Robert George Green Moulder v Messrs Cox Hallett & Wilkinson (A Firm)

• Jurisdiction: Bermuda
• Judgment Date: 27 July 2017
• Neutral Citation: [2017] SC Bda 58 Civ
• Date: 27 July 2017
• Docket Number: CIVIL JURISDICTION 2016: No. 491
• Court: Supreme Court (Bermuda)

[2017] SC (Bda) 58 Civ

IN THE SUPREME COURT OF BERMUDA

CIVIL JURISDICTION 2016: No. 491

Between:

Robert George Green Moulder

Plaintiff

and

Messrs Cox Hallett & Wilkinson (A Firm)

1st Defendant

and

Stephen P. Cook

2nd Defendant

and

Michael Alan Cranfield

3rd Defendant

and

Paul Jeremy Slaughter

4th Defendant

Janet Murray Slaughter

5th Defendant

The Plaintiff (assisted by Ms Judith Chambers as his McKenzie Friend) appeared in person

Mr David Kessaram, Cox Hallett Wilkinson, for the 1 ^st Defendant

Mr Paul Harshaw, Canterbury Law Limited, for the 2 ^nd Defendant

Mr Timothy Marshall, Marshall Diel & Myers Limited, for the 4 ^th and 5 ^th Defendant

The 3 ^rd Defendant appeared in person

RULING ON STRIKE OUT APPLICATION

(in Chambers)

Introductory

1 On February 17, 2010, the Plaintiff issued proceedings against the Defendants in the present action in Civil Jurisdiction 2010: No. 53 (the “2010 Action”). Those proceedings were struck out by Ground CJ on November 26, 2017 ( Moulder v Cox Hallett Wilkinson (a Firm) [2010] Bda LR 78) (the “2010 Order”). The Court of Appeal dismissed the Plaintiff's appeal against Ground CJ's decision on June 17, 2011 ( [2011] Bda LR 40). Subsequently, leave to appeal to the Judicial Committee of the Privy Council was refused.

2 The Defendants obtained substantial costs orders against the Plaintiff in the 2010 Action which they are currently seeking to enforce by way of execution against property owned by the Plaintiff. The motivation behind the present Originating Summons was clearly a desire to obtain a full trial of the 2010 Action and to set aside the costs orders the Defendants are currently enforcing against the Plaintiff.

3 On January 4, 2017, the Plaintiff issued an Originating Summons against the Defendants seeking the following primary relief:

“ 1. For the strike-out Judgment dated the 26 ^th November 2010 and all subsequent decisions, writs and orders obtained in Supreme Court civil proceedings number 53 of 2010 be set aside as a consequence of the Defendants having obtained the judgment by way of a fraud on the court. The plaintiff will set out details of the fraud in his accompanying affidavit, but such fraud is alleged due to the discovery of new material evidence being the existence of, and contained within, Supreme Court Civil Jurisdiction case no. 179 of 2009 between the Fourth and Fifth Defendants and the Third Defendant, which file was material to case number 53 of 2010 but was concealed from both the Court and the Plaintiff…”

4 In March and April 2017, the Defendants filed Summonses seeking to strike out the Plaintiff's Originating Summons on the grounds that it was frivolous and vexatious and did not disclose a reasonable cause of action.

5 At the outset a central theme ran through the Plaintiff's presentation. The word fraud was bandied about so indiscriminately as to strip the word of its legal meaning. It was recited like a ritual incantation, often to merely embrace conduct by the Defendants (and their lawyers) which ranged from entirely innocent acts to simply firmly defending their legitimate rights. The 2010 Action was in large part struck out because the Plaintiff failed to appreciate how narrow a concept fraud is in the legal context. The Defendants effectively contended that the present proceedings were afflicted by the same fatal flaw; a failure to appreciate that the ability of the courts to grant remedies is not open ended but is constrained by established principles of substantive and procedural law. Mr Marshall put the position concisely thus. Any loss flowing from the injunction obtained against the Plaintiff in the 2004 proceedings which he ultimately won could have been recovered by enforcing the undertaking given the 4 ^th to 5 ^th Defendants in those proceedings. In commencing the 2010 Action the Plaintiff had simply pursued the wrong remedy.

6 Before considering the facts relevant to the present application (most importantly what was the basis of the 2010 Order and how does the new evidence undermine it), it is necessary to decide what legal principles apply to:

• • striking out proceedings;

• • setting aside judgments procured by fraud.

