Smellie J
IN THE GRAND COURT OF THE CAYMAN ISLANDS CAUSE NO. 153 of 1995 In the matter of the Cotorro Trust originally constituted by a Trust Agreement dated the 1st day of June 1979 between Maria Ernestina Barcardi y Gailard and Roywest Trust Corporation (Cayman) Limited, now named Coutts & Co. (Cayman) Limited. AND In the matter of the Trust Law (Revised) BETWEEN: COUTTS & CO. (CAYMAN) LIMITED PLAINTIFF AND:
JERRY M. LINDZON
ELENA GOMEZ DEL CAMPO DE LINDZON
ELENA LAURA PESSINO DE BALMASEDA
CESAR JAIME DE BALMASEDA (A minor, by his Guardian ad Litem George Giglioli on his own behalf and on behalf of all minor and remoter beneficiaries of the Cotorro Trust)
SANTIAGO CASAS
MARIANA ELENA PESSINO DE QUIRCH
MARIA EUGENIA PESSINO DE ROTHWELL DEFENDANTS APPEARANCES: Graham Ritchie of Charles Adams, Ritchie & Duckworth for the Plaintiff. Neil Timms of Maples and Calder for the 1st and 2nd defendants. RULING The present summons is brought by the 1st and 2nd defendants seeking the further renewal of a writ of sequestration - already issued and once renewed by this court - but in the form which is proposed as the more usual form, ie: one not prescribing an expiry period. Since the date of the renewal new circumstances have arisen which, apart from issues of policy and practice also advanced, are canvassed as additional grounds for the different form of the writ now being sought. The contempt which Douglas J found to be proved and which justified the issuance of the writ in the first place was the deliberate disobedience of an order of this court, made on 17 January 1997, restraining the 3rd defendant from continuing certain proceedings she had instituted in Florida, USA against the 1st and 2nd defendants and others. That anti-suit injunction of 17 January 1997 was made in the context of it having been clearly demonstrated to this court that the Florida proceedings were oppressive - designed as they were to embarrass and pressure the 1st and 2nd defendants who were already parties to these proceedings, enjoined before this court over issues touching upon essentially the same subject-matter as raised in the Florida proceedings. This court was therefore also then found to be the natural and proper forum for the resolution of the same issues - issues which all related to the Trust which is domiciled in this jurisdiction. The 3rd defendant, although granted leave to do so, never challenged the anti-suit injunction. Instead, in flagrant breach of the anti-suit injunction, she pressed on with the action in Florida. She was however, unsuccessful at first instance, for reasons which included considerations similar to those which had been taken up by this court in granting the injunction in the first place, ie: forum non conveniens and oppression. In continued breach of the injunction, the 3rd defendant even now persists in the action in Florida by pursuing it on appeal. In so doing it seems just about every conceivable ploy has been taken on her behalf including, quite remarkably, recourse to an allegation of bias on the part of the first instance judge. Although ultimately unsuccessful, such recourses I am told and accept must have exacerbated the anxiety of the 1st and 2nd defendants who had to join in to all the way to an appeal to defeat the allegation. The 1st and 2nd defendants must now further contend with the substantive appeal against the decision of the Florida court which is set to proceed later this year, despite the anti-suit injunction. Mr. Timms has asserted that this has likely been the cause and will continue to be the cause of great stress and of the resultant mental and physical debilitation of his clients, the 1st and 2nd defendants, who are both quite elderly. There is medical evidence to that effect on which he relies. I am satisfied that the 3rd defendant is motivated entirely by self-interest and there is every reason for this court to believe that notwithstanding the detrimental effect on the health of the 2nd defendant who is her mother, the 3rd defendants’ campaign of harassment will continue unless it is brought home to her that the continued disobedience of the orders of this court will not be tolerated and will result in severe consequences. For the reason that he is also being affected by the 3rd defendant’s actions, the 1st defendant now also joins in the application for the renewal of the writ of sequestration. There can be no doubt that he has the right to do so. I must also, of course, consider the obvious public policy interest in reissuing the writ. This court should in no manner be seen as accepting or condoning a contempt of its orders. Refusal to reissue the writ would inevitably carry that implication. Douglas J issued and reissued the writ for 3 months only in each instance for reasons which are explained (as to the original order and implicitly carried over to the reissuance) in his written ruling of the 7th September 1997. Briefly put, he had concerns that as no assets of the 3rd defendant appeared