Cayman Islands – Grand Court
Grand Court, Graham J., 23 marzo 2001 [C. Bonotto, F. I. Bonotto E. Bonotto and Elbo Limited v
G. Boccaletti and four others]
The background
I delivered judgment in this matter on June 2nd, 2000, after an eight-week trial. Notice of appeal was filed shortly thereafter
but was, on March 12th, 2001, withdrawn. Accordingly, my findings of fact as set out in that judgment stand. I found that, for
the purpose of misleading the court, and of course cheating the plaintiff, Mr. Boccaletti had produced a series of false
invoices, altered bank documents and had behaved in a dishonest manner, both in relation to the taking of the plaintiffs' money
and in his conduct of the proceedings. Only an "unless" order made on May 20th, 1998, two years after the commencement of
litigation, brought about the disclosure of the Sphinx documents, and that after much prevarication and frequent changes of
lawyers. Those documents, inter alia, proved fatal to his case and are now of great importance in relation to the present
application. My findings of fact as to the credibility of Mr. Boccaletti were as follows (2000 CUR nt 159):
"In short, I find [Boccaletti] to be a swindler. [His] performance in the witness-box has made it clear that he can properly be
described as a persistent and inventive liar, a person capable of bribing a witness, a maker of false documents, a person who
has made fraudulent alterations on bank statements and, in general, a person not to be trusted. … My findings as to [his]
modus operandi in relation to documents make it impossible to accept Gipa's documents [alleged invoices] at face value no
matter how many stamps appear upon them."
The application
I rejected Mr. Boccaletti's most recent attempt to satisfy the court in relation to the order made against him to account for all
moneys withdrawn from the Elbo account (beneficially owned by the plaintiffs) with the Swiss Bank & Trust Corp. ("Swiss
Bank"). This was his second attempt to do so, and I accordingly fixed the final judgment sum to be paid by him as
US$1,433,932.92, being the sum of US$867,371.81 together with interest at 8% per annum compounded with quarterly rests.
Boccaletti has failed to pay any sum arising out of the court order made on June 2nd, 2000 or any of the costs awarded against
him. His wife, the fifth defendant, was also ordered to pay the costs of the suit.
The application now before the court is for a declaration that Boccaletti is and has always been the beneficial owner of Nos.
30 and 34 Laguna del Mar and No. 721 Grand View, all situated on the Seven Mile Beach, Grand Cayman. The "legal" owner
of all these properties is a company named Deal Age Ltd.
Chronology of key events
Between January and May 1986, Boccaletti systematically took for his own use sums to the total of US$869,000 which had
been placed in his hands by the plaintiffs, thereby constituting him a trustee. Mr. and Mrs. Boccaletti purchased No. 30
Laguna del Mar for $300,000. The purchase price comprised both money belonging to the plaintiffs (US$41,850) and money
belonging to Sphinx Corp. Ltd. ("Sphinx"), a company beneficially owned and controlled by Mr. Boccaletti alone. On April
16th, 1993 Mr. and Mrs. Boccaletti purchased No. 34 Laguna del Mar for US$295,000. The funds for the purchase of this
apartment were provided by Sphinx, Mr. Boccaletti's company.
On May 10th, 1996, the plaintiff commenced proceedings against Mr. Boccaletti and others and obtained an ex parte
injunction supported by an affidavit. On May 25th, 1996 Mr. and Mrs. Boccaletti saw Mr. Roger Nelson of Nelson & Co. Mr.
Nelson took full instructions in respect of the affidavit supporting the ex parte injunction, obtained two weeks before. It is to
be noted that that date was only established when Mr. Nelson was called to produce the document in the course of the trial. Up
until then, Mr. Boccaletti had claimed that he had not known of the proceedings until many months thereafter.
On May 31st, 1996, Mr. Boccaletti instructed the tenant of No. 30 Laguna del Mar to pay the rent for the apartment to Mrs.
Boccaletti directly instead of Sphinx. On August 16th, 1996, Deal Age Ltd. was incorporated with the sole shareholder being
Mrs. Boccaletti, and the directors Mr. and Mrs. Boccaletti. On August 16th, 1996, Deal Gael Ltd. was incorporated with the
sole shareholder being Mrs. Boccaletti and the directors Mr. and Mrs. Boccaletti.
In September 1996, Deal Gael acquired Nos. 721, 731 and 732 Grand View, notwithstanding that they were previously
contracted for in the name of both Boccalettis (they were bought at the pre-construction stage). Two of their apartments, Nos.
