In the Courts: Civil Procedure - Appleby

News Alert
                                                                                                 January 2018

In the Courts: Civil Procedure
Legal issues concerning the litigation process and remedies have been the subject of numerous cases in the
courts of offshore jurisdictions in 2017. In particular, the BVI Commercial Court and the High Court in the Isle
of Man have been busy with a number of decisions on jurisdiction and forum non conveniens, while the law
relating to the cost of legal proceedings, and the related questions of security for costs and third-party funding,
continues to evolve. There have also been several cases involving injunctions. Below we summarise some of
the cases of interest from the last year.

In the Cayman Islands, most of the interesting decisions on procedural matters have arisen in the context of a
series of cases involving mergers and the statutory regime dealing with the rights of dissenting shareholders
under s. 238 of the Companies Law. These decisions primarily relate to the procedure under that regime and
are accordingly discussed in our update on company law.

Jurisdiction, forum challenges and service out of the jurisdiction

At the start of the year a decision from the High Court in the Isle of Man, Crowd Shout & Otr v. Nova Scotia &
Otr (7 December 2016) provided a useful overview of the principles on which the Manx courts will approach
applications to stay proceedings on the grounds that another available forum exists which is more appropriate
for the resolution of the dispute. The underlying dispute concerned the construction and effect of a
shareholders’ agreement, governed by the laws of Malta, which contained provisions relating to pre-emption
and voting rights.

The test for forum non conveniens was set out by the High Court and follows well-established principles in other
common law jurisdictions. First, the defendants must show that there is a foreign court which is clearly or
distinctly more appropriate than the Isle of Man. Once the natural forum has been shown to be overseas; the
claimants can resist a stay by showing that it is unjust to confine them to the rights and remedies available in
the foreign court. On the facts, the Manx proceedings were stayed to enable the issues in dispute to be dealt
with by the courts of Malta. The Court based its decision on a number of factors including (a) that the primary
matter for determination was the effect of the shareholders’ agreement, which was governed by the laws of
Malta; (b) that there was ongoing litigation in Malta relating to one of the claimant’s which should be
determined first and (c) the Maltese courts appeared to be dealing with the ongoing litigation swiftly.

Within a few weeks of the Crowd Shout decision, the Manx court decided another challenge to its jurisdiction in
the case of Cunningham v. Ellis & Otrs (27 January 2017). In this case only one of the defendants was located
in the Isle of Man, by virtue of having a branch there. The others were based in England; all of them agreed
that England was the proper forum. All factual matters took place in England, and all the relevant companies
were English. All the relevant documents were governed by English, or Scottish, law and none by Manx law.
The claimant’s sole basis for proceeding in the Isle of Man and for resisting the stay was the fact that he would
not be eligible for Legal Aid in England and Wales whereas he would be in the Isle of Man. This was the first
case in which circumstances relating to Legal Aid had been advanced by a claimant to resist a forum challenge
and keep proceedings in the Isle of Man. The Isle of Man Court applied the English case of Lubbe v. Cape Plc
[2000] 1 W.L.R. 1545 and held that the claimant’s reliance on Legal Aid was not by itself a sufficient ground to
justify litigation proceeding in the Isle of Man and it was clear the English courts were the appropriate forum.

The BVI case of Millicom v. Golden Globe (10 May 2017) served to emphasise both the burden on the party
resisting a stay once another forum has been found more appropriate, and the fact that decisions on such
challenges are exercises of judicial discretion, which are difficult to challenge on appeal. In this fraud claim,
Millicom had obtained leave to serve the proceedings outside of the jurisdiction on Manji together with a
freezing order against Manji and Golden Globe. Upon an application by Golden Globe, the court stayed the
proceedings on the basis that the BVI was forum non conveniens, and that Millicom had failed to provide cogent
evidence of a real risk of injustice if it were to prosecute its claim in the natural forum, which in this case was
Tanzania. Millicom appealed. The issue was whether the judge had exercised his discretion improperly in
granting the stay on that basis. The appeal was dismissed. The Court of Appeal held that Millicom did not
adduce cogent evidence which showed there was a real risk of injustice. Therefore, the judge properly
exercised his discretion in granting the stay and his decision could not be said to have been plainly wrong such
that it must be regarded as outside the generous ambit of the discretion which had been entrusted to the court.

