I Ltd v A

• Jurisdiction: Cayman Islands
• Court: Grand Court (Cayman Islands)
• Judge: (Harre, C.J.)
• Judgment Date: 01 January 1994
• Date: 01 January 1994

I LIMITED (in liquidation)

and

A and SIX OTHERS

(Harre, C.J.)

Grand Court

Companies-legal proceedings-forum conveniens-in dispute over share ownership, exceptional to decide forum on basis of company”s main operations if international shareholders

Civil Procedure-pleading-amendment-amendment of statement of claim allowed if defendant outside jurisdiction and leave granted under Grand Court (Civil Procedure) Rules, r.13(3) to serve him with amended claim-discretion to grant leave guided by Rules of Supreme Court, O.11, r.1

Civil Procedure-declarations-locus standi of parties-petitioner needs real interest in seeking declaration and respondent needs real reason to oppose it-respondent need only oppose making of declaration and not seek declaration in own favour

Civil Procedure-judgments and orders-declaratory judgment-declaration of non-liability-seldom granted if relates to another existing or prospective action-normally no reason to refuse positive declaration

Civil Procedure-pleading-striking out-court will not hear application to strike out statement of claim where not prompt and involves prolonged, serious argument without likelihood of striking out

Held, granting the plaintiff leave to amend and dismissing the defendants” application:

(1) Pakistan was not a more appropriate forum for the present proceedings since, although they may have been motivated by a desire to control the A Ltd. subsidiaries which were the subject of proceedings in Pakistan, that was their only connection with Pakistan and not all of the parties were involved. In any event, it would be exceptional to decide the forum for an action concerning the ownership of shares on the basis of where the company”s main operations took place (page 184, lines 27–30;page 184, line 42 – page 185, line 9).

(2) The plaintiff would be granted leave to remove F Ltd. as a defendant and to introduce it as a plaintiff under the Grand Court (Civil Procedure) Rules, r.24 since the plaintiff”s allegations of conspiracy were based on the claim that F Ltd. was the rightful owner of the A Ltd. shares (page 185, lines 5–12).

(3) The court accepted that it should only allow the addition of a new claim if it were satisfied that the claim was one in respect of which leave would be granted under the Grand Court (Civil Procedure) Rules, r.13(3) to serve C outside the jurisdiction. In the exercise of its discretion under r.13(3), the court took guidance from the English Rules of the Supreme Court, O.11, r.1. The plaintiff had a real interest in making the claim for the declaration and L and C had real reason to oppose it, since it was fundamental to the conspiracy allegations made against them. Therefore, although L made no direct claim of ownership, it could be duly served with the claim for the declaration, allowing leave to be granted to serve C in Panama in accordance with O.11, r.1(1)(c) (page 185, line 18 – page 186, line 20).

(4) Furthermore, the court had jurisdiction to grant the declaration and, since it was not a negative declaration denying liability in an existing or prospective action based on a positive claim arising out of the same dispute (which were seldom granted), it had no reason to refuse to exercise it. Consequently, leave would be granted to amend the writ and statement of claim to include the claim for a declaration that F Ltd. was the sole beneficial owner of the A Ltd. shareholding or as to the extent of its ownership (page 188, lines 31–37).

(5) The defendants” application to strike out all or part of the statement of claim would fail since it had not been made promptly and would necessitate prolonged and serious argument without the likelihood of any part of the pleadings being struck out (page 187, lines 27–38).

Cases cited:

(1) Guaranty Trust Co. of New York v. Hannay & Co., [1915] 2 K.B. 536; [1914–15] All E.R. Rep. 24, dictum of Pickford, L.J. distinguished.

(2) Harrods (Buenos Aires) Ltd., In re, [1992] Ch. 72; [1991] 4 All E.R. 334, distinguished.

(3) Insurco Intl. Ltd. v. Gowan Co., 1992–93 CILR 445.

(4) Lonrho PLC v. Fayed, [1992] 1 A.C. 448; [1991] 3 All E.R. 303.

(5) Rawson Trust Co. Ltd. v. G.C.T.C. Ltd., 1980–83 CILR 214.

(6) Russian Comm. & Indus. Bank v. British Bank for Foreign Trade, [1921] 2 A.C. 438; [1921] All E.R. Rep. 329, dictum of Lord Dunedin applied.

(7) Saipem S.p.A. v. Dredging VO2 B.V., The Volvox Hollandia, [1988] 2 Lloyd”s Rep. 361.

(8) Vine v National Dock Labour Bd., [1957] A.C. 488; [1956] 3 All E.R. 939; [1956] 2 Lloyd”s Rep. 567.

(9) Waterhouse v. Reid, [1938] 1 K.B. 743; [1938] 1 All E.R. 235, applied.

(10) Williams & Humbert Ltd. v. W. & H. Trade Marks (Jersey) Ltd., [1986] A.C. 368; [1985] 2 All E.R. 208, dictum of Lord Mackay applied.

Legislation construed:

Grand Court (Civil Procedure) Rules, r.13(3):

‘No such process shall be served outside the jurisdiction without leave of the Court. . . .’

Rules of the Supreme Court (England), O.11, r.1(1)(c): The relevant terms of this rule are set out at page 185, lines 28–30.

The plaintiff sought leave to amend its writ and statement of claim and two of the defendants, C and L, applied to strike out all or part of the statement of claim.

The plaintiff alleged that 88% of F Ltd.”s shareholding in A Ltd. had been wrongfully transferred to L who had wrongfully transferred it to a subsidiary of C. It was acknowledged that the plaintiff owned not less that 75% of F Ltd. Some of the parties in these proceedings were also involved in an action started in Pakistan to determine who was entitled to control the business conducted through certain valuable A Ltd. subsidiaries established there and an English court had already made orders in relation to A Ltd. share ownership.

The Cayman proceedings had reached the discovery stage when the plaintiff applied for leave to amend his writ and statement of claim, to have F Ltd. removed as a defendant and added as a plaintiff and to introduce a claim for a declaration that F Ltd. was the sole beneficial owner of A Ltd. or as to the extent of its ownership. C and L also applied to strike out the whole or part of the statement of claim.

The plaintiff submitted that (a) Pakistan was not a more appropriate forum since (i) the proceedings concerning the A Ltd. subsidiaries were the only connection with Pakistan and did not involve all the parties; and (ii) in any event, the forum for an action concerning the ownership of shares should not be decided on the basis of where the company”s main operations took place; (b) leave should be granted to remove F Ltd. as a defendant and to introduce it as a plaintiff under the Grand Court (Civil Procedure) Rules, r.24 since the plaintiff”s allegations of conspiracy were based on the claim that F Ltd. was the owner of the A Ltd. shares; (c) furthermore, leave should be granted to introduce the claim for a declaration because (i) both L and C had real reasons for opposing the declaration since it was fundamental to the...