Bandone v Sol Properties

• Jurisdiction: Cayman Islands
• Judge: (Henderson, J.)
• Judgment Date: 05 June 2008
• Court: Grand Court (Cayman Islands)
• Date: 05 June 2008

Grand Court

(Henderson, J.)

BANDONE SDN. BHD. and BRUNEI INVESTMENT AGENCY

and

SOL PROPERTIES INCORPORATED and DULI YANG TERAMAT MULIA PADUKA SERI PENGIRAN DIGADONG SAHIBUL MAL PENGIRAN MUDA HAJI JEFRI BOLKIAH

M. Pascoe, Q.C., C. Russell and W. Jones for the plaintiffs;

J. Walton for the defendants.

Cases cited:

(1) Bolkiah v. Brunei Darussalem, [2007] UKPC 63, referred to.

(2) Castrique v. Imrie, [1861–73] All E.R. Rep. 508; (1870), L.R. 4 H.L. 414; 39 L.J.C.P. 350; 3 Mar. L.C. 454, considered.

(3) Flight v. BollandENR(1828), 4 Russ. 298; 38 E.R. 817, referred to.

(4) Indyka v. Indyka, [1969] 1 A.C. 33; [1967] 2 All E.R. 689, referred to.

(5) Lumley v. Ravenscroft, [1895] 1 Q.B. 683, referred to.

(6) Luther v. Sagor, [1921] 3 K.B. 532; (1921), 7 Ll. L. Rep. 218, referred to.

(7) Miller v. Gianne, 2007 CILR 18, applied.

(8) Pattni v. Ali, 2005–06 MLR 586; [2007] 2 A.C. 85; [2007] 2 W.L.R. 102; [2007] 2 All E.R. (Comm.) 427; [2006] UKPC 51, applied.

(9) Pro Swing Inc. v. Elta Golf Inc., [2006] S.C.R. 612; 2006 SCC 52; 2006 CarswellOnt 7203, applied.

(10) Schibsby v. Westenholz, [1861–73] All E.R. Rep. 988; (1870), L.R. 6 Q.B. 155, referred to.

Companies-register of shareholders-rectification-summary procedure-applications for rectification of company”s register of members amenable to summary procedure under Companies Law (2007 Revision), s.46, if to direct full trial would case delay-undesirable to leave corporate register incorrect for too long

Conflict of laws-recognition of foreign proceedings-judgment in personam-foreign order for specific performance of agreement to transfer shares and rectify Cayman company”s register not judgment in rem but in personam-order does not determine title to, or disposition of, shares but merely helps fulfil contractual obligation to transfer

Conflict of laws-recognition of foreign proceedings-judgment in personam-may recognize and enforce foreign non-money in personam order for equitable remedy such as specific performance (e.g. order for share transfer and rectification of Cayman company”s register), if comity requires it and integrity of Cayman judicial system not jeopardized-court to have regard to fairness, mutuality and public policy considerations

The plaintiffs sought the recognition and enforcement of an order of the High Court of Brunei for the specific performance of the second defendant”s obligations to them.

A settlement agreement was made between the plaintiffs and the second defendant (‘Prince Jefri’), requiring him to transfer his shares in the first defendant (‘Sol’), a Cayman company, to either of the plaintiffs. The settlement was in respect of litigation seeking the restoration of more than US$15bn. misappropriated by him when he was Brunei”s Minister of Finance and chairman of the second plaintiff (‘BIA’).

When Prince Jefri did not make the transfer and claimed to be no longer bound by the terms of the settlement agreement, the High Court of Brunei ordered specific performance of his obligations arising from it. Both the Court of Appeal of Brunei and the Privy Council dismissed Prince Jefri”s

appeal against that order, holding that BIA was entitled to the order, on summary application. In the meantime, the High Court of Brunei appointed the Registrar to act in Prince Jefri”s place to make the share transfer. However, when BIA asked Sol to rectify its register of members to reflect the transfer, it refused. BIA therefore brought the present proceedings, seeking the rectification of the Sol register.

