BETWEEN: (1) Arnage Holdings Ltd (2) Brooklands Holdings Ltd (3) East Farthing Holdings Ltd (4) Ms Katia Rabello (5) Mr Fernando Toledo Plaintiffs v Walkers (A Firm) Defendant
| Jurisdiction | Cayman Islands |
| Judge | Justice David Doyle |
| Judgment Date | 27 July 2023 |
| Docket Number | CAUSE NO: FSD 105 OF 2014 (DDJ) |
| Court | Grand Court (Cayman Islands) |
His Hon. Justice David Doyle
CAUSE NO: FSD 105 OF 2014 (DDJ)
IN THE GRAND COURT OF THE CAYMAN ISLANDS
FINANCIAL SERVICES DIVISION
Determination of application for leave to appeal; application for disclosure of identity of funders and details of funding arrangements; jurisdictional issues; factors to consider when disclosure orders are sought; application for indemnity costs; application for interim payment; joint and several liability in respect of costs and set-off
Harry Matovu KC and Stuart Diamond of Diamond Law Attorneys for the Plaintiffs
Mark Simpson KC, Sebastian Said, Nico Leslie and Daniel Coelho of Appleby (Cayman) Ltd for the Defendant
| Subject | Page |
| Introduction | 3 |
| Documentation and Submissions | 6 |
| Determination | 6 |
| Application for Leave to Appeal | 6-8 |
| Application for disclosure of funders and details of funding arrangements | 9-10 |
| - The jurisdiction of the Grand Court | 10 |
| - Section 24 (3) of the Judicature Act (2021 Revision) | 10 |
| - Dymocks | 10-12 |
| - English White Book | 13 |
| 13-14 | |
| - Raiffeisen | 14-15 |
| - Automotive Latch Systems | 15-16 |
| - Flatman v Germany | 16-19 |
| - Thomson | 19-20 |
| - Rudd v Bridle | 20-23 |
| - Tomlinson | 23-24 |
| - Kenney | 24-25 |
| - VC Computer Holdings | 25-26 |
| - Primeo Fund | 26-27 |
| - Banks v Parsons | 27 |
| - Cigna Worldwide | 27-28 |
| - Section 11(1) of the Grand Court Act (2015 Revision) | 28-29 |
| - The exercise of the jurisdiction | 29-36 |
| Costs | 36 |
| P5's Costs | 36-40 |
| Application for Interim Payment | 40-42 |
| Application for Joint and Several Liability | 42-49 |
| Application for Set Off | 49-51 |
| Summary | 51-52 |
| Ancillary Applications | 52 |
| Orders | 53 |
As long ago as 8 November 2022 I made an Order dismissing the claims of the First to Fourth Plaintiffs (“P1-P4”) for failure to comply with an Order of the Cayman Islands Court of Appeal dated 4 October 2021 making P1-P4 jointly and severally liable to pay security for the Defendant's costs in the amount of US$4.25 million by no later than 18 November 2021 (the “CICA Security Order”). I also ordered that P1-P4 shall be jointly and severally liable to pay the Defendant's costs of the Summons of P1-P4 dated 5 September 2022 and of the Defendant's Summons dated 28 July 2022 together with the Defendant's cost of the action referable to the claims brought by P1-P4 to be taxed on the standard basis if not agreed. The Judicial Committee of the Privy Council on 19 July 2022 had refused permission to appeal in respect of the CICA Security Order because the application raised no arguable point of law. On 31 January 2023 the Registrar of the Privy Council certified that pursuant to an Order dated 19 July 2022 the costs of the Defendant in respect of the application for permission to appeal were assessed on the standard basis and the sum of £39,128.22 was allowed, but they still have not been paid.
