Re S

• Jurisdiction: Cayman Islands
• Judge: (Summerfield, C.J.)
• Judgment Date: 05 May 1986
• Court: Grand Court (Cayman Islands)
• Date: 05 May 1986

Grand Court

(Summerfield, C.J.)

IN THE MATTER OF S (A Company)

IN THE MATTER OF T (A Company)

A. Jones for the petitioners;

N. Hill, Q.C. and W. Rodger for the companies;

R. W. Ground, Senior Crown Counsel, for the Attorney General as amicus curiae.

Cases cited:

(1) R. v. Chief Reg. of Friendly Socies., ex p. New Cross Bldg. Socy., [1984] Q.B. 227; [1984] 2 All E.R. 27, followed.

(2) Scott (orse. Morgan) v. Scott, [1913] A.C. 417; [1911–13] All E.R. Rep. 1, followed.

(3) Stonegate Secs. Ltd. v. Gregory, [1980] Ch. 576; [1980] 1 All E.R. 241, distinguished.

Legislation construed:

Companies Law (Laws of the Cayman Islands, 1963, cap. 22), s.94: The relevant terms of this section are set out at page 68, line 13-16.

Companies-compulsory winding up-hearing-hearing in chambers permitted in court”s discretion under Companies Law, s.94 if public hearing would threaten company”s confidential relationships with investors and deter proceedings by investors

Companies-compulsory winding up-creditors-proper to determine petitioners” status as creditors before hearing winding-up petition itself

Petitioning creditors applied for the hearing of winding-up petitions in respect of two companies to be held in camera or, pursuant to the Companies Law, s.94, in chambers.

The two companies were part of a group controlled by a Caymanian resident and were engaged in the marketing of financial services on an international basis. Some of the companies in the group were beneficially owned by North American residents.

The petitioners made the present application on the basis that they did not wish to give evidence in open court in case its content came to the attention of foreign taxation authorities. It was believed that there were other creditors who would be in the same position. The petitioners submitted that it would be inconsistent with public policy in the Islands, as reflected in the Confidential Relationships (Preservation) Law, to allow the winding up of a company to be carried on in open court when the company was involved in providing services to overseas clients who had been assured of the confidentiality of their investment activities.

The companies, whilst not suggesting that their affairs would be prejudiced by a hearing in camera or in chambers, submitted that the court should strictly apply the common law principle that the public interest required a hearing in open court unless such a hearing would defeat the ends of justice. If necessary, they proposed the dividing up of the hearing between chambers and open court to ensure the confidentiality of the appropriate parts of the proceedings. They further submitted that in any case the application was premature and that the determination of the issue should be deferred until the petitioners” status as creditors had been satisfactorily established and until other creditors had proved and could be heard.

Held, adjourning the proceedings into chambers:

(1) The court would exercise its wide discretion under the Companies Law, s.94 to order the hearing in chambers even though the hearing of

winding-up petitions had invariably taken place in open court. The exercise of the discretion was not limited to the strict ensuring that justice would be done by a hearing in private but extended to the enforcement of the public policy of the Islands. In this particular case it would be wrong in principle that investors attracted to the Islands by the guarantee of strict confidentiality of their affairs should be impeded in, or deterred from, protecting their rights by the fear of the disclosure of confidential information by the court”s own processes. There was a serious risk of the disclosure of confidential information-even inadvertent disclosure-in the present case and that alone justified the making of an order for a hearing in chambers (page 70, lines 4–11; page 70, line 23– page 71,line l5).

(2) Nor was the application premature. The present petitions were already on file and would have to be disposed of sooner or later; whether they were disposed of in public or private might affect the willingness of other creditors to come forward and this decision should therefore be taken at the present time. The status of the present petitioners as petitioning creditors could easily be determined at the time their petitions were heard (page 72, lines 1–24).

SUMMERFIELD, C.J.: This is an application by persons hold-

ing themselves out as petitioning creditors, in petitions for the

winding up of two companies, for the hearing of the petitions to

be held in camera or, pursuant to s.94 of the Companies Law, in

chambers. One of the main distinctions between a hearing in

camera and a hearing in chambers lies in the proceedings which

might follow as a result of unauthorised publication of a report of

the evidence adduced in the course of the hearing. It is said that

that would constitute an offence under s.99(1)(e) of the Penal
Code where the hearing is in camera but contempt of court where
the hearing is in chambers.
Normally, some statutory provision permits a certain cause or
5	matter to be heard in chambers. In the case of a trial, however,
the power of a judge to order that the whole or any part of it shall
be heard in camera is very limited. It is clear from Scott (orse.
Morgan) v. Scott (2) that exceptional circumstances must be
demonstrated before the whole or any part of a trial can be
10	ordered to be held in camera. While the category of cases in
which such an order can be made is not closed, that case stresses
that a paramount consideration is whether justice can be done. If
not, the general rule as to publicity must yield. Where it is shown
that the administration of justice would be rendered impracti-
15	cable by the presence of the public, as for example where a party
would be reasonably deterred by publicity from seeking relief at
the hands of the court, an order may be made. It is not sufficient
that the parties themselves agree that the hearing shall be held in
camera.
20	In my view, where a statutory provision gives a court power to
hold proceedings in chambers then the conditions for its exercise
are not so stringent. For example a judge may consider that its
exercise is proper where the parties agree that the matter shall be
heard in chambers. The legislation gives the judge a discretion to
25	decide whether the hearing is to be in public or not. Of

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