An APPLICATION for JUDICIAL REVIEW and GCR O.53 BETWEEN: (1) Maples Corporate Services Ltd (2) Maplesfs Ltd Plaintiffs v Cayman Islands Monetary Authority Defendant

• Jurisdiction: Cayman Islands
• Judge: Justice Kawaley
• Judgment Date: 05 June 2023
• Docket Number: CAUSE NO: GC 20 OF 2021
• Court: Grand Court (Cayman Islands)

IN THE MATTER OF AN APPLICATION FOR JUDICIAL REVIEW

AND IN THE MATTER OF GCR O.53

BETWEEN:

(1) Maples Corporate Services Limited

(2) Maplesfs Limited

Plaintiffs

and

Cayman Islands Monetary Authority

Defendant

Before:

The Hon. Justice Kawaley

CAUSE NO: GC 20 OF 2021

IN THE GRAND COURT OF THE CAYMAN ISLANDS

INDEX

Costs — extent to which ‘costs follow the event’ rule should be departed from — impact of overall loser achieving success on some issues — relevance of public law character of proceedings and public importance of issues in dispute — Judicature Act (2021 Revision), section 24 — Grand Court Rules (2023 Revision) Order 62 rule 4 (2), (5), (7)

Appearances:

Mr Paul Bowen KC of counsel and Mr Adam Huckle of Maples and Calder (Cayman) LLP for the Plaintiffs, Maples Corporate Services Limited (“MCSL”) and MaplesFS Limited (“MFS”)

Mr Hector Robinson KC, Mr Laurence Aiolfi and Ms Laura Stone of Mourant Ozannes (Cayman) LLP for the Defendant (the “Authority”)

IN COURT

COSTS RULING

Background

1 The present proceedings were commenced by a Notice of Application for Leave to Seek Judicial Review dated 12 February 2021. Following interlocutory skirmishes over, inter alia, discovery, the main hearing took place between 13 and 17 February 2023. In my Judgment dated 30 March 2023, I summarized the issues in dispute as follows:

“ 8. The List of Agreed Issues submitted by the Plaintiffs on behalf of the parties provides as follows:

“ (1). Nature / purpose of business: Reg. 12(1) (d) (MCSL Grounds 1, 9(a))

1. Whether CIMA's findings and conclusions (“Findings”) of breaches of regulation 12(1)

(d) of the Anti- Money Laundering Regulations (2017 Revision) (the “AMLRs”) and/or the associated Requirement in relation to “nature and purpose of business” are lawful or unlawful.

(2). Authorised signatories: Reg. 12(1) (b) (MCSL Grounds 2 and 9(a), MFS Grounds 1 and 7)

2. Whether CIMA's Findings of breaches of regulation 12(1) (b) of the AMLRs and/or the associated Requirements in relation to missing due diligence for authorised signatories of bank accounts held by corporate clients are lawful or unlawful.

(3). Scrutiny of transactions: Reg. 12(1) (e) (i) (MCSL Grounds 3 /7 and 9(a), MFS Grounds 2 / 6 and 7)

3. Whether CIMA's Findings of breaches of regulation 12(1) (e) (i) of the AMLRs and/or the associated Requirements in relation to ongoing monitoring and periodic reviews and ‘scrutiny of transactions’ are lawful or unlawful.

(4). Source of wealth and/or source of funds: Reg. 12(1) (e) (i) (MCSL Grounds 4-7 and 9(a), MFS Grounds 3-6 and 7)

4. Whether CIMA's Findings of breaches of regulation 12(1) (e) (i) of the AMLRs and/or the associated Requirements in relation to “source of wealth and/or source of funds” are lawful or unlawful.

5. Except that CIMA concedes that it made an error of law solely in relation to its Findings and Requirements in relation to “source of wealth”.

(5). Review and update of documents: Reg. 12(1) (e) (ii) (MCSL Grounds 8 and 9(a))

6. Whether CIMA's Findings of breaches of regulation 12(1) (e) (ii) of the AMLRs and/or the associated Requirement in relation to keeping due diligence documentation up to date are lawful or unlawful.

(6). Proportionality of the Requirements (MCSL Ground 9, MFS Ground 7)

7. Whether the Findings (MCSL Grounds 1-8, MFS Grounds 1-6) justify the Requirements and are rational and/or necessary and/or proportionate and/or compliant with section 9 and/or section 19 of the Bill of Rights in Schedule 2, Part I of the Cayman Islands Constitution Order 2009 (the “Constitution”) and/or the principle in section 6(3) (d) of the Monetary Authority Act (2020 Revision) (the “MAA”) and/or section 5 and Schedule 1, Part 1, paragraph 3 of the Data Protection Act (2017 Revision) (the “ DPA”), or whether the Requirements, in whole or in part, are irrational and/or unnecessary and/or disproportionate and/or non-compliant with the Constitution, MAA or DPA.

(7). (MCSL Ground 9(c), MFS Ground 7)

8) Whether CIMA had power to make any of the Requirements under section 6(2) (f) of the MAA or otherwise.”

