Between: (1) Arnage Holdings Ltd (2) Brooklands Holdings Ltd (3) East Farthing Holdings Ltd (4) Ms Katia Rabello (5) Mr Fernando Toledo Plaintiffs/Appellants v Walkers (A Firm) Defendant/Respondent

• Jurisdiction: Cayman Islands
• Court: Court of Appeal (Cayman Islands)
• Judge: Beatson JA,Birt JA,Field JA
• Judgment Date: 31 October 2025
• Docket Number: CICA CIVIL APPEAL No. 0014 of 2023 (formerly FSD 105 of 2014 (DDJ))

Between:

(1) Arnage Holdings Ltd

(2) Brooklands Holdings Ltd

(3) East Farthing Holdings Ltd

(4) Ms Katia Rabello

(5) Mr Fernando Toledo

Plaintiffs/Appellants

and

Walkers (A Firm)

Defendant/Respondent

Neutral Citation Number: [2025] CICA (Civ) 17

Before:

The Hon Sir Richard Field, Justice of Appeal

The Hon Sir Michael Birt, Justice of Appeal

The Rt Hon Sir Jack Beatson, Justice of Appeal

CICA CIVIL APPEAL No. 0014 of 2023 (formerly FSD 105 of 2014 (DDJ))

IN THE CAYMAN ISLANDS COURT OF APPEAL

ON APPEAL FROM THE GRAND COURT OF THE CAYMAN ISLANDS

FINANCIAL SERVICES DIVISION

Appearances:

Mr Richard Eschwege KC instructed by Mr Stuart Diamond of Diamond Law for the First to Fourth Appellant

Mr Mark Simpson KC and Sebastian Said instructed by Messrs Daniel Coelho and Zuhair Farouki of Appleby (Cayman) Ltd for the Respondent

Beatson JA

I Overview

1 This appeal is against an Order dated 8 November 2022 (“the Dismissal Order”) of Doyle J (“the judge”). It raises two questions. The first concerns the approach of a court and the evidence required when faced with an application to set aside or vary an order requiring a plaintiff to pay security for the defendant's costs on the ground that the order will stifle a genuine claim. The second is when, notwithstanding the principle of access to justice that people should have an unimpeded opportunity to pursue bona fide claims or defences in court, a claim should be dismissed before trial for non-payment of the security that has been ordered. Underlying these questions is that of the relationship in the context of security for costs of two principles: access to justice and finality in litigation.

2 The questions arise in the context of long running, fiercely fought and complex proceedings commenced on 4 February 2014 by five plaintiffs against Walkers, a major Cayman Islands law firm and the Respondent in this appeal (hereafter “the Defendant” or “the Respondent”). The claim, then valued at over US$400 million, is for breaches of trust and confidence owed by Walkers to the plaintiffs as their clients or former clients in accepting instructions in 2010 from Dr Afonso Braga, the Brazilian court-appointed trustee-in-bankruptcy for the estate of the Petroforte Group, a Brazilian petrochemical conglomerate, to act against the plaintiffs in proceedings in the Cayman Islands. The consequences that the plaintiffs maintain resulted from this are summarised at [25] below. The plaintiffs allege that the substantive issues in these proceedings are important not only to themselves but also to the regulation of the legal profession and the administration of justice in these Islands.

3 The appellants (hereafter “the Appellants” or “the Plaintiffs”) before us are four of the five plaintiffs when proceedings were commenced. They represent the interests of the Rabello family, a prominent Brazilian family with substantial business assets and interests through a conglomerate called the Rural Group, the principal company in which was Banco Rural. They are Arnage Holdings Ltd, Brooklands Holdings Ltd and East Farthing Holdings Ltd. (“EFHL”), three Cayman Islands companies, and Katia Rabello (hereafter “Ms Rabello”), the daughter of Sabino Rabello, the patriarch of the family. On his death in January 2005, she became the sole shareholder in Arnage and Brooklands and the President of Banco Rural's Administrative Council.

4 Fernando Toledo was the fifth plaintiff when proceedings were commenced. He is a trusted friend of the Rabello family and considered a de facto member of it. 1 Since May 2005 he has been the sole shareholder of EFHL. His claim against the Defendant was settled in September 2022, without admission of liability and was stayed on 8 November 2022. He is not an appellant, although he has been in charge of and responsible for the pursuit of the Appellants' claims in these proceedings, making decisions regarding strategy and settlement, and raising the funds to finance them. 2 As will be seen, his position remains relevant in relation to security for costs.

5 Walkers deny that Ms Rabello or Fernando Toledo had ever been their clients, claim that the breaches of duty to the companies did not cause the losses which had stemmed from dealings designed to defraud Petroforte's creditors, and raised defences of illegality and ex turpi causa to the claims.