Cases involving different issues between multiple parties, some within and some outside the jurisdiction,
involve considering whether findings about jurisdiction in relation to some defendants should affect the position
of others. One such case was Chi Hung Andy v. Noble Group Limited, decided by Ramdhani, J. in the BVI on 23
March 2017. The claimants, Hong Kong nationals, each claimed to hold in their respective names an executed
instrument of transfer of shares in the first defendant Noble More Group Limited, a BVI company. In the
proceedings they sought declarations that the instruments of transfer of the shares and certain resolutions
removing the third defendant and appointing them directors were valid and binding. Leave was initially granted
to serve the claim out of jurisdiction.

The third defendant applied to set aside service on the basis of procedural irregularities related to the service,
the lack of jurisdictional grounds for service out of the jurisdiction, and that BVI was not the natural or
appropriate forum. Noble also sought a stay of the proceedings and a declaration that the court should not
exercise its jurisdiction to hear the claim on the grounds that the claim disclosed no cause of action and/or was
frivolous and vexatious, and that the BVI was not the appropriate forum to try the claim. The court was not
satisfied on the facts that the BVI was clearly or distinctly the appropriate forum, and found in favour of both
applicants, setting aside service of the proceedings against the third defendant and staying the claim against
Noble and the second defendant, Noble's registered agent.

Having found that the substantial underlying dispute would require a full trial between the claimants and the
third defendant, and that the BVI was not the appropriate forum to try those matters, the court concluded that
it would not be in the interests of justice to continue the proceedings against the remaining defendant s.

The territorial limits of the court’s jurisdiction were central to another decision from the BVI. In Rogalskiy v.
JSCC Eurochem (14th July 2017), the claimants obtained a freezing order against the eighth defendant, and
then applied for permission to cross-examine him on his asset disclosure affidavit. On appeal, the eighth
defendant argued that the court had no jurisdiction to order a foreigner that had not submitted to the
jurisdiction of the court and who was disputing jurisdiction to compel him to travel to the BVI, or to attend a
video conferencing facility in Moscow. The Court of Appeal held that the court had no jurisdiction “in the wide
sense” to make an order against a foreigner who was disputing jurisdiction. On the facts, such an order was
also inappropriate because the claimants’ counsel had foreshadowed an intention to make use of any disclosure
on a later committal application.

Litigation funding

The funding of commercial litigation by third parties, in particular the many businesses that now exist in the
growing litigation funding market, is an area that continues to evolve in the offshore jurisdictions. The limiting
factor is always the old common law concepts of maintenance (in essence where a person assists in
proceedings, in the outcome of which he has no interest) and champerty, which is an aggravated type of
maintenance where the maintainer gets a share of the proceeds in exchange for the assistance provided. These
were criminal offences at common law: they still are in some jurisdictions, while others have abolished the
offence, but retained the concepts as torts or as matters of public policy, rendering offending contracts
unenforceable or void. In the last year the courts of both Guernsey and the Cayman Islands grappled with the

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question of how litigation funding can work against this background and set out principles to be observed if
funding agreements are to be allowed.

