Wakefield and Accardo v Marshall and Others

• Jurisdiction: Bermuda
• Judgment Date: 09 August 2010
• Date: 09 August 2010
• Docket Number: Civil Jurisdiction 2009 No. 44,Civil Jurisdiction 2008 No. 221
• Court: Supreme Court (Bermuda)

In The Supreme Court of Bermuda

Civil Jurisdiction 2008 No. 221

BETWEEN:

JOSEPH EDWARD WAKEFIELD AND DONNA JEAN ACCARDO (EXECUTORS OF THE ESTATE OF HAZEL JEAN CROZIER, DECEASED)

Plaintiffs

v

JOHN G. MARSHALL

1st Defendant

COUNTRY SQUIRE INTERNATIONAL CORPORATION

2nd Defendant

HOSPEL HOLDINGS SA

3rd Defendant

JOHN L. SAMCOE

4th Defendant

Mr J Pachai for the Plaintiffs

Mr P Harshaw for the 1st Defendant

The following cases were referred to in the judgment:

Intercontinental Natural Resources Ltd v Conyers Dill & Pearman [1982] Bda LR 1

Harley v Sampson [1914] The Times, 1 May

Vann v Awford [1986] The Times, 23 April

Evans v BartlamELR [1937] AC 473

Alpine Transport Bulk Transport Co Inc v Saudi Eagle Shipping Co IncUNK [1986] 2 Lloyds Rep 221

Abstract:

Application to set aside default judgment - Investments - Fraud - Delay

RULING of WADE-MILLER, J

1. On 3rd December 2009, the First Defendant applied by summons to set aside a Judgment in default of Defence which was entered against him on 5th November 2008 for the sum of $3,827,027 on the basis that:

i. it was entered irregularly, and/or

ii. that the First Defendant has a defence to the cause to which the court should pay heed.

Factual Background

2. On 23rd September 2008, a Specially Endorsed Writ of Summons was filed by the Plaintiffs who are the Executors of the estate of the late Hazel Jean Crozier, a Canadian citizen and a long term resident of Bermuda who had her principal place of residence at No. 6 Mizzentop, Warwick Parish. Mrs. Crozier died on the 8th April 2007. The First Defendant, John G. Marshall who resides at No. 39 Mizzentop knew Mrs. Crozier.

3. The Plaintiffs contend that over a number of years - between October 1997 and 30th March 2007 - Mr. Marshall induced Mrs. Crozier to invest monies into the Second Defendant, Country Squire International Corporation ("CSIC"), which is managed by the Fourth Defendant, Mr. John C. Samcoe, who is resident in Canada and the President of CSIC.

4. Mrs. Crozier's first investment was ostensibly for a development of an Industrial Park in Russia. The second investment and all subsequent investments were purportedly for an oil refinery in Russia.

5. Eventually, Mrs. Crozier was advised by Mr. Marshall and Samcoe through CSIC that she held 23,078 shares regarding both investments. It was also represented to her that she would be paid 10% interest annually calculated on the capital value on her investments.

6. Over the course of time - from July 1999 to May 2006 - Mr. Marshall and Samcoe made numerous promises to Mrs. Crozier of re-payment.

7. In April 2007, Mr. Marshall indicated that a payment, to the estate of the various investments, would be made on 2nd May 2007. Subsequently, numerous promises of payment were made by Mr. Marshall to the Plaintiffs. The Plaintiffs alleged that in breach of the representation no amounts were paid to Mrs. Crozier or to her representatives.

8. The Plaintiffs contend that the representation of payment and financing for the projects were made by or on behalf of the Defendants fraudulently, the Defendants well knowing that they were false and, untrue or recklessly not caring whether they were true or false.

9. On the 23rd September 2008, the Plaintiffs by a Specially Endorsed Writ claim inter alia an amount not less than US$3,827,027.

10. On 5th November 2008, the Plaintiffs obtained judgment in default of Defence inter alia against the 1st Defendant John G. Marshall, the 3rd Defendant Hospel Holdings S.A. on the sum of $3,827,027 with interest and cost to be agreed or taxed.

11. First, I deal with the submission that the Judgment in Default of Defence should be set aside if the Plaintiffs have not complied with the provision of Order 10 rule 1 (4). This order stipulates that the original writ must be endorsed as to service within three (3) days of service otherwise the Plaintiffs in the action begun by the writ shall not be entitled to enter judgment in default of defence.

12. Mr. Harshaw submits that if the court looks at the file and this condition precedent is not satisfied the Registrar had no power to grant judgment and it must be set aside as it was entered without jurisdiction. The court has no authority to waive a condition precedent without specific power to do so: Anlaby v PraetoriousELR(1888) 20 QBD 764.

13. Mr. Harshaw stressed that if there has been a failure in relation to indorsing the original writ, as the First Defendant believes, the court need only look on the file and if the requirement is not met the Default Judgment must be set aside.

14. The Court's inspection of the file revealed that the Plaintiffs had fulfilled the requirement of Order 10 rule 1 (4) - i.e. there was nothing irregular about the judgment which was obtained on 5th November 2008, the original writ was properly endorsed and filed. Mr. Harshaw accepted that once the provision was met that is the end of this aspect of the matter.

15. Mr. Harshaw submitted further that the Plaintiffs' case is that money was invested in CSIC and they want that money back. Mr. Harshaw maintained that the First Defendant does not dispute that, but says that he has no control over CSIC. In cases of fraud, the allegations of fraud must be distinctly pleaded and proved. Mr. Harshaw cited the words of DaCosta J.A. in Intercontinental Natural Resources Ltd. v. Sir Bayard Dill and Others, Civil Appeal 14 of 1981 at page 22:

'it is a principle of justice that no one should be brought before "the seat of justice" to account for his conduct unless he is adequately informed of the case he has to meet.'

16. Mr. Harshaw submits that the First Defendant is hardly a man who was a fraudster. He is not an investor; he was merely a go between. It cannot be proved that he made his assertion knowing that they were false. He must be cross-examined.

17. Counsel for the parties are in agreement on the relevant law which is applicable in this case.

The Impact of Delay

18. Mr. Pachai submits pursuant to order 2 rule (2) that the application to set aside the order should be refused as the application was not made within a reasonable time.

19. An application to set aside a default judgment should be made promptly and within a reasonable time. He submits that even though the Court can in a fit case disregard lapse of time, an excess of one year before the application is made is simply too late. See Harley v Sampson: The Times Law Reports, Friday, May 1, 1914 p450.

20. Mr. Pachai submits that the First Defendant has always been represented by Mr. Harshaw who acted for him in connection with action No. 202 of 2007 where the claim was under a Promissory Note. On 2nd April 2001 Mrs. Crozier loaned the First Defendant the sum of $315,000. The Defendant agreed to repay the loan to Mrs. Crozier with accrued interest at a rate of 6%. The First Defendant drafted and executed a promissory note in favour of Mrs. Crozier recording the terms of the loan. On the 18th May 2007 and on 14th June 2007, the Plaintiffs demanded that the First Defendant repay the loan or satisfy the promissory note with accrued interest. The Defendant failed to repay and a writ of summons was filed on 25th July 2007. A judgement in...