The Committee to Restore Nymox Shareholder Value, Inc. (CRNSV) v Paul Averback

• Jurisdiction: Bahamas
• Judge: Madam Senior Justice Deborah Fraser
• Judgment Date: 15 March 2024
• Docket Number: CLAIM NO. 2023/COM/com/00057
• Court: Supreme Court (Bahamas)

Between

The Committee to Restore Nymox Shareholder Value, Inc (CRNSV)

First Claimant

Randall Lanham

Second Claimant

Christopher Riley

Third Claimant

M. Richard Cutler

Fourth Claimant

Steven Riley

Fifth Claimant

Arthur Diedrich

Sixth Claimant

Mark Ramina

Seventh Claimant

Maurizio Biaggi

Eighth Claimant

Todd Mitmesser

Ninth Claimant

Robert S. Piland

Tenth Claimant

James Byrom

Eleventh Claimant

Sean Beasley

Twelfth Claimant

and

Paul Averback

First Defendant

Patrick Doody, Esq.

Second Defendant

James G. Robinson

Third Defendant

David Morse

Fourth Defendant

Nymox Pharamaceutical Corporation

Fifth Defendant

Before:

Her Ladyship The Honourable Madam Senior Justice Deborah Fraser

CLAIM NO. 2023/COM/com/00057

IN THE SUPREME COURT

COMMERCIAL DIVISION

Civil Procedure Rules, 2022 — — Part 37 — Discontinuance and Withdrawal — Part 71 Court's Discretion as to an award of Costs — — Indemnity Costs — Costs on a Standard Basis — Appropriate Order as to Costs

Appearances:

Ms. Michelle I. Deveaux for the Claimants

Mr. Christopher Jenkins KC, Mr. Ramonne Gardiner and Mr. McFallough Bowleg Jr. for the Defendants

RULING ON COSTS

Re: Costs for the Defendants' costs for their extant Application to Set Aside the Interim Injunction and Costs emanating from the Claimants' Discontinuance Application

(Heard on the Papers)

1 This is my ruling on costs emanating from the Claimants' decision to withdraw and discontinue their Action as against the Defendants and resulting costs relating to the Action as well as the extant and now fruitless Defendants' application to set aside an interim injunction granted on 03 October 2023.

Background

2 The Parties do not appear to agree the facts of this case. I will, therefore, only reference facts which do not appear to be in dispute. On 03 October 2023, the Claimants commenced a derivative action against the Defendants by way of a Standard Claim Form and Statement of Case (“ Action”). The Action concerned, inter alia, allegations of breaches of the Defendant directors' fiduciary and statutory duties owed to the Fifth Defendant's, NYMOX Pharmaceutical Corporation (“ NYMOX”) shareholders. The Claimants were some minority shareholders of NYMOX and a US incorporated association.

3 On that same day, the Claimants made an ex-parte application requesting an interim injunction (“ Interim Injunction”). The Interim Injunction was granted on 03 October 2023, with an undertaking as to damages attached. The Interim Injunction reads as follows:

“”…IT IS HEREBY ORDERED AND DIRECTED THAT:

• 1. Mandatory and Prohibitory Injunctions:

  • (1) The Defendants shall forthwith give notice of the convening of the 2023 Annual General Meeting or alternatively a Special Meeting to be held on a date not more than 28 days from the date of such notice for the purpose of considering, inter alia the matters set out in the draft Notice of Shareholders Meeting exhibited to the Affidavit of Randall Lanham, a copy of which is attached to this Order.

  • (2) If by close of business at 5:00pm Bahamas time on the 9 ^th day of October 2023 the Defendants have failed to comply with the order at paragraph 1 above by giving such notice, the Claimants shall be permitted themselves to give notice of such Meeting to be convened in accordance with paragraph 1 above.

  • (3) The [Fifth Defendant] acting by it board of directors, shall give effect to all resolutions passed at the General/Special

  Meeting held pursuant to the Court's Order.

• 2. Until such time as the Special or General Meeting is held or until further order, that save for ordinary business expenses, the Defendants [shall] not whether by themselves, their servant[s], agents or assigns, dissipate reduce charge or assign or in any way diminish or reduce the assets of the Fifth Defendant company or issue any shares in the Company to themselves or to any agent or person connected to them.

• 3. Until trial of this Action the First and Third Defendants be restrained from voting the Averback Excess Shares and the Robinson Excess Shares (as defined in paragraphs 43 and 53 in the Affidavit of Randall Lanham filed herein on the 3rd day of October 2023), at the Meeting convened pursuant to this order and any other meeting of shareholders of the Fifth Defendant company until trial or further order.

• 4. Costs of this application be cost in the cause.

