(1) Jasdip Ltd v (1) Sea Breeze Hills Development Company Ltd

• Jurisdiction: St Lucia
• Judge: Sandcroft, M.
• Judgment Date: 10 June 2020
• Judgment citation (vLex): [2020] ECSC J0610-2
• Court: High Court (Saint Lucia)
• Docket Number: Claim Number: SLUHCV2019/0276
• Date: 10 June 2020

[2020] ECSC J0610-2

EASTERN CARIBBEAN SUPREME COURT

IN THE HIGH COURT OF JUSTICE

(CIVIL)

Claim Number: SLUHCV2019/0276

Between:

(1) Jasdip Limited

(2) David Jackson

Claimants/Respondents

and

(1) Sea Breeze Hills Development Company Limited

(2) Cap Estate St. Lucia Limited

Defendants/Applicants

Appearances:

Ms. Patricia Augustin of Counsel for the Claimants/Respondents

Mr. Dexter Theodore Q.C. and Ms. Sueanna Frederick of Counsel for the Defendants/Applicants

Introduction

1 Sandcroft, M. [ Ag.]: The matter before the Court is an application for strike out by the Defendants/Applicants who submit that the claim should be dismissed as having disclosed no cause of action as against the 2 ^nd defendant. The application was vehemently resisted by the Claimants/Respondents.

2 The settled legal position in respect of striking out a statement of case is found in S & T Distributors Limited and S & T Limited v. CIBC Jamaica Limited and Royal & Sun Alliance SCCA 112/04, delivered 31st July, 2007, a decision of the Court of Appeal in which Harris, J.A. said at page 29:

“The striking out of a claim is a severe measure. The discretionary power to strike must be exercised with extreme caution. A court when considering an application to strike out is obliged to take into consideration the probable implication of striking out and balance them carefully against the principles as prescribed by the particular cause of action which sought to be struck out. Judicial authorities have shown that the striking out of an action should only be done in plain and obvious cases.”

3 In Drummond Jackson v British Medical Association and Others [1970] 1 WLR 688, Lord Pearson said at page 695 that:

“Over a long period of years it has been firmly established by many authorities that the power to strike out a statement of claim as disclosing no reasonable cause of action is a summary power which should be exercised only in plain and obvious cases.”

4 The Rules declare that its overriding objective is to empower the court to save time and costs by dealing with matters expeditiously. If there are no reasonable grounds for bringing an action, the court ought to strike it out, pursuant to rule 26.3(1) (b).

5 The claimants are not required, for the purpose of these proceedings to particularize how the companies, the defendants, have wronged them; they simply rely on the claim that the defendants have breached their duty to the 1 ^st claimant as a share-holder of the 1 ^st defendant. The claimants are not making a claim based on fraud but are mounting a claim based on breach of duty. Both sides have raised triable issues which may require a hearing.

6 The test for summary judgment is whether the respondent has a case with a real prospect of success, which is considered having regard to the overriding objective of dealing with cases justly.

7 The dicta of Lord Wolfe in Swain v Hillman [2001] 1 All ER 91 provides guidance on how a judge should exercise his discretion in deciding whether or not to grant summary judgment. In assessing the provisions of Part 24 of the Civil Procedure Rules of the United Kingdom, which are similar to Part 15 of the Civil Procedure Rules of the Eastern Caribbean States, Lord Wolfe MR enunciated at paragraph 7 of that decision:

“It enables the court to dispose summarily of both claims and defences which have no real prospect of being successful. The words ‘no real prospect of succeeding’ do not need any amplification, they speak for themselves. The word ‘real’ distinguishes fanciful prospects of success … they direct the court to the need to see whether there is a ‘realistic’ as opposed to a ‘fanciful’ prospect of success.”

At paragraph 14 he continued:

“It is important that a judge in appropriate cases should make use of the powers contained in Part 24. In so doing he or she gives effect to the overriding objectives contained in Part 1. It saves expenses; it achieves expedition; it avoids the court's resources being used up on cases where this serves no purpose and I would add, generally that it is in the interest of justice.”

Background/Chronology

8 The 1 ^st defendant is a company incorporated by the 2 ^nd defendant on or about the 5 ^th day of August 2005 for the purposes of maintaining the viability of the “Development” known as Sea Breeze Hills Development Limited, with the intention that the 1 ^st defendant would have the responsibility for repair and maintenance of common areas, garbage collection, pest control and all incidents incurred in the normal course of property maintenance.

9 The 2 ^nd defendant is a land development Company which developed 29 lots in a “Development” known as Sea Breeze Hills Development, of which it has sold lots to various land owners.

