Henderson J
IN THE GRAND COURT OF THE CAYMAN ISLANDS
HOLDEN AT GEORGE TOWN, GRAND CAYMAN - Civil
CAUSE NO: 227 OF 2004
BETWEEN:
(1) CONDOCO GRAND CAYMAN RESORT LTD.
(2) VILLASCO GRAND CAYMAN LIMITED
Plaintiffs
AND
(1) BROADHURST DACOSTA (A FIRM)
(2) REDWOOD HOTEL INVESTMENT CORP.
(FORMERLY KNOWN AS NANO INC.,
FORMERLY KNOWN AS MICRO INDUSTRIES INC.)
(3) CAYMAN NET LTD.
(4) KYC NEWS, INC.
Defendants
Appearances: Mr. Jeremy Walton of Appleby Spurling Hunter for the Plaintiffs/Applicants
Mr. Sean McCann of Campbells for the first and second Defendants/Respondents
Before: Hon. Justice Henderson
Heard: May 31, 2004 & June 21, 2004
JUDGMENT
The plaintiffs and applicants, Condoco Grand Cayman Resort Ltd. and Villasco Grand Cayman Limited, seek an order restraining the first and second defendants from using or disclosing certain confidential information, an order that they deliver up or destroy all documents containing such confidential information, and an order compelling them to
disclose the source of it. My decision was delayed pending resolution of a dispute over the plaintiffs’ attempt to serve the fourth defendant out of the jurisdiction, and by the circumstances of Hurricane Ivan. The action against the third defendant has been settled. Leave to serve the fourth defendant outside the jurisdiction has been refused.
The plaintiffs are involved in the construction, marketing and sale of condominiums and villas in a development project known as the Residences at the Ritz-Carlton on Grand Cayman. The second defendant, Redwood Hotel Investment Corp., agreed to purchase from the first plaintiff four condominium units. The first defendant, Broadhurst DaCosta, is a law firm practicing in the Cayman Islands. It represented the second defendant at all material times.
The first plaintiff was also in negotiations with Exclusive Resorts for the sale of four condominiums and sixteen villas to it. Exclusive Resorts intended to earn rental income from these units. The second defendant also intended to rent its units. By letter dated April 20th, 2004, Peter Broadhurst of the first defendant wrote to the first plaintiff expressing his client’s concern that the proposed sale to Exclusive Resorts would conflict with obligations owed to his client under a certain rental pool agreement. The letter included this sentence:
“we understand that there are negotiations taking place with an entity known as Exclusive Resorts for the sale of four furnished condominiums and another sixteen villas to be constructed.”
A copy of the letter was sent to the vice president and general manager of the
Ritz-Carlton Hotel Company, Jean Cohen.
On April 22nd, 2004 an article appeared on the internet website of the fourth defendant which divulged the same information. The following day, the third defendant printed a newspaper article containing the same information and quoting the opinion of Mr. Broadhurst to the effect that the proposed sale to Exclusive Resorts “could create direct competition with the rental pool units, something to which previous PIP unit purchasers might object…” Mr. Broadhurst’s client, the second defendant, was a PIP unit purchaser.
Mr. Broadhurst wrote the letter on the express instructions of his client. He swears in his affidavit that his opinion quoted in the newspaper “is based on information which is within the public arena…” He does not say if the information was in the public arena as at April 20th, when he wrote the letter.
The Statement of Claim alleges a conspiracy to breach confidence using unlawful means, a conspiracy to interfere with the economic interests of the plaintiffs, and breach of confidence. It alleges that the information was confidential and that the first and second defendants came into possession of it in circumstances which imposed upon them a duty of confidence. Thus, it is argued, they are under a continuing duty to refrain from using or disclosing the information and must disclose their sources to the plaintiffs.
As I said in my ruling of January 17, 2005, there is a good arguable case that the information in question was confidential. It concerned a private negotiation between two
parties, each of whom has sworn that they intended that the information would remain private. It may have been leaked by an employee of one of the plaintiffs or, for that matter, by an employee of Exclusive Resorts.
It is not enough that the information be shown to be confidential. The plaintiffs, on the present application, must also establish a good arguable case that the information was communicated to the first and second defendants "in circumstances importing an obligation of confidence": Coco v. A.N. Clark (Engineers) Ltd. [1969] RPC 41, at page 47. There is no evidence at all showing how, why, or in what circumstances the information was communicated to them.
Jean Cohen of the Ritz-Carlton, who was not an employee of either plaintiff at the time, was contacted on April 21st, 2004 by Alan Markoff and asked about the proposed purchase by Exclusive Resorts. Mr. Markoff was a journalist seeking information on behalf of the third defendant. Ms. Cohen said, in answer to Mr. Markoff's questions, that:
"I had heard [Exclusive Resorts] had expressed an interest about three weeks earlier... in so doing I was not confirming anything, I was merely acknowledging the existence of an unattributed and unconfirmed rumour. ...I said that I had no knowledge of the details of any ongoing deal between them, or whether any deal had been completed..."
Ms. Cohen also said it was clear to her that Mr. Markoff was aware of and had information concerning the negotiations between Exclusive Resorts and the plaintiffs.
Melissa Perkins, Director of Marketing for the plaintiffs, told Mr. Markoff on
April 21st, 2004 that “it was not a finalized deal and should not be reported as such.”
This scant body of evidence does not amount to a good arguable case that either of the defendants received the information in circumstances importing an obligation of confidence. The most reasonable inference is that rumours were circulating about the negotiations for some three weeks prior to the letter written by Mr. Broadhurst. He may have heard those rumours and passed them on to his client, who then instructed him to write the letter. Alternatively, his client may have heard the rumours and brought them to Mr. Broadhurst’s attention. Neither version of events would impose any duty of confidentiality upon Mr. Broadhurst or his client. When he wrote his letter of April 20th, Mr. Broadhurst was advancing the interests of his own client and communicating the confidential information only to those who were already aware of it – the plaintiffs and a related entity.
Mr. Broadhurst expressed his opinion to the fourth defendant on the difficulty which a sale to Exclusive Resorts might cause. There is no evidence he provided any factual information to that newspaper. By April 22nd, the date upon which he provided his opinion, the rumours had already been posted on the fourth defendant’s website.
The plaintiffs have not been able to establish that they have a good arguable case that the
confidential information was communicated in circumstances imposing a duty of confidentiality upon these two defendants. For these reasons, the application is dismissed.
Dated this 7th day of June, 2005
Henderson, J.
Henderson, J.
Judge of the Grand Court