160088 Canada Inc. v Socoa Intl

• Jurisdiction: Cayman Islands
• Judge: (Smellie, J.)
• Judgment Date: 19 September 1997
• Date: 19 September 1997
• Court: Grand Court (Cayman Islands)

Grand Court

(Smellie, J.)

160088 CANADA INCORPORATED

and

SOCOA INTERNATIONAL LIMITED and PINAT

J.P. Telfer, C.J. Bridges-Giglioli and J. Walton for the plaintiff;

A. Turner for the first defendant;

The second defendant did not appear and was not represented.

Cases cited:

(1) Adams v. Cape Indus. PLC, [1990] Ch. 433; [1991] 1 All E.R. 929, followed.

(2) Carl Zeiss Stiftung v. Rayner & Keeler Ltd. (No. 2), [1967] 1 A.C. 853; [1966] 2 All E.R. 536.

(3) Colt Indus. Inc. v. Sarlie (No. 2), [1966] 1 W.L.R. 1287; [1966] 3 All E.R. 85.

(4) Emanuel v. Symon, [1908] 1 K.B. 302; [1907] W.N. 236.

(5) Erie Beach Co. Ltd. v. Att.-Gen. (Ontario), [1930] A.C. 161; (1929), 142 L.T. 156.

(6) Goodwill v. Zuiderent, 1988-89 CILR N–3.

(7) India (Govt.) v. Taylor, [1955] A.C. 491; [1955] 1 All E.R. 292.

(8) Nouvion v. Freeman, In re HendersonELR(1889), 15 App. Cas. 1.

(9) Rousillon v. RousillonELR(1880), 14 Ch. D. 351.

(10) Schibsby v. WestenholzELR(1870), L.R. 6. Q.B. 155; [1861-73] All E.R. Rep. 988, dicta of Blackburn J. applied.

Conflict of Laws-recognition of foreign proceedings-enforcement of judgment debt-court to recognize judgment in personam creating debt if debtor (a) was present in foreign jurisdiction when proceedings instituted; (b) participated as plaintiff or counter-claimant; (c) appeared voluntarily as defendant; or (d) agreed in advance to submit to foreign court”s jurisdiction as defendant

Conflict of Laws-recognition of foreign proceedings-enforcement of judgment debt-presence in foreign jurisdiction-court to recognize foreign judgment if corporate debtor”s business conducted from foreign jurisdiction when proceedings instituted and previously-no public policy reasons to refuse recognition merely because debtor registered or domiciled in Cayman Islands

Conflict of Laws-recognition of foreign proceedings-enforcement of judgment debt-debtor as counter-claimant in foreign proceedings-for purposes of recognition of foreign judgment, insolvency petition in foreign court to recover costs awarded in related proceedings is submission to court”s jurisdiction by way of counter-claim

The plaintiff applied to the Grand Court to enforce a judgment obtained in Canada against the first defendant.

The plaintiff, a Canadian company, and the first defendant, a Cayman company, were established by the second defendant to receive the proceeds of his illicit infringement of patents owned by a third party through a company. Following proceedings against the plaintiff by the latter company in Quebec, the plaintiff was placed in receivership and ordered to proceed against the defendants to recover moneys which the second defendant had transferred from the plaintiff to the first defendant. The shareholders” and directors” meetings necessary to render the second defendant judgment-proof were conducted by the second defendant and his family at an address in Montreal.

The first defendant meanwhile petitioned in Quebec for the insolvency of the owner of the patents in respect of a judgment in its favour for costs in related proceedings in the Cayman Islands.

The plaintiff obtained judgment in the Quebec court against the first defendant in default of any acknowledgement of service. It applied to the Grand Court for summary judgment against the first defendant in respect of the sum awarded by the Quebec court.

The plaintiff submitted that (a) the Grand Court could enforce the judgment of the Canadian court as the final judgment of a foreign court having jurisdiction over the parties at common law since (i) although registered as an investment company in the Cayman Islands, the first defendant had a place of business in Montreal, at which its only business (namely, the transfer to it of funds from the sale of the plaintiff”s assets in exchange for its own shares) was conducted, and from which the Canadian litigation was handled, (ii) the first defendant had submitted to the Quebec court”s jurisdiction by its petition for insolvency against the owner of the patents, the costs of which were settled at the same time as those in the main proceedings and (iii) the Quebec court had assumed jurisdiction in any event under Canadian companies legislation by virtue of the fact that the first defendant was affiliated to the plaintiff; and (b) there was no public policy reason why the Grand Court should not recognize the Canadian judgment.

