Bank of Nova Scotia v Becker
| Jurisdiction | Cayman Islands |
| Judge | (Zacca, P., Kerr and Henry, JJ. A.) |
| Judgment Date | 15 August 1988 |
| Court | Court of Appeal (Cayman Islands) |
| Date | 15 August 1988 |
(Zacca, P., Kerr and Henry, JJ. A.)
L. Hendrickson, Q.C. and M. Parkinson for Paradise Manor Ltd;
P. Lamontagne, Q.C. and G. Ritchie for Bank of Nova Scotia Ltd;
J. Nuss, Q.C. and T. Shea for the receivers;
R.D. Alberga, Q.C. and A. Foster for William and Marguerite Becker.
(1) Amon v. Raphael Tuck & Sons Ltd., [1956] 1 Q.B. 357; [1956] 1 All E.R. 273, dicta of Devlin J. considered.
(2) Bennetts & Co. v. Mcllwraith &ELRCo., [1896] 2 Q.B. 464.
(3) Dollfus Mieg & Cie. S.A. v. Bank of England, [1951] 1 Ch. 33; [1950] 2 All E.R. 605.
(4) Edward v. LowtherUNK(1876), 45 L.J.C.P. 417.
(5) McCheane v. Gyles (No. 2), [1902] 1 Ch. 911, dicta of Buckley J. applied.
(6) Vandervell”s Trusts, In reELRUNK, [1970] Ch. 44; [1969] 3 All E.R. 496; on appeal, sub nom. Vandervell Trustees Ltd. v. White, [1971] A.C. 912; [1970] 3 All E.R. 16.
Grand Court (Civil Procedure) Rules, r.25: The relevant terms of this rule are set out at page 22, lines 14–19.
r.26: The relevant terms of this rule are set out at page 18, lines 7–15.
Rules of the Supreme Court (England), O.15, r.6(2): The relevant terms of this sub-rule are set out at page 18, lines 20–30.
Civil Procedure-parties-joinder of parties-joinder strictly governed by Grand Court (Civil Procedure) Rules and whether ‘just and convenient’ only one factor in applying Rules-not ‘just and convenient’ if joinder would result in unnecessary complication of simple case
Civil Procedure-parties-joinder of parties-no joinder of receivers of company under Grand Court (Civil Procedure) Rules, r.26 as parties who ‘ought to have been joined’ at beginning of suit, if suit originally between bank appointing receivers and guarantors of debt and no claims against receivers at that time-no joinder as ‘necessary party’ if no possible liability as agents of bank or personally and if company joined as codefendants making application for reasons outside purpose of its own joinder
The applicant, a company in liquidation which had been joined as a party in a suit between two other persons, applied for an order to join its own receivers as parties.
The company had been granted a loan by a bank for which collateral security had been provided by the defendants. It had defaulted in payment and the bank had appointed receivers who took possession of the company”s property. In an action by the bank against the defendants as guarantors, the company was itself made a co-defendant upon the successful application of one of the defendants. It was joined for the purpose of setting off any damages it might recover for the wrongful acts of the receivers (whom it alleged to be agents or servants of the bank) against any relief granted to the bank in relation to it as principal debtor and the other defendants as guarantors.
The company then sought to counterclaim against the bank, alleging that the receivers as its agents or servants had trespassed upon the company”s land, wrongfully taken possession of it and wrongfully converted the company”s chattels. The company also applied for leave to join the receivers as added parties in the counterclaim, contending that (i) as it was entitled to damages from the bank or the receivers or both, the receivers were, under the Grand Court (Civil Procedure) Rules, r.26, necessary parties to the proceedings; and (ii) in any event, since by virtue of r.25 it could have initiated proceedings against the bank and joined the receivers as co-defendants, it was only just that it should be able to counterclaim against them both at the same time
The Grand Court (Douglas, Ag. J.) held that since the company had chosen to sue the bank as principal, it was not necessary to include the receivers in the suit as the bank”s servants or agents in order to determine the bank”s liability. Further, the fact that the company might have to bring a separate action against the receivers if its action against the bank failed by reason of its being the wrong party was not a circumstance to require joinder of the receivers as necessary parties.
