Kingate Global Fund Ltd and Another v Kingate Management Ltd and Others
| Jurisdiction | Bermuda |
| Judgment Date | 11 January 2016 |
| Neutral Citation | [2016] SC Bda 3 Com |
| Date | 11 January 2016 |
| Docket Number | CIVIL JURISDICTION COMMERCIAL LIST 2010: No. 454 |
| Court | Supreme Court (Bermuda) |
[2016] SC (Bda) 3 Com
In The Supreme Court of Bermuda
CIVIL JURISDICTION COMMERCIAL LIST 2010: No. 454
Mr Alex Potts, Sedgwick Chudleigh Ltd, for the Plaintiffs
Mr Thomas Lowe QC, Ms Sarah-Jane Hurrion, and Ms Lilla Zuill, Harneys Bermuda Limited, for the Second, Third, Eighth and Ninth Defendants
The other Defendants were not present and were not represented.
(In Chambers)
By a summons dated 13 th August 2015 (‘the Plaintiffs' Summons’) the Plaintiffs seek an order that the applications contained within paragraphs 1, 2 and 3 of what is now the Re-Amended Summons of the Second, Third, Eighth and Ninth Defendants (‘the FIM Defendants’) dated 11 th September 2015 (‘the Re-Amended Summons’) be not entertained and/or summarily dismissed, in accordance with the power of the Court exercised in Williams & Humbert v W&H Trade Marks (Jersey) Ltd [1986] 1 AC 368 (‘Williams & Humbert’) and/or the Court's inherent jurisdiction and/or Order 18, rule 19 and Order 1A, rules 1 and 4, of the Rules of the Supreme Court 1985 (‘RSC’).
Alternatively, the Plaintiffs seek an order that the Re-Amended Summons be stayed generally, pending the final determination of the preliminary issues which are the subject of an appeal to the Court of Appeal from a judgment of this Court dated 25 th September 2015 (‘the Judgment on the Preliminary Issues’).
In the further alternative, the Plaintiffs seek directions for the service of evidence with respect to the hearing of the Re-Amended Summons.
By the Re-Amended Summons the FIM Defendants seek orders pursuant to RSC Order 18, rule 19 or under the inherent jurisdiction of the Court that:
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(1) The fault-based claims and allegations made by the Plaintiffs against the Eighth and Ninth Defendants, Mr Grosso and Mr Ceretti, in paragraphs 126 to 132 of the Re-Re-Re-Amended Statement of Claim be struck out on the basis that they disclose no reasonable cause of action and/or are an abuse of process.
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(2) The claims and allegations based on retention of legal title or the proprietary claims made by the Plaintiffs against each Defendant in paragraphs 97 – 103 of the Re-Re-Re-Amended Statement of Claim be struck out on the basis that they disclose no reasonable cause of action.
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(3) The claims and allegations based on indirect unjust enrichment made by the Plaintiffs against each of the Fourth to Twelfth Defendants in paragraphs 78 to 96 of the Re-Re-Re-Amended Statement of Claim be struck out on the basis that they disclose no reasonable cause of action.
The background to the action is set out in the Judgment on the Preliminary Issues. I need not repeat it.
Williams & Humbert is the leading authority on when the Court should refuse to permit a strike out application pursuant to RSC Order 18, rule 9 to proceed.
Lord Templeman reviewed the relevant case law from which at 435 H – 436 A he extracted the following principle:
‘ … if an application to strike out involves a prolonged and serious argument the judge should, as a general rule, decline to proceed with the argument unless he not only harbours doubts about the soundness of the pleading but, in addition, is satisfied that striking out will obviate the necessity for a trial or will substantially reduce the burden of preparing for trial or the burden of the trial itself.’
Lord Templeman held at 436 C – D that although in the case before the House that test was not satisfied, there were special circumstances which had justified the judge at first instance in entertaining the strike out application:
‘ If the appellants' pleadings and particulars had not been struck out, the appellants would have proceeded to demand discovery before trial and to lead evidence at the trial, harassing to the plaintiffs and embarrassing to the court and designed to support the allegations and insinuations of oppression and bad faith on the part of the Spanish authorities which appear in the amended defences and particulars. These allegations are irrelevant to the trade marks action and the banks' action and are inadmissible as a matter of law and comity and were rightly disposed of at the first opportunity.’
Lord Mackay stated that he agreed with Lord Templeman's analysis of the authorities to which Lord Templeman had referred but at 441 E – F expressed the general rule to be derived from them in his own words:
‘ If on an application to strike out it appears that a prolonged and serious argument will be necessary there must at the least, be a serious risk that the court time, effort and expense devoted to it will be lost since the pleading in question may not be struck out and the whole matter will require to be considered anew at the trial. This consideration, as well as the context in which Ord. 18, r. 19 occurs and the authorities upon it, justifies a general rule that the judge should decline to proceed with the argument unless he not only considers it likely that he may reach the conclusion that the pleading should be struck out, but also is satisfied that striking out will obviate the necessity for a trial or will so substantially cut down or simplify the trial as to make the risk of proceeding with the hearing sufficiently worth while.’
Lord Mackay agreed at 441F that the course taken by the judge in the case before the House was justified by ‘ the very special circumstances’ to which Lord Templeman had referred.
Each of Lords Scarman, Bridge and Brandon stated at 425 E – G that he agreed with both speeches.
In summary, therefore, when considering whether to permit a strike out application to proceed the court should ask the following questions:
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(1) Would the strike out application be likely to involve serious and prolonged argument? In my judgment it is not helpful to attempt to define these terms further: the Court will know such an application when it sees it. Various cases were cited to me in which the length or estimated length of the hearing ran to several weeks. Eg Morris v Bank of America Trust [2001] 1 BCLC 771 EWCA (15 days); Mentor Insurance Limited (in Liquidation) v Ocean Drilling & Exploration Company [1991] Bda LR 60 SC (three weeks); and Frogmore Estates v Berger, The Times 1st November 1989 Ch D (four weeks). In Peters v Menzies [2009] EWHC 3709 (Ch), on the other hand, the court held that a somewhat shorter application with an estimated length of two days would undoubtedly involve prolonged and serious argument. These cases are merely examples, and do not purport to establish a rule as to the length of argument necessary to count as ‘ prolonged’. If a strike out application would not be likely to involve serious and prolonged argument then it should proceed. If it would be likely to, then the Court should consider the following question.
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(2) Does the Court harbour doubts about the soundness of the pleading (Lord Templeman), or, put another way, think it likely that it may reach the conclusion that the pleading should be struck out (Lord Mackay)? Although Lord Templeman and Lord Mackay formulated this question differently, neither they, nor any of the three Law Lords who agreed with them both, seemed to think that they were laying down different tests. Rather, they were expressing in different ways...
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