Between: (1) Canterbury Securities, Ltd (in Official Liquidation) (2) Karen Scott as Joint Official Liquidator of Canterbury Securities, Ltd (3) Russell Homer as Joint Official Liquidator of Canterbury Securities Plaintiffs v (1) Erin Winczura (2) PFS Ltd (3) Canterbury Group Defendants

• Jurisdiction: Cayman Islands
• Court: Grand Court (Cayman Islands)
• Judge: Justice David Doyle
• Judgment Date: 17 October 2024
• Docket Number: CAUSE NO. FSD 133 OF 2024 (DDJ)

Between:

(1) Canterbury Securities, Ltd. (In Official Liquidation)

(2) Karen Scott As Joint Official Liquidator of Canterbury Securities, Ltd.

(3) Russell Homer As Joint Official Liquidator of Canterbury Securities

Plaintiffs

and

(1) Erin Winczura

(2) PFS Ltd.

(3) Canterbury Group

Defendants

Before:

The Hon. Justice David Doyle

CAUSE NO. FSD 133 OF 2024 (DDJ)

IN THE GRAND COURT OF THE CAYMAN ISLANDS

FINANCIAL SERVICES DIVISION

Determination of an application for a debarring order against the Defendants on the ground of their non-compliance with a disclosure order made to assist in the enforcement of an asset freezing injunction and proprietary claims — consideration of the laws of the Cayman Islands in respect of debarring orders, unless orders, freezing and disclosure orders and the importance of complying with court orders and fair trials and access to justice

Appearances:

Alice Carver and John Harris of Nelsons Attorneys at Law Ltd for the Plaintiffs

First Defendant in person remotely

No appearances on behalf of the Second Defendant or Third Defendant

INDEX
Heading	Page
Introduction	3–9
The background and history	9–11
The Disclosure Order and the failure to comply	12–13
The Debarring Summons	14
The Evidence	14
— Paula Richmond	14–16
— Erin Winczura	17–18
— Karen Scott	18–19
The Law	19
— Jurisdiction	19
— Zuckerman on Civil Procedures	19–20
— Civil Fraud Law, Practice & Procedure	20–25
— Hadkinson [1952]	25–27
— Arnage & Walkers [2022]	27–29
— JSC BZA Bank v Ablyazov [2012]	29–33
— Lexi Holdings v Luqman [2007]	33–34
— Blue Sky One [2010]	34
— ORB a.r.l. v Ruhan [2016]	35–36
— Byers v Samba Financial Group [2020]	36–37
— Michael Wilson & Partners v Sinclair [2017]	37–39
— Meridian Trust Company [2017]	39–40
— The Armand Hammer Foundation [2024]	41
— Perry v Lopag Trust [2024]	41–42
Summary of the relevant law	42
— Debarring orders	42–43
— Unless orders	44
— Freezing and disclosure orders	44
— Importance of complying with orders	44–45
— Fair trial and access to justice	45
Determination	45
— General	45
— What was the explanation for the deliberate non-compliance?	46–52
— D1's failure to appear in person at the hearing	52–53
— An immediate debarring order or an unless debarring order or no debarring order?	53–55
— Article 6 and Section 7 considerations	55–56
— Fact sensitive cases	56–57
— Costs	57–58
Summary of determinations	58–59
— The big question	59–60

Introduction

1 On 2 October 2024 I made the following orders:

• “1. Unless the Defendants do by 3.00pm on 16 October 2024 comply with paragraph 1 of the Order dated 26 April 2024, whereby the Defendants were required to provide to the Plaintiffs the information and documents specified therein, then the Defendants be debarred from further defending the action in FSD 133 of 2024 (DDJ) or from filing any application or evidence therein or progressing the Second and Third Defendants' summons dated 29 July 2024 or the First Defendant's summons dated 19 August 2024 without leave of the Court.

• 2. The Defendants do pay the Plaintiffs' costs of and occasioned by the Summons to be taxed on the indemnity basis and paid on a joint and several basis forthwith.

• 3. The Defendants do by 3.00pm on 16 October 2024 make an interim payment in the amount of US$ 35,000 on account of such costs.”

2 I indicated I would deliver a judgment containing the reasons for making such orders in due course and I now do so.

3 It is a serious step to make an unless order debarring a litigant from taking any further part in the proceedings. No Cayman case in which the relevant law was covered in detail was brought to my attention. I therefore make no apology for the length of this judgment that sets out, amongst other things, the relevant law and my reasons for making such an order on 2 October 2024.

