Meridian Trust Company Ltd v (1) Eike Fuhrken Batista
| Jurisdiction | Cayman Islands |
| Judge | Ingrid Mangatal |
| Judgment Date | 09 October 2017 |
| Court | Grand Court (Cayman Islands) |
| Docket Number | CAUSE NO FSD 172 of 2016 (IMJ) |
| Date | 09 October 2017 |
Hon. Justice Ingrid Mangatal
CAUSE NO FSD 172 of 2016 (IMJ)
IN THE GRAND COURT OF THE CAYMAN ISLANDS
FINANCIAL SERVICES DIVISION
WFO — Unless Orders as a result of non-compliance with disclosure orders .
Mr. G Halkerston of Counsel instructed by Ms. L Hatfield and Mr. J McGee of Solomon Harris. Mr. G Halkerstonof Counsel instructed by Mr. McGee only on 20 July 2017.
Mr. J Golaszewski and Ms. A Dixon of Carey Olsen on behalf of the 2nd to 4th Respondents. Ms. Dixononly on 20 July 2017.
1. On 15 June 2017, I heard an application by the Applicants for a number of orders, including debarring and “Unless Orders”, as set out in a Summons filed 1 June 2017 (“the Application”). The Application took place in the context of a Case Management Conference (“the CMC”) listed for the Court to address two principal issues:
-
1) Orders dealing with the consequences of any non-compliance with the 8 May Order by the Respondents; and
-
2) Directions for the determination of the WFO on an inter partes basis.
2. I have made a number of Orders previously in this matter, commencing with the Worldwide Freezing Order (“the WFO”) against the First to Fourth Respondents and ancillary disclosure relief made on 28 October 2016 pursuant to section 11A of the Grand Court Law (2015 Revision) in aid of proceedings that have since been instituted in Florida, United States of America. I have also delivered a number of decisions and rulings and reasons for rulings as follows:
-
(A) Unreported reasons for Ruling on WFO, delivered 11 November 2016 (Judgment No. 1);
-
(B) Unreported Reasons for Ruling on 24 January 2017, delivered 16 February 2017 (Judgment No. 2);
-
(C) Unreported Ruling, delivered 15 March 2017 (Judgment No. 3); and
-
(D) Ex Tempore Ruling, delivered 27 April 2017 (Judgment No. 4).
3. I do not intend to set out much background to the instant applications, as they have been addressed in some detail in my earlier judgments/reasons.
4. Mr. Halkerston, who represents the Applicants, submitted that both Mr. Batista and the 63X Companies are in breach of the disclosure orders which I made on 8 May 2017. It was also argued that this was the fourth consecutive disclosure order that the Respondents are in deliberate breach of, i.e. the WFO itself, the 24 January 2017 Order, the 25 April 2017 Order, and the 8 May 2017 Order.
The Applicants' submissions are usefully divided into “Matters to be determined against Batista”, and “Matters to be determined against the 63X Companies”. I will also adopt those headings in summarising the submissions of the Applicants.
5. On 27 April 2017, I dismissed Mr. Batista's challenges to jurisdiction and substituted service. On 8 May 2017, I made the following orders (I will adopt Mr. Halkerston's summary of the orders gratefully):
-
(1) Mr. Batista was ordered (if he so chose) to acknowledge service by 11 May 2017 (paragraph 7);
-
(2) Mr. Batista was ordered, by 11 May 2017, to provide a more limited sub-set of his disclosure obligations, including disclosure — to the best of his knowledge — of his 10 most valuable assets and 5 biggest bank accounts outside of Brazil (para 8.1), and provision of authority letters in respect of current assets (para 8.2);
-
(3) Mr. Batista was ordered to comply with the remainder of his disclosure obligations contained in the WFO by 31 May 2017 (para. 9);
-
(4) To the extent that any of the above compliance might be incomplete, Mr. Batista was ordered to file an affidavit confirming his steps towards compliance by 31 May 2017 (paragraph 10); and
-
(5) To the extent that Mr. Batista was unable to comply with his disclosure obligations and had identified the same in an affidavit, Mr. Batista was directed to issue a summons to vary paragraph 9 (paragraph 11).
6. Mr. Batista has not complied with any of the Orders of 8 May 2017. In his 17th Affidavit (Trainer 17), Mr. Trainer identifies Mr. Batista's non-compliance.
