Gray 1 CPB, LLC Plaintiff v Gulfstream Finance, Inc.; Bruce Elieff; Kathy Elieff; Does 1–50 Inclusive Defendants
| Jurisdiction | Cayman Islands |
| Judge | The Hon. Chief Justice Anthony Smellie |
| Judgment Date | 15 May 2012 |
| Court | Grand Court (Cayman Islands) |
| Docket Number | CAUSE NO FSD: 10 OF 2012 |
| Date | 15 May 2012 |
In the Matter of the Evidence (Proceedings in other Jurisdictions) (Cayman Islands) Order 1978
And in the Matter of a Request for International Judicial Assistance in Respect of a Civil Proceeding Now Pending in the Superior Court of the State of California for the County of Orange, Central Justice Center Before The Honourable Robert J. Moss, Department C-23 Entitled as Follows:
The Hon. Chief Justice Anthony Smellie
IN CHAMBERS
This is an Application on behalf of the Plaintiff Gray 1 CPB, LLC (‘Gray 1’) for documentary and oral evidence from 16 intended witnesses to be produced pursuant to a Letter of Request issued to this Court by the Superior Court of the State of California for the County of Orange (the ‘Californian Court’) and dated 9 January 2012. The Application is brought in accordance with Grand Court Rule Order 70, rule 2 in the form of an Ex-parte Originating Summons dated 24 January 2012.
The Letter of Request was issued in civil proceedings pending before the Californian Court with case number 30-2010-00361680 (the ‘US Action’). The US Action arises from Gray 1's allegations that the Defendants have conspired together, and possibly with others, to record fraudulent encumbrances on real and personal property located in the State of California and legally owned by some of the Defendants (Bruce and Kathy Elieff) in an effort to prevent Gray 1 from obtaining satisfaction of a judgment obtained by it against Bruce Elieff in an initial amount of $9.16 million.
According to the evidence of Mr Edward Morales, an attorney for Gray 1 in the US Action; it is Gray 1's case that the intended witnesses from whom evidence is sought in the Cayman Islands, were involved, innocently or otherwise, in transactions apparently connected with transfers of money through certain Cayman Islands entities holding Cayman Islands bank accounts. Gray 1 avers that these transactions formed part of a fraudulent scheme used by Bruce Elieff to create fictitious loans up to an aggregate value of $150 million dollars, with such loans constituting the purported basis for the granting of security interests over assets belonging directly or indirectly to him. Gray 1, as an unsecured judgment creditor of Bruce Elieff, seeks to set aside those security interests or encumbrances which stand in the way of the enforcement of its judgment against the known Elieff assets. I understand that the position relating to those security interests is to be determined at the trial of the US Action by the Californian Court, with the trial set for 16 April 2012. It is in that context that the Letter of Request has been issued and the evidence sought for thattrial. I note that the Californian Court requires the evidence by 16 March 2012 and that the matter before me is therefore urgent.
The jurisdictional basis for the Order sought by this Application is statutory: the Evidence (Proceedings in Other Jurisdictions) (Cayman Islands) Order 1978 (the ‘Evidence Order’). The Evidence Order extended to the Cayman Islands the provisions, as adapted, of the Evidence (Proceedings in Other Jurisdictions) Act 1975, a United Kingdom statute which incorporated into United Kingdom domestic law, the provisions of the Hague Convention on the Taking of Evidence Abroad in Civil or Commercial Matters 1968 (the ‘Hague Convention’).
Section 1 of the Schedule to the Evidence Order provides:
‘Where an application is made to the Grand Court for an order for evidence to be obtained in the Cayman Islands, and the court is satisfied -
(a) that the application is made in pursuance of a request issued by or on behalf of a court or tribunal (‘the requesting court’) exercising jurisdiction in a country or territory outside the Cayman Islands; and
(b) that the evidence to which the application relates is to be obtained for the purposes of civil proceedings which either have been instituted before the requesting court or whose institution before that court is contemplated,
the Grand Court shall have the powers conferred on it by the following provisions of this Act.’