In Guernsey, Providence Investment Funds PCC Limited & Providence Investment Management International
Limited (Guernsey Judgment 44/2017) was an application by the administration managers of two companies
(PIF and PIMIL) who wished to bring an action against auditors, but did not have the funds to do so. They had
reached a potential agreement with a funder who specialised in insolvency litigation funding and applied to the
court for approval. The question was whether such an agreement would be void under Guernsey law on the
basis that it was champertous. The Lieutenant Bailiff considered the validity of litigation funding arrangements,
with particular reference to the recognised exception for insolvency in English law. She concluded that in
principle the law of Guernsey would permit the assignment of a cause of action for value by a liquidator and
would also allow a liquidator to enter into a litigation funding agreement on appropriate terms, even though the
doctrines of maintenance and champerty are part of Guernsey law. Here, however, the applicants were not
liquidators but managers in an administration process. The court considered that an administration is a
statutory creation established for similar but more nuanced purposes than liquidation and that an
administration manager’s powers and their justification are analogous to those of a liquidator, and therefore
was satisfied that the same principles would apply. The Deputy Bailiff said that her judgment would be subject
to the terms of the particular agreement being appropriate. She considered that the following considerations
should be taken into account, with reference to In re Longmeade Limited (in liquidation)(2016 Bus LR 506):

    The merits and prospects of success of the prospective litigation;

    The adequacy of funds available to the liquidator;

    The likely costs to be incurred (and hence diminution in funds available for distributions) if the proceedings
     should fail;

    The proportion of damages which the litigation funder would be taking under agreement if the proceedings
     were successful; and

    How and why office holders lighted on and chose the particular litigation funder as their counterparty.

She was satisfied that they had given proper consideration to such factors and that the decision was within the
range of decisions that could be properly made by a reasonable administration manager. She then considered
the terms in respect of public policy and noted particularly that the proposed agreement was governed by
English law and that the funder would pay any adverse costs order. She was satisfied that the decision to enter
the agreement was reasonably reached, that the structure of the agreement was permissible and in particular
that its terms did not permit the litigation funder to exercise control or undue influence over the prospective
conduct of such litigation.

In Cayman, one of the jurisdictions where maintenance and champerty still constitute both criminal offences
and civil torts, the Grand Court (Segal, J.) signalled a relaxation of its approach and a limitation of the ambit of
maintenance and champerty in its very recent decision in A Company v. A Funder (Grand Court, 23 November
2017). Unlike previous situations considered in Cayman, this was not a liquidation case, and the company
seeking approval was not unable to fund the proceedings: it merely wished for other commercial reasons to use
outside funding. The proceedings took a rather unorthodox form, in effect seeking an ex parte declaration that
the funding contract was lawful. The Judge expressed some concerns as to the appropriateness, and indeed the
effectiveness, of making a declaration in the circumstances, as he could not thereby decriminalise what would
otherwise be criminal conduct, and could not bind the defendant to the New York proceedings that the company
wished to bring on a funded basis. He nonetheless considered the issue, made clear that third party funding in
non-liquidation cases is in principle permissible, reviewed the previous Cayman authorities, as well as decisions
from Jersey and Bermuda, and gave useful guidance as to the factors the court will consider.

These factors are similar but not identical to those set out by the Deputy Bailiff of Guernsey in the Providence
Investment case, in particular as to the importance of the funder not being able to control the proceedings. A
factor potentially indicative of indirect control, and therefore objectionable, would be the funder’s ability to
terminate the agreement without reasonable cause. One that will be likely to weigh in favour of permitting

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funding is that the funder is a professional funder and is regulated or at least a member of the Association of
Litigation Funders and has agreed to follow its Code of Conduct.

Segal, J. considered that commercial funding of litigation could, providing those principles were respected,
promote access to justice, even in cases where it cannot be said that the plaintiff could not otherwise afford to
bring the proceedings. The case marks something of a policy shift in Cayman and will be likely to spark
renewed interest in the jurisdiction by the litigation funding industry.

Third party liability

The decision of the Royal Court of Jersey in CMC v. Forster and RBC Trust Company (International) Limited
[2017] JRC 014A considers some novel and difficult points relating to the court’s jurisdiction to join third parties
where a claim for a contribution and indemnity are made against them. The underlying proceedings concern
allegations of breach of duty and breach of trust brought by two Kenyan companies against a former director,
and against trust companies alleged to have received monies in breach of trust. It is alleged that over a period
of three decades, funds were diverted to trusts and companies in Jersey and the BVI by way of over -invoicing
arrangements which had been agreed with the companies’ suppliers.

