[1] Halliwel Assets Inc. [2] Panikos Symeou [3] Marigold Trust Company Ltd Appellants/Defendants v Hornbeam Coproration Claimant Vadim Shulman Respondent

JurisdictionBritish Virgin Islands
CourtCourt of Appeal (British Virgin Islands)
JudgePereira, CJ,Chief Justice,Justice of Appeal,Dame Janice M. Pereira, DBE,Gertel Thom,Anthony Gonsalves,Justice of Appeal [Ag.]
Judgment Date12 October 2015
Neutral CitationVG 2015 CA 10,[2015] ECSC J1012-2
Docket NumberBVIHCMAP2015/0001
Date12 October 2015
[2015] ECSC J1012-2

EASTERN CARIBBEAN SUPREME COURT

IN THE COURT OF APPEAL

Before:

The Hon. Dame Janice M. Pereira, DBE Chief Justice

The Hon. Mde. Gertel Thom Justice of Appeal

The Hon. Mr. Anthony Gonsalves Justice of Appeal [Ag.]

BVIHCMAP2015/0001

Between:
[1] Halliwel Assets Inc
[2] Panikos Symeou
[3] Marigold Trust Company Limited
Appellants/Defendants
and
Hornbeam Coproration
Claimant
Vadim Shulman
Respondent
Appearances:

Mr. Vernon Flynn, QC with him, Mr. Robert Nader for the Appellants

Civil appeal – Ex parte hearing – Court's costs jurisdiction – Service out of jurisdiction of non-party costs application – Whether judge erred in dismissing application to serve party out of the jurisdiction – Rule 7.3 of the Civil Procedure Rules 2000 – Rule 7.14 of the Civil Procedure Rules 2000 – Section 11 of the Eastern Caribbean Supreme Court (Territory of the Virgin Islands) Act

The appellants were granted costs orders against Hornbeam Corporation ("Hornbeam"). They filed applications that the costs should be made payable by Mr. Vadim Shulman ("Mr. Shulman"), the ultimate beneficial owner of Hornbeam's Halliwell shares, jointly with Hornbeam. The appellants applied for Mr. Shulman to be joined as a party to each set of the proceedings giving rise to the costs orders against Hornbeam. They also applied for permission to serve the applications on Mr. Shulman out of the jurisdiction, in Monaco.

The learned judge, without addressing the merits of the case, refused permission to serve out on the basis that rule 7.3 of the Civil Procedure Rules 2000 ("CPR") did not provide a gateway for service out of third party costs applications in that the claim for costs did not fall under CPR 7.3(10).

The appellants appealed contending that the learned judge ought to have found that there was jurisdiction to serve out under CPR 7.3(10) and/or rule 7.14 or, alternatively, in the absence of any rule enabling permission to serve out, by applying the importation provision provided by section 11 of the Eastern Caribbean Supreme Court (Territory of the Virgin Islands) Act ("the Supreme Court Act").

Held: allowing the appeal; and remitting the applications to the court below, that:

  • 1. The court's jurisdiction to make costs orders are derived from statute. This jurisdiction is grounded in section 50(1) of the Supreme Court of Judicature (Consolidation) Act 1925 imported into the Virgin Islands by virtue of section 7 of the Supreme Court Act, and further buttressed by rules of court namely the ECSC CPR which by rule 64.10(1) specifically empowers the court to make costs orders against non-parties.

  • 2. CPR 7.3 provides gateways for service out. The appellants must be able to show that the claim form is one which qualifies under one or more gateways contained in CPR 7.3 for service out to be effected.

    Rule 7.3 of the Civil Procedure Rules 2000 applied.

  • 3. CPR 7.14 contemplates service of an application out of the jurisdiction where the claim form itself qualifies for service out of the jurisdiction and where permission may be granted by the court. For CPR 7.14 to be engaged, Mr. Shulman must have been a party to the original claim. A claim for costs against Mr. Shulman pursuant to rule 64.10 does not without more make him a party to the claim.

    Rule 7.14 of the Civil Procedure Rules 2000 applied.

  • 4. The application to join Mr. Shulman as a party is inextricably linked to the non-party costs application. The appropriate course therefore is for the court below to consider the joinder application and determine it on its merits along with the non-party costs applications and permissions to serve out.

    Part 19 of the Civil Procedure Rules 2000 applied.

  • 5. Section 11 of the Supreme Court Act is a procedural empowering provision and is not one which may be relied upon as a basis for importing a substantive jurisdiction.

    Section 11 of the Eastern Caribbean Supreme Court (Territory of the Virgin Islands) Act Cap. 80, Revised Laws of the Virgin Islands 1991 applied.

Pereira, CJ
1

This is an ex-parte interlocutory appeal following the grant of leave to appeal. It arises from a dismissal of the appellants' application to serve an application seeking a third party costs order out of the jurisdiction on the named respondent Mr. Vadim Shulman ("Mr. Shulman").

