Nike Real Estate Ltd v De Bruyne

• Jurisdiction: Cayman Islands
• Judge: (Kellock, Ag. J.)
• Judgment Date: 23 January 2002
• Court: Grand Court (Cayman Islands)
• Date: 23 January 2002

Grand Court

(Kellock, Ag. J.)

NIKE REAL ESTATE LIMITED

and

DE BRUYNE, DE CUYPER and INTERNATIONAL RELOCATION GROUP LIMITED

D. MacF. Murray for the plaintiff;

Cases cited:

(1) Andrews v. BarnesELR(1888), 39 Ch. D. 133; 57 L.J. Ch. 694, referred to.

(2) Berkeley Admin. Inc. v. McClelland, [1990] F.S.R. 565, considered.

(3) Bir v. Sharma, The Times, December 7th, 1988, unreported, followed.

(4) Bonotto v. Boccaletti, 2001 CILR 292, followed.

(5) Burgess v. Stafford Hotel Ltd., [1990] 1 W.L.R. 1215; [1990] 3 All E.R. 222, considered.

(6) Cepheus Shipping Corp. v. Guardian Royal Exchange Assur. PLC, [1995] 1 Lloyd”s Rep. 647, followed.

(7) Disney v. Plummer, [1991] F.S.R. 165n, dicta of Kerr, L.J. applied.

(8) Macmillan Inc. v. Bishopsgate Inv. Trust PLC, Queen”s Bench Division, 1994, unreported, dicta of Millett J. applied.

(9) Munkenbeck & Marshall v. McAlpineUNK(1995), 44 Con. L.R. 30; [1995] E.G.C.S. 24, referred to.

Civil Procedure-costs-costs as damages-no power to award as damages costs unrecovered under party and party costs order-different restrictions apply to awards of costs and damages

Civil Procedure-costs-indemnity basis-available in exceptional circumstances when unsuccessful party has abused process of court, e.g. deliberately misleading court by giving false evidence

The plaintiff applied for its costs on an indemnity basis following successful proceedings against the defendants.

The plaintiff obtained summary judgment against the defendants on the basis that it had been induced by fraudulent misrepresentations (for which the third defendant was responsible) to enter a contract to purchase land from the first and second defendants. The court granted a declaration that the plaintiff had properly rescinded the contract, and awarded damages against all three defendants. It found that the witnesses, including the second defendant and an employee of the third defendant, had colluded in giving false evidence. The plaintiff applied for its costs on an indemnity basis.

It submitted that (a) the costs of bringing proceedings to recover its losses were recoverable as a head of damages directly resulting from entering the contract; (b) accordingly, if costs were awarded on the standard basis only, it could recover the remainder of its costs as damages; and (c) even if litigation costs could not be recovered as damages, the court had jurisdiction to award indemnity costs where, as here, the

unsuccessful party had acted dishonestly and sought to mislead the court in the conduct of its case.

The defendants submitted in reply that (a) the plaintiff could not recover as damages any costs it had incurred which the court declined to award against them; (b) although the court had jurisdiction to award indemnity costs, it would do so only in exceptional circumstances, where the unsuccessful party had engaged in dishonest conduct amounting to an abuse of the process of the court, such as forging or fabricating evidence; and (c) they were not guilty of an abuse of process merely by conducting their case aggressively or by reason of the fact that the court had chosen to accept the plaintiff”s version of events above theirs.

Held, awarding costs on the indemnity basis:

(1) The plaintiff was not entitled to recover as damages the unrecovered costs of its action against the defendants. Litigation costs were awarded on a more restricted basis than damages and the principles applicable to damages did not apply to them. Party and party costs were limited by statutory tariffs and were intended to give only a partial indemnity (paras. 7–8).

(2) Indemnity costs could be awarded in the court”s discretion if an unsuccessful party had acted in such a way as to abuse the process of the court. Although conduct amounting to abuse for other purposes might not suffice for the purposes of an indemnity costs order, a party who urged the court to accept as truth a case in which it had no genuine belief would be guilty of such an abuse (para. 15; para. 18)

(3) The court would exercise its discretion to award the plaintiff its costs on an indemnity basis, since the defendants had not only induced the plaintiff”s principal to buy the relevant property by making deliberately false representations, but had then colluded in lying to the court to excuse their failure to disclose vital documents to the plaintiff. These were exceptional circumstances in which the defendants had abused the process of the court (paras. 24–30).

R.D. Alberga, Q.C. and Mrs. L.D. DaCosta for the first and second defendants; Ms. K.M. Thompson for the third defendant.

1 KELLOCK, Ag. J.: On December 31st, 2001 I granted judgment in favour of the plaintiff affirming the rescission of a contract for the purchase by the plaintiff from the first and second defendants of a commercial property in George Town known as the Sage Building. This result followed a finding that the plaintiff had been induced to enter into the contract of purchase and sale by fraudulent misrepresentations, for which the third defendant was largely responsible. The judgment resulted from three applications for summary judgment, one on behalf of the plaintiff, one on behalf of the first and second defendants, and one on behalf of the third defendant.

2 In addition to a declaration that the plaintiff had properly rescinded the contract, the judgment awards damages against all three of the defendants. During the argument of the applications it became apparent that no useful purpose would be served by a trial of the action and I was invited to dispose of it. The judgment is...