Henderson J
IN THE GRAND COURT OF THE CAYMAN ISLANDS HOLDEN AT GEORGE TOWN, GRAND CAYMAN Cause No. 378 of 2010 BETWEEN: (1) NOVACELL (ST. LUCIA) LIMITED (2) COMPLETWIRELESS JAMAICA LIMITED (IN RECEIVERSHIP) (3) KENNETH TOMLINSON (AS RECEIVER OF COMPLETWIRELESS JAMAICA LIMITED) Plaintiffs AND: (1) ISSAC RANKINE (2) PAN CARIBBEAN CONSULTING LIMITED Defendants Appearances: Mr. Neil Timms instructed by Mr. Orren Merren of Merren & Company for the Defendants Before: Hon. Justice Henderson Heard: March 18, 2011 RULING
The issue presented on this application is whether a counterclaim may be advanced in the absence of a statement of claim and therefore in the absence of a defence.
The plaintiffs served a generally endorsed writ of summons without a statement of claim on October 18, 2010. On the following day, the plaintiffs obtained a Mareva injunction ex parte on the basis of affidavit evidence. In the same order as the Mareva Injunction, the plaintiffs were granted an order requiring Isaac Rankine, the first defendant, to provide certain information by affidavit. By a separate action in Cause 377 of 2010, they also applied for but did not obtain a Norwich Pharmacal order.
The time for delivery of a statement of claim expired on November 19, 2010, without any pleading having been filed. The defendants offered an extension of time until December 3rd, 2010. The plaintiffs rejected this offer and, notwithstanding having been granted a Mareva injunction, have not filed a statement of claim at all.
Pan Caribbean Consulting Limited, the second defendant, says it submitted an invoice dated March 28, 2008 for US $206,400 for services rendered in Jamaica to Completwireless Jamaica Limited, the second plaintiff. This invoice has remained unpaid. Completwireless is a telecommunication company incorporated in and operating in Jamaica. Novacell St. Lucia Limited, the first plaintiff and a company incorporated in St. Lucia, serves as a funding vehicle for investors in Completwireless.
On or about 17th November 2008, Novacell appointed Kenneth Tomlinson, the third plaintiff, to act as receiver for Completwireless pursuant to a debenture dated August 10, 2007.
The defendants filed a counterclaim on December 1st, 2010 in respect of the debt owed by the second plaintiff. The plaintiffs then, on December 3rd, 2010, filed a notice of discontinuance.
The defendants filed an application for default judgment in respect of the counterclaim on January 18, 2011. The Deputy Clerk of the Court referred the application to Creswell J. On 19th January 2011, Justice Creswell declined to enter default judgment and posed the following question: "Can a counterclaim be made to a generally endorsed writ where no statement of claim has been served and therefore no defence has been served?" He directed attention to O. 15, r. 2. On this application, the plaintiffs have chosen not to attend but have presented a brief argument in the form of a letter. Grand Court Rule O. 15, r. 2 provides as follows: "Subject to rule 5(2), a defendant in any action who alleges that he has any claim or is entitled to any relief or remedy against a plaintiff in the action in respect of any matter (whenever and however arising) may, instead of bringing a separate action, make a counterclaim in respect of that matter, and where he does so he must add the counterclaim to his defence."
On its face, O. 15, r. 2 provides for a defendant in "any" action to bring a counterclaim. It does not distinguish between actions begun by generally endorsed writs and those endorsed with a statement of claim. The words "and where he does so he must add the counterclaim to his defence" do not, on their face and given their natural meaning, limit the right to make a counterclaim. The words describe an unconditional right to advance a counterclaim when a defendant happens to have a claim against a plaintiff. If there is a defence, the counterclaim must be added to it. The quoted words do not require the existence of a pleaded defence as a precondition. This much can be seen from the fact that a counterclaim may also be made in an action begun by originating summons in which no defence is required. In such a case, the plaintiff by counterclaim will have, subject to O. 28, r. 7(2), the same rights under O. 15 as if the action had begun by writ. This shows that a defence is not a precondition to a valid counterclaim.
Any requirement that there must be a statement of claim before a counterclaim may be pleaded would fail to recognise that a counterclaim is simply a cross-action. A counterclaim is to be treated as an independent claim. For example, for the purposes of the Limitation Law (1996 Revision), a counterclaim is a new claim and deemed to be a different action commenced on the same date as the original action. Order 15, r. 2(3) also illustrates the independent standing of a counterclaim as it provides that a counterclaim may be proceeded with even where the original claim is stayed, discontinued, dismissed or subsumed in a judgment.
The purpose of the words "and where he does so he must add the counterclaim to his defence" in O. 15, r. 2 are procedural and not substantive. These words do not limit the right to counterclaim but serve only to emphasise that a counterclaim must be made with the requisite degree of formality in a pleading and that it is subject to the rules of pleading. In any case where there is a defence, the counterclaim must be added to it.
The plaintiffs have relied heavily upon what was said by Brandon, J. in the Gniezno [1967] 2 All E.R. 738 to this effect: "It is, however, right to say that, under the rule, the mode by which the counterclaim is to be made is by the service of a counterclaim added to the defence. It follows from that that a defendant cannot, under that rule, make a counterclaim until a statement of claim has been served on him because it is not until then that he can serve a defence."
The rule to which his lordship was referring was the English equivalent of Grand Court Rule O. 15, r. 2.
The point actually decided in the Gniezno was that a notice of counterclaim of the sort sometimes filed in the Admiralty Division was not of itself a counterclaim because it was not a process sanctioned by the Rules of Court. The passage quoted above was not necessary to His Lordship's decision. He did not have to decide whether it was necessary for a defence to have preceded a counterclaim to render the latter a valid pleading. The point turns solely upon the nature of a conventional notice of counterclaim so the last sentence quoted above is obiter dicta. It is unclear from the decision whether any argument at all was presented to His Lordship on the point before me now.
The overriding objective of the Grand Court Rules is to enable this court to deal with every cause or matter in a just, expeditious and economical way: see the preamble to the Rules, section 1.1. Ordinarily the processing of an application for default judgment is an administrative matter. In this instance, the court on its own motion intervened to prevent entry of judgment and to raise a question relating to the entitlement to bring a counterclaim, a question not raised by the plaintiffs. The plaintiffs, having been successful in obtaining a Mareva injunction, failed in their obligation to file a statement of claim and by so doing denied the defendants an opportunity to file a defence. The plaintiffs are now seeking, on the basis of O. 15 r. 2, to rely on this unavoidable absence of a defence to deny the defendants the opportunity of having their counterclaim determined in this jurisdiction. Since the plaintiffs elected to invoke the jurisdiction of this court, there can be no unfairness in requiring them now to litigate the counterclaim here. I am satisfied that our Rules of Court do contemplate that a counterclaim may be advanced even where no defence has been or can be filed.
For these reasons, default judgment may be entered on this counterclaim. The defendants may have default judgment in the amount of US $206,400 plus interest in the amount of US $28,601.94.
The defendants, plaintiffs by counterclaim, may also have their costs against Completwireless. I am not persuaded that this is one of those exceptional cases where they should have their costs also against Novacell, which is not a party to this counterclaim. Dated this 18th day of March, 2011 Henderson, J. Henderson, J. Judge of the Grand Court