Jan 2012
CAYMAN ISLANDS
GRAND COURT
COMPANIES – WINDING UP – TRANSACTION APPROVAL PROCEEDING COSTS
The Company’s official liquidators brought a sanction application seeking directions in respect of a dispute about the respective shareholdings of the Company’s only two shareholders. Pursuant to the directions of the Court in that application, the matter was conducted as though it were an action, inter partes, between those two shareholders. The official liquidators had no ongoing involvement in the application: One shareholder defended against the other’s claim in its own interest.
At the conclusion of the matter, the Court held that costs should follow the costs in the cause. Leave to appeal of the order for costs was sought and denied. The decision turned on the proper characterisation of the application. If properly characterised as a sanction application, principles contained in Companies Winding Up Rules (“CWR”) Order 24 would apply, in which case costs would ordinarily be payable out of the assets of the company. If properly characterised as an, inter partes, application between the shareholders, the principles contained in GCR O. 62, R.4 would apply, under which costs would generally follow the event.