World Class Development Ltd v Von Albedyhll

• Jurisdiction: Bahamas
• Judge: Evans, J.
• Judgment Date: 28 June 2013
• Court: Supreme Court (Bahamas)
• Docket Number: CLE/GEN/FP 167 of 2011
• Date: 28 June 2013

Supreme Court

Gray-Evans, J.

CLE/GEN/FP 167 of 2011

World Class Development Limited

and

Von Albedyhll

APPEARANCES:

Mr. R. Dawson Malone and Ms. Jacqueline Banona for the plaintiff

Mr. Gregory Moss and Mrs. Lena Hield Bonaby for the defendant

Civil practice and procedure - Costs — Security for costs — Impecuniosity — Assets — Likelihood of injustice — Whether Court had unfettered discretion to order security for costs — Whether assets of plaintiff company were insufficient to pay defendant's costs.

Evans, J.

1 The plaintiff, World Class Development Limited, is a company incorporated under the laws of the Commonwealth of The Bahamas.

2 The plaintiff commenced this action on 8 July 2011 by a specially indorsed writ of summons, as amended on 9 May 2012, in which the plaintiff company is seeking reliefs against the defendant, Mr. Peter Von Albedyhll, by way of specific performance and damages for, inter alia, breach of contract and loss of interest in real property, incurred by the plaintiff under a joint venture agreement between, inter alia, the parties hereto.

3 The defendant in its defence filed 31 October 2012 as amended with leave on 22 May 2012 denies the plaintiffs claim and applies by summons filed 3 January 2012 for security for costs pursuant to the provisions of section 285 of the Companies Act, chapter 308, Statute Laws of The Bahamas, 2000, and/or under the inherent jurisdiction of the court.

4 Section 285 of the Companies Act provides as follows:

‘Where a limited liability company is plaintiff in any action, suit or other legal proceedings, a judge having jurisdiction in the matter may, if it appears by any credible testimony that there is reason to believe that if the defendant is successful in his defence the assets of the company may be insufficient to pay his costs, require sufficient security to be given for such costs, and may stay all proceedings until such security is given.”

5 The first issue to be determined is whether there is credible evidence for me to believe that the assets of the plaintiff company may be insufficient to pay the defendant's costs.

6 In his affidavit filed on 4 January 2012 in support of his application, the defendant deposes, inter alia, that, the plaintiff is a limited liability company and for the reasons discussed at paragraphs 16 through 21 of his said affidavit, he verily believed that if he is successful in his defence, the assets of the plaintiff may be insufficient to pay his costs. At paragraphs 16 through 21 of his affidavit filed 3 January 2012, the defendant avers as follows:

• “16. On October 11, 2011, my attorneys obtained an asset search report from Computitle which evidenced that the plaintiff has no known recorded real estate assets.

• 17. Thereafter, on October 25, 2011, my attorneys retrieved an online Company Report from the Registrar General's website which provides that the last payment of the plaintiff's annual fees to the Company Registry was for the year 2000.

• 18. Subsequently, on October 26, 2011, my attorneys conducted a corporate search at the Bahamas Registrar General Office and retrieved a copy of the last statement filed on behalf of plaintiff. The statement is dated October 2, 2008, and is also for the year of 2008.

• 19. On November 30, 2011, my attorneys wrote to the Grand Bahama Port Authority Licensing Department (GBPA) requesting information as to whether or not the plaintiff possessed a license to conduct business in Freeport. In response, on December 1, 2011, GBPA wrote a letter to my attorneys which stated that the plaintiffs License Agreement with the GBPA was cancelled on February 8, 2011.

• 20. I have also conducted a search of the Grand Bahama Telephone Directory for the year 2011 which evidences that the plaintiff does not have a listed telephone contact.

• 21. Based on the above mentioned, I am of the view that the plaintiff company should be ordered to pay security for my costs for the following reasons:

  • 21.1. The asset report shows that the plaintiff does not own any assets. In the event that an order for costs is granted in my favour, I would not be able to exercise my rights of enforcement against the plaintiff's assets to aid in the recovery [of] my costs.

