IN THE HIGH COURT OF JUSTICE SUB-REGISTRY, SAN FERNANDO BETWEEN AND

Transcription

1 THE REPUBLIC OF TRINIDAD AND TOBAGO Claim No. CV IN THE HIGH COURT OF JUSTICE SUB-REGISTRY, SAN FERNANDO BETWEEN ANIL MAHARAJ Trading as A.MAHARAJ TYRE SERVICE Claimants AND RUDY ROOPNARINE First Applicant/First Defendant PAULA KIM ROOPNARINE Second Applicant/Second Defendant Both Trading as REFINERY INDUSTRIAL FABRICATORS LIMITED BEFORE THE HONOURABLE MR. JUSTICE PETER A. RAJKUMAR APPEARANCES: Ms. Tammy Cato for the Claimant Mr. Kingsley Walesby for the 1 st, 2 nd and 3 rd named Defendants Third Defendant REASONS FOR DECISION 1

2 TABLE OF CONTENTS PAGE BACKGROUND 3 ISSUES 3 CONCLUSION 3 ORDERS AND DISPOSITION 5 ANALYSIS AND REASONING 6 THE CLAIM 6 THE STATEMENT OF CASE 6 APPLICATION TO STIKE OUT 8 WHETHER A LIMITATION DEFENCE COULD BE DETERMINED AS A PRELIMINARY ISSUE 8 LIMITATION 10 ACKNOWLEDGEMENT 11 EXAGGERATION 12 REQUIREMENTS FOR PLEADING INTEREST 12 BAILIFF S FEE 16 EXAGGERATED CLAIMS 18 LAW- PIERCING THE CORPORATE VEIL 20 THE DOCUMENTARY EVIDENCE 21 COSTS 23 MATTERS OF SUSPICION & CONCERN 23 CONCLUSION 26 ORDERS AND DISPOSITION 28 2

3 BACKGROUND 1. The claimant s claim is against Rudy Roopnarine and Paula Kim Roopnarine trading as REFINERY INDUSTRIAL FABRICATORS LIMITED, for the recovery of $641,474.04, and bailiff fees of 20% of the sum of $641,474.04, in addition to interest. 2. The total claim is therefore for $769, in addition to interest. 3. The claimant claims this amount allegedly on the basis of work done by him on vehicles in respect of which invoices were issued, which remained unpaid 30 days after their issue date. The invoices span a period from March 3 rd 2008 to December 15 th The first and second named defendants apply to strike out the claim on grounds that amount in effect to alleging that it discloses no grounds for a claim against them personally. In view of the documents filed by the claimant the court also invited submissions on the issues of limitation and the requirements for pleading interest. ISSUES 5. (i) Whether the claims under the invoices, or any of them, are barred by the Limitation of Certain Actions Act. (ii) Whether the statement of case discloses any cause of action against the first and second named defendants. (iii)whether the claim, or any part thereof, can be struck out against the defendants or any of them. CONCLUSION 6. (i) The court can strike out those parts of the claim that are clearly statute barred. (ii) The majority of the claim is based on alleged debts evidenced by invoices, recovery upon which, even if proved, is statute barred. As repeatedly emphasized by the claimant in the 3

4 statement of case, payment was due within 30 days of each invoice date. Save for five of the invoices, (#3927, #3928, #3934, #3904 and #4378), all are dated more than 4 years and 30 days before the filing of the claim form herein. (iii)those invoices remaining, upon which recovery is not obviously statute barred, (#3927, #3928, #3934, #3904 and #4378) total $ (iv) Accordingly the claim is struck out against all the defendants in so far as it is based on any invoices apart from those numbered #3927, #3928, #3934, #3904 and #4378. (Although the defendant disclosed invoice #3915 for $1, dated November 25 th 2008 as one in respect of which it claims, the claimant does not include this in its bundle of documents). 5. The claim for bailiff s fee of 20% of the claim is similarly struck out as against all the defendants as, (even if permitted by statute,) no basis is pleaded in the statement of case for attributing any such fee, to the defendants or either of them (even if agreed between the claimant and a bailiff). In any event the initial figure claimed of $641,474.04, upon which 20% was claimed as bailiff fees has been disallowed, save as to $ The basis for any alleged interest component of 5% per month accruing on each invoice has not been pleaded in any form, as required by the Civil Procedure Rules 1998 (the CPR), so as to permit its inclusion. i. The claim consists largely of unpleaded and unparticularised interest at the rate of 5% per month. This only became apparent when the clamant filed its bundle of documents pursuant to this court s order; ii. Apart from that interest itself not being pleaded or particularized as required by the Civil Procedure Rules 1998 (the CPR), there is no pleading as to how such a term for that rate of interest, even if permitted by statute, came to be incorporated into any contract between the claimant and the defendant. iii. Any such claim for interest in those circumstances must be, and is, disallowed, and, as against all the defendants, any portion of the claim based on interest is accordingly struck out. 4

