In the case of Canterbury Securities Ltd (In Official Liquidation) v Wincura, the Grand Court of the Cayman Islands addressed the issue of granting declaratory relief upon an application for default judgment.
Under Order 19 rule 7 of the Grand Court Rules, upon a defendant's default in filing and serving a defence, the court shall grant judgment as the plaintiff appears entitled to on the statement of claim. With reference to the corresponding sections in both Supreme Court Practice 1999 of England and the Hong Kong White Book, Justice Doyle highlighted that the power to grant declaratory relief in a default judgment application is discretionary but requires the court's careful consideration.
On the basis of the defendants' default in filing their defence, the plaintiffs sought, inter alia, a declaration that the first defendant holds a residential property on trust for the first plaintiff, and an order for transfer of the property to the first plaintiff (together with an order for execution of the necessary paperwork for the transfer). Justice Doyle was not content to grant the declaratory relief on the basis that such declaration was never sought in the amended statement of claim. Nevertheless, based on the evidence before the court establishing that the first defendant holds the property on trust for the first plaintiff, the court was willing to grant the order for transfer of the property as requested.
In his reasoning, Justice Doyle emphasised that the court must ensure that the relief granted does not result in injustice to the defendant, and such relief should only be granted if denying it would impose injustice on the plaintiff. In this case, the court's refusal to grant the declaratory relief as sought on the basis that it was not explicitly sought in the amended statement of claim demonstrates the court's cautious approach in exercising its discretion.
Judge Doyle further noted that the court has a duty to exercise caution before committing itself to a sweeping declaration. The court must be satisfied that the relief sought is appropriate and justified, considering the justice to both the plaintiff and the defendant, and whether the declaration would serve a useful purpose.
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