Aspect Properties Japan Godo Kaisha v Jonathan Cheng
| Jurisdiction | Cayman Islands |
| Judge | Justice David Doyle |
| Judgment Date | 27 April 2022 |
| Court | Grand Court (Cayman Islands) |
| Docket Number | CAUSE NO: FSD 263 of 2021 (DDJ) |
The Hon. Justice David Doyle
CAUSE NO: FSD 263 of 2021 (DDJ)
IN THE GRAND COURT OF THE CAYMAN ISLANDS
FINANCIAL SERVICES DIVISION
Service out of the jurisdiction in a conspiracy claim — gateways under Grand Court Rules Order 11 rule 1 (1) (c) necessary or proper parties, (f) tort, (ff) director, member of local company — Order 11 rule 4 (2) proper case for service out
Liam Faulkner of Campbells LLP on behalf of the Plaintiff
Kyle Broadhurst of Broadhurst LLC on behalf of the First, Second and Third Defendants
At the hearing on 22 March 2022 I heard helpful, concise and well focused oral submissions from Kyle Broadhurst of Broadhurst LLC attorneys for the First, Second and Third Defendants (the “Foreign Defendants”) and Liam Faulkner of Campbells LLP for the Plaintiff. I reserved judgment. I now deliver my judgment.
On 24 September 2021 I made an order, on an ex parte without notice basis, granting leave “pursuant to Grand Court Rules Order 11 for the Plaintiff to serve the Writ of Summons on the First, Second and Third Defendants out of the jurisdiction at such places in Hong Kong SAR, Australia or other foreign jurisdictions as they may be found.”
The brief reasons for making that order were contained in my 5 page ex tempore judgment delivered on 24 September 2021.
The writ of summons refers to the First Defendant with an address in Australia, the Second and Third Defendants with addresses in Hong Kong SAR, the Fourth, Fifth and Sixth Defendants with addresses in the Cayman Islands. The Plaintiff is a company incorporated under the laws of Japan. I refer to the Fourth, Fifth and Sixth Defendants as the “Cayman Defendants.”
By summons dated 20 December 2021 (the “Jurisdictional Application”) Broadhurst as attorneys for the Foreign Defendants applied for:
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“1. A declaration that in the circumstances of the case, the Grand Court does not have jurisdiction over either the First Defendant, Second Defendant or Third Defendant in respect of the subject matter of the claim or the relief or remedy sought in the action;
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2. Discharge of the order dated 24 September 2021 giving leave to the Plaintiff to serve the Writ of Summons on the First Defendant, Second Defendant and Third Defendant out of the jurisdiction …”
The grounds for applying for such relief were not specified in the Application. One could have been forgiven for thinking having read the first affidavit of Yicheng Chen (“Mr Chen”) sworn on 11 January 2022 in Hong Kong that the application for the discharge was on the basis of an allegation that the Plaintiff had breached the duty of full and frank disclosure at the ex parte stage. Mr Chen in the “Conclusion” section of his affidavit at paragraph 42 asks for service out of the jurisdiction to be set aside in the first sentence and then adds:
“The Plaintiff has failed to disclose the full factual position in this matter. I believe that the Plaintiff failed to make full disclosure as it is aware that if the full factual position was made known it would be obvious that it has no basis to assert that there was a conspiracy.”
Non-disclosure was not relied upon in the skeleton argument of the Foreign Defendants or in the oral submissions at the hearing.
Mr Chen finishes his 15 page affidavit by descending not into fact but into legal argument and submissions which would have been much better left to the attorneys by way of a skeleton argument and oral submissions:
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“43. While the Plaintiff asserts that it has suffered damage in the Cayman Islands, the factual position is that the Plaintiff is a Japanese company whose primary claim relates to the loss of the Apartments which are also located in Japan. The payments which were due to be made to the Plaintiff under the Contract Documents were to be made to the Plaintiff in Japan. As a result, it is clear that any loss that the Plaintiff claims it has suffered occurred in Japan and not in the Cayman Islands.
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44. To the extent that it has been suggested in Fook 1 that acts undertaken in the Cayman Islands, namely the incorporation of certain of the Defendants and the transfer of certain shares in (alleged) breach of the Deed of Charge constitutes proof of fraud and conspiracy on behalf of the First and Second Defendants, I would respond by saying that it is not a tort to incorporate a company within the Cayman Islands, nor can it be said that any alleged breach of the Deed of Charge could be considered to be a tortious claim, as it is clearly a contractual matter.