5 7. There is no basis pleaded to justify piercing/lifting the corporate veil, and/or ascribing personal liability to the first and second named defendants. For this reason the claim against the first and second named defendants is struck out in its entirety. 8. As against the third named defendant, the claimant s claim is struck out in its entirety, save for the non statute barred portion of the claim. This would be in respect of invoices, #3927 for $2,231.00, #3928 for $379.50, #3934 for $ and #4378 for $ and #3904 for $ The claim can proceed against the third named defendant only in respect of their total of $ ORDERS AND DISPOSITION 7. i. The claim against the first and second named defendants is struck out in its entirety. ii. Pursuant to Part 67.5 (2) (b) (i) of the Civil Proceedings Rules 1998 the Claimant is ordered to pay the First and Second Defendants their costs of these proceedings at the prescribed level (70%) in the sum of $64, based upon the total value of the claim- $769, iii. The claimant s claim is struck out save for the non statute barred portion of the claim against the third named defendant which can proceed against the third named defendant only in respect of the amount of $ (on invoices, #3927 for $2,231.00, #3928 for $379.50, #3934 for $ and #4378 for $ and #3904 for $977.50). Any interest claim on these invoices is struck out and/or disallowed. iv. The claimant and the defendant are to file and exchange witness statements on or before April 29 th 2013 in default of which the claimant s claim do stand dismissed. v. The judgment herein is to be forwarded to the Registrar of the Supreme Court, (who has supervisory jurisdiction under the Bailiffs Act with respect to Bailiffs), and authority to make referrals under the Legal Profession Act), to take such action as may be necessitated in respect of the bailiff and the attorneys at law, whose conduct has been the subject of comment in this case. 5

6 ANALYSIS AND REASONING THE CLAIM 8. By letter from Beckles and Associates dated September 5 th 2011 the sum of $216, was claimed as due and owing. It asserted if this sum together with legal cost of $ is not paid within 7 days of receipt of this letter legal action would be vigorously pursued against you in the High Court of Justice or alternatively the services of a bailiff would be employed to recover same. 9. By Claim form and Statement of Case filed on October 31 st 2012 the sum of $641, was claimed in addition to Bailiff Fees at 20% of the total ($641,474.04) value to date The pleadings in the statement of case are set out as they are relevant to the application to strike it out. THE STATEMENT OF CASE (emphasis added) The Claimant was at all material times the owner of A. MAHARAJ TYRE SERVICE of No.4 Southern Main Road, Claxton Bay and a service provider of the Defendants. 2. That the Defendant was at all material times the customer of the Claimant. 3. The relationship between the Claimant and the Defendants is one of a business nature, which existed for the past twelve (12) years. 4. The Claimant was always in the practice of conducting repair works to the vehicles of the Defendants and being paid within 30 days of the Invoice date. 5. It was always mutual verbal understand(sic) of the both parties that the Claimant s Company would conduct repairs to the Defendants vehicles at any given time, on the basis of the mutual and verbal agreement, that the Defendant would pay all expenses associated with the repairs within 30 days of the Invoice date to the claimant. 6. The mutual verbal agreement was enjoyed by both the Claimant and the Defendant with little to no interruptions or dispute for the past twelve (12) years. 7. The Defendants, both in person and through their employees took vehicles to the Claimant s company seeking various types of services from the Claimant. The Claimant made the necessary repair works, to the Defendants vehicles and released the said vehicles to the 6

7 Defendants (as was the norm for the past twelve (12) years) together with the Invoice, which was to be paid within 30 days of the Invoice date. 8. The Claimant conducted work on the Defendants vehicles amounting to the sum of Six Hundred and Forty One Thousand Four Hundred And Seventy Four Dollars And Four Cents ($641,474.04). 9. The Claimant continued caring (sic) out repair work on the Defendants vehicle ( sic) despite the outstanding sum owed, as the Claimant was assured by the Defendants via telephone and in person conversations that the outstanding balance would be paid. Given the twelve (12) year history of the Claimant and the Defendants business relationship the claimant allowed the Defendants the time needed to pay the outstanding sum. 10. The said sum is a debt due and owing by the Defendants to the Claimant s (sic) for work conducted by the Claimant s company, whilst the Defendants and the Claimant were functioning under the mutual verbal agreement which existed and was upheld by both the claimant and Defendant, for some twelve (12) years prior to this action. 11. Under the said mutual verbal agreement, the said sum was payable at the end of every month which always honored (sic) by the Defendants up until Several requests were made to the Defendants to have the outstanding sum pay, by to no avail (sic). 12. By letter to the Defendant dated the 16 th December, 2010, 28 th day of April, 2011, 5 th September, 2011, and the 12 th October, 2012, the Defendants have failed and/or refused to settle the outstanding debt. 13. On or around January, 2011, the Claimant employed the services of AARS investigation Agency of No.17 Lord Street, San Fernando, a License (sic) Bailiff, to assist in recovering the moneys owed and outstanding by the Defendants to the Claimant s company. 14. To date the Defendant is outstanding to the Claimant (sic) in the amount of Six Hundred And Forty One Thousand Four Hundred And Seventy Four Dollars And Four Cents ($641,474.04) together with the addition (sic) sum of Bailiff (sic) and the cost of seeking legal advice and filing this action. AND THE CLAIMANT CLAIMS: The sum of Six Hundred and Forty-One Thousand Four Hundred and Seventy- Four Dollars and Four Cents ($641,474.04) 7

