Bumgarner v Watler

• Jurisdiction: Cayman Islands
• Judge: (Schofield, J.)
• Judgment Date: 04 June 1990
• Court: Grand Court (Cayman Islands)
• Date: 04 June 1990

Grand Court

(Schofield, J.)

BUMGARNER

and

WATLER

N. Clifford for the plaintiff;

A. Foster for the defendant.

Cases cited:

(1) Cotton v. BennettELR(1884), 26 Ch. D. 161; 51 L.T. 70, considered.

(2) Eastern Shipping Co. Ltd. v. Quah Beng Kee, [1924] A.C. 177; [1918–23] All E.R. Rep. Ext. 814, dicta of Lord Wrenbury applied.

(3) Pontifex v. FoordELR(1884), 12 Q.B.D. 152; 53 L.J.Q.B. 321.

Legislation construed:

Grand Court (Civil Procedure) Rules, r.28(1):

‘Where a defendant claims to be entitled to contribution or indemnity by any person not a party to the cause he may, by leave of the Court, file in the Court a notice (hereinafter called a Third Party Notice) to that effect. . . . ’

Civil Procedure-parties-third parties-vendor”s estate agent may be joined as third party in action for failure to complete transaction if prima facie in breach of fiduciary duty to vendor-circumstances may give rise to indemnity as required by Grand Court (Civil Procedure) Rules, r.28(1) and not merely damages

The plaintiff brought an action against the defendant in respect of an alleged breach of contract for the sale of land.

The defendant through her agent offered land for sale which the plaintiff entered into an agreement to buy. The defendant refused to proceed with the agreement and the plaintiff brought proceedings for breach of contract seeking, inter alia, specific performance and/or damages.

The defendant denied entering into an agreement with the plaintiff and alleged that her agent had agreed with the plaintiff to receive a secret commission for making the alleged agreement, thereby acting in breach of his duty to her and in effect acting as agent for the plaintiff. She further alleged that if there were an agreement it had only come about through the undue pressure placed upon her by the agent and was therefore unenforceable and should be set aside. In the light of the plaintiffs action against her she applied for leave to issue third party notices against her agent for an indemnity in respect of any liability she might incur by way of damages or costs to the plaintiff and for her own costs in defending the proceedings.

Held, granting the application:

The defendant had prima facie established that her agent had induced her to enter an agreement to sell land to the plaintiff whilst acting in both his own interests and those of the plaintiff, thereby abusing his powers and breaching the fiduciary duty he owed her. The facts indicated that the defendant might properly have a right of indemnity against the agent, rather than simply a right to damages, thus enabling the issue of a third party notice under the Grand Court (Civil Procedure) Rules, r.28(1). Although the trial of the issue might eventually prove that it was otherwise, the defendant”s application to join the agent as a third party would be granted (page 28, line 40 – page 29, line 6; page 30, line 9 – page 31, line 26).

SCHOFIELD, J.: The difficulty in this application arises
10	because of the narrow scope of our third party procedure. Instead
of permitting a third party notice to issue in the wider circum-
stances set out in O.16, r.1 of the English Rules of the Supreme
Court our third party procedure is restricted by r.28 of the Grand
Court (Civil Procedure) Rules to cases where a defendant claims
15	to be entitled to contribution or indemnity by a third party.
In this case Roger W. Bumgarner, the plaintiff, claims, inter
alia, specific performance and/or damages against Zelma Lee
Watler, the defendant, in respect of an alleged breach of a
contract for the purchase by him from the defendant of certain
20	land. In the amended statement of claim the plaintiff alleges

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