160088 Canada Incorporated v Socoa International Ltd et Al
| Jurisdiction | Cayman Islands |
| Judge | Smellie, J. |
| Judgment Date | 19 September 1997 |
| Court | Grand Court (Cayman Islands) |
| Date | 19 September 1997 |
Smellie, J.
Grand Court
Conflicts of Laws - Recognition of foreign proceedings — Enforcement of judgment debt — Court to recognise judgment in personam creating debt if debtor was present in foreign jurisdiction when proceedings instituted, if debtor participated as plaintiff or counter—claimant, appeared voluntarily as defendant or agreed in advance to submit to the foreign court's jurisdiction as defendant.
Ritch & Conolly for the plaintiff.
W.S. Walker & Co. for the first defendant.
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, 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 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 recognised 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 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 the framework 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 (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 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.”
This common law basis of recognition and enforcement has been invoked in this Court before: see Goodwill v. Zuiderent.
It follows that provided the foreign Court had jurisdiction to give the judgment according to English (Cayman) rules on the conflict of laws, the judgment is to be regarded as conclusive here, unless it is impeachable on other justiciable grounds such as having been obtained by fraud or being contrary to natural justice or contrary to public policy.
Apart from a reference to public policy to be addressed later, no such other ground is sought to be advanced here. Instead, the defence is mainly confined to a challenge to the judgment of the Quebec Court on the basis that the first defendant was not subject to its jurisdiction. The premise is that the first defendant, which is a Cayman Islands registered exempt Company, had maintained no presence in Quebec (nor elsewhere in Canada for that matter) so as to permit the Quebec Court to be wised of jurisdiction over it, and had in no manner submitted to the jurisdiction of the Quebec Court in the particular proceedings — Cause No. 500-050000939-907 (“the Quebec action”)-in which the judgment was given.
This matter has a rather long and complicated history going back to July 1980, when the earliest related proceedings were filed in Canada. Those proceedings were originally instituted against the present plaintiff (“160088”), then registered and known in Canada as Swecan International Ltd., among other defendants, claiming infringement of certain patents and damages and accounting for profits flowing therefrom. The original plaintiff was Standal's Patents Ltd. (“Standal's”), whose principal was a Mr. George Standal (now deceased), the inventor and beneficial owner of the patents. The patents related to special knives and machines used for debarking trees. The patents were infringed widely in Canada and the north-western United States and Standal's had become involved in litigation in both countries, seeking compensation and protection from further infringement.
Mr. Gaston Pinat (“Pinat”), the second defendant herein, had been a business associate of George Standal and, as the various actions subsequently proved, the principal perpetrator through related entities of the patents infringement. The evidence accepted in various Canadian proceedings — including by Tremblay, J. in the Quebec action — is that Pinat, through a series of numbered Canadian companies controlled by him, sought to render himself judgment-proof and to defraud Standal's by secreting away the profits which he had received from the infringement of the patents. The first in that line of numbered Canadian companies is 160088.
The first defendant herein (“Socoa”) was established in the Cayman Islands by Pinat on April 28th, 1988, and was proved in the Quebec action to be the recipient of funds from Pinat's numbered Canadian companies, funds which were ultimately traced back to 160088, which had itself earlier received the proceeds of the patents fraud.
As for the merits of the Quebec action, I will not delve too deeply into them. They are not being and could not properly be questioned in these proceedings (in the absence of any suggestion that the Quebec judgment was obtained by fraud or some other such basis of impeachment). For present purposes the judgment is to be regarded as generally conclusive: see Carl Zeiss Stiftung v. Rayner & Keeler Ltd. (No. 2) and Dicey & Morns, 1 The Conflict of Laws, 12th ed. Rule 35, at 468.
It will suffice for present purposes, then, if I extract from the Quebec judgment in Tremblay, J.'s words the findings as to the payment of sums to Socoa. Before him, the most important aspect of Standal's claim was that 160088 be ordered and directed to recover those sums from Socoa. I quote from his judgment:-
“But most of all, Standal's requests that the total sum of $2,790,000 transferred from Canada to Socoa International be recovered by 160088.
The details of the amount are as follows:
$1,700,000. This sum is that which was paid at execution [on January 29th, 1988] of the bulk sale [of most of the assets of 160088 by Pinat to a third party] and which the directors of 160088 paid to 151095 [another numbered Company], which belongs exclusively to Gaston Pinat, and which subsequently transferred this amount to Socoa International.
$200,000. This sum was kept in escrow starting from the execution of the deed of sale [the bulk sale of the assets of 160088] until the completion of certain documents and, when those documents were completed, the sum was paid to 152931 [another Pinat Company] which transferred this amount to Socoa two days later.
$450,000. This sum represents the reduced amount of the balance of [the proceeds] of sale of $800,000 which was initially reduced to $620,000 as a result of certain adjustments and was then reduced to $450,000 for an accelerated payment rather than payment over four years.
In August 1984, Standal's advised 160088 that it was continuing its proceedings for patent infringement and it is after this notice that … on September 16th, 1988 the bulk sale purchaser paid to 152931 the sum of $450,000 which was immediately transferred to Socoa's account in the Cayman Islands, although a judgment of the Federal Court rendered at Standal's request on September 16th, 1988 prohibited 160088 from making any such transfer.
$50,000. On July 8th, 1988, 151095 transferred this sum of $50,000 to Socoa, which sum represents the reimbursement of excise taxes payable to 160088.
$390,000. On July 19th, 1988, 151095 transferred this sum of $390,000 to Socoa, which sum represents the net proceeds from the sale of the St. Leonard property [a residential property in Quebec] which belongs to 160088 and which was placed in the account of 151095 in order to be transferred to Socoa.”
By reference to these amounts illegally paid out from 160088 to the other Pinat entities and ultimately to Socoa for Pinat's benefit, Tremblay, J. in his judgment of December 22nd, 1993 ordered the defendants, including Pinat and Socoa, jointly and severally to pay to 160088 the total sum of CAN$2,998,701.85 inclusive of costs, plus interest at the legal rate calculated from the respective dates of payment of the sums out from 160088 in 1988.
The sum of CAN$5,472,918.29 claimed in the present 0.14 summons for summary judgment represents the sum of the Quebec judgment plus interest, to May 31st, 1995, when the summons was first set down to be taken in this Court. As every step has been taken by Pinat and the other defendants to evade the judgment in Canada, here and elsewhere, the total judgment sum is now a good deal larger, interest having continued to accrue.
The extent of Pinat's evasiveness and the measures taken by him, his companies and on their behalf was highlighted in earlier proceedings in this Court. There were others — Causes No. 316 of 1988, No. 167 of 1989 and No. 318 of 1989 — in which Standal's, as plaintiff, tried to trace and recover the proceeds of the patents fraud from Socoa in this jurisdiction. An illustration of the ill-fortunes of Standal's in those efforts is to be seen in the circumstances under which it was persuaded to discontinue Causes No. 316 of 1988...
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