8 2. Interest 3. Bailiff Fees at 20% of the total Six Hundred and Forty One Thousand Four Hundred and Seventy Four Dollars and Four Cents ($641,474.04) value to date. 4. Costs 5. Such further and other relief. There is a certificate of truth signed by the claimant, and a certificate of value by attorney at law. APPLICATION TO STRIKE OUT 12. i. No documents are attached to the Statement of Case. ii. The court gave directions at the first case management conference February 8 th 2013 for the filing of all documents on which the claimant was relying. iii. An application to strike out the claim against the first and second named defendants was filed by the claimant on March 7th 2013 and is primarily based on grounds that amount to an assertion that there was no material pleaded, that would permit the court to ascribe personal liability to them, and/or permit the piercing of the corporate veil of the third named defendant. iv. Based upon the documents filed pursuant to the court s direction on February 8 th 2013 the court invited written submissions also on the issues of limitation and the requirements for pleading interest. 13. It cannot be disputed that the court can consider a limitation defence at this stage, and whether or not to strike out the claim as an abuse of process. For this purpose, and this purpose alone, all the matters in the statement of case are assumed to be fact. WHETHER A LIMITATION DEFENCE COULD BE DETERMINED AS A PRELIMINARY ISSUE 14. Part 15.2 (b) of the Civil Proceedings Rules 1998 provides that:- The court may give summary judgment on the whole or part of a claim or on a particular issue if it considers that (b) on an application by the defendant, the claimant has no 8

9 realistic prospect of success on the claim, part of claim or issue. Part 26.2(1) of the Civil Proceedings Rules provides that:- The court may strike out a Statement of Case or part of a Statement of Case if it appears to the court (b) that the statement of case or the part to be struck out is an abuse of the process of the court; (c) that the statement of case or the part to be struck out discloses no grounds for bringing or defending a claim. 15. It is clearly established in this jurisdiction that an application that the Claim Form and Statement of Case be struck out pursuant to Part 26 (2) of the Civil Procedure Rules 1998 (the CPR) is permissible in relation to a defendant s preliminary issue that a limitation defence applies. See Civil Appeal No. 171 of 2012 Kenneth Julien Et Al and Evolving Tecknologies v Enterprise Development Company Limited. 16. It was there held that the issue of a limitation defence should be heard as a preliminary issue as the facts on which the appellants relied in their applications were not in dispute, taking into account the time wasted, as well as the expense incurred in going to trial, if the claim should be dismissed at trial on the very grounds on which the application is based. (Per the Honourable Bereaux paragraph [46] But in my judgment, to proceed to trial and hear the entire evidence is effectively to deprive the appellants of the benefit of the limitation provisions which are intended to liberate a litigant from the oppression of defending a stale and dated claim. [47] It is fair that the entire question of limitation under section 14(2) (section 14(2) of the Limitation of Certain Actions Act Chap 7:09 in that case) be addressed first. If the appellants succeed it will save costs and even if they do not then it eliminates one major issue and the trial proceeds on the pure question of breach of duty. 9

10 17. In the instant case the facts asserted in the claimant s pleaded case were assumed, and the effect, on the facts so assumed, of issues of limitation, and date of breach, were considered. LIMITATION 18. Section 3 (1) of the Limitation of Certain Actions Act Chapter 7:09 provides that an action for breach of contract shall not be brought after the expiry of four years from the date on which the cause of action accrued. 3. (1) The following actions shall not be brought after the expiry of four years from the date on which the cause of action accrued, that is to say: (a) actions founded on contract 19. The claimant claims in his statement of case that the invoices upon which this claim is based became due 30 days from their date. As stated in Nykredit Mortgage Bank plc - v - Edward Erdman Group Ltd (No 02) [1998] 1 ALL E.R. 305 at pages 308 Paragraph (b) and 310 Paragraph (b), per Lord Nicholls (all emphasis added): Accrual of a cause of action: actual damage As every law student knows, causes of action for breach of contract and in tort arise at different times. In cases of breach of contract the cause of action arises at the date of the breach of contract 20. The contract evidenced by the issue of each invoice would have been breached after it remained unpaid for 30 days. The Claimant s claim was filed on the 31 st October, That being so, recovery on all the invoices prior to October 1 st 2008, being 4 years and 30 days before the issue of the claim form, would be barred by statute, limitation having been expressly pleaded. 21. The invoices submitted by the Claimant, upon which it relies as the basis of its claim, all date back more than four years and 30 days prior to the institution of these proceedings, save for the following: Invoice amount invoice date amount claimed with interest at 5% per month 10

11 #3927 for $2, Dec 5 th 2008 $18, #3928 for $ Dec 5 th 2008 $3, (one tube, service and labour) #3934 for $ Dec 15th 2008 $6, #4378 for $ October $4, (one tyre one tube, labour, VAT) #3904 for $ November $8, Total - $4, The claimant s attempt to argue that the limitation period does not defeat recovery upon the majority of the invoices is found in the written submissions filed on his behalf as follows: 1. The said correspondence dated 16 th December, 2010 puts the due date as 16 th March, 2011 (three (3) months later as so indicated) so that the matter is not statue barred. 2. According to the time purport (sic) of Section 3 (1)(a) of the Limitation of Certain Actions Act Chapter 7:09, four (4) years will be calculated on or about 16 th March, 2011 to expire on or about 16 th February, ( sic) It suffices to say this is wrong in principle, and misleading. ACKNOWLEDGEMENT 23. It is for the claimant to set out in his statement of case all the matters on which his claim is based. He pleads merely verbal acknowledgements. Even assuming, which the defendants deny, that there was ever a verbal acknowledgement of any debt by any of the Defendants, this would still have been insufficient to stop time running for limitation purposes under the Act. 24. Section 13 of the Limitation of Certain Actions Act 13. For the purposes of this Act (a) an acknowledgment shall be in writing and signed by the person making the acknowledgment; and (b) an acknowledgment or payment shall be evidenced by writing and may be made by the agent of the person by whom it is required to be made and shall be made to the person, or to an agent of the person, whose title or claim is being acknowledged or, as the case may be, in respect of whose debt the payment is being made. 11

