Harre CJ
1 IN THE GRAND COURT OF THE CAYMAN ISLANDS 2 CAUSE NO. 91 OF 1997 3 BETWEEN: Jacques Scott & Co. Ltd. PLAINTIFF 4 AND: (1) The Immigration Board (2) Island Companies Ltd. DEFENDANTS 5 For the Plaintiff: Pierre Lamontagne Q.C., instructed by Charles Adams Ritchie & Duckworth 6 For the 1st Defendant: Mr. Ivor Archie, Solicitor General 7 For the 2nd Defendant: Ramon Alberga Q.C., instructed by Bruce Campbell & Co. 8 REASONS FOR ORDER 9 This was an application by the Plaintiff for judicial review of the decision of the Immigration Board ("the Board") to grant to Island Companies Ltd ("ICL") a licence under sections 10 and 11 of the Local Companies Control Law ("the LCCL"), following which I made the following Order and Declaration - 10 "1. That the decision of the first defendant of 9th December, 1996 to grant the second defendant a local company licence under the provisions of sec. 10 and 11 of the Local Companies (Control) Law (1995 Revision) be removed to this court for the purpose of its being quashed.
It is declared that the said licence is null, void and of no effect.
That the second defendant's application for the said local companies licence be further considered by the first defendant in accordance with sec. 11 of the said Law and that notice of the date specified for the meeting of the first defendant when such reconsideration is to take place be advertised in the Caymanian Compass at least seven (7) days prior to such meeting."
That the first defendant, in considering the said application, shall have regard to the written submissions made by the plaintiff to the first defendant on 10th December, 1996.
That the second defendant be permitted to trade until such time as the first defendant shall have reconsidered its said application.
That the plaintiff pay the defendants’ costs of the preliminary point raised herein by the plaintiff.
That the defendants pay the plaintiff’s costs of the application for judicial review.” Since that time consolidated appeals which was then pending against an order of the Grand Court which affirmed the Board’s consent to the transfer of 51% of ICL’s shares to a non-Caymanian company known as Nuance International Holdings Ltd (“Nuance”) has been determined by the Court of Appeal. Nuance is part of a major international group and the competitive advantage which this status may bring to it has been a source of some consternation in the local business community. The consolidated appeals were successful and the Grand Court order was vacated. The Court of Appeal ordered that the Board should rehear the application by ICL under the, LCCL observing procedural fairness, that is to say the duty to inform ICL of the substance of the objections to its application and to give it an opportunity to make representations both in writing or orally. However, before the Board was so ordered, and on the basis of the judgment and order of the Grand Court which was subsequently vacated, the attorneys for ICL wrote to the Board asking for its immediate written consent to the transfer of 51% of its shares 1 to Nuance International Holding Limited pursuant to Section 8(1) of the law. The 2 Board's decision to consent to the transfer of the shares was ratified at its meeting on 3 November 18th and perfected by a letter dated December 4th 1996. By a letter dated 4 December 5th ICL renewed its application for a licence under Section 10 of the law. 5 On Monday 9th December the Board granted the licence pursuant to Section 11 to 6 ICL. The following passage appears in an affidavit of Miss Lisabeth Walton, the 7 Secretary of the Board - 8 9 "In doing so the Board considered all the factors set out in Section 10 11.3 of the LCCL and saw fit to impose conditions pursuant to 11 Section 11.2. The Board took into consideration all the representations 12 made to it up to that date and noted that there had been no change in 13 policy between the time of the original application of March 12th 1996 14 and December 9th 1996. 15 In view of the protracted period that ICL's applications had been in the 16 public eye due to the aforementioned legal proceedings the prior 17 advertisement in early 1996 and the many representations received 18 from members of the public including competitors of ICL the Board in 19 the exercise of its discretion to regulate its own procedure did not 20 consider it necessary to invite further objections or to require ICL to 21 advertise again." 22 23 It is convenient to repeat here the description by The Court of Appeal of the process 24 under Sections 8, 10 and 11 of the LCCL which was given in the consolidated appeals 25 to which I have referred (CICA No. 8 of 1996 and M9 of 1996) - 26 27 28 "Section 8, subsection 2 of the LCCL provides: 29 "[2] The directors and officers of a local company 30 shall decline to register any transfer of shares in the 31 Company if such transfer will, to the knowledge or 32 belief of the Directors, or any of them, result in the 33 number of shares beneficially owned by persons who 34 are not Caymanians exceeding forty per cent of the total 35 number of the shares issued by the Company unless 36 prior consent is given by the Board in writing." If the consent of the Board is obtained under Section 8, the Law provides in Section 10 that the Company may then apply to the Board for a licence to carry on business in the Islands. The law therefore envisages two stages:
