Talent Business Investments Ltd Plaintiff/First Counterclaim Defendant v China Yinmore Sugar Company Ltd Defendant/Counterclaim Plaintiff Mr. Zhang Nan Second Counterclaim Defendant
| Jurisdiction | Cayman Islands |
| Judge | The Hon. Anthony Smellie |
| Judgment Date | 22 October 2015 |
| Court | Grand Court (Cayman Islands) |
| Date | 22 October 2015 |
IN CHAMBERS
The Hon. Anthony Smellie, CHIEF JUSTICE
On 24th April 2015 judgment was handed down in relation to the claim and counterclaim in this matter (‘the Judgment’). The Court found in favour of the Plaintiff (‘Talent’) (which is also the First Counterclaim Defendant) and Second Counterclaim Defendant Mr. Zhang Nan, who is the majority shareholder of Talent (‘Mr. Zhang’).
The Judgment requires the Defendant/Counterclaim Plaintiff (‘China Yinmore’) to pay a sum of USD5,663,761.37 to Talent, representing an unpaid dividend from China Yinmore (of which Talent is a minority shareholder) for the year 2011/2012. China Yinmore's counterclaim was dismissed entirely.
The parties have been unable to agree upon the orders that should follow from the Judgment in respect of interest and costs.
Talent and Mr. Zhang contend that the proper orders in these regards should be:
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(a) Interest to be paid on the Judgment at the statutory rate of 2.375% ($368.53 per diem) from 24 May 2012 until the date of payment – 24 May 2012 being the date the cause of action is claimed to have accrued, as will be explained below.
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(b) China Yinmore should pay Talent's and Mr. Zhang's costs of the action to be taxed on the indemnity basis.
China Yinmore's position is explained in the arguments to be unfolded below.
On behalf of China Yinmore, Mr. Imrie raises a preliminary point of pleading by way of objection to Talent's claim for interest. This is that as Talent did not plead its claim for interest in the body of its Statement of Claim (such a claim appearing only in the Prayer to the Statement of Claim), recovery is precluded.
In this regard, Mr. Imrie relies on Order 18 rule 8.4 of the Grand Court Rules which provides:
‘8. (4) A party must plead specifically any claim for interest under Section 34 of The Judicature Law or otherwise and —
(a) the claim for interest must be pleaded in the body of the pleading and should be repeated in the prayer;
(b) the ground or basis on which interest is claimed must be identified precisely; and
(c) wherever possible, the date from which and the rate at which interest is claimed must be stated
Those formalities of pleading were not satisfied. Instead, as already mentioned, Talent made reference to interest only in its prayer in broad terms as follows:
‘AND THE PLAINTIFF claims:
As against the Defendant, payment of USD5,663,761.37 in respect of the Dividend.
Interest upon any sum found due for such period and at such rate as the Court shall think fit….’
Order 18 r8.4 has its genesis in the former Rules of the Supreme Court of England and Wales (‘RSC’) although the RSC was somewhat differently worded, as will be explained below.
The purpose of Order 18 rule 8.4, like all other rules of pleading, is to ensure that the defendant is put fully on notice of the nature of the claim it has to meet.
Among other reasons, such notice may well inform whether a defendant should make an early offer to settle, including by way of a payment into court and how much that payment should be. The risk of an adverse judgment after trial which could include an award of interest, will be an important consideration in deciding whether to make a payment into court.
The rationale of this rule was authoritatively explained by the English Court of Appeal (per Purchas LJ) inWard v Chief Constable of Avon and Somerset (1985) 129 S.J. 527 The Times, 17 July 1985 in these terms (taken from the Appeal Practice at p.3 of the transcript):
‘Para (4) [of the rules] which requires a claim for interest to be pleaded reflects the fundamental principle that the pleading should give fair notice to the opposite party of the nature of the claim which is being made against him, with the relevant facts relied upon, so as to enable him to meet such a claim and to prevent surprise at the trial. Thus, if the defendant has due notice of the plaintiffs intention to seek an award of interest he will know the extent or totality of the plaintiffs claim and he can better calculate what sum, if any, he should pay into Court under 0. 22 r. (8), or what sum he can fairly offer to settle the claim out of Court, or even whether in all the circumstances he should allow the plaintiff to enter judgment in default of pleading’.
