Anwar et al v. Fairfield Greenwich Limited et al

Filing 1048

DECLARATION of Professor Jonathan Harris in Support re: #775 FIRST MOTION to Certify Class.. Document filed by AXA Private Management, Harel Insurance Company Ltd., Harel Insurance Company, Ltd., Pacific West Health Medical Center Inc. Employees Retirement Trust(On behalf of Itself), Pacific West Health Medical Center Inc. Employees Retirement Trust(on Behalf of All Others Similarly Situated), Pacific West Health Medical Center, Inc. Employee's Retirement Trust, Securities & Investment Company Bahrain, St. Stephen's School. (Attachments: #1 Exhibit 1 through 3, #2 Exhibit 4 Part 1, #3 Exhibit 4 Part 2, #4 Exhibit 5, #5 Exhibit 6, #6 Exhibit 7 and 8, #7 Exhibit 9 through 11, #8 Exhibit 12 through 14, #9 Exhibit 15 through 21, #10 Exhibit 22 and 23, #11 Exhibit 24, #12 Exhibit 25 through 27, #13 Exhibit 28 through 32, #14 Exhibit 33, #15 Exhibit 34, #16 Exhibit 35, #17 Exhibit 36, #18 Exhibit 37 through 39, #19 Exhibit 40, #20 Exhibit 41 Part 1, #21 Exhibit 41 Part 2, #22 Exhibit 42 through 51, #23 Exhibit 52 through 65, #24 Exhibit 66 through 70, #25 Exhibit 71 through 74, #26 Exhibit 75 through 77, #27 Exhibit 78 through 81, #28 Exhibit 82, #29 Exhibit 83 Part 1, #30 Exhibit 83 Part 2, #31 Exhibit 84 and 85, #32 Exhibit 86 Part 1, #33 Exhibit 86 Part 2, #34 Exhibit 87 through 90, #35 Exhibit 91 Part 1, #36 Exhibit 91 Part 2, #37 Exhibit 92 through 103, #38 Exhibit 104 through 106, #39 Exhibit 107 and 108, #40 Exhibit 109 through 113)(Barrett, David)

EXHIBIT 91
Part 1

THE
CAYMAN ISLANDS
LAW REPORTS

2007

Editor in Chief
ALAN MILNER, M.A., LL.M., Ph.D.
of Gray's Inn, Barrister; Attorney-at-Law
Emeritus Fellow of Trinity College, Oxford
Editors
ESTHER LAW, B.A.
SUSAN LEE BARBER, B.A.
Production Editor
SARAH SMITH, B.A.
Consulting Editors
RAMON D. ALBERGA, O.B.E., Q.C., M.A.
COLIN D. McKIE, M.A., Attorney-at-Law

LAVV REPORTS
Oxford 2008

INTERt-JATIOt-JAL

THE CAYMAN ISLANDS LAW REPORTS

2007 CILR

[2007 CILR 18]
MILLER v. GIANNE and REDWOOD HOTEL
INVESTMENT CORPORATION
GRAND COURT

(Smellie, C.J.): March 29th, 2007

Civil Procedure-service of process-service out of jurisdiction-service
within jurisdiction of ex juris writ not precluded by Grand Court Rules,
0.6, r:6, which provides alternative, not exclusive procedure for serviceby 0.2, n], action not nullity because of irregularity
Conflict of Laws-divorce-property-foreign
community property
regime recognized as applicable to movables and immovables owned in
Cayman Islands by parties domiciled in foreign jurisdiction where
applicable .
'
Conflict of Laws-recognition
of foreign proceedings-judgment
in
personam-foreign in personam non-monetary judgment (e.g. requiring
transfer of Cayman assets, including immovables, to another) recognized
and enforced in Islands if final and conclusive and subject to specific
peiformance-recognition
and enforcement no longer limited to
judgment for debt for determinate sum of money
The plaintiff (the wife) applied inter partes for a Mareva injunction in
respect of the Cayman assets of the first defendant (the husband) pending
the determination of her entitlement to share in them, and the
appointment of a receiver to manage the second defendant company,
which was owned by the husband
The husband and wife were married in California, where they remained
domiciled until their divorce in 2006, though from time to time resident
in the Cayman Islands. They agreed to a "stipulated judgment" by the Los
Angeles Family Court, which stated inter alia that the husband had
disclosed all his assets to the wife and, as he claimed to be bankrupt, she
agreed to forego the financial provision to which she would otherwise
have been entitled. Since a community property regime applied to
matrimonial assets in California, the judgment further stated that if the
husband were found to have property which he had not disclosed, the
wife would be entitled to receive; at her discretion, either half the
property itself or half its market value. They also agreed that the Los
Angeles Family Court would have exclusive jurisdiction to hear disputes
arising under the judgment. The wife later discovered information
suggesting that the husband owned a Cayman company (the second