The significance of the decision as regards third party liability is that the relevant legislation in Jersey is drawn
in much narrower terms than the English equivalent (the Civil Liability (Contribution) Act 1978). The judgment
contains some helpful guidance as to the scenarios in which such third party claims may be pursued in Jersey.

(A second judgment in the same case (reported at [2017] JRC 188) provides useful guidance as to the
circumstances in which the Jersey court will make an order limiting the scope of discovery where the obligation
to provide full discovery would place a disproportionate burden upon a party.)

Costs and security for costs

The Isle of Man High Court considered the circumstances in which a claimant will be required to put up security
for the defendant’s costs in Blackwood v. McCallion & Otr (1 August 2017). Based on the particular facts, the
Court refused the application for security for costs as neither of the grounds relied on (that the claimant was
resident outside of the jurisdiction and that he had taken steps in relation to his assets that would make it
difficult to enforce an order for costs) had been proven. In doing so, the Court made clear that there is no
requirement for an individual claimant to produce evidence of solvency, as they would if they were a corporate
entity. In relation to judgment-proofing, the defendant asking for security did not have to show that the
claimant had taken steps specifically to evade a costs order, just that the steps he had taken would as a matter
of fact make such an order difficult to enforce.

The issue in the Cayman case of In the Matter of Primeo Fund (In Official Liquidation) (1 August 2017) was the
availability of an award of costs against a non-party. The court confirmed that it has a wide discretion to
allocate costs and there is no bar to an order for costs against a non-party in Cayman. Non-party costs orders
are only exceptional in that they are outside the ordinary run of cases.

The facts were complex, but in summary, the liquidators of Primeo were engaged in ongoing proceedings
against certain companies in the HSBC group. Those defendants had pressed the liquidators to use their powers
to seek documents ultimately from Ernst & Young (EY) Luxembourg, through the offices of EY Cayman. They
issued a summons against EY Cayman, which was dismissed, leaving two issues about the cost of the process:
first, whether the relevant costs rule extended to the type of application made against EY Cayman (it did, and
EY Cayman was awarded its costs against the estate on an indemnity basis), and secondly, whether the HSBC
entities should be subjected to a non-party costs order, not themselves being involved in the unsuccessful
application against EY but arguably having been the driving force behind it.

On the facts, McMillan, J. held that the Primeo estate should not have to bear any of the costs of an
unsuccessful discovery application and made a non-party costs order against the two HSBC entities. The case
was novel in that the liquidators were the unsuccessful party in the discovery application, and yet they were
able to recover costs from a non-party, and also in that their liability to pay EY’s costs was held to fall within
the amount that they could claim from the HSBC defendants.

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While cost awards in relation to interlocutory steps in proceedings are only payable in advance of the trial if the
court expressly orders it, costs orders made after substantive proceedings are generally not stayed pending
other steps being taken. In Al Hamrani v. Al Hamrani (8 March 2017) Carrington, J. of the Commercial Division
of the Eastern Caribbean Supreme Court in the BVI refused an application to stay an order and to bar
attachment of frozen funds pending the sale of a property. He relied in particular on the fact that the applicants
for the stay had done nothing for a considerable period to satisfy the costs order and the fact that they had not
produced any evidence of assets other than the frozen funds that would be available to satisfy the order, other
than assets in Saudi Arabia, where the costs order would not be enforceable. As well as indicating the sort of
consideration that the court will find persuasive on such applications, the case confirms the general rule that a
stay will not be granted.