On 11-12 July 2023 I heard two long days of legal submissions in respect of the following issues consequential to my Order of 8 November 2022:
Application for Leave to Appeal
(1) whether leave to appeal should be granted in respect of the Order made on 8 November 2022 made consequent to my judgment delivered on 28 October 2022 (the “Application for Leave to Appeal”);
Application for disclosure of funders and details of funding arrangements
(2) whether pursuant to section 24(3) of the Judicature Act (2021 Revision) and Order 62 rule 1 of the Grand Court Rules P1-P4 should disclose the following information within 7 days of the date of the court's Order:
(a) the identity of all individuals, companies or other entities that have provided funding to P1-P4 since September 2011;
(b) the amount of such funding in each case;
(c) the terms on which such funding was provided;
(d) the extent of such party's involvement in the conduct of the action;
(e) the nature and extent of that party's interest (financial or otherwise) in the outcome of the action (the “Application for disclosure of funders and details of funding arrangements”);
P5's Costs
(3) whether the Fifth Plaintiff (“P5”) is entitled to his costs of the proceedings and if so whether those costs should be taxed on the indemnity or standard basis (“P5's Costs”). The Defendant agreed to pay the costs of P5 incurred by him after 30 November 2021 which are attributable to his account of profits claim to be taxed on the standard basis if not agreed;
Application for Interim Payment
(4) whether P1-P4 should be made liable, on a joint and several basis, to make an interim payment on account of the costs of the Defendant in respect of the proceedings up to and including 3 October 2021 in the amount of US$4,091,830 or on an alternative basis in the amount of US$3.3 million (the “Application for Interim Payment”);
Application for Joint and Several Liability
(5) whether P5 should be made jointly and severally liable along with P1-P4 to pay the Defendant's costs of defending the action up to and including 30 November 2021 (when the Defendant abandoned his multi-million-dollar damages claim and elected for an account of profits worth US$358,000 plus interest) (the “Application for Joint and Several Liability”);
(6) whether P5 should be made liable, jointly and severally, along with P1-P4 to make any interim payment ordered; and
Application for Set Off
(7) whether the Defendant is entitled to set off against any costs that P5 may be and/or has been ordered to pay to it (i) the sum which it has agreed to pay to P5 under “the settlement agreement” and (ii) any costs which it has agreed to pay and/or which it has been or may be ordered to pay to P5 (the “Application for Set Off)”;
I record that I have considered all the documentation provided to the court in the five, helpfully colour coded, hearing bundles and the authorities in the agreed authorities bundle and the additional bundle of authorities on disclosure.
I have considered all the written and oral submissions put before the court. I do not record them all in detail in this judgment but have full regard to them.
I now turn to the determination of the various applications and issues before the court.
I have considered the draft grounds of appeal and the submissions put before me in support of leave being granted.
As I think Mr Matovu realistically recognised at its core the Order dismissing the claims was in effect a discretionary case management Order, albeit with serious consequences for the Plaintiffs.
Mr Matovu referred to BPP Holdings Ltd v Commissioners for Her Majesty's Revenue and Customs [2017] UKSC 55 which concerned an appeal against a debarring Order. Lord Neuberger (with whom Lord Clarke, Lord Sumption, Lord Reed and Lord Hodge agreed) at paragraph 33 stated:
“… the issue whether to make a debarring order on certain facts is very much one for the tribunal making that decision, and an appellate judge should only interfere where the decision is not merely different from that which the appellate judge would have made, but is a decision which the appellate judge considers cannot be justified.”
Lord Neuberger referred to comments made by another judge in another case as follows “[A]n appellate court should not interfere with case management decisions by a judge who has applied the correct principles and who has taken into account matters which should be taken into account and left out of account matters which are irrelevant, unless the court is satisfied that the decision is so plainly wrong that it must be regarded as outside the generous ambit of the discretion entrusted to the judge.”
In Lord Neuberger's words: “… before they can interfere, appellate judges must not merely disagree with the decision: they must consider that is unjustifiable. HMRC cannot in my view cross that high hurdle in this case.”
Lord Neuberger added at paragraph 34 that the “decision to impose a debarring order (unlike case management decisions of a more routine nature) can often have the effect of determining the substantive case … [t]here must be a limit to the permissible harshness (or indeed the permissible generosity) of a decision relating to the imposition or confirmation (or discharge) of a debarring order … I do not consider that it was on the wrong side of the line …”
At paragraph 163 of my judgment delivered on 28 October 2022 I stated:
“I appreciate that dismissal of an action without consideration of the merits may be regarded as a harsh result but there comes a time when a court must conclude that enough is enough. That time has arrived.”
P1-P4 had on 4 October 2021 been ordered by the Court of Appeal to provide security for costs by no later than 18 November 2021. They had sought to appeal such order all the way up to the Privy Council. The Court of Appeal and the Privy Council had refused leave. By the date of the hearing before me in October 2022, P1-P4 had nearly had a whole year to comply with the CICA Security Order. P1-P4 had had more than enough time to provide the security but in breach of the CICA Security Order had failed to do so. Enough was indeed enough. I acknowledged that my decision to dismiss the claims of P1-P4 may be regarded as a harsh decision but having heard further from Mr Matovu I am of the opinion that it was not arguably the “wrong side of the line”. I am not persuaded that such was arguably outside the limits of “permissible harshness”. I do not accept Mr Matovu's extravagant submission that the decision arguably “went beyond the...
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