18

R

:e
S,

y
n
"e

n
g

d

c
o
n

g

e
y,

s
n
d

GRAND CT.

MILLER

v. GIANNE

defendant) which had acquired a number of valuable property contracts
during the course of the marriage. She therefore issued proceedings in the
Los Angeles Family Court (subsequently stayed) seeking declaratory
orders in respect of any Cayman assets it was proved the husband owned.
In a series of actions in the Cayman Islands, the wife tried to prove the
husband's interest in the company. Her action for fraudulent misrepresentation was dismissed by the Grand Court on the ground that, in the light
of the agreement as to jurisdiction in the stipulated judgment, the Los
Angeles Family Court was the appropriate forum to decide the claim.
When she discovered that the husband was attempting to sell the Cayman
property, however, she sought an ex parte injunction from the Grand
Court (dismissed subject to an inter partes application), restraining the
husband's dealings with the Cayman assets and leave to serve the writ
and statement of claim in the present proceedings on him in California.
He was instead fortuitously served with a copy of the writ at the airport in
Grand Caynian, while in transit.
At the inter partes hearing, the defendants submitted that (a) the
husband had been improperly served with process,as the wife's writ had
been designated for service outside the jurisdiction, and had been served
upon him in the Cayman Islands in breach of the Grand Court Rules,
0.6, r.6(3), which provided that an ex juris writ could only be served
within the Islands by an office copy of the writ endorsed for service
within the jurisdiction; (b) the court had no jurisdiction to try ,the
plaintiff's claim because she did not assert a proprietary claim: against
the property here, and accordingly the question of whether the Cayman
assets were community property under California law must be decided in
the California courts before she could exert a claim over them in: the
Cayman courts; (c) the Cayman assets were mostly immovable property
which the plaintiff might not be entitled to claim as community property
as it was not clear that immovables would be governed by the law efthe
domicile of the marriage rather than the lex situs; (d) theaction-should.in
any case be dismissed as resjudicata, since the Grand Court had 'already
decided that the Los Angeles Family Court was the appropriate forum
for the dispute, given the agreement to that effect in the stipulated
judgment; (e) the wife-should not be allowed to amend her pleadings to
seek: the recognition and enforcement of the stipulated judgment,since
the judgment did not declare any Cayman property to be community
property; only the Los Angeles court could determine whether ,"he
t
husband had breached that judgment so as to create an in personam
liability, which itself could only be recognized if it were for a-debt-for a
definite sum of money, and if it were final and conclusive; furthermore
the amendment should be refused because the wife would still need to
re-amend if she obtained the necessary declarations from the Los
Angeles court; ef) the plaintiff should not be "allowed to maintain
concurrent proceedings in the Cayman Islands and California, since the
doctrine of lis alibi pendens' required her to choose one jurisdiction in
which to bring her case; and (g) the present proceedings should be

