Walkers have successfully represented the Plaintiffs in a recent hearing before the Grand Court of the Cayman Islands in Cowan v Equis (FSD 22 of 2018 (RPJ)). The hearing, which took place over the course of three days in March 2024, arose out of a number of applications before the Court, including: (1) the Plaintiffs' summons for leave to amend their statement of claim (the "Amendment Summons") (2) the First to Fifth and Seventh to Eighth Defendants' (together, the "Active Defendants") summons against the First Plaintiff for security for their costs of the proceedings (the "Security Summons") and (3) the Active Defendants' summons against the First Plaintiff for disclosure of the name of the party funding the First Plaintiff (the "Disclosure Summons").
The Proceedings
Walkers act for the First Plaintiff in both his personal capacity and on behalf of Equis Special L.P. ("Special LP"), a Cayman Islands exempted limited partnership, as a derivative claimant and Second Plaintiff. The Plaintiffs bring the proceedings against Special LP, Equis Special GP (its general partner) and a number of the limited partners of Special LP, in respect of alleged breaches of Special LP's limited partnership agreement.
Broadly, the proceedings arise out of: (1) the purported assignment of Special LP's rights to performance fees in respect of certain investments to a new entity known as Equis Special II LP, the legal effect of which was, on the Plaintiffs' case, to exclude the First Plaintiff from the financial benefit of certain performance fees to which he otherwise would have been entitled; and (2) the exit of the various funds in which Special LP invested by way of a sale to an entity called Global Infrastructure Partners orchestrated by the Third to Eighth Defendants in late 2017. The Plaintiffs allege, inter alia, that the Defendants conspired to misappropriate certain proceeds of the sale which should have been for the benefit of Special LP (and ultimately the First Plaintiff).
The Amendment Summons
By the Amendment Summons, the Plaintiffs sought leave to introduce four new claims (the "New Claims") against the Defendants. The Plaintiffs contended, inter alia, that (1) the New Claims were clearly not bound to fail (2) there would be no prejudice to the Defendants if the amendments were granted and, in any event, the Defendants had already consented to such amendments in writing, and (3) that the Court ought not to conduct a "mini-trial" in determining whether the New Claims were bound to fail.
In response, the Active Defendants contended, inter alia, that the New Claims were founded on basic factual errors, plain mischaracterisations, and broad-brush allegations of dishonesty such that the allegations had no reasonable prospect of success at trial.
In granting leave for the Plaintiffs to amend their statement of claim to introduce three out of the four New Claims, the Court held that, on the evidence, it was clear that the Defendants had unequivocally consented to the amendments in writing, by way of correspondence from their attorneys, in accordance with GCR Order 20 rule 12. Accordingly, having consented to the amendments it would not be fair on the Plaintiffs to have a full-scale merits case advanced by the Active Defendants so late before the hearing in the guise of a strike out application. However, if at a later stage the Active Defendants wished to make strike out applications in relation to those three claims, they were at liberty to do so.
The Security Summons
In dismissing the security for costs application, the Court held that GCR Order 23, rule 1 must not be applied so as to discriminate against a foreign-resident (in this case, Hong Kong) personal plaintiff and that impecuniosity is not a permissible basis on which to order security for costs against such a plaintiff (although it may be in the case of a corporate plaintiff). The Court further held that in appropriate cases, security for costs may be ordered against such a plaintiff but what must be shown is a real risk of non-enforcement as distinct from a real risk of non-recovery because of insufficient assets.
The Disclosure Summons
In dismissing the application for disclosure of the identity of the First Plaintiff's funder, the Court ruled that while there is a discretion to award costs against a third party funder, in circumstances where the funder is a 'pure funder' who wishes to remain anonymous, the Court is not inclined to discourage such a funder assisting a litigant to secure representation and in all the circumstances, the disclosure of the identity of the funder was not necessary for justice to be done in this case.
Our team included Nick Dunne, Gareth Murphy, Brett Basdeo, Chaowei Fan, David Lee and James Cheung, along with Thomas Grant KC of Wilberforce Chambers and Stuart Cribb of Essex Court Chambers.
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