  • 21.2 The plaintiff company's fees payable to the Registrar General have not been paid since 2008. Additionally the plaintiff does not have a license from GBPA to operate a business. Moreover, the plaintiff does not have a business telephone number listed in the telephone directory. In addition, I have conducted inquiries among various retailers of timeshares here in Grand Bahama and from my inquiries, I have not found anyone that states that the plaintiff conduct business as a timeshare retailer on its or [sic] account or as an agent on behalf of any other company or business. It appears that the plaintiff is not actively engaged in the operation of a business that generates income. Therefore, I believe that the plaintiff would have insufficient funds to pay my costs if I am successful in my defence. Similarly, I believe that if I obtain a costs order upon the conclusion of this action, I would be prevented from utilizing the enforcement mechanism of appointing a receiver to apply the income from the timeshare to my costs because the plaintiff is not presently licensed to operate a business that may generate income.

  • 21.3. Notwithstanding my request for security for costs on the ground that I believe that the plaintiff is a liability company that may have insufficient funds to pay my costs if I am successful in my defence, the plaintiff rejected my request without disputing whether or not the plaintiff was capable of paying my costs and did not proffer any substantive reason.

7 Included amongst the documentary evidence exhibited to the defendant's said affidavit is a letter dated 25 November 2011 from counsel for the plaintiff to counsel for the defendant, in response to the plaintiffs request for security for costs, in which he wrote, inter alia:

“We reject your client's request for security for costs in the sum of $300, 000.00 or nay [sic] other sum whatsoever as, in the circumstances, your client has no entitlement to any such security.”

8 At paragraph 22 of his said affidavit, the defendant avers further:

“22. As set out above, subsequent to my initial request for security for my costs, the plaintiff has filed an amended writ which purports to add an additional party to the action and I have also filed a summons to strike out the purported amendment. In addition, I have now been put to the expense of making a formal application for security for costs. Taking into account the additional costs that have arisen subsequent to my initial request, my costs in defending this action have increased since my initial request and in the continued conduct of my defence, the costs are now estimated to be approximately $530, 000.00 upon conclusion.”

9 Also exhibited to the defendant's said affidavit is a draft bill of costs showing the sum of $520, 550.00 as his estimated professional fees and $10, 032.00 as the estimated disbursements, for a total estimated bill of $530, 582.00.

10 The plaintiff opposes the defendant's application and relies, inter alia, on the affidavit of Mr.s Franklyn Laing filed 27 February 2012. Nowhere in his said affidavit does Mr. Laing, on behalf of the plaintiff, refute the defendant's allegations regarding the status of the plaintiff company, nor does he say that the plaintiff has assets sufficient to pay any costs which it may be ordered to pay in the event its claim is unsuccessful.

11 However, during the course of his arguments, counsel for the plaintiff submitted that the interest in certain properties to which the plaintiff is entitled under the Joint Venture Agreement, the subject of these proceedings, exceeds “by a massive amount the moneys required for security for costs.”

12 It seems to me that by that submission, counsel for the plaintiff is saying that the plaintiff's ability to meet a costs order is dependent on the plaintiff being successful in its claim against the defendant. The defendant denies that the plaintiff is entitled to the interest it claims. So, if the plaintiff is unsuccessful, the plaintiff would not be entitled to the 40% interest in the said properties which it claims; in which event, it would have no assets to meet a costs order.

13 In the circumstances, I am satisfied that if the defendant is successful in his defence, the assets of the plaintiff company may be insufficient to pay the defendant's costs.

14 It is accepted that the court has a complete and unfettered discretion whether or not to order security for costs. Sir Lindsay Parkinson & Co Ltd v. Triplan Ltd [1973] 2 All ER 273, [1973] QB 609.

15 The defendant's position is that the plaintiff should be ordered to provide security for its costs and, that it is really just a matter of whether the plaintiff is ordered to pay all or only a portion of the amount that the defendant is asking. In support of the defendant's position, counsel for the defendant relies on three local authorities, namely the judgments of Osadebay, J. (Acting) (as he then was) in El Condor Enterprises Ltd v. Paradise Island Ltd [1994] BHS J. No. 82; and D.B.S. Builders and Developers Co. v. Beauport Investment Co [1998] BHS J. No. 103; and the judgment of Thompson, J. in the case of Mega Management Limited v. Southward Ventures Depositary Trust and others [2006] BHS J No. 65, in each of which the Court found that the assets of the respective plaintiff companies may have been insufficient to pay the defendant's costs in the event the respective defendants were successful. The Court in those cases also considered that an order for costs may have had the effect of driving the respective plaintiffs from the judgment seat, but nevertheless made the order. It appears that the latter...