19

THE CAYMAN ISLANDS LAW REpORTS

2007

CILR

dismissed as the forum conveniens was California, as that was the
domicile of both husband and wife and the location of other suits
between them.
The plaintiff submitted in reply that (a) the husband had been properly
served with the copy of the writ, as the Grand Court Rules, 0.6, r.6 was
enabling rather than restrictive in its language, and did not operate so as
to negate personal service of an ex juris writ within the jurisdiction, and
in any case the husband had not suffered any prejudice by being served in
this way; (b) the Grand Court had jurisdiction to decide whether the
husband's Cayman assets would be treated as community property in
California, as California law could readily be adjudicated upon before the
Cayman courts as an issue of fact, presented by way of expert evidence;
(c) it was well established that the law of community property applicable
in the domicile of parties to a marriage would apply to movables acquired
abroad by a party to the marriage prior to divorce; (d) as Cayman law
contained no' provision precluding the immovable property here being
treated as community property, there was a strong argument that that too
would be validly treated as such under California law; (e) she wished to
amend her statement of claim to plead that part of the stipulated judgment
requiring the transfer of half of any community property found to exist in
the Cayman Islands contrary to the husband's warranties, it being a
conclusive judgment capable of recognition and enforcement here as a
foreign in personam judgment; (f) it would not be res judicata to -allow
the wife to invoke the jurisdiction of the Grand Court in these
proceedings, since the court's earlier decision in favour of the Los
Angeles Family Court as the appropriate forum (based on the agreement
in-the stipulated judgment) had been given in the context of a claim based
on fraudulent misrepresentauon, whereas here she was attempting to lay
the basis for a proprietary claim to the Cayman assets; indeed, it would be
unjust to. allow an agreement as to jurisdiction in the very judgment the
husband had breached, to prevent her from pursuing a necessary action
here; (g) she 'should not be forced by the doctrine of lis alibi pendens to
choose between the Cayman and Californian actions, as-both jurisdictions
offered advantages which were unavailable in the other; and (h)
California did not represent a more appropriate forum for the trial of her
present application:•.. s significant expense would be incurred in
a
transporting documents, witnesses and experts in Cayman law to
California to give evidence.
Held,allowing the plaintiff's application to continue but adjourning
the final decision until the resolution of the wife's application for a
declaration in the Los Angeles court:
(1) The service of the copy of the writ on the husband would not be set
aside,as the Grand Court Rules, 0.6, r.6 was not intended to prevent the
service ·of a copy of an ex juris writ within the jurisdiction, but rather to
allow the further option of serving an endorsed office copy in circumstances in which the original was not available. Moreover, even if the way

20

GRAND CT.

s

v

s
s
j
1
1

,.
"

j
V

s
t

i
'(

1
::>

1

t
)

MILLER

v. GIANNE

in which service had been effected was not justified under the Rules, it
could be treated as a mere irregularity under 0.2, r.l and would not
nullify the proceedings. The court would only ever stay an action where a
defendant had been properly served within the jurisdiction if he could
show that to continue the action would be oppressive of him or an abuse
of process, and on the other hand that a stay would not cause injustice to
the plaintiff. The husband here had clearly suffered no prejudice through
the manner of his service (paras. 14-17).
(2) The Grand Court could, without difficulty, assume jurisdiction over
the wife's claim even though it fundamentally involved questions of
foreign law. Such questions were readily justiciable in the Cayman courts
as questions of fact, resolved by expert evidence as to their meaning and
effect. It was clear that the shares in the second defendant, as movable
assets, would be subject to the Californian law of community property as
the law of the matrimonial domicile, and therefore could be seen as being
held in trust by the husband subject to the wife's rights. Furthermore, it
was also arguable on the authorities that the immovable property acquired
by the second defendant was also likely to be subject to the Californian
law of community property, as there was no provision in Cayman law
which prevented that from being the case. The wife's pleadings clearly
indicated that the question the Grand Court had to decide-namely, what
was the effect of marriage in California upon property located in .the
Cayman Islands-was one it had jurisdiction to entertain. There was,
however, precedent suggesting that a more suitable approach might be to
defer to the decision of the California court on whether the property here
would be regarded as community property under California law, and then
decide upon the wife's claim in accordance with that opinion. This was
the safest approach to take (paras. 23-45).
(3) There was no estoppel in rem judicatam to bar the wife's
application for the Grand Court to assume jurisdiction. The earlier
judgment of the Grand Court in favour of the jurisdiction of the Los
Angeles court had been given in the context of her in personam claim
against her husband based on fraudulent misrepresentation; it did not
purport to bar all further action in the Cayman Islands and since the
present proceedings were attempting to lay the basis for her proprietary
claim to the Cayman assets, it was, clear that they involved different
issues from those decided previously. The court would exercise its
jurisdiction in the wife's favour, as it would be unjust to allow the
husband to rely on the judgment he had breached (as the previous
decision was based on the agreement embodied in the stipulated
judgment) to prevent her from doing so (paras. 49-52).
(4) Additionally, the plaintiff would be allowed to amend her statement
of claim in order to plead part of the stipulated judgment as a final and
conclusive judgment on the community nronertv oblizations of the narties
capable of recognition and enforceme~t .Lin Caymin Islands. Although
the
it represented only an in personam judgment against the first defendant