12 25. The Claimant is required under Section 13 of the Limitation of Certain Actions Act to establish that there was such an acknowledgment or payment made in writing and signed by any of the Defendants.However, the Claimant in its Statement of Case has not pleaded a partpayment nor attached any written evidence of either part-payment or acknowledgment of the alleged debt. 26. Further, the court s direction of February 8 th 2013 required all documents in support of the claim to be filed. No such document was among the documents filed pursuant to that order. The only claims of the Claimant which are not statute-barred, and therefore maintainable, would be in relation to the invoices listed hereinabove totalling $ The entirety of the claimant s claim, save for that based on the invoices itemized above, is therefore struck out. EXAGGERATION AND MATTERS OF SUSPICION Failure to Annex documents in support of claim 27. The Claimant failed to annex or to identify a copy of any documents pursuant to Part 8.6(2) of the Civil Proceedings Rules 1998 which he considered necessary to his case. He only filed documents after the defence was filed, and pursuant to the Court s order to do so. In the circumstances of this case, which is based upon invoices which allegedly remained unpaid, attracting interest over the years, the failure to file such documents originally is a matter of suspicion, and is part of the context that a court can take into account in assessing the weight and value of documents filed subsequently. REQUIREMENTS FOR PLEADING INTEREST 28. Part 8.5 (3) of the Civil Proceedings Rules 1998 expressly provides that:- If the Claimant is seeking interest, he must (a) Say so expressly on the claim form, and (b) Include details of (i) The basis of entitlement; (ii) The rate; (iii)the period for which it is claimed; 12

13 (iv) Where the claim is for a specified amount of money, the total amount of interest claimed to the date of the claim; and (v) The daily rate at which interest will accrue after the date of the claim, on the claim form or in his statement of case. 29. There was no compliance with Part 8.5 (3) of the Civil Proceedings Rules It therefore does not appear from the statement of case that most of the claim consists of interest. In fact it only appears from the documents subsequently filed by the claimant, that the claimant is actually claiming interest at the incredible rate of 5% per month. 30. The effect of this is that:- a. A claim for $2, INV#3927 from Dec 5 th 2008 becomes a claim for $18, b. A claim for $ (for one tube, service and labour) INV#3928 from Dec 5 th 2008 becomes a claim for $3, c. A claim for $ INV# 3934 from Dec 15th 2008 becomes a claim for $6, d. A claim for $ for one tyre, one tube, labour, VAT) - INV#4378 from October becomes a claim for $4, e. A claim for $ INV #3904 from November becomes a claim for $8, Each figure is thereby multiplied by a significant and exorbitant factor. 31. It is clear that this claim is exaggerated to an unusual extent. Each invoice is actually for amounts far less than that for which a claim is presented, as appears from the table hereinabove. However the claimant claims interest at the rate of 5% per month. This rate of interest, applied to all the invoice amounts, including those statute barred, purportedly increases the amount to the figure of $641, In this case the apparent reluctance to file documents, clearly necessary to the maintenance of the claim, justifies the inference that it was an attempt to conceal the true nature of an inordinately exaggerated claim, one that was :- a. largely statute barred, and in any event, b. excessively exaggerated by the inclusion of an unpleaded interest factor of 5 % per month, and, 13

14 c. significantly in excess of the amount of $216, originally claimed by letter dated September 5 th It is clear from the Statement of Case and the List and Bundle of Documents filed by the Claimant that the Claimant has included interest in its claim without pleading the amount of interest, the basis for claiming interest, the rate of interest, the period for which interest is claimed and the daily rate of interest. The failure of the Claimant to do so is in breach of Part 8.5(3) of the Civil Proceedings Rules Such an interest figure does not appear in the invoices. Neither is the calculation of the interest figure pleaded in the manner prescribed by the Civil Proceedings Rules The claimant s justification for claiming this interest is set out in its written submissions as follows 1. By correspondence dated 16 December, 2010, exhibited as No. 34 on the Claimant s List and Bundle of documents filed on 1 st March,2013; the claimant s time starts to run from the date the sum becomes due and owing and not the date of the invoices. 7. Further, by the said document letter dated 16 December, 2010 they were informed of the interest and they made no objections at the material time. 35. This verges on the absurd. The invoices to which this interest rate is being applied date from March to December Yet the claimant claims in his submissions that it can be retroactively incorporated and applied to amounts in invoices issued 2 years previously. It is a curious misunderstanding of the basis on which a term for the payment of such interest would be incorporated into any contract between the claimant and the defendant. 36. As a result the Claimant s claim for interest in so far as it is contained in the total claim of $641, cannot be sustained. Having regard to the Claimant s failure to comply with Part 8.5(3) of the Civil Proceedings Rules 1998 there is no basis upon which the Court should award such interest, especially in light of the fact that there appears to be a deliberate attempt to conceal that most of the claim in fact consists of such interest, allegedly at the rate of 5 % per month. 14