The first defendant submitted in reply that (a) the Grand Court should not recognize the judgment of the Canadian court since (i) the fact that the company had used a Montreal address on occasions for business meetings was an insufficient connection with Canada for the court to conclude that it was carrying on business there, and the Cayman Islands, as the company”s place of registration and the location of its bank accounts, were its place of business, (ii) the first defendant”s petition for insolvency was not a cross-proceeding by which it could be said to have submitted to the jurisdiction of the court in Quebec, and (iii) the Quebec court”s assumption of jurisdiction under Canadian legislation was not a sufficient basis in common law for the Grand Court to recognize its judgment; and (b) it would be contrary to public policy for the Grand Court to recognize the jurisdiction of a foreign court over a Cayman company which was not resident abroad, since this might lead to Cayman tax-exempt companies being the subject of foreign tax impositions.

Held, giving summary judgment for the sum claimed:

(1) The Grand Court would recognize the final and conclusive judgment of a foreign court in an action in personam creating a debt, provided that one or more of four circumstances existed, namely, that the judgment debtor had (a) been present in the foreign jurisdiction at the time when the proceedings were instituted; (b) participated as a plaintiff or counter-claimant in the foreign proceedings; (c) voluntarily appeared in the foreign proceedings as a defendant; or (d) submitted to the foreign court”s jurisdiction as a defendant by prior agreement (page 416, lines 10–33).

(2) In this case, since the first defendant had established a place of business in Montreal, from which for some years its affairs were mainly conducted by the second defendant as the representative of the company, it had been present in Quebec at the time when proceedings were instituted there and was thereby subject to the jurisdiction of its courts,

even though its place of business there was not a registered address for the company (page 419, lines 24–41; page 420, lines 6–39).

(3) There was no public policy reason why the court should refuse to recognize the Quebec court”s assumption of jurisdiction over the first defendant, since the foreign judgment did not affect the ownership of the first defendant”s shares as a Cayman company. For present purposes the plaintiff was required only to show that the defendant was present in Quebec and not that it was domiciled or registered there, and had done so (page 421, lines 35–41).

(4) Furthermore, by instituting insolvency proceedings against the owner of the patents, the first defendant had submitted to the jurisdiction of the Quebec court, since the aggrieved owner had been the plaintiff in the proceedings there for whose benefit the action against the first defendant had been ordered. The petition constituted cross-proceedings in the nature of a counter-claim, and the fact that the petition was withdrawn and its costs referred to the main action was analogous to a consolidation of the proceedings (page 422, line 32 – page 423, line 3).

40	SMELLIE, J.: The plaintiff seeks by this action to recover from the
first defendant the sum of the award of a judgment in its favour given by
the Superior Court for the Province of Quebec, Canada, on December
22nd, 1993. The action is brought at common law and so I am not
concerned with any statutory measures for the reciprocal registration,
45	recognition or enforcement of foreign judgments.

Having filed its writ, the plaintiff now moves this court to award
summary judgment pursuant to the Grand Court Rules, O.14 on the basis
that there is no proper defence to the action. Summary judgment is sought
in the sum of CAN$5,472,918.29 as at May 31st, 1995, with interest
5	continuing to accrue thereafter on that sum at the rate of 7% per annum-
the rate awarded by the Quebec judgment. The plaintiff does not seek to
have recognized or enforced here other relief granted to it by the Quebec
court, as that other relief does not create a debt or obligation to pay a
definite sum of money. The plaintiff sues on its Canadian judgment on
10	that aspect which is a final judgment for a specific sum and on the basis
that it issues from a competent foreign court creating a debt which, at
common law, the defendants have an obligation to satisfy. Thus, it is the
doctrine of obligation which the plaintiff seeks to invoke.
As a matter of first principles, it is just as well that I state at the outset
15	the frame-work of the doctrine as the basis for proceeding. It is perhaps
still best described in the words of Blackburn, J. pronounced in Schibsby
v. Westenholz (10) (L.R. 6. Q.B. at 159):
‘We think that…the true principle on which the judgments of
foreign tribunals are enforced in England is…that the judgment of
20	a court of competent jurisdiction over the defendant imposes a duty
or obligation on the defendant to pay the sum for which judgment is
given, which the courts in this country are bound to enforce; and
consequently that anything which negatives that duty, or forms a
legal excuse for not performing it, is a defence to the action.’
25	This common law basis of recognition and enforcement has been invoked
in this court before: see Goodwill v. Zuiderent (6).
It

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