Norwich Pharmacal Relief and Certain Proceedings in the Grand Court of the Cayman Islands AA and ors v UU and ors

• Jurisdiction: Cayman Islands
• Judge: Justice Kawaley
• Judgment Date: 13 June 2025
• Docket Number: CAUSE NO. FSD 308 OF 2024 (IKJ)
• Court: Grand Court (Cayman Islands)

In the Matter of Norwich Pharmacal Relief

And in the Matter of Certain Proceedings in the Grand Court of the Cayman Islands

AA and ors

and

UU and ors

Neutral Citation Number: [2025] CIGC (FSD) 42

Before:

The Hon. Justice Kawaley

CAUSE NO. FSD 308 OF 2024 (IKJ)

IN THE GRAND COURT OF THE CAYMAN ISLANDS

FINANCIAL SERVICES DIVISION

Inter partes hearing on terms of Norwich Pharmacal Order — status of order made at ex parte on notice hearing — whether cross-undertaking as to damages should have be included in initial order and/or final order — whether leave to appeal exclusion of undertaking should be granted or whether review permissible under liberty to apply provision in order — whether interim payment on account of respondents' costs and/or security for costs should be ordered-appropriate respondents to order — effect of acceptance of jurisdiction by some respondents on ability of others to contest jurisdiction — application of “mixed up” requirement to successor in title of party innocently involved in wrongdoing — need for limits on innocent party's entitlement to recover full costs of compliance — Grand Court Rules (2023 Revision), Preamble paragraph 4, Order 62 r.4(7)(h)

Appearances:

Mr Paul Lowenstein KC with Mr Adam Crane, Ms Shula Sbarro and Ms Nicosia Lawson of Baker & Partners for the Applicants

Mr Thomas Grant KC with Mr Christopher Easdon, Mr Paul Kennedy and Ms. Yuan Wen of Campbells, for the Respondents (“R1” to “R11”, respectively)

IN COURT

INDEX

Topic	Para
1. Background	1–4
2. October 2024 Order	5–14
3. Respondents' Leave to Appeal Application	15–42
4. Cross-undertaking	43–71
5. Fortification	72–88
6. Payment on account of costs	89–96
7. Security for costs	97–104
8. Scope of Order: should case be dismissed-v-R7-R10?	105–119
9. Scope of Order: should case be dismissed-v-R11?	120–123
10. Scope of Order: privilege review	124–133
11. Form of Order: miscellaneous	134–147
12. Conclusion	148

Background

1 In my experience, applications for a Norwich Pharmacal Order (“NPO”) typically fall into two categories. Firstly, cases where the jurisdiction to make an order is in dispute and, secondly, cases where there are comparatively minor disputes about what information should be produced. In the present case, the Respondents agreed that the Applicants were entitled to obtain a NPO at the initial ex parte on notice hearing on 21 October 2024 (and with effect from that date), subject to the terms of the order being finalised. The 21 October 2024 Order was perfected on 25 October 2024 (the “21 October Order”). Nearly six months later, not a single document having been produced and a 1 ¹/₂ day hearing took place with controversy focussing primarily on:

• (a) whether a cross-undertaking as to damages ought to have been included in the 21 October 2024 Order (leave to appeal against my refusal to include a cross-undertaking was sought and an application to vary the Order was made under the liberty to apply provision therein);

• (b) whether any cross-undertaking as to damages should be fortified;

• (c) whether the Applicants should be ordered to make a payment on account of the Respondents' incurred costs of compliance with the Order and/or provide security for future costs of compliance; and

• (d) whether some of the Respondents should not be made subject to the final form of Order, the terms of which were not otherwise subject to any significant dispute.

2 The application was originally filed with a view to ensuring that the Applicants' ability to obtain the information they sought was not prejudiced by a pending sale of R7 (the “Transaction”). The Order had the foreseeable effect of preventing the completion of the Transaction, and the Respondents contended that they suffered financial damage as a result. This unusual part of the factual matrix may well in part explain why the present application has been contested in what appears to me to be an unusual way. However, another unusual factor is the fact that the Respondents are regulated professional service providers, who were “mixed up” in the fraud in an undeniably atypical way. They were appointed as trustees of the trusts alleged to be a vehicle for the fraud (the “Trusts”) after it had been perpetrated. This added an additional layer of complexity to the dynamics of the application. The Applicants seemingly proceeded on the basis that this was a standard NPO application while the Respondents appear to have believed that the usual process ought fairly to be adjusted to meet the exigencies of this particular case.

3 Finally, the present matter came before the Court on a full inter partes basis on the terms of the Order on the Summons issued by the Respondents dated 17 January 2025. The Applicants, despite criticising the Respondents for delay, themselves failed to take the lead to bring their own Originating Summons back before the Court.

4 This Judgment addresses the following matters:

• (a) the 21 October Order;

• (b) the Respondents' Leave to Appeal application (in relation to the 24 October 2024 Ruling on the cross-undertaking issue);

• (c) the cross-undertaking issue (in relation to the 21 October Order and as condition for compliance with the Disclosure Order);

• (d) the fortification issue;

• (e) the payment on account of costs issue;

• (f) the security for costs issue;

• (g) the application to dismiss the case against R7-R10;

• (h) the application to dismiss the case against R11;

• (i) the privilege review issue; and

• (j) miscellaneous issues relating to the form of the Order.

The 21 October Order

5 The proceedings were commenced by an Ex Parte Originating Summons filed on 27 September 2024 and sealed on 30 September 2024. A 27 September 2024 letter sought a ‘Sealing and Gagging Order’, which was granted on 4 October 2024 and which in summary:

• (a) sealed the file and anonymised the proceedings;

• (b) restrained the Respondents from disclosing the existence of the proceedings.

6 Also on 27 September 2024, an Ex Parte Summons was filed seeking leave to serve R6 out of the jurisdiction. Leave was granted by Order dated 11 October 2024. According to paragraph 5 of attorney Nia Statham's 1 ^st Affidavit, the NPO application papers were served on the Respondents at 3.27 pm on Thursday 17 October 2024 in advance of the Monday 21 October 2024 initial hearing of the Originating Summons. The Respondents have now filed unchallenged evidence that they anticipated a cross-undertaking in damages would be offered because this was foreshadowed in the Applicants' supporting evidence, the draft Consent Order and the Applicants' Skeleton Argument. On this basis, the Respondents agreed in principle that a NPO should be granted when their respective former attorneys appeared in Court on 21 October 2024.

7 After the hearing, I dealt with what appeared to be a minor dispute on the terms of the Order on the papers:

• (a) on Wednesday 23 October 2024 at 4.13 pm, Appleby (the Respondents' then attorneys) emailed the Court advising that they would shortly be filing a draft Order and wondered whether I would be available to consider it that afternoon on grounds of urgency. At 4.17 pm (three minutes later), my Personal Assistant responded that I was travelling and would not return to the Office until Friday morning but indicated any documents filed would be forwarded to me;

• (b) at 5.42 pm, Appleby emailed a letter and draft Order to the Court and asked if it could be forwarded to me. The letter stated most pertinently:

  “… The Applicants have deleted the cross undertaking included in the recital of the Order. The Court will be aware that a cross undertaking is part of the standard order for an ex parte Norwich Pharmacal application. The matter proceeded ex parte and the Applicants have obtained the benefit of an order and advanced no (let alone no proper) basis for the departure from the usual order. Given the importance of this matter, if the Court is inclined to deny the Respondents the benefit of a cross undertaking under the circumstances, the Respondents respectfully request that the matter return to court for an urgent hearing on this issue, with provision for the filing of skeleton arguments and (if required) evidence in advance…”;

• (c) at 9.09 pm on 23 October 2024, Baker & Partners (the Applicants' attorneys) emailed the Court indicating the inclusion of the cross-undertaking was the only issue in dispute and, “ in the interests of time”, referred the Court to their email to Appleby early that evening (at 5.46 pm) in which they stated:

  • “… 1. There is no basis for the court to make an order with the cross-undertaking at this time, especially one which contemplates loss to an unknown third party. This Order, at present, creates no disclosure obligations. What damages are foreseeable in the circumstances where the terms of the disclosure are yet to be agreed or ordered by the Court?

  • 2. This order is not an ex parte Order as you have sought to frame it. The Order results from the application by the Respondents for an adjournment of the Norwich Pharmacal Application at a hearing where all of the Respondents were represented by counsel. Given the adjournment and the length of time the parties will have to negotiate the terms of the order or seek a determination by the Court, this application cannot and should not be treated as the parties having no notice or short notice. The Respondents have sufficient time to raise and ventilate their points of concern…”;

• (d) the above 23 October 2024 emails and letters were forwarded to me at some point on 24 October 2024 when I had a morning speaking engagement, coincidentally, at the ACI Fraud, Asset Tracing & Recovery Conference in Miami. At 4.09 pm that afternoon, the following Ruling on the form of the draft Order was communicated to counsel:

  “ The Judge has considered...