2 In the Judgment, I summarized the findings reached in relation to those issues as follows:

“ 167. To summarize, for the reasons set out above the Agreed Issues are resolved in the following way:

(a) Issues 1 and 5 are resolved in favour of MCSL and Issues 2, 3, 4 and 5 are resolved in favour of MCSL and MFS;

(b) I did not consider it necessary to resolve Issue 6, but if I did, I would resolve it on the basis set out in paragraph 145 above [i.e. I would have rejected the Bill of Rights argument but accepted the Plaintiffs' complaint that requiring implementation of the Authority's changes within 3 months was disproportionate]; and

(c) Issue 7 is resolved in favour of the Authority.”

3 The parties sensibly agreed to address all contentious costs issues through written submissions without a hearing to save costs.

The contentious costs issues

4 It was common ground the Plaintiffs achieved substantial success overall. The only controversy turned on (a) whether there should be any percentage discount to take into account the Authority's success on some issues, and (b) how the reserved costs in relation to certain interlocutory applications should be dealt with.

5 The Plaintiffs in their Costs Submissions most broadly submitted as follows:

“ 15. There can be no reasonable argument that CIMA should not pay the Plaintiffs' costs of the whole proceedings, including in relation to those interim applications and hearings.”

6 In addition, the Plaintiffs sought their costs of a withdrawn Summons dated 27 February 2023 seeking to stay further inspections until the issues arising in the present proceedings were finally determined. The Authority ultimately on 18 April 2023 agreed that the inspections scheduled for 2023 should be postponed until the conclusion of its appeal in CICA No.006 of 2023 and that the costs of the Plaintiffs' Summons should be determined on the papers by this Court.

7 In outline, the Authority submitted as follows:

• (a) there should be no order as to costs, because the proceedings raised issues of fundamental public importance and had been contested in the public interest;

• (b) alternatively, the Plaintiffs' costs should be proportionately reduced (by 30%) because the Plaintiffs were not entirely successful on Issues 1-5, the Court did not need to consider Issue 6 and they were unsuccessful on Issue 7;

• (c) as regards applications in respect of which costs had been reserved, the Authority submitted:

  • (i) there should be no order as to the costs of the Plaintiffs' 14 May 2021 Letters of Good Standing Application, because it was resolved without the Court's intervention within 7 days;

  • (ii) there should be no order as to the costs of the Plaintiffs' Disclosure Summons dated 18 July 2022 and the Authority's Public Interest Immunity Summons dated 30 September 2022;

  • (iii) the Plaintiffs should pay the Authority's costs in relation to their own 27 February 2023 Inspection Stay Application which was “ unnecessary and premature”;

• (d) the Authority should be awarded its costs of the costs application if the Plaintiffs “ are not awarded all of their costs, as sought”.

Findings: does the public importance of the issues canvassed displace the usual ‘costs follow the event’ rule?

8 The Authority referred to the breadth of the statutory discretion in relation to costs which is conferred upon this Court by section 24 of the Judicature Act (2021 Revision):

“ 24. (1) Subject to the provisions of this or any other Law and to rules of court, the costs of and incidental to all civil proceedings in –

(a) the Court of Appeal; and

(b) the Grand Court,

shall be in the discretion of the relevant court.

…

(3) The court shall have full power to determine by whom and to what extent the costs are to be paid.”

9 It also referred to the following rule which it was conceded meant that costs following the event was the “ starting point”:

“ If the Court in the exercise of its discretion sees fit to make any order as to the cost of any proceedings, the Court shall order the costs to follow the event, except when it appears to the Court that in the circumstances of the case some other order should be made as to the whole or any part of the costs.” (GCR Order 62 rule 4 (5)).

10 How important that “starting point” is, however, requires reference to GCR Order 62 rule 4 (2) upon which the Plaintiffs positively relied:

“ The overriding objective of this Order is that a successful party to any proceeding should recover from the opposing party the reasonable costs incurred by successful party in conducting that proceeding in an economical, expeditious and proper manner unless otherwise ordered by the Court.”

11 It seems likely that GCR Order 62 rule 4 (2) was introduced into the GCR in 2003 at the same time as the Overriding Objective was introduced in the Preamble to the Rules as revised in that year. That legislative history is significant, because the discretion the Court was invited to exercise not to award costs against the Authority on public interest grounds was only explicitly supported by reference to authorities which predated these enactments. It was argued:

“ 23. The general rule that costs follow the event applies to a judicial review claim. However, the rule that costs follow the event is only the starting point and the Court is required to consider all the circumstances of the case. Furthermore, in accordance with the decision of the Cayman Islands Court of Appeal in Finsbury Bank & Trust Co v Att. Gen 1996 CILR 349, where a matter raises for the first time issues of significant public importance and is brought in the public interest, including in relation to matters of statutory interpretation, the Court may exercise its discretion not to award a successful litigant its costs against a public...