Paul and Teresa Rodrigues v Clearwater Development Ltd
| Jurisdiction | Bermuda |
| Judge | Mussenden J |
| Judgment Date | 11 July 2023 |
| Docket Number | CONSOLIDATED ACTIONS 2018 : No. 38 2018 : No. 66 |
| Court | Supreme Court (Bermuda) |
IN THE MATTER OF CLEARWATER DEVELOPMENT LTD.
AND IN THE MATTER OF THE COMPANIES ACT 1981
[2023] SC (Bda) 55 Civ. 11 July 2023
CONSOLIDATED ACTIONS
2017 : No. 467
2018 : No. 38
2018 : No. 66
In The Supreme Court of Bermuda
COMMERCIAL JURISDICTION
Grant Spurling of Chancery Legal Ltd, for the Petitioners/Plaintiffs
Richard Horseman, Terry-Lynn Griffiths of Wakefield Quin Limited, for the Defendant/Respondent
Strike out application for pleadings of allegations of fraud on grounds that they are scandalous, frivolous, vexatious and an abuse of process
Application to strike out or limit the scope of expert report on grounds that expert not qualified to be an expert and the opinion of the expert is outside the scope of the Order of the Court
RULING of Mussenden J
By a Summons dated 10 January 2023, the Plaintiffs applied for an order that all explicit and implicit allegations of fraud as set out in the Defendant Clearwater Development Ltd.'s (“ CDL”) Re-Amended Defence and Counterclaim at paragraphs 3, 3A, 3B, 3C and 8 be amended by removal pursuant to Order 18, rule 19 of the Rules of the Supreme Court (the “ RSC”), on the ground that such allegations are scandalous, frivolous or vexatious; may prejudice, embarrass or delay the fair trial of the action; and constitute an abuse of the process of the Court (the “ Plaintiffs' Application”).
By a Summons dated 3 March 2023, CDL applied for an order that the Plaintiffs' expert report prepared by Kroll dated 2 December 2022 be struck out for failing to comply with the Order of Directions which provided for the scope of expert evidence to be filed and/or be limited to the issue to be determined pursuant to the Order for Directions and/or be ruled inadmissible at trial (the “ Defendant's Application”).
The Plaintiffs' position is supported by the First and Second Affidavits of Grant Spurling (“ Spurling 1” and “ Spurling 2”). CDL's position is supported by the Ninth Affidavit of John Bush (“ Bush 9”) which referred to his witness statement dated 21 June 2022 and by the Fifth Affidavit of Richard Horseman (“ Horseman 5”).
The Consent Order for Directions dated 12 October 2021 (the “ Consent Order”) specified the scope of the matter which requires expert evidence. Paragraph 6 stated as follows:
“ [6] The parties are at liberty to call one IT expert witness each in relation to the issue of the exchange of emails and culminating in the final Letter of Agreement and in particular, the timing of when “services” was inserted into the Letter of Agreement as alleged in paragraph (xx) of the Statement of Claim.”
The provision for expert evidence related to paragraphs 3, 3A & 3B of the Re-Amended Defence which alleged that the Plaintiffs inserted the word “services” in the Letter of Agreement (the “ LOA”) without advising the Defendant which widened the scope of the LOA to the Plaintiffs' benefit which was not agreed between the parties. Paragraphs 3, 3A & 3B provide as follows:
“ 3. Paragraph 3 is denied. The Defendant will aver that the agreement originally drafted and agreed to by the parties by email correspondence on the 14 September 2016, provided that the Plaintiff would be the preferred pool construction contractor and “supplier of other construction and finish materials as appropriate”. The Defendant will aver that prior to executing the agreement, the Plaintiff inserted the word “services” into the said clause without notifying the Defendant so that it now read “supplier of other construction services and finish materials as appropriate “. The Defendant will say that it never agreed that the Plaintiff would become the preferred construction services provider but rather the preferred pool construction contractor. The Defendant will aver that the Plaintiff inserted the word “services” into the agreement without notifying or bringing to the attention of the Defendant that he had done so with the intent to widen the scope of the agreement. The Defendant signed the said agreement without noticing that the Plaintiff had inserted the word “services” into the agreement which widened the scope of the agreement. The Defendant denies that it is bound by the agreement as intentionally manipulated by the Plaintiff.