A particular issue relating to costs that arises in the offshore jurisdictions is the extent to which the fees of
foreign lawyers (in practice, particularly London counsel and onshore lawyers acting for a party and through
whom the local lawyers of record in the proceedings may have been instructed) are recoverable under costs
orders. In Cayman, for example, court rules make clear that the fees of foreign lawyers may only be claimed
from the date on which they have been granted admission in the proceedings, and practice directions and case
law establish that generally only leading counsel will be granted such admission. In the case of Shrimpton v.
Scriven (3 February 2017), the question of how the BVI deals with this issue was revisited by the Court of
Appeal. In the earlier case of Garkusha v. Ashot Yegiazaryan & Ors BVIHCMAP2015/0010 the Court of Appeal
had appeared to hold that foreign lawyers were committing an offence under the Legal Profession Act 2015 in
providing assistance to BVI lawyers, and that their fees were consequently irrecoverable. In Shrimpton the
court acknowledged that this reasoning was faulty, in relying upon a definition as to the “practice” of BVI law
which appeared to operate extra-territorially, but which had been repealed. However, the court held that the
decision in Garkusha was capable of being supported on other grounds. The result is that foreign lawyers’ fees
are not currently recoverable inter-partes.

In our round-up of cases on company law we covered the Guernsey scheme of arrangement case of Puma
Brandenburg Limited v Aralon Resources and Investment Company Limited & Nortrust Nominees Limited. It
was a case where Aralon and Nortrust as minority shareholders had persuaded the Bailiff not to sanction a
scheme that had been approved by the statutory majority. Puma had unsuccessfully appealed. A separate
decision (Guernsey Judgment 29/2017) dealt with the question of costs.

To the extent that costs were awarded to the winning party, the decision is unsurprising. Its interest lies in the
Court of Appeal’s rationale for awarding those costs on an indemnity basis, and in its obiter comments about
how it would have dealt with the question even if Aralon and Nortrust had not prevailed.

In choosing not to accept the Bailiff’s decision and to prosecute the appeal, Puma had used resources in which
Aralon and Nortrust, as owners of a substantial shareholding, were materially interested. The Court of Appeal
therefore considered that the justice of this case pointed to Puma giving Aralon and Nortrust an indemnity for
their costs: it would be unfair that they should have been faced with litigation in which they preserved their
own interest in Puma, and the interests of other minority shareholders who did not want to sell, while resources
in which they had an interest were used to support the litigation against them.

Puma had submitted that it would have been wrong for them not to have pursued the appeal due to the
support given to the scheme by those voting at the meetings. The Court of Appeal thought there was nothing in
this consideration: Puma failed on the appeal and the respondents should not be left out of pocket, principally
to the advantage of the majority shareholders.

The Court further noted that in relation to both the substantive questions of the case, it was helpful to have th e
respondents’ assistance and indicated that as a result even if they had been unsuccessful on both points, they
still would have deserved indemnity costs. Although obviously obiter, this shows that the courts recognise the
importance of interested parties intervening in scheme applications and that they will not cause those who
intervene to suffer a loss.

There was a further application by Aralon and Nortrust for indemnity costs of the initial hearing (Puma
Brandenburg Limited and a Scheme of Arrangement (Guernsey Judgment 31/2017)). The Bailiff followed the
Court of Appeal’s analysis in Guernsey Judgment 29/2017, summarised above.

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Injunctions

In freezing injunction cases the applicant needs to show that in the absence of an order there is a risk of
dissipation of the assets. In the BVI case of Gilfanov v. Polyakov (3 February 2017) the issue was whether that
risk needs to be established as a matter of fact or whether it can be inferred from other evidence. Bannister, J.
had discharged a freezing injunction on the basis that although there was a good arguable case of fraud there
was no general risk of dissipation. The Court of Appeal held that where there is a good arguable case of fraud
on an application for a freezing injunction, and the fraud is the central issue in the case, the court should
consider whether that finding by itself or with other relevant evidence could lead to an inference of a general
risk of dissipation. The appeal against the discharge of the injunction was allowed.

