Bonotto v Boccaletti

• Jurisdiction: Cayman Islands
• Judge: (Zacca, P., Rowe and Taylor, JJ.A.)
• Judgment Date: 24 August 2001
• Court: Court of Appeal (Cayman Islands)
• Date: 24 August 2001

Court of Appeal

(Zacca, P., Rowe and Taylor, JJ.A.)

C. BONOTTO, F.I. BONOTTO and E. BONOTTO

and

G. BOCCALETTI, SPHINX CORPORATION and H. BOCCALETTI

S.E. Phillips and D. MacF. Murray for the appellants;

Ms. C.J. Bridges for the respondents.

Cases cited:

(1) Aiden Shipping Ltd. v. Interbulk Ltd., [1986] A.C. 965; [1986] 2 All E.R. 409, applied.

(2) Andrews v. BarnesELR(1888), 39 Ch. D. 133; 57 L.J. Ch. 694, applied.

(3) Ansbacher (Cayman) Ltd., In re, 1998 CILR N–7.

(4) Bartlett v. Barclays Bank Trust Co. Ltd. (No. 2), [1980] Ch. 515; [1980] 2 All E.R. 92.

(5) Bowen-Jones v. Bowen-Jones, [1986] 3 All E.R. 163; (1986), 136 New L.J. 203.

(6) E.M.I. Records Ltd. v. Ian Cameron Wallace Ltd., [1983] Ch. 59; [1982] 2 All E.R. 980, followed.

(7) Garnett v. BradleyELR(1878), 3 App. Cas. 944, followed.

(8) Ingersoll-Rand v. Banco Portugues do Atlantico, 1988–89 CILR 189, not followed.

(9) McCallister v. Tortuga Club (No. 2), 1984–85 CILR 411, not followed.

(10) Reed v. Gray, [1952] Ch. 337; [1952] 1 All E.R. 241.

(11) Tower Corp. Ltd. v. Hadsphaltic Intl. Ltd., 1986–87 CILR 40, further proceedings, Grand Ct., November 17th, 1987, unreported, not followed.

Legislation construed:

Grand Court Law (1995 Revision) (Law 8 of 1975, revised 1995), s.11(1): The relevant terms of this sub-section are set out at para. 4.

s.16: The relevant terms of this section are set out at para. 61.

Grand Court (Taxation of Costs) Rules, r.2: The relevant terms of this rule are set out at para. 28.

Judicature Law (1995 Revision) (Law 11 of 1975, revised 1995), s.24: The relevant terms of this section are set out at para. 59.

Supreme Court of Judicature (Consolidation) Act 1925 (15 & 16 Geo. V, c.49), s.18(2): The relevant terms of this sub-section are set out at para. 24.

Supreme Court Act 1981 (c.54), s.51(1):

‘Subject to the provisions of this or any other Act and to rules of court, the costs of and incidental to all proceedings in the civil division of the Court of Appeal and in the High Court … shall be in the discretion of the court, and the court shall have full power to determine by whom and to what extent the costs are to be paid.’

Civil Procedure-costs-indemnity basis-discretion under Judicature Law (1995 Revision), s.24(2) to award indemnity costs in exceptional circumstances-power includes but not limited to costs award in accordance with scale in Schedule to Grand Court (Taxation of Costs) Rules

Civil Procedure-costs-indemnity basis-Grand Court Law (1995 Revision), ss. 11 and/or 16 import English High Court”s equitable jurisdiction to award indemnity costs-Grand Court Law (1995 Revision) and Judicature Law (1995 Revision) to be construed together as statutes in pari materia-discretion under Judicature Law, s.24(2) encompasses English jurisdiction

The first appellant applied to the Grand Court for his costs of obtaining certain remedies against the respondents in relation to the shares of a company.

The first appellant succeeded in obtaining, inter alia, a declaration of trust in his favour, the delivery of shares held in trust by the first respondent and an account of moneys due to him. He applied for his costs on an indemnity basis, but the Grand Court (Graham, J.) refused on the

ground that although it would do so if it could, it had no power under the Judicature Law (1995 Revision), s.24(2) or otherwise to award costs on that basis in an ordinary civil action. The proceedings are noted at 2000 CILR N–3.

On appeal, the appellants submitted that (a) s.24(2) conferred a wide discretion as to costs, which was not limited to the expressed power to award costs to the successful party on the prescribed scale; (b) s.11(1) of the Grand Court Law (1995 Revision) conferred the powers vested in the English High Court to award indemnity costs under (i) s.51(1) of the Supreme Court Act 1981, or (ii) its inherent equitable jurisdiction to do justice, particularly in cases of proven fraud by trustees; (c) s.16 of the Grand Court Law authorized the court to grant all legal and equitable remedies, including costs, to which the parties were entitled, and did not operate subject to other legislative provisions; and (d) the court had an inherent jurisdiction, established by custom and usage, to award costs on an indemnity basis if appropriate.

