1. Tibor Hollo 2. Hank Thomas 3. St. Lucia Federal Development Corporation Ltd Plaintiffs v 1. Grande Anse Beach Company Ltd 2. Eric Lawaetz Defendants [ECSC]
| Jurisdiction | St Lucia |
| Judge | Farara J |
| Judgment Date | 07 November 1997 |
| Judgment citation (vLex) | [1997] ECSC J1107-4 |
| Date | 07 November 1997 |
| Court | High Court (Saint Lucia) |
| Docket Number | SUIT NO: 1113 OF 1996 |
IN THE HIGH COURT OF JUSTICE
(CIVIL)
A.D. 1997
SUIT NO: 1113 OF 1996
In this action, commenced by writ of Summons indorsed with Statement of Claim on 23rd December, 1996 the Defendants have by Summons filed 13th June, 1997 applied for an order that the Plaintiffs provide security for their costs of this action, on the basis that -
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(1) the First and Second Plaintiffs are ordinarily resident outside of the jurisdiction;
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(2) the Third Plaintiffs address is not stated in the Writ of Summons or other originating process; and
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(3) the Third Plaintiff will be unable to pay the Defendants' costs in the event that they are successful after a trial.
The Defendants also sought in their summons an order, at this stage, which is tantamount to an "unless order", that if the Plaintiff fail to provide the security within the period ordered, the action be dismissed. In keeping with well established principles, I will not, if the Defendants application is successful, make such an order at this stage. (SeeLa Grange v Mc Andrew (1879) 4 QBD 210 cited by Counsel for the Defendants/Applicants).
The application for security for costs is supported by the first affidavit of Robert Sundborg, made as attorney for the First and Second Defendants and company secretary of the Third Defendant.
In paragraph 2 of Mr. Sundborg's first affidavit he deposes, and it not disputed, that the First and second Plaintiffs are ordinarily resident outside the jurisdiction. This is manifest on the face of the writ.
In paragraph 3 of Mr. Sundborg's first affidavit, he alleges that from his personal knowledge and information received the Third Plaintiff will be unable to pay the Defendants' costs. Section 548 of the Companies Act 1996 empowers a court to order a Plaintiff company to provide security for the Defendant "if it appears from credible testimony that there is reason to believe that the company will be unable to pay the costs of the defendant if successful in his defence", In support of his allegation Mr. Sundborg advances» in five (5) sub-paragraphs, what amounts in substance, to three (3) grounds.
The first ground is that he was informed by the Second Plaintiff, that the First and Second Plaintiffs are the only shareholders of the Third Plaintiff company (which is not denied by the second Plaintiff in his affidavit filed 25th June, 1997), and from a search at the Registry of companies, no list of directors or other officers of the Third Plaintiff Company has been filed.
Learned Counsel for the Defendants submitted that if the shareholders of the Third Plaintiff owe substantial debts the said company is unlikely to be solvent. We have no evidence whatsoever as to the means or indebtedness of the First Plaintiff. The evidence adduced as to the Second Plaintiffs indebtedness will be examined and assessed in the foregoing passages.
The second ground advanced as to the insolvency of the Third Plaintiff, is that there is a judgement of the High Court of Justice [St. Lucial filed against the Second Plaintiff which remains unsatisfied.
Although this allegation has not been addressed at all by the Second Plaintiff in his affidavit, neither the suit number or the name of the parties thereto were provided to the court, and, so this allegation goes unsubstantiated and must be wholly discounted. in any event the impecuniosity of a shareholder/director of a company does not necessarily, without more, mean that the company is insolvent or unlikely to be in a financial position to pay the costs of a successful defendant.
The third ground as to the Third Plaintiffs insolvency is based on an article published in the 24th November, 1996 edition of the St. Lucia Mirror Newspaper (Exhibit A), to the effect that the Second Plaintiff is indebted to various creditors in St. Lucia in an aggregate sum of $1,300,000.00, and no article has appeared in any newspaper circulating in St. Lucia or other media that these debts "are still due and owing".
There is an obvious slip by the drafter in the omission from the excerpt of the word "not". However, no further evidence of this indebtedness has been produced to me and I do not attach much, if any, weight to the newspaper article in the absence of additional evidence. Furthermore, the Second Plaintiff in hisaffidavit filed 25th June, 1997 seems to categorize any sums owed to creditors as debts of the "The Jupiter Group", of which he was president and Mr. Sundborg an employee and local adviser, and he states, further, that the Jupiter Croup debts in St. Lucia total $159,550.00 incurred mainly for construction work done on Grande Anse Estate (the property the subject of the Agreement for sale dated 13th June, 1995). This amount is confirmed by the correspondence passing between the lawyers for the parties exhibited to Mr. Sundborg's second affidavit filed 23rd October, 1997. it seems that the Jupiter Croup is being treated by the Plaintiffs as the alter ego of the Third Plaintiff.
At paragraph 4 of his first affidavit Mr. Sundborg deposes that he was informed by Henry Isidore (the person to whom the Third Plaintiff is indebted), that the monies owing to him was delivered to the Second Plaintiff for and on behalf of the Third Plaintiff. This allegation is unclear to say the least and may be wholly irrelevant. While it may be referring to the sum of $56,793.00 admittedly owed by the Third Plaintiff to Henry Isidore, it is unclear as to when and who provided or delivered to the Second Plaintiff monies for payment of the said debt and whether same was or was not paid over to Mr. Isidore, In any event, of what relevance is this to the alleged insolvency of the Third Plaintiff or the Defendants application for security for costs.
At paragraphs 5 and 6 of his first affidavit, Mr. sundborg asserts, based on advise received, that the Plaintiffs' claim against the Defendants is a sham and has no reasonable chance of success. I do not agree with this statement as I am firmly of the view, for the reasons given later in this judgement, that there is a serious issue for trial.
The statement at paragraph 9 of Mr. Sundborg's first affidavit that the Plaintiffs have no assets or property in St. Lucia, is not denied and has been established to my satisfaction.
The second Plaintiff in his affidavit filed 25th June, 1997 does not address at all several of the allegations in Mr. Sundborg's first affidavit. However, at paragraph1, he deposes that the Plaintiffs treated the Defendants request for security for security for costs "as a ploy intended to divert the Plaintiffs from the pursuit of their claim, since the Defendants were aware that the Plaintiffs claim for improvements to the estate were far in excess of any costs that the Defendant might incur in the remote possibility of the Plaintiffs claim for specific performance not being granted". And at paragraph 8 he states "while the Plaintiffs are not normally resident in St. Lucia their potential claim for damages as referred to in paragraph 7 above makes this an unsuitable case for a request for security for costs to be granted".
I treat these statements as, in substance, an assertion that based upon the strength of the Plaintiffs...
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