731 and 732, were sold for US$525,000 and US$495,000 respectively. This left No. 721 in the hands of the Boccalettis. Mrs.
Boccaletti was the sole shareholder of Deal Gael Ltd.
On October 11th, 1996, Douglas, Ag. J. restrained Mr. Boccaletti from disposing of any of his assets. On February 3rd, 1997,
Mr. Boccaletti applied to Murphy, J. to restrict the order of Douglas, Ag. J. so that it applied only to the extent of US$1.2m. or
to No. 16 Laguna del Mar. On February 5th, 1997, Mr. and Mrs. Boccaletti transferred Nos. 30 and 34 Laguna del Mar to
Deal Age Ltd. for no consideration, Mrs. Boccaletti being the sole shareholder of that company.
On October 2nd, 1998, a consent order was made by which Mr. and Mrs. Boccaletti agreed to sever the joint tenancy at
Laguna del Mar. The effect of this was to enable the plaintiffs, in the event that they were to obtain a judgment against Mr.
Boccaletti, to proceed with the sale by way of a charging order. The valuation of No. 16 was then estimated at US$1.2m. It
has since fallen to US$lm.
On January 7th, 2000, Mrs. Boccaletti transferred her shares in Deal Age Ltd. to her three sons, Alessandro, Andreas and
Giancarlo Boccaletti. This was for no valuable consideration. On January 7th, 2000, Deal Gael Ltd. transferred 721 Grand
View to Deal Age Ltd. for no consideration (Deal Gael Ltd. then had no assets). On March 10th, 2000, Mr. Boccaletti
resigned as director of Deal Age Ltd.
On March 20th, 2000, the trial commenced. On May 9th, 2000, judgment was delivered in favour of the plaintiffs. On June
2nd, 2000, the court ordered:
( a ) Gianni Boccaletti was to account for all moneys withdrawn from Elbo's account with Swiss Bank;
(b) Gianni Boccaletti was to pay US$1,433,932 as an interim payment;
(c) Gianni and Helga Boccaletti and Sphinx were ordered to pay the plaintiff's costs; and
(d) injunctive relief then in place was to continue until further order.
On July 6th, 2000, an ex parte order was made to this effect:
(a) Gianni and Helga Boccaletti, as directors of Deal Gael and Deal Age, were restrained from charging or disposing of Deal
Age and Deal Gael's assets and in particular CIBC accounts and Nos. 30 and 34 Laguna del Mar and 721 Grand View;
(b) Gianni and Helga Boccaletti, as shareholders of Deal Age and Deal Gael, were restrained from removing themselves as
directors o r from disposing of shares in the companies;
(c) Gianni Boccaletti was free to dispose of assets in excess of $3m.; and
(d) Sphinx and Helga Boccaletti were free to dispose of assets in excess of $400,000.
On August 4th, Helga Boccaletti was removed as a director of Deal Age Ltd. by a members' resolution of her three sons who
appointed themselves in her place. Although there was not a technical breach of the injunction dated July 6th, it broke its spirit
in every material particular. The assets of Deal Age Ltd. and Deal Gael Ltd. were frozen by an order of Sanderson, J. up to
US$2m. on September 19th, 2000. No dealings were to be permitted in Nos. 30 and 34 Laguna del Mar and 721 Grand View.
On March 20th, 2001, the reserve price for the sale of No. 16 Laguna del Mar was reduced from US$1.2m. to US$1m. The
court was informed that the total indebtedness, including costs, is approximately US$1.8m.
Gianni Boccaletti's dealings with the three properties in question
No. 30 Laguna del Mar
This condominium was purchased in the name of Gianni and Helga Boccaletti on January 9th, 1989. The purchase price was
paid mostly from funds in Swiss Bank account No. 51523, the Sphinx account, of which Gianni Boccaletti was the beneficial
owner. In addition, the sum of US$41,850 was taken from the Elbo Ltd. account which, in the principal judgment, was found
to belong beneficially to the plaintiffs. The discovery process revealed clear evidence that all outgoings in respect of the
condominium were paid from the Sphinx account as per written instructions to Swiss Bank dated Januar; 27th, 1989. All
rental income was paid into that account.
His attempt to create the illusion of joint ownership with his wife is belied by the objective facts. At all times he knew he was
dealing with the plaintiffs' money but hoped, if detected, to be able to say that his wife had a half interest in every property
bought. In the principal judgment it was found that Gianni Boccaletti had notice of the proceedings in the principal action by
May 24th, 1996. Seven days later, on May 31st, 1996, he instructed the tenant of No. 30, a Mr. Tomkins, to pay the rent
directly to Helga Boccaletti instead of to Sphinx.