The respondents submitted in reply that (a) s.11(1) of the Grand Court Law did not confer the jurisdiction of the High Court in substantive matters on the Grand Court, but only in matters of practice and procedure; and (b) moreover, s.11(1) applied subject to the Judicature Law, s.24(2) which, unlike the Supreme Court Act 1981 (giving ‘full power’ to determine ‘by whom and to what extent’ costs should be paid), limited the court”s discretion to deciding whether to award costs to the successful party solely on the prescribed scale.

Held, allowing the appeal:

(1) The equitable jurisdiction of the English High Court was conferred on the Grand Court by s.11(1) of the Grand Court Law as the jurisdiction of the former English Court of Chancery, now vested in the High Court by the Supreme Court of Judicature (Consolidation) Act 1925, s.18. That jurisdiction included wide powers to award costs to a successful party on a solicitor and client basis. The Grand Court Law and the Judicature Law were statutes in pari materia and were to be read together as forming one system of law, each interpreting and enforcing the other, as far as was practicable. Section 24(2) of the Judicature Law, placing the award of costs in the discretion of the court, was subject to other laws, including s.11(1) of the Grand Court Law, and vice versa. Since the provisions were complementary, the s.24(2) discretion was the same as that conferred by s.11(1) (per Rowe, J.A., paras. 22–28; para. 30; Zacca, P. dissenting, para. 6).

(2) Alternatively, the substantive English equitable jurisdiction was imported to the Grand Court by s.16 of the Grand Court Law. That section conferred power to grant all remedies to which parties before the court might be entitled in respect of any legal or equitable claim or defence, and enabled the court to grant any remedy which could be granted by the English courts at common law or equity. It was intended to

be broadly construed. Accordingly, the Grand Court had the power of the English court to award indemnity costs in equity, as costs were a form of relief claimed by the successful plaintiff to relieve him of the expenses incurred due to the defendant”s fraud. Unlike s.11(1), s.16 was not expressed to be subject to other laws, whereas s.24(2) was subject to s.16. Therefore, s.24(2) was to be construed in accordance with the legislative purpose behind s.16 (per Taylor, J.A., paras. 55–62).

(3) The purpose of the discretion conferred by s.24(2) was to enable the court to do justice in a multiplicity of circumstances for which it would be overly burdensome for the legislature to legislate individually. The discretion included, but was not limited to, the express power to award costs on the scale prescribed in the Schedule to the Grand Court (Taxation of Costs) Rules. The reference to the prescribed scale was merely to indicate that costs should normally follow the event and that, in the ordinary case, advocates” fees should be on that scale. Rule 2 of the costs rules was to be construed accordingly (per Rowe, J.A., para. 29; para. 31; paras. 36–39; per Taylor, J.A., para. 63; Zacca, P. dissenting, paras. 12–14).

(4) In view of the Grand Court”s findings of dishonesty, bribery and obstruction of justice by the respondents, this was an appropriate case for an award of indemnity costs, and the court had jurisdiction to do so. The costs of the application for costs and of this appeal would be awarded on the ordinary scale (per Rowe, J.A., paras. 41–42; per Taylor, J.A., para. 66).

1 ZACCA, P.: The first appellant was successful in an action in the Grand Court which resulted in a declaration of trust, delivery of shares held in trust, an accounting of moneys due to the plaintiffs and assets purchased with the plaintiffs” money, payment to the plaintiffs of moneys had and received to the plaintiffs” use and interest thereon.

2 The first appellant made an application to the Grand Court (Graham, J.) for an order for costs on an indemnity basis. In his ruling, the judge held that he had no jurisdiction to make such an order but that if he had the power to do so, he would have so ordered. At the outset I will say that I too would have made an order for indemnity costs if the Grand Court had the jurisdiction to do so. The appellants now appeal to this court against the order of Graham, J., as it relates to costs. The issue, therefore, before this court on appeal is: ‘Does the Grand Court have jurisdiction to order indemnity costs?’

3 For the appellants it is submitted that s.24(2) of the Judicature Law (1995 Revision) gave the Grand Court Judge a discretion to order such costs. It was also submitted that in equity cases the court had a wide discretion to so order and the courts in England have, in equity cases, made orders for indemnity costs. Reliance is placed on the case of Andrews v. Barnes (2).

4 It was also submitted that, by virtue of s.11(1) of the Grand Court Law (1995 Revision), the court can look to the law relating to costs in England. Section 11(1) states:

‘The Court shall be a superior court of record and, in addition to any jurisdiction heretofore exercised by the Court or conferred by this or any other law for the time being in force in the Islands, shall possess and exercise, subject to this and any other law, the like jurisdiction within the Islands which is vested in or capable of being exercised in England by-

(a) Her Majesty”s High Court of Justice; and

(b) the Divisional Courts of that Court,

as constituted by the Supreme Court of Judicature (Consolidation) Act, 1925, and any Act of the Parliament of the United Kingdom...