Betta Ltd v Hongkong and Shanghai Banking Corporation Ltd and Hsbc Bank Plc
| Jurisdiction | Bahamas |
| Judge | Isaacs, J. |
| Judgment Date | 11 October 2013 |
| Court | Supreme Court (Bahamas) |
| Docket Number | CLE/gen 1598 of 2011 |
| Date | 11 October 2013 |
Supreme Court
Isaacs, J.
CLE/gen 1598 of 2011
Marco Turnquest and Chizelle Cargill for plaintiff.
John Wilson and Sharmon Ingraham for defendants.
Civil practice and procedure - Application to strike out — Whether claim frivolous or vexatious — Whether claim abuse of process — Whether Bahamas appropriate forum to litigate action.
This matter was commenced by Originating Summons filed 22 November 2011 essentially seeking a declaration that the plaintiff is entitled to the balance of funds standing in its name in its account held by the defendants. The action was converted to a Writ action on 4 July 2012 by an application of the plaintiff on the basis that a substantial conflict of facts had emerged.
On 18 July 2012 a Statement of Claim was filed. Paragraphs 4 through 18 of the Statement of Claim lays out the claim in the following terms:
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“4. Mr. Adrian Kundanmal (“Adrian”) is the current sole director and shareholder of the plaintiff having been voted in as a director on 12th March, 2009.
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5. Mr. Sunder Kundanmal (“Sunder”) is a former director of the plaintiff having been a director of the plaintiff from 3rd September, 1986 until ft April, 2011.
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6. Mr. Chandru Kundanmal (“Chandru”) is a former shareholder of the plaintiff having passed away on 25th July, 1995.
- On or about 2nd September, 1986 the plaintiff's directors resolved that the plaintiff should open a US Dollar Account(s) and/or Time Deposit Account with the first defendant in Nassau and that either Chandru or Sunder be authorized to sign on these accounts singly for and on behalf of the plaintiff. 8. The plaintiff's directors also on or about 2nd September, 1986 executed a banking mandate (“the mandate”) with the first defendant in the form of a resolution of the plaintiff's Board of Directors on the first defendant's standard form. Sunder signed as a signatory on the mandate. Chandru did not sign as a signatory on the mandate. 9. In or about mid-September, 1986 the plaintiff's directors provided the first defendant with all the necessary corporate resolutions and copies of its bylaws to facilitate the opening of an account with the first defendant. 10. After the plaintiff executed the mandate and provided the first defendant with the necessary corporate resolutions and copies of its bylaws in or about late September or early October, 1986 the First defendant agreed to act as the plaintiff's banker and established an account (“the account”) for the plaintiff in its International Deposits Department. 11. In addition to the terms and conditions set out in the mandate the following terms were implied in the said contract between the plaintiff and first defendant: (a) That the first defendant would pay the plaintiff on demand all or any part of the sums that that it owed to the plaintiff; and, (b) That the first defendant would provide the plaintiff on demand with information as to the state of account between the plaintiff and the first defendant. 12. In or about late September, 1986 the plaintiff transferred approximately USD$26 million dollars from the then Canadian Imperial Bank of Commerce in New Providence to the first defendant to fund the account.
- Following establishment of the plaintiff's account at the first defendant, in or about late September or early October, 1986 the parties agreed that the plaintiff's account would continue under the administration of Hongkong and Shanghai Banking Corporation, Hong Kong branch (“HSBC Hong Kong”) in its International Deposits Department and that the plaintiff should send all instructions to that office by letter or by authenticated cable from a bank. 14. On or about 1st October, 19986 the plaintiff was advised by letter from HSBC Hong Kong that it had established eight USD Deposits (“the term deposits”) on 22nd September, 1986 for the plaintiff.
- Based on the terms of the term deposits, it appears that HSBC Hong Kong and/or the first defendant, without the plaintiff's consent or approval, in fact transferred the plaintiff's funds to the second defendant to establish the term deposits for the plaintiff. The second defendant is thus holding the plaintiff's funds, which are subject to the term deposits, to the account of the plaintiff and/or the first defendant. 16. In addition to the express terms and conditions set out in the term deposits the following terms were implied into the contract between the plaintiff and second defendant: (a) That the second defendant would pay the plaintiff on demand all or any part of the sums that it owed to the plaintiff or alternatively all or any part of the sums due on the maturity of the term deposits; and, (b) That the second defendant would provide the plaintiff on demand with information as to the state of account and the state of the term deposits. 17. On or about 27th November, 1989 the plaintiff, acting through Sunder, instructed HSBC Hong Kong that inter alia all the term deposits should have one hundred twenty day terms at the best prevailing rate and should be rolled over automatically at maturity.
