Mayo Associates S.A., Troy Associates Ltd and T.T.S. International S.A. v Cantrade Private Bank Switzerland (C.I.) Ltd and Touche Ross and Company

CourtRoyal Court
JudgeBailhache, Bailiff and Jurats Myles and Potter:
Judgment Date18 December 1997
Date18 December 1997
Bailhache, Bailiff and Jurats Myles and Potter:

P.C. Sinel for the plaintiffs;

A.R. Binnington for the first defendant.

Cases cited:

(1) Bekhor (A.J.) & Co. Ltd. v. Bilton, [1981] Q.B. 923; [1981] 2 All E.R. 565; [1981] 1 Lloyd's Rep. 491; [1981] Com LR 50; (1981), 125 Sol. Jo. 203, dictum of Ackner, L.J. considered.

(2) CD, In re, 1995 JLR N-19.

(3) Finance & Econ. Cttee. v. Bastion Offshore Trust Co. Ltd., 1994 JLR 370, followed.

(4) Lampaert, In re, 1990 JLR 290.

(5) Siskina (Cargo Owners) v. Distos Cia. Naviera S.A., [1979] A.C. 210; [1977] 3 All E.R. 803; [1978] 1 C.M.L.R. 190; (1977), 121 Sol. Jo. 744; sub nom. Ibrahim Shanker Co. v. Distos Cia. Naviera S.A., [1978] 1 Lloyd's Rep. 1, dicta of Lord Hailsham, L.C. considered.

Additional cases cited by counsel:

Allen v. Norris, [1884] W.N. 118.

Benest v. Kendall, 1992 JLR N-2.

Bristol & W. Bldg. Socy. v. Mothew, [1996] 4 All E.R. 698.

Burke v. Sogex Intl. Ltd., 1987-88 JLR 316.

Castanho v. Brown & Root (UK) Ltd., [1981] A.C. 557.

Classic Trading Co. v. Declercq, 1992 JLR 34.

Clore v. Stype Trustees (Jersey) Ltd., 1984 J.J. 13.

Compagnie Financiere & Commerciale du Pacifique v. Peruvian Guano Co. (1882), 11 Q.B.D. 55.

Consul Corfitzon, The, [1917] A.C. 550.

Daisy Hill Real Estates Ltd. v. Rent Control Tribunal, 1995 JLR 176.

Farley (Ernest) & Son Ltd. v. Takilla Ltd., 1984 J.J. 123.

Hanby (Victor) Associates Ltd. v. Oliver, 1990 JLR 337.

Home Office v. Harman, [1982] 1 All E.R. 532.

Krohn G.m.b.H. v. Varna Shipyard, 1997 JLR 194.

Le Cocq v. Gillespie, 1991 JLR N-5.

Le Masurier (C.) Ltd. v. Alker, 1992 JLR 123.

Lane v. Lane (ne Coverdale), 1985-86 JLR 48.

Marriott v. Chamberlain (1886), 17 Q.B.D. 154.

Martin v. Millwood (H.) Ltd. (1954), 71 R.P.C. 316.

Martin v. Scrib Ltd. (1950), 67 R.P.C. 127.

Mauger (ne Kenny) v. Batty, 1995 JLR N-8.

Moore v. Assignment Courier Ltd., [1977] 1 W.L.R. 638.

Overseas Ins. Brokers Ltd., Re, 1966 J.J. 547.

Panayiotou v. Sony Music Entertainment (UK) Ltd., [1994] Ch. 142.

Practice Direction (Civil litigation: Case management), [1995] 1 W.L.R. 262.

Purdie v. Bailhache & Bailhache, 1989 JLR 111.

Riddick v. Thames Board Mills Ltd., [1977] 3 All E.R. 677.

Roberts v. Jump Knitwear Ltd., [1981] F.S.R. 527.

Rumasa S.A. v. W&H Trademarks (Jersey) Ltd., 1985-88 JLR 308.

S v. S, [1972] A.C. 24.

Sayers v. Briggs & Co. (Jersey) Ltd., 1964 J.J. 399, 423.

Sebright v. Hanbury, [1916] 2 Ch. 245.

Services Club Syndicate Ltd., In re, [1930] 1 Ch. 78.

Shropshire, The (1922), 127 L.T. 487.

Sloan (ne Amy) v. Sloan, 1987-88 JLR 651.

Smith New Court Securities Ltd. v. Citibank N.A., [1997] A.C. 254.

Thackwell v. Barclays Bank PLC, [1986] 1 All E.R. 676.

Trollope v. Jackson, 1990 JLR 192.

Tucker, In re, 1987-88 JLR 473.

Vaucluse Court Ltd. v. Takilla Ltd., 1991 JLR N-5.

Wilson v. Church (No. 2) (1879), 12 Ch. D. 454.

Wimborne (Viscount), Ex p., 1983 J.J. 17.

