Singh Rahul, Commonwealth Communications LLC and Ocean Petroleum Inc. v Kingston Telecom Ltd and Cable & Wireless JA Ltd

• Jurisdiction: Jamaica
• Judge: HARRIS, J.A :
• Judgment Date: 05 December 2006
• Judgment citation (vLex): [2006] 12 JJC 0501
• Court: Court of Appeal (Jamaica)
• Date: 05 December 2006

IN THE COURT OF APPEAL

BEFORE:

THE HON. MRS. JUSTICE HAZEL HARRIS, J.A

BETWEEN:

RAHUL SINGH

1 ^st APPELLANT

AND

COMMONWEALTH COMMUNICATIONS LLC

2 ^nd APPELLANT

AND

OCEAN PETROLEUM INC.

3 ^rd PARTY INTERVENER/3 ^RD APPELLANT

AND

KINGSTON TELECOM LTD.

1 ^ST RESPONDENT/ CLAIMANT

AND

CABLE & WIRELESS JA. LTD.

4 ^TH PARTY INTERVENER/ 2 ^ND RESPONDENT

IN CHAMBERS

Winston Spaulding, Q.C., & Gregory Lopez instructed by Mrs. Jeanne Barnes for appellants.

Arthur Williams instructed by Harold Brady of Brady & Co. for 1 ^st respondent.

Miss Hillary Phillips, Q.C., instructed by Grant, Stewart, Phillips & Co., for 4 ^th party intervener/2 ^nd respondent.

CIVIL PROCEDURE - Default judgment - Stay of execution - Application

HARRIS, J.A

1 Two applications have been placed before the court. The first is by the 1 ^st and 2 ^nd appellants, seeking a stay of execution of an order of Campbell, J refusing to set aside a default judgment pending the hearing of the appeal. The second is by the 1 ^st respondent, which seeks an order for security of costs of the appeal as well as for the unpaid costs in the court below.

2 The 1 ^st appellant is a shareholder and managing director of the 2 ^nd appellant which is a company incorporated by him in Florida, in the United States of America. The 3 ^rd party intervener/appellant is incorporated in the United States of America. The 1 ^st appellant is also a shareholder of that company. The registered office of the 2 ^nd appellant and that of the 3 ^rd party intervener/3 ^rd appellant is 8405 NW 29 Street, Miami, Florida.

3 The 1 ^st respondent, a licensed telecommunications carrier, is a limited liability company incorporated under the laws of Jamaica. It owns and operates a telecommunication network in Jamaica. The 1 ^st appellant is also a director of the 1 ^st respondent company. The 4 ^th party intervener/ 2 ^nd respondent is a company duly incorporated under the laws of Jamaica. The 1 ^st respondent entered into a contract with the 2 ^nd respondent under which they leased circuits which were installed by the 4 ^th party intervener/ 2 ^nd respondent connecting their network to that of the 2 ^nd respondent.

4 On December 15, 2003 a claim form and particulars of claim were filed by the 1 ^st respondent against the 1 ^st and 2 ^nd appellants as well as one Zion Dahari, claiming a sum of U.S $1.8 million as an estimated amount due to them pursuant to a contract for the supply of telecommunication services. They also claimed damages for breach of contract for breach of fiduciary duties, alternatively, damages for conversion and or detinue. It was an averment of the 1 ^st respondent that pursuant to the agreement with the 4 ^th party intervener/ 2 ^nd respondent, 20 circuits were leased. It was also averred that by an agreement among the shareholders, Dahari and one Marc Diamond assumed responsibility for provision of the equipment and finances Lu begin the network's operation.

5 It was further alleged by the 1 ^st respondent that by a purportedly majority resolution of shareholders, Dahari was subsequently appointed managing director being authorized to execute documents on the 1 ^st respondent's behalf, with unlimited power to contractually bind the 1 ^st respondent. They also alleged that the 1 ^st appellant conspired to cause the 1 ^st respondent to enter a contract for the supply of telecommunication equipment by the 2 ^nd appellant, by which it was agreed that the 1 ^st appellant would make deductions for the equipment from the receipt of the revenues due to the 1 ^st respondent, and that the appellants and Dahari, among other things, misappropriated all revenues received.

6 The 1 ^st and 2 ^nd appellants were served with the claim form and particulars of claim on December, 20, 2003. On January 9, 2004, they filed an acknowledgment of service. A defence was not filed.

