Phoenix Meridian v Lyxor

• Jurisdiction: Cayman Islands
• Judge: (Smellie, C.J.)
• Judgment Date: 03 August 2009
• Court: Grand Court (Cayman Islands)
• Date: 03 August 2009

Grand Court

(Smellie, C.J.)

PHOENIX MERIDIAN EQUITY LIMITED

and

LYXOR ASSET MANAGEMENT S.A. and SCOTIABANK & TRUST (CAYMAN) LIMITED

G. Halkerston and M.A. Loberg for the plaintiff;

C.D. McKie and S.J. Alexander for the first defendant;

The second defendant did not appear and was not represented.

Cases cited:

(1) Anglo Continental Educational Group (GB) Ltd. v. Capital Homes (Southern) Ltd., [2009] C.P. Rep. 30; [2009] EWCA Civ 218, dicta of Arden, L.J. applied.

(2) Chartbrook Ltd. v. Persimmon Homes Ltd., [2009] 1 A.C. 1101; [2009] 3 W.L.R. 267; [2009] Bus. L.R. 1200; [2009] 4 All E.R. 677; [2009] UKHL 38, referred to.

(3) Investors” Compensation Scheme Ltd. v. West Bromwich Bldg. Socy., [1998] 1 W.L.R. 896; [1998] 1 All E.R. 98; [1998] 1 BCLC 531; [1997] CLC 1243, referred to.

Civil Procedure-case management-interpretation of documents-if party seeking to use background facts to construe contractual terms fails to identify terms adequately, may be directed to identify precise provisions, suggested interpretation and particular supporting background evidence

The plaintiff challenged the first defendant”s contractual right to impose a charge upon early redemption of its investments in funds managed by the first defendant.

The first defendant founded its claim on the construction of the contracts it had with the plaintiff to manage its investments, when interpreted in the context of the background facts including the negotiations which led to the formation of the contracts. The plaintiff sought directions for the first defendant to identify the specific terms of the contracts upon which it relied and the background facts which justified its construction of those terms.

The first defendant submitted in reply that even though it sought to rely upon evidence of the negotiations before the contracts were executed, the

proper course was for the plaintiff to resolve its lack of understanding of the defendant”s case by applying for further and better particulars.

Held, directing clarification of the first defendant”s case:

Given that there was an evidential burden on the party seeking to rely on the background facts in construing a contractual term and the first defendant had not adequately identified what aspects of the management contracts were to be construed by reference to the factual background-and since, as a matter of case management, it would be unnecessarily time consuming and costly for the parties to prepare their cases for the forthcoming trial at cross-purposes-the first defendant would be directed to specifically identify the precise provisions of the contracts on which it sought to rely, the precise points which the evidence established and also the particular background evidence in support of the...