Anderson J
IN THE GRAND COURT OF THE CAYMAN ISLANDS IN CHAMBERS CAUSE NO: 44 OF 2005 IN THE MATTER OF CYBERVEST FUND Appearances: Mr. James Lagan of Maples & Calder Mr. Hector Robinson of Quin & Hampson Before: Justice Anderson (Acting GC Judge) Date of hearing: 5th April 2005 JUDGMENT The matter before me today, is an application by way of summons on behalf of the Petitioner herein, (Public Institution for Social Security of Kuwait) seeking the following Orders:
That the Company produce forthwith unredacted copies of the letters sent to shareholders in accordance with the Order of this Court dated 4 March 2005.
That failing production of the unredacted copies of the letters the notice of opposition to the petition filed by the Company be struck out.
An Order that the costs of and incidental to this application be payable by the Company The application arises out of the Order for Directions made by Sanderson J. on March 4, 2005. In particular, the application is made in relation to Order number 2, of the learned judge’s orders, which is in the following terms. 2. The Company shall serve on all the shareholders of the Company before March 11th (the “shareholders”) except the Petitioner copies of 2.1 The Petition; 2.2 The affidavit of Abdullah Al-Sabah sworn 31 January 2005; and 2.3 This Order, when sealed... Service is to be effected by the Company sending the said documents to the Shareholders by fax and by courier with a letter explaining the effect of this Order, such letters to be copied to the Petitioner’s attorneys, Maples and Calder. It was the position of counsel for the Petitioner, Mr. Imrie, that the Company had failed to comply with the Order above, in that it had not sent the copies of the letters sent to the other shareholders to Maples and Calder but had instead, proposed sending redacted copies of the aforesaid letter, with the contact information for each shareholder redacted. In his view, this was a clear breach of the Order of Sanderson J., and he supported that position with the following submissions. A. The Order For Directions was a “Consent Order” which, by its terms, required the Company to provide the copy letters specifically as sent to the respective shareholders. “Such letters” in the Order meant copies of the actual letters sent. Redacted copies would therefore not be in compliance with the Order. Had the Company not consented to this Order, the Petitioner would have sought and, on his reading of the matter obtained, an order requiring the Company to disclose “immediately and if necessary by means of an affidavit, a list of participating shareholders. B. Pelling v Families Need Fathers Ltd [2001] EWCA Civ 1280 at page 645, although an English case based upon the English statute, was authority for the proposition that where the applicant has a “legitimate purpose” for seeking the details of the identity of the members, the court has a discretion to make an appropriate order. In that case it was to “canvass members of the association for their votes at the forthcoming annual general meeting”. It was argued by analogy that in this contributors’ winding-up petition, there was a “legitimate purpose” in relation to which the court would exercise its discretion. That purpose was to ascertain who those shareholders are in order to canvass their support for the view which the Petitioner held on the present status and activities of the company. C. Article 143 of the Company’s Articles of Association is in the following terms: The Directors, Investment Manager, Administrator or other agent of the Company shall if lawfully required to do so under the laws of any jurisdiction to which the Company is subject or in compliance with the rules of any Stock Exchanges upon which the shares are listed be entitled to disclose any information regarding the affairs of the Company including without limitation information contained in the Register of Members and transfer books of the Company. It was counsel’s submission that this article was determinative of the issue as to the Company’s right to give effect to Order #2, as it gave clear authority for the Company to disclose the identity of the shareholders, pursuant to the Order of March 4, 2005. In other words, the Order made the information agreed to be given in paragraph 2 of the Order, “lawfully required”. Article 91 also authorizes the directors to make disclosure when they consider it necessary and “in the interests of the company”. D. The Company could not refuse to disclose the information sought by virtue of the Confidential Relationships (Preservation) Law, (the “Confidentiality Law” or “the Law”), because the information was not “confidential”, within the meaning of that Law. This was because, as articulated earlier, knowing the identities of the other shareholders was critical in a case involving a contributories’ winding up petition, and the petitioner’s purpose of itself wishing to communicate with other shareholders was a “legitimate purpose”. Further, to be confidential information, the Principal must in the course of transacting of business of a professional nature have imparted the information to a “Professional person”. This was not the position here unless the definition of “commercial agent and adviser” is wide enough to cover the directors. It must also be information “otherwise than in the normal course of business”. If it is “in the normal; course of business”, then by definition, it is “not confidential”. If it is not, then the appropriate application under section 4 of the Law must be made. E. In any event, if it is of the view that the disclosure of the information requested may cause them to run afoul of the Confidentiality Law the Company cannot just sit back and do nothing. They then have a duty to seek directions under section 4 of the Confidentiality Law so that the court may consider its position. Mr. Imrie also pointed out that there was no evidence beyond the suggestion by the Mr. Robinson of Quin & Hampson in a letter, that “some shareholders may not wish to be identified”, that there was any objection to such disclosure by the Company. F. Mr. Imrie also rejected the proposition that the case of UJB Financial Corporation v Chilmark Offshore Capital Fund Limited, decided by Schofield J. in the Grand Court on April 9, 1992, and cited by the Company’s attorneys, was of assistance in establishing that the information was in fact confidential. He pointed out that in that case the information sought was being sought, not of the directors, but of the commercial agent, namely Pierson Heldring & PiersonLtd. Moreover, if the information being sought was already available elsewhere, then it would already be outside the definition of confidential information. Maples and Calder had sought to ascertain from the attorneys for the Company whether this was the case but had not received confirmation in