Talent Business Investments Ltd v China Yinmore Sugar Company Ltd

• Jurisdiction: Cayman Islands
• Judge: (Smellie, C.J.)
• Judgment Date: 22 October 2015
• Court: Grand Court (Cayman Islands)
• Date: 22 October 2015

Grand Court, Financial Services Division

(Smellie, C.J.)

TALENT BUSINESS INVESTMENTS LIMITED

and

CHINA YINMORE SUGAR COMPANY LIMITED

N. Dunne for the plaintiff and the second counterclaim defendant;

M. Imrie for the defendant.

Cases cited:

(1) Ahmad Hamad Algosaibi & Bros. Co. v. Saad Invs. Co. Ltd., 2013 (2) CILR 344, considered.

(2) Al Sadik v. Investcorp Bank BSC, 2012 (2) CILR 33, considered.

(3) Asia Pacific Ltd. v. ARC Capital LLC, 2015 (1) CILR 299, considered.

(4) Barrett v. Att. Gen., 2012 (1) CILR 127, referred to.

(5) Bennett v. Att. Gen., 2010 (1) CILR 478, applied.

(6) Nike Real Estate Ltd. v. De Bruyne, 2002 CILR 31, applied.

(7) Rainero v. Cayman Rent-A-Villas, 1994–95 CILR 126, referred to.

(8) Riches v. Westminster Bank Ltd., [1943] 2 All E.R. 725, referred to.

(9) Three Rivers D.C. v. Bank of England, [2006] 5 Costs L.R. 714; [2006] EWHC 816 (Comm), dicta of Tomlinson J. applied.

(10) Ward v. Chief Const. (Avon & Somerset)(1985), 129 Sol. Jo. 527, distinguished.

Legislation construed:

Grand Court Rules, O.2, r.1: The relevant terms of this rule are set out at para. 19.

O.18, r.8(4): The relevant terms of this sub-rule are set out at para. 7.

O.62, r.4(11): The relevant terms of this sub-rule are set out at para. 33.

Civil Procedure—costs—indemnity basis—costs may be awarded on indemnity basis pursuant to GCR, O.62, r.4(11) if losing party abuses process of court by making false allegations of dishonesty against winning party—court to determine whether losing party acted improperly, negligently or unreasonably

Civil Procedure—pleading—matters to be pleaded—failure to plead claim for interest on unpaid dividends in body of statement of claim not to preclude recovery if pleaded in prayer to statement of claim and defendant aware that claim might be made—court may exercise discretion pursuant to GCR, O.2, r.1 to allow proceedings to continue

The plaintiff sought an order that (a) it was entitled to interest on an unpaid dividend; and (b) costs should be awarded against the defendant on the indemnity basis.

The plaintiff successfully claimed in the Grand Court (Smellie, C.J.) that it was entitled to a dividend amounting to US$5.66m., which the defendant had declared but not paid. During the course of the proceedings, a number of dishonest allegations were made by the defendant concerning the plaintiff”s conduct. The parties subsequently failed to agree on costs and the date from which interest on the unpaid dividend should be calculated.

The plaintiff submitted that (a) the cost of the proceedings should be paid by the defendant on the indemnity basis as it had been successful in its claim and the defendant had acted dishonestly by making dishonest

allegations and relying on false evidence; and (b) it should receive interest from the date the dividend was declared, and the claim for interest should not be struck out as its failure to plead the claim in the body of the statement of claim was a technicality which had caused no prejudice to the defendant.

The defendant submitted in reply that (a) it should not be liable on the indemnity basis as it was its president who gave false evidence and acted wrongfully, and his conduct should not be imputed to the company as a whole; and (b) as the plaintiff had only pleaded its claim for interest in the prayer to its statement of claim, and had failed to do so in the body of the statement of claim as required by the Grand Court Rules, O.18, r.8(4), its claim should be struck out as an abuse of process.

Held, granting the orders sought:

(1) Costs would be granted on the indemnity basis pursuant to the Grand Court Rules, O.62, r.4(11) as the defendant had been an active participant in the litigation and had acted fraudulently by making false allegations of dishonesty against the plaintiff, and had therefore inappropriately abused the process of the court. Although the company”s president had attempted to defraud the company itself as well as the plaintiff, the defendant had relied on his and other witnesses” dishonest evidence in its defence and had therefore adopted his actions as its own and based its defence on untrue evidence. Further, it was not possible to dissociate the president”s actions from those of the defendant company as its actions had been directed and controlled by him, and therefore it could be said that the company itself deliberately abused the process of the court. When deciding whether to order costs to be paid on the indemnity basis, the court should determine whether the losing party acted improperly, negligently or unreasonably, and should consider whether it (a) made unfounded allegations of fraud or dishonesty; (b) knew that it had no basis for its claim or defence; (c) relied on false evidence; or (d) advanced a case which was trivial or clearly devoid of merit (paras. 36–37; para. 39; paras. 41–43; paras. 45–47; paras. 52–56).

(2) The failure to plead the claim for interest in the body of the statement of the claim, as required by the Grand Court Rules, O.18, r.8(4), was merely a technicality and would be considered an irregularity. The court would therefore exercise its discretion (as granted by the Grand Court Rules, O.2, r.1) to allow the proceedings to continue, particularly as the defendant had not suffered any prejudice as it was aware that a claim for interest might be made (paras. 19–20; paras. 22–24).

1 SMELLIE, C.J.: On April 24th, 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 the second counterclaim defendant, Mr. Zhang Nan, who is the majority shareholder of Talent (‘Mr. Zhang’).

2 The judgment requires the defendant/counterclaim plaintiff (‘China Yinmore’) to pay a sum of US$5,663,761.37 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.

3 The parties have been unable to agree upon the orders that should follow from the judgment in respect of interest and costs.

4 Talent and Mr. Zhang contend that the proper orders in these regards should be:

(a) Interest to be paid on the judgment at the statutory rate of 2.375% ($368.53 per diem) from May 24th, 2012 until the date of payment—May 24th, 2012 being the date the cause of action is claimed to have accrued, as will be explained below.

(b) China Yinmore should pay Talent”s and Mr. Zhang”s costs of the action to be taxed on the indemnity basis.

5 China Yinmore”s position is explained in the arguments to be unfolded below.

Interest should be pleaded properly

6 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.

7 In this regard, Mr. Imrie relies on O.18, r.8(4) of the Grand Court Rules, which provides:

‘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.’

8 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:

1. As against the defendant, payment of US$5,663,761.37 in respect of the dividend.

2. Interest upon any sum found due for such period and at such rate as the court shall think fit . . .’

9 Order 18, r.8(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.

10 The purpose of O.18, r.8(4), like all other rules of pleading, is to ensure that the defendant is put fully on notice of...