Lea Lilly Perry v Lopag Trust R
| Jurisdiction | Cayman Islands |
| Judge | Mr Justice Segal |
| Judgment Date | 31 May 2022 |
| Year | 2022 |
| Court | Grand Court (Cayman Islands) |
| Docket Number | CAUSE NO. FSD 205 of 2017 (NSJ) |
In the Matter of the Estate of Israel IGO Perry Deceased
(Children, by Hagai Greenspoon, their Guardian AD Litum)
and
The Hon. Mr Justice Segal
CAUSE NO. FSD 205 of 2017 (NSJ)
IN THE GRAND COURT OF THE CAYMAN ISLANDS
FINANCIAL SERVICES DIVISION
Proceedings for contempt — in proceedings commenced by the Plaintiffs seeking to establish proprietary rights to a share held by the Trustees, the Plaintiffs obtain an injunction preventing the Trustees from disposing of, encumbering of dealing with a share and dividends paid — one of the Defendants to the proceedings claims that assets held in a trust of which she is a discretionary beneficiary are subject to the injunction and that the Trustees have acted in breach of the injunction by obtaining litigation funding that gives the Trustees and the litigation funder rights of recourse to those trust assets — applications by the Fifth Defendant under GCR O.24 r.11 for inspection of the funding agreement and for an interim injunction
Mr John Machell QC instructed by Ms Jessica Williams of Harneys Westwood & Riegels appeared on behalf of the Fifth Defendant
Mr Graeme McPherson QC instructed by Campbells LLP appeared on behalf of the Trustees
On 23 March 2022 the Fifth Defendant issued a Notice of Motion claiming that the First and Ninth Defendants (the Trustees) breached the terms of a proprietary injunction made by this Court on 17 October 2017 (as subsequently amended) (the Injunction) by entering into a financing (litigation funding) agreement on 22 June 2018 (the Litigation Funding Agreement). The relief sought in the Notice of Motion includes an order that the Trustees be fined for contempt. The evidence in support of the Notice of Motion includes the Fifth Defendant's Eleventh Affidavit ( D5 11) and Twelfth Affidavit ( D5 12).
On 22 April 2022, the Fifth Defendant issued a summons (the Summons) seeking (a) an order that certain paragraphs in the Sixth Affidavit of Mr Klaus Boehler ( Boehler 6), filed by the Trustees in opposition to the Notice of Motion, be struck out and (b) an order pursuant to GCR O.24, r.11 that the Trustees produce the Litigation Funding Agreement for inspection (the O.24 Application). The evidence in support of the Summons was the Fifth Defendant's Thirteenth Affidavit ( D5 13).
The Summons was listed to be heard on 28 April 2022 (by video link) at the same time as the first hearing of the Notice of Motion. In addition to the relief sought in the Summons, the Fifth Defendant sought:
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(a). an order, in the terms of paragraph 2 of the Notice of Motion, that the Trustees disclose, within seven days, copies of the evidence filed in the application they made to this Court in 2018 in Cause No. 98 of 2018 (the Champerty Application), when they sought and obtained (see my Ruling dated 26 July 2018 (the Champerty Ruling) an order that the Litigation Funding Agreement did not constitute or involve unlawful maintenance or champerty and a transcript of the hearing before me on 1 June 2018 (if one was made) (the Paragraph 2 Application).
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(b). an interim (or interlocutory) injunction (the Interim Injunction) prohibiting the Trustees from borrowing further funds in their capacity as trustees of the Ypresto Trust whether pursuant to the Litigation Funding Agreement or any existing or future variation thereto (the Interim Injunction Application). Prior to the hearing, it appeared that the Fifth Defendant was also seeking an order for the appointment of receivers over the bank accounts opened by the Trustees as trustees of the Ypresto Trust, but it was made clear at the hearing that this was not in fact the case.
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(c). directions for the future conduct of the Notice of Motion.
The Trustees oppose the Fifth Defendant's applications for the relief sought in the Summons and in the Notice of Motion and have made submissions as to the appropriate directions to be made. The Trustees relied on the evidence of Mr Boehler, a member of the board of the Ninth Defendant, who filed and served Boehler 6.
At the hearing, Mr John Machell QC appeared for the Fifth Defendant and Mr Graeme McPherson QC appeared for the Trustees.
