The Grand Court of the Cayman Islands has issued a judgment dismissing the remnants of a claim by an assignee of certain causes of action emanating from the collapse of Tangerine Investment Management Limited (in liquidation).
Harneys previously blogged about the matter of Goodman v Cummings and Another where Justice Mangatal determined a number of preliminary issues which ensured meaningful protection for directors of Cayman funds.
With the Plaintiff (Mr Goodman) having opted to discontinue his proceedings against the former director (Ms Cummings) in light of the preliminary ruling, only two remaining applications came to be decided before the Court for the purposes of this judgment, namely
- A strike out application by DMS, with whom Ms Cummings had been employed during her brief tenure as a director of Tangerine; and
- Mr Goodman’s application to amend his Statement of Claim.
DMS’ strike out application was premised on a belief that the claim that it was vicariously liable for a breach of duty on the part of Ms Cumming was bound to fail, that the claim was bad in law and that Mr Goodman’s freestanding claims in contract and in tort were “makeweights” which were bad in law and / or “embarrassing as pleaded”.
In short, DMS submitted that if Ms Cummings was not liable for a wrong in the Court’s eyes, then her employer could not be liable either. DMS produced a plethora of supporting jurisprudence and pointed to Mr Goodman’s poorly particularized pleadings as evidence of insufficiently pleaded claim.
Mr Goodman strongly opposed the strike out application pointing to the low bar in the established test in Cayman with the relevant question being whether there is a real, not fanciful, prospect of success.
However, Justice Mangatal was not persuaded by the claims in his pleadings which amounted to no more than “bare assertions” which disclosed no reasonable cause of action. The Judge ruled that on balance Mr Goodman’s case had no real prospect of success. Interestingly, Justice Mangatal also accepted that it is settled law in the Cayman Islands that absent fraud or bad faith, a management company offering services such as the appointment of one of its employees as a director of a company owns no duty of care to that company (following the decisions in the English case of Kuwait Asia Bank EC v National Mutual Life Nominees Ltd and the Cayman case of Paget-Brown & Co v Omni Securities Ltd).