6 The judge's Dismissal Order arises from his judgment delivered on 28 October 2022, hereafter referred to as “the Dismissal Judgment” or “the judgment below”. Paragraph 1 of the judge's Dismissal Order dismissed the Appellants' application to set aside or vary an Order of this Court dated 4 October 2021 (“the Security Order”) reflecting its judgment on 2 August 2021 (“the Security Judgment”) requiring them to give security for the Defendant's costs in the sum of US$4.25 million. This Court's Security Judgment is summarised at [37] – [40] below. Paragraph 2 of the judge's Dismissal Order granted an application by the Respondent to dismiss the Appellants' claims for failure to comply with this Court's Security Order.

7 The application to set aside or vary the Security Order was made on the ground that the claims would otherwise be stifled because the Appellants had no means of financing the requirement of security themselves and despite wide-ranging efforts had not been able to obtain funding to provide such security from third parties.

8 The Respondent's application to dismiss the Appellants' claim was made on the grounds that this Court's Security Order was unambiguous; all avenues of appeal against it had been exhausted; the position of the Appellants was that they could not fund the security that had been ordered; and those who had funded the cost of the proceedings were not prepared to fund security for the Respondent's costs. Before the judge, the Respondent submitted that there had been no material change of circumstances since the Security Order, and that the evidence served by the Appellants in support of the submission that the claim would be stifled was inadequate.

9 In the 2021 hearing which resulted in the Security Order, the Appellants did not argue that their claim would be stifled if they were required to provide security for costs. They say this was because at that time they anticipated they would be able to obtain funding, but that since the decision of this Court it has become apparent that no such funding is to be found.

10 The Respondent maintains that the Appellants have advanced and withdrawn assertions of stifling on numerous occasions since proceedings were commenced in 2014 but ultimately elected not to pursue a stifling argument before this Court in 2021 or in their application for permission to appeal to the Privy Council in 2022. It submitted that neither the circumstances at the time of the hearing before the judge nor those at the time before the hearing in May 2025 of the appeal against his Dismissal Order justify setting aside or varying this Court's October 2021 Order requiring security for costs or the judge's order dismissing the Appellants' claims.

11 In considering when an order requiring security for costs should be set aside or varied or a claim dismissed before trial, it will be necessary first to consider when security for costs may be ordered and the basis on which it was ordered in the particular case. The relevant details are discussed in Section IX of this judgment. Here it suffices to set out the separate tests in this jurisdiction for such orders against corporate and individual plaintiffs and to provide an overview of the approach of the courts.

12 In the case of a company, section 74 of the Companies Act (2025 Revision) provides:

“Where a company is plaintiff in any action, suit or other legal proceeding, any Judge having jurisdiction in the matter, if that person is satisfied that there is reason to believe that if the defendant is successful in that person's defence the assets of the company will be insufficient to pay that person's costs, may require sufficient security to be given for such costs, and may stay all proceedings until such security is given.”

In the case of an individual, GCR Order 23 Rule 1 provides that if it appears to the Court that the plaintiff is ordinarily resident out of the jurisdiction then:

“if, having regard to all the circumstances of the case, the Court thinks it just to do so, it may order the plaintiff to give such security for the defendant's costs of the action or other proceedings as it thinks just.”

13 These provisions and the decisions in these Islands and in England and Wales give the court a wide discretion to ensure that justice is done in the case before it. The court must carry out a balancing exercise. The decisions show that “ before ordering security for costs in any case, the court should be sensitive and alert to the risk that by making such an order it may be denying the party concerned a right of access to the court; whether or not the person concerned has raised or can raise the money will always be a prime consideration”: Paul Gregory Allen v Bloomsbury Publishing Ltd. [2011] EWHC 770 (Ch) at [32] (iii) – (iv)] per Kitchin J, approved at [2011] EWCA Civ 943 at [7] per Lloyd LJ. See also Goldtrail Travel Ltd v Onur Air Tasimcilik AS [2017] 1 WLR 3014 at [12] per Lord Wilson applied by this court in AHAB Company v SAAD Investments Co. Ltd Civil Appeal 015/201 16 November 2018 and the English Court of Appeal in Harbour Castle Ltd v David Wilson Homes Ltd. [2019] EWCA Civ. 505 at [10] per David Richards LJ.

14 In Keary Developments Ltd v Tarmac Construction Ltd. [1995] 3 All ER 534 at 540 Peter Gibson LJ stated:

“ On the one hand [the court] must weigh the injustice to the plaintiff if prevented from pursuing a proper claim by an order for security. Against that, it must weigh the injustice to the defendant if no security is ordered and at the trial the plaintiff's claim...