Cedrus Investments Ltd v Harun Abidin
| Jurisdiction | Cayman Islands |
| Judge | Cheryll Richards |
| Judgment Date | 24 December 2018 |
| Year | 2019 |
| Court | Grand Court (Cayman Islands) |
| Docket Number | CAUSE NO: G 0219 OF 2015 |
The Hon. Justice Cheryll Richards Q.C.
CAUSE NO: G 0219 OF 2015
IN THE GRAND COURT OF THE CAYMAN ISLANDS
CIVIL DIVISION
Civil Division — Civil Procedure Rules — Application to Set Aside Default Judgment following non-compliance with unless order.
Ms. Anna Peccarino of Travers Thorp Alberga for the Plaintiff
Mrs. Terrence Caudeiron and Ms. Christine Bodden of Quality Law Services for the Defendants
The Plaintiff is a company incorporated in the Cayman Islands carrying on an investment management business including private wealth management and institutional asset management.
The First Defendant, Harun Abidin is an Indonesian national, resident in Indonesia, and he is a 95% shareholder of the Second Defendant Tata Artha Group.
The matter for the Court's consideration is a Summons filed by the Defendants on the 12 th October 2018 seeking to set aside a Default Judgment in this matter. 1 The Default Judgment was issued by the Grand Court on the 31 st May 2017, following non-compliance with an “Unless Order” dated 21 st April 2017. The Unless Order was made on the application of the Plaintiff and required the Defendants, by no later than 4pm on the 28 th day after its making, to file and serve an amended Defence or confirm in writing to the Plaintiff that no amended Defence was to be filed, failing which the Plaintiff would be at liberty to enter Judgment on the Claim, and the Defendant's Counterclaim would be dismissed.
On the same day that this Unless Order was made, Mourant Ozannes, the Defendants' Attorneys, were given leave to come off record and were to serve a copy of the Order evidencing this leave on the Plaintiff's Attorneys and on the First Defendant by e-mail and on the First and Second Defendants by DHL courier to their address in Indonesia and on their Attorneys, Virtus Law LLP, a Singapore Law Firm by e-mail.
By Application dated 23 rd May 2017, the Plaintiff sought the issue of the Default Judgment as:
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i. The Defendants had been served with an original sealed copy of the Unless Order as this had been handed to the Defendants' Attorney outside the courtroom on the said 21 st April 2017 and subsequently a copy of the Order had been sent by e-mail to the said Attorney on the 24 th April 2017; and
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ii. The Defendants had failed to comply as they had not filed an amended Defence or confirmed that they did not intend to file same.
By the Summons filed on the 12 th October 2018, about 16 months after the Default Judgment was issued on the 31 st May 2017, the Defendants now seek the following Orders:
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i. That the Defendants be allowed time to file their Defence to the Judgment entered on 31 st May 2017 [as exhibited hereto] and that the Judgment of same date be set aside because:
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a. The Defendants' failure to file a defence was not willful and deliberate;
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b. The Defendants' application to set aside the Default Judgment was made as soon as reasonably possible after they became aware of the Judgment and there was a reasonable explanation for any delay;
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c. The Defendants have a meritorious defence or a defence worthy of investigation; and
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d. The Defendants have a real prospect of successfully defending the claim for reasons set out in the Affidavits and exhibits of Mr. Harun Abidin dated 12 th October 2018; and
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ii. That the Plaintiff's do pay the costs of this Application.
In light of the reliance placed by both sides on the history of this matter, I set out for the record the sequence of events in so far as they appear to be material.
On the 2 nd December 2015, a Writ of Summons and Statement of Claim was filed by the Plaintiff against the two Defendants seeking repayment of loans, interest and late fees in the sum of $2,071,240.30.
On the 3 rd December 2015, an ex parte Summons for leave to file out of the jurisdiction was filed by the Plaintiff. This was supported by the First Affidavit of Mr. Melvin Patterson dated 7 th December 2015 which asserted that the Plaintiff has a good case.
On the 8 th December 2015, an ex parte Order was made by the Court granting leave to serve out of the jurisdiction.
On the 14 th January 2016, the Affidavit of Damba Akmala was filed. Mr. Akmala states that he is an Attorney in Indonesia and that personal service was effected on the First Defendant.
On the 22 nd January 2016, an Acknowledgment of Service was filed by Mourant Ozannes on behalf of both Defendants, indicating an intention to defend.
