Meridian Trust Company Ltd v (1) Eike Fuhrken Batista Da Silva

• Jurisdiction: Cayman Islands
• Judge: Ingrid Mangatal
• Judgment Date: 15 March 2017
• Court: Grand Court (Cayman Islands)
• Docket Number: CAUSE NO FSD 172 of 2016 (IMJ)
• Date: 15 March 2017

Between

Meridian Trust Company Limited

American Associated Group, Ltd.

Applicants

and

(1) Eike Fuhrken Batista Da Silva

(2) 63X Investments Ltd

(3) 63X Fund

(4) 63X Master Fund

(5) Maples Corporate Service Limited

(6) Banco Btg Pactual S.A.

Respondents

Before:

Hon. Justice Ingrid Mangatal

CAUSE NO FSD 172 of 2016 (IMJ)

IN THE GRAND COURT OF THE CAYMAN ISLANDS

FINANCIAL SERVICES DIVISION

HEADNOTE

Civil practice and procedure — world-wide freezing order — ancillary disclosure orders — application to vary, suspend — unless order application — flexibility of freezing order, injunction jurisdiction — whether historic disclosure, and not just current asset disclosure permissible in personal, as opposed to proprietary claim where claim is that respondent has hidden assets over many years using complex offshore structures .

Appearances:

Mr. G Halkerston of Counsel instructed by Ms. L Hatfield and Mr. J McGee of Solomon Harris

Mr. E McQuater QC of Counsel instructed by Ms. A Dixon and Mr. T Baildam of Carey Olsen on behalf of the 1^st to 4^th Respondents

IN CHAMBERS

JUDGMENT

1. At a hearing on 8 February 2017, I ordered that the following four summonses be listed for hearing on February 23 and 24:

• (a) The Applicants' Summons dated 3 February 2017 seeking an unless order as a sanction for what the Applicants say is the 1^st to 4^th Respondents' deliberate and persistent refusal to comply with the Cayman Mareva (“the Unless Order Summons”);

• (b) The 1^st to 4^th Respondents' (the “Respondents”) Summons dated 2 February 2017, seeking a suspension of the disclosure obligations under the Cayman Mareva, until further order, on the basis of allegations that the Applicants have leaked the First Respondent's confidential information to the Brazilian press (“the O Antagonista Summons”);

• (c) The First Respondent, Mr. Eike Fuhrken Batista's (“Mr. Batista”), Summons dated 31 January 2017, seeking a number of aspects of relief, including that Mr. Batista does not have to disclose banking documentation prior to 28 October 2016 (“the Historic Disclosure Summons”); and

• (d) The Applicants' Summons dated 7 February 2017, seeking a variation of Undertaking 8 of the Cayman Mareva, if, which the Applicants deny, the making of a FUFTA injunction application in Florida was not permitted by reason of the Undertaking (“the FUFTA Summons”).

2. I wish to express my gratitude to Counsel on both sides for the great level of preparation and invaluable assistance to the Court.

3. To some extent, the exact contents of the Historic Disclosure Summons and the Unless Order Summons are important, and thus I set out their material terms as follows. The Historic Disclosure Summons seeks the following:

• “1. An order that the worldwide freezing order of Mangatal J dated 28 October 2016 as amended (the “WFO”) be varied by:

  • (a) Replacing paragraph 10(b) of the WFO with the following “all bank statements in relation to all bank accounts in which the Respondents have an interest (direct or indirect, legal or beneficial, sole or joint) showing the credit balance of the said accounts as at the date of this Order or copies of those documents.”

  • (b) Replacing the second paragraph (commencing “I hereby authorise…”) of the draft letter contained in Annex A Part 1 to the WFO with the following “I hereby authorise and request you immediately to inform Solomon Harris…, of the current credit balance of the Accounts. I authorise you to have contact with Solomon Harris in order to answer their questions about the current status of the Accounts. I further authorise you to send to the said Solomon Harris…copies of all current and future bank statements and other records prepared by you in respect of the Accounts until further instruction from Solomon Harris.”

  • (c) Inserting the word “current” before the word “assets” in the fourth line of the draft letter contained in Annex A, part 2 to the WFO.

  • (d) Replacing the second paragraph (commencing “I authorise you…”) of the draft letter contained in Annex A Part 2 to the WFO with the following: “I authorise you to have contact with Solomon Harris in order to obtain their instructions and to deliver the copy documents requested (Attn: Laura Hatfield) and to answer any questions they may have about my current assets and my current financial affairs.

• 2. An order that time for compliance by the First Respondent with paragraphs 10, 11 and 12 of the WFO shall be extended until 7 days after the determination of this Summons.

• 3. The said orders be subject to such exceptions and provisos as the Court shall consider appropriate.

