Murphy and Slutsky v Hacet and Montgomery

• Jurisdiction: Cayman Islands
• Judge: (Williams, J.)
• Judgment Date: 29 October 2019
• Court: Grand Court (Cayman Islands)
• Date: 29 October 2019

MURPHY and SLUTSKY

and

HACET and MONTGOMERY

(Williams, J.)

Grand Court, Civil Division (Cayman Islands)

Civil Procedure — pleading — striking out — principles applied on application to strike out

Held, ruling as follows:

(1) In relation to the “bullying allegation,” the plaintiffs were correct to highlight that only facts must be pleaded and not the evidence upon which those facts were to be proved. It had not been appropriate simply to reproduce the full content of the email from Lacovia’s administrator, especially without any elaboration as to which parts of the email were relevant to a contention that the bullying allegation was true. The allegation was serious. There was a duty on the defendants to inform the plaintiffs with complete frankness the case they had to meet. The defence of justification must be pleaded in a more concise manner with fullparticulars of all the facts and matters relied on in support of the allegation that what was said was true. Reproducing the content of the email and leaving the plaintiffs to try to identify any parts that might be relevant to the truthfulness of an allegation of bullying against each defendant did not amount to proper particularization. Accordingly part of para. 30 of the defence would be struck out, and para. 31. Having regard to the overriding objective, the defendants would be given an opportunity at this early stage of the proceedings to rectify their pleading to properly plead their defence of justification. They should plead the precise meaning said to be true in relation to each plaintiff and particularize the facts and matters relied on in support of the allegation. It should involve providing sufficient detail about what each plaintiff was alleged to have done or said that amounted to intolerable bullying or intimidation (paras. 44–47).

(2) Having regard to GCR O.18, r.19(1)(b) and (c), the court would strike out parts of para. 14 of the defence as they raised irrelevant unrelated allegations of breach of fiduciary duty that did not go to the fraud issue and which could unnecessarily occupy a great deal of court time (paras. 63–66).

(3) Parts of para. 15 of the defence would be struck out as they made an irrelevant allegation of an alleged conflict of interest. What the auditors did was also irrelevant, as was the reference to audit representation letters. The pleading also contained a recital of evidence which was not material to the defence advanced and it was inappropriate to plead the evidence by which facts were to be proved (paras. 69–70).

(4) Part of para. 16 would be struck out as it was irrelevant and was included as part of the background to the defendants’ allegation that the plaintiffs were negligent and/or in breach of fiduciary duty. Paragraph 18 would be struck out in its entirety. It contained irrelevant allegations of serious mismanagement. Paragraph 18 appeared to be designed to create an impression of misconduct by the plaintiffs in a case in which there was no justification defence being put forward. The same objections applied to parts of para. 20 of the defence which contained irrelevant allegations against the plaintiffs. Those parts of para. 20 would be struck out. Part of para. 24 would be struck out as it referred to paras. 18 and 27.10 which had been struck out. Parts of para. 27 would be struck out (paras. 74–76; paras. 78–82; paras. 84–86).

(5) At the present stage, the second defendant’s counterclaim would not be struck out. Further particulars of fact, not evidence, could well be pleaded to further clarify the basis of the counterclaim. The court could not conclude at this stage that the statements could not possibly constitute a slander and that an unsustainable counterclaim was being advanced (paras. 87–90).

(6) The court adopted the following as principles applicable to the consideration of the parties’ submissions in relation to GCR O.18, r.19(1)(a): (i) The court was to assume that the facts pleaded were true(unless they were entirely speculative and without foundation). (ii) The pleading must be clearly untenable in the sense that the court could be certain that it could not succeed. (iii) The jurisdiction was to be exercised sparingly and only in clear cases. (iv) The jurisdiction was not excluded by the need to decide difficult questions of law, even if requiring extensive argument. In relation to GCR O.18, r.19(1)(b), a frivolous pleading was one which trifled with the court’s processes, while a vexatious one contained an element of impropriety. In relation to GCR O.18, r.19(1)(c), pleadings that could cause delay included those that were unnecessarily prolix, scandalous and irrelevant, pleaded purely evidential material (especially if excessively drafted) or were unintelligible. Long-winded, ill-drafted pleadings might defeat the purpose of a statement of claim or a defence and counterclaim to such an extent that it was an abuse of process (paras. 20–24).