On the 5 th February 2016, the Defendants filed a Summons seeking an extension of time for the filing of a Defence and the making of an application to challenge the jurisdiction of the Court. The basis for the request included difficulty in making contact with the First Defendant who was said to be travelling.
On the 24 th February 2016, the Court extended time by 28 days to 4 th March 2016.
On the 24 th February 2016 a Defence and Counter Claim was filed by the Defendants.
The Plaintiff's Summons filed on the 23 rd February 2016 seeking Judgment under GCR O.19 r. 2 was not proceeded with.
On the 18 th March 2016, the Plaintiff filed a Reply to the Defence and Counterclaim.
On the 18 th April 2016 the Plaintiff filed a Summons seeking an Unless Order re Discovery.
On the 30 th May 2016 the Plaintiff filed a Summons seeking directions for trial and for Further and Better Particulars.
The Parties exchanged lists of documents and responses to Requests for Further and Better Particulars on the 31 st May 2016 and that the Defendants responded to the Plaintiff's request for Amended responses to the Plaintiff's Request for Further and Better particulars on the Defence and Counterclaim on the 5 th August 2016.
On the 4 th August 2016, a Summons was filed by the Defendants seeking leave to file an Amended Defence and Counterclaim. The Amended Defence was attached in draft form. An amendment was made to paragraph 3 of the Defence inserting an admission that the First Defendant's investment account dated 9 th January 2012 with the Plaintiff was designated by the Plaintiff as a “high net worth/sophisticated” investment account.
On the 15 th February 2017, pursuant to the Plaintiff's Summons filed on the 21 st November 2016, a Directions Order was issued by the Court, granting leave to amend, to both parties, and giving directions for trial including as to expert witnesses. The trial was to be set down on the first available date after the 12 th June 2017.
Pursuant to this Directions Order, on the 15 th February 2017, the Plaintiff filed an Amended Writ and Statement of Claim. The primary amendments were as to the high-risk nature of the Plaintiff's business and as to the deposits made by the First Defendant as collateral for the loans.
On the 17th February 2017, the Defendants' Attorneys filed a Summons for an Order of declaration that they had ceased to be the Attorneys on record for the Defendants. That summons was not heard on the first appointed date of 27 th March 2017 and was instead re-listed by Notice of Hearing to the 21 st April 2017.
On the 7 th April 2017, the Plaintiff filed its Summons for the Unless Order which was supported by the First Affidavit of Mr. Rani Jarkas, the Chairman of Cedrus Investments.
On the 12 th October 2018 the Defendants filed the Summons to Set Aside the Default Judgment which was supported by the First Affidavit of the First Defendant, Mr. Abidin,
On the 6 th November 2018 Quality Law Services and TMC Chambers filed a Notice of Appointment as Attorneys for the Defendants.
By the Amended Writ of Summons and Statement of Claim, the Plaintiff states that it carries on investment management business only with sophisticated investors and high net worth individuals.
In January 2012, the Plaintiff was introduced to the First Defendant who is the President, Commissioner and owner of the Second Defendant. In February 2012, the First Defendant deposited over US$12 million worth of securities into a margin account with the Plaintiff as collateral for the loans that he intended to obtain from the Plaintiff.
Between June 2012 and January 2014, the two Defendants entered into promissory notes with the Plaintiff as follows:
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i. US$1 million at 9.75% per annum interest;
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ii. US$300,000 at 12.5% per annum interest with a 6% origination fee;
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iii. AU$500,000 at 10% per annum interest with a 3% origination fee; and
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iv. AU$504,000.00 at 13% per annum interest rate with an 8% origination fee.
Each of the four loans was secured by a lien against the margin account.
Between June 2014 and November 2014, the Defendants entered into various extensions of the promissory notes and in February 2015 a further agreement, whereby the loans were restructured.
By that extension agreement the Defendants agreed that the sum owing was US$2,071,885.02 including interest up to February 2015.
In March 2015 following default of the repayment obligation under this agreement, the Parties entered into a further agreement.
Following additional defaults, the Plaintiff liquidated shares on the First Defendant's margin account, applied them to the loans, interest and various fees and claimed the sum of US$2,071,240.30.
The Defendants in response to the Claim assert that the Plaintiff undertook to provide investment and advisory services to them and owed them a fiduciary duty to act in good faith and in their best interests as well as a duty to exercise reasonable skill and care in the handling of their funds. Further, the Defendants assert that the Plaintiff in breach of its duties, liquidated securities in the First Defendant's brokerage account and failed to render a true, full...
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