• 5. Liberty to any party to apply to the Court at any time to vary or discharge this Order by not less than two (2) days' notice to the other parties.”

4 Subsequently, an urgent application for a Stay of the Interim Injunction was made by the Defendants on 10 October 2023 and a Stay was granted by this Court on 03 November 2023.

5 Thereafter, the Court gave directions in relation to two applications brought by the Defendants, namely: (i) an application to set aside the Interim Injunction; and (2) an application for Security for Costs.

6 Prior to the hearing of either of those applications, the Claimants filed an application for Discontinuance of the Action, pursuant to Part 37 of the Supreme Court Civil Procedure Rules, 2022 (“ CPR”) on 08 February 2024. The Parties have agreed costs in relation to all other aspects of the Action, save and except costs relating to the application to set aside the Interim Injunction.

7 The Claimants submit that the issue of costs should be determined on the standard basis whereas the Defendants assert that costs ought to be on an indemnity basis. They have asked the Court to rule on the issue.

ISSUE

8 The issue that this Court must decide is whether, based on the circumstances of this case, the Defendants should be granted costs on the standard basis or on an indemnity basis?

DISCUSSION AND ANALYSIS

9 The Parties provided written submissions, which the Court reviewed and considered. I will now provide my analysis of the relevant law in relation to the facts of this case and render a decision.

10 Part 37 of the CPR governs Discontinuance of an action. Rule 37.2 of the CPR provides:

“37.2 Right to discontinue claim.

• (1) The general rule is that a claimant may discontinue all or part of a claim without the permission of the court.

• (2) Notwithstanding paragraph (1) —

  • (a) a claimant needs permission from the court to discontinue all or part of a claim in relation to which —

    • (i) any party has given an undertaking to the court; or

    • (ii) the court has granted an interim injunction…”

11 There is an Interim Injunction in place with an undertaking as to damages. Consequently, the Claimants require the Court's permission to discontinue the Action. The Claimants have indeed made formal application to discontinue the Action on 08 February 2024. The consequential costs flowing from a discontinuance is also addressed under Part 37 of the CPR. Rule 37.6 (1) of the CPR states:

“37.6 Liability for costs.

• (1) Unless the —

  • (a) parties agree; or

  • (b) court orders otherwise,

  a claimant who discontinues is liable for the costs incurred by the defendant against whom the claim is discontinued, up to the date on which notice of discontinuance was served (emphasis added).”

12 Accordingly, the Claimants must pay the Defendants' costs up to the date on which the Notice of Discontinuance is served. This does not appear to be in dispute. I am aware of the Court's power to award indemnity costs as opposed to costs on the standard basis.

13 The Court is imbued with the power to award costs by virtue of section 30(1) of the Supreme Court Act, 1997. That section provides:

“30. (1) Subject to this or any other Act and to rules of court, the costs of and incidental to all proceedings in the Court, including the administration of estates and trusts, shall be in the discretion of the Court or judge and the Court or judge shall have full power to determine by whom and to what extent the costs are to be paid.”

14 The Supreme Court's power to award costs is also expressly provided in Part 71 of the CPR. It also overtly states the discretionary nature of awarding costs and factors which ought to be considered when making an order as to costs. Whereas I acknowledge Part 71 speaks to the discretionary nature of costs and that costs relating to the discontinuance of the Action is what is before me (and attaches a mandatory costs penalty in favor of the Defendants), I believe that some of the factors are still applicable to the instant case – particularly where I must decide whether I ought to award costs on an indemnity basis. Rule 71.10 of the CPR reads:

• “ “(1) In deciding what order, if any, to make about costs, the Court must have regard to all the circumstances, including —

  • (a) the conduct of all the parties ;

  • (b) whether a party has succeeded on part of his case, even if he has not been wholly successful;

  • (c) any payment into court or admissible offer to settle made by a party which is drawn to the Court's attention and which is not an offer to which costs consequences under Part 35 and 36 apply.

• (2) For the purposes of paragraph (1)(a), the conduct of the parties includes —

  • (a) conduct before, as well as during, the proceedings;

  • (b) whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue;

  • (c) the manner in which a party has pursued or defended his case or a particular allegation or issue;

  • (d) whether a claimant who has succeeded in his claim, in whole or in part, exaggerated his claim ; and

  • (e) unreasonable conduct of any kind by any party in relation to the inclusion or exclusion of documents or authorities in any bundle and whether a joint bundle or otherwise.

• (3) The Court may make an order that a party must pay —

  • (a) a proportion of another party's costs;

  • (b) a stated amount in respect of another party's costs;

  • (c) costs from or until a certain date only;

  • (d)...