Hall v First National City Bank and International Capital Realty Investment Company

JurisdictionBahamas
CourtCourt of Appeal
JudgeBlair-Kerr, P.,Luckhoo, J.A.
Judgment Date05 Mar 1980
Neutral CitationBS 1980 CA 8
Docket NumberCivil Side No. 5 of 1977

Court of Appeal

Blair-Kerr, P.; Duffus, J.A.; Luckhoo, J.A.

Civil Side No. 5 of 1977

Hall
and
First National City Bank and International Capital Realty Investment Co.

Contract - Performance

Contract - Enforceable contract

Company law - Assets — Fixed assets

Practice and procedure - Statement of claim — Application for further particulars

Blair-Kerr, P.
1

This action was commenced on 1st December 1975. According to the Statement of Claim the plaintiff company was incorporated in the Cayman Islands for the purpose of establishing a real estate mutual fund. Paragraph 3 of the claim reads:

“In or about the month of February… the plaintiff and the Defendant entered into an oral agreement whereby in consideration of the Defendant participating in the Plaintiff company, the Defendant would lend to the Plaintiff such sums of money as might be required by the Plaintiff for the purpose of accomplishing its object …”

2

The document goes on to aver that about August 1971

“The Defendant informed the Plaintiff that by virtue of the said agreement he had authorised the First National City Bank, Nassau, Bahamas, to hold on fixed deposit to the order of the Plaintiff the sum of $80,761.39.”

3

In paragraph 5 it is alleged that “in anticipation of the deposit”, the plaintiff formed a subsidiary company in Costa Rica and issued a prospectus inviting investment. Paragraphs 6 and 7 read:

“6. At sometime in November 1971, the Plaintiff became aware that the First National City Bank had notified the defendant that the transfer authorised by him had not been made …………

7. As a result of the failure of the Defendant to cause the said funds to be held to the order of the Plaintiff as aforesaid, the Plaintiff was forced to discontinue its operation in Costa Rica and elsewhere, and in anticipation of the said funds has moved to its detriment generally and has suffered damage…”

4

The claim of the plaintiff company is for specific performance of the alleged oral agreement, including payment over of the sum of $80,761.39 with interest.

5

On 16th January 1976 the defendant filed a defence. He admitted the oral agreement but alleged that in pursuance of that agreement he had “authorised the First National City Bank… to hold on fixed deposit to the order of the Plaintiff the said sum of $80,761.39”. The defendant then served a third party notice on the First National City Bank. Although a copy of the notice was not before us, we were informed by counsel that it followed the phraseology of Form 20 in Appendix A to the R.S.C. 1965. The notice concluded thus:

“and take notice that if you wish to dispute the plaintiff's claim against the defendant, or the defendant's claim against you, an appearance must be entered…”

6

On 9th February, 1976, the defendant took out a summons for third party directions in which he sought, inter alia, orders

1
    That the Defendant serve a statement of his claim on the third party within 14 days 2. That the third party plead thereto within 14 days ………. 5. That the third party be at liberty to appear at the trial of this action, and take such part as the judge shall direct, and be bound by the results of the trial. 6. That the question of the liability of the third party to indemnify the Defendant to be tried at the trial of this action.
7

At the hearing before the Registrar on 24th February, 1976 the plaintiff, defendant and third party were legally represented; and Mr. Christie who appeared for the third party, is recorded as having said:

“The third party has a valid defence but this is a matter which should go to trial. I have no objection to the order being made as prayed”.

8

The Registrar thereupon made the order sought.

9

On 4th March, 1976, the defendant's statement of claim dated 2nd March, 1976 against the third party was filed. The defendant averred that in the event of his being held liable to the plaintiff, he is entitled to be indemnified by the third party and he claimed for a declaration to this effect; and for judgment for any amount, which may be found to be due from the defendant to the plaintiff.

10

The third party's defence to the defendant's statement of claim was filed on 12th April, 1976. They denied that the defendant is entitled to be indemnified and paragraph 2 of the defence reads:

“The Third Party denies that in the month of August 1971 or at any material time it held on fixed deposit or time deposit for the account of the defendant the sum of $80,71.39 or any sum at all”.

