant, a separate and legal entity, they maintain as between themselves and the claimants there is no contract.

24 13. The response to this assertion by Mr. Hylton was that the company was merely an alter ego of the persons who actually controlled it.

25 The case of Donovan Crawford et al v. Financial Institutions Ltd. SCCA No. 64 and 68 of 1999 delivered July 31, 2001 was cited as demonstrative of how in particular circumstances the court can refuse to regard a company as a separate legal entity.

26 The Privy Council's decision in the matter had found that there had been "ample material on which to conclude that Regardless was a creature of [the controlling director] a device and a sham; a mask which he holds before his face in attempt to avoid recognition by the eye of equity."

27 PCA No. 34 of 2004 delivered 2 ^nd November, 2005.

28 14. In the instant case, it was submitted that the 1 ^st defendant was only a vehicle and a device through which the other defendants carried out their investment business. It is noted that both the 2 ^nd and 4 ^th defendants admitted that the 1 ^st defendant was under their control, management and direction in their defences.

29 The 5 ^th defendant denied this and stated instead that she was an employee of the 1 ^st defendant at all material times.

30 Mr. Hylton opined therefore that the 1 ^st defendant conceded it was the alter ego of the 2 ^nd , 3 ^rd and 4 ^th defendants.

31 15. It was further pointed out that although the 1 ^st defendant was incorporated in Panama, the evidence indicated that all decisions on its behalf had been made by the remaining defendants and all communication was through them.

32 In none of the correspondence and other documents was there communication with or reference to any of the persons listed as officers in the Panamanian company registry. It was further pointed out that there had been another vehicle used by the defendants at one point that is Fl Holding Company Ltd. — a Jamaican company with Steve Palmer and Christopher Kelly as the sole shareholder and they and Patrice Palmer as directors.

33 This company held an account at the National Commercial Bank in Jamaica and some of the investors with the 1 ^st defendant were directed to transfer money to that account.

34 In a law suit filed in the United States involving the 1 ^st defendant, it gives it address as c/o F1 Holding Company Limited.

35 17. This suit is also referred to for the way in which the 2 ^nd and 5 ^th defendants referred to funds invested with the 1 ^st defendant. The 2 ^nd defendant described it as "my funds" or "my money" and the 5 ^th defendant described it as "my husband's funds" or "Steve's funds".

36 This, Mr. Hylton submitted are classic indicia of an alter ego situation.

37 18. In those proceedings it was noted that the 2 ^nd ...