Guinness Mahon Cayman Trust Ltd v Washington Intl Bank & Trust Ltd

• Jurisdiction: Cayman Islands
• Judge: (Hull, J.)
• Judgment Date: 13 June 1985
• Court: Grand Court (Cayman Islands)
• Date: 13 June 1985

Grand Court

(Hull, J.)

GUINNESS MAHON CAYMAN TRUST LIMITED

and

WASHINGTON INTERNATIONAL BANK AND TRUST LIMITED

A. Jones for the plaintiff;

R. D. Alberga, Q.C. and J. Stafford for the defendant.

Cases cited:

(1) Baker (G.L.) Ltd. v. Medway Bldg. & Supplies Ltd., [1958] 1 W.L.R. 1216; [1958] 3 All E.R. 540.

(2) Bartlett v. Barclays Bank Trust Co. Ltd. (Nos. 1 & 2), [1980] Ch. 515; [1980] 1 All E.R. 139; [1980] 2 All E.R. 92.

(3) Edevain v. CohenELR(1889), 41 Ch.D. 563; on appeal, (1889), 43 Ch.D. 187.

(4) Lowson v. CopelandENR(1787), 2 Bro. C.C. 156; 29 E.R. 89.

(5) Mitchell v. Harris Engr. Co. Ltd., [1967] 2 Q.B. 703; [1967] 2 All E.R. 682.

(6) Pottinger v. Ebanks, Grand Court, 1982, unreported.

(7) Rodriguez v. Parker, [1967] 1 Q.B. 116; [1966] 2 All E.R. 349.

(8) Steward v. North Metrop. Tramways Co.ELR(1886), 16 Q.B.D. 556.

(9) Tebbs v. CarpenterENR(1816), 1 Madd. 290; 56 E.R. 107.

(10) Tildesley v. HarperELR(1876), 3 Ch.D. 277.

(11) Weldon v. NealELR(1887), 19 Q.B.D. 394.

Legislation construed:

Judicature Law (Revised) (Law 11 of 1975, revised 1976), s.62(2):

‘Where a party to a civil suit is ordered to pay to another party a fixed sum of money and the court is of opinion-

(a) that the indebted party has no serious defence to the action; or

(b) was guilty of using delaying tactics in order to postpone payment,

the court may at its discretion order that the indebted party shall in addition pay compound interest not exceeding 10 per cent per annum at half yearly rests from any time after the occasion giving rise to the indebtedness until the date of payment, both dates inclusive, upon the sum representing the indebtedness originally incurred.’

Rules of the Supreme Court (England), O.20, r.5:

‘(1) . . . [T]he Court may at any stage of the proceedings allow the plaintiff to amend his writ, or any party to amend his pleading, on such terms as to costs or otherwise as may be just and in such manner (if any) as it may direct.

(2) Where an application to the Court for leave to make the amendment . . . is made after any relevant period of limitation . . . has expired, the Court may nevertheless grant such leave . . . if it thinks it just to do so. . . .

(5) An amendment may be allowed under paragraph (2) notwithstanding that the effect of the amendment will be to add or substitute a new cause of action if the new cause of action arises out of the same facts or substantially the same facts as a cause of action in respect of which relief has already been claimed in the action by the party applying for leave to make the amendment.’

Civil Procedure-pleadings-amendment-should be allowed for determining real questions in issue or correcting errors or defects-applicant not to act mala fide or cause prejudice to opponent which cannot be compensated by costs or otherwise

Trusts-breach of trust-restoration of loss-trustee in breach of trust to restore trust fund and income it should have earned-beneficiary may plead higher rate of interest required to compensate for actual loss despite discretionary maximum of 10% in Judicature Law (Revised), s.62(2)

Civil Procedure-pleadings-amendment-amendment allowed if adds new head of claim, provided arising out of same facts as existing claim-English Rules of Supreme Court, O.20, r.5 applies in Cayman Islands as local law silent

The plaintiff, in a suit for breach of trust, sought leave to amend its statement of claim out of time.

