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Arnage Holdings Ltd – resisting the "siren song" of split preliminary issues

In the recent decision of Arnage Holdings Ltd in the Grand Court of the Cayman Islands, Justice Doyle dismissed the plaintiffs’ application for the split trial of certain preliminary issues. The Learned Judge considered Grand Court Rule O33 r 3, r 4(2), and r 7, and correlative parts of the English White Book, and held that certain issues (namely retainer, duty and breach) should not, as requested by the Plaintiffs, be heard at a separate trial in advance of other issues including loss, causation and illegality.

Reference was made to the well-known English Court of Appeal authority of Rossetti Marketing Limited v Diamond Sofa Company Limited [2012] EWCA Civ 1021 and the following observations when the then Master of the Rolls (Lord Neuberger), in the same month, gave his Hamburg lecture on Judges and Professors-Ships passing in the night, giving the following well-informed warning at paragraph one of the judgment: “It represents yet another cautionary tale about the dangers of preliminary issues. In particular, it demonstrates that (i) while often attractive prospectively, the siren song of agreeing or ordering preliminary issues should normally be resisted, (ii) if there are nonetheless to be preliminary issues, it is vital that the issues themselves, and the agreed facts or assumptions on which they are based, are simply, clearly and precisely formulated, and (iii) once formulated, the issues should be answered in a clear and precise way.”

It was noted that in the case of Royal & Sun Alliance Insurance plc v T & N Ltd [2002] EWCA 1964 Civ, Arden LJ (as she then was) commented that the ability to order preliminary issues is a valuable case management tool. It must however be used with great care. A watchful eye has to be kept out for possible “treacherous short cuts” which may in the long run lead to further delays and expense. In particular, it should not generally be used where the application of the relevant law will depend on the determination of the precise facts, which have yet to be identified. Arden LJ stressed that in respect of preliminary points of law or a separate trial of a point of law if tried on the basis of assumed facts there may still have to be a second trial of the actual facts, which may turn out to be materially different from the assumed facts upon which the question of law was determined.

It was held that: “It can be seen therefore that local law has been heavily influenced by English law in this area and the courts of the Cayman Islands have taken on board the warnings at English appellate court level in respect of separate trials for preliminary issues but where the circumstances have permitted orders have been made for separate trials of preliminary issues”. The Learned Judge identified six matters to be taken into account in determining whether a split trail was appropriate and also held that where credibility and reliability of the parties and/or witnesses is interwoven throughout the issues in the case this would normally militate against a split trial.

Arnage Holdings Ltd – resisting the "siren song" of split preliminary issues

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