now or in the foreseeable future likely to become amenable to sequestration as being within the jurisdiction of this court, the indefinite extension of the writ would be futile and it was not appropriate for the court to make ineffective orders. However - as both Mr. Timms and Mr. Ritchie were able to demonstrate to my satisfaction - the ramifications of public policy and the possible permutations for enforcement of the writ are now more fully apparent than they were before, Douglas J and require a change of approach. The third defendant’s breach of the order of this court is now established beyond peradventure to be deliberate and calculated to advance her own purposes. Having failed to advance her complaints before this court, the embarrassing pleadings filed in the Florida proceedings are shown to be intended to pressure her mother and the 1st defendant, her stepfather, into an award or settlement of what are essentially the very same complaints. So long as the continuation of the writ of sequestration can serve as a deterrent to such a flagrant contempt of the orders of this court, I am persuaded that public policy requires that it be allowed to run in the usual way. And although benefit to any party is only incidental to the real reasons of public policy which demand that the writ be continued as a deterrent, that benefit is also a factor to be considered. The element of ensuring that those who are affected by contempt do not suffer insofar as the court can prevent it, may ipso facto, be reason justifying the writ: Richardson v Richardson [1989 3 W.L.R. 865. That was a case in which the court ordered sale of the respondent’s house in order to provide the plaintiff with the means by which he could pursue action against the respondent overseas for the return of the child of the marriage to the jurisdiction of the Court where the issues of custody and care and protection were to be resolved. The writ was an appropriate remedy to compel the respondent to obey the order for the return of the child. I accept, as Mr. Timms submits, that that approach is a priori applicable in this case, insofar as the currency of the writ will or might enable the plaintiff to pursue the 3rd defendant to compliance with the anti-suit injunction. Thus apart from the element of relief to a party, there is also to be considered the coercive value of the writ as itself being a means by which the contemnor can be compelled to obey. Notwithstanding that the order is an injunction and therefore negative in terms, it would nonetheless ordinarily be practicable that assets of the 3rd defendant be pursued and if appropriate seized and held without - absent further order - having to apply them toward satisfaction of a judgment debt in the way they would be applied if there were a positive debt to be satisfied. This settled practice is discussed also in Richardson v Richardson (supra) at p. 869-870 (citing dictum of Scarman J. in Romilly v Romilly [1964] p 22-23: “....A distinction was .... drawn between sequestration to enforce payment of a sum of money and sequestration as punishment for some default other than in the payment of money. In the former the court would, upon application, order the sequestrators, if they had the funds, to satisfy the demand, whereas in the latter the property sequestered would only be held in medio until the contempt was purged. See Anderson Law of Education (1889) page 537 and Daniells’ Chancery Practice, p. 7909.” In this case the only “asset” of the 3rd defendant presently known to be amenable to the jurisdiction of this court is her contingent interest in the Trust. That is an interest which will be actualised only if she survives her mother when an entitlement to one-quarter the income from the Trust is to go to her. Mr. Timms accepts that at best that interest is to be regarded as an equitable chose in action and not as an asset which can now be directly sequestered. That I regard as plainly correct. See Halsbury’s Laws 4th Ed. Vol 6. para. 8(4). It follows that the interest is not one that can be presently seized to compel obedience of the order of the court as was contemplated in Romilly v Romilly (supra). But that is not necessarily the end of the matter. There are already significant sums due from the 3rd defendant to the 1st and 2nd defendants for costs incurred in the proceedings in this jurisdiction (in the main action and in this) as well as, perhaps, in the Florida proceedings. Mr. Ritchie, for the trustee, also felt obliged to lay down the marker in respect of costs owed to the trustee in the main action here. The marker is set as follows: Should action be taken any time to recover any or all those debts against the 3rd defendant’s entitlements under the Trust, that eventuality would, at least arguably, serve to trigger the forfeiture provisions of the Trust Deed which create a protective discretionary trust over those entitlements (notwithstanding their inchoate nature) in the following terms: “This