  ….”

4. On 24 February 2017, the 2^nd to 4^th Respondents also filed a Summons seeking the same relief as the First Respondent in his summons dated 31 January 2017, i.e. the Historic Disclosure Summons, but also seeking additional relief, notably that historic disclosure documents previously handed to the Applicants be destroyed. At the hearing, it was agreed, by the parties and the Court that the best use of the Court's resources would be for the portion of this Summons that sought the same relief as that contained in the Historic Disclosure Summons, to also be determined at this hearing.

5. The Unless Summons seeks relief as follows:

• “1. That unless the First Respondent by 48 hours after hearing do comply with his disclosure obligations contained in paragraphs 5, 6, 7, 11 and 12 of the Cayman Mareva and 3.1–3.3 of the Order dated 24 January 2017 by:

  1.1 Providing Asset Documents as defined by Paragraph 11 of the Cayman Mareva;

  1.2. Providing Annex A authority letters as set out in Paragraph 12 of the Cayman Mareva;

  1.3. Informing Solomon Harris of his assets as set out Paragraph 5 of the Cayman Mareva;

  1.4. Providing notice of liabilities or claims as set out in Paragraph 6 of the Cayman Mareva; and

  1.5. Providing an affidavit confirming his assets as set out in Paragraph 7 of the Cayman Mareva;

  then the First Respondent be debarred from opposing the continuation of Cayman Mareva until 14 days after the grant of any final judgment in the Florida Proceedings and the Cayman Mareva shall be continued against the First Respondent until 14 days after grant of any final judgment in the Florida Proceedings.

• 2. That unless each of the 2^nd to 4^th Respondents by [48 hours after hearing] do comply with their disclosure obligations contained in paragraphs 11 and 12 of the of the worldwide freezing order dated 28 October 2016 as varied (the WFO) within 48/72 hours by:

  2.1. Providing Asset Documents relating to accounts outside the Islands pursuant to paragraph 11 of the Cayman Mareva.

  2.2. Providing Annex A authority letters for banks inside the Islands pursuant to paragraph 12 of the Cayman Mareva;

  then each of the 2^nd to 4^th Respondents be debarred from opposing the continuation of Cayman Mareva until 14 days after grant of any final judgment in the Florida Proceedings and the Cayman Mareva shall be continued against such Respondents until 14 days after grant of any final judgment in the Florida Proceedings.

  ……

• 4. The Respondents' Summons filed on 2 February 2017 be struck out”

6. During the second day of the hearing, Mr. Halkerston, Counsel for the Applicants, handed up a draft order which modified the position and the orders being sought considerably. By this draft, the Applicants sought a number of orders which are different than those set out in the Unless Order Summons. For example, this includes that the Applicants are prepared, on the basis of practical considerations, to roll back the historical disclosure obligations under paragraph 10(b) to 1 September 2012, rather than 1 January 2010. I note in passing that the original draft order filed in the Bundle for the October hearing had in fact sought the date 1 September 2012, but this was modified during the hearing to seek the 1 January 2010 date, which I ultimately ordered. The Applicants would also be agreeable to further variation so as to not require the 1^st to 4^thRespondents to provide bank statements for accounts in Brazil. Additionally, they are prepared to agree that, in respect of the letters at Annex A, the categories of documents be narrowed to bank statements, payment orders and wire transfer advices and amendment to the date 1 September 2012.

7. Also quite fundamentally, there has been a substantial increase in the extended time periods for compliance sought by the Applicants before the Unless Order sanction trips in. As regards the 2^nd to 4^th Respondents, they ask that the Court require that these Respondents comply with paragraphs 10(b) and 12 of the Cayman Mareva, and provide copies of the written instructions given to third parties in compliance with paragraph 11 of the Cayman Mareva, and that unless they do so within 14 days, (and thus no longer within 48 hours), they be debarred from opposing the continuation of the Cayman Mareva until 14 days after the grant of any final judgment in the Florida Proceedings.

8. In relation to Mr. Batista, they now seek that he comply with the obligations in paragraphs 5, 6, 7, 10, 11 and 12 of the Cayman Mareva within 28 days. Further, that if and to the extent that Mr. Batista considers in the course of his compliance with those obligations that his compliance may be incomplete, he serve an affidavit stating certain details by way of confirmation and explanation as set out in the draft order. They seek at paragraph 7 of the draft order that unless Mr. Batista complies as required, then he be debarred from opposing the continuation of the Cayman Mareva until 14 days after the grant of any final judgment in the Florida Proceedings. Further, that if and to the extent that Mr. Batista is unable to comply with the obligations during the 28 day time period, and confirms this in the affidavit required, he shall be required within 35 days to issue a summons to vary the paragraph with which he is unable to...