Background
2

The appellants obtained in the court below substantial costs orders against the above named claimant Hornbeam Corporation ("Hornbeam") a Panamanian company. Those costs were assessed and made payable by Hornbeam collectively in a sum of US$846,526.00 on 10 th December 2014 ("the Costs"). Meanwhile the appellants 1 on 28 th November 2014 made applications that the Costs should be made payable by Mr. Vadim Shulman ("Mr. Shulman"), the ultimate beneficial owner of Hornbeam's Halliwell shares and who is said to be ordinarily resident in the principality of Monaco. The appellants applied for Mr. Shulman to be joined as a party to each set of the proceedings giving rise to the Costs orders against Hornbeam and for Mr. Shulman to be made jointly liable with Hornbeam for the payment of the Costs pursuant to rule 64.10 of the Civil Procedure Rules 2000 ("CPR"). Because Mr. Shulman is out of the jurisdiction, they applied for permission to serve the applications on Mr. Shulman in Monaco.

3

On 18 th December 2014 the learned judge, without addressing the merits as to whether a case was made out for grounding liability for payment of the Costs

against Mr. Shulman, refused permission to serve out on the basis that CPR 7.3 simply did not provide a gateway for service out of third party costs applications. The appellants have accordingly appealed. Nothing was said in relation to the application for joinder and no reference was made to CPR Part 19 which deals with addition and substitution of parties. It may be that the learned judge not being persuaded as to an available gateway under CPR 7.3 considered it unnecessary to address the question of joinder.
4

It is noted that by the time the appeal came on for hearing, Hornbeam had been placed into voluntary dissolution. 2

The judge's reasons
5

The learned judge refused permission to serve out on two main grounds:

  • (a) Firstly, that a claim for costs was not a claim under an enactment which confers jurisdiction on the court as contemplated under CPR sub rule 7.3(10) which permits service out where "[a] claim is made under an enactment which confers jurisdiction on the court and the proceedings are not covered by any of the other grounds referred to" in the rule. In paragraph 6 he opined that the only rule in the Eastern Caribbean CPR ("ECSC CPR") which might be said to come close to permitting service out of the applications was sub rule 7.3(10) but that this sub rule covered cases where a statute gives the court jurisdiction which it would not otherwise have but for the provisions of the enactment in question. By way of example he cited the Trade Marks Act 1887 section 31. He was of the view that the court's power to make third party costs orders was not a power which the Court would not otherwise have but for an enactment and opined that this power was part of the "Court's general batterie de cuisine". 3 He felt fortified in this view because in the comparative English Rule the rule-maker had, instead of relying on the equivalent of the ECSC

    CPR 7.3(10), found it necessary to insert a specific gateway for third party costs applications brought pursuant to the power contained in section 51 of the Supreme Court Act 1981. 4 The ECSC CPR had no similar insertion.
  • (b) Secondly, he considered that CPR 7.3 was not appropriate to deal with third party costs applications as it referenced and thus dealt with causes of action (by a claim form) requiring acknowledgments of service and filing and service of defences. He thus concluded that third party costs applications were "not 'claims' as that word is used in Rule 7.3". 5

The Appeal
6

The appellants say that the learned judge erred in that he ought to have found that there was jurisdiction to serve out under rule 7.14 and/or rule 7.3 or, alternatively, in the absence of any rule enabling permission to serve out, by applying the importation provision provided by section 11 of the Eastern Caribbean Supreme Court (Territory of the Virgin Islands) Act6 ("the Supreme Court Act"). They further ask this Court to deal with the substantive applications on their merit as they consider that the third party costs applications have a realistic prospect of success against Mr. Shulman.

Discussion
7

I propose to deal with the issues raised under two main heads namely:

(a) whether the court's costs jurisdiction is statutory rather than inherent; and

(b) applications which may be served out pursuant to CPR 7.14.

The Court's Costs Jurisdiction
8

It is true to say that the court's costs jurisdiction has been so long established that much thought is not given as to the source of the court's jurisdiction. It is taken as a given. It is therefore not surprising that the learned judge considered it as part of the court's general 'batterie de cuisine'. It is not clear whether the learned judge meant that it was an inherent power incidental or ancillary to the court's substantive jurisdiction or was in and of itself a necessary part of the court's inherent jurisdiction particularly as a tool of the court in protecting against abuse of its process or ensuring observance of due process. The concepts of 'jurisdiction' and 'power' are distinct concepts. Jurisdiction is ordinarily the authority or substantive power which the court has to decide matters before it and in doing so may invoke powers inherent to the exercise of that jurisdiction in giving it full effect. Jurisdiction may be said to be a substantive power whereas powers may be considered as procedural for the purpose of giving effect to the substantive power. If...

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