Quayum v Hexagon Trust Company (CI) Ltd

JurisdictionCayman Islands
Judge(Smellie, C.J.)
Judgment Date05 July 2002
CourtGrand Court (Cayman Islands)
Date05 July 2002
Grand Court

(Smellie, C.J.)

QUAYUM and SIX OTHERS
and
HEXAGON TRUST COMPANY (CAYMAN ISLANDS) LIMITED

S.J. Barrie for the plaintiffs;

W.J. Helfrecht for the defendant.

Cases cited:

(1) Aratra Potato Co. Ltd. v. Taylor Joynson Garrett, [1995] 4 All E.R. 695; (1995), 145 New L.J. 1402, not followed.

(2) Awwad v. Geraghty & Co., [2001] Q.B. 570; [2000] 1 All E.R. 608, not followed.

(3) Baker v. Jones, [1954] 1 W.L.R. 1005; [1954] 2 All E.R. 553, referred to.

(4) Bergel & Edson v. WolfUNK(2000), 50 O.R. (3d) 777; 49 C.P.C. (4th) 131, referred to.

(5) British Cash & Parcel Conveyors Ltd. v. Lamson Store Service Co. Ltd., [1908] 1 K.B. 1006; (1908), 77 L.J.K.B. 649, referred to.

(6) British Waterways Bd. v. NormanUNK(1993), 26 H.L.R. 232; [1994] C.O.D. 262, referred to.

(7) Campbell v. HallENR(1774), 1 Cowp. 204; 98 E.R. 1045, referred to.

(8) Clyne v. New South Wales Bar Assn.UNK(1960), 104 C.L.R. 186; 34 A.L.J.R. 87, referred to.

(9) Giles v. Thompson, [1994] 1 A.C. 142; [1993] 3 All E.R. 321, dicta of Lord Mustill applied.

(10) Hill v. Archbold, [1968] 1 Q.B. 686; [1967] 3 All E.R. 110, considered.

(11) Johnson v. Cook-Bodden, 1999 CILR 399, referred to.

(12) McIntyre Estate v. Att. Gen. (Ontario)UNK(2001), 53 O.R. (3d) 137; 198 D.L.R. (4th) 165, considered.

(13) Oram v. Hutt, [1914] 1 Ch. 98, referred to.

(14) Sheehan, In re(1990), 97 Fed. L.R. 190; 13 Fam. L.R. 736, referred to.

(15) Swain v. Law Socy., [1983] 1 A.C. 598; [1982] 2 All E.R. 827, referred to.

(16) Thai Trading Co. v. Taylor, [1998] Q.B. 781; [1998] 3 All E.R. 65, considered.

(17) Trepca Mines Ltd. (No. 2), In re, [1963] Ch. 199; [1962] 3 All E.R. 351, considered.

(18) Wallersteiner v. Moir (No. 2), [1975] Q.B. 373; [1975] 1 All E.R. 849, not followed.

(19) Wallis v. Duke of Portland(1797), 3 Ves. 494; 30 E.R. 1123, referred to.

(20) Warren v. Immigration Bd., 2002 CILR 188, followed.

Legislation construed:

Interpretation Law (1995 Revision) (Laws of the Cayman Islands, 1963, cap. 70, revised 1995), s.40: The relevant terms of this section are set out at para. 14.

Contract-illegal contracts-agreements contrary to public policy-maintenance and champerty-champertous maintenance is giving of assistance to litigant by person without interest in action or legally recognized motive for doing so, in consideration for share of proceeds of action-attorney/client conditional (normal or uplift) fee agreement not contrary to public policy

Criminal Law-maintenance and champerty-reception of English law-common law offences of maintenance and champerty part of Cayman law (although now abolished in England)-imported by original English settlers in 1734 as suitable to their circumstances

Attorneys-at-Law-remuneration-conditional fee agreement-normal and uplift fees valid and enforceable subject to court”s approval, provided no agreement to share proceeds of action (outright contingency fee)-public policy objections based on maintenance outweighed by benefits of access to justice-need not provide for other side”s costs-approval may be conditional, e.g. on taxation of costs

The plaintiffs brought proceedings to recover the costs of preserving and tracing the assets of an employees” pension fund.

The plaintiffs, all employees of BCCI (now in liquidation), were defrauded by the bank of the funds in its staff benefit trust. They formed an action group to recover the assets of the trust, and with the co-operation of the bank”s liquidators, secured the establishment of new employee benefit trusts here and in Jersey for their benefit. They sought in the present proceedings to recover from the trustee of the Cayman trust the costs they had incurred in doing so (commonly referred to as a ‘salvage claim’).

