Ferrostaal AG v Jones

• Jurisdiction: Cayman Islands
• Judge: (Hull, J.)
• Judgment Date: 03 October 1984
• Court: Grand Court (Cayman Islands)
• Date: 03 October 1984

Grand Court

(Hull, J.)

FERROSTAAL A.G.

and

JONES and FIVE OTHERS

A Jones for the plaintiff.

The first defendant did not appear and was not represented.

Miss R. Irving for the second and subsequent defendants;

G. Giglioli for Barclays Bank International Ltd.;

A.S. Smellie, Crown Counsel, for the Attorney General as amicus curiae.

Cases cited:

(1) Gale v. Denman Picture Houses Ltd., [1930] 1 K.B. 588; (1930), 143 L.T. 31; 46 T.L.R. 282; 99 L.J.K.B. 351; 74 Sol. Jo. 187.

(2) R.H.M. Foods Ltd. v. Bovril Ltd., [1982] 1 W.L.R. 661; [1982] 1 All E.R. 673; [1983] R.P.C. 275.

(3) Speyside Estate & Trust Co. Ltd. v. Wraymond Freeman (Blenders) Ltd., [1950] Ch. 96; [1949] 2 All E.R. 796; (1949), 65 T.L.R. 681; 93 Sol. Jo. 773, applied.

(4) U.S. v. Carver, Court of Appeal, Civil App. No. 5 of 1982, December 2nd, 1982, unreported.

Legislation construed:

Confidential Relationships (Preservation) Law (Law 16 of 1976), s.3(2), as substituted by the Confidential Relationships (Preservation) (Amendment) Law, 1979 (Law 26 of 1979), s.3:

‘This Law has no application to the seeking, divulging, or obtaining, of confidential information-

(a) in compliance with the directions of the Grand Court pursuant to section 3A;

(c) in accordance with the provisions of this or any other Law.’

s.3A, as added by the Confidential Relationships (Preservation) (Amendment) Law, 1979 (Law 26 of 1979), s.4:

‘(1) Whenever a person intends or is required to give in evidence in . . . any proceeding . . . any confidential information within the meaning of this Law, he shall before so doing apply for directions . . . .

(2) Application for directions under subsection (1) shall be made to . . . a Judge of the Grand Court . . . .’

Evidence Law, 1978 (Law 13 of 1978), s.8:

‘Subject to the provisions of . . . the Confidential Relationships (Preservation) Law on the application of any party to a legal proceeding a court may order that such party be at liberty to inspect . . . any matter in a banker”s book for the purpose of such proceeding . . . .’

Grand Court (Civil Procedure) Rules, r.47:

‘(1) Any party may apply to the Court . . . for an order . . . directing any such [opposing] party to make discovery on oath of the documents which are or have been in his possession . . . relating to any matter in question . . . .

(2) On hearing such application the Court in its discretion may grant or refuse such . . . order . . . .’

Civil Procedure-discovery-discovery before statement of claim filed-if nature of plaintiffs case evident in principle and no suspicion of fishing expedition but information required to facilitate precise formulation of claim, saving time and costs, discovery limited to purpose of completing proper statement of claim may be granted

Confidential Relationships-application to court for directions-inspection of banker”s books-party to proceedings seeking inspection under Evidence Law, 1978, s.8 must first apply to Grand Court under Confidential Relationships (Preservation) Law, s.3A for directions, and intend to use information in proceedings

The plaintiff company issued a writ against the defendants in respectof sums due under joint venture agreements and damages for breach ofcontract. Before filing a statement of claim, the plaintiff applied underthe Grand Court (Civil Procedure) Rules, r.47 for an order of discoveryagainst the defendants and under the Evidence Law, 1978, s.8 for auth-ority to inspect books in the custody of Barclays Bank International Ltd.

The plaintiff company alleged that the first defendant acted as its consultant, operating through nominee companies (the five defendant companies) owned and controlled by him. The first defendant”s fees were paid directly into the second defendant”s account with Barclays Bank International Ltd., George Town; that account was subsequently closed but the fourth defendant also maintained an account at the same branch of the same bank.

Joint ventures between the plaintiff company and the second defendant proved largely unsuccessful and the first defendant also allegedly caused loss to the plaintiff company by the unauthorised removal of valuable equipment used in one of the joint ventures.

On the application for discovery, the plaintiff company submitted that it was necessary to enable it to establish the existence and whereabouts of the defendants” assets and thus be able to prepare a proper statement of claim, thereby saving costs. The corporate defendants opposed this application, particularly in relation to assets beyond the jurisdiction, submitting that it was not common practice to order discovery before the filing of a statement of claim and, since the events complained of had occurred over a long period of time, such an order could not be justified on grounds of urgency.

On the application for an order for inspection of the banker”s books under the Evidence Law, 1978, s.8 the Attorney General, as amicus curiae submitted that a party wishing to obtain an order under that section should first make an application to the court for directions under the Confidential Relationships (Preservation) Law, s.3A, since s.8 of the Evidence Law was expressed as being ‘subject to the provisions of . . . the Confidential Relationships (Preservation) Law.’ The plaintiff company and the bank, however, submitted that on a proper interpretation of the Evidence Law, s.8 prevailed over the Confidential Relationships (Preservation) Law, since the latter did not apply to the divulging of confidential information ‘in accordance with the provisions of this or any other Law.’

The plaintiff company further submitted that even if an application under s.3A were required, which was denied, the court had been provided with sufficient information to proceed as if such an application had in fact been made.

Held, giving liberty to apply for an order for discovery upon certain conditions but refusing the order for inspection:

(1) This was one of the exceptional cases in which the discretion to grant an order for discovery before a statement of claim was issued could properly be exercised, since there was no suspicion that the plaintiff company”s application involved a fishing expedition, the nature of its case in principle was evident and immediate discovery would save time and expense by enabling the company to formulate precisely its claim against each defendant. Discovery at this stage should, however, be limited to the purpose of completing a proper statement of claim and an order would not be made until the plaintiff company submitted a draft limited to the defendant corporations specifically identified as having received payments or participated in joint ventures, but not necessarily limited to documents within the jurisdiction (page 149, line 24 – page 150, line 25).

(2) The order for inspection of the banker”s books would, however, be refused. The phrase ‘subject to the provisions of . . . the Confidential Relationships (Preservation) Law’ qualified the scope of the Evidence Law, 1978, s.8 with the effect that if a party to proceedings in any court wished to obtain an order for inspection under s.8 he had first to make an application to the Grand Court under s.3A of the Confidential Relationships (Preservation) Law and, further, had to have the

intention of using in the proceedings the information sought. Since the legislature clearly contemplated that the process of balancing the preservation of confidential information against the requirements...