Court name
Supreme Court of Turks and Caicos Islands
Case number
CL 53 of 2003

Rainville v. Orr and Others (CL 53 of 2003) [2003] TCASC 9 (27 August 2003);

Law report citations
Media neutral citation
[2003] TCASC 9
Ground, CJ

IN THE SUPREME COURT                                                                                                                                   CL-53/03







3.     MCLEANS



Mr. A Davidson for the plaintiff;

Mr. A. Jones QC for the first defendant; and

Mr. J. Katan for the 2nd to 4th defendants.


1.             The plaintiff's principal cause of action is based on an alleged oral agreement in February 2002 that the parties would divide their "joint assets" equally. No particulars are given in the pleadings of where this agreement was made. In paragraph 26 of the affidavit in support the plaintiff merely says:

"At the time of our separation, the 1st Defendant and I agreed orally to divide our property equally. This agreement reflected my understanding that the assets accumulated during our marriage would be shared jointly by us in the event of our separation."

2.             It is then alleged that the first defendant had prepared a Memorandum of Understanding "which purported to have included in it all of the assets (other than the assets of the Misha Trust isle of Man) of the parties acquired during the marriage." and she refers to those as the '‘Disclosed Assets"." The plaintiff says that the first and second defendants deliberately deceived her as to the completeness of that disclosure, because it did not include various other assets. These are listed in the affidavit of a forensic accountant Mr. Rizarri. Various allegations of negligence and deceit are then made against the firm of attorneys to which the second defendant belonged in respect to the Memorandum of Understanding.

3.             By way of relief the plaintiff seeks rectification of the Memorandum of Understanding (although at paragraph 43.1 of the Statement of Claim she refers to "rectification of the agreement"); she also seeks damages for breach of the Agreement, by which she means the oral agreement; she seeks against the attorneys, damages for deceit; and against everyone various proprietary and other remedies.

4.             All this turns upon:

(i)            first of all the alleged oral agreement which at the moment is wholly unparticularised; and

(ii)           secondly the alleged breach of it. the evidence for which is to be found in the analysis performed by Mr. Rizarri. He has analysed a lot of unsourced documents provided to him by the wife, and as a result deposes that they show assets exceeding Can $17M. As to the source of those documents, she simply says that they "were obtained from records in my possession and from information downloaded from the 1st Defendant’s computer." Because of the dates of the documents referred to in Mr. Rizarri's schedule it seems to me that there is a real risk of double counting in this analysis, and though that would obviously be a matter for trial were we to get there, it was for that reason that the ex parte order was made for a sum considerably less than the $10M originally claimed.

5.             There is a separate and quite distinct claim in paragraphs 40 - 42 of the Statement of Claim, referring to 44,000 special warrants, which is independent of the alleged agreement. It seems primarily to be a claim that Temple Trust hold them on trust for the Plaintiff, and it is against them that the primary remedy is sought.

6.             Although various specific allegations are made about the ownership of certain trusts and other properties, these appear to be by way of background to the financial holdings of the parties, rather than themselves giving rise to specific causes of action. However, the plaintiff seems to be saying that, to the extent that they embodied her assets, she is entitled to recover those assets from the first defendant and/or the trustees, and that is the basis for the proprietary claims she maintains.

7.             Against that background Mr. Jones, for the first defendant, argues that the oral agreement as to equal division can only have been made in the context of, and to implement the parties’ rights under, the Ontario Family Law Act ('the FLA’). It should, therefore, he says, be struck out as disclosing no reasonable cause of action and/or as an abuse of process. In any event he says that the Turks and Caicos Islands courts lack subject matter jurisdiction in respect of an FLA application, and yet that is the best and most effective remedy. Moreover, he says the Ontario court is clearly and distinctively the most appropriate forum, and the TCI action should, therefore, be stayed on forum non conveniens grounds. There are then various subsidiary arguments as to why the ex parte relief should be discharged, being (i) that this court cannot grant Mareva relief in respect of foreign proceedings which have not resulted in a judgment: (ii) that the plaintiff does not have a good arguable case on breach of the oral agreement: and (iii) that there is no evidence that the 1st defendant is likely to dissipate his assets in order to avoid meeting any judgment awarded against him here.

8.             Against that background I consider that there is no doubt on the plaintiff's evidence that the alleged oral agreement was in fact reached against the background of the Ontario requirements as to matrimonial property, and that appears from paragraph 26 of the Plaintiff's affidavit, where she says:

"The 1st Defendant and I separated in February 2002. At the time of our separation, the 1st Defendant and I agreed orally to divide our property equally. This agreement reflected my understanding that the assets accumulated during our marriage would be shared jointly by us in the event of our separation. It was on this basis that I trusted the Defendant to manage our assets including assets owned by me."