21

2007

THE CAYMAN ISLANDS LAW REpORTS

CILR

until the Los Angeles court made its finding on community property, it
was no longer the law that only a judgment for a debt for a definite sum of
money was enforceable overseas-and
a foreign in personam nonmonetary judgment could be recognized and enforced if specific
performance of it could be ordered (in this case requiring the husband to
transfer to the wife half his assets found here in breach of his warranties
that none existed), since it was not precluded by the lex situs. The
plaintiff would be allowed to amend her claim and it was not a valid
objection that, if she did, she might have to re-amend at a later stage after
the Los Angeles court had made its further determination (paras. 59-70).
(5) The Cayman proceedings would not be struck out under the
doctrine of tis alibi pendens, as the expense and inconvenience of
allowing two sets of proceedings to continue had to be weighed against
the potential injustice to the plaintiff if she were forced to choose one
jurisdiction in which to pursue the action. There were clearly issues of
California law which needed to be decided there, yet if the Cayman
application were not allowed to proceed, the assets here would no longer
be restrained by the Grand Court's injunction and there was a significant
risk that they would be dissipated. The balance of convenience pointed to
the', Cayman Islands as the appropriate forum for the trial, as the
documents, the assets and the witnesses were all located here, requiring
only that experts on California law be brought to testify-but the court
would compromise between the two jurisdictions in the interests of
efficiency and cost and would adjourn the Cayman proceedings until the
Los Angeles Family Court had first made a declaration as to the status of
the Cayman assets as community property (para. 43; paras. 74-78; paras.
80-83).
Cases cited:
(1) Abidin Daver, The, [1984] A.C. 398; [198411 All E.R. 470; [1984]
1 Lloyd's Rep. 339, followed.
(2) Bank of Butterfield (Cayman) Ltd. v. Crang, 1992-93 CILR 409,
applied.
. ..
(3) Bassv.Bass,2001CILR
317, referred to.
(4) Beatty
Beau», [1924] 1 K.B. 807; [1924] All E.R. Rep. 314;
(1924),93 LJ.K.B. 750, referred to.
.
(5) Brasil Telecom S.A. v. Opportunity Fund, Grand Ct., Cause 102 of .
2006, unreported, considered ..
(6) Bumper Dev. Corp, v. Metropolitan Police Commr., [1991] lW.L.R.
1362; [1991] 4 All E.R. 638, followed.
(7) Callwood v. Callwood, [1960] A.C. 659; [1960] 2 All E.R. 1,
considered.
(8) Carl Zeiss Stiftung v. Rayner & Keeler Ltd. (No.3), [19701 Ch. 506;
[1969] 3 All E.R. 897. applied.
(9) Chi'wellv. Carlyon (1897), 14 S.C. 61;7 C.T.R. 83, considered.
(1O) De Nicols, In re, [1900] 2 Ch. 410; (1900), 69 LJ. Ch. 680,
considered.

v.

L

22

..'

GRAND CT.

MILLER

v.

