Arnage Holdings Ltd v Walkers
| Jurisdiction | Cayman Islands |
| Judge | Anthony Smellie |
| Judgment Date | 24 May 2019 |
| Court | Grand Court (Cayman Islands) |
| Docket Number | CAUSE NUMBER: FSD 0105 of 2014 (ASCJ) |
(A Firm)
THE HON. Anthony Smellie, CHIEF JUSTICE.
CAUSE NUMBER: FSD 0105 of 2014 (ASCJ)
IN THE GRAND COURT OF THE CAYMAN ISLANDS
FINANCIAL SERVICES DIVISION
Action against attorneys for breaches of duties of confidence, trust and loyalty — application for summary judgment on basis that there is no arguable defence — existence of the lawyer—client relationships—the Trillium Indicia for the identification of the relationships—acceptance of conflicting retainer — disclosure of confidential information to party hostile to clients whether to be excused because any other reasonably competent attorney would have obtained disclosure in light of clients' obligation to disclose — distinction between fiduciary and contractual duties—continuing nature of the duty of confidence beyond termination of retainer .
Causation of loss — actionable breaches of fiduciary duties of trust and confidence — whether causation of loss must be proven — liability in equity — equitable compensation — whether common law principles of causation and foreseeability applicable — equitable remedy of account for profits — election between an account and equitable compensation — liability for loss resulting from breach of professional code of conduct — whether also in public interest to enforce — Myers v Elman wasted costs jurisdiction — whether appropriate to invoke in circumstances of case .
Jurisdiction to grant summary judgment on liability with loss or damages to be assessed applicable principles — whether some loss to be proven at summary judgment stage .
Foreign proceedings — Defendant's cross — application to strike out Plaintiffs' claims on grounds of abuse of process — whether abuse of process of Cayman Court to seek to recover losses resulting from Brazilian bankruptcy and regulatory proceedings — defence of illegality whether a defence to claims for losses arising from alleged but unproven dishonest conduct and where no pleaded reliance on that conduct .
Res judicata in the wider sense — Henderson principle — whether plea in bar can be based on preclusive effect of foreign proceedings — application of doctrines of privity of parties and mutuality of estoppel .
Anneliese Day QC and Anthony Akiwumi Attorney-at-Law of Etienne Blake, instructed by Richard Annette of Stuarts, for the Plaintiffs.
Mark Simpson QC instructed by Sebastian Said and Anna Snead, Attorneys-at-Law of Appleby, for the Defendant.
The Plaintiffs are companies and individuals who represent the interests of the Rabellos, a prominent Brazilian family.
The first and second Plaintiffs are Cayman Islands companies which are owned and controlled by the fourth Plaintiff, Katia Rabello. She represents her family's interests, as well as her own, in this action. The third Plaintiff is another Cayman Islands company of which the registered shareholder is the Fifth Plaintiff, Fernando Toledo. Fernando Toledo is a close and trusted friend and business associate of the Rabellos, regarded by them as a “ de facto” member of the family. He has personal claims and supports the claims of the Rabellos in this action.
Lying at the heart of the dispute before the Court is the Plaintiffs' — and through them the Rabellos' — claim to a longstanding lawyer-client relationship with the Defendant. It is a relationship which the Plaintiffs claim existed for many years and which the Defendant betrayed. This alleged betrayal is pleaded to have resulted in massive losses which the Plaintiffs seek to recover in this action.
The Defendant is a major Cayman Islands law firm which provides legal services in the Cayman Islands and in other jurisdictions. It largely denies the existence of the lawyer—client relationship with the Plaintiffs and denies entirely, any liability for the alleged losses.
Before the court for resolution now are two cross-applications. The first is that of the Plaintiffs for summary judgment on liability, on the basis that the Defendant has no arguable defence to their claims. The second, that of the Defendant for striking out of the Plaintiffs' claims, is presented on the basis that the claims have no prospect of success and are an abuse of the process of the court.
These antithetical and opposing applications are emblematic of this hostile litigation which has been marred throughout, by allegations and counter-allegations of abuse 1.
