Section 238 of the Companies Law (2016 Revision) and Nord Anglia Education, Inc.
| Jurisdiction | Cayman Islands |
| Judge | Justice Kawaley |
| Judgment Date | 05 November 2019 |
| Court | Grand Court (Cayman Islands) |
| Docket Number | CAUSE NO. FSD 235 OF 2017 (IKJ) |
The Hon. Justice Kawaley
CAUSE NO. FSD 235 OF 2017 (IKJ)
IN THE GRAND COURT OF THE CAYMAN ISLANDS
FINANCIAL SERVICES DIVISION
Case Management Conference — section 238 of the Companies Law Petition — whether regime for highly sensitive documents directed in relation to discovery should be modified for the purposes of trial — access to unredacted copies of highly sensitive documents restricted to experts, local and leading counsel, excluding clients — whether denying parties full access to documents to be deployed at trial inconsistent with fundamental fair rights of litigants — Bill of Rights section 7 — means of preserving commercial confidentiality at trial in open court — case management directions for trial
Mr Mac Imrie (with Lord Grabiner and Mr Richard Boulton QC) and Mr LukasSchroeter of Maples and Calder on behalf of Nord Anglia Inc (“the Company”)
Mr Richard Millett QC instructed by Ms Jessica Vickers and Mr Harry Rasmussen of Mourant Ozannes on behalf of the Mourant Dissenting Shareholders
Mr George Bompas QC instructed by Mr Hamid Khanbhai and Mr Jeremy Durston of Campbells on behalf of the Campbells Dissenting Shareholders
Mr Jonathan Adkin QC instructed by Mr Andrew Jackson of Appleby on behalf of the Appleby Dissenting Shareholders
At the Case Management Conference held on October 17, 2019 in relation to the trial due to commence on December 2, 2019 and conclude on December 20, 2019, it was apparent that the parties had worked well together to agree most logistical aspects of the trial process. The Court was requested to (a) confirm the availability of Court No. 5, which had been requested several weeks ago as most suitable in terms of its size, and (b) to confirm whether or not a hearing was possible on either December 19, 2019 (despite the fact that that date had recently been declared a Public Holiday) or Saturday December 7, 2019, so that the trial would not have to be concluded (with considerable wasted costs) at a date to be fixed in the New Year. I am able to confirm that:
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(a) Court 5 has been assigned for the hearing of the present Petition; and
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(b) the Court can sit, as originally scheduled, on December 19, 2019, on the understanding that all parties will strain every sinew to ensure adherence to a timetable which will result in the trial concluding on December 20, 2019.
Subject to minor contentious tweaks which the parties will seek to resolve by consent, the trial timetable set out in Schedule 1 to the Draft Order was agreed in all material respects except the important issue of how highly sensitive documents (“HSDs”) should be dealt with at trial. There were two main sub-issues:
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(a) whether the Dissenter clients (and, where applicable, their US lawyers) should be entitled to see unredacted versions of all HSDs their counsel had identified as intended to be deployed in cross-examination at trial;
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(b) irrespective of how (a) is resolved, how will HSDs be referred to at trial in terms of preventing the publication of commercially confidential material to any person attending Court and not entitled to be privy to the relevant material?
Before considering the governing legal principles, it is necessary to clarify the intent underpinning the HSD regime approved on the hearing of the Summons for Directions. The Company contended that the burden was on any party seeking to loosen those protections to make out a case for so doing. The Appleby Dissenters, who led the opposing charge on this issue, contended that the existing regime was always intended to be revisited prior to trial. It was, for reasons of legal principle, for the Company to justify at this stage depriving the litigants themselves from full access to documents seen by their Expert and their lawyers and which would be seen by the Court at trial.
