Campbells Successfully Acts For The Defendants In The Matter Of Steven Goodman v Dawn Cummings And DMS Governance Ltd.

In a Judgment delivered on 2 July 2019, the Grand Court dismissed the Plaintiff's application to amend his pleading and granted summary judgment in favour of DMS, thus dismissing the entire action in favour of the Defendants without a substantive trial. This recent judgment is concerned with the circumstances in which a management company offering directorship services can become vicariously liable for the acts or omissions of an employee, and also provides a helpful reminder about the threshold for proving "wilful neglect or default" and for obtaining summary judgment and strike out.

The Judgment is a vindication of DMS and Ms Cummings and serves as a useful reminder to those that seek to pursue vexatious claims against independent directors and professional fund governance companies in the Cayman Islands.

Background

In December 2016 the Plaintiff, Mr Steven Goodman, issued proceedings against the First Defendant (the "Director") for breach of common law director duties and/or breach of fiduciary duties. The Second Defendant, DMS Governance Limited ("DMS") who provides investment management services and employed the Director, was alleged to be vicariously liable for the acts of the Director. The Plaintiff brought the claim by way of an assignment of certain causes of action from Tangerine Investment Management Limited (in Official Liquidation) ("Tangerine").

The Plaintiff alleged that the Director was a director of Tangerine whose principal business was to act as Investment Manager to funds established by Axiom. It was alleged that the Director caused Tangerine to pay out money to entities controlled by Tangerine's sole owner, to enter into agreements with unsuitable panel law firms, and that her alleged breaches caused the termination of the investment management agreement, resulting in the loss of fees totalling $55 million over four years.

The Defendants vehemently rejected the allegations raised and applied to dismiss the claims against both defendants either by way of summary judgment or strike out ("Strike Out Application").

Preliminary Issues Trial

Following an earlier judgment of Mangatal J dated 13 September 2018, in which it was held that the Director was entitled to rely on an indemnity under Tangerine's Articles of Association (the "Articles"), the proceedings were discontinued against her. Following the decision on the Preliminary Issues, and with DMS left as the only Defendant, the Plaintiff applied for leave to amend the...