Despite that history, the arguments in support of the claims and those for the defence must now be addressed on these cross-applications.
The Plaintiffs sue, more particularly, for breach of contractual and fiduciary duties of confidence, trust and loyalty and tortious duties of care 2; claims which are said to have arisen from the Defendant's betrayal of their lawyer-client relationship.
The focus of the Plaintiffs' grievances, is the conduct of the Defendant in acting for a third party, a Dr. Afonso Braga, a Brazilian court-appointed trustee in bankruptcy. Dr. Braga is regarded by the Plaintiffs as their arch nemesis, he having pursued and rendered the Rabello family interests, including Katia Rabello herself and her interests, bankrupt in Brazil.
It is uncontroverted that in aid of Dr. Braga's campaign against the Plaintiffs, the Defendant obtained the disclosure of the Plaintiffs' confidential information in this jurisdiction by way of ex parte (without notice) applications to this Court and provided that information to be deployed by Dr. Braga against them in Brazil.
This conduct of the Defendant is the basis upon which the Plaintiffs seek summary judgment on liability, asserting, as already mentioned, that the Defendant has no arguable defence 3 to their claims.
Upon being granted summary judgment on liability, the Plaintiffs would next move for the trial and assessment of the quantum of the consequential losses.
The Defendant for its part either denies the existence of the lawyer-client relationship or where, in the case of any of the Plaintiffs it is either admitted or is to be found to have existed, denies any breach of duty and pleads that the Plaintiffs, by their own unlawful conduct in Brazil, are the authors of their own misfortune.
This the Defendant pleads, is largely the result of Katia Rabello having been found by the Brazilian courts to be complicit in fraudulent misconduct, including having been found to have deceived the Brazilian courts. This is misconduct which the Defendant also pleads,
was the justification for Dr. Braga's campaign in bankruptcy against the Rabello interestsOn that basis says the Defendant, the Plaintiffs' claims against it are for losses which are the consequences of fraudulent conduct and cannot be maintained without either raising an impermissible collateral attack upon judgments of the Brazilian courts or without reliance upon their own, and in particular Katia Rabello's, illegal conduct. That for those reasons also, the Defendant is entitled to the striking out of the Plaintiffs' claims now 4.
Framed in those conflicting terms, it was immediately apparent that the Plaintiffs' application for summary judgment and the Defendant's cross-strikeout application, were not readily given to resolution on the summary basis upon which such applications are typically to be heard and decided. For even while important matters of fact were incontrovertible (and so not requiring of trial to proof) 5, some factual issues were complicated. Complex issues of law also arose for determination but none which could not also be determined without the need for a full trial and as contemplated by the rules where the determination of points of law could result in the disposal of the entire case or of an important aspect of the case 6.
Accepting that allowing the entire dispute to go instead to a full trial on all the issues would certainly have involved a more costly and acrimonious exercise, I acceded to the taking of the cross-application at this stage.
I was satisfied, on the basis of the settled principles for the taking of such applications, and as a matter of better case management, that the issues of liability (on the Plaintiffs' case) and the strike out arguments (on the Defendant's case) were sufficiently amenable to resolution on the incontrovertible facts, to allow for their summary determination at this stage.
I was also satisfied that proper case management in the case called for a split trial of liability and quantification of loss, the latter being likely to itself involve a substantial hearing once liability was established.
The Plaintiffs' application for summary judgment on liability, is predicated upon the absence of a reasonable defence 7. This is the test to be applied to the assessment of the pleadings and the evidence as to liability, without the need for a trial of facts which may properly be disputed 8. The policy of Order 14 is to prevent delay in cases where there is no real defence. See European Asian Bank AG v Punjab and Sind Bank (No.2) 9, per Lord Justice Goff (as he then was). And where, in an action for unliquidated damages such as the present, the liability of the defendant can be clearly and readily established, the case law is also clear that the court should give judgment for the plaintiff with costs
In the case of the Defendant's strike-out cross-application on grounds of abuse of process, proper case management also called for...
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