an application under Section 8 [2] for consent to the transfer of shares; and [2] an application under Section 10, if prior consent, to the transfer of the shares has been obtained under Section 8 [2], for the grant of a licence to carry on business in the Island." The Court of Appeal was clearly not troubled by the fact that until the shares have actually been transferred the company remains a local company and has no locus to make an application under section 10 but once the shares have been transferred a company already in business which continues to trade will be trading illegally until the licence under Section 10 has been obtained. Sometimes strict logic has to yield to practical common sense. In fact there was preliminary argument at some length as to the true date of transfer of the shares under the share purchase agreement as amended and the jurisdictional consequences. Interesting though these were I do not think that at this point in time it will be useful for me to canvass them. I addressed the point in my order by providing that ICL be permitted to trade until such time as the Immigration Board had considered its application. In considering whether the Board should grant a licence under Section 10, the Board must have regard to Section 11(3) of the Law which provides, among other things for the Board to have regard to the following matters - 1 [a] the economic situation of the Islands and the due protection of persons already engaged in business in the Islands; 2 3 4 [b] the nature and previous conduct of the company and the persons having an interest in that company whether as directors, shareholders or otherwise; 5 6 7 8 [c] the advantage or disadvantage which may result from that company carrying on business in the Islands; 9 10 11 [d] the desirability of retaining in the control of Caymanians the economic resources of the Islands; 12 13 14 [e] the efforts made by the company to obtain Caymanian participation; 15 16 17 [f] the number of additional people from outside the Islands who would be required to reside in the Islands were the application to be granted; 18 19 20 21 [g] whether the company, its directors and employees have and are likely to continue to have the necessary professional, technical and other knowledge to carry on the business proposed by the company; 1 [h] the finances of the company and the economic feasibility of its plans; 2 3 4 [i] whether the true ownership and control of the company have been satisfactorily established; and 5 6 7 [j] the environmental and social consequences that could result from the carrying on of the business proposed to be carried on by the company. 8 Board may see fit to specify therein. 9 10 11 A licencee may be subject, under section 11(2), to such terms and conditions as the 12 13 14 It was on 10th December 1996, one day after its decision to grant the licence, that the Board received a memorandum of objection from Jacques Scott & Co. Ltd. ("Jacques Scott"). 15 16 17 18 It is well known, and I take notice, that Jacques Scott is a major supplier of alcoholic and other beverages in the Cayman Islands. In essence, I view the complaint of Jacques Scott as being that the Board should have directed further advertisement of ICL's application for a licence under the LCCL. 22 23 It is important to notice the nature of the advertisements which, before any application had been made to the Board, had been placed in a local newspaper inviting local 1 participation on four occasions during February 1996. The advertisements were identical and each read as follows - "LOCAL PARTICIPATION IS INVITED IN CONNECTION WITH THE SALE OF 51% OF A LOCAL DUTY FREE, DUTY PAID AND DESTINATION RETAIL COMPANY OPERATING RETAIL STORES IN THE CAYMAN ISLANDS. THE TOTAL COST OF 51% INTEREST IS US$8,262,000.00. EXPRESSIONS OF INTEREST ARE INVITED FROM CAYMANIAN INDIVIDUALS OR COMPANIES WHICH SHOULD BE ACCOMPANIED BY EVIDENCE OF THE APPLICANT'S ABILITY TO MAKE THE FINANCIAL COMMITMENT MENTIONED ABOVE, WILLINGNESS TO ALLOW EXISTING LOCAL MANAGEMENT TO REMAIN IN PLACE AND AN ABILITY TO FUND EXPECTED CAPITAL NEEDS OF THE COMPANY. IN THE EVENT THAT THERE IS NO LOCAL PARTICIPATION FORTHCOMING, AN APPLICATION WILL BE MADE TO THE IMMIGRATION BOARD FOR THE GRANT OF A LOCAL COMPANIES CONTROL LAW LICENCE. ANY INQUIRIES SHOULD BE ADDRESSED TO P.O. BOX 268, GRAND CAYMAN, CAYMAN ISLANDS, QUOTING REFERENCE 5016." On receipt of the application of the 12th March 1996 the Board deferred making a decision with the request that the proposal continued to be advertised for a further period of thirty days to allow ample opportunity for expressions of local interest (if any). In fact the local interest was of a different nature from that solicited by the advertisement. A number of written representations were made to the Board from retailers who could be regarded as competitors of ICL. Jacques Scott was not among these. The group of objectors did, however, include Kirk Freeport Plaza Ltd ("KFL") which was a party to the consolidated appeals. KFL offers high class duty free 1 personal items such as jewelry and watches to customers but is not in the duty free liquor business. The difference in the nature of the businesses of Jacques Scott and KFL took on some significance in this case. 2 3 4 5 The advertisements which related to the application to transfer the shares, were part of the first stage of the two stage process under Sections 8,10 and 11 of the LCCL. The advertisements were invitations for local participation, not local objection. The name of the enterprise concerned is not even mentioned. Nevertheless it is argued that because of these advertisements and the publicity surrounding the 1996 Grand Court proceedings relating to the S. 8 application sufficient opportunity was given to Jacques Scott and to any other person to object and Jacques Scott has only itself to blame for having lodged no objection before the decision to grant the application under S. 10 was taken. Jacques Scott has acknowledged in its evidence that it took the decision to object on learning of an application for a liquor licence by Mr. Renard Moxam, a director and shareholder of ICL. It is now a matter of record that the application has been strenuously contested. The decision of the Liquor Licensing Board not to grant the licence has been the subject of an appeal to the Grand Court and thence to the Court of Appeal. The decision of the Court of Appeal has been reserved and is awaited. 