The commentary in the notes to the RSC goes on to citeWard v Chief Constable for Avon and Somerset (above) as authority for the proposition that if the claim for interest is not pleaded, the court will not award the plaintiff any interest. See RSC 1999 Ed. Notes at 18/8/19, p.321
But this was not always the state of the law. Until the rules were changed in 1980 in England and Wales, the dictum of Lord Green Mr. delivered on behalf of the Court of Appeal to the effect that the statutory provisions which allowed the court to award interest did not require a claim for interest to be pleaded, prevailed. SeeRiches v Westminster Bank Ltd. [1943] 2 All E.R. 725.
The change in the law as explained in the RSC 1999 Ed. Volume 2 para. 20A – 226:
‘0. 18 r.8(4) requires a claim for interest to be specifically pleaded whether the claim is for interest under S.35A [of the Supreme Court Act 1981] or otherwise, thus negating Riches v Westminster Bank Ltd .’
The notes to the RSC go on to explain (at 18/8/19, p.321) that although it is sufficient that a claim for interest under s.35A of the Supreme Court Act 19811 should appear only in the prayer to a pleading, ‘all other claims for interest, which require the facts and matters in which they depend to be set out must be pleaded in the body of the pleading, and not only in the prayer, though it should also be repeated in the prayer’.
Accordingly, while under the GCR provisions, all claims for interest must be specifically pleaded in the body of the pleading and should be repeated in the prayer, under the RSC, claims for statutory interest needed only be pleaded in the prayer while other such claims requiring of a factual enquiry by the Court, must be pleaded in the body of the pleading and should be repeated in the prayer.
The RSC approach to pleading for statutory interest seems to have been the course adopted by Talent in its pleadings here. As Mr. Dunne explains, what Talent seeks is interest at the statutory rate.
I consider that this state of affairs invites the exercise of the Court's remedial discretion, the existence of which is expressly recognised in the rules themselves. Here, GCR 0.2 r.l is specifically on point and provides, inter alia that:
‘(l) Where, …at any stase in the course of or in connection with any proceedings, there has, by reason of anything done or left undone, been a failure to comply with the requirements of these Rules, whether in respect of time, place, manner, form or content or in any other respect, the failure shall be treated as an irregularity and shall not nullify the proceedings, any step taken in the proceedings, or any document, judgment or order therein. (Emphasis added.)
2) Subject to paragraph (3), the Court may, on the ground that there has been such a failure as is mentioned in paragraph (l) and on such terms as to costs or otherwise as it thinks just, set aside either wholly or in part the proceedings in which the failure occurred, any step taken in those proceedings or any document, judgment or order therein or exercise its powers under these Rules to allow such amendments (if any) to be made and to make such order (if any) dealing with the proceedings generally as it thinks fit. (Emphasis added.)
(3) The Court shall not wholly set aside any proceedings or the writ or other originating process by which they were begun on the ground that the proceedings were required by any of these Rules to be begun by an originating process other than the one employed.’
The words in emphasis identify both the manner in which the rules regard a failure of pleadings of the present kind (that is: as an ‘irregularity’) as well as the remedial orders that the Court might make.
As the notes to the RSC explain (in relation to the equivalent former remedial English rules, at 2/1/3 p.10 of the 1999 Edition):
‘The authorities taken as a whole, show that O. 2 r.1 should be applied liberally in order so far as is reasonable and proper, to prevent injustice being caused to one party by mindless adherence to technicalities in the rules of procedure: but Leal v Dunlop Bio-Process International Ltd . [1984] 1 W.L.R. 874; [1984] 1 All E.R. 207. C.A. and Camera Care Ltd. V Victor Hasselblad AB [1986] 1 F.T.L.R. 348 [1986] 1 F.T.L.R. 348 C.A illustrate situations in which the Court adopts a less liberal attitude where service out of the jurisdiction has been effected irregularly.’
Here the failure to plead a claim for interest in the body of the pleadings even while it is pleaded in the prayer, is the kind of technical irregularity that admits of the more liberal approach to the application of the rules.
The failure has resulted in no prejudice to the defendant that would justify the complete preclusion of the claim and no such prejudice has been articulated by Mr. Imrie. China Yinmore has been on notice of the claim for interest from the outset. The claim is one for interest at the statutory rate on the amount of the damages claimed, itself a liquidated sum.
The failure to plead the claim for interest in the body of the statement of claim was therefore no impediment to China Yinmore's ability to assess whether it should have made a payment into Court or an offer to settle....
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