I must be satisfied that each of the three conditions precedent identified above in section 1 of the Schedule to the Evidence Order, is fulfilled in order to establish that Ihave jurisdiction to make an order to assist the requesting court. I find that each condition precedent has been satisfied:
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(a) as to the first, this Application is for an order for evidence to be obtained in the Cayman Islands;
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(b) as to the second, this Application is made pursuant to the Letter of Request issued by the Honourable Robert J Moss of the Superior Court of the State of California for the County of Orange and dated 9 January 2012, exercising jurisdiction in the USA, being a country or territory outside of the Cayman Islands; and
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(c) as to the third condition, I note that when construing the phrase ‘evidence … to be obtained for the purpose of civil proceedings’” (same as that contained in section 1(b) of the Schedule to the Evidence Order), Lord Diplock observed ‘I would not be inclined to place any narrow interpretation on the phrase … In my view ‘civil proceedings’ includes all the procedural steps taken in the course of the proceedings from their institution up to and including their completion and, if the procedural system of the requesting court provides for the examination of witnesses or the production of documents for the purpose of enabling a party to ascertain whether there exists admissible evidence to support his own case or to contradict that of his opponent [It is apparent from pages 8 and 9 of the Letter of Request that the California Code of Civil Procedure 2027.010 does so provide], the High Court has jurisdiction to make an ardor unripr thr Act‘SeeRio Tinto Zinc Corporation v Westinehouse Electric Corporation [1978] AC 547, per Lord Diplock at pages 633 and 634, para. A.
Thus, I have to be satisfied that the evidence is required for the purpose of civil proceedings in the requesting court, but in the ordinary way, in the absence of evidence to the contrary, I should be prepared to accept the statement by the requesting court that such is the purpose for which the evidence is required. See again:Rio Tinto(above), per Lord Diplock p. 634, para. A-B.
Page 1 of the Letter of Request states in clear terms that the Superior Court of the State of California for the County of Orange‘requests international judicial assistance to obtain testimony and documents to be used in a civil proceeding before [the Superior Court of the State of California] in the above-captioned matter… [and that Court] …is satisfied that this request is required to produce evidence necessary for trial.’
Consistent with the approach of Lord Diplock in the House of Lords in Rio Tinto(above) and which was carefully considered in the leading decision of the Cayman Islands Court of Appeal inUnited States v Carver and Four Others [1980–83] CILR 297 this Application satisfies the three conditions in section 1 (a) and (b) of the Evidence Order. I am therefore satisfied that I have jurisdiction to give effect to the Letter of Request.
Having determined that I have the jurisdiction to make an order giving effect to the Letter of Request, I must consider whether as a matter of the exercise of discretion I ought to make or refuse to make such an order in accordance with the Court's powers.
Guidance as to the starting point for the exercise of that discretion is contained also in the House of Lord's decision inRip (above). At page 634, lines B to E, Lord Diplock stated
‘…the court should hesitate long before exercising its discretion in favour of refusing to make an order unless it was satisfied that the application would be regarded as falling within the description of frivolous, vexatious or an abuse of the process of the court.’
In the same case, at page 612, Lord Wilberforce stated
‘I am of the opinion that following the spirit of the Act which is to enable judicial assistance to be given to foreign courts, the letters rogatory ought to be given effect to so far as possible; …’. At page 618, paragraph E, Viscount Dilhorne stated ‘In the interests of comity, it is, and I trust will continue to be, as Lord Denning M.R. said in this case in this Court of Appeal (ante, p. 560H) ‘it is our duty and our pleasure to do all that we can to assist’ the requesting court.’
This dictum was recently endorsed by Quin J. sitting in this Court in theMatter of Lancelot Investors Fund Limited [ 2009 CILR 7], page 24, paragraphs 69 and 70;
‘The Cayman Islands has enjoyed international standing as a major financial centre for almost 40 years and the Grand Court of the Cayman Islands has actively assisted foreign courts to give effect to The Hague Convention on the Taking of Evidence Abroad in Civil or Commercial Matters 1968
Indeed, the Grand Court has, on many occasions, assisted American courts and. to adopt the classic language of Lord Denning sitting in the Court of Appeal in Rio Unto Zinc Corn, v. Westinehouse Elec. Corp . (7) ( [1978] A.C. at 560): ‘It is our duty and our pleasure to do all we can to assist [the foreign] court, just as f the English court] would expect the [foreign] court to help us in like circumstances. ‘In that particular case, the House of Lords ruled on appeal that the High Court in England should assist in a letters rogatory application made by the District Court of Virginia in the United States.’
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