7. Mr. Halkerston submits that Mr. Batista has refused to comply, and further, that all that Mr. Batista has done is to raise yet more excuses for his non-compliance. Mr. Batista was, since the last hearing, released from prison on 28 April 2017. He is now under house arrest. Counsel characterised the affidavits of Mr. Batista (Batista 2) and Martins 3, both dated 11 May 2017, as spinning a familiar story: despite being released from prison and only now being subject to a House Arrest Order, Mr. Batista claims to be unable to comply in any manner whatsoever with the Grand Court's Orders. The assertion is that if Mr. Batista takes any step towards compliance with his disclosure obligations, this would be a breach of the House Arrest Order and he would be sent back to prison (Martins 3, paragraphs 10, 13; Batista 2, paragraph 15). It was Counsel's contention that Mr. Batista's claims of not being able to comply with his disclosure obligations are strained and opportunistic.
8. Counsel referred to the translation of the House Arrest Order, as approved by the Respondents, and exhibited to Martins 3, which states as follows:
“For these reasons, among the precautionary measures provided for under Title IX of the Code of Criminal Procedures, I understand as necessary, moreover in view of what had been decided by the judge competent for the case as set forth above, to decree precautionary measures alternate to preventive imprisonment, starting from the exercise of general precautionary power that is inherent to the regular exercise of jurisdiction.
In view of what was set forth and in compliance with the preliminary decision of the Supreme Federal Court in the case files of HC No. 143247 MC/RJ, I order application of the following ALTERNATE PRECAUTIONARY MEASURES to Defendant EIKE FUHRKEN BATISTA, without prejudice of a subsequent reassessment by the judge of the competent jurisdiction:
1. withdraw himself or remain withdrawn from the direction/management of the involved companies, particularly the companies of the “X” Group;
2. prohibition on keeping contact with any person that is a Defendant or is being investigated in case files under way before the 7th Federal Criminal Court of Rio de Janeiro, or in other case files related to the “Carwash Operation” (13th Federal Court of Curitiba) and its ramifications:
3. Defendant must, since now, agree with the permanent lifting of telephonic and telematic secrecy, for the duration of the precautionary measure;
4. integral confinement at home, except for a situation of medical emergency, that should be communicated forthwith to the court;
5. heed all judicial communications;
6. deliver at the Registrar's Office of Court his passport(s) within 24 hours, if he did not deliver them until now;
7. prohibition on change of address without judicial authorization;
8. defense shall keep a record of all persons entering the real estate where the measure is being complied with, being certain that visits of people that are neither relatives nor attorneys regularly appointed with their powers of attorney in the case files, are forbidden;
9. Federal Police is authorized to perform visits at the real estate where the measure is being complied with, at any day of the week, without previous communication or court authorization, to check if all conditions are being complied with.”
9. It was submitted that on any reading of the House Arrest Order, the extreme position adopted by Mr. Batista is wholly inconsistent with the terms of that order. It was submitted that the fact that Mr. Batista can comply with the Cayman Disclosure Orders is corroborated by a Brazilian criminal lawyer in the affidavit of Fernanda Prates Fraga 1, (filed on behalf of the Applicants), as follows:
-
1. The House Arrest Order does not restrict Mr. Batista from complying with his disclosure obligations under paragraphs 8 and 9 of the WFO (Fraga 1, para 9);
-
2. Although Mr. Batista is required to withdraw from the management of companies allegedly involved in Mr. Batista's bribing the Governor of Rio de Janeiro, he is at liberty to communicate with third parties by telephone and electronic communication, and to use the internet (paragraph 10(c)). Such communications can be monitored by the Brazilian authorities but there is no impediment to those communications taking place;
-
3. Mr. Batista is allowed personal visits from family members (such as Thor Batista) or attorneys acting for him in respect of the Carwash Operation. These meetings would not be monitored (paragraph 10(d)); and
-
4. There is nothing in the House Arrest Order which impedes Mr. Batista from disclosing his world-wide assets or identifying — to the best of his knowledge — his ten most valuable assets and five biggest bank accounts (paragraph 13(a)). There is no impediment to Mr. Batista signing authority letters (paragraph 14).
10. It was argued that unless Mr. Batista can establish that compliance with the terms of his disclosure obligations constitute direction or management of a company involved in the criminal case, the House Arrest Order is not engaged at all. Further, that Mr. Batista has not identified any specific basis upon which the disclosure obligations so engage the House Arrest Order.
11. The Applicants, at the paragraphs of the Summons for Directions referred to below, seek the following case management orders against Mr. Batista:
-
1. An order against Mr. Batista, pursuant to O. 28, r 10 of the Grand Court Rules 1995 (“the GCR”) debarring Mr. Batista from opposing the January Summons, alternatively an Unless Order (paragraphs 1–3) (“...
To continue reading
Request your trial