15 37. The basis of the calculation has not been provided so as to permit the court to determine whether this is a claim based on simple interest at that rate, or whether it comprises interest upon interest at the already exorbitant, and unpleaded, rate of 5 per cent per month. 38. It is clear that the Civil Proceedings Rules 1998 were intended to reveal abuses such as the instant one, where a claim is exaggerated to an exorbitant level by the unpleaded, unparticularised, and therefore concealed, claim for excessive interest. 39. If the claim had been properly pleaded it would have been obvious that the principal amounts being claimed were as stated in the invoices, and that an interest rate of 5% per month was responsible for the hyperinflation of the claim. The failure to properly plead the interest being claimed amounts in effect, if not intention, to concealment, and is suspicious in the extreme. This is coupled with the distortion in the claimant s written submissions of the law regarding the commencement of limitation periods - (in effect - the period of limitation claimed to run from the date when the letter of demand makes it due March 16 th 2011, expiring on February 16 th (sic). 40. The period of limitation does not run from the date of March 16 th 2011 as claimed by the claimant s attorney. It runs from the date of breach of contract that is 30 days after the date of each invoice. It is clear that the court s process is being abused to present a highly exaggerated claim. It is equally clear that claims upon all such invoices would be statute barred, save for the invoices above totalling $ The court can strike out those parts of the claim that are clearly statute barred. This court has no hesitation in doing so, asi. Save as to $ , the claim for $769,768.85, is based on debts evidenced by invoices, recovery upon which would statute barred, ii. Further, and in any event, the claim consists largely of unpleaded interest at the rate of 5% per month, 15

16 iii. Apart from that interest itself not being pleaded, there is no pleading as to how such a rate of interest, even if permitted by statute, came to be incorporated into any contract between the claimant and the defendant. BAILIFF S FEE 42. The alleged bailiff s fee is based on 20 % of the exaggerated claim. As appears from a document filed in the claimant s bundle of documents, on September 9 th 2011 the claimant gave authorization to one Oswald Alexis of AARS Investigation Agency of 17 Lord Street San Fernando, bailiff to act as his agent to recover debts due and owing to him. In that document he stated that Rudy Roopnarine and Paula Kim Roopnarine trading as Refinery Industrial Fabricators Limited is ( sic) indebted to me in the total sum of $216, Subsequent thereto a letter headed without prejudice, (which could not be, as it also purports to be a pre action protocol letter,) claims the sum of $216, with accumulated interest, resulting in the instant claim for $641, It is silent on the basis for the alleged interest claim, which resulted in the almost tripling of the sum claimed from September 2011 to October The Bailiffs Act Chapter 4:61 provides:- 9. (1) The functions of a bailiff under this Act are to (a) levy execution in accordance with a judgment of a Judge of the Petty Civil Court; (b) serve documents from a Court of summary jurisdiction; (c) levy tenant s goods for arrears of rent as provided for under the Landlord and Tenant Ordinance; and (d) repossess goods on hire purchase in accordance with the Hire Purchase Act. (2) The functions listed in subsection (1)(a) and (b) shall be performed exclusively by a public service bailiff and the other functions listed in subsection (1)(c) and (d) shall be performed exclusively by any other bailiff. 16

17 (4) No person shall engage in business as a bailiff while an employee of or engaging in the business of a debt collection agency. (8) A bailiff shall not charge any costs or fees other than those prescribed. 45. A Bailiff s fee is prescribed by the Regulations made under section (1) The fee to be charged by a bailiff for levying distress and sale of goods shall not exceed twenty-five per cent of the arrears of rent or the arrears due on a hire purchase agreement. 46. The Regulations made under that Act make specific provision, as set out hereunder, for oversight of a bailiff s charges when he levies distress. It is even provided that items of fees and expenses may be disallowed by a magistrate if he is of the view that any such items have been improperly charged. 11. (1) A bailiff levying distress shall make a return to the Magistrate of the Petty Civil Court of the District in which the levy is made within three days after levy, setting out the date and place of levy and a detailed list of the goods levied upon. (2) Where a sale takes place a bailiff shall prepare and render within seven days a detailed account of his receipts, fees and expenses to the Magistrate who may disallow any item improperly so charged and in such case may order the bailiff to refund the amount thereof to the person entitled to receive the balance of the proceeds of the sale. 47. A code of conduct is prescribed which stipulates as follows:- CODE OF CONDUCT FOR BAILIFFS 1. A bailiff shall exemplify high standards of integrity and honesty in the performance of his duties and responsibilities. 48. There is no basis prescribed for fees charged for recovery of an amount merely claimed, and that is not a function recognized under the Bailiffs Act. However the CPR prescribes the fees recoverable by a claimant as reimbursement for attorney s fees in respect of High Court actions instituted by attorneys at law. These are set out in the schedule to Part 67 of the CPR. Those 17

