United States v Carver

• Jurisdiction: Cayman Islands
• Judge: (Kerr, Ag. P., Rowe and White, JJ.A.)
• Judgment Date: 02 December 1982
• Court: Court of Appeal (Cayman Islands)
• Date: 02 December 1982

Court of Appeal

(Kerr, Ag. P., Rowe and White, JJ.A.)

UNITED STATES

and

CARVER and FOUR OTHERS

N. Hill, Q.C. and S. McField for the appellant;

R.D. Alberga, Q.C. and J. Martin, Senior Crown Counsel for the Attorney General of the Cayman Islands.

Cases cited:

(1) Arnott v. HayesELR(1887), 36 Ch. D. 731, followed.

(2) Emmott v. StarNewsp. Co.UNK(1893), 62 L.J.Q.B. 77, considered.

(3) Rio Tinto Zinc Corp. v. Westinghouse Elec. Corp., [1977] 3 All E.R. 703; on appeal, [1978] A.C. 547; [1978] 1 All E.R. 434, applied.

(4) South Staffs. Tramways Co. v. Ebbsmith, [1895] 2 Q.B. 669, dictum of Lord Esher, M.R. applied.

(5) Tournier v. National Provncl. & Union Bank of England, [1924] 1 K.B. 461; [1923] All E.R. Rep. 550.

(6) U.S. v. General Elec. Co., District of York County Court, November 19th, 1980, unreported.

(7) Waterhouse v. Barker, [1924] 2 K.B. 759; [1924] All E.R. Rep. 777, dictum of Scrutton, L.J. applied.

Legislation construed:

Confidential Relationships (Preservation) Law (Law 16 of 1976), s.3A, as added by the Confidential Relationships (Preservation) (Amendment) Law, 1979 (Law 26 of 1979), s.4: The relevant terms of this section are set out at page 312, lines 18–24; page 316, line 35 – page 317, line 4.

Evidence Law, 1978 (Law 13 of 1978), s.7: The relevant terms of this section are set out at page 311, line 32 – page 312, line 5.

s.8: ‘Subject to the provisions of the Banks and Trust Companies Regulation Law (Revised) and the Confidential Relationships (Preservation) Law on the application of any party to a legal proceeding a court may order that such party be at liberty to inspect and take copies of any matter in a banker”s book for the purpose of such proceeding, and an order under this section may be made with or without summoning the bank or any other party, and shall be served on the bank three clear working days before the same is to be obeyed unless the court otherwise directs.’

Evidence (Proceedings in Other Jurisdictions) (Cayman Islands) Order 1978 (S.I. 1978/1890), Schedule, s.2: The relevant terms of this section are set out at page 302, line 18 – page 303, line 12.

s.5: The relevant terms of this section are set out at page 303, lines 22–24.

Rules of the Supreme Court (England), O.70, r.2:

‘Subject to rule 3 an application for an order under the Act of 1975 must be made ex parte and must be supported by affidavit.’

Evidence-assistance to foreign court-examination of documents and witnesses-under Evidence (Proceedings in Other Jurisdictions) (Cayman Islands) Order 1978, court given general power to make orders for access to documents and witnesses-powers of court in relation to confidential information subject to local legislation, i.e. Evidence Law, 1978, ss. 7–8 and Confidential Relationships (Preservation) Law, s.3A

Evidence-assistance to foreign court-examination of documents and witnesses-if foreign request seeks access to documents and witnesses from bank not party to foreign proceedings, court may order it under Evidence Law, 1978, s.7 only for special cause-special cause established if all other means of obtaining information exhausted and court is last resort

Evidence-banker”s books-production of banker”s books-request for production of ‘all correspondence, ledgers, day books and account books’ used by bank recording particular transactions within definition of ‘particular documents’ in Evidence (Proceedings in Other Jurisdictions) (Cayman Islands) Order 1978, Schedule, s.2(4)(b)-such request not of fishing nature although court may sever offending words

Evidence-banker”s books-inspection of banker”s books-request for court order under Evidence (Proceedings in Other Jurisdictions) (Cayman Islands) Order 1978, Schedule, s.2(1) to inspect banker”s books appropriate even if not made in original letter of request but later by amended summons-order for inspection merely facilitative of order for discovery and no additional right of discovery given

Confidential Relationships-application to court for directions-foreign application for judicial assistance-parties ordered under Evidence (Proceedings in Other Jurisdictions) (Cayman Islands) Order 1978 to produce banker”s books and appear as witnesses must then apply to Grand Court for directions under Confidential Relationships (Preservation) Law, s.3A

Evidence-assistance to foreign court-videotaping of evidence-court should assist foreign court by authorising videotaping of evidence if requested-videotaping challengeable by witness if threat to life or liberty-court can rule upon substantive objections

The US District Court for the District of Columbia applied by letter of request to the Grand Court for judicial assistance in obtaining evi-

dence material to proceedings pending in that court against five persons charged with offences involving fraud.

