Elliott v CI Health Servs Auth

• Jurisdiction: Cayman Islands
• Court: Grand Court (Cayman Islands)
• Judge: (Sanderson, Ag. J.)
• Judgment Date: 20 April 2007
• Date: 20 April 2007

ELLIOTT

and

CAYMAN ISLANDS HEALTH SERVICE AUTHORITY

(Sanderson, Ag. J.)

Grand Court

Civil Procedure-costs-security for costs-order against non-resident with no assets in jurisdiction restricted to costs of enforcing judgment abroad if (a) defendant”s estimate of costs of action disproportionate to value of claim; (b) significant order would restrict access to courts; _(c) plaintiff has substantial assets in foreign jurisdiction where effective legislation to enforce Cayman judgment at reasonable cost; (d) defen-dant”s case not clearly stronger; and (e) unreasonable delay in defendant”s application

Held, granting the application in part:

(1) The plaintiff would be ordered to provide security for costs of $15,000. This was the court”s estimate of the maximum cost of enforcing a judgment in the United States, based on its experience in enforcing foreign judgments here and Cayman judgments abroad, and took into account that the defendant might have to register any costs order in three different US states. It would not be appropriate to order security for the defendant”s estimates of its total or even future costs (i.e. $505,931 and $150,000 respectively) since these were unreasonably high and disproportionate to the maximum value of the claim, which was likely to be approximately $712,000 (paras. 25–26; paras. 29–30).

(2) The court had considered the following significant factors in determining the amount of the security ordered: (a) the plaintiff”s status as a non-resident with no assets in the jurisdiction was an important, but not a determinative factor, since the court would only make an order under the Grand Court Rules, O.23, r.1(1) against a non-resident plaintiff if it were just in all the circumstances; (b) the plaintiff was entitled to pursue his claim for breach of contract in this jurisdiction, since he had been recruited by the defendant to come to work here and a more substantial costs order might have the effect of restricting his access to the courts; (c) the plaintiff had substantial assets in the United States and there was no evidence that he would attempt to hide them or to resist the enforcement there of any costs order made by this court; (d) legislation in the United States provided a straightforward mechanism to enforce a foreign judgment, which would not result in significant expense to the defendant, and any potential defences were unlikely to present serious obstacles; (e) the additional expense in registering judgments in three different US states was likely to be small; (f) the merits of the case were not an important factor here as without the benefit of full argument, it was

not immediately clear that one party had a much stronger case; and (g) it would be unfair to take account of those costs incurred by the defendant prior to its making the application, given that these were the result of its significant and unexplained delay of over two years (para. 10; para. 28).

Cases cited:

(1) Barclays Private Bank & Trust (Cayman) Ltd. v. McLaughlin, 1998 CILR 313, considered.

(2) De Beer v. Kanaar & Co., [2003] 1 W.L.R. 38; [2002] 3 All E.R. 1020; [2002] CLC 114; [2002] I.L. Pr. 24; [2001] C.P. Rep. 118; [2001] EWCA Civ. 1318, referred to.

(3) Naghshineh v. Chaffe, [2003] N.P.C. 146; [2003] EWHC 2107 (Ch.), referred to.

(4) Nasser v. United Bank of Kuwait, [2002] 1 W.L.R. 1868; [2002] 1 All E.R. 401; [2001] EWCA Civ. 556, referred to.

(5) Porzelack K.G. v. Porzelack (U.K.) Ltd., [1987] 1 W.L.R. 420; [1987] 1 All E.R. 1074; [1987] 2 C.M.L.R. 333; [1987] E.C.C. 407; [1987] F.S.R. 353, referred to.

(6) Somerset-Leeke v. Kay Trustees, [2004] 3 All E.R. 406; [2003] EWHC 1243 (Ch.), referred to.

(7) Thune v. London Properties Ltd., [1990] 1 W.L.R. 562; [1990] 1 All E.R. 972; [1990] B.C.C. 293; [1991] I.L. Pr. 66, referred to.

(8) Weissfisch v. Julius, [2005] EWHC 2746 (Ch.), referred to.

Legislation construed:

Grand Court Rules, O.23, r.1(1): The relevant terms of this paragraph are set out at para. 3.

Health Services Authority Law (2003 Revision), s.12: The relevant terms of this section are set out at para. 11.

Uniform Out-of-country Foreign Money-Judgment Recognition Act, s.55.604: The relevant terms of this section are set out at para. 15.

s.55.606: The relevant terms of this section are set out at para. 17.

The defendant applied for an order requiring the plaintiff to give security for the costs of an action against it for breach of a contract of employment.

The plaintiff, who was ordinarily resident in Florida, came to work for the defendant in the Cayman Islands. He alleged that the defendant repudiated his contract of employment and constructively dismissed him, whereupon he returned to the United States. He brought an action against the defendant for damages for breach of contract of $950,000, although the defendant alleged that under the contract, it could not be liable for more that 75% of that amount. The defendant sought security for costs under the Grand Court Rules, O.23, r.1(1), on the grounds that the plaintiff was ordinarily resident out of the Cayman Islands with no assets here and it would be prejudiced if it were required to go to the United States to recover any costs ordered against him.

The plaintiff submitted that he should not be required to provide security for costs since (a) although his non-residence and lack of assets in the jurisdiction were significant factors, they were not determinative and the court should consider all the circumstances; (b) the defendant was not bound to succeed at trial as it was not clear that the Health Services Authority Law (2003 Revision), s.12 provided an absolute defence to a claim for breach of an employment contract; (c) he would be able to meet any costs from his substantial assets in the United States; (d) legislation in Florida provided a simple mechanism for the recognition and enforcement of a foreign judgment, and he was prepared to sign an undertaking not to raise any of the available defences should an order for costs be made against him; (e) his alleged delay during the proceedings was not significant, whereas the defendant had delayed over two years in

bringing this application, causing both it and the plaintiff to incur substantial costs; and (f) the defendant”s estimate of its costs was excessive as the maximum amount recoverable was $238,000.

The defendant submitted in reply that security for costs should be ordered because (a) the general...