IN THE HIGH COURT OF JUSTICE AND. Before The Honourable Mr. Justice Devindra Rampersad

Transcription

1 IN THE REPUBLIC OF TRINIDAD AND TOBAGO IN THE HIGH COURT OF JUSTICE Claim No. CV BETWEEN Real Time Systems Limited Claimant AND Renraw Investments Limited CCAM and Company Limited AND Austin Jack Warner also know as Austin Warner Trading as Dr. Joao Havelange Centre of Excellence Defendants Before The Honourable Mr. Justice Devindra Rampersad Appearances: Mr. Neil Bisnath instructed by Ms. Lydia Mendonca for the Claimant Mr. William McCormick QC, Mr. Om Lalla instructed by Mr. Dereck Balliram for the Defendants Date Delivered: 8 th November, 2011 JUDGMENT Page 1 of 19

2 Table of Contents The statement of case:... 3 The claimant s application for summary judgment:... 4 The defendant s application to strike out the statement of case:... 6 The submissions... 6 The claimant s submissions:... 6 The defendant s submissions:... 7 The law:... 8 Seldon v Davidson:... 9 Discussion of the case: Cause of action: The pleading precedent relied upon by the claimant: The letter of the 24 th June 2008: What is the case that the defendant has to meet? Was this loan agreement oral or in writing? Who were the parties to the oral arrangement? When was this loan contract agreed? Conclusion with respect to the loan: The defendant s allegations in relation to interest: The breach of the pre-action protocol: The court s concerns and observations: Order: Page 2 of 19

3 1. On 22 nd July 2010, directions were given by consent to consolidate twenty-three matters in which twenty-three different respective claimants brought proceedings against the defendants herein on the ground that they all highlighted the same issue i.e. the repayment of an alleged loan granted by the respective claimants to the defendants in October/November It was further agreed that these proceedings would be the lead proceedings in the series and that the other twentytwo matters would be stayed pending the outcome of this matter and the parties agreed to be bound by the outcome. The common issue is elaborated upon in the statement of case which is the subject of these proceedings. The statement of case: 2. According to its statement of case, the claimant is a limited liability company incorporated under the Companies Act. The defendant is a business registered under the Registration of Business Names Act. 3. Paragraph 3 of the statement of case says: Between the 9 th October 2007 and 1 st November 2007 the claimant paid the defendant by way of loan the total sum of $1,505, by way of five cheques and the defendant agreed to repay this sum by 28 th February That was the entire plea in relation to the loan and the statement of case went on to stipulate out the dates when the five cheques were issued, their respective amounts and the dates when they were presented for payment. Copies of five cheques made payable to Centre of Excellence/Indoor Facility were annexed to the statement of case. 5. The alleged loan was not repaid by the 28 th February 2008 and, according to the statement of case, nothing was done for over two years until the 17 th March 2010 when a pre-action protocol letter was written to the defendant and which led to the commencement of this action on the 15 th April Page 3 of 19

4 6. The claimant therefore claims: 6.1. The sum of $1,505, being the total sum of monies paid by the claimant to the defendant by way of loan during the period 9 th October 2007 to 1 st November Statutory interest at the rate of 12% pursuant to the Supreme Court of Judicature Act for such period as the court may deem just Such further or other relief as the honourable Court may deem just in the circumstances Costs. 7. There is no plea of any special relationship between the parties which would suggest that this was not meant to be an arm s length commercial transaction between two commercial entities. 8. To date, no defence has been filed although there is an application to extend the time for the filing of the defence filed in these proceedings on the 20 th May 2010, prior to the expiry of the time for the filing and service of the defence according to the defendant s attorney at law. The claimant s application for summary judgment: 9. On the 5 th of May 2010, the claimant filed an application for summary judgment against the defendant on the ground that the defendant had no realistic prospect of success of defending the claim. 10. The application was supported by an affidavit of instructing attorney in these proceedings which essentially repeated the matters pleaded in the claim form and statement of case based upon information received from Krishna Lalla, an officer of the claimant company. 11. The affidavit went on to refer to the response to the claimant's pre-action protocol letter by attorney for the defendant which was dated 1 st April 2010 in which particulars of the loan referred to were requested. That letter was not annexed to the statement of case nor was it exhibited to the affidavit. Page 4 of 19

