Febvre Company Ltd v Grape Expectations SA

• Jurisdiction: British Virgin Islands
• Judge: JOSEPH-OLIVETTI, J.
• Judgment Date: 12 February 2007
• Docket Number: BVIHCV2006/0168
• Court: High Court (British Virgin Islands)
• Date: 12 February 2007

IN THE HIGH COURT OF JUSTICE

BVIHCV2006/0168

BETWEEN

Febvre Company Limited

Claimant

and

Grape Expectations SA

Respondent

Appearances:

Mr. Michael Fay of WSmiths for the Claimant

Mr. Christopher Young of Harney, Westwood & Riegels for the Respondent

(Civil Procedure — Summary Judgment — Claimant relying on oral contract for subscription of shares and payment of subscription monies — Defendant alleging that share allotment depended on performance of two related contracts — whether Defendant has any real prospect of successfully defending claim.

Civil Procedure — Forum non conveniens — whether fact that remedy sought can only be granted in BVI decisive factor)

JOSEPH-OLIVETTI, J.

1 Mr. Dickens might appreciate the silent homage expressed in the name of the Defendant but it signified the hopes of Mr. Alken and Mr. Read when they embarked on a joint venture in the marketing of bottled wine and just like Pip it seems that their “great expectations” came to naught.

2 This court has before it two applications: the Claimant's for summary judgment and the Defendant's for a stay of proceedings on the doctrine of forum non conveniens.

3 I shall consider the Claimant's application first as it seems logical to do so.

4 The Claimant relied on the affidavits of Mr. Simon Schilder filed 6 ^th July 2006 and that of Mr. Anthony Alken filed 6 ^th November 2006. The Defendant based its opposition on the affidavits of Mr. Geoff Read filed 5 ^th September 2006 and 3 ^rd January 2007. Having regard to how the action unfolded these affidavits are also relied on for the forum challenge application.

5 The Claimant's application is that filed 4 ^th January 2007. For completeness I mention that the Claimant had made a prior application for judgment on admissions and or for summary judgment on the 6 ^th July, the same time that it issued the Claim Form.

6 However, as a result of certain pertinent observations made by Master Mathurin when the application came on for hearing on the 21 ^st July the application was adjourned and the Claimant amended its Statement of Claim on the 28 ^th July 2006. In light of the new application and despite the Claimant's desire to have the old application remain as pending, the Court dismissed it with costs of $350.00 to the Defendant. From the arguments it seems the real obstacle to this course was that the Claimant was wary of having to pay substantial costs to the Defendant if it elected to withdraw. In my view, as the Claimant is relying on the same grounds in its new application this was the proper course to take.

The Law

7 This application is governed by CPR 2000 Part 15.2 (b) which gives the court a discretion to grant summary judgment where, ‘the Defendant has no real prospect of successfully defending the claim.’ And the evidence for this purpose is to be presented in the form of affidavits in support of and in opposition to the application. See Part 15.5.

8 The basis for making such an application is that the pleadings and other written evidence before the court disclose sufficient undisputed, or indisputable, facts to make a trial unnecessary. See Lord Scott of Foscote p. 733 c Criterion Properties PLC v Stratford (UK) Properties LLC and others. 1

9 The guiding principles were fully adverted to in The Bank of Bermuda v. Pentium (BVI) Ltd. and Landcleve Ltd.2 where the Court of Appeal (Saunders, JA) stated that in the Court below, Rawlins, J. had ‘meticulously set out the proper approach to CPR 15.2.’3

10 In that case at first instance Rawlins, J. (as he then was) followed the approach of the English court in Swain v. Hillman and Another4 in which the English Court of Appeal considered Rule 24.2 of the new English Civil Practice Rules, which is similar to our Part 15.2. He quoted the judgment of Lord Woolf MR, who said, ‘the word “real” is used to direct the court to determine whether there is a “realistic” as opposed to a “fanciful” prospect of success’ and that the Rule does not require the conduct of a mini-trial.

11 The learned judge also referred to the statement of Judge L.J., in Swain: ‘…If there is a real prospect of success, the discretion to give summary judgment does not arise merely because the court concludes that success is improbable. If that were the court's conclusion, then it is provided with a different discretion, which is that the case should proceed but subject to appropriate conditions imposed by the court.’

