Blum v Bruce Campbell & Company

• Jurisdiction: Cayman Islands
• Judge: (Smellie, J.)
• Judgment Date: 20 October 1993
• Court: Grand Court (Cayman Islands)
• Date: 20 October 1993

Grand Court

(Smellie, J.)

BLUM

and

BRUCE CAMPBELL AND COMPANY and CAMPBELL CORPORATE SERVICES LIMITED

O. Watler for the plaintiff;

S. McCann for the defendants.

Cases cited:

(1) Castrique v. ImrieELR(1870), L.R. 4 H.L. 414, distinguished.

(2) Didisheim v. London & Westminster Bank, [1900] 2 Ch. 15, distinguished.

(3) Kilderkin Invs. v. Player, 1984–85 CILR 63.

(4) Pélégrin v. Coutts & Co., [1915] 1 Ch. 696, distinguished.

(5) Salvesen or Von Lorang v. Administrator of Austrian Property, [1927] A.C. 641; [1927] All E.R. Rep. 78, dicta of Viscounts Haldane and Dunedin applied.

Legislation construed:

Rules of the Supreme Court, O.30, r.1:

‘(1) An application for the appointment of a receiver may be made by summons or motion.

(2) An application for an injunction ancillary or incidental to an order appointing a receiver may be joined with the application for such order.

(3) Where the applicant wishes to apply for the immediate grant of such an injunction, he must do so ex parte on affidavit.

(4) The Court hearing an application under paragraph (3) may

grant an order restraining the party beneficially entitled to any interest in the property of which a receiver is sought from assigning, charging or otherwise dealing with that property until after the hearing of a summons for the appointment of the receiver and may require such a summons returnable on such date as the Court may direct, to be issued.’

Trusts-foreign-appointed trustee-recognition and enforcement of appointment-foreign order appointing trustee is judgment in rem-prima facie entitled to recognition in Cayman Islands but no direct enforcement if terms of appointment unknown to Cayman law and legal effect and consequences uncertain

Family Law-property-appointment of receiver-trustee of missing person”s assets appointed by foreign court on petition of wife may be appointed receiver in respect of assets in Cayman Islands if beneficial to estate and just to defendants and creditors

Family Law-property-appointment of receiver-Rules of Supreme Court, O.30, r.1 allows ex parte application for appointment of receiver of missing person”s assets-court has discretion to grant application in proceedings already in progress without fresh pleadings or affidavit of fitness to act

The plaintiff applied for (a) declarations recognizing and enforcing a foreign order which appointed him trustee over the assets in the Cayman Islands of a person whose whereabouts were unknown; and (b) injunctions to facilitate disclosure from the defendants.

A Pennsylvania court appointed the plaintiff as trustee of the assets in the Cayman Islands of a person who had disappeared two years earlier while on a solo sailing trip. Death was not presumed, as the statutory seven-year period had not then expired. By the terms of the order, the trustee was empowered inter alia to ‘recover and take possession of any assets which . . . the absentee has or has the right to possess.’

The plaintiff brought the present proceedings in the Cayman Islands seeking (a) declarations recognizing his authority at large to seek and recover any assets within the jurisdiction belonging to the absentee; and (b) mandatory injunctions directing the defendants to disclose to him all information in their possession concerning the property of the absentee and to deliver up all such property in their possession, custody or control. There was no evidence before the court of any identified property or of any involvement of the absentee with the second defendant but the first defendant admitted that the absentee was a client and there was affidavit evidence from the absentee”s wife setting out her belief that the defendants or others might be holding assets on behalf of her husband.

The trustee submitted inter alia that (a) since the Pennsylvania order of appointment was a final order made by a court of competent jurisdiction it was in effect a judgment in rem and as such was conclusive and binding in the Cayman Islands, as against all the world; (b) accordingly, the defendants were obliged to recognize the order in the Cayman Islands and the present application was in fact strictly unnecessary; (c) recognition and enforcement of the order would be in the best interests of the estate and beneficiaries and, in particular, would properly result in the fair treatment of the absentee”s dependants and his creditors; (d) as a practical solution, in the alternative, he could be appointed a receiver by the court over the absentee”s assets; and (e) he was entitled to the costs of the application.

