Category: Cayman Islands
Category: Cayman Islands

In the recent Cayman Islands decision of In the matter of E-House (China) Holdings Limited, the Grand Court of the Cayman Islands has provided further welcome guidance on proper case management of s.238 proceedings, and the need for the Court to carefully control experts and attorneys when seeking to put further expert questions to a company out of time.

E-House (China) Holdings Limited (the Company) and the dissenter had agreed a directions order by consent, and discovery was progressing in good order.  One week before the exchange of expert reports, however, the Company produced for the first time new costs projections in response to a question raised by the Company’s expert.  Both experts submitted two rounds of joint questions to the Company which were duly answered.  However, this did not satisfy the Company and it sought a variation of the Consent Order to allow each expert to ask a further 5 written questions.

There was no evidence from the experts regarding the scope of the 5 questions and, in fact, the idea of “5 questions (as opposed to 10 or 20)” had come from the Company’s attorney, not one or both of the experts.

In rejecting the Company’s application to vary the Consent Order, the Court emphasized the need for the Court to exert management over such cases and exercise its judgment.  With this in mind, the Court had to be careful to ensure that [a]ttorneys do not by themselves dictate relevance or the scope for discovery, however, harmless or reasonable a request may at “first blush” appear…..”  (para 37).  The fact that it might be helpful to have such an order “just in case” could result in such orders becoming standard, which would be plainly wrong.

In considering previous appraisal authoritiesthe Court emphasised the need for finality in the expert request process and clarified the role of experts in appraisal litigation i.e. while experts must be given substantial autonomy in determining the information they require, applications to seek further information from a company must be based on evidence.  This decision guides the way for future applications and indicates that this relief will only be available where experts assert a plain and unambiguous need for the information in question.

Click here for full judgment.

Please contact Madeleine Heal, James Noble and William Peake for any more information.

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