Since they were unemployed and ineligible for legal aid, and had expended all their resources in funding their efforts to recover the pension fund assets, the plaintiffs entered a conditional fee agreement with a firm of Cayman attorneys for the purposes of the salvage claim, under which they would pay nothing to their attorneys if the claim failed, but would pay an increased fee (28.5% higher) in the event of success. A similar agreement was entered into by the firm and the counsel they instructed, with a 50% ‘uplift’ in the event of success.

The plaintiffs made an interlocutory application for the court”s approval of the fee agreements before taking further steps in the salvage action.

The defendant submitted that (a) conditional fee agreements were tainted by the common law offences of champerty and maintenance, since the plaintiffs” attorneys had no interest in the litigation nor any justification in law for assisting them, and had effectively been promised a share in the proceeds of the salvage action in the form of the fee uplift in the event of success; (b) champerty and maintenance were part of Cayman law, either (i) under s.40 of the Interpretation Law, as English law introduced to the Islands before the commencement of 1 George II, cap. 1 (an English statute dated 1725), or (ii) as English law brought to the Islands by its earliest English settlers, that was necessary for the establishment and good government of the colony; (c) in the absence of legislative intervention, the law of maintenance and champerty had not altered in the Cayman Islands so as to permit the type of arrangement in this case, and accordingly, it was against public policy and void; and (d) even if the law had so evolved, a valid fee agreement had to provide for the payment of the other side”s costs as well as those of the assisted party.

The plaintiff submitted in reply that (a) maintenance and champerty had not been accepted as part of Cayman law, under the Interpretation Law s.40 or otherwise, since the Islands had not been settled until 1734 and the offences were not suitable to the needs of the settlers in the founding of a new colony; (b) even if maintenance and champerty were a part of common law here, the agreement was not void, since the abuse which the prohibition on maintenance and champerty sought to address, namely the temptation to corruption amongst the legal profession, was not present in this case; (c) the common law here had adapted in line with English law, in the interests of ensuring access to justice for those who otherwise could not fund litigation, so as to permit conditional fee agreements under which the legal adviser did not agree to receive a proportion of the proceeds of the successful action; and (d) there was no requirement that an enforceable fee agreement had to provide for the other side”s costs.

Held, approving the fee arrangement:

(1) The conditional uplift fee agreements were not void as being against public policy. The legality of conditional fee agreements was governed by common law (in particular the common law offences of maintenance and champerty), since the legislation that had shaped the development of the applicable law in England did not apply here. Maintenance (which was also a tort) was the giving of assistance or encouragement to a litigant by someone without an interest in the proceedings or any legally recognized motive for doing so. Champerty was a form of maintenance which entailed an agreement to receive a share in the proceeds in consideration for the assistance (paras. 9–12).

(2) Both maintenance and champerty were part of Cayman law under the rules of settlement, by which the earliest permanent settlers in the Islands in 1734 (the date of the first grant of land by letters patent) brought with them all laws applicable to their situation and the establishment of the new colony. The mischief that the common law prohibition sought to address would have been condemned by those settlers, and the relevant English law readily received. The provisions of the Interpretation Law, s.40-by which all English laws received in the Islands prior to 1725 continued in force here-were meaningless if 1734 were accepted as the year of settlement, but they were explained by the fact that the Law had been modelled on a Jamaican statute passed in 1728, long after that Island had been colonized. Whilst maintenance and champerty had been abolished as offences by legislation in England, no such measures had been passed here (para. 6; paras. 14–22).

(3) In England, the maintenance of actions had remained contrary to public policy even after the abolition of the common law offences, but the range of persons recognized as having a legitimate interest in funding litigation had expanded. The common law had evolved to reflect changing social needs, so as to permit the maintenance of actions, e.g. by trade unions, insurance companies, or the state (in the form of legal aid). Until legislation intervened, contingency fees continued to be illegal on the basis that they jeopardized the integrity of the legal profession and the conduct of litigation. The same concern, that attorneys should not be tempted to conduct litigation in an unethical manner in order to increase their reward in the event of success, applied in the Cayman Islands. However, the competing public interest of ensuring access to justice for persons otherwise unable to fund litigation, was equally relevant here as in England. The advantages of conditional normal fee agreements had now been recognized there, but whereas legislative change had been needed to amend the existing English statutory regime, here (by the Legal Practitioners Law, s.7) the court itself was charged with the discipline and regulation of the legal profession (paras. 25–27; para. 34; paras. 36–42).

