Interinvest (Bermuda) Ltd and Black v Adobie

• Jurisdiction: Bermuda
• Judgment Date: 07 April 2010
• Date: 07 April 2010
• Docket Number: Commercial Jurisdiction 2008 No. 218
• Court: Supreme Court (Bermuda)

In The Supreme Court of Bermuda

Commercial Jurisdiction 2008 No. 218

BETWEEN:

REGULA DOBIE

Plaintiff

v

INTERINVEST (BERMUDA) LIMITED

First Defendant

DR HANS PETER BLACK

Second Defendant

Mr D Duncan & Ms N Tovey for the Applicant

Mr J Pachai for the Respondent

The following cases were referred to in the judgment:

Ladd v MarshallWLR [1954] 1 WLR 1489

Abstract:

Application for leave to appeal - Fresh evidence - Arguable prospects of success

RULING of KAWALEY, J

Introductory

1. On June 1, 2009, following hearings on April 21, May 6, and May 7, 2009, I granted Summary Judgment in favour of the Plaintiff in the present action in the amount of US$5 million plus interest and costs as against the First Defendant. The basis of this decision was that the First Defendant's Defence disclosed no triable issues. No evidence was filed in support of the crucial elements of the Defence, which essentially contended that the contract the Plaintiff sued on had been terminated and the relevant investment in the Hedge Hog Fund fell outside its scope. However, the Default Judgment entered against the First Defendant's President, the Second Defendant, was set aside conditionally.

2. The Applicant sought leave to appeal against this decision by Notice of Motion dated September 17, 2010 after changing lawyers. The Respondent presented a winding-up petition against the Applicant based on the judgment debt on September 24, 2009. On October 8, 2009 at the initial ex parte hearing, I granted the Applicant an extension of time within which to seek leave to appeal and adjourned the initial leave application for an inter partes hearing. On November 24, 2009, I adjourned the inter partes application for leave to enable further evidence to be filed. On March 9, 2010, the Applicant applied to admit fresh evidence in support of its appeal and for a stay of execution pending appeal.

3. The initial arguments on the inter partes application for leave to appeal based on fresh evidence were supplemented by further broad written submissions, with the Applicant's brief going beyond my invitation at the end of the oral hearing to address a narrow fresh evidence point. This issue seemed crucial as it appeared obvious on the face of the draft Notice of Appeal that the proposed appeal would stand or fall on the success of the application to admit fresh evidence in support of the appeal.

4. Having considered the contending arguments, it appears to me that the following issues require determination. Firstly, should this Court determine the fresh evidence application on its merits or merely decide whether it is arguable that the Court of Appeal might accede to the application? After all, the primary role of an application for leave is to determine whether the appeal has arguable prospects of success. Secondly, assuming the application to admit fresh evidence is either allowed or found to be arguable, whether the appeal is itself arguable then falls to be determined.

Should the Supreme Court determine an application to admit fresh evidence on appeal?

5. Order 2 rule 3(1) of the Rules of the Court of Appeal clearly provides that the Supreme Court must entertain an application for leave to appeal; I was not referred to any rule conferring on this Court the competence to determine what fresh evidence could be admitted on appeal. However, Mr. Duncan in his supplementary submissions referred the Court to the following provisions of the Court of Appeal Act 1964:

"Powers of Court of Appeal

8 (1) Subject to this Act and any Rules, in the determination of appeals before it, the Court of Appeal shall have all the powers and duties conferred or imposed on the Supreme Court in the exercise of its original or appellate jurisdiction.

(2) The powers of the Court of Appeal to admit additional evidence shall correspond to the power of the Supreme Court to admit fresh evidence in the exercise of its appellate jurisdiction in a civil or criminal cause, as the case may be."

6. Although the fresh evidence point was argued on the basis that this Court was competent to entertain the application, section 8(2) of the Act indirectly suggests that the appellate court and not the trial court is competent to consider such applications. I find that the Applicant merely has to demonstrate to this Court that its fresh evidence application has arguable prospects of success.

Does the fresh evidence application have arguable prospects of success?

