Swiss Bank & Trust Corporation Ltd v Iorgulescu

• Jurisdiction: Cayman Islands
• Judge: (Zacca, P., Georges and Henry, JJ.A.)
• Judgment Date: 27 March 1991
• Court: Court of Appeal (Cayman Islands)
• Date: 27 March 1991

Court of Appeal

(Zacca, P., Georges and Henry, JJ.A.)

SWISS BANK AND TRUST CORPORATION LIMITED

and

IORGULESCU

R.D. Alberga, Q.C. and A.J.E. Foster for the appellants;

P. Lamontagne, Q.C. and R.L. Nelson for the respondents.

Cases cited:

(1) Clarapede & Co. v. Commercial Union Assn.(1883), 32 W.R. 262, dictum of Brett, M.R. applied.

(2) Guinness Mahon Cayman Trust Ltd. v. Washington Intl. Bank & Trust Ltd., 1986–87 CILR 447.

(3) Ingersoll-Rand v. Banco Portugues do Atlantico, 1988–89 CILR 189, dictum of Collett, C.J. applied.

(4) Ketteman v. Hansel Properties Ltd., [1987] A.C. 189; [1988] 1 All E.R. 38, dictum of Lord Griffiths applied.

(5) Lawrance v. Lord NorreysELR(1887), 39 Ch. D. 213; on appeal (1890), 15 App. Cas. 210; [1886–90] All E.R. Rep. 858, applied.

Civil Procedure-pleading-amendment-amendment of statement of claim allowed if no injustice to other party and claim not useless-no injustice if can compensate for prejudice-claim not useless if evidence can be adduced in support of it

The respondent brought an action in the Grand Court against the appellant bank alleging breach of contract and/or breach of duty of care.

In a statement of claim filed in 1984, the respondent claimed that in handling her investment portfolio over the period 1978–79 the appellant had breached a management agreement and/or its duty of care in giving advice as her investment adviser in relation to the portfolio. In an amended statement of claim in 1985, the respondent substituted for the alleged breach of duty of care a claim for breach of fiduciary duty and/or breach of trust with the respondent claiming that the appellant had improperly charged her certain commissions. The appellant admitted the receipt of a return commission on a sale of some of the respondent”s holdings but maintained that this was in keeping with usual practice.

Subsequently, a further amendment was made to the claim but it was not until the first day of the trial in 1990 that the respondent sought leave to add a new cause of action based on the allegation that this commission was a secret commission.

Leave to amend was granted by the Grand Court (Schofield, J.). The court weighed the reasons in favour of the amendment against the inconveniences it would cause and concluded that it was just to grant leave since, although counsel had been negligent in failing to raise the issue in 1986 when he first became aware of the facts, the application had still been made before trial, the proposed amendment had substantial issues for determination, and any evidentiary problems would be shared by both parties. The inconvenience to the appellant in incurring extra irrecoverable costs could be discounted since it was a business corporation which did not have the same concerns as a personal litigant. The proceedings are reported at 1990–91 CILR 163.

On appeal, the appellant submitted that the Grand Court had been wrong to grant leave to amend because (a) the proposed amendment involved a useless claim since the respondent”s present mental condition left her unable to give evidence and her lack of knowledge of the commission

could not be established without it; (b) the court had incorrectly acted upon the version of the history of the matter given by the respondent”s counsel when it should have taken affidavit evidence; and (c) the introduction of a new cause of action at this stage would be unjust to the appellant since (i) 13 years had elapsed from the time of the disputed transactions, one of its witnesses had died and the other two were overseas-and it would therefore be increasingly difficult to adduce reliable evidence; and (ii) the cost of bringing the witnesses from overseas would be irrecoverable.

The respondent submitted in reply that (a) the claim was not useless since the respondent”s lack of knowledge could be proved by the evidence of the former bank officials; and (b) the respondent would not be prejudiced by the amendment since (i) the evidentiary problems had not increased after 1986 when the facts upon which the claim was based were fully appreciated for the first time and the amendment would have been readily granted; and (ii) the appellant could be compensated for the cost of bringing its two witnesses to the Cayman Islands.

Held, dismissing the appeal and amending the order in part:

In principle the amendment had been correctly allowed. An amendment should always be permitted unless it caused injustice to the other party or constituted a useless claim because no evidence was available in support of it. The court was entitled to act upon counsel for the respondent”s version of the history of the matter since it was not imperative for there to be an affidavit in an application for leave to amend, although the court might request one. In the present case (a) the proposed claim was not useless since, although the respondent was unable to give evidence by reason of her present mental condition, evidence could be adduced from former bank officials in support of the claim that secret commissions had been charged; and (b) the appellant could be compensated for the cost of bringing its two remaining witnesses to the Cayman Islands and would suffer no further injustice since it was unlikely that the witnesses” recollections of the disputed transactions would have been any better in 1986 when the amendment would have been readily granted. Accordingly, the court would affirm the grant of leave to amend on condition that the respondent paid the costs of bringing the two witnesses to the Cayman Islands, the costs to be taxed if not agreed (page 154, lines 14–32;page 155, line 25 – page 156, line 27; page 156, lines 32–36;page 156, line 45 – page 157, line 23).

GEORGES, J.A., delivering the judgment of the court: This is an
10	appeal from an order of Schofield, J. dated October 3rd, 1990 in which he
granted leave to Mrs. Valentina Iorgulescu (the respondent) to re-amend
her statement of claim in her action against the Swiss Bank & Trust Corp.
Ltd. At the time of making the order the learned judge granted the bank
leave to appeal.
15	The action had taken some time to reach the stage at which it could be
set down for hearing on October 1st, 1990. The writ of summons had been
filed on January 7th, 1983 and appearance entered on January 21st, 1983.
The statement of claim was not filed until May 23rd, 1984.
In essence it alleged that in or about early 1977 the respondent had
20	transferred her investment portfolio worth approximately US$1.5m. to an
account with the bank. She had had prior consultation with officers of the
bank and had expressed her wish to convert her portfolio into investments
in Swiss francs as she was concerned that the US dollar, in which currency
the bulk of her holdings were denominated, was likely to fall in value.
25	After some discussions and the rejection of advice coming from the
New York affiliate of the group to which the bank belonged, the
respondent agreed to a recommendation that she should invest in
Universal Bond Selection (U.B.S.) units at a price of SFr87 per unit of
investment. The statement of claim alleged that she thought the holdings
30	of U.B.S.

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