JM Bodden & Son Intl Ltd v K Bodden

• Jurisdiction: Cayman Islands
• Judge: (Harre, J.)
• Judgment Date: 28 August 1990
• Court: Grand Court (Cayman Islands)
• Date: 28 August 1990

Grand Court

(Harre, J.)

J.M. BODDEN AND SON INTERNATIONAL LIMITED

and

K. BODDEN (as Executrix of the Estate of J.M. BODDEN, Deceased)

E. Grant and K. Collins for the plaintiff;

P. Lamontagne, Q.C. and R. Nelson for the defendant.

Cases cited:

(1) Beddoe, In re, Dowries v. Cottam, [1893] 1 Ch. 547; (1893), 37 Sol. Jo. 99, dicta of Lindley, L.J. applied.

(2) Parkinson (Sir Lindsay) & Co. Ltd. v. Triplan Ltd., [1973] Q.B. 609; [1973] 2 All E.R. 273, applied.

(3) Sandiford v. RobinsonUNK(1976), 28 W.I.R. 48, considered.

(4) Turner v. HancockELR(1882), 20 Ch. D. 303; 51 L.J. Ch. 517, applied.

Legislation construed:

Companies Law (Laws of the Cayman Islands, 1963, cap. 22), s.71: The relevant terms of this section are set out at page 215, lines 32–38.

Succession-claims against estate-indemnification of personal representative-costs-executor entitled to indemnity for proper expenditure out of estate-entitlement does not affect right to seek security for costs in litigation

The defendant in an action brought by the plaintiff company against her in her capacity as executrix of a deceased person”s estate sought security for costs.

The plaintiff alleged that at the request of the deceased it had made certain loans to him, in part as payment to his bank to liquidate his debts and in part as cash advances. It claimed this sum out of the deceased”s estate.

The defendant denied the claim and alleged, inter alia, that as part of a transfer by the deceased of his controlling interest in the plaintiff company to his son, the company agreed not to bring any proceedings against the deceased with respect to any past or future obligations.

Before the hearing of the action and as a consequence of the acknowledged state of the plaintiff”s finances, the defendant sought security for costs under the Companies Law (cap. 22), s.71.

The plaintiff submitted in reply that (a) the defendant”s application was misconceived since the matter was governed by O.85 of the Rules of the Supreme Court and, accordingly, the defendant should apply to be indemnified in respect of her costs out of the estate before any question of security for costs arose; and (b) in any case it could not provide security for costs because it had become short of funds as a direct result of the defendant”s refusal to repay the moneys owed.

Held, dismissing the application:

(1) The general rule was that a trustee was entitled to a full indemnity out of his trust estate against all costs incidental to the execution of the trust as a matter of contract between himself and the settlor but, if he brought or defended an action unsuccessfully and without leave, he would have to show that the costs of the action were properly incurred (page 216, lines 8–33).

(2) However, the right of an executor to be indemnified in respect of his own proper expenditure out of the estate was a different issue from a defendant”s right to recover costs or security for costs from a plaintiff. There was no rule that the executor should first try to obtain indemnity

for his costs out of the estate before applying for security for those costs. In contentious litigation, the executor would normally be in the position of any other litigant with costs in the discretion of the court and usually following the event. Accordingly, on a suitable application, the court could order security for costs in favour of an executor defending an action but, in this case, although the plaintiff was in fact impecunious and there was a risk that the defendant, if successful, might not be able to recover costs, the court would not on balance make the order as it might have the effect of stifling a just cause of action (page 217, lines 18–35; page 218, line 40 – page 219, line 12).

HARRE, J.: The plaintiff company has brought an action by
specially indorsed writ, claiming liquidated sums against the
25	defendant in her capacity as executrix. It sought summary
judgment against her but I granted unconditional leave to defend
on May 11th, 1990 and gave certain directions as to

...