5 12. Attorney-at-law for the claimant indicated that she verily believed that the defendant had no defence to the claim and/or had no realistic prospect of success in defending this action. 13. In response, an affidavit was deposed to and filed by instructing attorney for the defendant on the 19 th of May 2010 referring, inter alia, to: A previous letter sent on behalf of Mr. Krishna Lalla in his personal capacity to Mr. Austin Jack Warner in his personal capacity dated the 24 th June 2008 [ the 2008 letter ] claiming repayment of the sum of $70,139, which, according to him, incorporated the monies which are the subject of these proceedings; A letter dated 1 st April 2010 seeking the following particulars of the loan referred to namely: Whether the agreement was in writing or oral; When was it made and who were the parties; If it was oral what were the specific terms and conditions of it A letter dated 16 th April 2010 in response thereto from the claimant's attorney-at-law merely stating that proceedings had been filed and calling upon the defendant s attorney to confirm that they were willing to accept service on behalf of the defendant, without responding to the request made in the defendant's letter; Preliminary information received from the defendant that there was no loan agreement and that there were verbal conversations between Mr. Krishna Lalla and Mr. Jack Warner in relation to a payment of over $70,000, and that the claimed sum, which was part of the said $70,000, was transferred by way of gift. The defendant s instructing attorney-at-law went on to say that the case at hand was not a straight case in contract but that there was more involved in it. Page 5 of 19

6 14. No affidavit in response to this was filed for or on behalf of the claimant and no application to amend the statement of case in any way was made. The defendant s application to strike out the statement of case: 15. By application filed on 10 th August 2010, the defendant sought to have the claim form and statement of case struck out on the grounds that: The claimant had not complied with paragraphs 1.2 and 1.3 (b) and (c) of the pre-action protocol for claims for a specified sum of money; The claim form and statement of case were an abuse of the process of the court because they did not identify proper particulars of the alleged loans and each is inconsistent with the claim previously notified to the defendant in respect of the same sum; The claim form and statement of case does not comply with the following parts of the CPR: Parts 8.5 (3)(iii), (iv) and/or (v); Part This application was supported by an affidavit of Austin Jack Warner filed on even date relying on the 2008 letter to found the basis for the application that the claimant s case was not properly particularized and was contrary to a previous pre-action allegation made in respect of these monies. 17. There was no affidavit filed in opposition. The submissions The claimant s submissions: 18. In support of the application for summary judgment, the claimant s attorney submitted that: Page 6 of 19

7 18.1. The payment of money prima facie imported an obligation to repay it and the onus is on the defendant to prove the facts which he alleged showing that it was not repayable 1 ; The defendant s case referred to in the affidavit suggested that the monies were paid to the defendant by way of gift but does not state any facts upon which a presumption of advancement could arise; As a result, the onus would shift to the defendant to adduce evidence showing that the money was not repayable which the defendant has failed to do on the affidavit evidence before the court; The 2008 letter is irrelevant to the facts of this case where the claimant had made payment to the defendant and is claiming the sum so paid from the defendant; The application to strike out made by the defendant is misconceived. 19. The claimant relied on the following authorities: Seldon v Davidson [1968] All ER 755; Ed Polar & Ors v Millennium Development Corporation Ltd CV , 4. The defendant s submissions: 20. The defendant s attorney says that: the claimant's claim form and statement of case (whether taken individually or in combination) woefully lack the particulars required under the Civil Procedure Rules ("CPR"). Without such particulars: the defendant is unable to understand the case against him and hence to respond in a proportionate manner, and the Court is unable to manage the claim justly and proportionately (because the issues are not adequately identified). 1 Seldon v Davidson [1968] All ER 755 Page 7 of 19