18 amounts are based on the amounts proved and/or determined by the High Court to be due and owing, not on the amounts merely claimed. 49. An attorney at law would be unable to claim as against a defendant costs at a flat rate of 20% of a claimed debt of $641, Even if the claimant were to succeed on the full amount of his claim, the costs payable to him in respect of his attorney s fees, if the matter were to proceed to a full trial, would be less than $90, A flat rate fee of 20% of a claimed debt of $641, that is $128, included in a claim on behalf of a bailiff is therefore obviously excessive. For any such fee to be claimed against an alleged debtor in respect of recovery of an alleged debt by a bailiff it must be justified by statute. For any such fee to be claimed in that excessive and exorbitant amount, and without any judicial oversight whatsoever, in respect of a mere unproven claim, demonstrates the significant potential for abuse of the licence granted to a bailiff Exaggerated Claims 51. In relation to insurance claims it has been stated that:- The excess may be so great as to justify the conclusion that, having regard to the circumstances, the exaggeration of the amount cannot be an honest estimate but must have been intended to deceive the insurers and to induce them to pay a larger sum than is properly payable; in this case the exaggeration is fraudulent 6. An exaggeration of amount may also be classified as fraudulent where the insured puts forward deliberately exaggerated figures, not for the purpose of inducing the insurers to pay the full amount of the claim, but for the purpose of fixing a basis upon which to negotiate a settlement 7 Halsbury s Laws of England Volume 60 (2011) 5 th Edition paragraph In Danepoint Ltd v Allied Underwriting Insurance Ltd [2005] EWHC 2318 (TCC) it was stated as follows: [50] Mr Rhys also helpfully drew my attention to the definition of dishonesty in Twinsectra Ltd. v Yardley [2002] UKHL 12, [2002] 2 AC 164 in which Lord Hutton observed: 18

19 ... it must be established that the Defendant's conduct was dishonest by the ordinary standards of reasonable and honest people and that he himself realised that by those standards his conduct was dishonest. I will term this 'the combined test'. [56] It seems to me that mere exaggeration of an insurance claim will not of itself be fraud. On the other hand, exaggeration which is wilful, or which is allied to misrepresentation or concealment will, in all probability, be fraudulent. In addition, I consider that exaggeration is more likely and more excusable where the value of the particular claim or head of loss in question is unclear or a matter of opinion; where, as Lord Hoffmann put it, the insurer's loss adjuster is in as good a position to value the claim as the insured. Conversely, where the value of the claim is or should be clear-cut, and the information on which it is based is wholly within the control of the insured, exaggeration is much less easy to excuse and thus much more likely to be fraudulent. (All emphasis added). 53. The above dicta relate to insurance claims which are based on contracts of utmost good faith. Nevertheless, in so far as they illustrate that, beyond a certain degree, an exaggerated claim may become a fraudulent one, it is considered reflective of both common sense and law. 54. While mere exaggeration need not in itself be fraud unless allied to misrepresentation or concealment, I find that the major aspects of the instant claim were misrepresented or concealed, namely:- a. The invoices themselves which would have revealed that claims upon them were largely statute barred, and b. the fact that interest, though not pleaded, was being calculated and included in the total claimed, at the rate of 5% per month, and in fact accounted for the majority of the claim. When those factors are compensated for, what is left of the claim is the total of $ out of an original claim of $769,

20 c. Further, just one year prior to the instant claim being filed, the initial claim was for $216, The fact that the claim almost tripled in quantum in the course of a year was known to the defendant and his advisors. d. In addition, as set out hereunder, no material is pleaded that discloses a cause of action against the first and second named defendants, separate from any claim against the third named defendant, a limited liability company. The fact that there was no such material must have been within the knowledge of the claimant and his advisors. 55. This claim is therefore demonstrably an abuse of the court s process. LAW PIERCING THE CORPORATE VEIL 56. The further assertion is made that the claim should be struck out in its entirety against the first and second named defendants as there is no material pleaded which would permit or require the piercing of the corporate veil, and in any event the second named defendant became a director after the alleged invoices were issued. 57. The statement of case refers to the Defendant as the customer, and to the agreement as being between the claimant and the defendant. It refers to agreement between both parties and the obligation to pay as being that of the defendant (paragraphs, 5, 6, and 10 of the statement of case.) When the term Defendants is used in the possessive it omits any apostrophe to denote whether it is intended to be in the singular or the plural. 58. The basis of the alleged liability of the personal defendants is unclear, and in all material aspects appears to contemplate an agreement with, and a breach of payment obligation by, only one defendant. Although there are occasional references in the Statement of Case to the defendants, i. the customer is the defendant, ii. the agreement is with the defendant, and 20

21 iii. the obligation to pay is that of the defendant. 59. The pleading, apart from its grammar, is itself confused as to the basis if any, of the liability of the first and second named defendants, and no cause of action is discernible against them. 60. The claimant contends in its sparse written submissions, that those defendants were directors at the date of demand. The claimant is silent on the further submission that the basis for lifting the corporate veil, or ascribing personal liability to them, has not been pleaded. THE DOCUMENTARY EVIDENCE 61. The Claimant and the Defendants were ordered to file all documents upon which they were relying. These reveal clearly that the Third Defendant was a limited liability company at the time of the invoices. i. Item 1 in the List and Bundle of Documents of the Defendants filed on the 20 th February, Certificate of Incorporation of the Third Defendant dated the 9 th November, ii. The Supplemental List and Bundle of Documents of the Defendants filed on the 7 th March, Certificate of Continuance dated the 7 th July, 1998 under the Companies Act iii. Further the invoices disclosed by the Claimant and by the Defendant in their respective lists and bundles are issued to R.I.F.L. This is clearly an abbreviation of Refinery Industrial Fabricators Limited, the Third Named Defendant in this matter, and this is the party which is actually sued as the Third Named Defendant. This demonstrates that the Claimant was at all times aware of the Third Named Defendant s status as a limited liability company. iv. No documents have been filed by the Claimant to contradict the status of the Third Named Defendant as a limited liability company. 21

