ICIC (Overseas) Ltd v Adham
| Jurisdiction | Cayman Islands |
| Judge | (Zacca, P., Georges and Rowe, JJ.A.) |
| Judgment Date | 10 December 1999 |
| Date | 10 December 1999 |
| Court | Court of Appeal (Cayman Islands) |
(Zacca, P., Georges and Rowe, JJ.A.)
J.H. Malins, Q.C., M. Scott and N.W. Levy for the appellants;
L.F.R. Cohen, Q.C., E.A. McQuater and Mrs. M. Jafa Bodden for the respondents;
C.G. Quin for the receiver of Attock Cement Ltd.
(1) Ash (Claudius), Sons & Co. Ltd. v. Invicta Mfg. Co. Ltd.UNK(1912), 29 R.P.C. 465, dicta of Earl Loreburn, L.C. applied.
(2) Australian Comm. Research & Dev. Ltd. v. ANZ McCaughan Merchant Bank Ltd., [1989] 3 All E.R. 65, distinguished.
(3) Banque de Paris et des Pays-Bas (Suisse) S.A. v. de Naray, [1984] 1 Lloyd”s Rep. 21, applied.
(4) Johnson v. Johnson, 1988–89 CILR 413; on appeal, 1992–93 CILR 250.
(5) National Westminster Bank PLC v. Daniel, [1993] 1 W.L.R. 1453; [1994] 1 All E.R. 156, applied.
(6) R. v. Gough, [1993] A.C. 646; [1993] 2 All E.R. 724, applied.
(7) R. v. HulusiUNK (1973), 58 Cr. App. R. 378, followed. (8) R. v. StephensonUNK(1974), 12 J.L.R. 1681; 22 W.I.R. 458, considered.
(9) Rolled Steel Prods. (Holdings) Ltd. v. British Steel Corp., [1986] Ch. 246; [1985] 3 All E.R. 52, applied.
(10) Royal British Bank v. TurquandENR(1856), 6 E. & B. 327; 119 E.R. 886; 25 L.J.Q.B. 317.
(11) Shephard, In re, Atkins v. ShephardELR (1889), 43 Ch. D. 131; sub nom. Re Sheppard, Atkins v. Sheppard, 59 L.J. Ch. 83.
(12) Smith & Fawcett Ltd., In re, [1942] Ch. 304; [1942] 1 All E.R. 542, considered.
(13) Trendtex Trading Corp. v. Crédit Suisse, [1982] A.C. 679; [1981] 3 All E.R. 520, considered.
Grand Court Rules, 0.2, r.1: The relevant terms of this rule are set out at page 507, lines 7–19.
0.2, r.2(1): The relevant terms of this paragraph are set out at page 523, lines 12–14.
0.5, r.2(b): The relevant terms of this sub-paragraph are set out at page 506, lines 40–41.
Fraudulent Dispositions Act 1991, s.3:
‘(1) With effect from the appointed date this Act shall apply in place of the law in effect prior to the appointed date … save that in any action or proceedings commenced … within six months of the appointed date but in respect of a disposition made prior to the appointed date this Act shall have no application….’
s.4(1): The relevant terms of this sub-section are set out at page 518, lines 5–7.
(3): The relevant terms of this sub-section are set out at page 518, lines 8–10.
Fraudulent Gifts Act 1571 (Statute Law of the Bahamas, 1987, cap. 138), s.1:
‘…[A]ll and every feoffement gyfte graunte alienation bargayne and conveyance of landes tenements hereditaments goodes and catalls or of any of them … to or for purpose before declared and expressed, shalbe from henceforth deemed and taken, onely as againste that pson or psons … whose actions … by such guylefull covenous or fraudulent devyses and practyses as is aforesaid, are shall or mought be in any wyse dysturbed hyndred delayed or defrauded, to be clearely and utterly voyde frustrate and of none effecte; any pretence color fayned consideration expressing of use or any other matter or thyng to the contrary notwthstanding.’
International Business Companies Act 1989 s.9(1): The relevant terms of this sub-section are set out at page 517, lines 17–28.
s.9(2): The relevant terms of this sub-section are set out at page 517, lines 31–32.
s.10(1): The relevant terms of this sub-section are set out at page 517, lines 34–39.
s.53: The relevant terms of this section are set out at page 517, line 43 – page 518, line 2.
Civil Procedure-execution-equitable execution-application in which fraud alleged may be commenced by summons rather than writ if follows finding of fraud at trial-no injustice to judgment debtor, since fraud fully pleaded and discovery made at trial
Civil Procedure-fair trial-bias-judgment may be set aside if real danger of bias, i.e. court”s regarding one party”s case unfairly-unfair if conduct of judge frustrates trial process-duty of counsel to protect client”s interests
The respondents brought proceedings against the appellants for conspiracy to defraud.