respect of their request. G. In further support of the submission that this was not confidential information, counsel cited Smellie J. (as he then was) in the Matter of The Ontario Securities Commission (Grand Court June 26, 1994) as authority for the proposition that there was a distinction between “agents” and “companies” in the Confidentiality Law. It was also submitted that the decision of Smellie C.J in Re Ansbacher (Cayman) Limited[2001, CILR 214] supported the submission that the categories in respect of which the Court may exercise jurisdiction are not limited to those set out in section 4(6) of the Law. Thune and Roll v Transocean Bank and Trust Company Limited and Four Others (Grand Court August 25, 1987) showed that the expression “required to give confidential information in evidence” was to be widely construed. H. Finally, Mr. Imrie submitted that the Court should reject the Company’s suggestion that the Order For Directions should be amended in relation to Paragraph 2. He submitted that if the Company was to be allowed to apply for directions under the Law, a strict timetable should be given so as to prevent further delay in this action. In support of this he cited In Re Euro bank Corp. (Grand Court, Murphy J., September 20, 1996 in which it was stated: On application for directions under the Confidential Relationships (Preservation) Law (1995 Revision) s.4, the Court will not repeatedly adjourn the proceedings so as to delay the operation of an order for the production of documents vital to the plaintiff's future course of action, on the basis of unsupported allegations that the defendants intend to apply to have the order set aside, or that unnamed third parties may be affected by the disclosure. The court will consider the propriety of disclosure solely in accordance with the guidelines set out in s.4 (6) of the Law, and will not review the decision to order discovery or the evidence upon which it was made. Mr. Farrow for the Company submitted that there was no dispute between shareholders so as to allow the disclosure of the contact information. The dispute he said was between the Petitioner and the Fund Managers. He was of the view that if the contact details were redacted, the Petitioner would still have the information that it required and that further, to supply the contact information would breach the provisions of section 4 of the Law, absent some special exception. He pointed out that like a Mareva injunction, disclosure orders are often made in anticipation of a section 4 application being made. He submitted that there was no intention that paragraph 2 of the Order was to provide the information now being requested by the Petitioner. It was merely to put the shareholders in the same position that they would have been if the petition were advertised. He also submitted that the identities and contact details of shareholders are "confidential information" within the Law and reinforced this submission with the proposition that "the register of members of an exempted company, unlike that of other companies, is not open to public inspection: see s. 44 Companies Law (2004 Revision). Thirdly, it was submitted that the relevant paragraph of the Order ought to be varied pursuant to the liberty to apply provision in paragraph 11 so as to relieve the company of the need to comply with the disclosure now being sought by the Petitioner on the basis that it was a mere interlocutory order for direction; the confidentiality point was never considered by the court at the time the order was made. Even if the unredacted letters were provided to the Petitioner, it would not provide evidence that every shareholder had been contacted, as only the register of members would be able to show that. The Petitioner perhaps should consider making an application to the Court for the register to be provided. Moreover, even if the order in paragraph 2 is not varied, “it should at least be supplemented by time stipulations sufficient to permit the company to make a section 4 application”. Finally, it was submitted that it was not at all clear that the circumstances herein, where there was no affidavit, would give the court jurisdiction to hear a section 4 application and Thune (above) was cited in this regard. The court was urged to the view that the nature of the information being sought here was “far removed from giving of “evidence in or in connection with any proceeding”, as required by the Law. For these reasons, the Order should be varied or time given to the Company to file a section 4 application. Having heard the submissions, I have come to the following conclusions. The Order for Directions is on its face clear. I do not believe that there is need to enquire further into what his lordship meant when the order was made. The order was a consent order and it was one which the attorneys on both sides had carefully worked out. I do not necessarily agree with counsel for the Petitioner that it was the purpose of paragraph 2 of the Order that the contact information be provided. However, it was a natural and necessary result of the Order and I so find. It is not at all clear to me that in those circumstances it is open to a court to amend the order without the consent of both sides. I recognize that there are cases in which it will be necessary to amend such order such as where timeframes given in an order have not been met and those timeframes have passed. I do not believe that this is an appropriate case. Secondly, I accept the submission of Mr. Imrie that Article 143 provides the necessary authority for the Company to release the unredacted copy letters in order to provide the contact information which the Petitioner seeks. I do not accept Mr. Farrow’s submission that the expression “lawfully required” in Article 143, is to be restricted to the meaning “lawfully required under the general laws” of the Cayman or any other country. If, however, I am wrong in this view, I would hold that the provision of contact information in the instant case is "in the ordinary course of business", and so is not "confidential information" for the purposes of the Law and these proceedings. I am, accordingly, of the view that the Petitioner is entitled to the Order sought in paragraph 1 of the summons. I further order that the said copies are to be provided on or before Monday April 11, 2005. As I perhaps indicated at the end of the submissions, I am also of the view that the Petitioner's attorneys must give an undertaking to this court that it will use the information solely for the purposes of this litigation, and I so order. I do not think it is necessary to grant the second order sought, since if the Company should disobey this order, it will be liable, in any event, to sanctions. Finally, I order that the costs of this application be reserved to the hearing of this matter. Judge of the Grand Court