Touche Ross & Company v Bank Intercontinental Ltd

• Jurisdiction: Cayman Islands
• Judge: (Zacca, P., Georges and Kerr, JJ.A.)
• Judgment Date: 09 March 1987
• Court: Court of Appeal (Cayman Islands)
• Date: 09 March 1987

Court of Appeal

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

TOUCHE ROSS AND COMPANY

and

BANK INTERCONTINENTAL LIMITED

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

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

Cases cited:

(1) British Airways Bd. v. Laker Airways Ltd., [1985] A.C. 58; [1984] 3 All E.R. 39, dicta of Lord Diplock applied.

(2) Castanho v. Brown & Root (U.K.) Ltd.WLRUNK, [1980] 1 W.L.R. 833; [1980] 3 All E.R. 72; on appeal, sub nom. Brown & Root (U.K.) Ltd. v. Castanho, [1981] A.C. 557; [1981] 1 All E.R. 143, dictum of Lord Scarman applied.

(3) Ellerman Lines Ltd. v. Read, [1928] 2 K.B. 144; [1928] All E.R. Rep. 415.

(4) Ladd v. Marshall, [1954] 1 W.L.R. 1489; [1954] 3 All E.R. 745.

(5) MacShannon v. Rockware Glass Ltd.WLRUNK, [1977] 1 W.L.R. 376; [1977] 2 All E.R. 449; on appeal, sub nom. Rockware Glass Ltd. v. MacShannon, [1978] A.C. 795; [1978] 1 All E.R. 625, dicta of Lord Diplock applied.

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

(7) Ratnam v. Cumarasamy, [1965] 1 W.L.R. 8; [1964] 3 All E.R. 933.

(8) Smith Kline & French Labs. Ltd. v.Bioch, [1983] 1 W.L.R. 730; [1983] 2 All E.R. 72, dicta of O”Connor, L.J. applied.

Legislation construed:

Court of Appeal Rules, 1962 (Jamaica, 1962 No. 278), r.18(2):

‘The Court shall have full discretionary power to receive further evidence upon questions of fact, either by oral examination in Court, by affidavit, or by deposition taken before an examiner or commissioner. . . . ’

Civil Procedure-appeals-fresh evidence-application to adduce fresh evidence on appeal refused in exercise of discretion under Jamaica Court of Appeal Rules, 1962, r.18(2) if merely expansive of evidence already on record and ample opportunity to adduce it in courts below

Conflict of Laws-jurisdiction-forum conveniens-where multiple claims triable both in Cayman Islands and abroad and one claim triable only in foreign jurisdiction, plaintiff still faced with genuine choice of forum-suit in Cayman Islands would not totally deprive plaintiff of remedy, though may lose juridical advantage in foreign jurisdiction

Conflict of Laws-jurisdiction-forum conveniens-Cayman Islands natural and appropriate forum for suit based on alleged breach in Cayman Islands of contract between firms incorporated and practising there, with all relevant documents there and damage occurring there

Conflict of Laws-parallel foreign proceedings-stay of foreign proceedings-applicant for stay to show parties amenable to Cayman jurisdiction and justice can be done in Cayman Islands at substantially less inconvenience and expense than abroad-stay not granted if plaintiff in foreign proceedings establishes would deprive him of real personal or juridical advantage-not established if mere unsubstantiated assertion of claim of juridical advantage, or if speculative rather than certain-that foreign proceedings far advanced not necessarily significant

The appellant firm sought an injunction restraining the respondent bank from continuing proceedings it had begun abroad and from making any other claims outside the Cayman Islands in respect of audit work carried out for it in the Cayman Islands.

A firm of accountants (Touche Ross & Co.) practising in the Cayman Islands and bearing the same name as the appellant (Touche Ross & Co.-a firm of accountants constituted under the laws of New York), carried out audit work in the Cayman Islands for the respondent bank, which was incorporated under Cayman law. When the respondent subsequently sustained heavy losses, its banking licence was suspended, whereupon it commenced proceedings in the Florida courts against a firm named as Touche Ross & Co., maintaining that it was a multi-

national partnership of accountants with offices in Florida, New York, the Cayman Islands and world-wide-and was in effect the same firm as the appellant 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. The suit alleged breach of contract, negligence, breach of fiduciary duty and fraud in the carrying out of the audit work and the making of representations based on it.

