Helmsman v Bank of New York

• Jurisdiction: Cayman Islands
• Judge: (Henderson, J.)
• Judgment Date: 14 September 2009
• Court: Grand Court (Cayman Islands)
• Date: 14 September 2009

Grand Court

(Henderson, J.)

HELMSMAN LIMITED and HOTHAM TRUSTEE COMPANY LIMITED

and

BANK OF NEW YORK TRUST COMPANY (CAYMAN) LIMITED

R. Ham, Q.C. and C. de S. Pimentel for the plaintiffs;

S. Taube, Q.C. and Ms. L. Luttermann for the defendant.

Cases cited:

(1) Cairnwood Global Technology Fund Ltd., In re, 2007 CILR 193, referred to.

(2) Green v. Jernigan(2003), 18 B.C.L.R. (4d) 366; 2003 BCSC 1097, referred to.

(3) KTH Capital Management Ltd. v. China One Fin. Ltd., 2004–05 CILR 213, referred to.

(4) Koonmen v. Bender, 2002 JLR N[45]; [2007] WTLR 293; (2002), 6 ITELR 568, referred to.

(5) Spiliada Maritime Corp. v. Cansulex Ltd. (‘The Spiliada’), ELR[1987] A.C. 460; [1986] 3 W.L.R. 972; [1986] 3 All E.R. 843; [1987] 1 Lloyd”s Rep. 1, dictum of Lord Goff of Chieveley applied.

(6) TCB Creditor Recoveries Ltd. v. Arthur Andersen LLP, 2007 CILR N[14], referred to.

(7) Telesystem Intl. Wireless Inc. v. CVC/Opportunity Equity Partners L.P., 2002 CILR N[21], referred to.

Conflict of Laws-jurisdiction-exclusive jurisdiction clause-specifying ‘forum for administration’ of trust unlikely to give jurisdiction over resolution of disputes including hostile litigation for breach of trust or negligence

Conflict of Laws-jurisdiction-forum conveniens-factors considered in Cayman Islands include public policy considerations (unlike England)-significant public concern if Cayman trust company in breach of fiduciary obligations-Cayman Islands then prima facie appropriate forum for breach of trust claims

The plaintiffs brought an action for damages against the defendant for breach of trust in failing as trustee to supervise adequately the investment of the trust funds.

The plaintiffs, as current trustees of the three settlements, brought the action against the defendant (the former trustee) for its failure to monitor the investment manager and adviser which resulted in heavy losses for the settlements. The proper law of two of the settlements was England, the deeds of settlement of which contained a clause providing that the courts of England were the ‘forum for the administration of’ the settlements. The third settlement was governed by Cayman law. The deeds provided the plaintiff trustees with the power to change the forum of administration at any time and this had been exercised before the writ in the present action was issued so as to change the forum to the Cayman Islands.

The defendant applied to stay proceedings on the ground that England was the more appropriate forum for the trial of the action. It submitted that (a) for two of the settlements the action was governed by the clause in their trust deeds which conferred exclusive jurisdiction on the English courts; and (b) moreover, on the facts of the case, England was the more appropriate forum for the trial of the action since two of the settlements were governed by English law and the Cayman court would otherwise have to receive expert evidence on English law and, further, the defendant wished to claim contribution from the investment adviser using English legislation.

Held, refusing to stay proceedings on the ground that England was the more appropriate forum:

(1) It was unnecessary to decide whether the clause nominating England as the ‘forum for the administration of’ the trusts would extend to giving jurisdiction over contentious litigation such as a claim for damages for breach of trust or negligence since the plaintiff trustees had the express power to change the forum ‘at any time’ and had done so before the present action to pre-empt the defendant”s application. Nevertheless, it was likely that it would not have had that effect because the ‘administration’ of a trust would be unlikely to extend to the resolution of disputes including hostile litigation for breach of trust. The clause would therefore not assign exclusive jurisdiction to the English courts and the court would need to consider which was the most appropriate forum for the trial of the action (paras. 10–15).

(2) The defendant had been served with proceedings in the Cayman Islands and therefore jurisdiction would be founded here unless it satisfied the court that England was ‘clearly or distinctly’ the more appropriate forum. Since the Cayman Islands was a British overseas territory, and given the similarity between English and Cayman law, it was unlikely that the Cayman court would have to hear expert evidence on English law. It was therefore irrelevant that two of the trusts were governed by English law, and further, there was no evidence of any possible advantage in conducting proceedings in England because it was doubtful that the defendant would be able to use an English judgment to claim contribution against the investment adviser since he was resident in Florida. Most of the witnesses resided in the United States and so the convenience of the witnesses was not a factor which argued strongly for conducting the proceedings in either jurisdiction. Moreover, even though the English courts had previously been responsible for the administration of the trusts at the time of the alleged breach, this was insignificant since no issue was ever referred to an English court. The one way in which the laws of the Cayman Islands and England differed in deciding forum conveniens issues was in respect of public policy. Public policy considerations could be considered in the Cayman Islands and since it was a significant public concern that a Cayman trust company had failed to carry out its fiduciary obligations, the Cayman court would be the natural forum for such a claim. It was usually appropriate that breaches of trust committed in the Cayman Islands would be adjudicated upon by Cayman courts though this would not be determinative in all cases if there were other more significant factors than domestic public policy. The defendant had not proved on the balance of probabilities that the English court was the most appropriate forum and the application would therefore be dismissed (paras. 16–25).

1 HENDERSON,...