20 21 The war has therefore shifted to another front since I made my order. I intend therefore to keep these reasons brief and, where I deem it appropriate, to refer to the decision of the Court of Appeal in the consolidated appeals Nos. 8 and M 9 of 1996. 24 There Kerr J.A. dealt succinctly with the issue of legitimate expectation, thus - “..... in any event, a legitimate expectation arises only where a person has been permitted in the past to enjoy or when he has received an assurance of a hearing before being deprived of an existing benefit - but not a mere hope of a future benefit - Council of Civil Service Unions v. Minister for the Civil Service [1985] 1 AC 374 at 408 (F-H); and Attorney-General for New South Wales v. Quin [1992] LRC (Const) 751 and, accordingly, the facts of the case did not support the finding of a legitimate expectation by the Judge. While from its very nature there can be no definite unassailable limitations to the concept of legitimate expectation, having regard to the submission of Counsel for KFL, I am of the view that it would be an unwarranted extension of the principle of legitimate expectation to meet the circumstances of the instant case.” These observations apply equally to the present case. The issue on which it turns is one of procedural fairness. Statutory bodies such as the Board undoubtedly have a general duty to act fairly. What is fair in any particular case is largely a matter of intuition, arising from the circumstances of a particular case, and other cases are for that reason often of limited applicability. Certain principles do, however, emerge. I adopt again, as I have already done recently in another judicial review matter the words of Lord Templeman in Doody v. Secretary of State for the Home Department (1993) 3 All ER 92. He said this - “What does fairness require in the present case? My Lords, I think it unnecessary to refer by name or to quote from, any of the often-cited authorities in which the courts have explained what is essentially an intuitive judgment. They are far too well known. From them, I derive the following. (1) Where an Act of Parliament confers an administrative power there is a presumption that it will be exercised in a manner which is fair in all the circumstances. (2) The standards of fairness are not immutable. They may change with the passage of time, both in the general and in their application to decisions of a particular type. (3) The principles of fairness are not to be applied by rote identically in every situation. What fairness demands is dependent on the context of the decision, and this is to be taken into account in all its aspects. (4) An essential feature of the context is the statute which creates the discretion, as regards both its language and the shape of the legal administrative system within which the decision is taken. (5) Fairness will very often require that a person who may be adversely affected by the decision will have an opportunity to make representations on his own behalf either before the decision is taken with a view to producing a favourable result, or after it is taken, with a view to procuring its modification, or both. (6) Since the person affected usually cannot make worthwhile representations without knowing what factors may weigh against his interests fairness will very often require that he is informed of the gist of the case which he has to answer." The public interest which this case has aroused has caused the procedures under the LCCL to be dealt with in an unusual way, in that major issues have had to be dealt with under the procedure pursuant to S. 8 which imposes no express requirements as to the factors which the Board has to consider when granting permission for an allotment or transfer of shares which would result in the number of shares beneficially owned by persons who are not Caymanians exceeding forty per cent of the total number of the shares issued by the company. The section appears to be addressing the issue of the sharing of the economic benefits arising from Caymanians having a stake in companies rather than the general public interest which the Board must consider under S. 11(1) and the specific matters set out in S. 11(3) to which the Board must, inter alia, have regard. In fulfilment of those specific statutory requirements the Board is under a duty to act fairly. The plaintiff says that in order to discharge this duty the Board was under a duty to communicate (probably by advertisement) to those whose vital business interests would be adversely affected by its grant the fact that an application for a licence under the LCCL had been made by ICL; that this could not have been done before the application for the licence was made on 5th December 1996; that instead, a conscious decision not to advertise the application