Jogodzinski v Trustnet (Cook Islands) Limited [2003] CKHC 3; OA 13 of 2003 (10 November 2003)

IN THE HIGH COURT OF THE COOK ISLANDS
HELD AT RAROTONGA
(CIVIL DIVISION)

OA NO. 13/2003

BETWEEN:

CHRISTIAN JOGODZINSKI
of Fiji, Investor
Applicant

AND:

TRUSTNET (COOK ISLANDS) LIMITED a company incorporated
in the Cook Islands and carrying on business there and elsewhere as a trustee company
First Respondent

AND:

LE GROUP des INSULAIRES LIMITED
a company international company incorporated
under the provisions of the trustee of the Le Group des
Insulaires Trust
Second Respondent

AND:

WILLIAM CLARKE of Suva, Fiji Solicitor
Third Respondent

AND:

JOYCE C TAYLOR of Newport
Beach California United States of America Retired
Fourth Respondent

AND:

JOHN SCOTT MILLER and
SHELLY ANNE MILLER both
of Suva Fiji
Fifth Respondent

Mr McFadzien for Applicant
Ms McCarthy for Respondents

Date of hearing: 10 November 2003
Date of judgment: 10 November 2003

JUDGMENT OF WILLIAMS J

[1] First Respondent by way of an application dated 30th of October seeks an order that the claim of the applicant in OA 13/2003 as against the First Respondent ("Trustnet") be struck out as no reasonable cause of action is disclosed against Trustnet. The application is made in reliance on Rule 131 of the Code of Civil Procedure and order for costs is also sought. The grounds asserted are, first, that the applicant has not and cannot allege any direct cause of action against Trustnet. Secondly, that Trustnet is not a party to the Trust and therefore has no capacity to deal with the assets of the Trust. Therefore there is no need for the injunction against it.

[2] The background circumstances are that a Mareva Injunction was made by this Court on the 17th of October 2003. Trustnet was a party to those proceedings but the Statement of Claim did not identify a specific cause of action against Trustnet. One of the orders made by way of Mareva Injunction on 17th of October was that the Trustnet and the Third Respondent "deliver up or cause to be delivered up and disclosed to the applicant on oath within 7 days, copies of all documents within their possession or knowledge in relation to firstly the Deed of Settlement of the Le Group des Insulaires Trust made on 1 June 2001 between the Fifth Respondents’ Settlors and the Second and Third Respondents as trustee and sole director of the Second Respondent respectively and secondly, Katafanga Island."

[3] The application is opposed by the applicant, the grounds of opposition being that Trustnet is the only resident respondent it will have against whom it can obtain necessary ancillary relief. The Second Respondent, which is an international company incorporated pursuant to the provisions of the International Companies Act 1981-82, is required by section 90 of that Act to have a resident secretary. That resident secretary will either be Trustnet or a wholly owned subsidiary of Trustnet as is permitted by section 4A of the Trustee Companies Act 1981-82. That resident secretary would be the only respondent within this jurisdiction who would have access to documents relevant to the Deed of Settlement of the Le Group des Insulaire Trust in the Cook Islands at least for the present time. For that reason Trustnet should remain a respondent. The position may change when the proposed proceedings are launched in Fiji against the Second, Third, Fourth and Fifth Respondents. (Fiji is the place where the prime asset of the Second Respondent, namely Katafanga Island is located.)

[4] The submissions on behalf of Trustnet Ms McCarthy summarized her case as follows:

(a) Trustnet should be struck out because in terms of the substantive injunction, as opposed to the orders of discovery, Trustnet has no power to deal with the assets of a Trust without instructions from other Respondents. It does not control and manage the Trust itself because instructions must come from the Second Respondent. The mere serving of the Mareva proceedings on Trustnet would be a sufficient protection because if Trustnet with knowledge of the proceedings became a party to any breaches of the injunctions made against the other Respondents it would itself become liable. In short, there is no need to have injunctions or orders against Trustnet.

(b). So far as the Court has power to make ancillary orders of the kind referred to in Blanchard Civil Remedies in New Zealand at page 295-299, the same reasoning applies. There is no need to join them as ancillary orders can be made against Trustnet without the need to have it as a party.

[5] Having considered these submissions the Court refuses the application for the following reasons. First, there is a cause of action known to the law, the Norwich Pharmacal course of action, based on the House of Lords decision in that case recorded in 1974 Appeal Case 133 which would have justified the joinder of Trustnet. Secondly, on a strike out, the strike out defendant can defeat the strike out by asserting, that it will be possible to amend the pleadings introducing a prima facie arguable cause of action. In this case it would be the Norwich Pharmacal course of action. Thirdly, at least at the present moment, there is justification for the ancillary discovery order against Trustnet. Fourthly, it may be preferable, rather than merely exercising the ancillary jurisdiction against Trustnet as a non party, to have Trustnet for the time being, remain a party and amenable to orders both against it and in its favour, for example as to costs. By having Trustnet joined as a party this Court has better control over the whole situation including control over the time at which it may be appropriate for Trustnet to be removed as a party to the proceedings.

[6] The Orders of the Court will therefore be as follows:

1. The application for Trustnet to strike out is refused;

2. The applicant is to file in this Court no later than 4pm on Friday 14th November 2003 an amended Statement of Claim alleging a Norwich Pharmacal course of action against Trustnet.

3. Paragraph 2 of the Order of the Court dated 17th of October 2003 by way of Mareva Injunction, is hereby amended so as to provide that in the first instance there shall be provided by Trustnet a list of all documents, as opposed to the delivery up of the documents themselves. Thereafter relevant documents will be delivered up, such documents to comprise documents which the parties agree are relevant or, failing agreement, those identified by the Court. The time for compliance with the amended order will be 4pm on 1 December for the list of documents. If the parties agree upon the documents to be delivered up, such delivery shall take place by 4pm on 14 December. If they cannot agree then by that same date, 14 December, the applicant will lodge an application to the Court specifying the documents in the list in respective of which it seeks delivery and serve that application on the local solicitors for the Trustnet.

4. The reasonable costs of Trustnet in producing the list under the amended 17th of October order and the subsequent delivery shall be met by the Applicant if the parties cannot agree those costs then Trustnet has leave to apply to have the Court determine such costs.

[7] Although the Applicant has successfully resisted the strike out, there would have been no need for it had the cause of action against Trustnet been properly pleaded in the first instance. In these circumstances, as properly acknowledged by counsel or the Applicant, it is appropriate that costs be awarded to Trustnet. The parties shall endeavour to agree to amount of such costs. Failing agreement within 7 days Trustnet has leave to file an application.

[8] Leave reserved to all parties to apply.

David Williams J
November 10, 2003