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More problems for the Oveson brothers with Levera

The Chinese construction work that is now in progress at Levera

Brothers Robert and Randall Oveson of Utah in the United States have been forced to plot their next move in a multi-million dollar legal battle pertaining to the Levera development site in the north of Grenada.

The brothers are linked to the Grenada Citizenship Development Limited (GCDL), the developer of Levera Nature & Beach Resort, which is embroiled in a fight in court with the Levera Resort Development Ltd (LRDL) involving businessman Lyden Ramdhanny and local attorney-at-law, Dickon Mitchell.

A high court judge has already ruled in favour of LRDL in the first round of the lawsuit filed by the Ovesons’ who are seeking damages amounting to some US$19.6 million after they were thrown out of the project site.

GCDL has accused LRDL of selling land on false premises and of “running a confidence game from the very beginning”.

The lawsuit arises from a dispute between GCDL, the developer of the partly constructed CBI-resort project at Levera and the Resort corporation, the owner of the land on which the resort was being built.

LRDL has since sold the lands to a wealthy Chinese businessman who is now doing a project on the site.

The warring parties had earlier agreed that LRDL would lend GCDL US$31.5 million, secured with a mortgage on the 256 acres and that the conveyance of the land would proceed upon the latter’s payment of US$3.5 million.

Central to this agreement, say the plaintiffs, was the clause granting GCDL the use of the project’s CIP-approved status, which LRDL had obtained in 2015.

GCDL’s ability to market and sell its development would, naturally, be contingent upon unit buyers having the possibility of obtaining Grenadian citizenship.

GCDL concedes that, according to the agreement, the payment of US$3.5 million should have taken place before May 18th, 2016 but that “despite best efforts by GCDL this payment was not made in full to LRDL until August 31, 2018.”

But despite this failure to pay on time, say the developers, the landowners encouraged GCDL to continue site improvements and construction, to hold a formal ground-breaking ceremony attended by the country’s Prime Minister Dr. Keith Mitchell, and to submit CIP applications under the auspices of the planned resort.

In October 2018, Grenada Citizenship by Investment Committee, under the guidance of CEO Thomas Anthony, opened a review into the Levera project.

Seven months later, Levera’s developers received a shocking message from officials: LRDL’s extension of their CIP-approval to GCDL was not valid.

Last week, THE NEW TODAY highlighted Part 1 of a ruling handed down by high court judge Raulston Glasgow in which he ordered GCDL to put down a substantial amount of money to cover cost in the matter in case LRDL is victorious in the proceedings.

The Levera outfit is contending that GCDL is financially broke and might not be able to pay them any court-awarded cost in the matter.

Following is part 2 of the Glasgow ruling:

GCDL’s answer
[12] GCDL opposes the request for security for costs. It filed a response on 1oth July 2020 via an affidavit sworn by its company secretary, Otis Wade (the Wade affidavit). Mr. Wade says that GCDL’s opposition is grounded in the fact:

(1)     GCDL has a claim with good prospects of success;

(2) GCDL’s claim seeks to recover the investments that it made on its own behalf and behalf of investors. The assets created by those investments have been seized by Levera and sold to 3rd parties;

(3) An order for security for costs will stifie its prospects of pursuing its claim; and

(4) That the request for security for costs is oppressive since GCDL’s current financial circumstances have been brought about by the very conduct of which complaint is made on its claim.

Mr. Wade explains that while the court cannot comment on the merits of GCDL’s claim, it is clear that the substantive claims are meritorious.

In respect of the amount of USD $276,391.65 claimed by the applicants as security for costs, Mr. Wade complains that the applicants provide “no basis for these costs instead relying on the filings in a different claim by another person in an unrelated matter.”

Mr. Wade explains that CPR 24.2 states that the amount and nature of the security shall be such as the court thinks fit.

As to the late payment of the costs on the discharge application in the sum of $1500.00, Mr. Wade expresses GCDL’s regret for the late payment and informs the court that GCDL has made payment to the applicants. I observe that the copy of the receipt exhibited with the Wade affidavit evidences payment to the office of counsel for the applicants on 15th June 2020 in respect of an order for costs made in September 2019.