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45. Lastly, I note that while the Plaintiff has asserted that the Foreign Defendants are necessary and proper parties with respect to the proceedings brought against the Fourth and Fifth Defendants, to the best of my knowledge those Defendants have not been served.”
In respect of paragraph 44, if the incorporation of companies within the Cayman Islands
was part of a conspiracy then it could, of course, be argued that the tort of conspiracy was committed within the jurisdiction. As regards paragraph 45, it is common ground that the Cayman Defendants including the Fourth and Fifth Defendants have been duly served. I turn now to a brief reference to the pleadings and the essence of the Plaintiff's case. The Plaintiff's case is disputed and there is plainly a factual dispute between the parties.
I focus on the situation at the time permission to serve out was granted. Parker J, in Raiffeisen International Bank AG v Scully Royalty Ltd (12 March 2021) at first instance at paragraph 65 citing Dicey 11 —161 and Satfinance v Athena [2020] EWHC 3527 (Ch) in support stated:
“The assessment on the application to set aside is to be directed to the situation at the time permission was originally granted.”
The point appears to have been untouched in the subsequent appeal court judgment delivered on 16 March 2022.
It would appear in England that applications for jurisdictional stays are to be considered in the light of circumstances existing at the time of determination of the application. (para [22] judgment of Cooke J in Credit Agricole Indosuez v Unicof Ltd [2003] EWHC 2676 (Comm)).
In the original writ of summons dated 6 September 2021 the Plaintiff claimed against all Defendants and each of them “Damages for conspiracy” and against the Sixth Defendant only a declaration that the Sixth Defendant had been unjustly enriched at the expense of the Plaintiff and an order that it restores to the Plaintiff the property it has received and also a declaration in respect of the Plaintiff's right to trace and an order that the Sixth Defendant “do account for such property and do cause it to be returned to the Plaintiff.”
The Plaintiff's skeleton argument dated 20 September 2021 for the hearing on 24 September 2021 for leave to serve the Foreign Defendants out of the jurisdiction at paragraph 6 referred to “the claims for unlawful means conspiracy.”
I gave leave for the writ to be amended on 10 January 2022 and the general endorsement put a little more flesh on the bones of the claim in conspiracy:
“Damages, declarations and ancillary relief as a result of the Defendants' conspiracy, by which they intended to injure the Plaintiff by unlawful means, and have combined together to defraud the Plaintiff and to conceal such fraud and the proceeds of such fraud from the Plaintiff.”
The amended writ was in the hearing bundle provided to the court. The following details appear in the amended writ:
“The Plaintiff's claims are for the following relief, which is set out (for the avoidance of doubt) without any election being made between alternative remedies or cause of action:
Damages, declarations and ancillary relief in respect of the Plaintiff's equitable proprietary interest in the apartments known as Units 201 and 203 at Aspect Niseko, 169–32 Aza-Yamada, Kutuchan-cho, Abuta-gun, Hokkaido, Japan (‘the Apartments’) that the Sixth Defendant received from the Plaintiff and in any traceable proceeds thereof.
Damages, declarations and ancillary relief as a result of the Fourth and Fifth Defendants' fraudulent misrepresentations made to the Plaintiff.
Damages, declarations and ancillary relief as a result of the Defendants' conspiracy, by which they intended to injure the Plaintiff by unlawful means, and have combined together to defraud the Plaintiff and to conceal such fraud and the proceeds of such fraud from the Plaintiff.
The Plaintiff claims:
Against all Defendants, and each of them:
1. Damages for conspiracy (including liquidated damages of not less than US$128,000);
2. Exemplary damages;
3. Interest under section 34 of the Judicature Act (2021 Revision) and/or alternatively pursuant to the equitable jurisdiction of the Court;
4. Costs; and
5. Further and other relief.
Against the Fourth Defendant and the Fifth Defendant:
6. Damages in respect of their fraudulent misrepresentations (including liquidated damages of not less than US$128,000).
Against the Sixth Defendant:
7. A declaration that:
(i) the Sixth Defendant has been unjustly enriched at the Plaintiff's expense;
(ii) the Apartments are held by the Sixth Defendant on constructive trust for the Plaintiff;
(iii) the Apartments represent traceable property in the hands of the Sixth Defendant; and
(iv) the Sixth Defendant is liable to account for and to restore the Apartments to the Plaintiff and/or to pay equitable compensation to the Plaintiff.
8. An Order that the Sixth...
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