Reserve Management Company, Inc. Plaintiff (FSD 83 & 84 of 2010) v Branch Banking and Truist Company Defendant (FSD 83 of 2010) Societe Generale Defendant in (FSD 84 of 2010) David Walker and Nicholas Carter (Official Liquidators of Reserve International Liquidity Fund Ltd) Interpleader Claimants (FSD 83 & 84 of 2010)
| Jurisdiction | Cayman Islands |
| Judge | Hon. Mr Justice Andrew J. Jones |
| Judgment Date | 28 May 2010 |
| Court | Grand Court (Cayman Islands) |
| Docket Number | CAUSE NOS. FSD 83 and 842010 (AJJ) |
| Date | 28 May 2010 |
and
and
Hon Mr Justice Andrew J. Jones QC
On Monday 13 April 2010 I ordered, inter alia, that Branch Banking and Trust Company (‘BB&T) and Societe Generale (‘SocGen’) each pay the sum of US$10 million plus interest then due and owing to Reserve International Liquidity Fund Ltd (in Liquidation) (‘the Fund’) on the instructions of Messrs Walker and Carter in their capacity as its official liquidators (‘the Order’). The Orderwas perfected (signed, sealed and filed) on the same day that it was made, but my written reasons for that order were not issued until Monday 19 April. In the meantime, on Friday 16 April SocGen's attorneys wrote a letter addressed to me, with copies to the parties, for the purpose of informing the Court and the parties that a statement contained in an affidavit sworn on behalf of SocGen by Mr Governor Tipton, its Managing Director and General Counsel for the Americas Region, may have been inaccurate.
In his first affidavit (filed in the related proceeding FSD #70 of 2010), Mr Tipton said (in paragraph 2) that‘SocGen's Cayman Islands Branch holds a Suspense Account No.3617600A90 (‘the Account’) in the name of the [Fund], As at 23 March 2010 the balance in the Account stands at US$10,000,022.22.’ The letter said that this statement may be inaccurate in that the funds may no longer have been held on the books of the Cayman Islands Branch at the time he swore the affidavit. It went on to say that it would take Mr Tipton a few more days to complete his investigation, whereupon it was intended that he would swear a further affidavit. The penultimate paragraph of the attorney's letter said ‘We believe that in light of this development Your Lordship may wish to have the parties attend before you today in order that you may give procedural directions in respect of all the causes regarding the filing of additional evidence and to provide the parties, if deemed necessary, an opportunity to make additional submissions to Your Lordship.’ In the light of this statement, I convened a case management conference which took place by means of a telephone conference call on Monday 19 April. I made the observation that the Order had been perfected and that if any party sought to set it aside or vary it, the remedy was to appeal to the Court of Appeal. I asked if any party wished to make any application and was told that they did not. I concluded that case management conference by informing counsel that my reasons for the Order, which had already been written, would be issued later in the day.
Flaving completed his investigation, Mr Lipton swore a second affidavit which was filed in respect of Causes FSD #70, #84 and #96 of 2010 on 22 April 2010. In summary, this affidavit says that on 11 February 2010 an overnight deposit of US$10 million was placed with SocGen's Cayman Islands Branch in the name of the Fund. This deposit was duly recorded in the books of the Cayman Islands Branch. On the same day SocGen was informed that a winding up order had been made in respect of the Fund on 18 January 2010; that Messrs Walker and Carter had been appointed official liquidators; and that the Official Liquidators were requesting SocGen to ‘freeze’ the deposit. SocGen responded by transferring the funds to a ‘suspense account’. Mr Lipton's evidence is that the suspense account is identified by reference to a different account number (#000119900848) and is an account maintained on the books of the New York Branch. Mr Liptonhad not appreciated that the deposit had been transferred to a suspense account on the books of the New York branch until he received a copy of my Order on 15 April, whereupon he realised that the statement contained in his first affidavit appeared to have been inaccurate. The decision to transfer the deposit to a suspense account, whether on the books of the Cayman Islands branch or any other branch, was made unilaterally by SocGen in its own interest and has no bearing upon the legal rights and obligations as between the bank and its customer.
On 12 May 2010 the Fund's Official Liquidators issued a summons (in FSD #84 of 2010) for a “supplemental order”. On the basis of the information contained in Mr Upton's second affidavit, the Official Liquidators contended that the original Order contained a factual error and, in order to give effect to the manifest intention of the Court, a supplemental order should be made to the effect that SocGen do pay US$10 million plus interest to the Fund. On 24 May the Official Liquidators' summons was amended to seek an order that the Order be varied by deleting the words (in paragraph 1.2)‘standing to the credit of the Fund in account number 3617600A90 operated by Societe Generate’ and replacing them with the words ‘owed to the Fund having been credited to the account of the Fund in the books of the Cayman Islands branch of Societe Generate on 11 February 2010’. As amended, the Official Liquidators' summons sought a variation of the Order as an alternative to the supplemental order.
The Official Liquidators' summons came on for hearing on 28 May 2010 when I made an order that paragraphs 1. 1 and 1.2 of the Order be amended by deleting the phrases ‘for payment of the sum of US$10,000,000.00 standing to the credit of the Fund in account number 414500121410 operated by BB&T’ and ‘for payment of the sum of US$10,000,000.00 standing to the credit of the Fund in account number 3617600A90 operated by SocGen’ and substituting the phrases ‘for payment of the sum of US$10,000,000.00 plus interest due and owing to the Fund by BB&T’ and ‘for payment of the sum of US$10,000,000.00 plus interest due and owing to the Fund by SocGen’ respectively. The amendment of paragraph 1.2 was made on the Official Liquidators' summons. To be consistent, I made exactly the same amendment to paragraph 1.1 of my own motion. I now give my reasons for amending the Order in this way.
It is not in dispute that the Court has jurisdiction to amend a perfected order which by accident or error does not reflect the actual decision of the judge. The Court has the power contained in GCR Order 20, rule 11 which provides that‘Clerical mistakes in judgments or orders, or errors arising therein from any accidental slip or omission, may at any time be corrected by the Court on motion or summons without an appeal’. In addition, the Court has a wider inherent jurisdiction to correct an order which, for whatever reason, does not accurately reflect the Court's intention. The argument turned upon the scope of these powers and their application in the particular circumstances of this case.
The language of GCR Order 20, rule 11 is derived from the Rules of the Supreme Court in England. It is reproduced from RSC Order 20, rule 11 (enacted in 1962) which was itself reproduced from RSC Order XXVIII, rule 11 (enacted in 1883). Whilst this legislative history enables us to have regard to the way in which the English courts have interpreted the equivalent rule, it must not be forgotten that the Grand Court Rules were first enacted in 1995 and must be interpreted in the light of the other applicable rules and circumstances prevailing in our jurisdiction today. The practice and procedure for drawing up...
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