The Wade affidavit goes on to deprecate the applicants’ reliance on Claims Nos GDAHCV 2017/0053 and 2019/0521. As to GDAHCV 2017/0053, Mr. Wade explains that it involves 3 entities of which GCDL is the 3″ defendant. GCDL explains that the judgment debt is in dispute and that it has already paid the principal amount of that claim in the sum of US$1million within the time ordered by the court. In respect of GDAHCV 2019/0521, Mr. Wade claims that this is a live matter wherein the court has reserved judgment. Mr. Wade opines that the applicants’ reliance on these 2 matters does not “determine or establish the financial standing of the Claimant herein whose substantial physical assets have been seized by the First Defendant.”‘ GCDL describes the applicants’ conduct as being oppressive.

Mr. Wade further deposes that the parties’ relationship commenced when GCDL was introduced to Mr. Mitchell by Levera’s principal. He explains that the applicants urged GCDL that “it would be more expedient and convenient for the same law firm to act for both parties.'”

The Wade affidavit goes on to remind the court that the CPR provides that costs are generally awarded to the unsuccessful party although there is a discretion to do otherwise. Mr. Wade deposes that there has been no final determination as to which of the parties has succeeded on this claim. As such, it is incorrect for the applicants to state that they have incurred substantial costs.

Mr. Wade then returns to GDAHCV 2017/0053 and makes the charge that the nature and substance of that claim could only have come to Mr. Mitchell’s attention during the period that he served as legal advisor to both parties. These matters were of a confidential nature to Mr. Mitchell.

Mr. Wade concludes that the applicants have not demonstrated that GCDL is or will be unable to satisfy costs orders made against it. They depose that the matters pleaded by the applicants are without merit as they touch and concern claims being litigated in other courts that are yet to be determined. Mr. Wade pleads that the applicants are using confidential matters covered by client/attorney privilege to approach this court for relief. This, GCDL says, amounts to material non-disclosure.

Mr. Wade reminds the court that an order for security for costs can only be made having regard to all the circumstances of the claim. The court, he says, must weigh up in the balance any risk of injustice to GCDL if it does not permit GCDL to pursue its claim until it provides security for costs as against the risk of injustice to the applicants if they succeed.

Mr. Wade deposes that there are valid issues of facts in dispute to be tried by this court. He states that the applicants are attempting to use this court to stifle GCDL’s claim which has a good prospect of success. This, he says, is particularly glaring when Levera has seized GCDL’s assets and that of its investors and sold them to a third party. The applicants are therefore seeking to engage, via this security for costs application, in an unveiled attempt to deny GCDL’s right to have this matter litigated. Mr. Wade prays that the court dismisses the application for security for costs and permits the claim to proceed in the interests of justice.

The applicants’ reply to the Wade affidavit

Mr. Mitchell filed a response to the Wade affidavit on 27th July 2020. In his response, Mr. Mitchell explains on behalf of the applicants that the figure of USD $276,391.65 sought as security for costs was derived from a “simple mathematical calculation of the value of the respondent/claimant’s claim and is based on the prescribed costs formula set by the Civil Procedure Rules.”‘

Mr. Mitchell repeats his previous charge that the applicants have incurred substantial costs so far in the defence of this claim.

In response to Mr. Wade’s charge regarding claim no. GDAHCV 2017/0053, Mr.Mitchell answers that the evidence filed by GCDL in that claim shows conclusively that it lacks assets beyond those set out in the Oveson affidavit. Accordingly, Mr. Mitchell replies, even if GCDL disputes the judgment debt in that action, its own evidence filed therein demonstrates that it has little or no assets. There is therefore a real risk that GCDL will be unable to pay the applicants’ costs if it does not succeed in the claim against the applicants. Mr. Mitchell reiterates the point that there is an unsatisfied judgment in GDAHCV 2017/0053 that GCDL has stated that it is unable to pay.

In respect of the winding up petition in GDAHCV 2019/0521, Mr. Mitchell deposes that GCDL filed an application to strike out the same. Actie, J dismissed the application in a judgment delivered on 17th July 2020. Mr. Mitchell concludes that the 2 claims remain outstanding against GCDL.

Mr. Mitchell flatly rejects the assertion that he obtained the information in respect of GDAHCV 2017/0053 and GDAHCV 2019/0521 further to a breach of attorney/client privilege. He insists that these pleadings are patently false. He states that he has never met GCDL’s principals or its officers including Mr. Oveson or Mr. Wade. He pleads that he does not know these individuals. He explains that he served as partner at the law firm of Grant, Joseph and Co (the firm) and during that time GCDL was a client of the firm until the relationship ended by 1st September 2016 when he left the firm. He says that he never acted for or represented GCDL.