was made and it was dealt with in secret and with unusual haste on 9th December, with a weekend intervening after the application on the 5th; and that the advertisements of February 1996 and the publicity given to the legal proceedings which arose from the issues under S. 8 were not a fair basis for the decision of the Board not to advertise the application under S. 10. The defendants’ case with regard to the duty to act fairly is essentially that having regard to the history, background and circumstances surrounding this matter between February and December 1996 the Board did so act and was not in breach of any duty towards Jacques Scott or anyone else. In addition I am invited to refuse relief to Jacques Scott on the following grounds, as a matter of discretion. On their own evidence they have not established that they have been sufficiently affected or prejudiced by the grant of the licence which they now seek to have quashed. The motive of the application for certiorari by Jacques Scott & Company Ltd is unworthy being as it is an attempt to forestall by a collateral attack the grant of an application for a liquor licence made by Mr. Renard Moxam to the Liquor Licencing Board in August 1996 to sell liquor at an outlet of Island Companies Ltd situated in the Anchorage Centre. The reason for the belated opposition to the application for a Local Companies Control Law licence by Jacques Scott & Company Ltd has nothing to do with Caymanian interest in general but to do with their special interest in the outcome of the liquor licence application and to forestall the liquor licence application being considered or granted. The grant of the Local Companies Control Law licence would not of itself entitle Island Companies Ltd to sell liquor and as Jacques Scott & Company Ltd have made it clear that they do not seek to stop Island Companies Ltd trading under the licence and that their doing so, apart from the sale of liquor, would not affect Jacques Scott & Company Ltd in any way, it must follow that the present application for certiorari is a collateral use of the judicial process namely to attack a decision of the Immigration Board which attack if successful would make the grant of a liquor licence irrelevant." It is not good enough to say that an advertisement inviting local participation in an unnamed enterprise, even if that name is not hard to guess, serves the purpose of giving notice to those having sufficient interest to wish to object. The notice serves a quite different purpose and if the invitation to local participation is accepted objection at that stage would be a waste of time and money. The stated intention to apply for a LCCL licence is conditional on an uncertain future event. In fact there were vehement objections at that stage but I do not think that Jacques Scott can be criticised for not being among them or for not having acted immediately following the Grand Court decision of October 1996. One of the factors which the Board is bound to consider under S. 11(3)(a) of the LCCL is "the due protection of persons already engaged in business in the Islands." One business may be selling one kind of product, another may be selling another. Their grounds for seeking protection may not be the same. Each, in my judgment, is entitled to object for its own reasons. I see nothing wrong in objection in those circumstances, to borrow the words of Mr. Alberga "thinking purely of themselves," as Jacques Scott did when they became aware of Mr. Moxam's intention to seek a liquor licence at one of the ICL premises. An LCCL licence may, pursuant to S. 11(2) of the LCCL, be subject to such terms and conditions as the Board may see fit to specify therein. I find the distinction 1 between an “indirect” interest of Jacques Scott in the LCCL application and a “direct” 2 interest in the application by Mr. Renard Moxam under the Liquor Licensing Law to 3 be an artificial one. The outcome of each might directly affect their business. 4 direct interest is not confined to cases where there is a “case to answer”, such as a 5 revocation of a licence where a duty to give the company concerned an opportunity to 6 object is set out in S. 11(4) of the LCCL. The powers and duties of the Liquor 7 Licensing Board and the Immigration Board are easily distinguishable. Issues which 8 could be canvassed before the Immigration Board under the LCCL might well be 9 found to be beyond the powers of the Liquor Licensing Board to determine. 10 11 While the Board can determine its own procedure, that is subject to the overriding 12 duty of fairness. Although the question before me was not whether I thought the 13 Board should have acted otherwise than in the way it did but whether it was wrong to 14 such a degree that the Court should interfere, I concluded that in the very unusual 15 circumstances of this case I should do so. I am not by this decision seeking to lay 16 down any general rule of procedure, save to say that it is the duty of the Board to 17 consider carefully in the light of the requirements of S. 11(3) of the LCCL the extent 18 of the consultative process which fairness, both to the applicant and others, demands. 19 20 I will, however, make one last observation. The spate of litigation which has arisen 21 out of the cumbersome procedures with which the Immigration Board has been 22 saddled under the LCCL makes it desirable that the drafting of the Law be scrutinised 23 with a view to improvement. 24 1 Leave to appeal against order to strike out. 2 3 4 5 6 7 1st September 1998 G.E. Harre Judge 8