At a later stage, the respondent sought to add a further claim under the Florida RICO Act (Racketeer Influenced and Corrupt Organisations Act), which imposed civil liability for certain criminal acts of a deceptive nature. It was alleged that the defendant to the Florida suit had been guilty of such acts in its relations with the respondent in the Cayman Islands and compensatory damages, punitive damages, interest, costs and fees were sought in excess of US $20m.

The appellant then brought the present proceedings seeking a declaration that it, its partners, employees and agents had no liability to the respondent arising out of the audit or other services and an injunction to restrain the respondent from continuing the Florida proceedings or from making any further claims outside the Cayman Islands in respect of the audit. The Grand Court (Hull, J.) initially granted an ex parte injunction on the basis that the respondent”s allegations in the Florida proceedings appeared to be an attempt to portray Touche Ross & Co. as a multinational firm, with residence in Florida, as a pretext for the commencement of proceedings there. The court gave the respondent leave to apply to discharge the injunction on notice, which application it subsequently made.

At the inter partes hearing, the Grand Court (Hull, J.) discharged the injunction, holding that even though the case could conveniently be resolved in the Cayman Islands, there had been no assertion that there was no substantive cause of action to be tried in Florida; the claim that Touche Ross & Co. was a multinational firm with residence in Florida was not a mere pretext to found jurisdiction but a genuine issue, best suited for trial in the United States; and in any case, the Florida proceedings were sufficiently far advanced so that the respondent would be prejudiced if it had to recommence proceedings in the Cayman Islands. The ruling of the Grand Court is reported at 1986–87 CILR 156.

The appellant appealed against the ruling; its application to have the injunction restored pending the hearing of the appeal was refused by the Grand Court (Hull, J.) but granted on further application to a single Judge of Appeal (Zacca, P.).

At the hearing of the appeal, the appellant submitted that (a) the facts disclosed a choice of forum situation for the respondent since four issues were triable in either Florida or the Cayman Islands and only one (the RICO claim) was triable only in Florida; (b) the more natural and appropriate forum was the Cayman Islands since the proper parties were respectively incorporated and practising there, the work in question had been carried out there, the work-papers were there, and the Florida suit did not involve any action against the Cayman residents who

had carried out the work; (c) the learned trial judge had erred in treating as central to the case the question whether the respondent”s claim that the appellant was a multinational partnership and whether or not the claim had been advanced in good faith, for that claim was justiciable in any place where the alleged multinational firm resided, and in any case was not determinative of the appellant”s liability; (d) the crucial question, to which the learned judge had not properly addressed himself, was whether the respondent had discharged the onus of showing that it would lose a real personal or juridical advantage if the Florida proceedings were stayed, sufficient to justify diverting the case from its natural forum; (e) the respondent had failed to discharge this onus on the basis of the RICO claim, since the conflict of laws principles applicable in Florida would prevent that claim arising, as they dictated that the transaction was governed by Cayman law, and in any event the mere unsubstantiated assertion of the existence of the claim was insufficient to establish that it was viable; (f) no case could be made for adducing additional evidence to give greater weight to the benefits of the RICO claim, since no reliance had been placed on the affidavit evidence concerning it in the Grand Court, additional affidavits had already been submitted in the proceedings pending appeal, and it was now too late to allow the elaboration of the issue by further evidence; and (g) no other personal or juridical advantage could be demonstrated which the respondent would lose if compelled to stay the Florida proceedings.

In reply, the respondent submitted that (a) this was a single forum case-and that forum was Florida-because if the appellant”s contention were correct and it was a separate entity from the Cayman firm of the same name, the case was not logically connected with the Cayman Islands; and if the RICO claim were isolated from the other claims in the case, it could only be tried in Florida and was not justiciable in the Cayman Islands; (b) further evidence should therefore be admitted to expand the earlier affidavit evidence on the RICO claim, there being no rigid control over the admissibility of fresh evidence on an interlocutory application, and the court being in any event able to exercise its discretion under the Jamaica Court of Appeal Rules, 1962, r.18 to allow it to be adduced; (c) if the case were a choice of forum case, the respondent would be denied a real and substantial juridical advantage, as it would not be able to pursue the RICO claim in the Cayman Islands, and this justified allowing the continuation of the Florida proceedings; (d) there were additional juridical advantages in Florida, namely the availability of jury trial and of the possibility of a punitive damages award, which were not available in the Cayman Islands; (e) it also followed that the...