The absence of a risk of dissipation was ultimately what prevented the Cayman court from granting a freezing
injunction in In the Matter of Trina Solar (In Official Liquidation) (6 November 2017). The main proceedings in
this matter involved merger dissent and the court was asked to grant an application by the dissenting
shareholders for a freezing order, appointment of receivers and discovery in relation to assets. The dissenting
shareholders claimed that Trina’s recent restructuring had the effect of reducing its assets which meant that
payment of the merger price (which the dissenting shareholders argued was significantly more than as stated
by Trina) would not be possible. The court found the dissenting shareholders to have a good arguable case for
the claim in the merger dissent proceedings, but that they had failed to show a risk of dissipation. The court
regarded the restructuring that had taken place to be justified and part of the company’s ordinary course of
business. The court also noted that the expert evidence that was provided in support of the injunction was at a
preliminary stage and it would be disproportionate to grant an injunction of such a huge scale based upon that
evidence.

Freezing injunctions are commonly coupled with orders for disclosure. The courts of the Isle of Man have
considered the circumstances in which the court will make further orders for disclosure to ensure that a freezing
order and ancillary disclosure order previously made had been effective. In IOTA Violet & Otrs v. Woman & Otr
(26 June 2017), the High Court dismissed an application for such an order. Although the court could interfere to
make further ancillary disclosure orders, it was acknowledged that these should be used only when justice
requires. There was no evidence in this case of any abuse of the freezing order or the disclosure order made, or
that the exceptions had been abused. Had there been such evidence that the defendants were flouting the
freezing order or the exceptions, the Court indicated that there might have been some justification for it to
exercise its discretion to grant the application.

Another Isle of Man case on injunctions, in this case of the anti-suit variety, was Excalibur Almaz & Otrs v.
Horie (Appeal division judgment 24 November 2017). This was the first occasion on which a Manx court was
asked to give a judgment concerning this type of injunction. The case involved Japanese internet entrepreneur
and potential space tourist Takafumi Horie. Mr Horie had filed a claim in Texas alleging fraud, negligence and
breach of fiduciary duty against Excalibur Almaz and others, who then sought an anti-suit injunction in the Isle
of Man against Mr Horie on the basis that the Texas proceedings were in violation of an exclusive jurisdiction
clause in a 2010 settlement agreement, which stated that any dispute or claim had to be dealt with in the Manx
courts. The application before the Isle of Man High Court was for an interim anti-suit injunction pending the
determination of the exclusive jurisdiction point. At first instance (24 August 2017), Deemster Corlett refused
the anti-suit injunction on the basis that damages would be an adequate remedy for the claimants. The
claimants lodged an appeal to the proceedings. It was held that the Deemster had erred in applying a
presumption that damages were an adequate remedy for the claimants and that the Deemster should have
instead favoured a balancing exercise as between the parties, therefore allowing the claimants' appeal and
granting the injunction sought.

Enforcement of judgments/awards
The enforcement of foreign court judgments and arbitral awards has always been a significant part of the work
of the courts of the offshore jurisdictions, and 2017 was no exception. Frequently, however, the proceedings
for enforcement do not give rise to decisions of wider interest. Two cases, one from BVI and one from Jersey,
are worth noting.

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In the BVI, the Court of Appeal gave judgment on 14 June 2017 in Cukurova v. Sonera. This was an appeal
against the judgment of Mr. Justice Gerard Farara, QC [Ag.], granting Sonera an order of sale over the shares
held by Cukurova in a subsidiary known as CFI. The court had previously made an order permitting Sonera to
enforce an Arbitral Award as a High Court judgment in the BVI and issued a charging order over the CFI shares.

Cukurova had at first instance unsuccessfully opposed the application for an order of sale, in particular relying
on a partial award that had been granted in a new arbitration it had commenced. The Judge found that Sonera
was seeking to enforce an unimpeachable judgment and that the existence of the further arbitration was not a
matter which ought to lead the BVI High Court to decline to make an order for sale.

On appeal, Cukurova attacked the first instance findings and raised as a new point that in the intervening
period a final award had been made in the new arbitration, arguing that this amounted to a material change of
circumstance which would justify the enforcement order being revisited, or at least not further enforced.