On August 16th, 1996 Deal Age Ltd. were incorporated with the sole shareholder being named as Helga Boccaletti, the
directors being Gianni Boccaletti and Helga Boccaletti. Deal Gael Ltd. was incorporated on the same day with the same
corporate structure and officials. Up to the time of the order to pay the rent directly to Helga Boccaletti, Gianni Boccaletti
benefited wholly and exclusively from the rent, as it was paid to Sphinx, which had paid all the outgoings. His wife had no
benefit whatsoever. After the request to pay the rent directly to Helga Boccaletti, Sphinx continued to pay the outgoings,
which is inconsistent with real ownership on her part. I find that the payments to Helga Boccaletti were a mere sham and that
he retained the entire beneficial ownership of No. 30.
His next move was on February 5th, 1997, when No. 30 was transferred by Gianni and Helga Boccaletti to Deal Age Ltd. for
no valid consideration. As has been indicated, Mrs. Helga Boccaletti was the sole shareholder of that company.
No. 34 Laguna del Mar
The history of this condominium is very similar to that of No. 30. In short, it was purchased in the joint names of Gianni and
Helga Boccaletti, the funds coming exclusively from Sphinx. The rents and outgoings were dealt with by Sphinx. The
property was also transferred to Deal Age for no valid consideration on February 5th, 1997.
I find as a fact that at all times Gianni Boccaletti retained the entire beneficial ownership in both Nos. 30 and 34 and that he
was the beneficial owner of Deal Age. These were investment properties and in a completely different category from that of
the matrimonial home, No. 16 Laguna del Mar, where Gianni and Helga Boccaletti had joint interests in the property. Gianni
Boccaletti's evidence at the trial was that he was the businessman of the family and that his wife took no part in it whatsoever.
I find that she merely did what she was told to in order to carry out Gianni Boccaletti's purposes in attempting to make his
assets judgment-proof by creating a bogus corporate structure.
No. 721 Grand View
This condominium was one of three purchased in September 1996. As was his habit, Gianni Boccaletti put the properties in
the joint names of himself and his wife. However, they were taken in the name of Deal Gael Ltd. The other two were sold for
about US$1m. There has been no accounting for the proceeds of those sales. The discovered documents demonstrated that the
funds came exclusively from Sphinx.
On January 7th, 2000, Helga Boccaletti transferred her shareholding in Deal Age to her three sons and on the same day, Deal
Gael transferred No. 721 to Deal Age for no consideration. The timing is significant as, at that stage, a handwriting expert
instructed by the plaintiff was, to the knowledge of Mr. Boccaletti, in a position to give evidence as to his forgeries and
deletions on his Swiss Bank account statements. Ten days before the commencement of the trial, Gianni Boccaletti resigned
as a director of Deal Age.
Deal Age's bank account was held in the George Town branch of CIBC. This account received the rent and paid the outgoings
for all three condominiums after Sphinx's actions were closed down. Boccaletti then permitted the company to be struck off
the Register. He now says that he has no interest in any of the condominiums, or in Deal Age, and consequently the court has
no jurisdiction to impose upon them the charging orders sought by the plaintiff. Unfortunately for Gianni Boccaletti, his son,
Alessandro Boccaletti, in his affidavit dated September 8th, 2000, reveals that his father Gianni Boccaletti is a signatory of the
bank account and that his expenses are paid out of that account for unspecified "functions" on behalf of the company. In
addition, that account discharges his credit card charges. Those debits were, in the past, paid by Sphinx.
In the light of all these facts, Gianni Boccaletti's claim that he has nothing to do with Deal Age can be discarded as yet another
of his lies, designed to hide the truth that he is, in reality, the owner of Deal Age, a company which "dances to his bidding."
The corporate structure put in place is a mere sham. There was clear evidence at the trial that all his children do precisely what
they are told. In respect of Gipa Pagi, his Italian clothing company, when its assets were fraudulently transferred to his new
company in Hungary, his son was "left holding the baby" and went to prison as a result. Despite all that, the family remains
united!
The argument was put to me on behalf of Gianni Boccaletti that the presumption of advancement applied when property was
placed in the joint names of himself and his wife and, in her case, when she transferred the shares of the company to her sons.
