The Exempted Ltd Partnership Act (2021 Revision) and Aquapoint L.P. (in Official Liquidation)

• Jurisdiction: Cayman Islands
• Judge: Justice David Doyle
• Judgment Date: 05 October 2022
• Court: Grand Court (Cayman Islands)
• Docket Number: FSD 157 of 2021 (DDJ)

In the Matter of the Exempted Limited Partnership Act (2021 Revision)

And in the Matter of Aquapoint L.P. (In Official Liquidation)

Before:

The Hon. Justice David Doyle

FSD 157 of 2021 (DDJ)

IN THE GRAND COURT OF THE CAYMAN ISLANDS

FINANCIAL SERVICES DIVISION

HEADNOTE

Refusal of a stay of a winding up order pending an appeal

Appearances:

Tom Smith KC, Rupert Bell and Chris Keefe of Walkers on behalf of AquaPoint L.P. (in Official Liquidation) (acting by GenScript Corporation, as general partner)

Bhavesh Patel and Bryan Little of Travers Thorp Alberga on behalf of Xiaohu Fan

Introduction

1 On 13 June 2022, for the reasons stated in a judgment delivered on 10 June 2022, I made an order (the “Order”) that AquaPoint LP (the “Partnership”) be wound up.

2 By notice of appeal dated 22 June 2022 (and amended on 2 August 2022) the Partnership, acting by GenScript Corporation its general partner (the “General Partner”), appealed against the Order.

3 By summons dated 20 July 2022 the Partnership (acting by the General Partner) applied for a stay of execution of the Order (the “Stay Application”).

4 A mass of material has been filed in respect of the Stay Application. A lot of the affidavit evidence does not limit itself to facts. It trespasses into areas of comment, argument and submission. The attorneys drafting such evidence and those swearing such affidavits should exercise more restraint. I have however considered all the evidence presented.

5 I record that I have considered:

• (1) the hearing bundle, including the evidence and the grounds of appeal;

• (2) the skeleton argument of the Partnership dated 23 September 2022 and the accompanying authorities;

• (3) the skeleton argument of Xiaohu Fan (the “Petitioner”) dated 23 September 2022 and the accompanying authorities; and

• (4) the oral submissions put before the court by Tom Smith KC for the Partnership acting by its General Partner and Bhavesh Patel for the Petitioner.

6 I am grateful to both counsel for their assistance to the court.

The relevant law

7 It is common ground between the parties that a stay should not be granted unless “good cause” is shown (section 19 (3) of the Court of Appeal Act (2011 Revision) (the “Act”)). Rule 20 (1) of the Court of Appeal Rules (2014 Revision) provides in effect that except so far as the first instance court or the Court of Appeal may direct, an appeal shall not operate as a stay of execution or of the proceedings under the decision of the first instance court.

8 The Court of Appeal (Goldring P, Field and Morrison JJA) in Deputy Registrar and Attorney General v Day and Bush 2019 (1) CILR 510, as a matter of some urgency, granted a stay in the particular circumstances of that well-known appeal. The court considered Frank v Canada (Attorney General) 2014 ONCA 485 and referred to Leicester Circuits Ltd v Coates Brothers plc [2002] EWCA Civ 474 and NB v LB of Haringey [2011] EWHC 3544 (Fam).

9 President Goldring at paragraph 15 helpfully set out the legal position concisely as follows:

“…a stay may be granted for good cause … As the cases make plain, a successful litigant is prima facie entitled to the fruits of his success. There must be good reason for the court to prevent that. In deciding whether or not to impose a stay, the court will consider the grounds of the appeal, their likelihood of success and the balance of convenience having regard to the interests of both parties. The overriding feature is the interests of justice in any given case.”

10 At paragraph 24 President Goldring added:

“Provided the grounds are arguable, and the balance of convenience on the facts of the case in question lies in favour of a stay, the court may grant one.”

11 It is trite that in the law as in life context is important and each case must depend on its own facts and circumstances.

12 The following note appears as note 4 to 1988–1989 CILR:

“STAY OF EXECUTION — appeal against repossession of business premises Although the purpose of r.20(1) of the Court of Appeal Rules, 1987 is to prevent the automatic invalidation of intermediate acts or proceedings on the filing of an appeal, the rule is no restriction on the power of the Court of Appeal to restore the status quo which existed prior to a Grand Court order. If, therefore, on the basis of such an order tenants repossessed premises, the court had the power to order the re-delivery up of possession to the landlord if he were successful on appeal. In these circumstances a stay of execution would not be necessary to prevent the appeal from being rendered nugatory. Moreover, the probability of the tenant continuing with renovations to the premises and the fact that they would be of no use to the landlord did not outweigh the hardship that would be caused to the tenant if a stay were granted and he were prevented from reopening and operating his business as a profitable venture pending the appeal. The court was therefore entitled to refuse a stay of execution to the landlord. S Ltd. v. A Ltd. (C.A.: Collett, C.J.), July 14 ^th, 1989.”

13 In Imbar Maritima S.A. v Gabon 1988–89 CILR 286 the Cayman Islands Court of Appeal dismissed an appeal against the refusal by Collett CJ at first instance to grant an injunction pending an appeal. The headnote states that it was held that the court would not grant the appellants an injunction pending appeal. It would normally make an order staying proceedings under the judgment appealed from if it would thereby prevent a successful appeal from being nugatory. However there were circumstances which could justify the court not granting an injunction; in each case it would have to consider where the balance of convenience lay and the trial judge, given his particular knowledge of the case, was best able to weigh the relevant factors and so decide appropriately. The headnote confirms that in that case the balance of convenience was in the respondent's favour since the court had found that allowing the winding up to proceed would cause no detriment to the appellants who were deliberately attempting to delay the proceedings, whereas the respondent would be seriously prejudiced if they were deferred. Kerr J.A. at page 293 referred to counsel's reliance on Wilson v Church (No 2) (1879) 12 Ch. D. 454 and the headnote:

“Where an unsuccessful party is exercising an unrestricted right to appeal, it is the duty of the Court in ordinary cases to make such order for staying proceedings under the judgment appealed from as will prevent the appeal, if successful, from being nugatory. But the court will not interfere if the appeal appears not to be bona fide, or there are other sufficient exceptional circumstances.”

Kerr, J.A. at page 293 expressed his view that the statements in Wilson “laid down no hard and fast rule.”

14 The following note appears as note 4 to 1997 CILR:

“Execution — stay of execution pending appeal

An unsuccessful defendant who applies for a stay of execution against him pending his appeal must show good reason for depriving the plaintiff of the fruits of his judgment ( Winchester Cigarette Machinery Ltd. v. Payne (No2), [1993] T.L.R. 647, observations of Ralph Gibson, L.J. applied). Whilst the court has a duty to ensure that the defendant's right of appeal...