Two of the accused in the US proceedings were directors of Cayman companies and it was believed that they had paid the proceeds of the alleged fraud into their companies” bank accounts in the Islands. Officials of the two Cayman banks concerned refused to testify in the proceedings in the United States or to produce copies of the banks” records in respect of the companies” accounts and all governmental attempts to secure their compliance failed.

As a last resort, the US court made the present application to the Grand Court for orders pursuant to the Evidence (Proceedings in Other Jurisdictions) (Cayman Islands) Order 1978 and the Confidential Relationships (Preservation) Law, as amended, to permit the examination of two named bank officials and to cause both banks to produce ‘all correspondence, ledgers, day books, account books and all other books, documents and papers’ relating to the accounts held by the two companies, ‘including all records’ relating to the receipt of certain sums of money credited to those accounts. It also requested that the examination of the witnesses be videotaped. Subsequently, by way of amended summons during the proceedings, a further request was made for an order permitting the inspection of these documents by an authorised person. The Grand Court (Summerfield, C.J.) refused to grant any of the orders requested.

On appeal, the appellants submitted that the court had erred in law in denying the requests because (a) the Evidence (Proceedings in Other Jurisdictions) (Cayman Islands) Order 1978, s.2 gave a wide and unequivocal power to the court to make such orders upon an application for judicial assistance from a foreign court, notwithstanding any domestic statutes to the contrary; (b) even if local legislation applied, s.7 of the Evidence Law, 1978 gave the court power, for special cause, to make the orders requested even though neither the banks nor their officials had been made parties to the action and, given that the court was the last resort (all other efforts having failed) through which access could be gained to the documentation, this was a circumstance sufficient to establish special cause; (c) the Confidential Relationships (Preservation) Law, as amended, ought not to be interpreted as establishing a public policy that would allow the laundering of the proceeds of crime in the Cayman Islands, secure from detection and punishment, and so should not in this case be construed narrowly so as to prevent disclosure; (d) where the request referred to ‘all other books, documents and papers . . . including all records’ relating to the particular accounts, it was clear that the specific intention was to examine only those sources which recorded the particular transactions on the particular dates and in the specified forms mentioned; and even if these terms might invalidate the request by being too vague or of a fishing nature, this was an appropriate case for severing and deleting the offending words; and (e) other Commonwealth courts had permitted the videotaping of evidence and although this was not the practice of the Cayman courts, the court should exercise its discretion to allow videotaping of the proceedings

since it was central to the request, as the evidence obtained would otherwise be useless in the US court.

The respondent submitted in reply that the application should not succeed because (a) the request for judicial assistance was unacceptable in that it called for the examination of classes of documents, using terms so wide as to amount to a fishing expedition through the entire accounts of the two companies involved, whereas s.2(4)(b) of the Evidence (Proceedings in Other Jurisdictions) (Cayman Islands) Order 1978 limited the jurisdiction of the court to ordering the production of particular documents only; (b) the court”s power to narrow the scope of the request was confined to circumstances in which the offending words were severable and did not extend to adding to, altering or rewriting the request; as such it was not possible, without offending the statute, to transform classes of documents into particular documents; and (c) in any event, the request for inspection of the banks” documents did not form part of the original letter of request but had been introduced after the proceedings had started and could not therefore be considered by the court.

Held, allowing the appeal:

(1) Although the Evidence (Proceedings in Other Jurisdictions) (Cayman Islands) Order 1978 generally provided for the court to make orders for the examination of witnesses and the production of documents, such as those specifically requested in the present proceedings, its jurisdiction and powers were subject to the relevant local legislation, i.e. the Evidence Law, 1978, ss. 7 and 8 and the Confidential Relationships (Preservation) Law, s.3A. In response to the request for judicial assistance by the US court, these Laws would have to be considered when making any orders under the 1978 Order (page 311, line 24 – page 312, line 15).

(2) Because neither the banks nor their officers were parties to the...