The defendants, while adopting a neutral stance on the general merits of the trustee”s position and his claim for recognition, submitted that whatever order was made, it should not result in the direct enforcement of the US order against them since that order did not as a matter of Cayman law guarantee them an effective and complete discharge against any later claims by the absentee (should he reappear) or by others in respect of property or information handed over to the trustee.

Held, granting the application in part:

(1) Since the Pennsylvania court was of competent jurisdiction, its final order appointing the plaintiff as the trustee of the missing person amounted to a judgment in rem entitled to recognition in the Cayman Islands. The declaration of his status vis-à-vis the missing person and the general assignment of his property and rights to property together constituted the res. There was nothing to suggest that the rules of the lex situs in respect of any assignment of real property or indeed any other rules of law or public policy justified refusing recognition of the order. Even the fact that the appointment of a trustee to act for a missing person was a concept unknown to Cayman law did not preclude its recognition when the compelling practical reasons for doing so were taken into account. The court would therefore grant a declaration recognizing the appointment (page 594, line 39 – page 595, line 4; page 598, lines 24–30;page 600, lines 20–28).

(2) Nevertheless, despite the order of appointment being a judgment in rem, the defendants had properly objected to its direct enforcement in the Cayman Islands since there were matters of Cayman law which had to be considered before they could be certain that they were acting properly in relying on it. In particular, the defendants would have had no way of knowing whether in responding to the trustee they would have been obtaining an effective and complete discharge in relation to the missing person (should he reappear) and as against others at large, in respect of any property or information handed over to the trustee. It would also clearly be wrong in principle and bad policy directly to enforce a foreign procedure which had no known parallel in the Cayman Islands-especially when there was insufficient evidence before the court to allow it to make a full assessment of the relationship between

the missing person and the defendants (page 596, lines 15–23;page 597, line 31 – page 598, line 5; page 598, lines 10–24).

(3) In the circumstances, to avoid freezing the assets of the missing person, to the detriment of his dependants and creditors, until he could be presumed dead after seven years had elapsed, the court would exercise its discretion exceptionally to appoint the trustee as a receiver. It was just and convenient to do so and the appointment would be beneficial to the estate. Moreover, since a receiver could stand in the place of a principal for the purposes of obtaining confidential information under the Confidential Relationships (Preservation) Law, the plaintiff would then be able to obtain full disclosure of the missing person”s confidential affairs from the defendants and others (page 600, line 36 – page 601, line 3; page 602, lines 15–30;page 603, lines 3–8).

(4) Since, by the Rules of the Supreme Court, O.30, r.1, the application could have been made ex parte and notwithstanding the absence of an express prayer, the court would make the order appointing the trustee as receiver without fresh pleadings. It would also dispense with the usual requirement of an affidavit of fitness to act. In the circumstances, costs would be awarded to the defendants since (a) they had been correct in not responding to the trustee”s demands for enforcement in the absence of an order from the Cayman court, and (b) in the case of the second defendant no evidence had been presented to show that it was involved with the absentee in any way-a circumstance which made it not unreasonable for this defendant to refuse to recognize the order or comply with its terms (page 603, lines 12–22;page 603, line 32 – page 604, line 7).

SMELLIE, J. The plaintiff is an attorney-at-law in Pennsyl-
10	vania, United States, and brings this action as trustee appointed
by the Orphans” Court of Common Pleas of Westmoreland
County, in the State of Pennsylvania, over the estate of Dr.
Robert Holst, an absentee.
The absentee was resident and domiciled in Pennsylvania
15	where he practised as a neurosurgeon. From the evidence
presented to the Pennsylvania court it appears he was last seen on
Long Island, in the Bahamas, on December 1st, 1991 where he
had stopped over during a solo sailing voyage. He was an avid
and accomplished sailor who frequently undertook solo voyages.
20	His unexplained and prolonged absence led to the petition by his
wife to the Pennsylvania court for the appointment of the trustee
over his assets.
On that petition the trustee was appointed pursuant to various
provisions of Pennsylvania law which also defined the trustee”s
25	duties, powers and responsibilities. He is empowered, among
other things, ‘to recover and take possession of any assets which
Robert Allen Holst, the absentee, has or has the right to
possess.’ Under Pennsylvania

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