4 The numerous judgments which should be publicly and freely available at www.judicial.ky and www.bailii.org reveal a long and sad history of the Canterbury Group (“D3”), Canterbury Securities Ltd (“CSL”) (before it went into liquidiation), PFS Ltd (“D2”) and their beneficial owner Erin Winzcura (“D1”) abusing and disrespecting the legal process and deliberately, without reasonable excuse, failing to comply with court orders. I refer to D1, D2 and D3 collectively as the “Defendants”. Not only have the Defendants failed to positively engage in the legal process they have deliberately flouted court orders over a considerable period of time. It is the most shocking non-compliance I have witnessed during my time as a Grand Court Judge. In proceedings before the Financial Services Division orders are normally complied with to the letter and on time. The Defendants provide an unfortunate exception to that rule.

5 If the reader wishes to delve into just three judgments to see examples of this misconduct they are as follows:

• (1) Judgment of Kawaley J in Fortunate Drift Limited v Canterbury Securities Ltd FSD 227 of 2018 (IKJ) delivered on 14 September 2023:

  “The Defendant's case has taken a series of unfortunate steps over the last few months which have resulted in the Court: (a) being unable to place any reliance on certain aspects of its evidence relating to the proceeds of sale of the YRIV shares it formerly held (subject to certain contingent security obligations) on behalf of the Plaintiffs; and (b) being satisfied that the Defendant is the sort of litigant which is not embarrassed to engage in blatant acts of asset dissipation in circumstances which constitute a serious abuse of the processes of the Court.” (paragraph 1)

  “The suspicious bystander might at this early juncture have raised any eyebrow quizzically and wondered whether or not the supposed Canadian Escrow funds were actually there.” (paragraph 6)

  “The Defendant continues to be, inexplicably, in flagrant breach of the various iterations of the June 2023 Information Order.” (paragraph 8(f))

  “At first blush, it appeared to be a remarkable display of audacity for the Defendant to have the temerity to seek to stay the Information Order which it has so significantly failed to comply with.” (paragraph 13)

  “… the Defendant has substantially failed to comply with paragraph 1.2 of the Information Order since 16 June 2023 …” (paragraph 17)

  “I concluded that I could not fairly and confidently find that the Defendant had given misleading evidence about the existence and/or location of the YRIV Share sales proceedings … I was entitled to proceed on the assumption that the funds were no longer (if they ever were) in an account held by Canadian Escrow Ltd for the Defendant's sole benefit. This flowed from the indisputable fact that the Defendant was ordered to verify the existence and location of funds and has (for whatever reason) failed to do so in circumstances where the Court was unwilling to accept the Defendant's bare assertions in the relevant respect.” (paragraph 24, internal underlining)

  “… it seems obvious that the Defendant's conduct disentitles it from recovering its costs of its Stay Summons and prima facie should be subject to an adverse costs order. If the Defendant has wilfully failed to comply with an Order it is able to comply with, it is guilty of contempt of Court. If the Defendant is unable to comply with the Order, it has filed a series of false Affidavits deliberately misleading the Court.” (paragraph 25)

  “… although the Defendant eventually demonstrated adequate compliance with paragraph 1.1 of the Information Order, its non-compliance with paragraph 1.2 made that partial compliance academic … A litigant does not establish compliance with a Court order by failing to comply with its actual terms and proposing alternative forms of compliance of its own choosing”. (paragraph 31(b))

  “… the Defendant failed over a period of nearly three months to provide a screenshot confirming the existence of funds over which a proprietary claim is asserted and which it has sworn are safely held for its own account. The reasons for its non-compliance are entirely unsatisfactory. The court was now required to assume (for the purposes of the present Injunction Summons) that the funds do not exist.” (paragraph 31(c)(1)).

  “… the Defendant had disposed of the primary asset the Plaintiff was seeking to freeze while contesting the application for the Further Freezing Order. That was both a blatant act of dissipation and a gross abuse of the processes of the Court.” (paragraph 31(c)(2))

  “Giving deference to the Defendant's fair hearing rights, and assuming it was not a rogue litigant operating outside the parameters of the normal and litigation rules, I deferred granting the Further Freezing Order.” (paragraph 36).

  “Having granted the Further Freezing Order on 17 August 2023 and discovered that the Defendant had already defeated the principal limb of the Order by disposing of the Treasury Bill before the order was sealed, the Plaintiff's initial suspicions about a risk of dissipation were entirely vindicated.” (paragraph 37)

  “… the Defendant elected to add to this sorry picture of dishonourable litigation conduct a blatant act of asset dissipation (effectively in the face of the Court)…” (paragraph 40)

• (2) Judgment of Kawaley J also in FSD 227 of 2018 (IKJ) delivered on 13 December 2023:

  “It is common ground that the Defendant has not complied with the Restraining Order which required the Defendant to deposit with its Cayman Islands attorneys' (sic) funds representing the value of a Treasury Bill which the Defendant dissipated while the Court was hearing an application to freeze it.”

• (3) Judgment of Parker J in FSD 163 of 2022 (RPJ) Blackgold Investment Holdings Inc v Erin Winczura, Canterbury Securities, Ltd (in...