12 However Rawlins J admonished: ‘The court should be cautious, however, since it is a serious step to enter summary judgment. It provides finality without the opportunity for trial on the merits with evidence tested on cross-examination. Yet, a Claimant is entitled to summary judgment if the Defendant does not have a good or viable Defence to the claim. This is in keeping with the overriding objective stated in Part 1 of the Rules, which enjoins the court to deal with cases justly, by, inter alia, saving unnecessary expense and ensuring that cases are dealt with expeditiously…’5

13 By its application the Claimant seeks the same relief as in its Claim form:—

• (i) a declaration that the Claimant is entitled to be registered in the share register of the Defendant as the proprietor of 49.9% of the allotted share capital of the Defendant;

• (ii) an order that the Defendant register the Claimant as the proprietor of 49.9% of the allotted share capital of the Defendant;

• (iii) an order that the Register of Members of the Defendant be rectified pursuant to section 29 of the International Business Companies Act, to register the Claimant as the proprietor of 49.9% of the allotted share capital of the Defendant.

• (iv) further or other relief;

• (v) costs.

14 The Claimant's pertinent allegations as made in its statement of claim are to this effect. The Defendant is a company incorporated in the BVI under the International Business Companies Act Cap. 291 (‘the IBC Act’). The Claimant subscribed for 49.9% of the share capital of the Defendant and the Defendant agreed to allot and issue the same to the Claimant. The Claimant paid £50,000 which the Defendant accepted as consideration for the allotment and issuance of the shares.

15 This Statement of Claim is skeletal in the extreme especially having regard to CPR Part 8. 7 which mandates that a Claimant must set out in its statement of claim all the material facts on which the Claimant relies and annex a copy of any documents which the Claimant considers necessary to its case.

16 In the usual course, one would have a formal Defence but because of the forum challenge the Defendant is not required to file a defence at this stage and has not done so. See CPR Part 9.8. Therefore, we must look to Mr. Read's affidavits to discern the nature of the proposed defence. The gist of the defence appears to be that the Claimant, through Mr. Alken and Mr. Read entered into a joint venture business arrangement to be carried out by the Defendant, that the Claimant's registration as a shareholder was contingent upon its satisfactory performance of distribution and administration agreements between it and the Defendant, that the Claimant is in breach of those agreements and thus not entitled to be registered as holder of the shares until it has remedied the breaches. (This dispute is before the Irish courts as the Defendant and another related company has sued the Claimant and Mr. Alken there. This has given rise to the forum challenge.)

Evidence of Mr. Schilder and Mr. Alken for Claimant

17 The Claimant bases its entitlement to the shares on an oral agreement made in 1995 and the payment of the consideration then as deposed to in the supporting affidavits of Mr. Schilder, one of the Claimant's BVI lawyers and Mr. Alken, a director of the Claimant. The Claimant has not given any particulars of that oral contract, for example, the date on which it was made, where it was made and who represented the parties.

18 Indeed, Mr. Alken would have us believe that this was a simple straightforward subscription agreement without more. However, he advances no reasons why the shares were not issued for nigh on 10 years, something which strikes me as curious to say the least seeing that the monies he paid, payment of which is not disputed, was substantial.

19 The Claimant relies heavily on the Defendant's accounts which show that the Defendant is fully capitalized and Mr. Fay submits that it is evident from the figures that his client's £50,000 was utilized for that. (See SJS 1 page 8 note 11 account for 2003 and page 9 note 14 account for 2004.) In addition he relies on statements in the Defendant's accounts for 2003 (Exhibit SJS 1 Tab 9 page 8, note 10) and 2004 (Exhibit SJS 1 page 9, note 11) and on the letter of Mr. Colin Freely of RSM Robson Rhodes LLP, the Defendant's auditors, dated 15 ^th May, 2006 (Exhibit SJS 1 Tab 9), the conjoint effect of which, Mr. Fay submits, amounts to an admission by the Defendant that the Claimant is a shareholder and entitled to the shares as claimed.

20 This is the statement in the 2003 accounts (a like statement appears in the 2004 accounts):—

‘CONTROLLING PARTIES AND RELATED PARTY TRANSACTIONS The shares in Grape Expectation S.A. are jointly owned and controlled by The Grape Settlement (50.1%) and Febvre & Company Limited (49.9%). Grape Expectations S.A. is also related to Reads World of Wine by virtue of common ultimate shareholders’.

21 In his explanatory letter (I term it such as it was written in response to a letter from the Claimant's Irish lawyers as to the source of Mr. Freely's information) Mr. Feely said this:

‘The management accounts in respect of the accounting period ended 31 ^st December 2002 reflected the full amount of the issued share capital as being £100,000. We understood at that time that formal share certificates had not been issued in respect of these shares and relied...