Lemos v Coutts (Cayman) Ltd

• Jurisdiction: Cayman Islands
• Judge: (Harre, J.)
• Judgment Date: 23 January 1992
• Court: Grand Court (Cayman Islands)
• Date: 23 January 1992

Grand Court

(Harre, J.)

C. LEMOS, P. LEMOS and M. LEMOS

and

COUTTS AND COMPANY (CAYMAN) LIMITED and EIGHT OTHERS

J. Mowbray, Q.C. and A. Foster for the plaintiffs;

A. Jones for the first six defendants;

A. Duckworth for the seventh, eighth and ninth defendants.

Cases cited:

(1) Cayman Islands News Bureau Ltd. v. Cohen, 1988–89 CILR 56, followed.

(2) Chaine-Nickson v. Bank of Ireland, 1976 I.R. 393.

(3) Company, In re A, [1988] Ch. 210; [1987] 3 All E.R. 137.

(4) Cowin, In reELR(1886), 33 Ch. D. 179; 56 L.J. Ch. 78.

(5) Dubai Bank Ltd. v. Galadari (No. 2), [1990] 1 W.L.R. 731; [1990] 2 All E.R. 738, dicta of Slade, L.J. applied.

(6) House of Spring Gardens Ltd. v. Waite, [1984] F.S.R. 277, considered.

(7) Londonderry”s Settlement, In re, [1965] Ch. 918; [1964] 3 All E.R. 855.

(8) Morice v. Durham (Bishop of )(1805), 10 Ves. 522; 32 E.R. 947; [1803–13] All E.R. Rep. 451.

(9) Rawson Trust Co. Ltd. v. G.C.T.C. Ltd., 1980–83 CILR 214, followed.

Legislation construed:

Grand Court Law (Law 8 of 1975), s.20: The relevant terms of this section are set out at page 10, lines 7–15.

Grand Court (Civil Procedure) Rules, r.47:

‘Any party may apply to the Court for leave to deliver interrogatories in writing for the examination of opposing parties or for an order in the prescribed form directing any such party to make discovery on oath of the documents which are or have been in his possession or power relating to any matter in question, or for production and inspection of any such documents.’

r.62, as substituted by Grand Court (Civil Procedure) (Amendment) Rules, 1980, r.3: The relevant terms of this rule are set out at page 10, lines 16–33.

Rules of the Supreme Court (England), O.24, r.10:

‘Any party to a cause or matter shall be entitled at any time to serve a notice on any other party in whose pleadings or affidavits reference is made to any document requiring him to produce that document for the inspection of the party giving the notice and to permit him to take copies thereof.’

Civil Procedure-discovery-documents referred to in pleadings or affidavits-inspection and taking of copies of documents referred to in pleadings or affidavits not governed by general rules on discovery in Grand Court (Civil Procedure) Rules, r.47-practice and procedure specially provided for in Rules of Supreme Court, O.24, r.10

Trusts-discovery against trustees-suit by beneficiaries-beneficiaries entitled to inspect and copy deeds of appointment referred to in trustees” affidavits to be certain of identities of trustees and other beneficiaries-similarly entitled to inspect letters of wishes referred to in affidavits to ascertain terms of trust

Injunctions-Mareva injunction-parallel proceedings in different jurisdictions-beneficiary entitled to obtain and continue Mareva injunction in action against trustees held in abeyance in one jurisdiction as protection for similar action in another jurisdiction-no entitlement if actions different but court has discretion if danger that trustees” acts will render Cayman suit abortive

The plaintiffs applied for an order to inspect and take copies of certain documents and the continuation of injunctive relief against the trustees of a settlement of which they were beneficiaries.

The first plaintiff (the settlor”s son) and his children (the second and third plaintiffs), the settlor”s widow and two daughters (the seventh, eighth and ninth defendants respectively) were all beneficiaries under a family settlement established in Greece and registered in the Cayman Islands by the settlor, now deceased, and managed by the first six defendants. The original trustees had been succeeded over a period of years by the first six defendants, one of whom was ultimately controlled by the settlor”s son-in-law.

The first plaintiff brought proceedings in Greece against the trustees, seeking to set aside the trust. In related proceedings in the Cayman Islands, the plaintiffs, while not admitting the validity of the trust, sought the removal of the trustees on different grounds, namely mismanagement, dishonesty, and the threatening of a beneficiary to deter him from taking legal action against them. Pending the substantive hearing, the plaintiffs obtained certain injunctions against the trustees which restricted their discretionary powers and their ability to manage the trust. In the present proceedings they applied for an order to continue the injunctions until trial or further order.

The defendants opposed the application and in their supporting affidavit referred specifically to several documents, including deeds of appointment, a ‘number of letters of wishes,’ records, formal trust accounts, and other accounts for specified years. The plaintiffs then served on the defendants a notice for the production and inspection of those documents, pursuant to O.24, r.10 of the English Rules of the Supreme Court. The defendants objected to the notice, in part relying on the clause in the trust deed which provided that the trustees should keep accurate accounts of the trusteeship but refusing beneficiaries the right ‘to the production or inspection of such accounts except . . . if the trustees shall (in their absolute discretion) think fit.’

The plaintiffs submitted that (a) under the English rules which applied in the Cayman Islands, they were entitled to require the defendants to produce the documents specified in their affidavit; (b) production and inspection of all these documents were necessary for disposing fairly and comprehensively of the cause and for saving costs; (c) as beneficiaries, they were entitled to see all the trust documents because in a sense they belonged to them. Moreover, they were entitled to be certain of the identities both of the trustees and the beneficiaries and to know the details of the trustees” appointments and resignations and the contents of all the settlor”s letters of wishes; and (d) they needed the protection of the injunctions in order to be able to litigate at all, particularly in the Cayman Islands, since there was a real risk that the trustees could frustrate their case by removing them as beneficiaries or by removing the formal trust documents and the assets to another jurisdiction.

The defendants submitted in reply that (a) O.24, r.10 did not apply in the Cayman Islands and under the Grand Court (Civil Procedure) Rules, the right to discovery of documents was limited by r.47 to the circumstances set out therein. The plaintiffs had, therefore, no statutory entitlement to the inspection and copying of the documents referred to in the affidavits; (b) the trustees had no duty, either under the trust deed or generally, to produce the documents specified, and in particular, none to allow inspection of accounts notwithstanding their acknowledgement of their existence; (c) the court had no jurisdiction either to maintain the injunctions against them or to grant the order for inspection when these were really being employed by the plaintiffs in aid of the Greek proceedings in which they were pursuing an entirely different cause of action; and (d) the injunctions should not be sustained because the trustees had an obligation to defend the trust in the interest of all the beneficiaries against an attack by any of them and were being inhibited in the performance of this and other duties to the detriment of the beneficiaries.

Held, granting the relief sought in part:

(1) The English rules relating to the inspection and taking of copies of documents referred to in pleadings or affidavits were distinct from the general rules relating to discovery and were originally intended to benefit...