Leeward Isles Resorts Ltd v Hickox

• Jurisdiction: Anguilla
• Judge: Redhead J.A
• Judgment Date: 03 April 2003
• Neutral Citation: AI 2003 CA 1
• Docket Number: No. 2 of 2001
• Date: 03 April 2003
• Court: Court of Appeal (Anguilla)

Court of Appeal

Redhead, J.A.; Byron, C.J.; Singh, J.A.

No. 2 of 2001

Leeward Isles Resorts Limited

and

Hickox

Appearances:

C. Abel with him Mr. S. Westmaas and Mr. P. Patterson for the appellant

C. Hendriques, Q.C. with him Ms. P. Webster, Counsel and Mr. W. Rodgier for the respondent

Contract - Loan — Promissory notes — Whether funds advanced by respondent to appellant.

Evidence - Burden of proof — Whether trial judge misapplied the law in relation to the burden and standard of proof in relation to whether a loan of US$4 million was made on a promissory note.

Redhead J.A

1 The issue in this appeal involved the determination of a preliminary issue in a dispute, the subject of litigation between the appellant and the respondent in High Court Suit No. 97 of 1998. The learned trial Judge at paragraph 27 of his judgment said:–

“Following a number of interlocutory applications in the matter, and upon the plaintiff giving a certain undertaking, it was decided to set down for determination as a preliminary issue the following questions:–

“Whether the plaintiff advanced to the defendant

• (a) monies totalling US$4,000,000.00 in the period 1986 to 1989 inclusive (being the subject of the Promissory Note dated 31st July, 1990 exclusively of interest); and

• (b) monies totalling US$3,962,830.41 in the period 1998 to 1994 inclusive (being the subject of Promissory Note dated 1st January, 1995”

The undertaking given by the plaintiff was to the effect that he would “withdraw this action and not ……… bring any further action against; the defendant in respect of his claim ……… on the respective alleged Promissory Notes…… if…… he is unable to establish that the monies advance to the defendant was substantially (as determined by the court) in the sums” alleged in the Promissory Note.

2 The hearing of the preliminary issue took some thirty-seven days. Notwithstanding that the proceedings were only concerned with the determination of the preliminary issue.

3 For the determination of the preliminary issue the learned trial Judge undertook an analysis of the following (1) the factual issues or evidence (2) the accounting issues and issue pertaining to US banking law. After a careful analysis of the above, the learned trial judge gave judgment for the respondent. He answered the questions posed on the preliminary issue as follows:

““I would answer the question ordered to be tried as a preliminary issue in this fashion. I am satisfied that the plaintiff has established that he advanced to the defendant monies substantially in the sums set out in the promissory notes. I am satisfied that, of the monies totalling US$4,000,000.00 the subject of the Promissory Note dated 31st July, 1990, the plaintiff advanced to the defendant either all of the same or a substantial position thereof. I am satisfied that, of all the monies totalling US$3,962,830.41 the subject of the Promissory Note dated 1st January, 1995, the plaintiff advance to the defendant either all of the same or a substantial portion thereof.”

4 The learned trial judge awarded costs to the respondent fit for two counsel.

5 The appellant is dissatisfied with the learned judge's findings on the preliminary issues and it has appealed to this court. Some forty [41] grounds of appeal with sub-grounds are filed on behalf of the appellant.

6 In my opinion it would neither be practical nor would it serve any useful purpose to refer to all the grounds of appeal in order to decide the appeal. The first ground of appeal advanced by the appellant is that the learned trial Judge misdirected himself and erred in law in relation to–

• (a) Burden and standard of proof

• (b) The learned trial judge was wrong in law and misdirected himself in that he determined:

“for the court to find facts in favour of the defendant I must therefore satisfy myself that, when juxtaposed with Mr. Sheehy's unchallenged testimony and the admitted documents, the factual evidence of Messrs. Hickox and Hassink was so unreliable or discredited by cross examination as to render the plaintiff's case unbelievable. The standard of proof would naturally be the civil one of a preponderance of probabilities.”

7 The appellant contends in ground 1(a) in so holding the learned judge–

• (a) Established a precondition to finding of facts in favour of the defendant

• (b) Shifted the legal burden of proof (of the preliminary issue) on to the defendant to discredit by cross-examination the factual evidence of Mr. Hickox and Mr. Hassink, so as to render the plaintiff's case unbelievable, and in so doing imposed on the defendant the need, in discharging that burden, to meet that burden either on the balance of probabilities or on a standard of proof higher than that required in civil cases.

