Lakatamia Shipping Company Ltd v Su

• Jurisdiction: Cayman Islands
• Judge: (Mangatal, J.)
• Judgment Date: 27 June 2017
• Court: Grand Court (Cayman Islands)
• Date: 27 June 2017

Grand Court, Financial Services Division

(Mangatal, J.)

LAKATAMIA SHIPPING COMPANY LIMITED

and

SU

A. Jackson for the plaintiff;

M. Wingrave for the defendant.

Cases cited:

(1) Beatty v. Beatty, [1924] 1 K.B. 807, referred to.

(2) Codd v. Delap (1905), 92 L.T. 510, referred to.

(3) De Cosse Brissac v. Rathbone (1861), 158 E.R. 123; 6 H. & N. 301, referred to.

(4) Garcia Manibardo v. Spain, [2000] ECHR 77; (2002), 34 E.H.R.R. 6, distinguished.

(5) Jet Holdings Inc. v. Patel, [1990] 1 Q.B. 335; [1988] 3 W.L.R. 295; [1989] 2 All E.R. 648, referred to.

(6) Joint Stock Co. “Aeroflot—Russian Airlines” v. Berezovsky, [2014] EWCA Civ 20; [2014] 1 C.L.C. 53, considered.

(7) Masri v. Consolidated Contractors Intl. Co. SAL, 2010 (1) CILR 265, considered.

(8) Merren v. Cayman Natl. Bank, 2008 CILR 428, considered.

Legislation construed:

Grand Court Rules 1995, O.14, r.1:

“(1) Where in an action to which this rule applies a statement of claim has been served on a defendant and that defendant has given notice of intention to defend the action, the plaintiff may, on the ground that the defendant has no defence to a claim included in the writ, or to a particular part of such a claim, or has no defence to such a claim or part except as to the amount of any damages claimed, apply to the Court for judgment against the defendant.”

Cayman Islands Constitution Order 2009 (S.I. 2009/1379), Schedule 2, s.7:

“Everyone has the right to a fair and public hearing in the determination of his or her legal rights and obligations by an independent and impartial court within a reasonable time.”

Conflict of Laws—recognition of foreign proceedings—enforcement of judgment debt—not contrary to public policy or breach of natural justice to enforce judgment of English High Court in circumstances where defendant granted leave to appeal to English Court of Appeal on payment of financial deposit but failed to make necessary payment so that appeal lapsed

The plaintiff applied for summary judgment.

The plaintiff had brought proceedings in the High Court of England and Wales against the defendant and others seeking damages for breach of contract. The English High Court held that the defendant and the associated companies were jointly and severally liable to pay US$37.85m. to the plaintiff and, in a further decision, that they were liable to pay consequential debts amounting to roughly US$10m. and interest.

The defendant sought leave to appeal to the English Court of Appeal, which granted permission on the condition that he lodged US$22m. with the court within two months. The defendant, whose assets were subject to freezing orders, failed to do so and the appeal lapsed.

The plaintiff sought to enforce the English judgments in the Grand Court and sought summary judgment pursuant to O.14, r.1 of the Grand Court Rules. It submitted that (a) the English proceedings were final and conclusive; (b) the defendant had submitted to the English proceedings and was therefore bound by them; (c) as the preliminary requirements of O.14, r.1 of the Grand Court Rules were satisfied, it was for the defendant to establish why summary judgment should not be granted, and if he failed to do so then judgment was to be entered for the plaintiff; and (d) there were no grounds on which to impeach the English proceedings.

The defendant submitted that summary judgment should be refused. He submitted that, as a matter of common law, foreign judgments could be impeached in circumstances where (a) the judgment was obtained by fraud; (b) the foreign court was not competent; (c) the judgment arose in circumstances contrary to natural justice; or (d) it would be contrary to the public policy of the Cayman Islands to recognize or enforce the judgment. First, enforcement of the English judgments would be contrary to public policy as the defendant’s right to a fair trial had been undermined by the requirement to lodge US$22m. with the English Court of Appeal before hecould pursue his appeal. Secondly, the addition of a company, Slagen (a company within the plaintiff’s group of companies), to the English proceedings had been wrongful because the company was dissolved and had been undertaken in order to bolster the plaintiff’s claim. Slagen’s lack of standing had not been disclosed to the English court at the time and it would be contrary to public policy now to enforce the orders in the Cayman Islands. Thirdly, the English judgment against the defendant was founded on evidence attributable to a Mr. Karakoulakis which was misleading or otherwise untruthful or dishonest. No allegation of fraud was made.

