ARTICLE
11 April 2024

Pyrrhic Defeat: A Cautionary Tale For Ambushing Ex Parte Applications

In the case of In the Matter of Orient TM Parent Ltd (Unrep, Grand Court, 27 July 2022), the Grand Court of the Cayman Islands dismissed with indemnity costs the petitioners...
Cayman Islands Corporate/Commercial Law
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In the case of In the Matter of Orient TM Parent Ltd (Unrep, Grand Court, 27 July 2022), the Grand Court of the Cayman Islands dismissed with indemnity costs the petitioners' application for the appointment of joint provisional liquidators (the JPLs) and alternative injunctive relief relating to the company's assets.

The winding up petition was issued in October 2021 by two minority shareholders of a Cayman Islands company. In what had the appearance of an attempt to neutralise the effect of a PRC arbitration award (to which neither the company nor the petitioners were a party) relating to the transfer of shares in the company, the petitioners issued the JPLs appointment application, with a hearing date the following week. Notice of the application and hearing date was not, however, given until the day before the hearing, for which those acting for the petitioners were unable to provide any explanation.

Justice Doyle was critical of the conduct regarding the application and the lack of supporting evidence.

Even on proper notice, he was not convinced that the application had merit. He also held that there was no satisfactory evidence as to why notice was not given at the time that the application was lodged the week before the hearing. Notice could have been given without formal service and any difficulties with the Hague Service Convention did not excuse a failure to give notice or serve formally those within the jurisdiction. The petitioners' separate application for substituted service of the winding up petition on shareholders in the PRC was also dismissed (see blog).

On reading the papers, Justice Doyle was left with the impression that the petitioners "were trying inappropriately to bounce the court into granting unjustifiable relief and to ambush other interested parties". He awarded indemnity costs against the petitioners based on their failure to give interested parties notice.

He added: "I want to discourage tactical games and proceeding with lack of notice where such is not justified. Without proper notice applications for the appointment of JPLs should be truly exceptional and only be made if solid grounds exist to proceed without proper notice. No such grounds existed in this case as should have been plain to the petitioners from the outset. They were wrong to proceed in the way they did and much time, including court hearing and preparation time, has been wasted."

Harneys acted for one of the successful majority shareholders.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

ARTICLE
11 April 2024

Pyrrhic Defeat: A Cautionary Tale For Ambushing Ex Parte Applications

Cayman Islands Corporate/Commercial Law

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