[1] Millhawke Holdings (Bequia) Ltd [2] Stowe Construction (Bequia) Ltd [3] Henry John Marriott a.k.a. Harry Marriott [4] Hon. Dinah Lillian Marriott Claimants v [1] Jorg "Stanley" Dorneiden [2] Timothy Gabriel [3] Carib Constructon [4] Carib International [5] Leomore Macdonald [6] Stanley'S Food and Beverages Ltd Defendants [ECSC]
| Jurisdiction | St Vincent and the Grenadines |
| Judge | Thom, J |
| Judgment Date | 30 October 2013 |
| Judgment citation (vLex) | [2013] ECSC J1030-1 |
| Court | High Court (Saint Vincent) |
| Date | 30 October 2013 |
| Docket Number | CIVIL CLAIM NO. SVGHCV2010/0301 |
THE EASTERN CARIBBEAN SUPREME COURT
IN THE HIGH COURT OF JUSTICE
CIVIL CLAIM NO. SVGHCV2010/0301
Mr. Joseph Delves for the Claimants
Mr. Stanley K. John for the First and Sixth Defendants
The First Defendant (Mr. Dorneiden) and the Sixth Defendant ("Stanley's Food") apply for a freezing injunction against the First Claimant ("Millhawke) to restrain it from removing from Saint Vincent and the Grenadines ("St. Vincent") or disposing or diminishing the value of its assets in St. Vincent to the value of USS2.6 million until the Defendant's counterclaim has been finally adjudicated or further order of the court.
The Third and Fourth Claimants ("Mr. and Mrs. Marriott") who are shareholders of Millhawke negotiated with Mr. Dorneiden a proposal to purchase property in Bequia, and to develop and sell the property. A Joint Venture Agreement ("JVA") was prepared and executed by Millhawke and Stanley's Food. Mr. Dorneiden is a major shareholder and Director of Stanley's Food.
A dispute has arisen in relation to the project and as a result the Claimants instituted proceedings against the Defendants in which they seek several reliefs including:
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(a) Damages for deceit and or special damages in the sum of E.C.$1.5 million.
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(b) Damages for breach of fiduciary duties.
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(c) Damages for detention and/or conversion.
The Defendants filed a defence denying the claim and a counterclaim in which they seek several reliefs including the following reliefs:
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(a) The sum of US$200,000.00 being its capital investment in the Project.
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(b) One-fifth of the equity in Millhawke and or the Second Claimant, alternatively one-fifth of the beneficial interest in the property which constitutes the Project.
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(c) Various management fees and investment profit.
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(d) Damages for repudiation of contract and conversion.
The grounds of the application are:
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(a) They have a good chance of obtaining judgment in their favor on their counterclaim.
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(b) Millhawke has been advertising the property for sale which is its sole asset and which is the subject matter of the claim.
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(c) Mr. and Mrs. Marriott who are the controlling minds of Millhawke have demonstrated their capabilities in easily moving large sums of money across international borders.
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(d) Upon realization of a sale of the project unless restrained by the Court Millhawke on the direction of Mr. and Mrs. Marriott will transfer all of the proceeds of sale out of this State and ultimately outside the jurisdiction of this Court. There is a real danger of the Claimant dissipating such assets by the time the counterclaim is determined in favor of the Applicants which will have the effect of defeating such judgment.
The Claimants oppose the application on the following grounds
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(a) There was significant delay in making the application.
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(b) The Defendants do not have a good arguable case.
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(c) They have not adduced any or any sufficient evidence of a real risk of dissipation of assets.
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(d) They have not demonstrated that it is just or convenient to issue an injunction in the circumstances.
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(e) They have not offered or provided a cross-undertaking in damages.
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(f) They will be unable, given the admitted impecuniosity of the Sixth Defendant and the refusal of the First Defendant to undertake to meet the Sixth Defendant's own costs, to meet any cross-undertaking they may provide.
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(g) They have not provided any evidence of means to pay damages, pursuant to any undertaking ordered by the Court.
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(h) A freezing order would cause more prejudice to the First Claimant than harm to the Defendants.