In both instances, that presumption is rebutted by the facts that I have found. I take the liberty of quoting the remarks of the
Chief Justice made on July 25th, 2000, when sitting as a single judge of the Court of Appeal:
"I am unconvinced that Gianni Boccaletti did not have the means to satisfy the aspect of the judgment calling for the
immediate interim payment to the plaintiff of US$1.5m. … All the indications point to his remaining the beneficial owner of
the properties-which were transferred to Deal Age Ltd. and Deal Gael Ltd. for no consideration--of which the companies still
own the proceeds of sale. . ."
I respectfully agree with his conclusions and add that the remaining condominiums are held in the name of that company.
The law
The courts have shown themselves ready to lift the corporate veil when the device of incorporation is used for some improper
purpose. In this case, I have found that Gianni Boccaletti, as far back as 1986, knew that, in effect, he was stealing the money
placed in trust to him by the plaintiff. His flagrant and repeated breaches of that trust are set out in detail in the principal
judgment. In that context, any corporation created by him or those under his control after that time is liable to be pierced to
discover the truth.
In Merchandise Transp. Ltd. v British Transp. Commn., a transport company caused one of its subsidiaries to make an
application for licences when it knew that, due to its history, it would have been unlikely to succeed if it had made the
application itself. The Court of Appeal in England held that the subsidiary companies were not to be treated as independent
entities but were part of one corporate structure under the direction of the main board.
In Jones v Lipman, the Chancery Division refused to permit the vendor of land to avoid specific performance by transferring
it to a company formed for that purpose. The court found that the company so formed was a "sham."
In Creasey v Breachwood Motors Ltd., a company was being sued for wrongful dismissal when the plaintiff found that the
company which had employed him had transferred its assets to an existing associated company in order to render itself
judgment-proof. As the learned judge, Richard Southwell, Q.C., referring to Jones v Lipman, said ([1992] BCC at 647-648):
"The most important factor in this case is that Mr. Ford and Mr. Seaman, and through them Motors, deliberately ignored the
separate corporate personalities of Welwyn and Motors, and did so with the benefit of the advice of the solicitors acting for
Welwyn and Motors.
Nothing I have seen in the evidence could justify their conduct in deliberately shifting Welwyn's assets and business
into Motors in total disregard of their duties as directors and shareholders, not least the duties created by Parliament as a
protection to all creditors of a company …
Mr. Ford and Mr. Seaman decided instead to remove the business and assets of Welwyn to Motors, and, realising that the
business could not be carried on satisfactorily unless Welwyn's trade creditors were paid, paid their then actual creditors, but
left Mr. Creasey facing a defendant without assets. They did so in full knowledge of Mr. Creasey's claim...
In all the circumstances, however, this is a case in which the court would be justified in lifting the veil …"
He referred (ibid.) to the facts of Re a Company, in which:
"the defendant had created a network of English and foreign companies through which he could dispose of his English assets
and, when [as a result of his fraud] the insolvency of the plaintiffs was imminent ... he had used this network to dispose of his
assets. In these circumstances, the court would pierce the corporate veil in order to achieve justice ... subject to the limitation
that [the order] was restricted to those companies and trusts over which the defendant exercised substantial or effective
control. In its judgment delivered by Cumming-Bruce, L.J. the Court of Appeal said... :
‘In our view the cases before and after Wallersteiner v Moir ... show that the court will use its powers to pierce the corporate
veil if it is necessary to achieve justice irrespective of the legal efficacy of the corporate structure under consideration. As
Lord Denning M.R. said ... in the Wallersteiner case, the companies there identified were distinct legal entities and the
principals of Salomon v Salomon & Co. Ltd. … prima facie applied. But only prima facie. On the facts of the Wallersteiner
case, the companies danced to Dr Wallersteiner's bidding … "' .
His Lordship continued (ibid., at 648-649):
"The power of the court to lift the corporate veil exists. The problem for a judge at first instance is to decide whether the
particular case before the court is one in which that power should be exercised, recognising that this is a strong power which
can be exercised to achieve justice where its exercise is necessary for that purpose, but which, misused, would be likely to
cause not inconsiderable injustice."
For all the reasons set out in this ruling and in the principal judgment, I lift the corporate veil in respect of all the companies in
which Gianni Boccaletti has been involved, namely Deal Age, Deal Gael and Sphinx.
