Qunar Cayman Islands Ltd v Maso Capital Investments Ltd
| Jurisdiction | Cayman Islands |
| Judge | Raj Parker |
| Judgment Date | 19 June 2018 |
| Court | Grand Court (Cayman Islands) |
| Docket Number | Cause No FSD 76 of 2017 (RPJ) |
| Date | 19 June 2018 |
In the Matter of the Companies Law (2016 Revision)
And in the Matter of Qunar Cayman Islands Limited
The Hon Justice Raj Parker
Cause No FSD 76 of 2017 (RPJ)
IN THE GRAND COURT OF THE CAYMAN ISLANDS
FINANCIAL SERVICES DIVISION
Summons for directions-section 238 of the Companies Law-scope and method of discovery to be given by dissenting shareholders.
Mr Tom Lowe QC, Paul Madden and Lachlan Greig of Harney Westwood & Riegels on behalf of Qunar Cayman Islands Limited.
Mr Erik Bodden of Conyers Dill and Pearman on behalf of PAG Asia Alpha LP, PAG Quantitative Strategies Trading Limited and PAG-P Asia Fund LP.
Mr Tony Heaver-Wren, Mr Andrew Jackson and Ms. Heather Froude of Appleby on behalf of Athos Asia Event Driven Master Fund, FMAP ACL Limited and Senrigan Master Fund.
Mr Rocco Cecere of Mourant on behalf of Maso Capital Investments Limited and Blackwell Partners LLC – Series A.
The judgment of the Court of Appeal ( CICA No. 24 of 2017, unreported 10 April 2018) allowed the company's appeal against my refusal of the orders sought for the dissenters to give discovery at a directions hearing on 23 June 2017. The parties (the company as petitioner and the respondents as dissenting shareholders) have been unable to agree consequential directions despite having made attempts to do so for the last three months.
I heard the parties' contentions on Friday 8 June 2018 and gave my directions/decisions on the contested matters orally at the hearing as requested. I said I would give the reasons for these in writing and they now follow.
It is clear from the Court of Appeal's decision that, contrary to the practice which was developing in the Grand Court in section 238 Petitions, there is now a general requirement for automatic mutual disclosure to be imposed in these cases. It follows that the Court's approach to discovery should be similar to that which applies generally in civil litigation where there is a mutual obligation to search for and to list all documents which are relevant to the issues in dispute and which are necessary to be disclosed for disposing fairly of the action or for saving costs.
A further aspect of this approach is provided for by the Overriding Objective — see Financial Services Guide B4.3 and the Preamble of the GCR in which expedition and economy are emphasised in this jurisdiction. Incidentally I do not see any tension between this approach and the English approach under the CPR to deal with cases ‘justly’. In this regard I am assisted by Justice Kawaley's approach in ( In the matter of Nord Anglia Education, Inc. unreported 19 March 2018) in particular at paragraphs 8 and 9.
He found that section 238
“…is designed to accord substantial commercial justice to merger companies and dissenting shareholders alike.” — see paragraph 9 on p 4.
In section 238 cases the issue in dispute is the fair value of the dissenter's shares, an exercise to be carried out by the trial judge with assistance from the experts. For this the Court needs as much information as is available which is relevant to that issue.
In holding that dissenters should give discovery, particular emphasis was placed in the reasoning of Rix JA (with whom the other two members of the Court of Appeal agreed) of the relevance of material held by those who were contemplating and making decisions to invest in the company whose shares are now in issue.
He says at paragraph 68
“[The Respondents'] reports are likely to be all the more pertinent in that they are likely to be highly contemporaneous and professional reports of sophisticated members of the market who are not only observers but ready to act on their own research and scholarship.”
The approach which the court will adopt to contested aspects of discovery will of course be fact specific, but the general proposition to now be followed is that both the company and dissenters are to give mutual disclosure of all material relevant to the issue of fair value which is, or has been, in their possession, custody or power.
It will of course ordinarily be the case that the company will have considerably more relevant material than will the dissenters, who will usually have a much more limited amount.
That is the position in this case where in summary, the company seeks documents reflecting or relating to any valuations or similar analyses of the company that were prepared, reviewed, or considered by the dissenters. Following the Court of Appeal's decision, these documents are clearly in scope.
It also seeks communications that the dissenters had with any representative of the company prior to the date of the merger in relation to the value of the company or its shares. It may be that those documents, or at least some of them, have already been provided by way of discovery by the company.
Finally it requires confirmation of the date upon which the dissenters purchased their shares in the company, including the method of purchase, a history of the dissenters' trades in the shares and all material shared between the company's investment manager and/or investment adviser and the company's investment committee for their consideration of the company's “go private” action, including notes of meetings, agenda's and communications.
All of those categories have been put into a schedule comprising five paragraphs.
Mr Lowe QC for the company referred me to passages in the judgment...
To continue reading
Request your trial