Article Fifth shall come into operation if any part of the income or principal of the Trust Fund or any interest of any beneficiary therein shall be subjected to any legal process in any part of the world for the payment of any obligation or indebtedness of any beneficiary or if any beneficiary shall anticipate, pledge or assign any interest in the income or principal of the Trust Fund or shall purport to do so and in any such event the Trusts hereby declared in favour of the beneficiary concerned .... shall determine and be replaced by a discretionary trust ....” (emphasis supplied) It must of course be recognised that the operation of the discretionary trust once triggered - while disentitling the 3rd defendant to a non-discretionary interest in the Trust replacing it with a discretionary interest only - would also remove her entitlement from the operation of the writ and so the sequestrators could not go against it: Halsbury’s Laws 4th Edition Vol. 17 para. 511 citing Dixon v Rowe (1876) 35 L.T. 548. This possible outcome was contemplated by Douglas J in his written reasons where he also nonetheless recognised its potential deterrent effect as a “sword of domiciles” to compel the 3rd defendants’ obedience of the injunction. It would, if operational in that way, be an entirely punitive recourse but one which this court may yet come to regard as justified if the flagrant disobedience of its orders and the resultant detriment to others is continued. As tangible further reason for the renewal and continuation of the writ, there are at least two other possibilities to be contemplated. These are both possibilities which may arise if the 3rd defendant survives her mother the 2nd defendant, but with there being carried over at that time to her estate, the interests of the 2nd defendant in the writ of sequestration itself. Any such interest which this court might recognise - such as, for example, the enforcement of a claim for damages or costs arising from the breach of the anti-suit injunction - may then become enforceable as against any interest which the 3rd defendant might then have in the Trust. See Halsbury’s Laws 4th Ed. Vol 17 para. 513.- where, (citing Hydes v. Foster (1748) 1 Dick 1132) in the notes it is explained that the interests which devolve to the estate of the person issuing the writ survive, irrespective of whether the sequestration is for disobedience of a final or interlocutory order-as was the nature of the anti-suit injunction here. The attempted enforcement of such a claim as against the income interests of the 3rd defendant under the Trust may then operate to trigger the forfeiture provisions under the Trust instead of realising the indebtedness, a possibility already recognised, should the 1st and 2nd defendants claim against the Trust - (See Halsbury’s op cit para 511 citing Dixon v Rowe (1876) 545) - but that outcome may well then, in that future event, also be considered a justifiable outcome for the reasons already examined. The other possibility is that the indebtedness arising under the operation of the writ and devolving to the estate of the 2nd defendant could be enforced, not directly as against the Trust itself and so not triggering the forfeiture clause, but by way of some mandatory form of order (eg: an injunction - see Willcock v Terrell (1878) P 239 - directing the Trustee to pay over her income entitlements after it is allocated to the 3rd defendant. At the current rate of income, even one such payment would be a considerable sum. The foregoing hypotheses are of course not matters which can be definitively pronounced upon now. They are being considered only as the reasons postulated to show that the writ, if re-amended and allowed to continue to run, will be no empty or mere token order. Given the primary objective of the writ, which is to compel obedience with the orders of this Court, and to compel the contemnor 3rd defendant, to purge her contempt, it is not necessary for the writ to specify particular property which can now be sequestered. The general form used and to be continued is sufficient: Hydes v Hydes (1888) 13 P.D. 166, 175. Any property seized by means of the writ will be required to be held until an attempt is made to purge the contempt. I have seen the first reports provided to this court by the sequestrators. From it there appears no reason to believe that the 3rd defendant has any assets apart from her contingent interest in the trust, within the Cayman Islands. The sequestrators will now turn attention to assets which may exist outside the jurisdiction. They are of course entitled to do so at the instance of the 1st and 2nd defendants who will fund the costs of their efforts. I require, as a means of monitoring and controlling the manner in which the process of this Court is being used, that they report once per year to the court during the continuation of the writ. Anthony Smellie 1 JUDGE OF THE GRAND COURT 2 3 Dated: April 7, 1998. 4 5 DATED THIS DAY OF MARCH 1998