Peterson Connor Dba Pete's Trucking & Equipment Rentals v Desmond Paul dba Unique Landscapes
| Jurisdiction | Anguilla |
| Judge | ‘Innocent, J’ |
| Judgment Date | 28 August 2020 |
| Judgment citation (vLex) | [2020] ECSC J0828-1 |
| Court | High Court (Saint Christopher, Nevis And Anguilla) |
| Date | 28 August 2020 |
| Docket Number | CLAIM NO. AXAHCV 2020/0039 |
THE EASTERN CARIBBEAN SUPREME COURT
IN THE HIGH COURT OF JUSTICE
(CIVIL)
A.D. 2020
CLAIM NO. AXAHCV 2020/0039
Ms. Jean Dyer, Jean Dyer & Associates of Counsel for the Applicant
Mr. Thomas W.R. Astaphan, QC with him Mrs. Tonae Simpson-Whyte of Counsel for the Respondent
This matter came on for hearing on an application by the applicant, Mr. Desmond Paul (Mr. Paul), to set aside an order of the court dated 6 th August 2020 wherein the court stayed the execution of a Writ of Fieri Facias (Writ of fifa) issued on 23rd August 2019 and extended on 29 th July 2020. This application is opposed by the respondent.
The execution of the Writ of fifa was stayed pending the determination of the court on the question of whether the freezing injunction obtained by Mr. Connor on 28 th January 2019 and extended by the court at various times thereafter by consent, and lately as of 17 th July 2020, prohibited the execution of the Writ of fifa against the property that is the subject of the freezing order (the ‘Stay Order’).
The following issues arose for determination on the present application:
-
(1) Whether the court failed to exercise its discretion in accordance with CPR 17.4 when it granted the Stay Order ex parte.
-
(2) Whether the ex parte Stay Order should be set aside for noncompliance with CPR 17.4.
-
(3) Whether the freezing order prohibits the execution of the writ of fifa.
-
(4) Whether the applicant is bound by the freezing order.
The application to set aside the ex parte Stay Order with respect to the execution of the writ of fifa was premised on the following grounds:
-
(1) That the respondent failed to state any reasons for proceeding ex parte with the stay application and not giving prior notice to the applicant contrary to CPR 17.3(3).
-
(2) The respondent failed to comply with CPR 17.4 which is mandatory; and that the stay order did not comply with CPR 17.4(4) as it was not limited in duration.
-
(3) The stay order did not fix a return date in accordance with CPR 17.4(5) (a); 17.4(5) (b); 17.2(5).
-
(4) The grant of the stay order was defective to the extent that:
-
(a) there was no basis for the grant of an ex parte order staying execution of the writ of fifa;
-
(b) the grant of a stay of execution ex parte was an exceptional step, and therefore irregular for the following reasons:
-
(i) an interim freezing order does not prevent enforcement of a judgment;
-
(ii) the freezing order gave the respondent no proprietary right in respect of the property and did not confer on the applicant the status of a preferred creditor;
-
(iii) the interim freezing order does not provide the respondent with security for his claim, that is, it does not make him a secured creditor;
-
(iv) that none of the circumstances, contemplated by CPR 46.2 exists.
-
-
-
(5) The respondent failed to make full and frank disclosure with respect to the value of his claim and the value of the property subject to the freezing order. In addition, that the freezing order is unlimited in scope and ought to have been limited to a particular sum.
-
(6) An interim freezing order is not a form of pretrial attachment.
-
(7) The interim freezing order did not create a charge against the property in favour of the respondent.
Ms. Jean Dyer (‘Ms. Dyer’), counsel for the applicant, submitted that an interim freezing order operates in personam and creates no rights in rem. Therefore, the respondent could not obtain security in the frozen property as opposed to preserving the property, and making them available at a time when the respondent obtains a judgment and seeks to enforce it. The freezing order did not create a charge over the property in favour of the respondent. Therefore, existing creditors may still enforce their judgment against the property.
In response to Ms. Dyer's submissions, Mr. Thomas Astaphan, QC (‘Mr. Astaphan QC’) presented the following arguments. Mr. Astaphan, QC submitted that a stay of execution is distinct from an injunction and accordingly, different considerations would apply. According to Mr. Astaphan, QC, the court's power to grant a stay is discretionary. In a nutshell, Mr. Astaphan, QC's argument was that, contrary to Ms. Dyer's assertions in relation to the exercise of the court's discretion under CPR 17 in granting the interim relief, the court had properly exercised that discretion on the basis of the evidence presented on the application for the stay of execution.