The Court of Appeal held that the final award could not and did not detract from the order enforcing the original
award, and agreed with the judge that the judgment was unimpeachable. The Court of Appeal concluded that
each of the grounds of appeal was "devoid of any merit" and the appeal was dismissed.

The Jersey case of Federal Republic of Nigeria v. Doraville (United States of America as proposed intervenor)
[2017] JRC was interesting not only as being the first to come before the courts in connection with the Civil
Asset Recovery (International Co-operation) (Jersey) Law 2007 but also for its confirmation of the status in
private international law of foreign judgments in rem. It concerns asset recovery in connection with the various
fraud claims against General Abacha, the former president of Nigeria.

The United States of America had previously obtained a default judgment in Washington DC in rem against
Doraville, a Jersey company holding substantial funds understood to have derived from General Ab acha and his
associates. The Federal Republic of Nigeria was also seeking to recover these funds, as the party originally
deprived of them, and sought judgment against Doraville in Jersey. Doraville did not defend the proceedings,
but the United States of America sought to intervene, to have them dismissed as an abuse of process, alleging
that the Nigerian proceedings had been brought to obstruct enforcement of the US judgment.

The Jersey court refused the United States’ application and held that Nigeria was entitled to judgment. The US
judgment was not enforceable in Jersey as a matter of private international law (on the basis that a judgment
in rem is not enforceable against assets which are not in the jurisdiction of the court in which it is entered).
The US judgment could only be enforced under provisions of the Civil Asset Recovery Law, which provided a
legislative scheme for doing so. If and when such an application for enforcement is made, the court would need
to assess the competing claims by Nigeria and the United States under their respective judgments.

Evidence
The decision of the Lieutenant Bailiff of Guernsey in The “R” Trusts (Guernsey 43/2017) provides useful clarity
of the scope of the privilege attaching to “without prejudice” materials, specifically in the context of an
application to the court to approve a momentous decision of trustees under the doctrine of Public Trustee v.
Cooper [2001] WTLR 901, but also more generally. The principal application before the court was the “blessing”
application, which was being heard by the Deputy Bailiff. This application was opposed by D who made a
procedural application for extensive disclosure of evidence and for other directions in respect of the conduct of
the principal application. This application was also heard by the Deputy Bailiff.

In the present application, the Lieutenant Bailiff explored the nature of the “without prejudice” doctrin e as
having a basis partly in the public policy of encouraging and facilitating parties to settle their disputes and
partly in contract, in that parties may agree, expressly or by implication, to apply without prejudice principles
to their communications even beyond the scope of the public policy principle.

Most of the grounds relied on by the applicants were specific to the facts, but of wider interest is the court’s
rejection of the argument that without prejudice privilege does not apply to Public Trustee v. Cooper
applications.

Finally, the Grand Court of the Cayman Islands addressed the question of when new evidence may be admitted
after judgment has been handed down, but before a final order has been sealed. In Midtown Acquisitions LP v.
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Essar Global Fund Limited (27 November 2017), Midtown sought to re-open its unsuccessful summary
judgment application to adduce additional evidence. The summary judgment application had been to enforce a
judgment of the New York Supreme Court, but it was refused on the grounds that Essar had a reasonable
prospect of success in showing that the judgment had been obtained by fraud, misrepresentation or other
misconduct. There had been procedural developments in the New York proceedings. Essar had also advanced
different cases in different jurisdictions in respect of enforcement.

The court does have jurisdiction to admit new evidence and order a further hearing (and thereby re-open the
trial or hearing) after a judgment has been handed down. The principle to be applied generally is the overriding
objective of dealing with cases justly and proportionately, including on the issue of costs. This also involves
dealing with cases expeditiously and fairly and allocating an appropriate share of the court's resources to a
dispute.

In cases involving an application to call new evidence and have a new trial, the court should take into account
the well-known test propounded in Ladd v. Marshall [1954] 3 All E.R. 745. In the case of applications before the
trial Judge rather than the Court of Appeal, the Ladd v. Marshall factors should be applied more leniently.

