In China Index, the Dissenters acknowledged that the merger consideration is generally considered the starting point for assessing an interim payment ahead of trial. However, the Dissenters sought a higher amount on the basis that they claimed China Index (and its valuation experts) made certain errors and omissions in the valuation of its shares at the time of the merger that, if corrected, would have resulted in a significantly higher merger consideration. The Dissenters contended that an interim payment should reflect this higher valuation. China Index argued that in light of a number of factors including revised financials and minority discount, the Court should quantify the interim payment at 60 per cent of the merger consideration.

In rejecting both positions, Justice Doyle reiterated the underlying principles of an interim payment, the key issue being what sum it can safely be assumed the Dissenters will recover at trial. Justice Doyle confirmed that he could “safely and justly” order an interim payment based on the merger consideration and not the higher amount sought by the Dissenters (or the lower amount sought by China Index).

In his judgment, Justice Doyle emphasised two key points in the assessment of an interim payment:

1. The determination of interim payment applications in fair value appraisal matters should not be allowed to be turned into mini-trials but rather should be a “somewhat pragmatic high level broad brush assessment of the evidence and arguments”.
2. Factual evidence submitted in support of an interim payment assessment should stick to the facts, and should not descend into inappropriate comment, argument or opinions.

The Court also made noteworthy remarks as to the circumstances in which an interim payment judgment (as an interlocutory decision in advance of trial) can and should be published. It held that given section 238 litigation is not concerned with liability to pay fair value of the shares following a merger (but rather a valuation exercise of those shares), the usual principle that a trial judge should not be made aware that an interim payment has been made, does not apply. That distinction, along with the principle of open justice in the Cayman Islands, allowed the Court to determine that it had good reasons (ie on public interest grounds), to order publication of the judgment.

China Index  therefore provides several useful reminders and indeed warnings as to the conduct of interim payment applications: parties should not treat applications for an interim payment as a form of mini-trial or potentially face adverse costs consequences; and the Court will likely be unwilling to stray from the now well-established principle that merger consideration is the appropriate yardstick for quantifying an interim payment absent “positive evidence” or “cogent legal argument” in support of another position. Additionally, parties should be alive to the Court’s willingness, in the face of opposition, to publish interim payment judgments given the degree of public interest that section 238 proceedings tend to attract.