CAYMAN ISLANDS Law and Practice Contributed by: Alan Bercow, Jae Shin and Ross McLeod, Appleby
1. Fraud Claims 1.1 General Characteristics of Fraud Claims Fraud claims under Cayman Islands law are gov - erned by principles of equity and common law. They generally involve the need to prove delib - erate or reckless deception and loss sustained as a result. Civil fraud claims can be framed in various ways and are not confined to a single cause of action. False Statements The making of a false statement can give rise to a claim in the tort of deceit when a false repre - sentation has been made knowingly (ie, without belief in its truth) or recklessly (as to whether or not it is true), with the intent that the other party will rely on that false representation. The party making the false representation will be liable for loss and damage caused to the other party in reliance on that false representation. Claims based on misrepresentations that induce a contract can also be brought under the Con - tracts Act (1996 Revision) without the need to prove fraud, with the added advantage that the burden of proof is reversed in that party who made the representation must prove that they had reasonable grounds to believe that the facts represented were true. Conspiracy As fraud often involves people acting together either wrongfully or to achieve wrongful ends, a conspiracy claim may arise that gives rise to liability. Conspiracy is an economic tort. There are two different types of conspiracy: unlawful means conspiracy and lawful means conspiracy. These are addressed in 1.3 Claims Against Par- ties Who Assist or Facilitate Fraudulent Acts .
Misappropriation/Breach of Fiduciary Duty Claims for breach of fiduciary duty are com - mon in commercial fraud cases. Someone who is entrusted with looking after another person’s property and with authority to make discretionary decisions on that person’s behalf owes fiduciary duties in respect of that property. In 1998, the relationship was described by the English Court of Appeal in Bristol and West Building Society v Mothew as follows: “A fiduciary is someone who has undertaken to act for or on behalf of another in a particular matter in circumstances which give rise to a relationship of trust and con - fidence. The distinguishing obligation of a fiduci - ary is the obligation of loyalty... A fiduciary must act in good faith; he must not make a profit out of his trust; he must not place himself in a position where his duty and his interest may conflict; he may not act for his own benefit or the benefit of a third person without the informed consent of his principal” . The Cayman court agreed with this formulation in Renova Resources Private Equity Ltd v Gilbertson [2009] CILR 268. Typical relationships in which a fiduciary duty is owed include a trustee (to the beneficiary), a company director (to the company), an attorney (to the client), a partner (to the other partner(s)) and an accountant (to the client). Fiduciary duties may also be owed by one joint venturer to another where one joint venturer has control of the assets of the joint venture. Unjust Enrichment A claim in unjust enrichment arises where a defendant has been enriched at the expense of the claimant in circumstances where the enrich - ment was unjust, and where no defences arise. “Enrichment” entails receipt of something of value, such as money, shares or the discharge of an obligation. “At the expense of the claimant” means suffering a loss – namely, that the claim -
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