In In the matter of Qunar Cayman Islands Limited (FSD 2017/76 – RPJ), the Grand Court has handed down written reasons for its further directions for dissenters’ discovery in a section 238 appraisal action.
Parker J began by acknowledging that the Court’s approach to discovery had changed as a result of the Court of Appeal decision, such that a “general requirement for automatic mutual disclosure” now applies. Although the exact approach in a given case would be fact-specific, in general both the company and the dissenters are to give mutual disclosure of all material relevant to the issue of fair value. The judge then turned to the three issues where the parties were in disagreement as to what further directions should be ordered in relation to dissenters’ discovery.
The first issue was whether the directions for dissenter discovery should contain special protections for alleged “proprietary rights” asserted by the dissenters over certain documents. The dissenters had not filed any evidence, however, which undermined their position. In refusing the dissenters’ request, Parker J cited the implied undertaking of every party to litigation not to use discovered material for an ulterior or collateral purpose, as well as the Court’s inherent jurisdiction to protect litigants inter alia by requiring undertakings. The judge did, however, leave open the possibility of a future application for additional protections supported by evidence.
The second issue related to the dissenters’ trading history in Qunar’s shares, which the Court of Appeal had ordered to be provided by way of a schedule to be confirmed by documents “if the schedule is challenged“. The dissenters argued that any challenge to a schedule must be “on bona fide grounds“. The judge rejected the dissenters’ proposed precondition but noted that, if necessary, the Court could deal with an alleged unreasonable or bad faith request in due course based on evidence.
Finally, the dissenters sought to limit their discovery to documents produced after the announcement of the merger, as opposed to the longer, five-year period that applied to the company. Parker J rejected this request also. He held that there was “no good reason advanced as to why the [dissenters] should not give discovery in the same way and over the same period as the [company]“.
The Court’s decision is potentially relevant for several other ongoing section 238 appraisal actions, where directions for discovery by the dissenters are yet to be ordered. It also underlines the extent of the recent changes to discovery in section 238 proceedings.