TMSF v Merrill Lynch

• Jurisdiction: Cayman Islands
• Judge: (Chadwick, P., Forte and Mottley, JJ.A.)
• Judgment Date: 30 November 2009
• Date: 30 November 2009
• Court: Court of Appeal (Cayman Islands)

Court of Appeal

(Chadwick, P., Forte and Mottley, JJ.A.)

TASARRUF MEVDUATI SIGORTA FONU

and

MERRILL LYNCH BANK AND TRUST COMPANY (CAYMAN) LIMITED and FIVE OTHERS

The appellant, as a judgment creditor of the sixth respondent, sought the appointment by the Grand Court of receivers by way of equitable execution over his power to revoke two Cayman trusts.

The appellant had obtained judgment in the Grand Court to recover a judgment debt obtained against the sixth respondent in Turkey, who was now bankrupt. It sought the appointment of receivers by way of equitable execution over the sixth respondent”s power of revocation over two Cayman trusts, to enable its assets to be applied in satisfaction of the judgment.

The Grand Court (Smellie, C.J., in proceedings reported at 2009 CILR 324) and the Court of Appeal (Chadwick, P., Mottley and Vos, JJ.A., in proceedings reported at 2009 CILR 474) dismissed the application since the court had no jurisdiction to appoint receivers in these circumstances. The Court of Appeal also indicated that it would be likely to reject any

Trusts-receivers-appointment-if jurisdiction exists, court may exercise discretion in favour of single judgment creditor to appoint receivers over foreign bankrupt”s power to revoke trust-creditor to undertake to pay over assets recovered for benefit of all creditors and secure support of foreign bankruptcy administration-leave to appeal against denial of jurisdiction may be conditionally granted if matter of general importance and not merely of academic interest

Courts-Judicial Committee of Privy Council-leave to appeal-conditional leave to appeal-may order giving of security and preparation and dispatch of record to Registrar within reduced period of 56 days-old requirements outdated given ease of modern communications and reduction may be necessary if uncertainty of ongoing proceedings

Courts-Judicial Committee of Privy Council-leave to appeal-finalization of leave to appeal-not necessary for oral hearing by Court of Appeal to make order for leave final-may be decided on paper application, with affidavit verifying compliance, made after completion of conditions-respondent may request oral hearing

application for special leave to appeal to the Privy Council, pursuant to s.3(2)(a) of the Cayman Islands (Appeals to Privy Council) Order 1984. Even though it was satisfied that the point was of great general or public interest, it was likely that leave to appeal would be rejected since it would be a matter of purely academic interest given that, if the sixth respondent were indeed bankrupt, it was inconceivable that the jurisdiction would have been exercised had it been available in favour of a single creditor.

The appellant formally sought leave to appeal to the Privy Council. In addition to the usual conditions to the provisions of security and the filing of the record, the application was supported by an undertaking on behalf of the appellant to pay over all sums received from the appointment of receivers (after deduction of all costs incurred) to the sixth respondent”s Turkish bankruptcy administration committee for the benefit of all of his creditors. An affidavit was also filed on behalf of the bankruptcy administration committee supporting the appellant”s actions in these proceedings and outlining its intention not to pursue proceedings in the Cayman Islands.

Held, granting conditional leave to appeal to the Privy Council:

(1) Given the support of the Turkish bankruptcy committee and the appellant”s undertaking that all assets recovered would be paid over to the committee for the benefit of all the sixth respondent”s creditors, it was not inconceivable that the court would exercise a discretion, if such a power were found to exist on appeal, to appoint receivers by way of equitable execution over a bankrupt”s power of revocation in favour of a single judgment creditor. Since an appeal on the jurisdiction issue would not therefore be purely academic and it was not disputed that this was a matter of great general or public importance, leave to appeal to the Privy Council would be conditionally granted (paras. 15–22).

(2) The time periods for compliance with the conditions for the granting of leave would also be reduced because the uncertainty generated by the ongoing proceedings was affecting the proper administration of the trusts and the ability to deal with the costs incurred, and improvements in communications meant that the existing statutory time-limits for completing the procedure were unnecessarily long. Security should be provided within 56 days (instead of 90 days, especially given that it was only to the sum of CI$750) and preparation and dispatch of the record to the Registrar of the Privy Council should also be completed within 56 days (instead of 120 days) (paras. 23–24).

(3) It would also not be necessary to wait to the next sitting of the Court of...