GIANNE

(11) De Nicols v. Curlier, [1900] A.C. 21; (1900), 69 L.J. Ch. 109,
applied.
(12) Electric Dev. Co. of Ontario v. Att. Gen. (Ontario), [1919] A.C. 687,
applied.
(13) Golden Ocean Assur. Ltd. v. Martin (The Goldean Mariner), [1990]
2 Lloyd's Rep. 215, considered.
(14) Grupo Torras S.A. v. Bank of Butterfield Intl. (Cayman) Ltd., 2001
CILR 9, followed.
(15) Higgins v. Woodhall (1890),6 T.L.R. 1, applied.
(16) India (Republic) v. India SS. Co., [1993] A.C. 410; [1993] 1 All
E.R. 998, considered.
(17) KTH Capital Management Ltd. v. China One Fin. Ltd., 2004-05
CILR 213, considered.
(18) Letang v. Cooper, [1965] 1 Q.B. 232; [1964] 2 All E.R. 929,
referred to.
(19) McHenry v. Lewis (1882), 22 Ch. D. 397. referred to.
J20) Mercedes Benz A.G. v. Leiduck, [1996] A.C. 284; [1995] 3 All E.R.
,
929; [1995] 3 L.R.C. 227, referred to.
(21) Morgan's Case (1737). 1 Atk. 408; 26 E.R. 259, considered.
(22) Nouvion v. Freeman (1889), 15 App. Cas. 1; 59 L.J. Ch. 337,
followed.
(23) Omni Sees. Ltd. v. Deloitte & Touche, 2000 CILR 102, referred to.
(24) Pattni v. Ali, 2005-06MLR 586; [2007] 2 W.L.R. 102; [2006]
UKPC 51, followed.
(25) Pearse's Settlement, In re, [1909] 1 Ch. 304; (1909). 78 L.J. Ch. 73,
considered.
(26) Phillips Petroleum Co. v. Quintin, 1994-95 CILR N-15, followed.
(27) Pro SWt.·~gInc. v. Elta Golf Inc., [2006] S.C.R. (;12; 2006 SCC 52,
followed.
(28) Prospect Properties Ltd. v. McNeill, 1990-91 CILR 32, considered.
(29) Sadler v. Robins (1808).1 Camp. 253; 170 E.R. 948, not followed.
(30) St. Pierre v. South American Stores Ltd.. [1936] K.B. 382.
considered.
(31) Seethadevi (H.R.H. Maharanee) v. Wildenstein, [1972] 2 Q.B. 283;
[1972] All E.R. 689, considered.
(32) Societe Nationale Indus. Aeraspatiale v, Lee Kui Jak, [1987] A.C.
871; [1987] 3 All E.R. 510. considered.
(33) Spiliada Maritime Corp. v. Cansulex Ltd.• [1987] A.C. 460; [1986]
3 All E.R. 843; [1987] 1 Lloyd's Rep. 1. applied.
(34) Stephenson v. Garnett. [1891] 1 Q.B. 677; (1891). 67 L.J.Q.B. 447,
applied.
(35) Swiss Bank & Trust Corp. Ltd. v. Iorgulescu, 1994-95 CILR 149,
referred to.
(36) Welch v. Tennent, [1891] A.C. 639, not followed.
Legislation construed:

Grand Court Rules 1995.0.2, r.l(l):

23

THE CAYMAN ISLANDS LAW REpORTS

2007 CILR

''Where, in beginning or purporting to begin any proceedings ... there
has, by reason of anything done or left undone, been a failure to comply
with the requirements of these Rules, whether in respect of time, place,
manner, form or content or in any other respect, the failure shall be
treated as an irregularity and shall not nullify the proceedings ... "
0.6, r.6: The relevant terms of this rule are set out at para. 14.
T. Lowe and A. Horsbrugh-Porter for the plaintiff;
S. Hall-Jones and S.N. Diamond for the first defendant;
R.D. Alberga, Q. C. and S. Wilson for the second defendant.