10 On or about 3 ^rd June 2008 the 1 ^st claimant, acting and represented by the 2 ^nd claimant purchased two lots from the 2 ^nd defendant, as a result of which the 1 ^st claimant was given two shares in the 1 ^st defendant and consequently the 1 ^st claimant is a shareholder of the 1 ^st defendant.

11 The claimants/respondents commenced proceedings claiming breach of duty owed by the defendants/applicants. The 1 ^st claimant is a shareholder of the 1 ^st defendant company; the 1 ^st claimant was represented by the 2 ^nd claimant in the purchase of two lots from the 2 ^nd defendant as a result of which the 1 ^st claimant was given two shares in the 1 ^st defendant.

12 The claimants/respondents requested of the 1 ^st defendant that they view several documents in its possession and that the 2 ^nd defendant, being the agent of the 1 ^st defendant and custodian of the records, and transacting business on behalf of the 1 ^st defendant, legally had in its possession all the documents relating to the business of the 1 ^st defendant.

13 The claimants/respondents stated that notwithstanding the continued request for records from the 2 ^nd defendant, the defendants/applicants had failed and or refused to provide to the 1 ^st claimant and or the 2 ^nd claimant the records of documents relating to the business of the 1 ^st defendant.

14 As a result of the failure of the defendants to provide the claimants with the records requested and access to the said records and documentation relating to the business of the 1 ^st defendant, the claimants brought a claim on the basis that the defendants were in breach of their duty to the 1 ^st claimant as a shareholder of the 1 ^st defendant.

15 By further Court Order dated 25 ^th May 2020, the parties were instructed to file legal submissions on sections 58, 97, 177,187, 190 and 238 through 244 of the Companies Act of St. Lucia (hereinafter referred to as “The Companies Act”) and their application in relation to the application to strike out filed by the 2 ^nd defendant on January 22, 2020.

2 ^nd Defendant's/Applicant's Submissions

16 Counsel for the 2 ^nd defendant/applicant, Mr. Dexter Theodore Q.C. argued that:

• i. The claimants/respondents had no real prospect of succeeding on the claim and that the claim did not disclose any reasonable cause of action.

• ii. The matter in dispute is a matter of law. The claimants had no locus standi to bring the claim against the 2 ^nd claimant in that neither the 1 ^st nor the 2 ^nd claimants are members of the 2 ^nd defendant.

• iii. The Amended Statement of Claim disclosed no reasonable ground for bringing the claim for breach of duty against the 2 ^nd defendant by the said claimants, neither of whom was a shareholder of the 2 ^nd defendant.

• iv. The Amended Statement of Claim disclosed no reasonable ground for bringing the claim, in that since the Claimants alleged that the 2 ^nd defendant was the agent of the 1 ^st defendant, any cause of action that existed can only exist against the 2 ^nd defendant's principal, Sea Breeze Hills Development Ltd, the 1 ^st defendant and not the 2 ^nd defendant.

17 Mr. Theodore Q.C. also submitted inter alia that the law was clear as to the distinction between the summary judgment rule and the strike out rule. The summary judgment rule, while not to be a mini-trial, is a determination on the issue before the court. The issue before this Honourable Court was whether there was a breach of duty by the 2 ^nd defendants on the face of the pleadings that would create a reasonable prospect of succeeding if this claim were to proceed.

18 Mr. Theodore Q.C. further contended inter alia, that the pleadings before this court were deficient; the particulars of breach in the claim stated that the defendants/applicants had breached their duty to the 1 ^st claimant as a shareholder. Notwithstanding this complaint, there were no obligations that the 2 ^nd defendant had under any alleged agency relationship with the 1 ^st defendant, which would have been owed to the 1 ^st defendant and not to the claimants. Therefore, it would be the 1 ^st defendant which would have the legal standing to institute those proceedings and not the claimants as in this case. Hence, the claimants had no locus standi to institute the claim against the 2 ^nd defendant because there was no relationship of agency existing between the claimants and the 2 ^nd defendant.

19 Mr. Theodore Q.C. also posited that the essence of the claimants'/respondents' case is that there was a breach of duty owed to the 1 ^st defendant based on a purported agency arrangement; where the 2 ^nd defendant was alleged to have been the agent of the 1 ^st defendant. The claimant's position was not complex on the law or the facts. The essence of the case is for the court to determine whether this claim rises to the level of creating a reasonable prospect of winning at trial.

20 Counsel further posited that the ground for the application to strike out the claim against the 2 ^nd defendant was that the claimant lacked locus standi to bring a claim against the Second Defendant as (1) neither claimant is a member nor shareholder of the 2 ^nd defendant, and (2) any obligations arising...