THE RIGHT TO DISCONTINUE / WITHDRAW AN ACTION
Nusenkis and another v. Papounides and others
(Case no. 10723/2010 decision dd. 05/07/2019)
Recently, the District Court of Cyprus, issued two interim decisions in two applications in the above – mentioned case, whereby it approved, the request of the plaintiffs and a counterclaimant to withdraw their action and counterclaims against the defendant, despite the fact that the defendant objected to the request on the grounds that, (i) it created injustice to him, (ii) will affect his right to a fair trial, (iii) was an abuse the judicial process and (iv) the plaintiffs and other claimant, by approving the applications, are gaining a procedural tactical advantage over the defendant at the trial of his counterclaim against both of them.
A. THE FACTS
The case was rather unusual and unique as the defendant objected to the withdrawal of the action and counterclaim against him and insisted for the reasons, he explained, that the proceedings should continue and that the plaintiffs and counterclaimant should prove the case against each other and himself.
The plaintiffs filed an application by which they were requesting the leave of the Court to fully withdraw their action against the defendant and the counterclaimant.
The same application was filed by a counterclaimant to withdraw all his claims accordingly against the defendant and the plaintiffs.
The action and counterclaim were related to the ownership of a group of foreign companies on which plaintiff 1 alleged that he was the sole owner (100% owner) and the defendant was simply acting as a trustee for him for the 100% of the shares.
The counterclaimant was alleging that the group of companies was belonging by 50% to him and not 100% to Plaintiff 1.
The defendant was alleging that he was a trustee not only for plaintiff 1 but also for the other claimant on equal basis, namely 50% to each one of the claimants or at such rates as the court will decide in view of the dispute between the two main litigants.
The defendant apart from the ownership dispute as to the group of companies, had his separate claims against both plaintiff 1 and the counterclaimant.
The defendant, opposed the applications, claiming, among others, that the applications have been filed in bad faith and if such leave is granted by the Court, it will create injustice to the defendant. In effect it will be an abuse to the process of the court, whilst it will also give a tactical advantage to plaintiff 1 and counterclaimant, as they will not be obliged to prove their claims as to the ownership of the group. The defendant on the other hand will be obliged to prove the percentages of shares he holds on behalf plaintiff 1 and counterclaimant and obtain relevant injunctions to transfer the shares accordingly to them.
B. THE LAW
According to Order 15, Rule 1 of the Civil Procedure Rules, any plaintiff may, withdraw the action by leave of the Court.
In exercising its discretion, the Court, as per the precedents in place, must be satisfied that the approval of the application to discontinue / withdraw the action, will not:
Create injustice to the defendant and/or
Will not affects his right to a fair trial, and/or
Constitute an abuse of the judicial process, and/or
Grant to the plaintiff a tactical advantage over the defendant.
C. THE INTERIM DECISIONS ON THE APPLICATIONS
The Court specified that Order 15, Rule 1, allows the plaintiffs to request leave from the Court to withdraw their action but, at the same time, allows the defendant to object to that request providing that the requirements pursuant to the rule above, are not met.
Considering the whole factual situation and the arguments put forward whether or not to grant such leave, the Court adopted the plaintiffs’ views and accepted the applications.
The Court did not consider that the change of the burden of proof from the claimants to the defendant on some part of the dispute is sufficient to reject the applications.
The court did not accept the argument put forward by the defendant that by accepting the applications, the defendant will be obliged to amend his counterclaim and be the person that will have the burden of proof as to the ownership of the shares held in the disputed companies, is something that will give tactical advantage to the plaintiff 1 and counterclaimant, being an abuse of the process of the court and that it creates unfair environment during the trial for the defendant.
The decisions issued in the above case, based on Order 15, Rule 1, establish that once a plaintiff would like to discontinue or withdraw his action against the defendant, this will be as a rule granted. Only, in extremely rare cases such a step will be rejected irrespective of the fact that such step will oblige the defendant to effect an amendment in his counterclaim and bear the burden of proof on the disputed facts.
The consequence of a change in the burden of proof, does not constitute, as per the court decisions, an indirect inference, an abuse of the process of the court, or an unfair outcome and also does not give tactical advantage over the defendant in the trial of his counterclaim, despite the fact that different arguments have been put forward but not accepted.
The right to discontinue or withdraw court proceedings, proved to be very strong in favour of plaintiffs or claimants even if the case is going for years and several changes have taken place and even if this, in some issues, changes the burden of proof from the plaintiffs to the defendant.
Despite the fact that the applications were successful, the court ordered the plaintiffs and the other claimant to pay the costs of the whole action which is to be withdrawn and the costs of the applications to the defendant. At the same time, it allowed the amendment of the counterclaim to be filed by the defendant.
The decisions discussed in this article are hereby attached.
Christos P. Kinanis
Associate Lawyer – Litigation Division
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