Kilderkin Invs Ltd v Player

• Jurisdiction: Cayman Islands
• Judge: (Summerfield, C.J.)
• Judgment Date: 17 October 1983
• Court: Grand Court (Cayman Islands)
• Date: 17 October 1983

Grand Court

(Summerfield, C.J.)

KILDERKIN INVESTMENTS LIMITED (by CLARKSON COMPANY LIMITED, Receiver and Manager)

and

PLAYER and SIX OTHERS

L. Hoffmann, Q. C., and A.J. Foster for the plaintiff;

N. Patten, P. Boni and R. Voaden for the first, fourth, sixth, and seventh defendants;

R.N.A. Henriques, Q.C., and S. McField for the second, third and fifth defendants.

Cases cited:

(1) Bankers Trust Co. v. Shapiro, [1980] 1 W.L.R. 1274; [1980] 3 All E.R. 353, applied.

(2) PCW (Underwriting Agencies) Ltd. v. Dixon, [1983] 2 All E.R. 158.

(3) Third Chandris Shipping Corp. v. Unimarine S.A., [1979] 1 Q.B. 645; [1979] 2 All E.R. 972; [1979] 2 Lloyd”s Rep. 184, applied.

Companies-receivers-foreign-appointed receiver-receiver appointed by foreign court and authorized to do so may bring proceedings in Cayman courts to identify and locate company”s assets in or having been in Islands

Equity-tracing action-breach of trust-order requiring disclosure of location and disposition of trust funds made if prima facie case of fraud or breach of trust

Confidential Relationships-discovery-equitable tracing action-order for discovery of confidential information not automatically barred by Confidential Relationships (Preservation) Law-if consent of principal not obtained, application under s.3A required and order under that section conclusive

Injunctions-Mareva injunction-guidelines to be observed-strong emphasis placed on need to show belief in risk of removal of assets from jurisdiction-risk perhaps more readily inferred from circumstances in Cayman Islands than in UK-use of inter partes summons may be evidence that no such belief

The plaintiff by its receiver and manager applied for orders identifying and disclosing the location of certain trust funds and for Mareva injunctions in respect of the defendants” assets.

The original parties aggrieved were trust companies incorporated in Ontario. They were persuaded to finance a series of speculative property deals in Ontario but it became apparent that their investments were illusory and that the ultimate beneficiaries from the deals would mainly be the present plaintiff and, through it, the first defendant, its sole director. Tne trust companies therefore instituted proceedings in the Supreme Court of Ontario against the present plaintiff and secured the appointment of a receiver and manager in respect of the plaintiff; by subsequent orders the court authorized the receiver and manager to identify the assets of the plaintiff and specifically authorized it to commence proceedings to preserve and recover any assets which had been transferred to the Cayman Islands.

The receiver and manager then commenced proceedings in the name of the plaintiff in the Grand Court to identify and recover such assets. It joined persons into whose hands the assets might have come (including

the second defendant, a Cayman bank) and also persons who might have been parties to a fraudulent conspiracy to commit a breach of trust, against whom damages were claimed. An ex parte order was obtained freezing all the first defendant”s assets within the jurisdiction.

The receiver and manager then made the present interlocutory application seeking (a) against some of the defendants, an order disclosing the disposition and location of any of the trust funds or their proceeds in the Islands or abroad; (b) against others of the defendants, Mareva injunctions in respect of their assets within the jurisdiction; and (c) an order against the second defendant bank freezing such of the trust funds as remained deposited with it. The defendants submitted that (a) the receiver and manager had no authority to bring the proceedings in the name of the plaintiff; (b) an order of disclosure was inappropriate as no prima facie case of fraud or breach of trust had been made out; in the case of the fourth defendant the evidence indicated that he was not a party to any alleged fraud; and that disclosure could not be ordered in respect of confidential information by virtue of the Confidential Relationships (Preservation) Law; and (c) Mareva injunctions should not be granted as there were no grounds for believing that there was any risk of assets being removed from the jurisdiction before they could be called upon to satisfy a judgment.

Held, allowing the application in part:

(1) The orders of the Supreme Court of Ontario cloaked the plaintiff”s receiver and manager with authority to commence the present proceedings in the name of the plaintiff on all aspects of the claims made and relief sought. It did not matter whether the assets in question were in the Cayman Islands or abroad, since he was under a duty to preserve the assets wherever they were, and the Grand Court”s power extended to making orders against...