22 62. In order to impose personal liability on the First and Second Defendants, the Claimant is required to plead all the relevant material facts to establish that there was a reasonable cause of action against them, separate from any liability of the third named defendant. 63. The Third Named Defendant is a limited liability company which is a separate legal entity. To attempt to include the First and Second Named Defendants who are individuals, separate and distinct from the company, more is required to be pleaded than a mere assertion that they are trading as the third named defendant. PIERCING THE CORPORATE VEIL 64. In Kay Aviation b.v. v. Rofe (2001) PESCAD 7 (P.E.I. C.A.), the court observed at paragraph 25: The minimum level of material facts in a statement of claim founded on causes of action against an officer, director or employee of a corporation with whom the plaintiff has contracted is very high. The imposition of personal liability on an employee, officer or director of a company is the exception rather than the rule. To justify a departure from this rule a plaintiff must plead all the relevant material facts to establish there is a reasonable cause of action. In the absence of specifically pleaded material facts the action against the director, officer or employee of the corporation will be struck. See: Serel v Ontario Ltd., [1996] O.J. No (Gen. Div.). This is particularly so where the plaintiff is not a stranger to the defendant. In the case at bar, for example, the respondent has contracted with the corporation in which the appellant is sole director and officer and with full knowledge of the inherent limits to liability. 65. In Montreal Trust Company of Canada v. ScotiaMcLeod Inc. (1995) 129 D.L.R. (4th) 711 at 720 (Ont. C.A.), the court summarized the circumstances under which the corporate veil can be pierced to render directors or officers of a company liable as follows: The decided cases in which employees and officers of companies have been found personally liable for actions ostensibly carried out under a corporate name are fact-specific. In the absence of findings of fraud, deceit, dishonesty or want of authority on the part of employees or officers, they are also rare. Those cases in which the corporate veil has been pierced usually involve 22

23 transactions where the use of the corporate structure was a sham from the outset or was an afterthought to a deal which had gone sour. There is also a considerable body of case-law wherein injured parties to actions for breach of contract have attempted to extend liability to the principals of the company by pleading that the principals were privy to the tort of inducing breach of contract between the company and the plaintiff: see Ontario Store Fixtures Inc. v. Mmmuffins Inc. (1989), 70 O.R. (2d) 42 (H.C.J.), and the cases referred to therein. Additionally there have been attempts by injured parties to attach liability to the principals of failed businesses through insolvency litigation. In every case, however, the facts giving rise to personal liability were specifically pleaded. Absent allegations which fit within the categories described above, officers or employees of limited companies are protected from personal liability unless it can be shown that their actions are themselves tortious or exhibit a separate identity or interest from that of the company so as to make the act or conduct complained of their own. 66. The claimant in the instant case has not pleaded fraud, deceit, fraudulent misrepresentation, or dishonesty, nor has he pleaded any other material facts specific to ascribing liability to the personal defendants. 67. The Claimant s claim against the First and Second Defendants as pleaded discloses no basis for ascribing personal liability to them or for lifting the corporate veil. 68. Accordingly the Claimant has no realistic prospect of success on its claim against the First and Second Named Defendants. The claim is struck out against them with the Claimant to pay their costs. COSTS 69. The Claimant s pleaded claim is for $769, based upon the amounts of the first relief ($641,474.04) and the third relief ($128,295.00) sought by the Claimant in its Claim Form and Statement of Case. 23

24 70. Pursuant to Part 67.5 (2) (b) (i) of the Civil Proceedings Rules 1998 the Claimant is ordered to pay to the First and Second Defendant their costs of these proceedings at the prescribed level (70%) in the sum of $64, based upon the total value of the claim. MATTERS OF SUSPICION AND CONCERN 71. In light of the result of this application, and in the disquieting circumstances of this claim, this court is constrained to express certain observations. 72. The fact that it has been necessary to determine that out of a claim for $769,768.85, the only possibly valid component remaining is for a sum of less than $ , does not reflect at all well on those responsible for presenting such a claim. The majority of the claim is based on interest claimed at the rate of 5% per month, which is concealed by the omission to plead it. 73. Further, recovery upon the majority of the invoices, on which the claim is purportedly based, is barred by the Limitation of Certain Actions Act. 74. These are basic matters, and the fact that a highly exaggerated claim is presented despite these being matters that would be known by any competent attorney at law, is curious. Coupled with the fact that it is further increased by the inclusion of a claim for bailiff s fees of 20% on an already highly exaggerated and inflated claim is extremely suspicious. 75. When an attorney at law facilitates such a claim by:- a. Failing to exhibit the documents in support of such a substantial claim, concealing thereby that actions on all the invoices on their face, save for five, would have been statute barred. b. pleading verbal acknowledgements to attempt to defeat this defence, without regard to the fact that the Limitation of Certain Actions Act s.13 requires any such acknowledgement to be in writing. 24

