Tempo Group v Fortuna Dev
Jurisdiction | Cayman Islands |
Judge | (Henderson, J.) |
Judgment Date | 28 September 2011 |
Court | Grand Court (Cayman Islands) |
Date | 28 September 2011 |
(Henderson, J.)
M. Imrie and J. Golaszewski for the plaintiff;
R. Hacker, Q.C. and G. Halkerston for the defendant.
(1) Birkett v. James, [1978] A.C. 297; [1977] 3 W.L.R. 38; [1977] 2 All E.R. 801; (1977), 121 Sol. Jo. 444, dicta of Lord Diplock and Lord Salmon considered.
(2) Duomatic Ltd., In re, [1969] 2 Ch. 365; [1969] 2 W.L.R. 114; [1969] 1 All E.R. 161, followed.
Civil Procedure-pleading-striking out-delay-inherent jurisdiction to strike out pleading for contumelious conduct, e.g. intentional breach of peremptory order, or for inordinate and inexcusable delay likely to cause prejudice or unfair trial-not inordinate and inexcusable when delay of 21 months before commencement of commercial contract/debt claim and 12 months thereafter-by-product of usual exigencies of commercial litigation
Civil Procedure-dismissal for want of prosecution-delay-period of delay excludes time elapsing during stay of proceedings by consent, as implied term of standstill agreements that neither party entitled to rely upon delay occasioned to seek strike-out
The defendant applied to strike out various contractual claims.
The plaintiff was a 30% shareholder in the defendant. The defendant company had been established to further investment initiatives in Vietnam. The majority shareholders of the defendant company, its three directors, passed a resolution to declare a fifth dividend of US$10m., to be paid at a time to be decided by a named director. At the time of his death, the director had not set a time for payment. In June 2004, the plaintiff commenced proceedings for breaches of contract based on causes of action arising up to 21 months before commencement of the claim, including, inter alia, breaches of oral agreement and the failure to pay the dividend. Upon commencing the claim, the plaintiff petitioned to wind up the defendant company on the ‘just and equitable’ ground that the majority shareholders (two of the company”s directors) were acting
oppressively, making improper transactions and failing to pay the dividends that had been declared. One of the directors had died within 3 months of commencement of the claim and another died 19 months later. Documentary evidence survived that recorded and supported this evidence.
Following negotiations, the parties agreed that the majority shareholders would purchase the plaintiff”s shares in resolution of the dispute at a reasonable valuation price, to be determined by independent valuers. They agreed to a consent order staying the proceedings pending the valuation. There followed a long-running dispute as to the independence of the chosen valuers (in proceedings reported at 2007 CILR 349 and 2008 CILR 67), culminating in the dismissal of the plaintiff”s appeal against the striking out of its petition for a winding-up order (reported at 2010 (2) CILR 85). During the litigation, the defendant had twice requested that the stay continue. The directors of the defendant company had, by that time, agreed a sixth dividend of US$30m., to satisfy any liability that might arise to pay the plaintiff the fifth dividend. Upon the dismissal of the plaintiff”s appeal against the dismissal of its winding-up petition, the consent order expired, after a stay that had lasted 6 years and 3 months, and the plaintiff revived its claim, including a claim for 32.33% of the dividends. Twelve months after the stay of proceedings expired, the defendant applied to strike out the statement of claim in whole or in part.
The defendant submitted that the claim should be struck out in whole or in part because (a) the delay in pursuing it before and after commencement, including during the period of the stay, was inordinate, inexcusable, and risked seriously prejudicing the defendant, as its two former directors, who were alleged to have entered into an oral agreement with the plaintiff”s director, had died during the period of delay and would be unavailable to give evidence; (b) the fifth dividend claim should be struck out because it had not been passed by a directors” resolution, the person empowered to declare a date for payment of the dividend had died, and the sixth dividend had extinguished any claim for debt based upon the fifth dividend; and (c) the plaintiff had a 30% share in the defendant and had not demonstrated its 32.33% entitlement to the dividends, which was a frivolous claim.
The plaintiff submitted in reply that (a) the delay in pursuing the claim before and after commencement excluded the period of the stay, which had been by consent and was not inordinate or inexcusable, given the ordinary course of commercial litigation, and did not risk seriously prejudicing the defendant, as sufficient documentary evidence was available to support its defence; (b) the fifth dividend claim should not be struck out, as where a board of directors agreed upon a dividend outside the ambit of a formal directors” meeting their agreement could be treated as a binding resolution of the board; it was arguable that the power to declare a date for payment of a dividend did not cease upon the death of the person empowered to make the declaration, as that power could be exercised by his successor in office; and it was arguable that the fifth
dividend was not extinguished by the declaration of the sixth dividend, as it had been open to the defendant to pay the plaintiff the debt claimed by declaring a further dividend for its benefit; and (c) the plaintiff was entitled to 32.33% of the dividends.
Held, refusing strike-out except on one part of the claim:
(1) It was within the court”s inherent jurisdiction to dismiss an action for delay if the default was intentional or contumelious, e.g. in disobedience to a peremptory order of the court, or if there had been an inordinate or inexcusable delay on the part of the plaintiff which gave rise to a substantial risk either that it would no longer be possible to have a fair trial or that serious prejudice would be caused to the defendant (paras. 4–5).
(2) The delay in the present case had not been inordinate. The action was commenced within 21 months of the earliest cause of action and the overall delay thereafter had been 12 months. The period during which the proceedings had been stayed by the consent order could not be pleaded in support of an application to strike out the claim, as it was an implied term of standstill agreements that a defendant could not rely upon the delay occasioned by them as a justification for striking out the claim (paras. 6–26).
(3) Further, the delay had not been inexcusable. The delay of 21 months before commencement, and 12 months thereafter, was clearly excusable, given the need to investigate aspects of the claim and the usual exigencies of modern...
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Tempo v Fortuna Dev
...claim on the ground of, inter alia, delay. The Grand Court (Henderson, J.) dismissed that application (in proceedings reported at 2011 (2) CILR 252) and, in respect of the dividends which were no longer in dispute, Fortuna consented to a judgment against it for US$6m. Tempo applied for an a......