Mr. Mitchell repeats his previous pleading that GDAHCV2017 /0053 and GDAHCV 2019/0521 are public records. He repeats that the winding up petition was listed for hearing on the court’s website and the striking out application was heard in open court. He deposes that the decision refusing the strike out application is published on the court’s website. He explains that these claims were filed long after the firm stopped acting for GCDL and long after he left the partnership there.

Mr. Mitchell ends his response by pointing out that GCDL has not made any statement in the Wade affidavit “that it is solvent, has the means or that it will be able to satisfy any costs order that may be made against it in the event that may be unsuccessful in its claim …”‘

Submissions Applicants’

The applicants’ submissions repeat many of the points that they raised on their factual matrix. They opine that the facts demonstrate that by the time that Mr. Oveson swore his affidavit, GCDL was already pleading that it was unable to pay its debt then due. The applicants ask the court to note that the Oveson affidavit predates the present claim.

The applicants then present legal arguments in response to the grounds on which GCDL opposes this application for security for costs. The first submission is with respect to GCDL’s statement that it has a claim with good prospects of success. The applicants remind the court that it must weigh this factor along with others when it is exercising its discretion.

In this regard, the applicants point out that GCDL’s claim is “demonstrably weak arising from the Claimant’s chronic breach of its contractual obligation to the First Defendant and the eventual termination of the contract…This, the First defendant was entitled to do’.

The applicants submit that the court should not conduct a mini trial. However, if the court is to consider the strength or weakness of a party’s case then this factor ought to weigh in the applicants’ favour.

This, they claim, is due to the admission made in the Oveson affidavit that GCDL did not own the land that forms the subject of the present dispute. Rather, the land belonged to Levera.

In terms of whether an order for security for costs would stifle GCDL’s claim, the applicants’ rejoinder states that GCDL’s argument that the claim would be stifled is not made out since –

(1)   The assertion of stifling is a mere bald one unsupported by any evidence. The applicants submit that the law places the burden on GCDL to prove that an order for security for costs would stifle its claim. The applicants submit that GCDL has presented no such evidence;

(2)     The court must consider whether GCDL has other backers and financiers with the resources and motivation to provide security. This information, they claim, would be in GCDL’s knowledge. The applicants complain that GCDL has not presented any of this material while it continues to demonstrate its ability to retain counsel to prosecute this claim and to defend other claims.

(3). The entire purpose of section 548 of the Companies Act is to protect against the instances where an insolvent claimant company loses a claim and in incapable of paying the costs associated with that loss.

It is inherent in the whole concept of the section that the Court is to have power to order the Company to do what it is likely to find difficulty in doing, namely, to provide security for the costs which ex-hypothesi it is likely to be unable to pay.

Where GCDL complains of oppression, the applicants’ riposte is that this ground of opposition to the application is patently false. The applicants repeat their responses regarding the admissibility of the documents regarding claims nos. GDAHCV 2017/0053 and 2019/0521. The applicants continue to deny that its actions on the contract brought about GCDL’s present impecuniosity.

However, they posit that even if this was the case, GCDL would still have to show that not only would an order for security for costs present a difficulty but that it would indeed stifle their claim.

The applicants rely on the following material as evidence that what is referred to as “the parameters for security for costs” have been made out:

(4)   Claim no. GDAHCV 2017/0053 is clear evidence that GCDL has little or no assets to pay the judgment debt in that suit;

(5)   The winding up petition in claim no. GDAHCV 201910521 is still pending;

(6) GCDL has not presented any statement or evidence in the Wade affidavit that it has means to satisfy a costs order if it is unsuccessful in this claim;

(7) GCDL previously retained and presently retains a suite of high profile lawyers including counsel from outside the jurisdiction to defend it in this claim, on this application and in claims nos. GDAHCV 201710053 and GDAHCV 201910521. The applicants reiterate that GCDL has even filed and prosecuted an application to strike out the winding up petition in GDAHCV 2019/0521;

(8) The evidence shows that GCDL is not stifled by this application. GCDL has shown that it is capable of prosecuting several different claims.

In respect of GCDL’s opposition on the quantum of the security for costs, the applicants repeat their pleading that they have quantified their request for security on the amount of GCDL’s claim. The applicants say that they are entitled to prescribed costs (CPR 65.5) if they are successful on their defence. They argue that the prescribed costs are the precise sum requested for security for costs.


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