Att Gen v Carbonneau

JurisdictionCayman Islands
Judge(Sanderson, Ag. J.)
Judgment Date07 April 2003
CourtGrand Court (Cayman Islands)
Date07 April 2003
Grand Court

(Sanderson, Ag. J.)

ATTORNEY GENERAL
and
CARBONNEAU and HARTOG

R.D. Alberga, Q.C. for the first defendant;

J.R. McDonough for the second defendant;

Ms. S.M. Corbett for Barclays Private Bank & Trust (Cayman) Ltd.

Cases cited:

(1) Aitken, ReENR(1820), 4 B. & Ald. 47; 106 E.R. 855, distinguished.

(2) Bodenham, Ex p.ENR(1838), 8 Ad. & E. 959; 112 E.R. 1105, distinguished.

(3) Dangar”s Trusts, ReELR(1889), 41 Ch. D. 178, dicta of Stirling J. applied.

(4) Dixon v. WilkinsonENR(1859), 4 De G. & J. 508; 45 E.R. 199, applied.

(5) Marsh v. Joseph, [1897] 1 Ch. 213, applied.

(6) Myers v. Elman, [1940] A.C. 282; [1939] 4 All E.R. 484, applied.

(7) R. v. Smith (Martin), [1975] Q.B. 531; [1974] 1 All E.R. 651, distinguished.

(8) R. & T. Thew Ltd. v. Reeves (No. 2), ELR[1982] Q.B. 1283; [1982] 3 All E.R. 1086, distinguished.

(9) Todd v. StudholmeENR(1857), 3 K. & J. 324; 69 E.R. 1132, applied.

Legislation construed:

Grand Court Law (1995 Revision) (Law 8 of 1975, revised 1995), s.11(1): The relevant terms of this sub-section are set out at para. 18.

Grand Court Rules, 1995 (Revised), O.29, 2(1): The relevant terms of this paragraph are set out at para. 36.

Legal Practitioners Law (2002 Revision) (Law 9 of 1969, revised 2002), s.5(3): The relevant terms of this sub-section are set out at para. 17.

Attorneys-at-Law-obligations to court-duty of care-duty of officer of court to take reasonable steps to obtain client”s compliance with court order-not checking bank”s calculation of funds due to client not so clearly negligent that raises Grand Court”s summary jurisdiction over officers of court

Courts-Grand Court-discipline of officers of court-summary jurisdiction to order compensatory payment by officer of court if (a) disciplinary matter involving malfeasance or misconduct, or (b) inadvertent or negligent breach of duty to court-inappropriate to use summary jurisdiction if alternative easy remedy available

The second defendant sought an order that attorneys for the first defendant and a bank repay the amount mistakenly paid to the second defendant out of funds held by the bank.

The first defendant obtained an order of the court for the payment to him of a portion of a fund held in a frozen account. The amount to be released by the bank depended mainly on whether the fund was held in US or Canadian dollars. In fact, it was held in Canadian dollars, but the bank made an error in calculating the payment in US dollars and overpaid the first defendant”s attorneys by US$180,000.

The overpayment was not noticed by either the attorneys for the bank or those for the first defendant. However, by the time the first defendant presented his final calculations, all the parties were aware that the fund was held in Canadian dollars, yet he persisted with his claim based on the fund being held in US dollars and his attorneys claimed that they understood the amount to be correct. The second defendant sought an order that the attorneys for the first defendant and the bank repay the amount of the overpayment. They applied for the summons to be set aside as an abuse of the process of the court.

The second defendant submitted that (a) the court had an inherent jurisdiction to control its officers on a summary basis; (b) as officers of the court, the attorneys owed a duty to the court to take reasonable steps to ensure that its order was complied with, which included ensuring that only the amount authorized by the court was released to the first defendant and detecting any obvious mistakes; (c) nonfeasance was sufficient to invoke the court”s summary jurisdiction, because the duty

imposed on officers of the court to ensure compliance with court orders was very high and in this case it seemed that no care had been taken by the attorneys; and (d) for an attorney to be an officer of the court, it was sufficient that he was involved in the proceedings and he did not necessarily have to appear before the court, hence the bank”s attorneys owed a duty of care despite the fact that the bank was not a named party to the proceedings.