8 This lack of particularity continues and compounds the default of which the claimant was guilty in pre-action correspondence when it failed to properly set out its claim in accordance with the relevant pre-action protocol. It is not some technical matter or inadvertent omission; it is clearly the chosen tactic of the claimant. 21. The submissions went on to say that the claimant's application for summary judgment is misconceived since the claimant seeks summary judgment on a claim, the basis of which is a factual account which, even if not to be struck out, is clearly lacking in detail. The defendant s attorney went on to submit that the defendant denies that the alleged contract was made and the claim notified in 2008 clearly raises real issues as to the reliability of the account on which the claimant now sues. 22. The defendant relied on the following authorities: Three River District Council v Bank of England (No. 3) [2000] 2 WLR 1220; Bank fur Gemeinwirtschaft Aktiengesellschaft v City of London Garages [1971] WLR 149. The law: 23. At face value, this is a case in contract between two commercial entities carrying on business in Trinidad and Tobago for profit. The contract is the loan I will pay you the sum of $1,505, which you promise to repay by the 28 th February There is no provision for interest in the alleged contract. A contract in respect of monies lent is defined as "a contract whereby one person lends or agrees to lend a sum of money to another, in consideration of a promise express or implied to repay that sum on demand, or at a fixed or determinable future time, or conditionally upon an event which is bound to happen, with or without interest." 2 Failure to repay the loan allows the lender to bring an action against the borrower for the money in contract. 2 Chitty on Contract 30th Edn, [909] Page 8 of 19

9 24. Halsbury s Laws of England defines the essential elements of a contract as follows: 603. The elements of a valid contract. 3 To constitute a valid contract (1) there must be two or more separate and definite parties to the contract; (2) those parties must be in agreement, that is there must be consensus on specific matters (often referred to in the older authorities as 'consensus ad idem'); (3) those parties must intend to create legal relations in the sense that the promises of each side are to be enforceable simply because they are contractual promises; (4) the promises of each party must be supported by consideration, or by some other factor which the law considers sufficient. Seldon v Davidson: 25. Notwithstanding the claim in contract, the claimant has relied on the case of Seldon v Davidson [1968] All ER 755, which is also referred to in Chitty on Contracts 4. In that case, the plaintiff brought a claim against the defendant, who was the plaintiff s chauffeur for several years, for the repayment of monies lent by the plaintiff to the defendant which the defendant failed to repay. By a specially endorsed writ issued in the High Court, the plaintiff claimed against the defendant 1,550 for money payable by the defendant to the plaintiff for money lent by the plaintiff to the defendant, particularising her claim as February 16. Amount lent this day 415. March 16. Amount lent this day 1, In his defence, the defendant said that the monies were a gift. At the trial, the defendant indicated that he utilized the money to purchase a house which the defendant s attorney conceded, must, prima facie be regarded as being held by the defendant by way of a resulting trust for the benefit of the plaintiff. That, at the very least, would have been the claimant's worst case scenario. However, the Court of Appeal held that there was no evidence to show any presumption of 3 CONTRACT (VOLUME 9(1) (REISSUE)) 4 Supra, [911] Page 9 of 19

10 advancement so that the claim of a gift in favor of the defendant failed and so the claimant was entitled to the repayment of the monies paid to the defendant. Discussion of the case: To my mind, the concept relied upon in this case of Seldon is one in equity that it is inequitable and/or unconscionable for monies advanced by a payer to a payeee to be retained by that payee unless the equitable principle of presumption of advancement applies 5. The very mention of the term presumption of advancement signals the applicability of the equitable remedy of resulting trusts Respectfully therefore, such a concept has no application in a case in contract which, by definition, is not founded on principles of equity but on the matters referred to above at paragraph 23. It may, however, amount to an alternate plea in matters where a contract may not be readily relied upon by the "payer" but which raises the presumption to repay referred to in Seldon in stated and pleaded circumstances where it is inequitable for the "payee" to retain monies paid to him. Cause of action: 27. The claimant has not sought to rely upon the doctrines of unjust enrichment or monies had and received nor has there been reliance upon the conscience of the court in its equitable capacity. 28. This is a claim for the repayment of a loan which is a case in contract between commercial entities so that there is no presumption that the mere payment of a cheque presumes an obligation to repay where a contract is alleged 6. 5 See Halsbury's Laws of England/GIFTS (VOLUME 52 (2009) 5TH EDITION)/1. GIFTS MADE BETWEEN LIVING PERSONS/(5) MAKING A GIFT/(iv) Resulting Trusts and Presumptions of Equity/241. Purchase in another's name at Note 8 where Seldon is referred to. 6 See for example International Commercial Finance (UK) Ltd v K & K Knitwear Ltd 2001 WL in which the pleaded case was in relation to an oral contract for the loan of 80,000 from the claimants to the defendants for a period of six weeks at an annual interest rate of 12.5%. It is specifically alleged that the contract was made between Mr Mohammad Amin for and on behalf of ICF and Mr Kewel Singh Sandhu for and on behalf of K & K Knitwear. Page 10 of 19