On appeal, the company submitted that (a) the court had been wrong in dismissing the application after only considering whether the receivers were ‘necessary’ parties to the action under r.26; (b) its own joinder had changed the circumstances of the case and consequently allowed it to apply under r.25 for joinder of the receivers as defendants in its counterclaim, for, if the receivers were agents or servants of the bank they would be liable jointly with the bank to the company and if they were not, they would be independently liable; and (c) in the interests of justice the receivers ought to be added in order to allow the company to treat the bank and the receivers jointly as co-defendants for the purpose of establishing its right of relief against one or other or both in the same action and further, since the bank had denied agency it was only proper that the application should be made for joinder of the receivers.
The respondents submitted in reply that (a) since the company had only been added to the proceedings in order to enable the guarantors to set off their indebtedness to the bank against the company”s claim against the bank, there was no justification for its attempting to include the receivers in these proceedings, as under r.26 they were not ‘necessary parties’ to the action between the bank and the defendants.
The bank also submitted that the company could rely on neither r.26
nor r.25 to justify joining the receivers unless the company was itself to sue independently as a plaintiff; that as an added co-defendant it was restricted to acting within the scope of the order joining it as a party; and at the time of that joinder there was no basis for either the bank or the guarantors to make the application.
Held, refusing to order the joinder of the receivers:
(1) The court was obliged to have regard to the terms of the Grand Court (Civil Procedure) Rules and was only entitled to consider whether joinder was ‘just and convenient’ as an aspect of the application of those rules. It was not entitled to use the ‘just and convenient’ principle to give itself an unfettered discretion to order joinder (page 18, line 39 – page 19, line 8; page 20, lines 3–7).
(2) As the bank had originally made no claim against the receivers, they could not be added as defendants in the bank”s writ against the guarantors. Consequently, so far as that action was concerned, the receivers could not qualify as persons who ‘ought to have been joined’ at the beginning of the proceedings. Nor did they so qualify when the company was introduced into the proceedings as an added party and counterclaimed against the bank. The application had therefore failed to satisfy the first criteria for joinder in r.26 (page 21, lines 11–16; page 22, lines 5–9).
(3) Nor did the receivers qualify under the second criterion as parties ‘whose presence before the court may be necessary to enable the Court to effectually and completely adjudicate upon’ the issues involved, within the meaning of r.26. During the proceedings but before the company was joined, the receivers could not qualify as ‘necessary’ parties because on the one hand, if the bank were found to be liable for their acts, no liability would fall on them and, on the other hand, if they were independently liable, their liability could have no effect on the bank”s claims against the guarantors. Nor did they become ‘necessary’ parties after the joinder of the company. The company, as principal debtor, had been joined for the purpose of a set-off between the bank and the guarantors and its counterclaim against the bank was compatible with this purpose. It could not join in that counterclaim, however, a fourth party (i.e. the receivers) who was not involved in the particular purpose for which it had itself been joined in the first place. For these reasons the application would fail (page 20, line 37 – page 21, line 10; page 22, lines 26–34; page 23, line 38 – page 24, line 8).
(4) In any event, even if the court were to consider whether it was ‘just and convenient’ to add the receivers, the application would fail, as the company”s claim against the receivers would be an unnecessary complication in an otherwise simple action in debt involving a counterclaim by a third party (page 24, lines 18–23).
| KERR, J.A.: The appellant, Paradise Manor Ltd., pursuant to | |
| r.26 of the Grand Court (Civil Procedure) Rules by summons | |
| dated October 29th, 1986, sought an order that Christopher John- | |
| son and John Dinan be joined as parties to the actions brought by | |
| 25 | the Bank of Nova Scotia against William Becker and Marguerite |
| Becker (Cause No. 408/84) and against Emerald Seas Ltd. (Cause | |
| No. 358/85) and to which actions Paradise Manor Ltd. had been | |
| added as a party on the applications of the Beckers and Emerald | |
| Seas Ltd. In the summons by Paradise Manor Ltd. certain | |
| 30 | incidental or |
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