The plaintiffs submitted that the register should be rectified because (a) the court had the jurisdiction to, and should, recognize and enforce the orders of the Brunei court, as although they were non-money in personam judgments, the court had a discretion to recognize and enforce them when the principle of comity required it, provided that the integrity of domestic law was maintained; (b) the exercise of this discretion was to be based on considerations of fairness, and the defendants had failed to demonstrate that the Brunei orders should not be recognized and enforced here, as (i) the Brunei Court of Appeal had established that BIA could be subject to an order for the specific performance of its own obligations under the settlement agreement, and therefore there was no issue of mutuality which would make the recognition and enforcement of the orders against the defendants unfair; (ii) the Privy Council had already held that Prince Jefri was able to receive a fair trial in Brunei and so he was estopped from relying on that issue again; and (iii) to conclude that the authoritarian nature of Brunei meant that orders made by its courts should be ignored here as a matter of public policy would be contrary to the principle of comity; and (c) they had correctly applied for the rectification of the register by way of a summary application and although the law enabled a full trial to be ordered, one was not necessary and would merely result in delay.

The defendants submitted in reply that (a) the court did not have the jurisdiction to recognize and enforce the Brunei orders because (i) the order for specific performance of the settlement agreement was an in personam judgment, which was not for debt or a definite sum of money; and (ii) the appointment of the Registrar to execute the share transfer was an in rem order, regarding property of which the lex situs was the Cayman Islands, not Brunei; (b) even if the court decided to amend the common law rule prohibiting the enforcement of foreign non-money judgments, it retained a discretion which should be exercised in their favour, in the interests of fairness and of maintaining the integrity of domestic law, because (i) BIA was immune from similar orders for the specific performance of its obligations to the defendants in Brunei and there was therefore a lack of mutuality; (ii) Prince Jefri was unable to receive a fair trial in Brunei; and (iii) it would be contrary to public policy for the court to recognize and enforce the judgment of an authoritarian judicial system such as Brunei; and (c) the plaintiffs should have instituted the proceedings with a writ of action, as the case was too complex to be dealt with via summary procedure.

Held, granting the application:

(1) The court would order the rectification of Sol”s register of members, and substitute the name of Bandone for that of Prince Jefri as the holder of the shares. The court had the jurisdiction to recognize and enforce the Brunei orders for the specific performance of the settlement agreement and the appointment of the Registrar to effect the share transfer. Although it did not have jurisdiction to recognize a foreign in rem judgment in respect of Cayman property, the Brunei orders were, in fact, in personam judgments; the first did not determine the title to, or disposition of, the shares, but merely ordered the specific performance of a contractual obligation regarding their transfer, while the second order simply effected that fulfilment, in light of Prince Jefri”s non-compliance. The direct enforcement of foreign in personam judgments and orders was no longer confined to those for debt, or definite sums of money. Non-money orders could be recognized and enforced, by way of equitable remedies such as specific performance, if the principle of comity required it, provided that the court did not have to extend domestic law to do so, and the foreign order was final and conclusive, as was the case here (paras. 14–15; para. 22).

(2) There had been a change to the common law rule against the enforcement and recognition of foreign non-money in personam judgments and it had been accompanied by judicial discretion to ensure that it did not jeopardize the integrity of the Cayman judicial system. The court should have regard to general considerations of fairness and ensure that domestic law was not extended to suit foreign litigants, when deciding whether or not to enforce non-money judgments. However, the defendants had failed to show that the court should not recognize and enforce the Brunei orders in the exercise of that discretion. The Brunei Court of Appeal had held that BIA, being a statutory corporation, was amenable to suit and therefore that court was not precluded from ordering the specific performance of BIA”s obligations under the settlement agreement. As a result, no mutuality issue existed to prevent the recognition and enforcement of the orders, in respect to the defendants, in the Cayman Islands, in the interests of fairness. Similarly, Prince Jefri was unable to rely on the authoritarian nature of the judicial regime of Brunei as a ground for exercising the court”s discretion in his favour; such a conclusion would mean that an order made by its courts must be ignored in the interests of public policy, and would violate the principles of comity and justice which were relevant considerations in the exercise of such discretion. In any case, the main concern in relation to the judicial system of Brunei was Prince Jefri”s ability to receive a fair trial there, but he was estopped from raising that issue as he had already failed to satisfy the Privy Council that he could not (paras. 23–24; paras. 29–30; paras. 37–39).

(3) The application for rectification of the register had correctly been brought by the plaintiffs under s.46 of the Companies Law (2007 Revision), which contemplated a summary procedure on the basis that it was undesirable to leave a corporate register in a state of error for too long.

Although the law enabled the court to direct a trial, therefore, nothing but delay would result from such course and it would not make such an order (para. 40).

1 HENDERSON, J.: This application for rectification of the register of members...