Rawson Trust Company Ltd v GCTC Ltd

• Jurisdiction: Cayman Islands
• Judge: (Summerfield, C.J.)
• Judgment Date: 27 October 1982
• Court: Grand Court (Cayman Islands)
• Date: 27 October 1982

Grand Court

(Summerfield, C.J.)

RAWSON TRUST COMPANY LIMITED

and

G.C.T.C. LIMITED (in liquidation) (BITTEL, LANGER and BLASS, Third Parties)

N. Williams for the applicants;

Miss R. Irving for the defendant;

J. Goodwill for the plaintiff.

Case cited:

(1) Speller & Co. v. Bristol Steam Nav. Co.ELR(1884), 13 Q.B.D. 96, not followed.

Legislation construed:

Grand Court (Civil Procedure) Rules, r.13: The relevant terms of this rule are set out at page 220, line 27 – page 221, line 13.

r.28(1): The relevant terms of this sub-rule are set out at page 222, lines 15–20.

r.62, as substituted by the Grand Court (Civil Procedure) (Amendment) Rules, 1980, s.3: The relevant terms of this rule are set out at page 219, lines 14–30.

Grand Court Law (Law 8 of 1975), s.20: The relevant terms of this section are set out at page 220, lines 14–22.

Civil Procedure-parties-third parties-Grand Court (Civil Procedure) Rules, rr. 13 and 28 govern Cayman practice on third party notices-English Rules of Supreme Court, O.11, r.1 not applicable by Grand Court Law, s.20 and Grand Court (Civil Procedure) Rules, r.62(2) because not rules on ‘practice and procedure’ and preference given to local rules

Civil Procedure-parties-third parties-third parties out of jurisdiction necessary and proper parties if sufficient connection with action brought in Cayman Islands and defendant has right to indemnity or contribution from them-exercise of discretion under Grand Court (Civil Procedure) Rules, rr. 13 and 28 to grant leave to serve third party notices to consider whether Cayman Islands forum conveniens and possible to enforce judgment in foreign jurisdiction-no leave if vexatious, oppressive or unduly onerous

The defendant company obtained an order giving leave to serve third party notices upon the applicants.

The applicants, resident in the United States, had been the sole directors and shareholders of the defendant company (now in liquidation), which was a trust company registered in and operated in and from the Cayman Islands. The plaintiff company, successor to the defendant company as trustee of a trust, brought proceedings against the defendant in respect of alleged breaches of trust and the defendant successfully applied to have third party notices served on the applicants from whom it claimed it would be entitled to indemnity should the plaintiff company succeed.

The applicants sought to have the third party notices set aside. They submitted that (a) there was no justification for making the order on the basis of the facts alleged; and (b) in any event, there being no local provision on the proper practice and procedure, r.62 of the Grand Court (Civil Procedure) Rules allowed the application of the English Rules of the Supreme Court and that O.11, r.1(1)(j) of those Rules did not permit third party notices to be issued in circumstances such as this case presented.

The defendant company, relying on the facts as alleged earlier, submitted in reply that leave to serve the third party notices had been justifiably granted, as the applicants had been jointly if not wholly responsible for the breaches of trust; they were therefore necessary and proper parties to the action between the plaintiff company and the defendant company as the defendant company was entitled to contribution or indemnity from them.

Held, dismissing the application:

(1) If the English Rules of the Supreme Court, O.11, r.1(1)(j)”) had applied in the Cayman Islands, the applicants would have been ‘necessary or proper’ parties to the action between the plaintiff company and the defendant company within the meaning of that paragraph. However, O.11, r.1 did not apply because (a) whereas the Grand Court (Civil Procedure) Rules, r.62(2) specified that in the absence of local provisions, the English ‘practice and procedure’ would apply in any proceeding, i.e. the particular process followed by the English courts for that proceeding, O.11, r.1, was concerned with jurisdiction rather than practice and procedure and r.62(2) could not therefore apply to it; and b) there were two local rules in existence, viz. rr. 13 and 28 of the rand Court (Civil Procedure) Rules, which adequately covered the situation and by virtue of both the Grand Court Law, s.20 and r.62(1), these rules were to be applied even though the court could still be guided by O.11, r.1(page 217, lines 39–41; page 220, lines 4–25; page 221, lines 14–22; page 222, lines 9–14).

(2) On the basis of rr. 13 and 28, the power of the court to grant leave to serve third party notices out of the jurisdiction was a discretionary one, in the exercise of which it would consider (a) whether the Cayman Islands was an appropriate forum in which to try the dispute-it would only consider it to be so if the subject-matter of the action and/or one or more of the parties had a sufficient connection with the Islands; (b) whether the court would be acting in vain in granting leave for service abroad-it would have to be satisfied that its judgment could be enforced in the foreign jurisdiction; and (c) granting the leave would not be vexatious, oppressive or unduly onerous on the party sought to be served abroad (page 221, line 23 – page 222, line 9).

(3) In the present case all of the above conditions had been met. The defendant company had established a prima facie case against the applicants sufficient to make the Cayman Islands the proper jurisdiction and the court an appropriate forum for the hearing of the dispute between the two parties, viz. that the applicants, although resident in the United States, were the sole directors of and at all times in complete control of the defendant company which they operated in the Cayman Islands. The allegations against them involved torts, such as misappropriation and conversion of trust properties, which had occurred wholly or partly in the Islands and which implied a breach of their contractual relationship with the company, thus qualifying them as necessary and proper parties to the action. Also, in view of their fiduciary relationship with the company, a right to indemnity would arise if the plaintiff company succeeded in its case. Further, the court was satisfied that its judgment could be enforced in the United States. Accordingly, the court had been justified in exercising its discretion in favour of the defendant company to have the third party notices served upon the applicants and the application to set them aside would therefore be dismissed (page 218, lines 25–35; page 222, lines 29–33).

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