The plaintiff alleged that the defendant, as trustee, was in breach of the trust and of its fiduciary duty as trustee, in allowing funds to be deposited with a bank and trust company in the Bahamas without adequate safeguards as to repayment, and leaving the funds so deposited when it should have known that it was no longer prudent or safe to do so. The plaintiff, which succeeded the defendant as trustee in 1978, alleged that the Bahamian Government compelled the bank and trust company to go into liquidation in 1977. It sought the recovery of its deposits and interest up to June 30th, 1977 and further interest on the trust moneys and on charges wrongly deducted, from July 1st, 1977 until payment, at the rate of 10%.

The litigation suffered many delays and adjournments, mainly as a result of the plaintiff”s pursuing its claims simultaneously in the Cayman Islands and the Bahamas. The conduct of the litigation also passed between different members of the firm of attorneys representing the plaintiff, the currently-appointed attorney seeking the present amendment to claim additional interest for the period from July 1st, 1977-at the rate a reasonably prudent trustee would have expected to secure at a Class A Cayman bank on a US$ three-month deposit. The rate varied over the relevant period of time between 8% and 16½% compounded annually, thereby increasing the claim by $629,455.67 to January 15th, 1985.

The plaintiff conceded that the amendment was effectively a new pleading and that if it had been used to start the action afresh it would be outside the limitation period. Nevertheless, it maintained that it was entitled to seek the amendment since it was merely seeking the restoration of the trust fund and the amendment sought no more than to quantify precisely what had been lost by the defendant”s mismanagement and what would have been earned if it had not occurred. It denied that it was attempting to introduce a new cause of action, since additional interest had been claimed from the outset and it was now trying to re-draft the claim in a more appropriate way, but submitted that even if it were a new cause of action the amendment should still be permitted by virtue of the Rules of the Supreme Court, O.20, r.5(1), (2) and (5). It denied that permitting the amendment at this stage would prejudice the defendant.

The defendant opposed the amendment, submitting inter alia that (a) the delay was unconscionable; (b) no amendment should be allowed if it involved the introduction of a new cause of action which was already statute-barred; (c) the defendant had for six years approached its conduct of the case on the basis that it had grounds for resisting the discretionary remedy of interest under the Judicature Law, s.62(2) (which grounds were acknowledged to exist by the plaintiff). Section 62 was the only statutory provision enabling an award of interest but the plaintiff was now basing its claim on a totally different premise which more than doubled the amount claimed; (d) believing that it would be able to resist a s.62(2) claim, the defendant had made no provision for reserves to meet a liability of the size now being asserted, it might well have responded differently at earlier stages of the proceedings if it had been aware that the claim would be reformulated, and it might also have attempted to prove in the Bahamian liquidation, though it was too late to do so now. Indeed, the plaintiff had led the defendant to believe that it would recover the whole or the bulk of its claim from the Bahamian liquidation, whereas it was now clear that it had not even claimed for the additional interest in that liquidation; (e) the prejudice to the defendant could not be compensated for in costs or otherwise; and (f) in any event, interest was not necessarily recoverable on breach of trust.

Held, allowing the amendment:

(1) It was clear as a matter of principle that amendments should be allowed for the purpose of determining the real questions in issue between the parties or correcting errors or defects in the proceedings. An applicant for amendment must act bona fide and must not by the error which he seeks to correct have done some injury to his opponent which cannot be compensated by costs or otherwise (page 452, lines 25–32).

(2) It was clear from the outset in the present case that the plaintiff was seeking, as he was entitled to do, additional interest in respect of the income lost after July 1st, 1977. The trustee was liable, on the facts alleged, to restore the trust fund and the income it should have earned.

The original pleading intended to invoke the Judicature Act, s.62(2) as the means of recovering the interest and the present application simply sought to re-frame that head of claim in terms which were better formulated (page 455, lines 8–22).

(3) Since the...