Majuro Investment Corporation v Timis and Others
| Jurisdiction | Bermuda |
| Judgment Date | 07 December 2015 |
| Neutral Citation | [2015] SC Bda 87 Civ |
| Date | 07 December 2015 |
| Docket Number | CIVIL JURISDICTION COMMERCIAL COURT 2015: No. 16 |
| Court | Supreme Court (Bermuda) |
[2015] SC (Bda) 87 Civ
In The Supreme Court of Bermuda
CIVIL JURISDICTION COMMERCIAL COURT 2015: No. 16
Mr Delroy Duncan and Ms Nicole Tovey, Trott & Duncan Limited, for the Plaintiff (‘P’) Mr. Steven White, Cox Hallett Wilkinson Limited, for the 6 th Defendant (‘D6’)
(in Chambers)
On January 15, 2015, P issued a Generally Endorsed Writ of Summons accompanied by a “Particulars of Claim”. P claimed equitable compensation or damages in the amount of $50.5 million from, inter alia, the first Defendant (‘D1’). From paragraph 1 of P's pleading, it was clear that P brought the claim as a shareholder of the 7 th Defendant (‘D7’), a Bermudian company, and its subsidiary the 8th Defendant (‘D8’), a Sierra Leonean company, on behalf of D7 and D8. The final paragraph of the pleading averred as follows:
‘ 81. No relief is sought against [D7] and [D8], who have been joined as Defendants solely for the purposes of their being parties to any order made in respect of this claim.’
On the same date as the Writ was issued, P issued an Ex Parte Summons seeking injunctive relief against the Fifth and Sixth Defendant (‘D5’ and D6’) and directions for service on the Defendants generally outside of the jurisdiction. This Ex Parte Summons was heard before Hellman J in Chambers on January 21, 2015. He granted both the injunctive relief sought against D5 and D6, which P's counsel addressed first in oral argument (‘the Injunction’); Hellman J also granted leave to serve out against, inter alia, D6.
On page 27 of a Skeleton Argument which ran to just over 33 pages, P's case for obtaining leave to serve all foreign Defendants out of the jurisdiction was set out in a single paragraph in the following terms:
‘ 86. The Company is located within this jurisdiction and accordingly the claim can be served upon it without permission. Each of the other Defendants, all of whom are located outside of the jurisdiction, are necessary and/or proper parties to the claim. They are necessary and proper parties for the reasons already set out in [Mr Memarian's] affidavit. Thus the requirements of RSC Ord.11, r.1(1)(c) are fulfilled in respect of each of the Defendants located outside of the jurisdiction. The requirements of RSC Ord.11, r.4(1) have been set out by [Mr Memarian] in [his] affidavit.’
In paragraph 5 of the 2 nd Memarian Affidavit, it was averred that:
‘ 5.3 There is a ‘real issue’ between the Sixth and Seventh Defendants since in order for effective relief to be obtained in respect of sums over which the Plaintiff claims that the Seventh Defendant has a proprietary interest, the Sixth Defendant must be a party to these proceedings as the legal holder of those funds.’
By Notice of Motion dated June 9, 2015, D6 applied for an Order either striking out or staying the present proceedings on jurisdictional grounds.
The sole jurisdictional ground relied upon by P as against all foreign Defendants including D6 was the “necessary and proper party” ground under Order 11 rule 1(1)(c). In my Ruling of December 4, 2015 on D1's application to set aside the January 21, 2015 Ex Parte Order granting leave to serve out, I set aside the said Order as regards D1 and dismissed the claim against him. The central foundation of this decision was that the inability of P to open a jurisdictional gateway for its claim could not be cured by the substitution of D7 as Plaintiff. Accordingly, there was no rational basis to postpone dismissing the proceedings with a view to awaiting the occurrence of a contingency which was unlikely to ever occur.
Mr White adopted the arguments made by Mr Potts in support of D1's application to set aside service of the Writ on him. He also demonstrated that Lord Collins” statements on the “necessary and proper party” jurisdictional gateway in the Privy Council decision in Altimo Holdings and Investment Ltd-v-Kyrgyz Mobil Tel Ltd [2012] 1 WLR 1804 at 1822–1823 had been approved in two subsequent cases. Firstly, they were approved by Walker J in Standard Bank Plc-v-Just Group LLC [2014] EWHC 2687 (Comm). Secondly, Lord Collins” remarks were reaffirmed by Lord Collins himself on behalf of the Privy Council in a judgment handed down on January 21, 2015, the same day the impugned Orders were made: Nilon Ltd-v-Royal Westminster Investments SA [2015] UKPC 2 (at paragraph 15).
The Nilon case also confirms that the claim against the anchor defendant must itself be a viable one in substantive and not simply abstract terms. As Lord Collins observed:
‘ 53… Although in general it is not objectionable to bring a viable claim against D1, who is within the jurisdiction, with the principal object of joining D2, who is outside the jurisdiction, as a necessary/proper party, the combination of the motive and the artificiality of the rectification proceedings, and the fact that they are dependant on a trial of the underlying facts, means that the appropriate order in these circumstances is not to stay or adjourn the rectification application, but to strike it out.’
It follows that, for the reasons set out in my said December 4, 2015 Ruling, service against D6 is also liable to be set aside.
Mr Duncan accepted that for standing reasons, P itself could no longer maintain the present action against D6 or at all. However, he invited the Court to stay the present proceedings rather than dismissing them at this stage to preserve the benefit of the Injunction granted against D6 for the benefit of D7's creditors. The rationale for this submission was, however, closely linked to P's rejected contention that D7 could pursue the same claim and viably pass through the same jurisdictional gateway.
By letter to the Court dated November 5, 2015, the UK Joint Administrators of D7 (who have had notice of the present proceedings since April 2, 2015 at least) invited the Court to keep the injunction in place pending an assessment by them of whether or not they wish to intervene in the present proceedings. This request was unsurprisingly endorsed by P with great enthusiasm.
Accordingly, the primary outstanding issue to be determined solely for the purposes of D6's application is whether the present proceedings should...
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