While a freezing order is often viewed as a draconian measure because of its effect, nevertheless where the circumstances so warrant Courts have always issued freezing orders. In Z Ltd v A and Others. 1 Kerr LJ in warning against the abuse of the jurisdiction to grant a freezing order stated:
"In particular, I would regard two types of situations as an abuse of it. First the increasingly common one, as I believe, of a Mareva injunction being applied for and granted in circumstances in which there may be no real danger of the defendant dissipating his assets to make himself "judgment proof: where it may be invoked, almost as a matter of course, by a plaintiff in order to obtain security in advance for any judgment which he may obtain; and where its real effect is to exert pressure on the defendant to settle the action. The second, and fortunately much rarer, illustration of what I would regard as an abuse of this procedure, is where it is used as a means of enabling a person to make a payment under a contract or intended contract to someone in circumstances where he regards the demand for the payment as unjustifiable; or where he actually believes or even knows, that the demand is unlawful; and where he obtains a Mareva injunction ex parte in advance of the payment, which is then immediately served and has the effect of freezing the sum paid over."
And further at p. 571:
"…Mareva injunctions should be granted, but granted only when it appears to the court that there is a combination of two circumstances. First, when it appears likely that the plaintiff will recover judgment against the defendant for a certain sum or approximate sum. Second, when there are also reasons to believe that the defendant has assets within the jurisdiction to meet the judgment; in whole or in part, but may well take steps designed to ensure that these are no longer available or traceable when judgment is given against him."
The Learned Authors of Blackstone Civil Procedure outline the following as the requirements that must be fulfilled for the granting of a freezing order:
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(a) A course of action justciable in England and Wales (St. Vincent).
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(b) A good arguable case.
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(c) The Defendant (Respondent) having assets within the jurisdiction.
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(d) A real risk that the Defendant (Respondent) may dissipate those assets before judgment can be enforced.
It is settled law that an applicant seeking equitable relief must do so promptly, if he does not he must give an explanation.
Mr. Delves referred the Court to Sean on Injunctions and the cases of Z Ltd, Black Swan Investment I.S.A. v Harvest View Ltd et al 2: and submitted that delay defeats an interim injunction even if the Respondent gives no evidence of prejudice. The Application was filed 24 months after the JVA was terminated, 17 months after their application for a stay was rejected by the Court, 15 months after the defence and counterclaim was filed and nearly six months after the Claimants applied for security for costs. The Applicants have given no reason or explanation for their delay in brining their application. This suggests that there is really no risk of dissipation of assets or otherwise, Mr. Delves referred to the case of First Montana Services Ltd et al v Best Concrete Corporation 3 where Justice George Creque (as she then was) in referring to the case of Bates v Lord Harlsham of St. Marylborne stated at paragraph 26 that:
"… in the absence of a most cogent explanation or unless the applicant had an overwhelming case on the merits, the injunction ought to be refused as apart from other considerations an inference to be drawn from insufficiently explained tardiness is that the urgency and gravity of the applicant's case are less than compelling."
Mr. John in response submitted that there was no delay in the application in that advertisement of the sale of the property was only recently being made. Thus the issue of dissipation has only now arisen.
I agree with Mr. Delves that the fact that a Respondent does not adduce any evidence of prejudice does not mean that the Court cannot refuse to grant the relief on the ground of delay. However, I do not find that there was delay in making the application. While I agree with the various time periods mentioned by Mr. Delves, the property at that time was not yet being advertised for sale. The project, the subject matter of the JVA, was for the purchase, development and sale of property. With the property now being advertised for sale the issue of dissipation of the proceeds of sale prior to the final determination of the claim and counterclaim has indeed now arisen.
Having reviewed the affidavit of Mr. Marriott I also do not find that the Respondents would suffer prejudice. Mr. Marriott in his Eighth Affidavit deposed at paragraph 18.2 as follows:
"Having a Restraining Order would impede the Claimants from pursuing the development. Prospective purchasers would be put off trying to buy a property or properties subject of such an order as they would be understandably unwilling to get involved in a legal dispute."
An order is not being sought to restrain the Respondents from selling the property nor is an order being sought to freeze all of the proceeds of sale of the property, but only a portion which represents less than one-third of the prospective sale proceeds. In view of the above, I do not find that the application should be refused on the ground of delay.
It is not disputed by the parties that there is a cause of action justiciable in St. Vincent and that the Respondents have assets within St. Vincent.
Mr. John submitted that the Applicants' counterclaim has a strong likelihood of success. The basis on which the Respondents sought in their letter of October 6, 2010 to terminate the JVA amounted to a breach of...
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