Connelly v South Pointe Capital Corporation

• Jurisdiction: Cayman Islands
• Judge: (Murphy, J.)
• Judgment Date: 14 August 1998
• Court: Grand Court (Cayman Islands)
• Date: 14 August 1998

Grand Court

(Murphy, J.)

CONNELLY

and

SOUTH POINTE CAPITAL CORPORATION and ROBERTSON

D.T.J. McCahill for the plaintiff.

Case cited:

(1) Chase Bank Intl. v. Abadi, [1986] HKLR 1104, considered.

Legislation construed:

Grand Court Rules, O.11, r.1(1)(c):

‘. . . [S]ervice of a writ out of the jurisdiction is permissible with the leave of the Court if in the action begun by the writ-

. . .

(c) the claim is brought against a person duly served within or out of the jurisdiction and a person out of the jurisdiction is a necessary or proper party thereto . . . ’

O.65, r.4(3): ‘Substituted service of a document, in relation to which an order is made under this rule, is effected by taking such steps as

the Court may direct to bring the document to the notice of the person to be served.’

Civil Procedure-service of process-service out of jurisdiction-contract-action to enforce guarantee has no sufficient connection with Cayman Islands merely because one of guarantors is Cayman company

Civil Procedure-service of process-substituted service-inappropriate if defendant”s whereabouts unknown-service at several previous addresses unacceptable if court not satisfied service will draw proceedings to defendant”s attention

Injunctions-Mareva injunction-court”s discretion to grant injunction-no injunction merely because one defendant is Cayman company believed to hold assets in jurisdiction and other defendants untraceable

The plaintiff applied for leave to serve proceedings on the second defendant outside the jurisdiction by substituted service and for a Mareva injunction in respect of both defendants” Cayman assets.

The defendants, a Cayman company and its principal officer, were among the guarantors of several debts owed by a third party to the plaintiff. The plaintiff commenced proceedings against them in Georgia, on the basis that the guarantee was governed by the law of that state. However, the action was discontinued because the second defendant could not be found for the purpose of being served.

The plaintiff then learned that the defendants might have assets in a Cayman investment bank. He served proceedings on the first defendant at its registered office and applied ex parte and on the basis of unsworn affidavit evidence for leave to serve the second defendant, who was believed to be in Canada, as a necessary and proper party to the action, under the Grand Court Rules, O.11, r.1(1)(c). He applied for leave to effect substituted service at the second defendant”s last three known addresses, since his exact whereabouts were unknown. He also sought a Mareva injunction on the basis that there was a real risk that the assets would be dissipated before judgment could be entered against the defendants.

Held, dismissing the application:

(1) The plaintiff would be refused leave to serve the second defendant outside the jurisdiction, since the Cayman Islands were not the appropriate forum for the hearing of the plaintiff”s claims. The proposed

action had no connection with the Islands save that the first defendant was registered here. The law governing the guarantee was probably that of a state of the United States, all other parties and potential witnesses at the trial were in the United States and nothing significant to the claim had occurred here. It was irrelevant that the defendants might have assets in Cayman bank accounts. The plaintiff was, on his own admission, merely ‘forum shopping’ in the hope of enforcing judgment against such assets. The court was not required positively to identify another forum before it could conclude that the Cayman court had no jurisdiction but would be willing to do so on the basis of the characteristics of the claim, its participants and the litigation itself if necessary (page 245, line 41 – page 246, line 23; page 246, line 39 – page 247, line 13; page 248, lines 28–32).

(2) Furthermore, the court would not authorize service upon a person who could not be found. It was not satisfied that the plaintiff”s efforts would succeed in drawing the proceedings to the second defendant”s attention as was required under the Grand Court Rules, O.65, r.4(3). Substituted service would be proper if his whereabouts could be sufficiently proved but service could not be effected by usual methods due to evasion on his part, but not in this case, where the plaintiff simply had no idea where the second defendant was (page 247, lines 22–35).

(3) The plaintiff would not be entitled to a Mareva injunction even if he could have established that Cayman was the proper forum for the proceedings, since he had not shown a clear risk that the defendants” assets would...