11

On 10th January, 1977 the third party gave notice that upon the hearing of another summons for directions which had been taken out by the plaintiff, they would seek variations to the Registrar's order of 24th February, 1976. They gave notice that they would seek leave to appear at the trial and oppose the plaintiff's claim and to be at liberty to:

  • (i) deny all the allegations in the statement of claim and put the plaintiff to proof of the same; and

  • (ii) raise certain specific defences namely:

    • (a) that the oral agreement is too vague to be enforceable

    • (b) that the plaintiff, through its chairman, the defendant, knew that the fixed deposit was monies of Concepta Corporation Ltd and not available to the defendant for his own personal use.

12

They also sought leave to serve on the plaintiff a request for further and better particulars of their claim; and annexed to the notice there was a draft of the further and better particulars. The notice issued by the third party also indicated that they would submit that the defendant's statement of claim should be struck out on the ground that it disclosed no cause of action against the third party.

13

The matter came before the Registrar on 20th January, 1977. We have been supplied with a copy of the Registrar's notes of the argument. Mr. Dunkley for the third party is recorded as having said:

“Third party…considers that defendant…has not raised all of the defences that he might raise. Third party therefore wishes to be active in defending against plaintiff. All of the orders I seek go towards that end…Third party is able to raise a defence on behalf of the defendant which defendant would not raise on his own behalf…Defendant…. knew that the money being held on deposit by the third party was held on behalf of Concepta Corporation Ltd., a company beneficially owned by the defendant and his wife.

Mr. Dunkley also asked that the defendant's statement of claim be either struck out or amended.

Mr. Bethell cited Coles v. Civil Service Supply Association (1884) 26 Chancery Division p.529 and he is recorded as having said: “Defendant has no objection to third party defending against plaintiff provided…. third party admits its liability to indemnify defendant”.

14

As the third party did not admit liability to indemnify the defendant the Registrar refused to make the directions sought.

15

On that occasion, the third party sought leave to file an amended defence to the defendant's statement of claim and a proposed amended defence was annexed to their notice of 10th January, 1977. The proposed amended defence was discussed during the hearing and Mr. Bethell is recorded as having referred in particular to paragraphs 2(iv), (viii) and (xii) and paragraphs 3 and 4 of that document. The Registrar gave the third party leave to file the amended defence to the defendant's statement of claim.

16

This document was not included in the appeal papers as they originally came to us. Instead, there was included the original defence filed on 12th April, 1976 which, obviously, had been superceded by the amended defence.

17

As the Registrar's note of Mr. Bethell's reference to particular paragraphs of the amended defence were unintelligible without reference to the document itself, we called for the Supreme Court file and found that the amended defence to the defendant's statement of claim had been filed on 11th June, 1977.

18

By this document the third party avers that Concepta was a Cayman corporation; that the few shares that had been issued were held by nominees of the defendant's wife and the defendant himself who was President; that in June 1969 Concepta placed $67, 515.58 on time deposit with the third party; that in July or August 1971 it came to the knowledge of the third party that the defendant and his wife were not on the best of terms and that there was a possibility that he might try and remove the money for his own purpose; that on 27th August, 1971 the third party received a letter signed by the defendant alone purporting to be written by Concepta in the following terms: “would you kindly change the name of fixed deposit $…from Concepta to International Capital Realty Investment Corporation”.

19

The amended defence goes on to aver that the defendant was informed that the third party would not act on his instructions without a certified copy of a resolution passed at a director's meeting; that the third party was informed by letter dated 28th September, 1971 signed by the Secretary of Concepta that the defendant's wife was now the sole director and President of Concepta; that by letter dated 17th December, 1971 the Secretary of Concepta sent a certified copy of a resolution by the sole director of Concepta to transfer to Canadian Imperial Bank of Commerce, Cayman, the proceeds of Concepta's fixed deposit; that the defendant instituted proceedings against Concepta in the Caymans; that the Grand Court of the Caymans made an order by consent of all parties (including the defendant) that the fixed deposit be transferred to Canadian Imperial Bank of Commerce and that the third party transferred the fixed deposit to the Canadian Bank.

20

The amended defence goes on to aver that in 1972 the defendant's wife was made a party to the action in the Caymans, and on 17th May, 1973 an order was made by consent that the ash assets of Concepta be divided equally between the Defendant and his wife and that Concepta be...

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