25 c. disregarding the proper parties to the action, including personal defendants as parties,under the guise that they were trading as a limited liability company, without pleading any matter that would justify ascribing personal liability to them or piercing the corporate veil, d. grossly inflating the claimi. by increasing the amount initially claimed, from $216,000.00, (as reflected in an original letter of demand, and in an authorization by the claimant to a bailiff), to $769, in the claim form, ii. by adding to the sums, initially claimed in the invoices, purported interest at the rate of 5% per month. e. failing to plead interest in the manner prescribed by the CPR, concealing thereby that the majority of the claim in fact comprises interest calculated at the exorbitant rate of 5 % per month. f. misrepresenting in written submissions the law relating to the time when the cause of action would have accrued, 76. A court is required to take notice, as it is the process of the court which is being utilized to obtain judgment on such a claim. As in the instant case, a. when an attorney at law threatens legal action over an debt allegedly incurred by a company, suggesting that it is open to the claimant in the alternative to retain the services of a bailiff, b. when the alleged debt is based on invoices, with interest being claimed thereon at the rate of 5% per month, but this is concealed by failure to plead or particularise such interest, c. when action on all the invoices save five, is barred by statute, and the invoices themselves are concealed by not being exhibited to the statement of case, d. when a bailiff s fee of $128, is added to such an alleged debt to increase the amount allegedly due to $769,768.85, 25

26 e. when in fact the valid component of such a claim is only $ , rather than $769,768.85, then this multitude of mistakes must raise red flags. 77. A claim for $ , masquerading as a claim for $769,768.85, is unlikely to be a mistake. The effects of incompetence on the one hand, and dishonesty on the other, are sometimes difficult to distinguish. The practical result in either case is to subject the defendants to pursuit of a largely statute barred, and in any event highly exaggerated, claim for in excess of $$769,768.85, with alleged bailiff s fees being tacked on to a claim that has not been assessed and verified by a court or made the subject of a judgement. 78. A claim in the circumstances such as set out above has the potential to bring the legal process, the legal profession, and the system of administration of justice into disrepute, if litigants are permitted to employ the court process to harass potential defendants with exaggerated and unmeritorious claims. 79. Curiously the attorney at law threatened under the guise of a preaction protocol letter, to institute legal proceedings or to retain the services of a bailiff. The suggestion is thereby made that a bailiff can be used in substitution for the court s legal process to recover a claimed amount. 80. An attorney at law who lends the legitimacy of the legal profession to what, as it turns out, is a device to increase a claim of approximately $ to one for $769,768.85, and threatens to bypass the process of the court to enforce what is merely a claim, must explain such action. 81. The inflation of this claim and the concealments referred to above, have the potential to bring discredit to the legal profession, and to the body of Bailiffs, both of whom are bound by a code of conduct and ethics. 82. In the circumstances outlined above the judgment herein is to be forwarded to the Registrar of the Supreme Court, (who has supervisory jurisdiction under the Bailiffs Act with respect to Bailiffs), and authority to make referrals under the Legal Profession Act), to take such 26

27 action as may be necessitated in respect of the bailiff and the attorneys at law, whose conduct has been the subject of comment in this case. CONCLUSION The court can strike out those parts of the claim that are clearly statute barred. 2. The majority of the claim is based on alleged debts evidenced by invoices, recovery upon which, even if proved, is statute barred. As repeatedly emphasized by the claimant in the statement of case, payment was due within 30 days of each invoice date. Save for five of the invoices, (#3927, #3928, #3934, #3904 and #4378), all are dated more than 4 years and 30 days before the filing of the claim form herein. 3. Those invoices remaining, upon which recovery is not obviously statute barred, (#3927, #3928, #3934, #3904 and #4378) total $ Accordingly the claim is struck out against all the defendants in so far as it is based on any invoices apart from those numbered #3927, #3928, #3934, #3904 and #4378. (Although the defendant disclosed invoice #3915 for $1, dated November 25 th 2008 as one in respect of which it claims, the claimant does not include this in its bundle of documents). 5. The claim for bailiff s fee of 20% of the claim is similarly struck out as against all the defendants as, (even if permitted by statute,) no basis is pleaded in the statement of case for attributing any such fee, to the defendants or either of them, (even if agreed between the claimant and a bailiff). In any event the initial figure claimed of $641,474.04, upon which 20% was claimed as bailiff fees has been disallowed, save as to $ The basis for any alleged interest component of 5% per month accruing on each invoice has not been pleaded in any form, as required by the Civil Procedure Rules 1998 (the CPR), so as to permit its inclusion. 27

28 i. The claim consists largely of unpleaded and unparticularised interest at the rate of 5% per month. This only became apparent when the clamant filed its bundle of documents pursuant to this court s order; ii. Apart from that interest itself not being pleaded or particularized as required by the Civil Procedure Rules 1998 (the CPR), there is no pleading as to how such a term for that rate of interest, even if permitted by statute, came to be incorporated into any contract between the claimant and the defendant. iii. Any such claim for interest in those circumstances must be, and is, disallowed, and, as against all the defendants, any portion of the claim based on interest is accordingly struck out. 7. There is no basis pleaded to justify piercing/ lifting the corporate veil, and/or ascribing personal liability to the first and second named defendants. For this reason the claim against the first and second named defendants is struck out in its entirety. 8. As against the third named defendant, the claimant s claim is struck out in its entirety, save for the non statute barred portion of the claim. This would be in respect of invoices, #3927 for $2,231.00, #3928 for $379.50, #3934 for $ and #4378 for $ and #3904 for $ The claim can proceed against the third named defendant only in respect of their total of $ ORDERS AND DISPOSITION 84. i. The claim against the first and second named defendants is struck out in its entirety. ii. Pursuant to Part 67.5 (2) (b) (i) of the Civil Proceedings Rules 1998 the Claimant is ordered to pay the First and Second Defendants their costs of these proceedings at the prescribed level (70%) in the sum of $64, based upon the total value of the claim- $769, iii. The claimant s claim is struck out, save for the non statute barred portion of the claim 28