The respondents, in liquidation, applied for declarations as to the ownership of shares in various companies and damages for, inter alia, breach of fiduciary duty. Witnesses gave evidence that as part of the conspiracy, the assets of the fourth appellant, a Bahamian company, were transferred from it to a holding company and thence to the sixth appellant, with the intention of defeating the fourth appellant”s creditors. These assets included shares in A Co.
The respondents obtained judgment in proceedings reported at 1996 CILR 89, and damages were assessed under two heads, by the Grand Court and the Court of Appeal respectively. They applied by a summons in the same proceedings for equitable execution of the two judgments in the form of a direction that A Co.”s preservation receiver should rectify its share register to show that the fourth appellant had been the owner of its shares at all times. An execution receiver would then be appointed to realize the assets. The appellants alleged that the transfer of shares from the fourth appellant had been part of a bona fide re-organization of the company, and not part of a dishonest scheme to cheat creditors. The court considered affidavit evidence from witnesses heard in the main proceedings.
The only oral evidence called in the course of the hearing was expert evidence as to the Bahamian law governing transactions by the fourth appellant. The appellants” expert gave evidence that the wording of a
Bahamian statute permitted company directors to take action to preserve the assets of the company even if this had the effect of defrauding creditors. Accordingly, the transfer of assets was not void or voidable at the instance of the company. The trial judge (Graham, J.) interrupted the appellants” expert at various points during the cross-examination on his affidavit, stating that the court had formed a provisional view in favour of the respondents on this issue, that the witness was in danger of committing perjury by expressing false and untenable opinions, and that the court was considering sending a copy of the transcript of the proceedings to the Chief Justice of The Bahamas for the purpose of disciplinary proceedings against him. Graham, J. later interrupted the appellants” counsel in his cross-examination of the respondents” expert, advising him as to how to phrase his questions and dismissing one proposition put to the witness as ‘legal garbage.’
The court dismissed an application for a stay of the proceedings pending the outcome of proceedings by the respondents against the third, fourth and sixth appellants in The Bahamas in which similar issues of law arose. It made orders for equitable execution as sought.
On appeal, the appellants submitted that (a) under the Grand Court Rules, O.5, r.2(b), since the respondents” claim was based on fraud, the equitable execution proceedings should have been commenced by writ, allowing full pleadings and discovery to take place; (b) the proceedings had wrongly been tried on affidavits alone, since the appellants had had no opportunity to cross-examine the witnesses of fact on whose evidence the allegations of fraud rested; (c) the court should have granted a stay of the proceedings to allow the issue of Bahamian law to be determined in the Bahamian Supreme Court, rather than attempting to resolve it here; (d) they had been denied a fair trial by the learned judge”s conduct in (i) interrupting the cross-examination of witnesses, (ii) intimidating their expert, and (iii) indicating an attitude of bias against them; and (e) the issue of law had been wrongly decided on its merits.
The respondents submitted in reply that (a) since the use of a summons to commence the proceedings had not been challenged at the directions stage and had resulted in no injustice to the appellants (the issue of fraud having been thoroughly explored at the original trial), O.2, rr. 1(3) and 2(1) of the Grand Court Rules applied; (b) for the same reasons, the failure to call witnesses of fact other than the experts could not now be challenged; (c) since the Bahamian action was independent of the present proceedings and no date had been indicated for its conclusion, the court had properly declined to grant a stay pending its outcome; (d) the court was at liberty to draw conclusions as to the honesty and validity of opinions expressed by the appellants” expert, and since the appellants” interests had been represented by experienced counsel, they could not now complain about the conduct of the presiding judge; and (e) the issue of law had been correctly decided.
Held, dismissing the appeal:
(1) Although the Grand Court Rules, O.5, r.2(b) required that proceedings alleging fraud be commenced by writ, O.2, r.1(3) proceedings could not be set aside only because the wrong process had been used. In the circumstances of this case, the issue of a summons for equitable execution in the existing proceedings was the correct procedure. No injustice had resulted, since there had already been a full trial at which uncontradicted evidence of fraudulent dealings by the fourth appellant had been heard. Accordingly, the court had properly based its findings on affidavit and documentary evidence. Furthermore, since O.2, r.2(1) required that an application to set aside proceedings for irregularity should be made before the complaining party took any further step, the appellants, who had made no challenge at the proper time, had left it too late to object (page 506, line 39 – page 507, line 45; page 512, lines 14–19; page 522, line 26 – page 523, line 27; page 524, lines 20–40; page 530, lines 16–25).
(2) The court had properly refused to grant a stay of the proceedings pending the outcome of the Bahamian action, since (i) it was undisputed that the Grand Court had...
To continue reading
Request your trial