ROYAL COURT
Samedi Division
3rd February, 1998
Before: B.I. Le Marquand, Greffier Substitute
BETWEENJohn RobertsonPLAINTIFF
ANDGerald Henry SlousDEFENDANT
Application by the defendant to strike out the Order of Justice
Advocate J D Melia for the Defendant
Advocate D M C Sowden for the Plaintiff
JUDGMENT
THE GREFFIER SUBSTITUTE: The plaintiff brought a previous action against the defendant relating to similar matters. That action concerned a dispute as to the ownership of a company known as Thermal Transfer Services Limited. On 23rd January, 1995, the Royal Court declared that the plaintiff was entitled to a 50% shareholding in that company from the date on which the company was formed. The present action has been brought by the plaintiff against the other shareholder in the company and the plaintiff is seeking an order that the defendant be condemned to pay to him £64,792.00 or such sum as the Court may determine as the plaintiff’s share of the company’s profits together with interest thereon. The original action contained a similar claim against the defendant but both Advocates who were before me told me that it was the trial Judge who suggested that the Court ought first to determine the issue as to whether the plaintiff held a 50% shareholding in the company. Both Counsel indicated to me that they were unclear as to why the trial Judge, Lieutenant Bailiff Le Cras, had suggested this.
Although the strike out application before me at the hearing on 7th January, 1998, was based upon a number of sub-paragraphs of Rule 6/13 (1), it was clear to me that it was really being brought on the basis of there being no reasonable cause of action against the defendant.
The strike out application was brought upon the basis that no claim for payment for a half share of the company’s profits could be brought against the defendant because any claim that should be brought should be brought by the plaintiff through the company rather than directly.
Advocate Sowden urged me not to strike out the action as that would make it very difficult for the plaintiff to obtain an effective remedy. However, it appears to me to be clear that there is no valid claim as pleaded against the defendant. The effect of the judgment in the early case was merely to clarify the shareholding and was not, as suggested by Advocate Sowden, in any sense a judgment for liability against the defendant with damages to be assessed.
If assets were wrongly removed from the company, which in fact is not alleged in the current pleading in any event, then it appears to me that the remedy of the plaintiff will be to seek to have the company reinstated (the company having been dissolved) and then to either seek to have someone appointed as a liquidator to bring proceedings against the defendant in this action or to seek to bring a minority shareholder’s action or to seek some other remedy such as a just and equitable winding up. However, what is clear is that the rights of a shareholder to a distribution of the assets of the company are rights against the company and if another shareholder has wrongly caused assets to be removed from the company then it is the company which should be claiming against that person. In appropriate circumstances, such a claim may be brought by a minority shareholder’s action if no other remedy is available. The plaintiff cannot simply short circuit things by directly suing the defendant.
However, before making a decision I had to consider the factor of the delay in the bringing of the strike out application. The action was commenced in December 1996, and applications for the striking out of an Order of Justice should be brought at the earliest possible date. Although, there was at one stage case law in Jersey which suggested that a striking out application had to be made before the close of pleadings, in recent years the Courts in Jersey have taken a less restrictive view and I have taken the matter of delay as being merely a factor to be taken into account when exercising judicial discretion. It seems to me that where, as in this case, there are very clear grounds for striking out the action, it would do no service to any of the parties for me to allow the action to go to trial with the substantial increase of costs thus involved, only for the action to inevitably fail at trial upon the very grounds upon which I could strike out. Accordingly, in the exercise of my discretion I decided to strike out the action.
However, I took the view that the costs order which I should make in this matter in relation to the costs of the action should reflect in some way the fact that the striking out did not in fact take place as early as it ought to have done and to reflect this I ordered that the defendant be condemned to pay the taxed costs of and incidental to the striking out application and the taxed costs of and incidental to the action up to and including the date of the filing of the answer only.
No Authorities