7 On July 27, 2004 Rattray, J made a freezing order over funds in the National Commercial Bank, which were in the joint names of the 1 ^st appellant and his brother Rohit Singh. The 3 ^rd party intervener/3 ^rd appellant sought to discharge the freezing order. In an affidavit dated October 26, 2004, in support of an application to discharge the order, one Richard Linhart, chairman and shareholder of the 3 ^rd party intervener/3 ^rd appellant averred that the money which forms the subject of the freezing order is not the property of either the 1 ^st or 2 ^nd appellant and that it was being held in trust for the 3 ^rd party intervener/ 3 ^rd appellant. On January 16, 2005 Norma McIntosh, J. refused the application. An appeal is pending with respect to the order of McIntosh, J.

8 On February 17, 2005, a Judgment in default of defence was entered against the 1 ^st and 2 ^nd appellants in the sum of U.S. $2,333,166.32 with interest at the rate of 12% from the date of Judgment, together with court fees and attorney's fees of $26,000.00. On April 13, 2005 the following applications came on for hearing before Campbell, J:

• (a) An application by the 1 ^st and 2 ^nd appellants to set aside the default judgment, and for a stay of execution of any process arising from the entry of the default judgment and stay of proceedings pending further order of the court. At the hearing two additional orders were sought, namely, to discharge the freezing order made and to strike out the claim.

• (b) An application to intervene in the proceedings was made by the 4 ^th party intervener/ 2 ^nd respondent at the hearing, which was granted.

• (c) An application by the 3 ^rd party/intervener 3 ^rd appellant for a stay of execution of the order of January 16 2006, pending their appeal and for an order that the freezing order had been determined by the default judgment.

9 The learned judge made the following orders:

10 Re the application by 1 ^st and 2 ^nd appellants:

• "(a) The application to set aside judgment in default entered on the 17 ^th day of February 2005 is refused.

• (b) The application for Stay of Execution of any process arising from the Default Judgment is refused.

• (c) Application for a stay pending further order is refused.

• (d) Application for the discharge of freezing order and striking out of claim refused".

11 Re the application by the 4 ^th party intervener/2 ^nd respondent:

• "(1) Cable and Wireless be joined as a 4 ^th party/intervener to this suit.

• (2) That the defendants, heir, servants and/or agents be restrained from dealing with any assets whether located within the jurisdiction or not."

12 Re the application by 3 ^rd party intervener/3 ^rd appellant:

• "(1) That the application for Stay of Execution of any process to execute any judgment of the Court which could access the money is refused.

• (2) That the Order of the Court of the 27 ^th July, 2004, freezing the sum of $630,000.00 in the account of Rahul Singh and Rohit Singh, "until trial" has been determined by the default judgment."

13 The Notice of Application for the stay is couched in the following terms:

• "1. That there be a Stay of Execution pending the decision of the Court of Appeal in the Appeal therein.

• 2. That there be such relief in the extending or the abridging of time to do any act or to make an application to the Court in this application, as the Court may deem necessary and appropriate in the circumstances.

• 3. That there be such further Order or relief, substantively or procedurally, which the Court considers just and appropriate in the circumstances of this case.

• 4. That to the extent a Judge of the Court considers it necessary or appropriate, an interim ex-parte application be granted to extend or effect a Stay of Execution pending inter-partes hearing of the application herein."

14 The grounds on which the 1 ^st and 2 ^nd the appellants rely in support of the application are as follows:

• "(1) That the appellants have strong Grounds of Appeal on the merits on the issues before the Court which arepatent on the face of the record and which significantly exceed the test enunciated by the Honourable Court of Appeal of "some prospect of success" and the outcome of the Appeal ought not to be negated by any acts of execution.

• (2) That if a continued stay is not granted the Defendants would be ruined and suffer extreme hardship.

• (3) That from the evidence before the Court and the evidence on the record of the Court, the Claimant company is a closed defunct company operating without assets which would make recovery of any money from it impractical, unlikely or impossible.

• (4) That the issues on this Appeal include matters of procedural, judicial and general public importance going far beyond the implication to the parties themselves and therefore reinforce the requirement of a Stay of Execution pending determination of these matters of great significance. These include:

  The abuse of the Court's process and deceit in the face of the Court which ought to be pronounced upon by the Court without the Court's determination being negated by the Claimant's securing benefits to which there is every indication that it has no entitlement at all and in an amount not claimed by the Claimant/Respondent as a matter of fact.

• (5) That on the facts and issues before the Court there is a very serious risk of injustice if a stay of execution is not in place pending Appeal.

• (6) That on a balance of convenience, more harm and undesirable consequences could arise from not having a stay of execution than from having the stay of execution.

• (7) That having regard to the overall nature of the issues, the Court of Appeal itself has a very special interest in ensuring that no developments will take place which will defeat the Court's duty to prevent any abuse of the process of the Courts in exercise of...