Nanfong International Investments Ltd

• Jurisdiction: Cayman Islands
• Judge: (Goldring, P., Morrison and Moses, JJ.A.)
• Judgment Date: 14 September 2018
• Court: Court of Appeal (Cayman Islands)
• Date: 14 September 2018

IN THE MATTER OF NANFONG INTERNATIONAL INVESTMENTS LIMITED

ORIENTAL KNOWLEDGE TANK LIMITED

and

BUSINESS INTELLIGENCE INVESTMENT LIMITED

(Goldring, P., Morrison and Moses, JJ.A.)

Court of Appeal (Cayman Islands)

Civil Procedure — case management — temporary stay of proceedings — Cayman winding-up proceedings stayed temporarily for determination in overseas proceedings as to whether foreign petitioner had authority to issue winding-up petition — otherwise risk of inconsistent judgments — no prejudice to plaintiff

Held, allowing the appeal and granting a stay:

(1) The stay sought by the appellant was a temporary stay to manage the order of proceedings in two jurisdictions, both of which were the appropriate forum for the determination of those proceedings. A grant of a temporary stay was a lesser interference with a plaintiff’s rights than a stay granted on grounds of forum non conveniens, which in practice determined whether a plaintiff could proceed at all in the jurisdiction of its choice. Very strong reasons were required before granting a temporary stay on case management grounds and the benefits which were likely to result from doing so had to clearly outweigh any disadvantage to the plaintiff. There was a very real burden on an applicant for a case management stay to satisfy the court that the ends of justice would be served by the grant of a stay. A stay would only be granted in rare and compelling circumstances. Although the judge applied the correct principles, the present court had difficulty with his approach to the appellant’s grounds for a stay and his apparent reasons for refusing it. The essential argument was founded on an identical issue in Samoa and the Cayman Islands relating to the respondent’s authority to issue the petition to wind up the company. The judge was being asked to manage the order in which that issue should be determined. The point was not whether determination by the Samoan court would be fair but whether the existence of the Samoan proceedings amounted to a rare and compelling circumstance justifying ordering a stay so that the issue of authority was decided in Samoa before the hearing of the Cayman petition. The judge failed to identify that central argument. He gave no view as to whether he accepted that if the Samoan court decided the issue of authority first that would dispose of an essential question arising in the Cayman proceedings, namely the respondent’s right to present the petition, nor as to whether that would save costs, nor whether there would be disadvantage to the respondent. The judge’s failure to deal with the essential argumentsadvanced or his reasons for rejecting them vitiated the exercise of his discretion (paras. 17–26; paras. 31–35).

(2) In the circumstances, the present court should exercise its discretion afresh. The issue of the respondent’s authority to present the petition to wind up the company was an essential question in the consideration of the petition by the Grand Court. It was inevitable that the question of the respondent’s authority would have to be decided in two different jurisdictions, absent any case management decision as to the order in which those two decisions would be made. It followed that there was a real difficulty of inconsistent decisions. Without a stay, courts in two different jurisdictions would have to decide, in the case of the Samoan court, mixed questions of law and fact as to the respondent’s authority and, in the Cayman Islands, questions of fact which included Samoan issues of law, which themselves might require further resolution in the Samoan appellate process. If the proceedings in the Cayman Islands were stayed, the Grand Court would have the benefit of the Samoan court’s ruling on the issue of authority in a manner which was likely to be determinative of the issue in the Cayman Islands. Moreover, it was difficult to foresee any particular disadvantage to the respondent by granting a temporary stay, and a stay might well avoid unnecessary duplication of costs. These considerations afforded compelling and very strong reasons for granting a temporary stay to manage the order of proceedings. The court was fortified in its view by the fact, which had not been available to the judge, that the issue of the determination of authority was due to be heard shortly. As there was no specific power in Cayman legislation for the imposition of a case management stay, the court invoked its inherent jurisdiction and its general case management powers. The appeal would be allowed and a temporary stay would be granted to ensure that the issue was decided in the order that would most likely further the ends of justice (paras. 36–43).

Cases cited:

(1)Ahmad Hamad Algosaibi & Bros. Co. v. Saad Invs. Co. Ltd., 2010 (2) CILR 289, applied.

(2)Amlin Corporate Member Ltd. v. Oriental Assur. Corp. (“Princess of the Stars”), [2012] EWCA Civ 1341, referred to.

(3)CIGNA Worldwide Ins. Co. v. ACE Ltd., 2012 (1) CILR 55, applied.

(4)Konkola Copper Mines plc v. Coromin Ltd., [2006] EWCA Civ 5; [2006] 1 All E.R. (Comm) 437; [2006] 1 Lloyd’s Rep. 410; [2007] Lloyd’s Rep. I.R. 247; [2006] 1 C.L.C. 1; [2006] I.L. Pr. 46, referred to.

(5)Racy v. Hawila, [2004] EWCA Civ 209, referred to.

(6)Reichhold Norway ASA v. Goldman Sachs Intl., [1999] 1 All E.R. (Comm) 40; on appeal, [2000] 1 W.L.R. 173; [2000] 2 All E.R. 679; [1999] All E.R. (Comm) 174; [1999] 2 Lloyd’s Rep. 567; [2000] C.L.C. 11, applied.

(7)Spiliada Maritime Corp. v. Cansulex Ltd. (“The Spiliada”), [1987]A.C. 460; [1986] 3 W.L.R. 972; [1986] 3 All E.R. 843; [1987] 1 Lloyd’s Rep. 1, referred to.

(8)Standard Chartered Bank (Hong Kong) Ltd. v. Independent Power Tanzania Ltd., [2016] EWCA Civ 411; [2016] W.L.R. (D.) 223, applied.

The respondent petitioned for the winding up of a company.

Two brothers, Mr. Wu and Mr. Ng, were said to have irreconcilable differences. They were engaged in litigation in Samoa, the Cayman Islands and the People’s Republic of China. A Cayman Islands company, Nanfong International Investments Ltd., was owned by the appellant company as to 40% and the respondent company as to the remaining 60%. A company owned by Mr. Wu held 67% of the shares in the respondent and a company owned by Mr. Ng held 33%. The respondent was incorporated in Samoa. At a Board meeting of the respondent in November 2017, it was resolved inter alia to petition in the Cayman Islands for the winding up of the company. Mr. Ng had not attended the meeting and claimed that he had not been given notice of it.

The appellant contended that the respondent had no authority to present the winding-up petition because the resolution to do so was invalid. The appellant applied to the Grand Court in the Cayman Islands to stay the winding-up petition. There were related proceedings in Samoa. Mr. Wu’s company filed a petition to wind up the respondent. Mr. Ng filed an application in that winding-up petition seeking various injunctions and declarations, including a declaration that the decision to authorize the filing of the petition to wind up the company in the Cayman Islands was invalid.

The appellant applied to the Grand Court for a temporary stay of the petition for winding up the company pending the determination of certain issues in Samoa, which would include the validity of the resolution to petition for the company’s winding up. The appellant submitted that thelogically prior question to consideration of the winding-up petition in the Cayman Islands was whether the respondent could lawfully authorize its presentation, which turned exclusively on questions of Samoan law which would be determined in the proceedings before the Samoan Supreme Court. If the Cayman proceedings were stayed, the Samoan decision would resolve the issue of authority; without a stay there would be a risk of inconsistent decisions.

The Grand Court (Kawaley, J.) refused the application, holding that very strong reasons had to be established for a case management stay where proceedings had been brought in the Cayman Islands as of right. While it was possible for the Samoan court to decide the issue, it was equally possible for the Grand Court to do so, and the...