Legal findings

Striking out test

7 The legal test for striking out proposed by Mr Harshaw was not in dispute. In Broadsino Finance Co Ltd v Brilliance China Automotive Holdings Ltd [2005] Bda LR 61 at page 4, the Court of Appeal for Bermuda (Stuart-Smith JA) stated:

“ There is no dispute as to the applicable principles of law. Where the application to strike-out on the basis that the Statement of Claim discloses no reasonable cause of action (Order 18 Rule 19(a)), it is permissible only to look at the pleading. But where the application is also under Order 18 Rule 19(b) and (d), that the claim is frivolous or vexatious or is an abuse of the process of the court, affidavit evidence is admissible. Three citations of authority are sufficient to show the court's approach. In Electra Private Equity Partners (a limited partnership) v KPMG Peat Marwick [1999] EWCA Civ 1247, at page 17 of the transcript Auld LJ said: ‘It is trite law that the power to strike-out a claim under Order RSC Order 18 Rule 19, or in the inherent jurisdiction of the court, should only be exercised in plain and obvious cases. That is particularly so where there are issues as to material, primary facts and the inferences to be drawn from them, and where there has been no discovery or oral evidence. In such cases, as Mr Aldous submitted, to succeed in an application to strike-out, a defendant must show that there is no realistic possibility of the plaintiff establishing a cause of action consistently with his pleading and the possible facts of the matter when they are known….. There may be more scope for an early summary judicial dismissal of a claim where the evidence relied upon by the Plaintiff can properly be characterised as shadowy, or where the story told in the pleadings is a myth and has no substantial foundation. See eg Lawrence and Lord Norreys (1890) 15 Appeal Cases 210per Lord Herschell at pages 219–220'. In National Westminster Bank plc v Daniel [1994] 1 All ER 156was a case under Order 14 where thePlaintiff was seeking summary judgment, but it is common ground that the same approach is applicable. Glidewell LJ, with whom Butler-Sloss LJ agreed, put the matter succinctly following his analysis of the authorities. At page 160, he said: ‘Is there a fair and reasonable probability of the defendants having a real or bona fide defence? Or, as Lloyd LJ posed the test: ‘Is what the defendant says credible’? If it is not, then there is no fair and reasonable probability of him setting up the defence”. [Emphasis added]

8. The governing principles for deciding an application to strike out may be reduced, for present purposes, to three short propositions:

• • a proceeding should only be struck out when it is obviously bound to fail;

• • when considering whether a claim should be struck out because it discloses no reasonable cause of action, the Court looks only at the pleadings and ignores the evidence;

• • when considering whether a claim should be struck out because it is (legally and factually) frivolous or vexatious, the Court does have regard to the factual position. The present strike out applications fall into this category.

Setting aside a judgment procured by fraud

9 There is one local decision on this legal test, which Mr Marshall placed before the Court. In Fidelity Advisor Series VIII and others v APP China Group, Ltd. [2007] Bda LR 35, I held:

“66. There was no serious dispute on the legal principles applicable to proving the fraud allegation. Mr. Woloniecki submitted that (a) perjury was a recognised form of fraud for the purposes of an application to set aside a judgment by fraud, (b) the action must be based on new evidence not previously available, (c) a witness for the successful party in the previous proceedings must be shown to have wilfully made a statement he knew to be false or did not believe to be true ⁹, (d) the burden was on the Plaintiffs to establish that perjury was “distinctly more probable than not”, and (e) the perjured evidence would be material if it ‘entirely changed the nature of the case’:Kuwait Airways Corp v Iraqi Airways Corp (No. 5) [2003] 1 Lloyds Rep 448.

67. I also accept the following submissions of Mr. Hargun. Firstly, this action is limited to the fraud issue and cannot be treated as a rehearing of the original application under section 99 of the Companies Act 1981 for the sanction of the Scheme: Flower v Lloyd (1876) 6 Ch 297 at 301. Secondly, the allegation must be fully particularised and strictly proved; “there must be conscious and deliberate dishonesty, and the declaration must be obtained by it”: The Ampthill Peerage case [1977] AC 547 at 571. I accept this latter dictum, having regard to the fact that deliberate dishonesty is what is pleaded in this case, but mindful of the fact the strict legal position appears to be that recklessness will suffice. In Fletcher v Royal Automobile Club Ltd. [2000] 1 BCLC 331 , Neuberger J held:

‘The fraud alleged in the present case is therefore an admittedly inaccurate statement made by or on behalf of RACL allegedly in order to deceive the court into granting the relief which it duly granted. So far as the principles are concerned in relation to pleading and establishing this fraud, it seems to me that the following five points apply.

First, the position is no different from any other allegation of allegedly fraudulent misstatement. What has to be pleaded and established is actual dishonesty or recklessness. Mere negligence or inadvertence is plainly not enough. In other words, the plaintiffs would have to establish that the person responsible for giving the information knew it was wrong or was completely unconcerned as to whether it was right or...