The Grand Court found that the principles laid down in Ladd v. Marshall dealing with admission of new evidence
and the holding of a new trial were persuasive (but not determinative) in situations involving admission of new
evidence before the sealing of an order. The courts would generally require powerful factors in the applicant's
favour before acceding to an application where the applicant could not satisfy the three requirements in Ladd v.
Marshall, namely that the evidence could not have been obtained with reasonable diligence for use at the trial,
that it would have been at least influential in the outcome, and that it was apparently credible.

The Court found those criteria satisfied and ruled that, based on the new evidence and contrary to its earlier
decision; Essar had no real prospect of impeaching the New York judgment.

Appleby acted for the successful Appellant in the Rogalskiy v. JSCC Eurochem case in the BVI; the Nigerian Government in
Federal Republic of Nigeria v. Doraville in Jersey; the first defendant in CMC v. Forster and RBC Trust Company
(International) Limited, also in Jersey; in Cayman for the respondents in the matter of Primeo (in Official Liquidation);; and in
the Isle of Man for the plaintiffs in IOTA Violet & Otrs v. Woman & Otr and the defendant in Excalibur Almaz & Otrs v. Horie.

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Key Contacts

               Andrew Bolton
               Partner                       John Wasty
               Practice Group Head           Partner
               Dispute Resolution            Dispute Resolution
               Cayman Islands                Bermuda
               +1 345 814 2011               +1 441 298 3206
               abolton@applebyglobal.com     jwasty@applebyglobal.com

               Andrew Willins                Peter McMaster QC
               Partner                       Partner
               Dispute Resolution            Dispute Resolution
               BVI                           Cayman
               +31 657 092287                +1 345 814 2795
               awillins@applebyglobal.com    pmcmaster@applebyglobal.com

               Anthony Williams              Eliot Simpson
               Partner                       Partner
               Dispute Resolution            Dispute Resolution
               Guernsey                      Hong Kong
               +44 1481 755 622              +852 2905 5765
               awilliams@applebyglobal.com   esimpson@applebyglobal.com

               Mark Holligon                 Fraser Robertson
               Partner                       Partner
               Practice Group Head           Practice Group Head
               Dispute Resolution            Dispute Resolution
               Isle of Man                   Jersey
               +44 1624 647 691              +44 1534 818 032
               mholligon@applebyglobal.com   frobertson@applebyglobal.com

               Yahia Nazroo
               Counsel
               Dispute Resolution
               Mauritius
               +230 203 4313
               ynazroo@applebyglobal.com

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Offshore Legal Services
                                                                                                                applebyglobal.com

  © Appleby Global Group Services Limited 2018 • All Rights Reserved

  This eAlert is published by APPLEBY and is not intended to be, nor should it be used as, a substitute for specific legal advice
  on any particular transaction or set of circumstances. It does not purport to be comprehensive or to render legal advice and
  is only intended to provide general information for the clients and professional contacts of Appleby as of the date hereof.

  Appleby is an organisation of separate entities and legal practices comprising both corporate and partnership form, each
  established to provide legal services under the Appleby name. Appleby British Virgin Islands, Appleby Hong Kong and
  Appleby Jersey are all general partnerships providing legal services from their respective jurisdictions. Appleby (Bermuda)
  Limited, Appleby (Cayman) Ltd., Appleby (Guernsey) LLP, Appleby (Isle of Man) LLC and Appleby Seychelles are all
  corporations with limited liability providing legal services from their relevant jurisdictions. Appleby (JV) Ltd & Cie in Mauritius
  and its representative office in Shanghai is a commercial partnership providing legal services from their respective
  jurisdictions. The term "Partner" is a title referring to a shareholder, director, employee or consultant of equivalent standing
  and qualifications of any Appleby legal practice, as well as to members of those legal practices that operate as general
  partnerships. A list of those who are termed “Partners” of any legal practice is available for inspection upon request from
  your relationship partner or any Appleby office.

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