I have concluded that:
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(a). the application to strike out paragraphs in Boehler 6 is granted.
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(b). the O.24 Application is granted, but only on the basis and to the extent that the Trustees must give inspection of those parts of the Litigation Funding Agreement (and any amendment thereof) (i) that require or permit the Trustees to have (or give the funder) recourse to (or which give the Trustees or the funder rights over) assets of the Ypresto Trust for the payment of sums due under the Litigation Funding Agreement (and the terms which condition and regulate those rights of recourse or rights over the Ypresto Trust assets) and (ii) on which the Trustees rely in support of their case that the Trustees and the funder do not have and cannot exercise rights of recourse to those assets until after the Injunction has been discharged (the Relevant Terms). The Fifth Defendant and the Court need to see these parts of the Litigation Funding Agreement so that the Fifth Defendant can fairly prosecute and the Court can fairly dispose of the claim set out in the Notice of Motion that the effect of entry into and the making of advances under the Litigation Funding Agreement was to dispose of, encumber or deal with assets of the Ypresto Trust subject to the Injunction. The requirement to give inspection is however subject to the Trustees' right to redact any clauses or provisions that are subject to legal advice privilege or which contain commercially sensitive information that can be redacted without affecting the ability of the Court and the Fifth Defendant to understand and interpret the nature and extent of the rights of recourse to and rights over the Ypresto Trust assets that I have described. It seems to me to be appropriate to require the Trustees and their legal advisers to review the Litigation Funding Agreement (and any amendments thereto) in light of this judgment and then to make available for inspection a redacted copy of the agreement showing the Relevant Terms but redacting the terms and provisions which the Trustees consider to be irrelevant to and unconnected with the Relevant Terms or are protected by legal advice privilege or confidentiality of the kind I have described. The redacted copy of the Litigation Funding Agreement must be supported by evidence that explains why the redactions are justified and is as specific as possible without making disclosure of the very matters that the claim for privilege or commercial sensitivity is designed to protect. If the proposed redactions are challenged by the Fifth Defendant, I will require short written submissions from the parties to be filed (including submissions as to whether I should see the unredacted Litigation Funding Agreement) and I will then deal with any challenge on the papers. I will invite the parties to agree within fourteen days from the handing down of this judgment the timetable and process for giving inspection and for the making of any challenge, but if they are unable to do so within that period they will need within twenty-one days of the date of hand down to file short submissions with their competing views as to timetable and process and I shall then make a suitable order without a further hearing.
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(c). the Paragraph 2 Application is dismissed.
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(d). the Interim Injunction Application is dismissed.
The Fifth Defendant also sought directions for the filing of evidence in answer and reply in respect of the Notice of Motion. The Trustees have indicated that they do not see the need for the filing of further evidence and I therefore assume that they do not wish or intend to serve further evidence. Therefore, once the timetable for and process with respect to the production of the Relevant Terms have been agreed or settled by further order, a hearing of the Notice of Motion can be listed and the timetable for the filing of skeleton arguments and bundles agreed. The Trustees in their written submissions indicated that Leading Counsel be permitted to appear remotely at the hearing. I do not consider that to be appropriate. The Notice of Motion involves proceedings for contempt and in view of the quasi-criminal nature of the proceedings and their seriousness, I consider that an in-person hearing is appropriate. I also consider that counsel should be robed. While not a requirement for the hearing of contempt proceedings in this jurisdiction, as it is in England and Wales (see CPR 81.8(2)), it seems to be best practice to require robing.
As I have noted, the Fifth Defendant has applied in the Summons for an order that certain paragraphs in Boehler 6 be struck out.
The relevant paragraphs are [5(e)] and [46] to [52] of Boehler 6 and pages 181 to 183 and 196 to 197 of the exhibit KB5 (the Material). In D5 13 at [5], the Fifth Defendant says that she notes that “ it is not in dispute between the parties that the communications referred to and exhibited by Mr Boehler arose in the course of a mediation/without prejudice process. What Mr Boehler has done is redact references to the mediation….” The Fifth Defendant submits that Mr Boehler seeks to rely on communications that took place in the course of a confidential mediation and are protected by the without prejudice rule. The Fifth Defendant argued that any discussions between the parties for the purpose...
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