The essence distilled from Ms. Dyer's argument was not that the court was not empowered to grant a stay of execution, but rather, that the respondent did not advance his application in conformity with CPR 17 and that the court had exercised its discretion improperly when granting the stay.
The second limb of Mr. Astaphan, QC's submissions was that the applicant's application for a writ of fifa, notwithstanding the existence of the interim freezing order, of which it is alleged the applicant had actual notice, was procedurally incorrect. According to Mr. Astaphan, QC, an interim freezing order places the property that is the subject of the freezing order under the control of the court. Therefore, the proper procedural step that the applicant ought to have followed was to apply to the court as an intervener to vary or set aside the freezing order.
In the present case, the respondent obtained the interim freezing order on 28 th 2019 and filed his claim on 22 nd May 2020. The applicant filed its claim on 22 nd February 2019 and obtained judgment in default on 1 st April 2019.
The answer to the specific questions raised on the present application lies in the nature of an interim freezing injunction itself. An interim freezing injunction is not a form of pretrial enforcement or attachment. The court is fortified in this view by ample authorities on the point.
In Mercedez-Benz AG v Leiduck 1 it was held that a claim for Mareva relief was not ‘brought to enforce’ a ‘judgment’ but merely prepared the ground for enforcement by different means in the future and was intended to hold the position until a judgment came into existence. A Mareva injunction was sui generis in that, unlike other forms of injunction, it did not decide any substantive rights, and did not call into existence any process by which such rights would be decided but merely ensured that once the mechanisms of enforcement were set in motion there was something physically available upon which they could work. 2
In Cretanor Maritime Co. Ltd. v Irish Marine Mangement Ltd. 3, the appellants, the owners of a vessel, chartered the vessel to the respondent. The appellants executed a debenture in favour of a bank which created a floating charge in respect of all monies due or to become due to them. The debenture holder was given the right to appoint a receiver with power to take possession and collect any property charged by the debenture. The guarantor of the debenture was called upon to honour his obligations under the debenture, and he having done so the debenture was assigned to him. The guarantor subsequently appointed a receiver. Disputes arose under the charterparty which were referred to arbitration in London. Thereafter, the appellant applied ex parte to Mocatta J. for a Mareva injunction and an order was made restraining the charterers from “removing or disposing out of the jurisdiction any assets up to the sum of U.S. $700,000” until 14 days after the publication of the award or further order. The arbitration was subsequently compromised and the charterers agreed to pay the owners the sum of $375,000 by instalments. The charterers only paid $93,000. Thereafter the appellants began an action against the respondents for the recovery of the monies owed and recovered judgment for the amount, but the judgment was unsatisfied. The receiver applied for an order discharging the injunction and, if necessary, for an order appointing him receiver for the purposes of recovering any assets or debts due to the appellants. The respondents' only asset in England was a bank deposit of £70,494. On December 2 Donaldson J. discharged the injunction and ordered that the certificate of deposit be released to the respondents at the expiration of 21 days from the date of the order unless the appellants appealed.
On appeal, it was held, dismissing the appeal, that a Mareva injunction, unlike a pre-trial attachment order which was in the nature of an order in rem and could give rise to rights similar to a lien, was relief in personam which prohibited certain acts in relation to the asset and, accordingly, in the instant case the owners acquired no rights against the deposited fund under the injunction. 4
It was also held that the injunction did not prevail as against the debenture holder where the foreign floating charge crystallised after the injunction had been granted as the rights of the debenture holder over the deposited fund stemmed from the creation of the debenture, and not from the appointment of the receiver which merely crystallised the existing equitable charge and removed the right of the charterers to continue to deal with their assets in the course of their business. 5
The court reasoned, that although the receiver as agent of the charterers could not obtain the discharge of the injunction, it was open to the debenture holder as equitable assignee under Irish law of the deposited fund in England to apply for such discharge, although he was not a party to the action and that as, there was no prospect of any surplus being available for unsecured creditors in the liquidation of the charterers after satisfaction of the claims of the debenture holder and of preferential creditors and as the...
To continue reading
Request your trial