Held, granting the application:

(1) The defendant had failed to demonstrate that he had a defence with any real prospect of success. The plaintiff was therefore entitled to summary judgment. The defendant had failed to demonstrate that by reason of the financial condition attached to his permission to appeal to the English Court of Appeal he had been deprived of his right to a fair trial contrary to the principles of natural justice, or in circumstances where recognition of the English judgments would offend Cayman public policy. There was no evidence that the defendant had been impecunious when he sought leave to appeal, or that he sought to have the freezing injunctions varied. There was no evidence that he was not simply unwilling to pay the financial deposit required. There was also no evidence that the defendant had taken steps to pursue the alleged violation of his right to a fair trial before the European Court of Human Rights. It was not unconstitutional generally for financial conditions, even substantial ones, to be attached to permission to appeal (paras. 83–95).

(2) Nor did the Slagen issue raise grounds for impeachment of the English judgment. There was no allegation of fraud against the plaintiff, nor any explanation as to why it was alleged that the plaintiff was itself under a duty to discover and disclose that Slagen was dissolved. More importantly, for reasons of practicality, courts proceeded on the basis that proper procedure had been followed unless the contrary were shown. The Slagen issue was an issue to have been taken and pursued in the English Court of Appeal. There was nothing in this issue that suggested that recognition of the English judgment would be contrary to public policy or that the English judgment was so tainted as to offend against the rules of natural justice. There was no irregularity, as the defendant had been granted a remedy, namely permission to appeal. In the absence of an allegation of fraud and as the defendant had chosen not to pursue his appeal, to allow the defendant to attack the judgment on the ground that it was tainted would be impermissibly to allow a collateral attack on the merits of the English judgment to be brought in the Grand Court (paras. 73–82).

(3) As the defendant did not submit that the English judgments should be impeached for fraud, the matters raised concerning the evidence of Mr.Karakoulakis were irrelevant. Even if the judgment were factually incorrect, that was not a ground for impeaching a foreign judgment. This ground also could not support an assertion that recognition of the judgment would be contrary to the public policy of the Cayman Islands, nor a breach of the principles of natural justice (paras. 66–68).

1 MANGATAL, J.: The application that I heard in January was the plaintiff’s (Lakatamia Shipping Co. Ltd. (“Lakatamia”)) summons seeking that it be granted summary judgment on the whole of its claim pursuant to O.14, r.1 of the Grand Court Rules.

2 I wish to thank counsel on both sides for the quality of their submissions and their patience in awaiting the judgment.Background

3 On August 3rd, 2016, I made an order, pursuant to O.4, r.4(1) of the GCR, that Cause Nos. FSD 142 of 2014 (IMJ) (“the first action”) and FSD 89 of 2016 (IMJ) (“the second action”) be consolidated.

4 In the first action, Lakatamia sought to enforce a judgment in its favour given by the High Court of England and Wales (“the English court”), together with interest.

5 On January 16th, 2015, following the commencement of the first action, a further hearing took place in the English proceedings (defined below) to determine matters consequential upon the trial of the action. The second action was commenced by Lakatamia to enforce the consequential judgment as well as a judgment of the Court of Appeal of England and Wales.

6 The amended statement of claim in the first action pleads that, on March 24th, 2011, proceedings were issued by Lakatamia, as first claimant, against the defendant, Nobu Su (“Mr. Su”), in the English High Court, with Cause No. 2011 Folio 357 (“the English proceedings”).

7 Six companies connected to Mr. Su were joined as second to seventh defendants to the English proceedings. In addition to Lakatamia, there were three other claimants in the English proceedings, but none of those claimants, the pleading states, has obtained a judgment or order from the English court which may be enforced in the Cayman Islands and, accordingly, they do not presently seek to participate in these proceedings.

8 Lakatamia sought in the English proceedings to recover damages from Mr. Su and the other defendants to those proceedings for breach of contract.

9 The English proceedings were deemed served on Mr. Su in accordance with the order of the English court dated January 8th, 2013 and Mr. Su submitted to the jurisdiction of the English court in respect of those proceedings. In particular, Mr. Su participated fully in the English proceedings to contest the claims against him and instructed solicitors and leading and junior counsel to represent him, including at a trial of the substantive merits of the claim. This took place over eight court days in October and November 2014. Mr. Su gave evidence-in-chief by his witness statement and attended the trial for cross-examination.

10 The amended statement of claim pleads that Mr. Su is...