- As of 1st August, 1995 the sum of approximately CAD$69,428,468.39 stood to the credit of the plaintiff with the second defendant and/or alternatively with the first defendant, which funds were held in nine term deposits.
Each defendant has filed an application in the circumstances. The first defendant by an Amended Summons filed 29 November 2012 seeks to have the action struck out as against it under RSC O. 18, r. 19(1)(a), (b) and (d); the second defendant by a Summons filed 18 May 2012 seeks to have the Ex Parte Order granted on 7 February 2012 to file and serve a Notice of Concurrent Originating Summons and any future pleadings on the second defendant in London England set aside on the grounds that (a) The Bahamas is not the appropriate forum for the claim and (b) there was not sufficient supporting evidence to grant leave under RSC O. 11, r. 1(f) and/or (j).
O. 18, r. 19(1)(a), (b) and (d) provide:
- (1) The Court may at any stage of the proceedings order to be struck out or amended any pleading or the indorsement of any writ in the action, or anything in any pleading or in the indorsement, on the ground that – (a) it discloses no reasonable cause of action or defence, as the case may be; or (b) it is scandalous, frivolous or vexatious; or (d) it is otherwise an abuse of the process of the court; and may order the action to be stayed or dismissed or judgment to be entered accordingly, as the case may be.
Of relevance is O. 18, r. 19(2) which provides:
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(2) No evidence shall be admissible on an application under paragraph (1)(a).
The first defendant by its submissions has relied on the Affidavit evidence of Adrian Kundanmal (the Kundanmal Affidavit), Mildred Johnson, and Sophia Rolle to make its case under O. 18, r. 19(1)(a). Reliance on Affidavit evidence is not allowed under this limb of the rule. As Lord Pearson stated in Drummond-Jackson v. British Medical Association & Others [1970] 1 W.L.R. 688,
“… ‘Reasonable cause of action’ means a cause of action with some chance of success, when only the allegations in the pleading are considered. If when those allegations are examined it is found that the alleged cause of action is certain to fail, the statement of claim should be struck out.”
The submissions on this point address the evidence supporting the claim. It is impossible to determine whether or not there exists a cause of action by considering only the pleadings in this case. The submissions on this ground cannot be made out and I therefore move on to the other limbs relied on.
The first defendant has submitted that this action is frivolous and vexatious. The classic definition of these words is that the case is obviously frivolous or vexatious or obviously unsustainable, and to put it forward would be an abuse of the process (see rubric 18/19/7 of the White Book 1982).
The Kundanmal Affidavit filed 27 January 2012 provides sworn evidence at paragraphs 7 through 9 that the account(s) referred to at paragraphs 7 through 14 of the Statement of Claim (supra) were opened in Hong Kong. The evidence is:
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“7. After the account was established at the first defendant I verily believe, based on a number of account statements that I have reviewed, that Bettas transferred a substantial sum of funds to the first defendant and/or HSBC Hong Kong to administer. As set out above, these funds were used to establish eight USD deposit accounts. I attach statements from HSBC Hong Kong dated 21st and 22nd July, 1989 confirming that eight time deposits in Canadian currency were in fact established for Bettas. It appears that these term deposits were administered by the Second defendant as all the statements state that, “we confirm the renewal of the principal plus interest of your deposit with our office in London.
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8. I am informed by Sunder that on or about 27th November, 1989 he wrote to HSBC Hong Kong and instructed that (a) all term deposits maturing will have one hundred twenty day terms at the best prevailing rate and will be rolled over automatically at maturity and (b) statements, deposits renewal confirmations, and any other correspondence concerning the subject account should be held at International Deposits Department until further notice.
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9. I verily believe that all of the aforementioned term deposits remained under the administration of the International Deposits Department of HSBC in Hong Kong as I have been provided with statements form Sunder dated 15th June, 1995 confirming the continued existence...
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