9.             Moreover, the general tenor of the Ontario law is also admitted by her in paragraph 75 of her affidavit, where she says:

“I have commenced divorce proceedings in the Province of Ontario, Canada. I am advised by my Ontario solicitors and do verily believe that Ontario property law for married and separated spouses is governed by the Family Law Act and that, under the statute, all property no matter what its nature or location is valued and equalized from the date of marriage to the date of separation. I am further advised that the Memorandum does not meet the formal and substantive requirements of a domestic contract to settle property rights between spouses in Ontario, nor does it purport to release these rights, and would not be regarded as a legally binding document for the purposes of the Family Law Act. These proceedings have not yet been served on the 1st Defendant."

10.          The first defendant has supplemented that statement of the law, which comes from the plaintiff, by affidavit as to Canadian law, from which it is apparent that the Memorandum of Understanding would not be regarded as binding because it is not witnessed. A fortiori, the preceding oral agreement for equal division on which the plaintiff sues, being oral, would also not satisfy the formal requirements for a binding agreement.

11.          I think first of all that the proper place to litigate this issue is Ontario. I would, therefore, have stayed the action on forum grounds. But it goes beyond that. I think that, in the absence of express agreement, the proper law of the oral contract alleged must be Ontario law, because it can only represent the settlement of the plaintiff’s claims under the Family Law Act and the release of the first defendant from those claims. It is therefore unenforceable, not meeting the formal requirements of s. 55(1) of the Family Law Act. To the extent, therefore, that the action is based on the alleged oral agreement to divide the matrimonial property equally, it must fail and I strike it out.

12.          Were I wrong on that I would, to the extent that the action is based upon the oral agreement, have struck it out as an abuse of process, being an attempt to use this court to perform the functions of the Canadian court under the Family Law Act. That is because of the nature of the relief sought. I would not go so far as to say that this court did not have subject matter jurisdiction over a separation and maintenance agreement made here in respect of a foreign divorce. But, to the extent that the relief claimed in this action is rectification of the Memorandum of Understanding, it is not really the enforcement of a separation and maintenance agreement which the plaintiff seeks, but the tearing up of the existing one and its replacement with a new one after a thorough investigation of the parties' financial positions. Once it is put that way. I think that it is plain that that is the job of the Canadian courts, and not of this one. Nor is there anything to show that the Canadian court would recognise or accept the result, even if this court were to do all of that. There is nothing to debar either party, if dissatisfied, from applying again there, and the whole exercise would have to be gone through again.

13.          In those circumstances I think it is simply an abuse of this court’s process to seek to litigate that here. It may well be that the reason for trying to doing so is the Mareva injunction. But if the action is abusive it does not make it any less so that its primary purpose is to obtain relief which would not otherwise be available from this court. On the other hand it appears that the Canadian Court has wide powers to protect the wife and to preserve the position during its determination.

14.          If there is a proprietary claim. I think it is inadequately pleaded. It simply amounts to an assertion that some of her assets were put into trusts for which she has never had an accounting. To the extent that she claims an account, she does not allege that she has asked for one from the trustees, and been denied. To the extent that she admits receiving $3.4M from the Misha Trust in the Isle of Man. it would seem at first glance that she has been paid out her property. Her real objection seems to be that the 1st defendant has not declared and then divided his own assets equally, and that is not a proprietary claim. I therefore strike out the proprietary claims, and the claims for an account. In respect of the latter. I do so with caution. To the extent that this court has jurisdiction over local trusts and local trustees, it will exercise it when required. Should the time come when an accounting is demanded and refused. I would look at the question then.

15.          I therefore strike out the claims against the first defendant. It follows that I discharge the Mareva Injunction, and the ancillary orders for disclosure, which were for the purpose of policing the injunction.

16.          I have not yet heard detailed arguments on the other claims, by which I mean claims other than the proprietary claims and the claims for an account against the other defendants. These are primarily claims in breach of contract and deceit. I do not think that they necessarily fall with the primary cause of action. They may have other defects, as set out in Mr. Katan’s skeleton, but they have not been argued at length at this stage. It may also be, now the action against the primary defendant has gone, that there is little commercial sense in pursuing that other relief. However. I invite counsel's submissions on how to proceed in respect to them. There is also the outstanding application for the amendment of the writ, or more properly to amend the Statement of Claim filed with the writ, which is still live against the other defendants.

Dated this 27th day of August 2003.

Richard Ground

Chief Justice