1
IN THE GRAND COURT OF THE CAYMAN ISLANDS
HOLDEN AT GEORGE TOWN， GRAND CAYMAN
CAUSE NO. 320/88
BETWEEN：
PIETER BASEDOW
PLAINTIFF
AND：
JOHN C.STONE
DEFENDANT
RULING
This is an application which seeks that the following two
issues be tried as preliminary questions of law and set down for early
trial
(a) Whether the construction of the Nominee Agreement dated
20th July 1984， the subject of these proceedings， falls
to be determined by the law of the Cayman Islands or by
the law of West Germany.
(b) Whether the legal effect， if any， of the said Nominee
Agreement falls to be determined by the law of the
Cayman Islands or by the law of West Germany.
These proceedings were begun by originating summons. The
substance of the relief sought is a declaration that the plaintiff is
the sole beneficial owner of certain shares in a company incorporated
under the laws of the Cayman Islands and that the shares are
registered in the name of the first defendant for the benefit of the
plaintiff absolutely. The other relief sought flows from
determination of that question.
The second defendant sought and was granted leave to
intervene. She claims， that in this matter German Civil Law prevails
and that in consequence the shares belong to the estate of her late
father and not to the plaintiff.
The plaintiff's claim to the shares is based on the terms and
legal effect of the nominee agreement. He says that the agreement
law of the Cayman Islands， and that under the law of the Cayman
ISlands the agreement entities him to the relief sought.
Order 33， Rule 3 of Rules of the Supreme Court gives me a
discretion to
* Order any question or issue
arising in a cause or matter，
whether of fact or law or partly of
fact and partly of law， and whether
raised by the pleadings or
otherwise， to be tried before， at or
after the trial of the cause or
matter， and may give directions as
to the manner in which the question
or issue shall be stated.
In inviting me to exercise the discretion， the plaintiff's
attorney sought to persuade me that the question of which law applied，
determined in accordance with Cayman Islands conflict rules， would
reduce the issue to a relatively straight forward one if the Court
determined that Cayman Islands law should apply. But not all matters
affecting a contract are necessarily governed by one law. The correct
question to ask is not "What law governs the construction and legal
effect of the nominee agreement?" but "what law governs the particular
question raised in the instant proceedings?"-that is to say the
beneficial ownership of the shares
Questions of intention arise in determining the proper law of
a contract. It was submitted on behalf of the plaintiff that the
facts which the Court would require to determine the preliminary
question are these which are not in dispute， namely the existence of
the agreement， the domicile of Dr. Basedow， his death， his will， and
the details relating to the company whose shares are the subject
matter of the action.
But other questions of fact-and in particular of the facts
relating to intention as to the governing law， to which evidence as to
the way Dr Basedow intended his estate as a whole to be disposed of
might well be relevant-may need to be addressed. In other words， I
have some doubt as to whether even the Cayman conflict of laws
principles can be properly determined without some evidence of both
In these circumstances this seems to me to be a case where
the caution urged by the House of Lords should apply. See Att.-Ger.
v. Nissan (1970) AC 179 and Tilling v. Whiteman (1980) AC 1.
In the
later case Lord Wilberforce said this
“I, with others of your Lordships,
have often protested against the
practice of allowing preliminary
points to be taken since this course
frequently adds to the difficulties
of Courts of Appeal and tends to
increase the cost and time of legal
proceedings. If this practice
cannot be confined to cases where
the facts are complicated and the
legal issue short and easily
decided, cases outside this guiding
principle should at least be
exceptional.”
In the same case Lord Scarman described preliminary points of
law as being too often treacherous short cuts, the price of which can
be delay, anxiety and expense.
I am not persuaded that the legal issue which I am invited to
treat as a preliminary one will prove to be either short or easily
decided or that it can be more conveniently dealt with in that way.
It is not even a matter, as was the case in both Nissan and Tilling,
which the parties are able to agree that this should be done.
Moreover, dealing with the matter in that way would be likely to
increase the difficulties of the Court of Appeal in the event of it
coming before them.
In consequence the plaintiff's application is dismissed.
After hearing the submissions of counsel, I award the costs
of this application to the second defendant.