Safeguard Management Corporation (as Trustee of The Timis Trust)

• Jurisdiction: Cayman Islands
• Judge: (Parker, J.)
• Judgment Date: 06 July 2017
• Court: Grand Court (Cayman Islands)
• Date: 06 July 2017

Grand Court, Financial Services Division

(Parker, J.)

IN THE MATTER OF SAFEGUARD MANAGEMENT CORPORATION (as trustee of the TIMIS TRUST)

P. Murphy and U. Payne for the plaintiff;

R. Gallagher and M. Kish for Gerald Metals S.A.;

P. Tyers-Smith and P. Mitchell for the trustees of the XYZ Trust.

Cases cited:

(1) Ansbacher (Cayman) Ltd., In re, 2001 CILR 269, referred to.

(2) Cayman Secs. Clearing & Trading Ltd. SEZC, In re, Grand Ct., October 14th, 2014, unreported, dicta of Williams, J. considered.

(3) Codelco, In re, 1999 CILR 42, applied.

(4) H, In re, 1996 CILR 237, considered.

(5) Norwich Pharmacal Co. v. Customs & Excise Commrs., [1974] A.C. 133; [1973] 3 W.L.R. 164; [1973] 2 All E.R. 943; [1973] FSR 365; [1974] R.P.C. 101, referred to.

(6) Polymer Purpose Trust, In re, Grand Ct., July 19th, 2011, unreported, referred to.

Legislation construed:

Confidential Information Disclosure Law 2016, s.4: The relevant terms of this section are set out at para. 7.

Confidential Relationships — application to court for directions — compliance with order for discovery — on application under Confidential Information Disclosure Law 2016, s.4 court to weigh competing interests and decide in exercise of discretion whether and how to direct disclosure having regard to administration of justice — to consider if information can be obtained by alternative means — identity of trustee not disclosed if not required by terms of disclosure order

The plaintiff applied for directions under s.4 of the Confidential Information Disclosure Law 2016.

A company, Gerald Metals S.A., brought an arbitration claim against the plaintiff, described as a simple debt claim, pursuant to a guarantee whereby the plaintiff, as trustee of the Timis Trust, agreed to guarantee the obligations of Timis Mining Corp. (SL) Ltd. arising under a framework purchase and advance payment contract. The plaintiff denied liability on the basis of discharge by release or estoppel.

In or around August 2015, the plaintiff authorized the transfer of the Timis Trust’s interest in two offshore blocks in Senegal to UVW as trustee of the XYZ Trust.

An arbitral tribunal constituted under the arbitration rules of the London Court of International Arbitration ordered the disclosure by the plaintiff of documents evidencing (i) the terms of and/or giving effect to the direct or indirect transfer of the Timis Trust’s interest in two offshore blocks in Senegal to UVW as trustee of the XYZ Trust, including any contract for the transfer; and (ii) the receipt by the Timis Trust of any consideration for that transfer, including any bank statements. The plaintiff applied for directions pursuant to the Confidential Information Disclosure Law 2016, s.4 as to whether it should disclose the confidential information and, if so, whether there should be any conditions attached.

The parties agreed that the plaintiff held confidential information comprising a deed of appointment, a deed of indemnity, bank statements and minutes of meetings.

Gerald Metals S.A. submitted that the documents ordered to be disclosed by the LCIA tribunal should be disclosed without any redaction and that the identity of the trustee of the XYZ trust, UVW, was an essential aspect of the disclosure to allow the tribunal to assess the terms of an alleged concealed related party transfer and its propriety. If the transfer was a non-related party transfer for market consideration and not an attempt to dissipate assets to avoid potential enforcement, disclosure should have been immediately forthcoming.

UVW accepted that in principle disclosure could be directed by the court as ordered by the tribunal but it should be tightly controlled and should not reveal its identity. The tribunal’s disclosure order did not require the disclosure of its identity, alternatively, the court should exercise its discretion to refuse the disclosure of identification evidence. A stranger to a trust should not be permitted to obtain pre-action disclosure in the context of the exercise of a supervisory jurisdiction such as under the Confidential Information Disclosure Law 2016.

The plaintiff adopted UVW’s submissions. In addition, it submitted that a number of serious allegations and accusations made in an affidavit by a partner in the firm that represented Gerald Metals were strenuously denied and, in any event, irrelevant to the present application.

Held, ruling as follows:

The plaintiff would be ordered to disclose the documents pursuant to the Confidential Information Disclosure Law 2016, s.4, as requested and ordered by the tribunal, but the identity of UVW would not be disclosed. When determining whether to direct a person to disclose confidential information, the court must weigh the competing interests and decide, in the exercise of its discretion, whether, and if so how, to direct disclosure having regard to the administration of justice in the proceedings to which the application related. Section 4 of the Law was intended to be a gateway for the disclosure of confidential information in recognition of the public interest in the due administration of justice, not to meet the discovery obligations of parties in litigation. Having regard to the administration of justice in proceedings to which an application related included considering whether the information could be obtained through alternative means. In the present case, evidence as to the identity of UVW was not required by the terms of the tribunal’s disclosure order. The terms of Gerald Metal’s request for disclosure were confined to documents for the relevant period evidencing “the terms of and/or giving effect to” the relevant transfer. “Terms of” did not include the identity of the transferee and the court could not see how that identity could be relevant to the issue. Having balanced the competing interests carefully, the identification information concerning UVW was not necessary for the prosecution of Gerald Metals’ claim in the LCIA arbitration. Even if the court were wrong, and the disclosure order did require disclosure of the identity of UVW, then as a matter of discretion the court would direct that disclosure be made subject to the condition that all facts which might reveal the...