Homeinns Hotel Group v Maso Capital Investments Ltd, Blackwell Partners Llc—Series A and Crown Managed Accounts Spc (Acting for and on Behalf of Crown/Maso Segregated Portfolio)
| Jurisdiction | Cayman Islands |
| Judge | (Mangatal, J.) |
| Judgment Date | 07 February 2017 |
| Court | Grand Court (Cayman Islands) |
| Date | 07 February 2017 |
(Mangatal, J.)
R. Hacker, Q.C. and P. Madden for the petitioner;
R. Levy, Q.C., A. Heaver-Wren and A. Jackson for the respondents.
(1) Bayer AG v. Harris Pharmaceuticals Ltd., [1991] F.S.R. 170, applied.
(2) Charm Comms. Inc., In re, Grand Ct., February 26th, 2015, unreported, considered.
(3) Integra Group, In re, 2016 (1) CILR 192, applied.
Companies Law (2013 Revision), s.232: The relevant terms of this section are set out at para. 3.
s.238: The relevant terms of this section are set out at para. 3.
Grand Court Rules 1995 (Revised), Preamble, para. 3: The relevant terms of this paragraph are set out at para. 5.
Companies—arrangements and reconstructions—dissenting shareholders—on application for determination of “fair value” of shares under Companies Law (2013 Revision), s.238, petitioner ordered to disclose all relevant documents—standard order under GCR, O.24 for disclosure by petitioner and dissenting shareholders inappropriate
Companies—arrangements and reconstructions—dissenting share-holders—on application for determination of “fair value” of shares under Companies Law (2013 Revision), s.238, petitioner to disclose translations of foreign documents where available but not required to translate all foreign documents
The petitioner sought the determination of the fair value of the respondents’ shares pursuant to s.238 of the Companies Law (2013 Revision).
Section 238 of the Companies Law (2013 Revision) provided that a member of a company participating in a merger or consolidation was entitled to payment of the fair value of his shares upon dissenting from the merger or consolidation. The petitioner brought proceedings seeking the determination by the court of the fair value of the dissenting shareholders’ shares and a fair rate of interest (if any). The dissenting shareholders filed a summons for directions to be given for the hearing of the petition, concerning inter alia the manner in which evidence was to be given; discovery and inspection of documents; and expert evidence.
Various matters were agreed between the parties. In respect of the remaining issues to be determined, the dissenting shareholders submitted that (a) they should have some form of early discovery, or an order for discovery of the documents set out in their draft order; (b) the petitioner should be required to procure translations of documents that existed only in Chinese; (c) once discovery had been given, it would be sufficient for a request for the provision of additional documents to be made by one expert, rather than by the experts jointly; and (d) any factual evidence should be given before the exchange of the experts’ reports.The petitioner submitted that (a) at the present stage, the order for discovery should be limited to standard discovery under GCR, O.24; (b) the obligation to provide translations of documents should be limited to those documents in respect of which translations existed; and (c) once discovery had been given, a request for the provision of additional documents should in the first instance be made by the experts jointly. The petitioner also sought an order providing for the service of affidavit evidence following the service of the experts’ reports.
Held, ordering as follows:
(1) In respect of discovery, without prejudice to the obligation to disclose all documents relevant to fair value, the discovery order should include the documents listed by the dissenting shareholders in their draft order as relevant. Discovery orders in s.238 applications were somewhat unusual in that it would be the company that would have the documents and information relevant to the determination of fair value. The experts and the court should have all relevant documents and information, not merely publicly available information. It would not be appropriate to make a standard order under GCR, O.24 for disclosure by both parties. It would not be consistent with the purposes of s.238 for the dissenting shareholders to be ordered to provide discovery (para. 20).
(2) The petitioner would be required to provide English translations of documents only where such were available. A party under a compulsion to disclose documents should not be obliged to translate all foreign documents. It would be for the party seeking to rely on a foreign document to translate it (para. 21).
(3) Once discovery had been made, it would be appropriate for requests for additional documents or information to be uploaded to the data room to be made by either expert, and it would not be necessary for the experts to make joint requests. The experts were the best judges of relevance in respect of disclosure. Although requests for further disclosure could be made on a rolling basis, there must be a cut-off point, particularly if the experts were to meet deadlines as to the exchange of signed reports as envisaged (para. 22).
(4) It would be incorrect and cumbersome for affidavit evidence to be provided after the experts had produced their reports. It would be appropriate for affidavit evidence to be produced after the discovery process and before the expert reports. The parties’ experts would be able, following the exchange of their respective reports, to meet to discuss the differences between them with a view to narrowing the issues. The experts would be required to attend court for cross-examination on their reports and the factual witnesses would also be required to attend for cross-examination. That should be adequate to encompass any loose ends and concerns of the petitioner in this regard. Without some specific issue arising requiring the court to contemplate hearing from a lay witness inresponse to an expert, it would be inappropriate to make a blanket order for factual evidence to follow the expert reports (paras. 23–24).
1 MANGATAL, J.: This is an application for directions in proceedings commenced by the petitioner, Homeinns Hotel Group (“the petitioner”/“Homeinns”), pursuant to s.238 of the Companies Law (2013 Revision) (“the Companies Law”). The purpose of the proceedings is to seek a determination by the court of the fair value of the dissenting shareholders’ (Maso Capital Dev. Ltd., Blackwell Partners LLC—Series A, and Crown Managed Accounts SPC acting for and on behalf of Crown/Maso Segregated Portfolio (“the dissenting shareholders”)) shares in Homeinns and a fair rate of interest (if any) upon the fair value so determined.
2 The petitioner filed the petition on May 30th, 2016 as required by s.238(9). According to the written submissions of the petitioner, the petitioner did not file a summons for directions at the same time as the petition as there is no requirement to do so under the GCR or the Companies Law; instead the petitioner requested that the court list the petition for a directions hearing. This hearing was fixed for August 5th, 2016. However, in the meantime, the dissenting shareholders filed a summons for directions on June 20th, 2016 and requested an earlier hearing, which has taken place. The dissenting shareholders’ summons sets out the issues for...
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