7. Mr. Pachai rightly submitted that the traditional Ladd v Marshall test was not satisfied in the present case. In my judgment the "fresh evidence" relied upon by the Applicant could with reasonable diligence have been produced at the initial hearing of the summary judgment application. This is because it was admittedly in the possession of the Applicant's former attorneys in advance of the relevant hearing. The knowledge of the litigation attorneys who had the conduct of the summary judgment application must be imputed to the Applicant, irrespective of whether Dr. Black, the Applicant's President, had personal knowledge or not. On its face, the letter dated March 11, 2009 under cover of which the compact disc containing electronic copies of the relevant data was forwarded from the Applicant's attorneys to the Applicant's Bermuda office (then staffed only be a clerical employee) was copied to Dr. Black. I would find no special reasons for admitting the additional evidence at this stage, adopting the traditional test.

8. In the Applicant's supplementary submissions, it was contended that section 8(2) of the Court of Appeal Act 1964 imported a more flexible test for the admission of fresh evidence than under the English fresh evidence rules. Mr. Duncan is plainly right that the Bermuda fresh evidence test is expressed in less restrictive terms than the English rule which has long been assumed to apply under Bermuda law to appeals from this Court to the Court of Appeal. Section 14 of the Civil Appeal Act 1971 provides as follows:

"(5) The Court shall, on the hearing of an appeal, have all the powers as to amendment and otherwise possessed by the Court in the exercise of its original jurisdiction, together with full discretionary power to receive further evidence upon questions of fact, either orally or by affidavit or deposition."

9. Order 59 rule 10(2) of the English CPR provides that where there has been a trial or hearing on the merits, "no further evidence (other than evidence as to matters which have occurred after the date of the trial or hearing) shall be admitted save on special grounds". It appears that the distinction between the English fresh evidence rule and the Bermudian statutory rule contained in section 8(2) of the Court of Appeal Act 1964 as read with section 14(5) of the Civil Appeal Act 1971 has never been considered by the Court of Appeal for Bermuda. In my judgment it is arguable that (a) the true Bermuda test is more liberal than the English test which has always been assumed to apply, and (b) applying such more flexible test the fresh evidence application will succeed before the Court of Appeal. This conclusion does not ignore the possibility that

even if the restrictive Ladd-v-Marshall test does not strictly apply, the Court of Appeal would retain the discretion to apply that test by analogy with a view to retaining the finality and certainty in litigation that presently exists before this Court1.

10. Accordingly, the application for leave to appeal must be considered on its merits on the assumption that the fresh evidence application will succeed.

Do the grounds of appeal have arguable grounds of success?

11. The fresh evidence potentially suggests that the Respondent/Plaintiff did not invest the monies claimed in her own name but that the investment was in fact made by a company owned by her, Amina Holdings Ltd. The Applicant sent multiple statements to the Respondent between 2006 to 2007 representing that the monies were invested in her own name and acknowledging an obligation to her personally. The Applicant was in the best position to know in whose name the relevant investment was made. If equity comes into play, it ought not to be open to the Applicant to assert in light of its past conduct that the Respondent had no relevant contractual relationship with the Applicant at all.

12. Nevertheless, it is at least arguable (assuming that the fresh evidence relied upon is admitted on appeal) that the Applicant has a good defence, no matter how unattractive it may at this point seem to me to be, based on the proposition that the Respondent was not the correct Plaintiff and that a company she apparently controlled was. It is also conceivable that if Amina Holdings Ltd. is a shareholder of the Hedge Hog Fund, this might impact in ways which cannot presently be understood, on the company's right to recover the full amount of the judgment debt.

13. It is unclear how far (if at all) this new proposed defence will affect the ultimate commercial result. The notion that if the judgment were to be set aside and Amina Holdings Ltd. joined as a co-Plaintiff the Applicant would not be indebted on any legal basis to the company to the same extent as it is to the Respondent presently seems highly improbable to me at this stage. But these doubts to my mind impact more on the issue of the stay application and the terms on which leave to appeal ought to be granted than they are germane to the issue of whether or not the proposed appeal meets the comparatively low threshold for the grant of leave.

14. Accordingly, the application for leave to appeal is granted, but on the terms set out below.

Should execution be stayed pending appeal?

15. This is a case where leave to appeal has only been granted because the Applicant's attorneys have had the ingenuity to construct an arguable appeal in circumstances where the merits in terms of general notions of justice lie heavily on the...