Text cited:

Dockray, The Inherent Jurisdiction to Regulate Civil Proceedings, 113 Law Quarterly Review, at 129; at 130-131 (1997).

Civil Proceduresettlement of proceedingspre-trial negotiationsin interests of justice, court may order Viscount to act as intermediary in pre-trial negotiations with non-parties with interest in proceedingsmay order parties to give Viscount names of relevant non-parties in confidence, to allow him to communicate offer

The defendants sought to enter into negotiations to settle proceedings brought against them by the plaintiffs.

The plaintiffs were investment managers who arranged the investment of funds in foreign exchange dealings, through the medium of the first defendant, a bank. It was alleged that certain persons for whose defaults the first defendant was responsible, including employees of the first defendant, facilitated large-scale fraud by taking secret commissions from the funds, so that substantial losses were suffered by the investors. The plaintiffs also alleged that they had suffered loss because they had received lower commissions on the deals than they would have done but for the fraud. They accordingly brought proceedings against the first defendant, together with the second defendant, an auditor alleged to have been negligent in approving the fraudulent accounts. These proceedings were purportedly brought on their own behalf and on behalf of the investors.

The first defendant then sought to enter into negotiations with the investors to settle their claims, but did not offer to settle the plaintiffs' own alleged losses. It asked the plaintiffs to put the terms of the offer to the investors: the plaintiffs did so, accompanied by their own commentary on the offer, to the effect that it was inadequate and that their interests were best served by supporting the plaintiffs' action. The plaintiffs refused to disclose to the first defendants the names of the investors so that it could not contact them directly, arguing that to do so would be a breach of the duty of confidentiality it owed to the investors.

The first defendant then made the present application for the Viscount to be appointed to oversee the putting of its offer fairly to the investors. It submitted that (a) the court had the power to make the order sought in the exercise of its inherent jurisdiction, notwithstanding that the investors were not parties to the action, because the investors had an interest in the outcome which the plaintiffs were not protecting; (b) the plaintiffs had a conflict of interests which had led them to misrepresent the nature of the offer and they could not be trusted to protect the investors' interests; and (c) the plaintiffs should therefore supply to the Viscount the names of the investors so that he could transmit the offer to them and because he need not disclose the names to the first defendant, their confidentiality would not be compromised.

The plaintiffs submitted in reply that (a) there was no conflict of interest between them and the investors and it was clear that they had brought the action to protect the investors' interests as well as their own; (b) in any case, the court had no power under any legislation or rules of court to order the Viscount to become involved; furthermore, it was inappropriate for the court to make such an order in the exercise of its inherent jurisdiction, which would amount to a usurpation of the function of the legislature and the rule-making role of the Superior Number; and (c) it should not be ordered to supply the names of the investors to the Viscount, because to do so would breach the duty of confidentiality it owed to them.

Held, granting the application:

Although the investors were not parties to the proceedings, they had an interest in the outcome which merited protection. It was clear that the plaintiffs had a conflict of interests and that as a result, the investors had not been given a fair assessment of the first defendant's offer, nor had they been told that their interests and those of the plaintiffs might not coincide. If it were possible to protect their rights by making the order sought and if the balance of fairness lay in favour of doing so, the court could make the order in the exercise of its inherent jurisdiction over its own procedure, although it had to take care not to trespass into the province of the legislature or the Superior Number in its rule-making capacity. It was material that the relationship between the plaintiffs and the investors was in dispute. In the present circumstances, it was fair that the offer should be put to the investors without additional comment by any party to the proceedings. The court would therefore order that the plaintiffs provide the Viscount with the names of the investors so that the offer could be put to them. In so ordering, the court was not endorsing the offer, nor making any comment on the merits of the proceedings, which were a matter for the trial, nor was it overriding the requirement of confidentiality, since the Viscount would be under a duty not to disclose the names of any of the investors. It would then be for individual investors wishing to respond to the offer to deal directly with the first defendant (page 336, line 34 - page 337, line 37; page 338, line 40 - page 339, line 16; page 340, lines 4-29).


Introduction This is a representation of Cantrade Private Bank Switzerland (C.I.)

Ltd. in the context of an action brought by Mayo Associates S.A., a company incorporated in Geneva, Troy Associates Ltd., a company incorporated in Liberia, and TTS International S.A. ("TTSI"), a company incorporated in Panama, to which we shall refer collectively as "the plaintiffs," against Cantrade and Touche Ross & Co., a firm of chartered accountants. The representation seeks the appointment of the Viscount for the purpose of communicating or otherwise dealing with an open offer made by Cantrade to certain investors who have lost money as a result of trading activities which are the subject of the action. It is convenient to record here that the Viscount is, inter alia, the executive officer of this court.

The background to the representation was succinctly described by Gloster, J.A. when delivering the judgment of the Court of Appeal in relation to an interlocutory matter on July 3rd, 1997 in the following terms:

"The plaintiffs, who at material times traded as the Troy Trust Service, and for this purpose I make no distinction between the individual...

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