Touche Ross & Company v Bank Intercontinental Ltd

• Jurisdiction: Cayman Islands
• Judge: (Hull, J.)
• Judgment Date: 06 November 1986
• Court: Grand Court (Cayman Islands)
• Date: 06 November 1986

Grand Court

(Hull, J.)

TOUCHE ROSS AND COMPANY

and

BANK INTERCONTINENTAL LIMITED

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

R. Henriques, Q. C. and M. Parkinson for the defendant.

Cases cited:

(1) Armour Intl. Co. v. Worldwide Cosmetics Inc.(1982), 689 F. 2d 134.

(2) British Airways Bd. v. Laker Airways Ltd., [1985] A.C. 58; [1984] 3 All E.R. 39.

(3) Midland Bank PLC v. Laker Airways Ltd., [1986] Q.B. 689; [1986] 1 All E.R. 526.

(4) Smith Kline & French Labs. Ltd. v. Bloch, [1983] 1 W.L.R. 730; [1983] 2 All E.R. 72, considered.

Conflict of Laws-jurisdiction-forum conveniens-US forum may be more appropriate and less expensive if disputes as to property and events in United States; no witnesses, documents or defendants in Cayman Islands; and substantial issue to be tried as to legal status of primary defendant admittedly carrying on business in United States

Conflict of Laws-parallel foreign proceedings-stay of foreign proceedings-if proceedings begun in forum conveniens abroad, Cayman court will not stay them if substantially advanced and prejudice caused to plaintiff if necessary to recommence proceedings in Cayman Islands

The plaintiff sought an injunction to restrain the defendant from continuing proceedings it had commenced in Florida and from making any other claims outside the Cayman Islands in respect of audit work carried out for it in the Islands.

A firm of accountants (Touche Ross & Co.) practising in the Cayman Islands and bearing the same name as the plaintiff (Touche Ross & Co.-a firm of accountants constituted under the laws of New York), carried out audit work in the Cayman Islands for the defendant bank, a company incorporated under Cayman law. The defendant commenced proceedings in the courts of Florida alleging professional negligence against a firm named as Touche Ross & Co., maintaining that it was a multinational partnership of accountants with offices in Florida, New York, the Cayman Islands and world-wide-and was in effect the same firm as the plaintiff and the allegedly separate firm practising in the Cayman Islands. Individuals alleged to be partners of this multinational firm, resident in Florida and various other parts of the world, were joined as defendants in the suit.

The plaintiff then brought the present proceedings seeking to restrain the defendants from continuing to prosecute the Florida suit submitting, inter alia, that (a) the audit work had been exclusively carried out by the Cayman firm of the same name, with which the plaintiff had no connection, pursuant to a contract between that firm and the defendant governed by Cayman law; (b) for these reasons the proper forum for the trial of the suit was the Cayman Islands, since it had no real connection with Florida and the defendant had alleged that Touche Ross & Co. was a single world-wide partnership (with partners resident in Florida) merely to bring the suit there; and (c) no proper juridical or personal advantage accrued to the defendant in Florida so as to justify the pro-

ceedings there in preference to proceedings in the Cayman Islands.

The Grand Court (Hull, J.) granted an initial ex parte injunction on the basis that the defendant”s allegations in the Florida proceedings appeared to be an attempt to cloak Touche Ross & Co. in a multinational mantle, though with residence in Florida, as a pretext for the commencement of proceedings there. The court gave the defendant leave to apply to discharge the injunction on notice, which application it subsequently made.

At the hearing of the application inter partes, the defendant submitted that (a) a choice of forum did not arise, for the courts of Florida were already seised of the case and on principle the Cayman court should not restrain those proceedings unless it could be shown that they had been brought unconscionably; (b) the burden of establishing unconscionability lay on the defendant and it had discharged this burden, since the evidence established that Touche Ross & Co. held itself out as a worldwide firm, on its own case it carried on a business in the United States, and it could not therefore be unconscionable to sue it in a State of that country; and (c) the first issue to be resolved in the Florida court (that court having refused a preliminary motion to dismiss the action) being that of the separate identities of the various parties called ‘Touche Ross & Co.’ was properly one for the Florida court and not for the Cayman court. In addition, several other matters in dispute concerned property and events in the United States.