It is submitted to me on the authority of Law Debenture Corp. PLC v Ural Caspian Oil Corp. Ltd. that, in the absence of a
Mareva injunction over Sphinx, Deal Age and Deal Gael at the time of the various transfers, there was no actionable wrong
committed by Gianni Boccaletti. The following passage from the judgment of Bingham, M.R. (as he then was) was relied
upon ([1995] Ch. at 165-166):
"It is not in dispute that Hilldon could, on timely application have been ordered to transfer the shares to Overseas and
restrained from transferring them on to Caspian or anyone else. It is said that Hilldon could only be restrained from
acting unlawfully and that it would be liable to such restraint if such onward transfer were lawful. Therefore
onward transfer is to be regarded as unlawful, as violating Law Debenture's right that it should not take place. As
a party to this onward transfer Caspian are party to the unlawful and so liable.
To my mind this chain of reasoning harbours a fallacy. It is of course true that the courts restrain the commission
of unlawful acts such as threatened breaches of contract or torts or breaches of trust and grant mandatory orders
for the doing of things which it would be unlawful not to do. But all injunctive orders are not of this kind. The
court will restrain a defendant and potential judgment debtor from making himself judgment-proof by dissipating
his assets and may order him to give disclosure of assets in support of the injunction. But the defendant violates
no legal right of the plaintiff if he makes himself judgment-proof by dissipating his assets before he is enjoined
from doing so and he does not act unlawfully in failing to give disclosure before he is ordered to do so. These are
measures the court adopts to protect the efficacy of its orders."
He continued (ibid.):
"Until some injunction was granted, Hilldon was in my judgment entitled to do what it would with its own. I
cannot regard the onward transfer as an actionable wrong, and it would in my view defeat the ingenuity of any
pleader, to frame a plausible statement of claim based on that transfer alone."
Those comments were made on the special facts of that case. In this case, as I have already pointed out, Mr.
Gianni Boccaletti was in breach of trust and was in continual breach of trust from 1986 onward. Each time he
transferred his own money it was with a view to judgment-proofing himself. He had transferred considerable sums
of money out of the jurisdiction, for which no accounting has properly been given, and I find that in protecting his
own assets, because he knew he was in breach of trust at the time, he was at that stage judgment-proofing himself.
As a result of the funding of the purchase of No. 30 Laguna del Mar and because of Mr. Boccaletti's knowledge at
the time of purchase, the shares of that company are clearly imprinted with the hallmarks of judgmentproofing. I
find this to be a highly significant fact.
It is further submitted to me that by virtue of s.23 of the Registered Land Law (1995 Revision), no charging order
can be made on either of the three properties in question. Section 23 provides as follows:
"Subject to section 27, the registration of any person as the proprietor with absolute title of a parcel shall vest in
that person the absolute ownership of that parcel together with all rights and privileges belonging or appurtenant
thereto, free from all other interests and claims whatsoever. . ."
That section has of course is to be read with s.164 of the same Law which provides: "Any matter not provided for
in this or any other law in relation to land, leases and charges registered under this Law, and interests therein,
shall be decided in accordance with the principles of justice, equity and good conscience."
In Myles v Prospect Properties Ltd., Kerr, J.A. said, quoting Schofield, J. at first instance (1994-95 CLLR at 17):
"’I am satisfied that our Registered Land Law recognizes equitable claims and interests unless they are
inconsistent with the Law.'
However, the limitations on the role of equity in this regard rest not merely on reasoned conclusion but on the
very last section of the Law, s.164...
I interpret these provisions as intended to make equitable principles applicable only to matters not dealt with
under the Law either expressly or by inescapable implication. Therefore, it follows that to determine whether or
not equitable principles apply in cases such as the instant appeal, regard must be had as to such provisions of the
Law as expressly deal with matters arising in the instant case as well as to the scheme and general legislative
intent of the Law."
In my judgment, there is nothing in the Registered Land Law which prevents the "eye of equity" focusing on the
real activities of Mr. Gianni Boccaletti. They were fraudulent throughout.
I make the following declaration: Gianni Boccaletti is and has always been the beneficial owner of Nos. 30 and 34
Laguna del Mar and No. 721 Grand View, being the properties known respectively as West Bay Beach South,
Block 12E, Parcel 77H, 29 and 33, and West Bay Beach South, Block 13B, Parcel 206H, 37, which properties are
legally owned by Deal Age Ltd.
I order charging orders nisi over all those properties. I further order that Gianni Boccaletti, Helga Boccaletti and
Deal Age Ltd. pay the costs of this application, to be taxed if not agreed.
Orders accordingly.