To stay or not to stay? Granting a stay pending determination of parallel proceedings
The recent Cayman Islands case of In the Matter of TFKT True Holdings provides valuable insight to the factors considered by the Grand Court when determining whether to grant a stay of a winding up petition pending the determination of parallel proceedings in Hong Kong.
The petitioner, a minority shareholder, had sought to wind up the company in question on just and equitable grounds. The majority shareholder opposed this and sought to strike out and dismiss the petition as an abuse of process on the ground of there being parallel proceedings in Hong Kong between the same parties and on the same issues. Alternatively, the majority shareholder requested that the claims in the petition be stayed pending the determination of the Hong Kong proceedings.
The Grand Court declined to strike out or dismiss the petition but instead granted a temporary case management stay of the proceedings pending determination of the Hong Kong proceedings.
The Court’s considerations included:
- Taking into account the overriding objective of the Grand Court Rules, namely “to deal with every cause or matter in a just, expeditious and economical way” bearing in mind the complexity of the issues, advancement of proceedings, cost, allocation of court resources and ensuring the substantive law is rendered effective.
- Most of the factual matrix and many issues in the petition overlapped those in the Hong Kong proceedings.
- Justice would be better served by the Grand Court waiting for determination of the common issues in Hong Kong before proceeding further.
- The applicable test is whether, in the circumstances of the case, it was in the interests of justice for a stay to be granted, having regard to the benefits and disadvantages of imposing a stay.
- The test is not whether the Hong Kong proceedings would be determinative of the Cayman Islands proceedings; but rather, a stay may be granted if the outcome of the Hong Kong proceedings may have “an important effect” on the Cayman Islands proceedings.
- The petitioner had not pursued the proceedings expeditiously in Hong Kong, which were commenced in 2019.
- The petitioner had not elaborated on the prejudice and disadvantages it would suffer if the Cayman Islands proceedings were stayed.
This decision is a helpful reminder to practitioners that determining if a stay is “in the interests of justice” requires balancing various non-exhaustive factors, assessed on a case by case basis.