3A. The Defendant became aware for the first time in September 2017 that the Letter of Agreement, as altered by the Plaintiff and signed by all parties, did not accurately embody the agreement which had been previously arrived at in that it purported to grant the Plaintiff preferred status for the provision of construction services rather than just the preferred status as the pool contractor. Upon noticing the discrepancy, the Defendant, through its counsel, wrote to the Defendant [sic] asking for an explanation and noting the alteration which had not been agreed and which did not reflect a common intention of the parties. The Plaintiff and his wife, Tereza Rodrigues, denied and continues to deny in their witness statements that either of them have amended the agreements as alleged.
3B. The Defendant will say on the 23 rd September 2017, the Plaintiff fraudulently altered an email from Mr. John Bush to the Plaintiff dated 14 th September 2016 by attaching the manipulated Letter of Agreement and forwarding the 14 th September 2016 email to the parties in an effort to pass it off his genuine and obtain a financial advantage for his own benefits by deception.”
CDL's expert report produced by Krys Global (the “ KG Report”) concluded that it was very unlikely, if not impossible for the LOA document that was attached to Mr. Rodrigues' email dated 14 September 2016 to have been sent on that date. That in effect means that it was very unlikely, if not impossible that the word “services” was inserted into the LOA at the time Mr. Bush sent his last draft of it to the Plaintiffs although it does later appear in the LOA attached to an email sent by the Plaintiffs back to Mr. Bush on 23 September 2017.
The Plaintiffs' expert report produced by Kroll (the “ Kroll Report”) stated that its instructions were as follows:
“ On September 15, 2022, Chancery Legal Ltd. (“Counsel”) engaged Kroll on behalf of Rodrigues Pools (“RP”) to assist Counsel in determining whether a 2017 email sent by Paul Rodrigues to John Bush, the President of Clearwater Development, Ltd (“CDL”), and copying members of the CDL Management Committee, Counsel, and counsel to CDL, Wakefield Quin, was fraudulently sent by RP to deceive CDL and its Management Committee.”
CDL's position is that the Kroll Report reluctantly accepted the KG Report's findings that it was highly unlikely that the word “services” was included in the attachment to the 14 September 2016 email. The Kroll Report stated [at paragraph 7] as follows:
“ While Kroll generally agrees with Mr. Sinclair that it is unlikely the Bush 14 September 2016 Email was sent with an attachment whose metadata indicates it was printed 36 days later, we do not believe that this disparity is proof of the assertion by CDL in Paragraph 3B of its Re-Amended Defence that RP intentionally deceived CDL.”
CDL's position is that the Kroll Report confirmed what CDL had been saying, which was that on 23 September 2017 when Mr. Rodrigues later forwarded Mr. Bush's email dated 14 September 2016 back to Mr. Bush and others, the attachment had been altered to include the word “services” in it. The Kroll Report stated as follows:
“ It appears that Draft Letter Agreement originally attached to the 14 September 2016 email was replaced with the Rodrigues Version which was later signed by the parties on October 27, 2017. The word “services” appears in the final paragraph of both the Executed Letter Agreement and the DLA-Rodrigues Version.”
CDL's position is that the Plaintiffs have accepted that the attachment was altered with the inclusion of the word “services” in it, however the Kroll Report went on to consider matters that are completely out of scope of the Consent Order providing for expert IT evidence. For example, the Kroll Report stated as follows:
“ Given that least four versions of the contract were floating around, it's reasonable to conclude that confusion existed among the parties as to which version of the agreement was the correct version to be finalized. This is also sufficiently confusing to help explain why Mr. Bush may have forgotten or misremembered various changes to the DLA, but it would also make sense that he would have therefore confirmed he was reviewing the correct version prior to signing it – particularly since the Draft Letter Agreement was effectively one page, and all four differences are readily apparent.”
CDL stated that Kroll went on to criticize the Defendant's expert Mr. Sinclair of Krys Global for failing to opine on whether the actions of the parties would constitute deception or fraud. The Kroll Report stated as follows:
“ Mr. Sinclair does not opine on whether the introduction of a new letter agreement by a sender or recipient of the two emails in question would constitute fraud or deception, or whether the difference in attachment can be attributable to error or oversight. Mr. Sinclair does not address whether Messrs. Bush or Oosthuizen read or recognized the difference in versions prior to the signing of the Executed Letter Agreement.”
The Kroll Report's final conclusion stated as follows:
“ Based on Mr. Sinclair's report and the evidence available to Kroll after investigation, Kroll cannot determine whether the differences between the Draft Letter Agreements attached to the Bush 14 September 2016 Email and the Rodrigues 23 September 2017 Email were, or were not, the result of fraud by Mr. Rodrigues, Teresa Rodriguez, or Rodrigues Pools, nor does Kroll believe,...
To continue reading
Request your trial