1 SMELLIE, C.J.: The plaintiff, Ms. Miller, and first defendant, Mr.
Gianne, are domiciled in California. There, after a marriage of more than
20 years, divorce proceedings were taken by Ms. Miller before the
Family Court, of California and this resulted in an order called a
"stipulated judgment" on August 26th, 2006.
2 A stipulated judgment given in this context is an agreement between
the parties to regulate their divorce which is approved by the court and
which divides between the parties all the community property of the
marriage. California law deems all property owned jointly or separately
to be community property, once it is acquired during the marriage and
wherever it may be situated. The same applies to any asset to which either
party acquires title, if and insofar as it is acquired with funds which were
themselves community property.
3 Where there is no pre-nuptial agreement, as is the case here, the
respective interests of the parties in community property dnring the
continuance of the marriage are deemed to be equal interests. As would be expected, parties have a -mutual obligation to disclose to. each other
and to the .courtss.for the,purposes of their settlement, all property which
they may be aware is capable of being regarded .as community property.
Notwithstanding these mutual obligations, it is Ms. Miller's assertion in
these proceedings, as well as in proceedings in California, that Mr.
Gianne deliberately concealed the existence of very valuable assets
located in the Cayman Islands. Her claim is that he did so in an effort
fraudulently to deprive her of.her interest in those assets.
4 It is further: pleaded that Ms. Miller's entering into the stipulated
judgment by which she agreed to forego substantial spousal support to
which she would otherwise have been entitled, was induced by Mr.
Gianne's repeated representation throughout the last year of.the marriage
and at the time of entering into the judgment itself, that he had become
bankrupt as the result of the failure of his business interests in companies
which he operated in California. It is indeed apparent from the stipulated
judgment that Mr. Gianne had warranted that he did not own any property
of any kind that had not been disclosed to Ms. Miller or specifically'
accounted for in the judgment.
24

GRANO CT.

MILLER

v. GIANNE (Smellie, C.J.)

5 As the result of disclosure orders made on May 16th, 2006 by
Henderson, J. in Cause 181 of 2006 in this court, Ms. Miller obtained
evidence which tends to show that Mr. Gianne owns and controls the
second defendant, Redwood Hotel Investment Corp., a company
incorporated in the Cayman Islands. The evidence also suggests that
Redwood has acquired, beginning in 2001 and so during the period of the
marriage, a number of very valuable estate contracts. These contracts are
for the purchase of five condominium units within an exclusive resort
residential development on Grand Cayman.

1

,
"'
1

1

I
,
"'
(

I
r
,
"'

>

-'

I
r
1

'.
1

s
t

i
)

e
s
d
y
y'

6 Ms. Miller's efforts to prove Mr. Gianne's interests in Redwood, and
thus in the properties, have been met with resistance from Mr. Gianne at
every tum. The present action is at least the fifth set of proceedings
undertaken in her quest. Previous proceedings brought by her in this
jurisdiction in Cause 40 of 2006 were, on the application of Mr. Gianne,
struck out by Harrison, Ag. J. on September 19th, 2006. This was on the
basis, among others, of want of jurisdiction and failure to conform with
the applicable conflict of laws principles.
7 Most to the point here, Harrison, Ag. J. found that Ms. Miller's claim
in Cause 40 of 2006 against Mr. Gianne was capable of being one in
personam only against Mr, Gianne, based upon allegations of fraudulent
misrepresentation and breach of the stipulated judgment, claims which
were therefore held to be properly justiciable only before the courts of
California, where the stipulated judgment was made. Ms. Miller's
application for a Mareva injunction and other relief in respect of
Redwood and its assets were also dismissed in the judgment delivered on
September 19th, 2006 in Cause 40 of 2006. ..
8 Ms. Miller's earlier efforts in California to bring Mr. Gianne to
account were also unsuccessful, as he was able to have her case against
him for fraud, brought in the Superior Court there, dismissed on the basis
that the Los Angeles Family Court continued to have exclusive
jurisdiction.over their divorce and any proceedings arising in respect of
the stipulated judgment. Ms. Miller therefore issued proceedings in the
Los Angeles Family Court seeking, among other things, declaratory
orders in respect of the Cayman assets.
9 However, on the same date, December Ist, 2006, she entered a stay of
those proceedings. That stay was plainly in deference to this present action
in Cause 484 of 2006 in which she also issued an ex parte summons on
December 1st, 2006. By that summons she applied fora Mareva
injunction and sought leave to serve the writ and statement of claim out of
this jurisdiction upon Mr. Gianne in California. At an ex parte hearing .in
this cause, Henderson, J. granted leave.for service out of the jurisdiction
but dismissed the ex parte application for the Mareva injunction on the
ground that that application should be heard inter partes.

25