(4) The court considered that a conditional uplift fee agreement carried many of the advantages of the conditional normal fee agreement, and that the disadvantage of an improper incentive to succeed was minimal when properly examined (particularly as normal fees in a long, complex case might exceed uplifted fees in a simpler one), and was outweighed by...

To continue reading

Request your trial
14 cases
  • Att Gen v Barrett
    • Cayman Islands
    • Court of Appeal (Cayman Islands)
    • 14 Febrero 2012
    ...3 All E.R. 610, applied. (6) National Trust v. Humphreys Ltd., 2003 CILR 201, considered. (7) Quayum v. Hexagon Trust Co. (C.I.) Ltd., 2002 CILR 161, doubted. (8) Thai Trading Co. v. Taylor, [1998] Q.B. 781; [1998] 2 W.L.R. 893; [1998] 3 All E.R. 65; [1998] 1 Costs L.R. 122; [1998] 3 FCR 60......
  • Bennett v Att Gen
    • Cayman Islands
    • Grand Court (Cayman Islands)
    • 10 Mayo 2010
    ......v. De Bruyne, 2002 CILR 31, referred to. (4) Quayum v. Hexagon Trust Co. (C.I.) Ltd., 2002 CILR 161, followed. ...The rate provided is up to a maximum of CI$300 or US$365. 12 The defendants argue that ......
  • Re ICP Strategic
    • Cayman Islands
    • Grand Court (Cayman Islands)
    • 4 Abril 2014
    ...[1997] 2 W.L.R. 764; [1997] 1 All E.R. 1009; [1997] 1 BCLC 689; [1997] BCC 282, applied. (9) Quayum v. Hexagon Trust Co. (C.I.) Ltd., 2002 CILR 161, followed. (10) Ruttle Plant Ltd. v. Environment, Food & Rural Affairs Secy. (No. 3), [2009] 1 All E.R. 448; [2008] BPIR 1395; [2008] EWHC 238 ......
  • Re DD Growth Premium Fund
    • Cayman Islands
    • Grand Court (Cayman Islands)
    • 23 Octubre 2013
    ...referred to. (7) Greenhaven Motors Ltd., Re, [1999] BCC 463; [1999] 1 BCLC 635, referred to. (8) Quayum v. Hexagon Trust Co.(C.I.) Ltd., 2002 CILR 161, followed. (9) SPhinX Group, In re, Grand Ct., January 14th, 2007, unreported, referred to. (10) Spiralstem Ltd. v. Marks & Spencer PLC, [20......
  • Request a trial to view additional results
5 firm's commentaries
  • The Dispute Resolution Review - Cayman Islands
    • Cayman Islands
    • Mondaq Cayman Islands
    • 6 Marzo 2014
    ...in Braga v. Equity Trust Company (Cayman) Limited [2011] (1) CILR 402). 16 Quayum v. Hexagon Trust Company (Cayman Islands) Limited [2002] CILR 161. 17 Re DD Growth Premium 2x Fund (in Official Liquidation) (Grand Court, 23 October 18 Attorney General v. Barrett [2012] (1) CILR 127. 19 Rule......
  • Applicability Of Ancient English Statutes In Common Law Offshore Jurisdictions
    • British Virgin Islands
    • Mondaq Virgin Islands
    • 7 Octubre 2015
    ...time when the British were forced out by the Dutch is gracefully overlooked. 6 Quayum v Hexagon Trust Company (Cayman Islands) Limited [2002] CILR 161. Note that the Interpretation Law refers to 1725 as the relevant date, but the Court held this to be a drafting 7 It is also worth noting in......
  • The Dispute Resolution Review, 9th Edition: Cayman Islands
    • Cayman Islands
    • Mondaq Cayman Islands
    • 2 Agosto 2017
    ...402). 10 Singularis Holdings Ltd v. PricewaterhouseCoopers [2015] 2 WLR 971. 11 Quayum v. Hexagon Trust Company (Cayman Islands) Limited [2002] CILR 161. 12 In the matter of ICP Strategic Credit Income Ltd and another [2014] (1) CILR 13 Re DD Growth Premium 2x Fund [2013] (2) CILR 361. 14 A......
  • Cayman Islands Case Notes, October 2014
    • Cayman Islands
    • Mondaq Cayman Islands
    • 6 Noviembre 2014
    ...3 See the unreported case of DD Growth Premium II x Fund and, before that, Quayum v Hexagon Trust Company (Cayman Islands) Limited [2002] CILR 161 The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific...
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT