Paget-Brown v Scenic Ltd

• Jurisdiction: Cayman Islands
• Judge: (Schofield, J.)
• Judgment Date: 23 November 1988
• Court: Grand Court (Cayman Islands)
• Date: 23 November 1988

Grand Court

(Schofield, J.)

PAGET-BROWN

and

SCENIC LIMITED

P. Lamontagne, Q. C. and G. Ritchie for the plaintiff;

A. Turner for the defendant.

Cases cited:

(1) Cohen v. Rothfield, [1918] 1 K.B. 410, dictum of Scrutton, L.J. applied.

(2) Société Nationale Indus. Aerospatiale v. Lee Kui Jak, [1987] A.C. 871; [1987] 3 All E.R. 510, applied.

(3) Spiliada Maritime Corp. v. Cansulex Ltd., The Spiliada, [1987] A.C. 460; [1986] 3 All E.R. 843; [1987] 1 Lloyd”s Rep. 1, applied.

(4) Touche Ross & Co. v. Bank Intercontinental Ltd., 1986–87 CILR 156; on appeal, 1986–87 CILR 268, distinguished.

Conflict of Laws-jurisdiction-forum conveniens-California more natural and appropriate forum for suit involving California real estates, litigants and witnesses and violation of California securities laws, with prima facie case already established in California court against Cayman defendant refused stay of proceedings by same court

Conflict of Laws-parallel foreign proceedings-stay of foreign proceedings-stay if proceedings vexatious or oppressive-not granted if applicant to receive fair hearing in foreign court and prima facie case against him already established there-extra expense of foreign proceedings not sufficient reason to grant stay

Conflict of Laws-parallel foreign proceedings-stay of foreign proceedings-presumption against interference in foreign proceedings-no stay if foreign party is plaintiff in foreign proceedings and put to disadvantage of defending Cayman proceedings

The plaintiff brought an action against the defendant company for damages for breach of contract, fraud and deceit and for services rendered, and sought inter alia an injunction restraining the defendant from bringing or continuing proceedings against him in California and from making any other claims against him save in the Cayman Islands.

The plaintiff was a Cayman attorney-at-law and president of the defendant company. The company had been formed for the purpose of taking over a Californian ranch which had been purchased by an Italian national who was the beneficial owner of the defendant company.

After discovering certain malpractices, the defendant brought an action in California against the former owners of the farm, the plaintiff and others, claiming damages for conspiracy to defraud and breach of California securities laws. The action succeeded, both in the Superior Court and on appeal, against all of the then defendants except the plaintiff, against whom it was dismissed without prejudice to the defendant company”s right to re-institute proceedings against him. There had been enough prima facie evidence implicating the plaintiff in that case to justify the court taking this stand but the plaintiff had not been represented.

The defendant subsequently filed a fresh complaint against the plaintiff claiming damages on the same grounds as those relied upon previously as well as for breach of fiduciary duty.

The plaintiff filed a defence to that action and started proceedings against the defendant in the Cayman court seeking (a) damages for breach of contract, fraud and deceit and for services rendered; (b) a dec-

laration that he had acted in a professional manner beyond reproach in connection with his fiduciary duties and other legal obligations in incorporating the defendant, that his duties in the capacity of director and officer of the defendant had been honestly and reasonably carried out and that he ought fairly to be excused from any liability to it, if any; and (c) an injunction restraining the defendant from bringing or continuing the California proceedings and from making any other claims against him save in the Cayman Islands. The plaintiff also applied to the California court for a stay of proceedings there on the grounds of forum non conveniens but this was refused.

Whilst proceedings were pending, the defendant obtained an earlier date for the hearing of the California proceedings. The plaintiff then made the present application by way of amended summons seeking an injunction to restrain the defendant from proceeding with the California action and from bringing any further or other action outside the jurisdiction of the Cayman court until after final judgment.

The defendant in turn sought to stay the present proceedings until the action before the California court had been finally determined.

The plaintiff submitted that (a) the Cayman Islands, not California, was the natural forum for the proceedings started against him by the defendant since (i) he was himself a Cayman resident as were his witnesses, one of whom would refuse to go to California to testify; (ii) the defendant was a Cayman company; (iii) on the face of it he had done nothing in California and all his acts had been within the framework of the Cayman Companies Law; (iv) the action concerned the professional conduct of a Cayman attorney which should be judged by Cayman ethical standards and adjudicated upon here; and (b) alternatively, to allow the California proceedings to continue would be vexatious and oppressive.

In reply, the defendant submitted that the cause of action in its suit against the plaintiff had the most real and substantial connection with California because (i) its beneficial owner had no connection whatsoever with the Cayman Islands; (ii) the alleged conspiracy and fraud concerned the purchase of a farm in California and most of the persons involved resided in California or had connections with the state; (iii) its witnesses were in California; (iv) the plaintiff had contravened California state securities laws; and (v) it had already brought a successful action in California against the other parties involved, in which there had been enough prima facie evidence implicating the plaintiff to justify pursuing the action against him before the California court.

Held, refusing to grant the plaintiff the orders sought and granting a stay of the...