(7) The key principles that applied to pleading were as follows: (i) The pleading must be accurate, clear and intelligible. (ii) Sufficient particulars must be given to enable the defendant to be fairly informed of the case to be met. (iii) While adequate particulars were required, the statement of claim must not stray into setting out the evidence relied upon. (iv) Separate causes of action must be separately stated. (v) The effect and not the exact words of a document or conversation should be pleaded. However, where the words used were material, such as in a defamation case, the exact words should be fully pleaded. The need to fairly inform the other party of the case being advanced was particularly important in defamation cases. (vi) The pleading should set out all the elements of the cause of action and the relief sought must be clearly pleaded in respect of each cause of action. Where there were multiple plaintiffs and defendants, the relief sought by each plaintiff against each defendant must be clearly stated. In respect of defences, every allegation of fact made in a statement of claim was deemed to be admitted unless it was expressly traversed by being denied or not admitted. A general denial of allegations or a general statement of non-admission of them was insufficient to traverse them. A denial of an allegation of fact in the statement of claim must go to the root of the allegation and must not be evasive (paras. 29–36).

(8) Defamation cases generally should be strictly confined to those matters which were essential to the proper disposal of the real issues between the parties. That might mean cutting out peripheral matters, the burden of the investigation of which would be disproportionate to their importance. The action should be so structured that a defendant was not prevented from deploying his full essential defence and so that the plaintiff, if successful, would obtain proper vindication upon a proper basis. The parties in the present case wished the trial to be by jury. If so, that would underline the need for clarity, economy and efficiency in identifying the issues. The case should be focused on the real issues between the parties and confined to the evidence which was necessary and proportionate for achieving a fair result. Inclusion of irrelevant andembarrassing material could not be justified on the ground that it was part of the factual matrix (paras. 58–60).

Cases cited:

(1)Basham v. Gregory, English C.A., February 21st, 1996, considered.

(2)Chase v. Newsgroup Newspapers Ltd., [2002] EWCA Civ 1772; [2003] EMLR 11, followed.

(3)Foley v. Ashcroft, [2012] EWCA Civ 423; [2012] EMLR 25, considered.

(4)Jeynes v. New Magazines Ltd., [2008] EWCA Civ 130, considered.

(5)McPhilemy v. Times Newspapers Ltd., [1999] EWCA Civ 1464; [1999] 3 All E.R. 775; [1999] CPLR 533; [1999] EMLR 751, referred to.

(6)Neville v. Fine Art & General Insurance Co., [1897] A.C. 68, considered.

(7)Polly Peck (Holdings) plc v. Trelford, [1986] Q.B. 1000; [1986] 2 All E.R. 84, followed.

(8)Taylor v. Royal Bank of Canada Trust Co. (Cayman) Ltd., 2018 (1) CILR 412, referred to.

Legislation construed:

Grand Court Rules, O.18, r.7(1):

“Subject to the provisions of this rule, and rules 7A, 10, 11 and 12, every pleading must contain, and contain only, a statement in a summary form of the material facts on which the party pleading relies for his claim or defence, as the case may be, but not the evidence by which those facts are to be proved, and the statement must be as brief as the nature of the case admits.”

O.18, r.7(2): “Without prejudice to paragraph (1), the effect of any document or the purport of any conversation referred to in the pleading must, if material, be briefly stated, and the precise words of the document or conversation shall not be stated, except insofar as those words are themselves material.”

O.18, r.19(1): The relevant terms of this sub-rule are set out at para. 17.

The plaintiffs sought damages and an injunction for slander and libel.

The parties were all owners or had an interest in condominium units in the Lacovia Complex (“Lacovia”). The first plaintiff had been a member and chairman of Lacovia’s executive committee until 2015 and the second plaintiff had served as a member of the committee until January 2018. The first defendant was chairman of the committee for a period which included January to May 2018 and the second defendant was a member of the committee for a period including January to May 2018. In January 2018, a report was read out at Lacovia’s AGM. The plaintiffs claimed that the report was published by the defendants. The plaintiffs contended that the report was defamatory of them as it alleged that (a) the plaintiffs had sought to conceal a fraud by Lacovia’s former general manager, which involved the dishonest misappropriation of very large sums of money from Lacovia, because the plaintiffs had been parties to the fraud (“the fraud allegation”); and (b) the plaintiffs had bullied and intimidated Lacovia’s administrator...