Banco International De Costa Rica, S.A. v Banana International Corporation

• Jurisdiction: Cayman Islands
• Judge: Kawaley
• Judgment Date: 23 April 2018
• Court: Grand Court (Cayman Islands)
• Docket Number: CAUSE NO. FSD 222 OF 2017 (IKJ)
• Date: 23 April 2018

Between:

Banco International De Costa Rica, S.A.

Plaintiff

and

(1) Banana International Corporation

(2) Banacol De Costa Rica, S.A.

(3) Banacol Corporation

Defendants

Before:

The Hon. Justice Kawaley

CAUSE NO. FSD 222 OF 2017 (IKJ)

IN THE GRAND COURT OF THE CAYMAN ISLANDS

FINANCIAL SERVICES DIVISION

HEADNOTE

Action to enforce New York judgment in the Cayman Islands — application by Defendants to set aside service and set aside the Ex Parte order permitting leave to serve out of the jurisdiction — requirements for showing tangible benefit from enforcement proceedings

Appearances:

Ms Grainne King of Harneys, for Applicants/Defendants

Mr Kyle Broadhurst and Ms Sally Bowler of Broadhurst LLC on behalf of the Respondent / Plaintiff

REASONS FOR REFUSING JURISDICTIONAL CHALLENGE

(in Chambers)

Introductory

1 The present proceedings were commenced by Writ of Summons issued on October 27, 2017 to enforce the judgment granted by the Supreme Court of the State of New York on September 8, 2015 in favour of the Plaintiff against the Defendants in the basic amount of US$19,750,000 (the “NY Judgment”).

2 On November 23, 2017, following an ex parte application, I granted the Plaintiff leave to serve the Defendants out of the jurisdiction pursuant to Order 11 rule 1(1)(m) of the Grand Court Rules (“GCR”) (the “Ex Parte Order”). By a Summons dated January 23, 2018, the Defendants applied to set aside the Ex Parte Order and service of the Writ on them.

3 The Defendants' Summons was listed for hearing on April 11, 2018. At the end of the hearing I refused the Defendants' application and awarded the costs of the application to the Plaintiff to be taxed if not agreed and to be payable forthwith. I also made no order as to the costs of the Defendants' application to extend time for filing acknowledgements of service and the Plaintiff's application for Default Judgment against the First and Third Defendants. These applications were both filed on the same day, following which I indicated to the parties that my provisional view on the papers was to allow the Defendants' application and refuse the Plaintiff's. The Plaintiff waived any right to be heard on the applications.

4 These are the reasons for the jurisdictional decision.

Uncontroversial legal and factual issues

5 A number of significant legal and factual issues were common ground. Firstly, the Plaintiff is entitled to obtain summary judgment on the merits of its claim to enforce the NY Judgment. There is no defence to the Plaintiff's claim.

6 Secondly, it could not be disputed that the jurisdictional gateway relied upon by the Plaintiff as the basis for the Ex parte Order was an appropriate one. GCR Order 11 rule 1(1) provides that leave to serve out may be granted where:

“(m) the claim is brought to enforce any judgment or arbitral award (within the meaning of section 2(1) of the Arbitration Law 2012) or interim measure (within the meaning of Part VIII of the Arbitration Law 2012).”

7 Thirdly it was not ultimately disputed that:

• (a) the 1 ^st Defendant held at least one bank account in the Cayman Islands which was active and was subsequently closed in November 2016;

• (b) by the l ^st Defendant's own admission, substantial sums passed through the relevant account;

• (c) there was no evidence as to the existence at any time of local bank accounts in the names of the 2 ^nd and 3 ^rd Defendants;

• (d) the NY Judgment was granted to enable the Plaintiff to recover monies lent to the 1 ^st Defendant in respect of which debt the 1 ^st, 2 ^nd and 3 ^rd Defendants were jointly and severally liable.

8 In my judgment the main controversy was how the relevant legal principles fell to be applied to these undisputed facts, although subsidiary factual disputes surrounding the practical utility of the present action did arise.

The relevant legal test

9 The first of two cases cited by both counsel was the local decision of Jones J in Masri v Consolidated Contractors International Limited [ 2011 (1) CILR 79]. It concerned an application to set aside an ex parte order granting leave under GCR Order 11 rule 1(1) (m) in circumstances where it was accepted that the basic requirements of that gateway were made by an arguable cause of action. At issue was the content and scope of the additional discretionary filter vested in the Court by Order 11 rule 1(4)(2):

“(2) No such leave shall be granted unless it shall be made sufficiently to appear to the Court that the case is a proper one for service out of the jurisdiction under this Order.”

10 Jones J (at pages 90–91) lucidly summarised the relevant legal test as follows:

“13… the purpose of Order 11 rule 1(1)(m) is not simply to allow foreign judgments to be domesticated. Its purpose is to put the judgment creditor in the position of being able to enforce against assets in this jurisdiction or take some other step towards enforcement.

14… In my judgment, it would be inconsistent with this objective for the court to refuse leave to serve out merely because the judgment creditor is unable to demonstrate that the debtor has an asset, meaning some property having a net present realizable value, against which he could immediately commence enforcement proceedings….In my judgment a judgment creditor …who will almost certainly succeed in...