A v B Bank Ltd

• Jurisdiction: Cayman Islands
• Judge: (Smellie, J.)
• Judgment Date: 04 March 1997
• Court: Grand Court (Cayman Islands)
• Date: 04 March 1997

Grand Court

(Smellie, J.)

A.

and

B. BANK LIMITED and D.

W.J. Helfrecht for the plaintiff;

N.R.F.C. Timms for the first defendant;

H. St.J. Moses and Miss M. Jafa for the second defendant.

Cases cited:

(1) -Att. Gen. (Duchy of Lancaster) v. London & N.W. Ry. Co., [1892] 3 Ch. 278, applied.

(2) -Caines, In re, Knapman v. Servian, [1978] 1 W.L.R. 540; [1978] 2 All E.R. 1, applied.

(3) -Deadman, In re, Smith v. Garland, [1971] 1 W.L.R. 426; [1971] 2 All E.R. 101.

Legislation construed:

Grand Court Rules, 1995, O.2, r.1(3): The relevant terms of this paragraph are set out at page 50, lines 16–19.

O.18, r.19:

‘(1) The Court may at any stage of the proceedings order to be struck out or amended any pleading or the indorsement of any writ

in the action, or anything in any pleading or in the indor sement, on the ground that-

(a) -it discloses no reasonable cause of action or defence, as the case may be . . .

and may order the action to be stayed or dismissed or judgment to be entered accordingly, as the case may be.

(2) No evidence shall be admissible on an application under subparagraph (1)(a).

(3) This rule shall, so far as applicable, apply to an originating summons and a petition as if the summons or petition, as the case may be, were a pleading.’

O.28, r.1A: The relevant terms of this rule are set out at page 48, lines 13–26.

r.4(5): ‘The Court may at any stage of the proceedings order that any affidavit, or any particulars of any claim, defence or other matter stated in any affidavit, shall stand as pleadings or that points of claim, defence or reply be delivered and stand as pleadings.’

r.8(1): ‘Where, in the case of a cause or matter begun by originating summons, it appears to the Court at any stage of the proceedings that the proceedings should for any reason be continued as if the cause or matter had been begun by writ, it may order the proceedings to continue as if the cause or matter had so begun and may, in particular, order that any affidavits shall stand as pleadings. . . .’

O.41, r.5(1): ‘. . . [A]n affidavit may contain only such facts as the deponent is able of his own knowledge to prove.’

Civil Procedure-originating summons-striking out-affidavit evidence supporting originating summons may be admissible to contest application under Grand Court Rules, O.18, r.19(1) to strike out as disclosing no reasonable cause of action-subsequently filed affidavits inadmissible

Civil Procedure-affidavits-contents-hearsay-affidavit containing hear--say supporting originating summons not valid part of pleadings-undisputed evidence in it may be admissible to contest application under Grand Court Rules, O.18, r.19(1) to strike out summons if already relied on in proceedings

Civil Procedure-affidavits-identity of deponent-affidavit to be sworn by person with knowledge of contents-inadmissible as hearsay under Grand Court Rules, O.41, r.5(1) if sworn by attorney based on client”s instructions

Civil Procedure-originating summons-appropriateness of procedure-no order under Grand Court Rules, O.28, r.8 to continue proceedings as if commenced by writ if plaintiff”s case properly pleaded by delivery of points of claim under O.28, r.4(5)

The plaintiff beneficiary of a trust applied for an order that the administration of a trust by the first defendant as trustee be suspended pending determination of the question of the second defendant”s mental capacity as settlor.

The plaintiff”s summons was accompanied by an affidavit prepared and sworn by her attorney according to his client”s instructions, which contained allegations of undue influence and fraud on the part of the settlor”s wife, his legal adviser and the trust protector, in relation to certain amendments to the trust deed.

The first defendant acknowledged service of the summons and supporting affidavit within two weeks, and the second defendant some 12 weeks later. Seven weeks after that the plaintiff filed a further affidavit, sworn by another person, without seeking the court”s leave to do so.

The second defendant applied to the court to strike out the plaintiff”s originating summons under O.18, r.19(1)(a) of the Grand Court Rules on the ground that it disclosed no reasonable cause of action, or alternatively to order that the proceedings continue as if commenced by writ. The first

defendant sought an order that it be permitted to continue to administer the trust notwithstanding the plaintiff”s summons.

He submitted that (a) the originating summons was supported entirely by inadmissible evidence since (i) the affidavit filed with the summons, having been sworn by the plaintiff”s attorney rather than the plaintiff herself, contained mainly hearsay evidence and was therefore in breach of O.41, r.5(1) of the Grand Court Rules and (ii) the affidavit filed later was in breach of O.28, r.1A, as it had not been filed within 14 days of receipt of the first acknowledgement of service and served on each defendant within 14 days of his own acknowledgement; (b) neither affidavit could be adduced as evidence in response to his application for the summons to be struck out, since O.18, r.19(2) stated that no evidence was admissible on such an application; and (c) if the plaintiff”s summons were not struck out, the court should exercise its discretion under O.28, r.8 to order that the proceedings continue as if commenced by writ, with the attendant consequences as to costs, in view of the contentious nature of the case.

The first defendant trustee submitted that (a) it should be allowed to continue to administer the trust in accordance with the amendments made to the trust deed which enabled it to distribute capital with the consent of the trust protector, until such time as the issue of the second defendant”s mental capacity was determined; and (b) in particular, since the plaintiff could not rely on the hearsay evidence contained in her attorney”s affidavit to challenge the integrity of the second defendant”s legal adviser and the trust protector, there was no reason why their outstanding fees should not be paid, if necessary out of trust capital.

The plaintiff submitted in reply that (a) although the later affidavit was inadmissible in support of her originating summons, the defect in the affidavit evidence filed with the summons could be cured by filing substantially the same affidavit but sworn by herself instead of by her attorney and, in the interests of justice, it ought not to be a sufficient reason to deprive her of a hearing; (b) since the exclusion of evidence on the hearing of an application under r.19(1)(a) to strike out an originating summons did not extend to affidavit evidence filed with the summons itself, her attorney”s affidavit could, for present purposes, stand as evidence of the existence of a reasonable cause of action; and (c) if proceedings were to be continued as if commenced by writ, that evidence would stand as pleadings therein.

Held, dismissing the second defendant”s application but ordering that the plaintiff deliver points of claim and that the first defendant be at liberty to continue to administer the trust:

(1) The plaintiff could not rely on the evidence in the affidavit filed 4½ months after the originating summons, since it was in breach of the time limit prescribed by O.28, r.1A(1) and (3) of the Grand Court Rules, and she had not obtained the leave of the court under r.1A(6) to file the affidavit out of time (page 48...