8 It was also contended on behalf of the appellant that the learned trial Judge misapplied the law in relation to the burden and standard of proof.

9 What the learned trial Judge said in his judgment at paragraph 31 when he was considering the issue of fact was that:

“Mr. Hickox, Mr. Hassink and Mr. Sheehy testified as to certain facts for and on behalf of the plaintiff. Mr. Hassink is an accountant who worked with KPMG, the auditors of LIR [the appellant]. He worked very closely with LIR during the period when the promissory notes were executed and it was he who actually carried out the field work for KPMG in respect of the audits of LIR. Sheehy is a Chartered Engineer. For most of the period of construction of the resort he was the construction manager. The defendant elected to call no witnesses to fact. Mr. Hickox and Mr. Hassink were cross-examined at length. Mr. Sheeh was as not cross-examined. For the court to find facts in favour of the defendant I must therefore satisfy myself that, when juxtaposed with sheehy's unchallenged testimony and the admitted documents, the factual evidence of Messrs. Hickox and Hassink are so unreliable or discredited by cross-examination as to render the plaintiff's case unbelievable. The standard of proof would naturally be the civil one of a preponderance of probabilities. (My emphasis).

10 It is not correct to say that the learned trial judge shifted the legal burden of proof on the defendant. Before analysing the factual issues, the learned trial Judge outlined the approach he would take. What did the learned trial judge have before him by way of evidence? He had the evidence-in-chief and cross-examination of Hickox and Hassink and the evidence-in-chief of Sheehy and documentary evidence. He had no viva voce evidence from the other side (it may have put in documentary evidence). He reasoned quite rightly, in my judgment, that the appellant having called no witness of fact, if therefore he had to find facts in favour of the appellant, he must satisfy himself that when he examined the documentary evidence and the evidence given by the Hickox and Hassink including the uncontroverted testimony of Sheehy, the evidence of Messrs. Hickox and Hassink must be so unreliable or discredited by cross-examination so as to render the respondent's case unreliable.

11 The evidential burden was on the respondent that is the burden of proof in the sense of adducing evidence to establish his case. If the other side leads evidence, that evidence may weaken or destroy the plaintiffs case [respondent's]. In the instant case there was no evidence coming from the appellant [defendant]. Evidence given by Hickox, Hassink and the uncontroverted testimony of Sheehy on behalf of the respondent, it follows therefore only the cross-examination and documentary evidence were capable of discrediting Hickox and the documentary evidence of discrediting the uncontroverted testimony of Sheehy. If the evidence led on behalf of the respondent was discredited or unreliable then he will find in favour of the appellant. This is in effect what the learned trial Judge was saying and in my judgment that must be correct because he had nothing else to go on.

12 As I said above in paragraph 3 of this judgment the learned trial judge outlined the preliminary issues as referred there and this must have been agreed to by all the parties. This to my mind must be the nub of the issue whether or not the respondent advanced monies totalling US$4,000,000.00 in the period 1986 to 1989 being the subject of a promissory note dated 31St July, 1994 and monies totalling US$3,962,832.41 in the period 1969 to 1994 being the subject of a promissory note dated 1St January, 1995.

13 The learned trial judge in, what I regard as, a very detailed and analytical judgment analysed the above queries in detail.

Under ground 3 it was contended as follows:

The learned trail Judge misdirected himself and was wrong in law–

• (a) in failing to confine the scope of the trial of the preliminary issue to the question ordered to be tried namely whether the plaintiff [respondent] advanced to the defendant [appellant] the sums of monies alleged and/or alternatively in expanding the scope of the Preliminary Issue to include the advancement of benefit or the benefit of monies or monies worth;

• (b) in failing to confine the scope of the trial of the preliminary issue to the question whether the plaintiff advanced to the defendant only the advances specifically recorded in the two schedules of the promissory notes and which monies are expressly referred to as being the subject of the promissory notes.

14 Under ground 3(bb) the appellant alleges that the learned trial judge misdirected himself in that he failed to give due weight to the significance of the fact that the promissory notes and contractual documentation specially incorporated the two schedules which specify each and every advance and represent that historically on particular days the plaintiff advanced specified amount to the defendant

• (c) In failing to hold that the sole issue for determination of the court at the trial of the...