The existing HSD regime was imposed following the hearing of the Summons for Directions over the objections of the Dissenters based on a legal analysis of the way in which confidentiality was imposed in the context of discovery: In Re Nord Anglia Education, Inc. [ 2018(1) CILR 164] at paragraphs 19–26. The key elements of the regime I approved were summarised at paragraph 26 of the judgment as follows:
“(1) the company should be permitted to designate documents as HSDs in the general manner it proposes;
(2) the company should not be permitted to decide unilaterally that some HSDs should not be posted in the data room at all;
(3) all HSDs shall be placed in the data room in redacted and unredacted form with access to unredacted HSDs limited to experts and counsel in the first instance;
(4) each expert shall provide the company with a list of his/her team members who will be given access to HSDs;
(5) where the dissenters' expert wishes to refer to HSDs or extracts therefrom in a memorandum or draft report to be shared with clients, only the redacted versions of the relevant HSD may be mentioned or referred to and best efforts shall be made to protect the confidentiality of information which is not central to the valuation analysis;
(6) where the document the dissenters' expert wishes to rely upon has been redacted in whole or in part, the dissenters' counsel shall seek to agree the terms of such reliance with the company's counsel with liberty to apply to the court as a last resort;
(7) for the avoidance of doubt I find that proposed paras. 2.71 and 2.72 of the draft confidentiality and non-disclosure agreement between the company and the experts are unreasonably restrictive of the ability of the experts to carry out their professional valuation task;
(8) the parties shall use their best endeavours to agree the final wording of the proposed non-disclosure agreements and any matters not expressly addressed in the present ruling.”
The critical provision in the Directions Order dated March 6, 2018 which foreshadowed how HSDs might be used at trial provided as follows:
“11.2 In the event the Dissenters' Expert wishes to rely in any final report (including any supplemental report) upon confidential information contained in any redacted portion of any Highly Sensitive Document (which has not already been the subject of a successful challenge by the Dissenters under paragraph 11.3), (a) the Dissenters' Cayman attorneys shall seek to agree the terms of such reliance with the Company's attorneys; and (b) in the absence of such agreement, the Dissenters shall have liberty to apply for further direction, including as to how that information should be dealt with in any final report and at the trial of the action. Until and unless such agreement is reached or order is made, no such information shall be divulged, disclosed or otherwise referenced in any final report.
The HSD regime envisaged that the Company would decide which documents should receive the additional protections and that the Dissenters could challenge such designation. This implicitly applied to the initial discovery stage. Where the Dissenters' Expert wished to refer to a redacted portion of an HSD in his Report, the parties are required to seek agreement failing which “the Dissenters shall have liberty to apply for further direction, including as to how that information should be dealt with in any final report and at the trial of the action”.
Implicit in the scheme is the notion that the Dissenters' Expert is best placed to assess the extent to which factual matters, including redacted material, is relevant to the valuation questions to be determined at trial. In these circumstances, commercial confidence would (potentially at least) have to give way to litigation fair hearing rights. It is clear that:
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(1) the language used in the Directions Order only expressly contemplated the lifting of HSD status in relation to redacted portions of documents the Dissenter' Expert considered relevant and wished to reference in his Report;
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(2) the liberty to apply provision in paragraph 11.2 did not expressly contemplate the Court giving directions for the deployment of redacted portions of HSDs which the Dissenters' Expert did not refer to in his Report;
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(3) the liberty to apply provision in paragraph 11.2 did not expressly contemplate the Court permitting the deployment at trial of redacted portions of HSDs with fact witnesses at all. However:
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(a) it is obvious that the parties would wish to explore with fact witnesses the factual bases for their opinions in so far as they relate to redacted portions of HSDs; and
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(b) it is not obvious that the parties would wish to explore with fact witnesses the redacted portions of HSDs which are not relied upon in the Expert Reports.
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In summary, the existing HSD regime (which the Company persuaded the Court to impose) expressly contemplated that redacted HSD material which the Dissenter's Expert relied upon in his Report could potentially be relied upon at trial to an extent which was either agreed between the parties or directed by the Court under the liberty to apply provision in paragraph 11.2 of the Directions Order. By necessary implication, the existing regime contemplated that the same initially redacted material could potentially be deployed at trial with relevant fact witnesses as well. Before considering the governing legal principles, the starting assumption must be that it is for the Company to justify depriving the Dissenters' counsel of the ability to share with their clients unredacted portions of documents to which their Expert has referred immediately before and at trial.
On the other hand, the HSD regime neither expressly nor implicitly contemplated that the veil of HSD protection would be lifted if...
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