David Shimeld and Others v Doubloon Beach Club Ltd
| Jurisdiction | St Lucia |
| Judge | RAWLINS, J.A.,Hugh A. Rawlins,Justice of Appeal |
| Judgment Date | 23 March 2007 |
| Judgment citation (vLex) | [2007] ECSC J0323-3 |
| Docket Number | CIVIL APPEAL NO.33 OF 2006 |
| Court | Court of Appeal (Saint Lucia) |
| Date | 23 March 2007 |
IN THE COURT OF APPEAL
The Hon. Mr. Hugh A. Rawlins Justice of Appeal
CIVIL APPEAL NO.33 OF 2006
Mr. Peter I. Foster, with him Ms. Renee St. Rose for the Intended Appellants/Applicants
Mrs. Kim St. Rose, with her Mr. Levi Herelle for the Respondent
The applicants in these proceedings applied for leave to appeal against a judgment of a judge of the High Court. In that judgment, the learned judge dismissed an application by the applicants for an order that the respondent, Doubloon Beach Club Limited,1 should be required to give security for their costs in the substantive proceedings on Doubloon's claim against them. The learned
judge consequentially dismissed the application by the applicants to stay the proceedings until Doubloon entered security for their costs. The application for leave to appeal will be considered against a brief background to the case. First, however, I shall set out the relevant provisions upon which the application for security was made.In St. Lucia, there are 2 basic provisions which govern applications for security for costs in relation to companies. Section 553 of the Companies Act2 states:
"Where a company is a plaintiff in any action or other legal proceeding any judge having jurisdiction in the matter may, if it appears by 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 or her defence, require sufficient security to be given for those costs and may stay all proceedings until the security is given."
Additionally, there is rule 24.3 of the Eastern Caribbean Supreme Court Civil Procedure Rules 2000.3 It states that the Court may make an order for security for costs under rule 24.2 against a claimant only if the court is satisfied, having regard to all the circumstances of the case that it is just to make such an order, and that any of the stated criteria listed subparagraphs of the rule are met. The applicants relied on 2 of the criteria set out in rules 24.3(d) and 24.3(f) of CPR 2000. Under rule 24.3(d), the court may order a claimant company to give security for costs where the claimant is acting as a nominal claimant, other than as a representative claimant under part 21 of CPR 2000, and there is reason to believe that the claimant will be unable to pay the defendant's costs if ordered to do so. Under rule 24.3(f), the court may order a claimant company to enter security for costs if that company is an external company. It is clear from these provisions that the jurisdiction of the High Court to order a claimant to enter security for the costs of a defendant is discretionary.
Doubloon is the claimant in the substantive claim for specific performance of an agreement into which the parties entered on 16th April 2003. By that agreement, the applicants contracted to sell the shares which the 2nd to 6th applicants hold in property to Doubloon. These 5 applicants and David Shimeld, the 1st applicant, are the defendants in the substantive claim. David Shimeld is the director of the 2nd to 6th applicants.
The High Court had granted an injunction to Doubloon restraining the applicants from dealing with the properties which are the subject of the case. The applicants state in their defence that the agreement is void because Doubloon was not able to fulfill its obligation to complete the purchase of the shares under the sale agreement on the due date. Doubloon, on the other hand, stated that they were ready, willing and able to fulfill the obligation and had already paid US$100,000.00 to the applicants.
The case came before the Master for case management conference. She made a case management order on 5th December 2005. This was the same date on which the applicants applied for an order that would require Doubloon to pay $130,000.00 into court as such security for their costs. They calculated this on a prescribed costs basis on the claim.
In relation to the ground that Doubloon is an alien company with 100% of alien shareholders, David Shimeld stated in the affidavit in support of the application, that he carried out a search of the Companies and Land Registry. From this he determined that Doubloon is registered in St. Lucia as an external company with 2 directors who are not citizens of St. Lucia. According to Mr. Shimeld, he alsofound that Doubloon has 2 shareholders. One is Doubloon International Limited,4 a company registered in the British Virgin Islands. In the statement of claim Doubloon referred to this company as its parent company. The other shareholder is a company that is registered in Paris, France. Doubloon International, according to Mr. Shimeld, is also an alien company, and Doubloon was used in the agreement for sale to purchase the applicants' shares.
On this ground, the learned judge held, quite correctly, in my view, that the applicants did not discharge their burden to prove that Doubloon is an external company.5 In this regard, the judge found that the evidence adduced by the applicants showed that although Doubloon is a subsidiary of Doubloon International, which is an alien and an external company, Doubloon is itself registered in St. Lucia and is therefore not an external company under rule 24.3(f) of CPR 2000.6 It is important to note that section 551 of the Companies Act defines an external company as "any firm or other body of persons, whether incorporated or unincorporated, that is formed under the laws of a country other than St. Lucia". Doubloon is not an external company on this definition. This is therefore not a live ground for the purpose of the application for leave to appeal.
On the second ground —that Doubloon is a nominal claimant — the applicants stated that Doubloon is a shell company with no assets in St. Lucia except a 50 year lease of the Queen's Chain from the government, which is currently the subject of a court action. In his affidavit in support, David Shimeld stated that a copy of the Land Register for the Queens Chain is dated 23rd September 2005 and the lease agreement was executed on 25th April 2005. The applicants also stated in the application that Doubloon earns no income and does not trade or carry on business in St. Lucia or elsewhere, and, therefore, will not be able to pay their costs if they prevail at the trial.
The applicants insist that Doubloon did not adduce any evidence to show that they would be able to meet the applicants' costs. However, the burden is not on Doubloon to adduce evidence to show that they would be able to meet the applicants' costs. The burden is upon the applicants to prove, by credible testimony, as section 553 of the Companies Act and rule 24.3(d) of CPR 2000 require, that Doubloon is a nominal claimant and there is reason to believe that Doubloon will not be able to pay the applicants' costs. In this regard, the decision by the learned judge that the applicants have not proved these matters has given me some pause. The applicants insist that the judge erred because in arriving at this decision she did not properly take into consideration, or at all, a letter which was written to an associate company of Doubloon by which that associate company offered to guarantee Doubloon's costs. I shall consider whether there is ground on which I may send this issue to the full court to review the judge's exercise of discretion against the applicable principles upon which I may permit this course of action to be taken.
The judgment from which the applicants seek to appeal is an interlocutory judgment. Section 26(2)(g) of the Eastern Caribbean Supreme Court (St. Lucia) Act7 provides that any person who wishes to appeal against an interlocutory judgment or order of a judge must first obtain leave. This application does not fall under any of the matters that are exempted from this provision. It is trite principle that leave will be granted if the appeal has a realistic prospect of succeeding or if there are other compelling reasons why the appeal should be heard, as long as there is no inordinate delay in making the application and the respondents will not suffer substantial prejudice.
The application for leave was made in a timely manner. Counsel for Doubloon submitted that Doubloon will suffer substantial prejudice because the actual trial of the case is fixed for dates in April 2007 and the applicants have not applied to stay the trial pending the outcome of the appeal proceedings. However, if leave to appeal is granted on the ground of realistic prospect or compelling reason, I shall attempt to fix the hearing before the full court on a date prior to the trial. If leave is not granted and the applicants apply for a review of my decision, it will be helpful if the application is made in a timely manner and that it be brought to the attention of this court with a view to an early hearing. In any event, the appeal or a review of my decision could be heard on the submissions and documents that are presently before me....
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