The plaintiff submitted in reply that (a) there was a choice of forum in the present case and an analysis of the relevant factors showed that the Cayman Islands were the more appropriate forum-the defendant was a Cayman bank, Cayman law was applicable to the relevant transactions, it would involve considerably less expense and inconvenience to determine the issues in the Cayman Islands, especially as the witnesses and documents were located there; the defendant”s remedies were certainly justiciable in the Islands and the plaintiff was both amenable to the jurisdiction of the Cayman courts and would accept it; (b) the defendant had named individual Touche Ross partners in the Florida suit merely to establish jurisdiction in Florida but the suit patently had so little connection with Florida that it would be proper to bar the defendant from continuing it; and (c) even if there were juridical advantage and personal convenience in bringing the suit in Florida, which had not been argued, the public interest required it to be tried in the place which was undoubtedly the natural forum, namely the Cayman Islands.

Held, discharging the injunction:

(1) The proceedings had revealed that a genuine choice of forum was open to the defendant. On the one hand, the plaintiff”s uncontradicted evidence established that an audit had been carried out in the Cayman Islands in respect of the books of a Cayman bank, a transaction undoubtedly of interest to the Cayman authorities and governed by Cayman law. There were thus issues which were justiciable in the Cayman courts whatever the true status of the present plaintiff. On the other hand, the defendant in the Florida proceedings was alleged to be a

multinational entity with a base in the United States, no averments had been made there against Cayman defendants, there were disputes as to property and events in the United States in respect of which no witnesses or documents were required from the Cayman Islands, and the plaintiff in the present Cayman proceedings had not asserted that there was no substantive cause of action to be tried in Florida (page 168, lines 15–18; page 173, line 9 – page 174, line 9).

(2) Moreover, the defendant”s allegations in the Florida proceedings as to the multinational nature of the plaintiff, were not merely a pretext to bring the suit within the jurisdiction of the Florida courts. There was a genuine issue to be tried as to whether Touche Ross & Co. was a multinational entity or a US domestic body with associates carrying on business abroad-and this was an issue best suited for trial in the United States. It had not therefore been established that the suit could be more conveniently and less expensively resolved in the Cayman Islands than in Florida (page 170, lines 16–33; page 171, lines 14–30; page 172, line 9 – page 173, line 8).

(3) Although the defendant had not claimed any personal or juridical advantage would be obtained by continuing the Florida proceedings, it had maintained that it would be prejudiced if it now had to recommence the proceedings in the Cayman Islands. The proceedings in Florida were already considerably advanced-to the extent that the Florida court had refused to strike them out when it had been maintained that the proceedings had been brought against the wrong party (a ruling which had not been appealed) and pre-trial discovery had commenced. It therefore appeared that the present plaintiff was attempting to prevent the determination in Florida of issues which might properly be left to be decided there, and the injunction restraining the defendant from continuing the Florida proceedings would in consequence be discharged (page 168, lines 4–21; page 174, lines 10–29).

40	HULL, J.: On July 18th, on the ex parte application of the
plaintiff in this action, Touche Ross & Co., described as being a

firm constituted in the State of New York (whom I will call ‘the
plaintiff in Cayman’ in the context of its role as such), I granted
an injunction restraining the defendant (‘the bank’) from prose-
cuting legal proceedings commenced by it in the State of Florida
5	against ‘the plaintiff and certain partners and employees
thereof’ and further from making any claims outside the Cayman
Islands in respect of any professional auditing of the defendant”s
accounts for the years 1980 to 1983.
That injunction was to remain in force until August 1st, or until
10	further order in the meantime and the defendant was in any event
at liberty to apply to discharge it on two days” notice. The bank so
applied. After hearing the inter partes summons on August 1st, I
discharged the injunction. My reasons were as follows:
The proceedings in Florida of which the plaintiff in Cayman
15	complains had been brought by the bank in July 1985, against a
defendant who was at first described as-
‘Touche Ross & Co. . . . a world-wide partnership of cer-
tified public accountants and chartered accountants with
offices and resident partners in Miami, Dade County, Flor-
20	ida, as well as in various other cities and States located in the
United States of America and other sovereign nations.’
The original complaint was subsequently amended. The
revised pleading (‘the first amended compiaint’) specified
several defendants. Of these

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