In his ruling Chief Justice Anthony Smellie found that the case was marred by allegations of abuse and that Walkers lawyers, if not intentionally, breached their obligations of the attorney-client confidentiality, opening the doors for a $400 million claim against the local leading offshore law firm.

The case took more than a year to go through the courts, though it actually began some five years go and involved a number of parties, including two Brazilian bankers as well as Cayman-registered firms Arnage Holdings Ltd, Brooklands Holdings Ltd and East Farthing Holdings Ltd.

The chief justice dismissed claims by Walkers, the defendants, that despite a 25-year multi-generational relationship and invoices to the contrary, the plaintiffs were not their clients. CJ Smellie said in his ruling that “the Defendant (Walkers) should not have accepted the Dr Braga Retainer, as the defendant has itself come to belatedly acknowledge”.

He said that in acting for Braga against the plaintiffs, their other clients, Walkers breached its duties and obligations of trust, confidence and loyalty, which it owed to the plaintiffs.

“While I do not need to find and do not find that the Defendant acted knowingly and deliberately in breach, the breaches are nonetheless serious and clear,” the CJ wrote. “No explanation has been offered by the Defendant. There was, for instance, no explanation whatsoever why the managing partner who had direct responsibility for the then still ongoing August 2009 Retainer …decided that the Defendant could act for D. Braga when he was approached by Martin Kenney & Co to do so on 28 April 2010.”

The senior judge said there was no explanation from Walkers how it found itself acting for both these parties through the same litigation department, which was at the time made up of a compact team of just ten people. The court said this called into question Walkers’ due diligence and conflict-checking systems and procedures.

The case also considered a law firm’s disclosure obligations and the need for care and caution where a firm was aware that funding, in this case from the adverse party, was the product of a champertous relationship which is still an offence under Cayman Islands law.

Walkers had claimed that as any other competent attorney would have accepted the instructions, it should be absolved from liability. But the chief justice took a different view, stating it was an abuse of process. “No hypothetical reasonably competent attorney can be assumed to have been willing to act in an abuse of process of the Court, and certainly not without full and frank disclosure being made,” he said.

Anthony Akiwumi, who acted for the plaintiffs, said the decision was an “important professional liability judgment”.

He added, “The judgment is notable in that all of the Defendant’s defences on liability were rejected. In particular, the Honourable Chief Justice dismissed the Defendant’s proposition that despite a twenty-five year multi-generational legal services/private client relationship, the Plaintiffs were not clients of the firm.”

Meanwhile, it is understood that Walkers will be appealing the chief justice’s decision.