Condor Insurance Ltd Applicant v [1] Promed Casualty Insurance Company Ltd [2] Promed Reinsurrance Ltd Respondents [ECSC]
| Jurisdiction | Saint Kitts and Nevis |
| Judge | Leigertwood-Octave,lanthea Leigertwood-Octave,High Court Judge [Ag.] |
| Judgment Date | 25 May 2006 |
| Judgment citation (vLex) | [2006] ECSC J0525-1 |
| Court | High Court (Saint Kitts and Nevis) |
| Docket Number | CLAIM NO. NEVHC2006/0009 |
| Date | 25 May 2006 |
IN THE HIGH COURT OF JUSTICE
Lanthea Leigertwood-Octave High Court Judge [Ag.]
CLAIM NO. NEVHC2006/0009
On 20th February 2006, Condor Insurance Limited, [hereinafter referred to as "the Applicant"] filed an application without notice for an injunction against Pro Med Casualty Insurance Limited and Pro Med Reinsurance Company Limited [hereinafter referred to as "the Respondents"]. The application was supported by the affidavits of Thomas R. Cherry and Harvey T. Millam. Written submissions in support of the application were filed on 21st Febmary 2006.
On 22nd February 2006, the Court granted the injunction, with the usual undertaking as to damages by the Applicant, in the following terms:
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i) That the Respondents by their agents or servants or otherwise howsoever be restrained and an injunction is hereby granted restraining them from continuing or prosecuting or assisting in the prosecution of certain arbitration proceedings commenced by the Respondents in the United States of America against the Applicant until 16th March 2006.
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ii) That the Applicant by its counsel undertake to issue and serve a Claim Form within 21 days of the date of the Order.
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iii) That the Court would further consider the matter on the 16th March 2006.
On 6th March 2006, the Respondents applied to vacate the order. The application was supported by the affidavit of Evan L. Smoak. In brief, the grounds of the application were that, in the application for the injunction, the Applicant had failed to disclose material facts to the Court and that the injunction had been obtained in bad faith and was merely a delaying measure aimed at stalling or stopping the arbitration process, to which both sides had agreed. Written submissions were filed by the Respondents on 14th March 2006.
The application to vacate the order was set down for hearing on 14th March 2006. On that date the court ordered that the application would be heard on 16th March 2006, the date set for the further consideration, on the granting of the injunction. The injunction was ordered to continue until 16th March.
Before considering the application for discharge, it is important to give some basic details of the relationship between the parties.
The Applicant is an international insurance company, incorporated in the Federation of St. Kitts and Nevis. Pro Med Reinsurrance Company Limited, is an international reinsurance company, similarly incorporated. The existence and status of the entity, Pro Med Casuality Insurance Limited, is central to the dispute between the parties.
[6] What is not in dispute, however, is that sometime prior to May 2005, the Applicant and the Respondents entered into two Reinsurrance Agreements, whereby the Respondents would pay premiums to the Applicant to cover certain risks. The first Agreement being the Excess of Loss Reinsurance Agreement and the second Agreement being the Quota Share Reinsurrance Agreement. Both Agreements contain arbitration clauses.
In their application to vacate the order, Respondents argued that the order for the injunction did not comply with the provisions of Rule 11.16 of Eastern Caribbean Supreme Court Civil Procedure Rules 2000 [hereinafter referred to "CPR"] and therefore should not stand.
CPR11.16 provides that where an order has been made on an application without notice, a Respondent may apply to the court to set aside or vary that order. Such an application must be made not more than 14 days after the service of the order on the respondent.
CPR11.16 (3) provides that the order must contain a statement telling the respondent of the right to make an application in accordance with the rule. The Respondents argued that the order for the injunction as filed and served did not contain the mandated statement and was therefore fatally flawed. This omission in their view has served as an additional disadvantage as the Respondents were made to suffer damages waiting on the stipulated time of the next hearing, until they were advised otherwise.
The Applicant in response to this argument accepts that the order did not advise the Respondents of their right to apply within 14 days to have it set aside but submits that the Respondents were not prejudiced by the form of the order. The Applicant is asking the Court to exercise its case management function under CPR26.9 [3], and put the matter right even though there has been failure to comply with CPR11.16 [3].
The purpose of CPR11.16 is quite clear, it is to ensure that a respondent against whom an order has been obtained on an application without notice is informed of his right to vary ordischarge it within a specified time and to prevent prejudice and injustice. It should be noted, however, that there is no sanction for non-compliance with the rule.
In this case, although the order did not inform the Respondents of their right under CPR11.16 [3], they applied to discharge the order on 6th March 2006. I agree with Rawlins J in David Carson v Richard Silva and Elizabeth Silva1, where he applied the decision of Matthew J in Cecil Penn [as attorney for Harold Creque] v Natalie Creque and James Connor [4] and [5]2 in holding that failure to comply with CPR17[4] and [5], which mandates the court to fix a date for the further hearing of an application for an interim order and fix a date on which an interim injunction will terminate, unless a further order is made on the further consideration of the application, will not invalidate an order, in the absence of prejudice to a respondent, as the rule did not provide a sanction for non-compliance.
In my view, it has not been shown that the Respondents suffered any prejudice or damages as a result of the Applicant's non-compliance.
CPR26.9 [2] states that failure to comply with a rule does not invalidate any step in the proceedings, unless the court so orders. I do not find it just in these circumstances to make such an order and the order filed on 23rd February 2006 is held to be valid.
The Respondents submits on this ground that in the application for the injunction, the Applicant failed to give the Court a true account of its relationship with the Respondents. In addition, the Applicant failed to disclose the following material facts that:
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i) The Applicant had specifically agreed to arbitrate "any" dispute, including "formation and validity" which is the basis of their challenge in this court;
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ii) The Applicant had agreed that the "venue of the arbitration would be New York City.
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iii) On 17th February 2006, the respondents had filed a Petition to Compel Arbitration in the U.S. District court for the Southern District of New York, which is the district in which the arbitration will be held.
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iv) After learning of the facts that underlie its challenges to the Reinsurance Agreements, the Applicant had continued to ratify the Agreements by accepting premiums;
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v) The Applicant further ratified the Reinsurance Agreements by invoking the Access to Records Clause of the Reinsurrance Agreements to conduct an inspection of the Respondents books in August 2005;
In his affidavit in support of the application for the injunction, Harvey T. Milam, President of Condor, deposed that at a meeting of 19th May 2005, he had been advised by Jeffrey Brunken that Pro Med Casualty Insurance Limited, the entity that had issued the policies to the public via the agency PRU, may not have ever been properly established as a company in Nevis.
Mr. Milam...
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