Counsel for the first defendant and his attorneys, submitted in reply that (a) the court did not have jurisdiction to make a compensatory award against its officers for damages founded in mere negligence, but the case had either to involve a breach of duty owed to the court itself, or must be in relation to a matter before the court which fell short of the high conduct the court expected of an attorney; (b) alternatively, even if the court did have jurisdiction, it should not be exercised summarily because on the facts the issue of negligence was questionable and required a trial in order to be properly determined, as it was not unreasonable for an attorney to rely on a calculation made by the bank without checking it; (c) further, the summary procedure invoked by the second defendant should not be undertaken because the overpayment could be recovered from more appropriate sources (the first defendant and the bank); and (d) given the possibility that the funds might ultimately become the property of the US Government, the second defendant should not be permitted to bring proceedings to recover money which might not ultimately belong to him.

The bank”s attorneys further submitted that (a) no duty of care should be imposed on the attorneys unless their conduct required disciplinary action by the court, and therefore, because in this case their actions amounted to nonfeasance and not misfeasance, they did not owe a duty to ensure compliance with the order; and (b) as the bank was not a named party in the proceedings, its attorneys had not been involved in the proceedings before the court and were not attorneys of record in this matter, and thus did not owe a duty of care.

Held, setting aside the summons:

(1) The court had summary jurisdiction to order an officer of the court to make a compensatory payment, where either the complaint and application was disciplinary in nature and a monetary award was appropriate, or where the officer of the court had breached a duty to the court through inadvertence or negligence, making a compensatory award appropriate. In the latter case, it was sufficient that the officer was involved in the proceedings and the attorneys of the bank were therefore subject to discipline even though the bank was not named in the proceedings and the attorneys were not attorneys of record (para. 24; para. 33).

(2) Officers of the court owed a duty to the court to take reasonable steps to obtain compliance with court orders. What was reasonable depended on the circumstances of the individual case. In this case, the conduct complained of-namely, not having checked the calculations

made by the bank-was not so clearly negligent, or in breach of duty to the court, that the matter should be heard summarily. As it was not evident that the attorneys should have checked the calculations of the bank, the court would not invoke its summary jurisdiction, since the need for further opinion evidence made the matter unsuitable for summary disposal (paras. 34–35).

(3) It was also inappropriate for the court to proceed summarily against the attorneys, since other means of recovery were available to the second defendant to rectify the calculation error, including an order under the Grand Court Rules, O.29. It would be unjust to the attorneys for the court to order the payment sought when there appeared to be a straightforward remedy available against both the first defendant and the bank (paras. 36–38).

(4) Although the US Government did have a claim to the frozen funds, that claim was unproved and the second defendant maintained the right to protect the property, which might ultimately be his. The second defendant had a sufficient interest in the funds, at the time, to have brought the present application (para. 39).

1 SANDERSON, Ag. J.:

Issue

In these proceedings, Daniel Hartog seeks an order that the attorneys for Victor Carbonneau (the first defendant) and the attorneys for Barclays Private Bank & Trust (Cayman) Ltd. (who are not a party) repay approximately US$190,426.80, which Mr. Hartog says has been mistakenly paid to Victor Carbonneau from funds held by Barclays Bank. Those funds were frozen by an order of this court. This is an application by the attorneys (Quin & Hampson and Walkers) to strike out Mr. Hartog”s claim on the basis that it is an abuse of process. Mr. Hartog asserts that the court has summary jurisdiction over lawyers, as officers of the court, and is entitled to proceed with the application on that basis.

Facts

2 On August 30th, 1993, Harre, C.J. issued an injunction restraining the defendants from removing certain funds deposited or held at Barclays Private Bank & Trust (Cayman) Ltd. (‘Barclays’). The defendant, Mr. Carbonneau, filed an application to have certain of those moneys released to him and on May 23rd, 2001, I granted that order, which stated in part:

‘Barclays Private Bank shall liquidate a sufficient portion of the bond portfolio in the name of Total Financial to pay to Quin & Hampson two banker”s drafts in the following amounts:

(a) US$524,979.37 plus interest on that amount at the rate of 5.163% from November 11th, 1998 up to and including the date of payment;

(b) US$42,628.55; or alternatively,

in the event that the information contained in the letter dated November 11th, 1998 from Sharon Marie, Compliance Manager, Barclays Private Bank, to the Solicitor General is incorrect, and the amount stated therein as $1,893,865.03, is an amount in Canadian currency rather than US currency, Barclays Private Bank shall liquidate a sufficient portion of the bond portfolio in the name of Total Financial and pay to Quin & Hampson-

(i) a banker”s draft in an amount equivalent to 27.72% of the amount in the bond portfolio together with accrued interest up to and including the date of payment, and

(ii) a...

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