Re BCCI (Overseas) Ltd

• Jurisdiction: Cayman Islands
• Judge: (Harre, C.J.)
• Judgment Date: 02 March 1994
• Court: Grand Court (Cayman Islands)
• Date: 02 March 1994

Grand Court

(Harre, C.J.)

IN THE MATTER OF BANK OF CREDIT AND COMMERCE INTERNATIONAL (OVERSEAS) LIMITED and INTERNATIONAL CREDIT AND INVESTMENT COMPANY

E. McQuaker and T.B. Shea for the applicant;

R. McCombe, Q.C., R.D. Alberga, Q.C. and M. Alberga for the respondents.

Cases cited:

(1) Arrows Ltd. (No. 2), Re, [1992] BCLC 1176, followed.

(2) British & Commonwealth Holdings PLC v. Spicer, [1993] A.C. 426; [1992] 4 All E.R. 876, applied.

(3) Cloverbay Ltd. v. B.C.C.I. S.A., [1991] Ch. 90; [1991] 1 All E.R. 894, dictum of Browne-Wilkinson, V.-C. applied.

(4) Morris v. Director of Serious Fraud Office, [1993] Ch. 372; [1993] 1 All E.R. 788, dictum of Nicholls, V.-C. applied.

Legislation construed:

Companies Law (Revised) (Laws of the Cayman Islands, 1963, cap. 22, revised 1990), ss. 126–127: The relevant terms of these sections are set out at page 77, lines 9–33.

Insolvency Act 1986 (c.45), s.236(2):

‘The court may, on the application of the office-holder, summon to appear before it-

. . .

(c) any person whom the court thinks capable of giving information concerning the promotion, formation, business, dealings, affairs or property of the company.’

s.237(4): ‘Any person who appears or is brought before the court under section 236 or this section may be examined on oath, either orally or by interrogatories, concerning the company or the matters mentioned in section 236(2)(c).’

Attorneys-at-Law-professional privilege-examination under Companies Law (Revised), ss. 126–127-court may refuse to examine attorney on matters concerning client”s pending litigation and will consider other objections based on attorney-client confidentiality

Companies-compulsory winding up-examination of witnesses by court-discretion under Companies (Law) (Revised), ss. 126–127 extends to specifying procedure for examination-court to balance liquidator”s reasonable requirements against avoiding oppression of examinee-oppression greater if examination oral, examinee owes no duty to company, questions not fundamental to liquidation and breach attorney-client confidentiality

The applicant sought an order that he was not to be examined in the course of the liquidation of the two companies on matters touching or concerning pending litigation in which his clients were engaged or any issue covered by attorney-client confidentiality.

The applicant served as a legal adviser to various companies and in executive capacities in some of them. He was obliged to attend the court for oral examination by orders obtained under the Companies Law (Revised), s.127 by the liquidators of BCCI and ICIC and by ICIC itself. He objected to the proposed areas of questioning on the grounds that they concerned pending litigation between his clients and the liquidators and breached attorney-client confidentiality.

He submitted that (a) as the liquidators had given no reasons why the answers to the questions were necessary for the discharge of their duties, no questions should be allowed; (b) if questions were to be allowed in the exercise of the court”s discretion under ss. 126–127 of the Companies Law (Revised) the balance that had to be struck was between the reasonable requirements of the liquidators in carrying out their task on the one hand and avoiding unnecessary, unreasonable and oppressive orders to the applicant and his clients, whose interests should also be considered, on the other; and (c) the order was oppressive to the applicant because (i) it was for oral examination rather than written interrogatories, which were the

less oppressive alternative under s.127; (ii) neither he nor his clients were officers or former officers of the companies but were in the second category of persons covered by ss. 126–127-persons suspected of having information concerning the companies, and consequently they owed no duty, apart from the order for oral examination to assist the liquidators; (iii) it was improper for the liquidators to ask questions relating to the pending litigation involving his clients; and (iv) his evidence was not fundamental to the liquidators” task or to an assessment of whether there was a cause of action against the defendants.

The liquidators submitted in reply that (a) the discretion of the court was limited to deciding whether to make or set aside an order and did not extend to deciding how an examination should be carried out; and (b) the public interest required that they be given the opportunity to gather in, as expeditiously and cheaply as possible, funds for the benefit of creditors in one of the world”s greatest banking collapses.

Held, making a declaration for the conduct of the oral examination:

The applicant would not be required to answer questions concerning his clients” pending litigation and would be entitled to make objections to questions on the ground of attorney-client confidentiality, which the court would consider in the light of the rules governing legal professional privilege. The court was entitled to exercise its discretion in such a way under ss. 126–127 of the Companies Law (Revised), to determine the manner in which an oral examination should be carried out, because this discretion was not limited to deciding whether to make or set aside an order. The reasonable requirements of the liquidators in carrying out their task had to be balanced on the one hand against avoiding an order which was unnecessary, unreasonable and oppressive for the applicant and his clients, who were included as third parties likely to be affected, on the other. The balance fell in favour of the applicant and his clients because the order for oral examination was oppressive on the grounds that (a) it was for oral examination which was the more oppressive alternative under s.127 of the Companies Law (Revised); (b) it compelled them to assist the companies even though they were under no general duty to do so because they were not officers or former officers; (c) it allowed the liquidators to ask questions relating to the pending litigation with the applicant”s clients which they should not be entitled to ask the clients, and by answering the questions the applicant would breach his professional duty of client confidentiality and the clients would lose their legal professional privilege; and (d) the evidence sought was not fundamental to the liquidators” task or to an assessment of whether there was a cause of action against the defendants (page 77, line 44 – page 83, line 20).

25	HARRE, C.J.: Mr. John Van Husan Whitbeck has been a member in
good standing of the New York Bar since 1973. Since July 1980 he has
been based in Paris and employed as General Counsel to Concorde
International S.A.R.L., a French service company, and he represents Lhasa
Investments Ltd. (‘Lhasa’) and Concorde International S.A. (‘Con-
30	corde’), a Pana-manian company. He also serves as legal adviser to a
group of companies owned by the Pharaon family of Saudi Arabia and
serves in executive capacities certain of the companies to which I have
referred. He attended for examination as a result of orders made by this
court on application made by the liquidators of Bank of Credit and
35	Commerce International (Overseas) Ltd. (‘BCCI’) and International
Credit and Investment Company Overseas Ltd. (‘ICIC’).
ICIC has also commenced proceedings by writ in which it claims
against a number of defendants, including Dr. Pharaon, ownership of
shares in a company called Finance and Investment International Limited
40	(‘FIIL’) and other relief. Among the reliefs granted by this court was an
order that certain defendants, including Lhasa, cause a director or other
responsible officer to attend the court to be examined on oath as to their
assets. Mr. Whitbeck also appeared in response to that order as an officer
of Lhasa.
45	In the liquidation of both BCCI and ICIC it has been ordered that the

English Insolvency Rules 1986 apply unless there is inconsistency with
the laws of the Cayman Islands.
A list of proposed areas of questioning was provided on behalf of the
liquidators to Mr. Whitbeck”s representatives. Those which are relevant
5	are the following:
‘4. The claims made by International Credit and Investment
Company (Overseas) Ltd. (“ICIC”) in the Grand Court of the
Cayman Islands, Cause No. 389 of 1992 (“the Cayman
proceedings”).
10	5. The defences served by Lhasa Investments Ltd. (“Lhasa”)
and by Concorde International Trading S.A. (“Concorde”) in
the Cayman proceedings.
6. The legal and beneficial ownership of the share capital of
Finance

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