11 29. In the case before this court, the claimant seeks to establish that there was an agreement reached between the claimant and defendant for the advance by the claimant to the defendant of the sums set out in the statement of case between 9 th October 2007 to the 1 st of November 2007 to be repaid by the defendant by 28 th February There is no reference to any demand made for the repayment of this loan between the period 28 th of February 2008 until the pre-action protocol letter referred to in the statement of case dated 17 th March more than two years after. The pleading precedent relied upon by the claimant: 30. Annexed to the claimant's submissions was an extract from Bullen & Leake & Jacobs, 15 th edition, volume 1 at page 183. That precedent includes a form at 12 C2 which quite clearly illustrates an example of how an oral agreement ought to be pleaded. It indicates the need to identify whether it is an oral or written agreement, the place where the agreement was reached and the parties involved. Of course, as has been pointed out by attorney-at-law for the defendant, the English jurisdiction specifically provides by practice direction what must be pleaded in relation to contracts of this nature. However, he has argued that that practice direction merely makes express that which must be implied. This argument is attractive to this court. There is absolutely no reason why those matters ought not to be pleaded as, to my mind, they are material facts which must be set out in fairness to the defendant, and to the court, for the defendant to meet and specifically address in defence if the matter is to be contested. This court is of the view that the precedents shown seem to be precedents involving individuals as opposed to parties who are companies. Nevertheless, the extent of the pleading in the case of monies lent is readily apparent especially because of the matters and doubts which can arise in the manner set out below. Page 11 of 19

12 The letter of the 24 th June 2008: 31. The defendants rely upon a letter dated 24 th June 2008 to show an inconsistency in the claimant s case in these proceedings and therefore show that the claim lacks bona fides. This letter was supplanted by a later letter of 17 th March Some reason may exist as to why this was done the court cannot suppose at this stage without evidence and cross-examination why this was done because the claimant may have a legitimate/reasonable explanation. In any event, the letter of 24 th June 2008 is not relied upon by the claimant in these proceedings. At the end of the day, that letter may go to the credibility of the parties at trial. 32. Interestingly, however, this letter does raise issues as to the true cause of action and the true parties. In light of this letter, this court is of the view that it was even more important for the claimant to properly particularize and elaborate about this loan especially since this seems to be the only other document arising out of the same series of transactions which form the subject of these proceedings. What is the case that the defendant has to meet? 33. It is therefore now necessary for this court to consider the statement of case as it is and to also consider the case that this defendant must meet. Was this loan agreement oral or in writing? 34. This is not defined and it is a material fact since, if it is in writing, the defendants are entitled to call for disclosure of the same and to meet such an allegation 7. No such document is referred to or annexed to the statement of case. In such a case, the claimant would not be able to rely upon any such document at trial and the claimant s case would fail see Part 8.6 (2) of the CPR. If it is oral, then the next section applies. 7 See for example the helpful case of RAMSAY WILLIAM HOLDEN Pursuer and Respondent against FOUNTAIN FORESTRY LIMITED Defenders and Appellants 2003 Scot (D) 42/3 Page 12 of 19

13 Who were the parties to the oral arrangement? 35. Unlike the position with a number of authorities in this area of law, this is a case between two parties comprising corporate entities and not between two easily identifiable individuals as in Seldon. A company cannot act of itself but must act through its officers or employees. Under the Companies Act, a company has at least two directors 8. If there are two directors for the claimant [CD1 9, CD2] and two companies and an individual which makes up the firm which comprises the defendant [DD1, DD2, DD3, DD4 & JW], it is possible to have several permutations with respect to who actually discussed and agreed the matter of the loan between the claimant and the defendant: CD1 agreed with DD1; or CD1 agreed with DD2; or CD1 agreed with DD3; or CD1 agreed with DD4; or CD1 agreed with JW; or CD2 agreed with DD1; or CD2 agreed with DD2; or CD2 agreed with DD3; or CD2 agreed with DD4; or CD2 agreed with JW; or CD1 agreed with DD1 & DD2; or CD2 agreed with DD1 & DD2; or CD1 & CD2 agreed with DD1 & DD2; or CD1 & CD 2 agreed with DD1; or CD1 & CD 2 agreed with DD Etc. 8 S CD = claimant director & DD = defendant director & JW = Austin Jack Warner Page 13 of 19

14 36. Of course, this brings with it the corresponding potential for explanations, alibis, and any other number of possible reasons for there not to have been a concluded oral contract between the parties. Add to that any number of employees and or servants and/or agents all acting on behalf of the company and the permutations of possible contracting players explodes into a smörgåsbord of different varieties of persons who could theoretically have contracted on behalf of the respective companies. What then is the case that the defendants must meet at trial and from whom should witness statements be obtained? 37. Who were the parties privy to this loan agreement and who promised to pay whom by 28 th February 2008? Certainly, attempting to obtain statements from every possible director, employee, servant or agent, who may or may not have had the due authority to have entered into such an oral contract, would be contrary to the overriding objective and would be a colossal task much less for a trial nightmare. 38. On that score, it seems very difficult, if not impossible, for the defendants to properly prepare to defend this action in the manner pleaded. Further, to my mind, the claimant cannot rely on any insinuation that the defendant knows the case the defendant must meet it is the duty of the claimant to lay bare before this court its entire case on the material facts. When was this loan contract agreed? 39. Paragraphs 3 and 4 of the statement of case speak about the payment of five cheques by the claimant to the defendant between the 9 th October 2007 to the 1 st of November That, of course, does not mean those were the dates when the loan agreement(s) was reached it could have been prior to or on the 9 th October (which seems most probable) or it could have been on each of the five occasions that the cheques were issued in favour of and/or delivered to the defendant. 40. Once again, there is no definition of the date when this agreement took place. How, therefore, can the defendant get instructions to meet the case when the date of the agreement is not defined? For example, is it that C1 told D1on the 9 th October 2007 that he/she would loan the defendant the sum of $1,505, Page 14 of 19

15 and pay the sum in five installments or did C1 have five separate loan agreements with D1 on each of the five occasions? Was the conversation held between them on the 1 st of October 2007 instead, in which case the defendants may want to say that could not have happened because D1 was in an ashram in the Himalayas at the time! 41. Once again, it seems impossible for the defendant to meet this case. Conclusion with respect to the loan: 42. Material facts in relation to the alleged loan are not before this court on the statement of case and this court is of the view that, in the circumstances, it is unjust, oppressive and prejudicial to the defendants to allow this case to proceed under the statement of case as pleaded. In particular, when it comes to preparation for trial and the preparation of witness statements, the claimant s case would only then become apparent when its own witness statement(s) have been filed by which time it would be too late for the defendant to address the issue properly in its own witness statement(s) since it may not have pleaded matters which it wishes to raise in witness statements. The defendant s allegations in relation to interest: 43. The defendants attorney-at-lawhas submitted that details in respect of interest were not properly particularized. To my mind, the contract pleaded by the claimant does not include any agreement for interest and the relief sought is statutory interest rather than contractual interest. In those circumstances, this court does not see the relevance of the submission in relation to the particulars sought. The breach of the pre-action protocol: 44. Appendix A to the practice directions in relation to the pre-action protocols deals specifically with claims for a specified sum of money. Page 15 of 19

16 45. Paragraph 1.2 thereof provides: "The claimant shall send to the proposed defendant a letter of claim which should contain a clear summary of the facts on which the claim is based together with any relevant statement of account and the essential documents on which the claimant relies to support the claim." 46. Paragraph 1.4 provides for a response by the defendant within 14 calendar days of the date of receipt of the letter. 47. The pre-action protocol letter sent by the claimant in these proceedings is dated 15 th March 2010 and a response dated 1 st April 2010 was forwarded to the claimant from the defendants attorney at law. The response to that was sent after the filing of these proceedings without providing the information referred to in the letter of 1 st April For the reasons given above, and especially in light of the 2008 letter, the pre-action protocol letter relied upon by the claimant in these proceedings does not, to my mind, conform with paragraph 1.2. This, however, would not, of its own, be sufficient to justify a striking out of the claim in these proceedings. It is, though, a factor to be taken into account by the court when deciding whether or not to make an order under Part 26 or Part 66 of the CPR 10. Had the claimant fully complied with this pre-action protocol as prescribed, the court is of the view that there may have been a possibility (however small) that litigation may have been avoided, depending on the full facts upon which the claimant wished to rely. The court s concerns and observations: 48. The court gets the distinct impression, having regard to the affidavit filed on behalf of the defendant and the exhibits thereto and having regard to the statement of case as pleaded, that less than the bare minimum of facts has been laid before it. 10 See PRE-ACTION PROTOCOLS paragraph 2.1 Page 16 of 19

17 49. The true nature of the transaction, would, to my mind, have had to have been fully set out if only to establish the legality of this alleged loan transaction involving twenty-three separate legal entities not that the court is in any way suggesting that attorney-at-law for either side is complicit in any unlawfulness. It is trite law, however, that a court would not engage itself in condoning any transaction tinged by illegality and it would therefore be necessary for all material facts to have been pleaded to ensure that the court process is properly invoked. It seems hardly conceivable that a transaction of this magnitude between seemingly, on paper, independent legal entities would enter into an arrangement of this scale without a specific agreement and understanding, whether written or oral, between, an assurance by and reliance upon major players on both sides. 50. It must be remembered that this matter is the lead matter in a series of twentythree matters filed by twenty-three various separate claimant companies against the same defendants all of which proceedings have been in respect of alleged loans of substantial sums of money (amounting in total to a sum in excess of $28 million TT) under the same terms and conditions and similar circumstances as pleaded in this matter. It hardly seems, on the bare facts pleaded, to be an arrangement at arms-length but carries with it some deeper purport. Of course, the loan could very well have been negotiated for the preparation, financing or, funding of matters required to be dealt with by the defendant in its business capacity in relation to the indoor facilities at the Centre of Excellence. Then, why not say so? Why not say that the claimant loaned to the defendant the mentioned sum to be used for these purposes which the defendant agreed to repay? Why is there no documentary trail leading up to and including a written loan agreement? 51. The failure to point that out and to plead the full basis upon which the alleged loan arose raises certain doubts, inter alia, with respect to the bona fides of the case. As an aside, it is interesting, and no more than that, that these proceedings were filed just prior to the local national general elections held on the 24 th of May 2010 after incubating for more than two years, and was a matter of public information. Of course, the court is concerned with the law and not otherwise but Page 17 of 19

18 it is necessary for the factual matrix to be properly pleaded to enable the law to be applied meaningfully and judicially and to ensure that the court process is being legitimately invoked. Again, not wanting to cast aspersions whatsoever on any of the counsel involved in these proceedings all of whom have impeccable characters and taking judicial notice of the financial climate and state of the existing law in relation to unexplained transactions involving large sums of money, it is this court's view that a series of transactions such as the one at hand calls for greater details and greater explanation and greater vigilance by the court in the exercise of its discretion when the court process is engaged. It goes without saying that the overriding objective must be exercised within the framework of the law and legal principles and that burden lies, at the outset, with the claimant to establish the legality of the transaction by reference to the full intentions of the parties as they relate to the case at hand. A court cannot just fold its arms and allow itself to be used as a vehicle for the pursuit of rights for which no proper explanation has been proffered. Order: 52. In those circumstances, this court is of the view that the statement of case does not comply with Part 8.6 of the CPR and the court further upholds the defendants attorneys submission that a request for information pursuant to Part 35 would be premature at this stage since the sanction for non compliance with such a request is not exercisable before the time for serving of witness statements has expired nor less than forty-twp days before the date fixed for trial see Part In any event, the claimant refused to respond positively to the defendant s written request made on 1 st April 2010 for details of the alleged loan so that in any event, no further information seems forthcoming. 53. As such, the court strikes out the statement of case pursuant to Part 26.2 of the CPR. Consequently, the claimant s application for summary judgment would be dismissed and the court would invite submissions on the appropriate order for costs and the manner of assessment thereof. Page 18 of 19

19 54. The parties agreed to reduce their submissions with respect to the costs of both applications and in respect of the claim and to file and serve the same by the 30 th day of November 2011 and leave was granted to the parties to respond in writing if necessary by 9 th December 2011; soft copies of all submissions to be forwarded to the court by . Decision on the issue of costs reserved to be delivered on 14 th December 2011 at 9:30 a.m. in POS 15. Devindra Rampersad Judge Page 19 of 19