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Walkers is a leading international law firm. We advise on the laws of Bermuda, the British Virgin Islands, the Cayman Islands, Guernsey, Ireland and Jersey.
GlobalMap Oct2018
Admissions Aug 2019

Walkers Admits Two New Caymanian Attorneys-at-Law

We are pleased to announce that Dajsha Samuels and Abigail Drummond have completed their legal training and have both been called to the Cayman Islands Bar.

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Walkers Admits Two New Caymanian Attorneys in August

Walkers is pleased to announce that Dajsha Samuels and Abigail Drummond have completed their legal training, with both being called to the Cayman Islands Bar on 5 August 2019 and 6 August 2019 respectively. The applications were moved by Walkers Partners Colette Wilkins and Philip Paschalides before the Hon. Justice Williams, at the Grand Court in the Cayman Islands.

Dajsha Samuels was born and raised in the Cayman Islands where she attended Red Bay Primary, Cayman Prep and High School and Cayman International School. Dajsha undertook her LLB degree at the University of Bradford, graduating with First Class Honours in 2015. Dajsha went on to complete her LLM in International Financial Law in 2016 at King’s College in London and received a Merit pass. In 2017, she went on to complete her LPC at the University of Law Moorgate, where she also undertook an MSc in Business Law and Management. Prior to commencing her articles Dajsha worked at Walkers Fiduciary Limited for four months. Dajsha was articled to David Collins, a Partner in Walkers' Finance and Corporate Group.

Dajsha states, "The continuous support and constant investment in training and development at Walkers is truly exemplary and it has assisted me in my professional development and strive towards excellence. Most importantly, the firm has taught me to have confidence in my abilities by being trained to be an independent thinker. I am proud to say that I have done it the Walkers’ way."

Abigail Drummond was a recipient of the 2013 Walkers' Legal Scholarship. Born and raised in the Cayman Islands, Abi attended Red Bay Primary, St. Ignatius Catholic School and the United World College of the Atlantic in Wales. Abi undertook her LLB degree at the University of Bristol, graduating with Upper Second Class Honours in 2016, and then went on to complete the LPC at the University of Law in Bristol where she was awarded a Distinction. Abi has participated in three legal internships with Walkers since 2014, completing placements in the Investment Funds, Finance and Corporate and Insolvency and Dispute Resolution groups. Abi was articled to Philip Paschalides, a Partner in Walkers' Finance and Corporate Group.

Abi comments, "From my internship through to my Articles, Walkers has provided me with a great balance of amazing support and independent challenge. I am humbled by the amount of time the talented team at Walkers has invested in me. I look forward to beginning my legal career at this top-ranked offshore law firm."

Walkers' Partner and Chair of the Trainee Committee, Caroline Heal commented "We would like to congratulate Abi and Dajsha on their recent admissions to the Cayman Islands Bar and are delighted that these talented young Caymanian women will continue their career progression here at Walkers. We are committed to providing a challenging yet supportive learning environment for our articled clerks and it has been extremely rewarding to see Abi and Dajsha reach this important milestone."

Royal Court Reverses Employment Tribunal in First Review of Case Management Powers

What happens in Jersey if you fail to file a response to an employment or discrimination claim in time? There is a strict deadline of 21 days from the date the claim is sent to a respondent (not 21 days from receipt), although respondents can apply for an extension of time provided they do so within that initial 21 day period. If however, respondents fail to file a response in time, then judgment in default of a response will be made against them.

The position of the Employment & Discrimination Tribunal ("Tribunal") has been that they do not have the power to admit a response filed out of time or to set-aside a judgment that is given in default of a response. This is because the Employment and Discrimination Tribunal Procedure Order 2016 ("Procedure Order") does not contain an express provision that deals with this scenario. According to the Tribunal Annual Report for 2018, almost 8% of claims are resolved in this way. This suggests that a number of employers have been prevented from defending claims, but need not have been.

This position could give rise to serious injustice for an employer. For instance, it would be open to a claimant to provide a false address for a respondent. This would lead to an employer not being aware of a claim until after judgment had been entered against it, but would not then allow that employer to get the judgment set-aside.

In the judgment issued this week of Ladbrokes v Lawrie, the Royal Court was asked to consider the Procedure Order, in particular, notwithstanding the above gap, whether the tribunal had the power to set-aside a judgment in default. This is the first time that the Tribunal's case management powers have come before the Royal Court, and the Court took the opportunity to provide some clarification on the powers of the Tribunal.

Particular emphasis was placed on article 89 of the Employment (Jersey) Law 2003, which states: "The Tribunal shall have, as regards the attendance, swearing and examination of witnesses, the production and inspection of documents, and other matters necessary or proper for the due exercise of its jurisdiction, all such powers, rights and privileges as are vested in the Royal Court."

Those familiar with litigation in Jersey will know that the Royal Court can set-aside a judgment in default, where the defendant provides an explanation for its failure and can show that it has an arguable defence to the claim. The question for the Royal Court was whether it was necessary for the Tribunal to have a similar power.

The Royal Court held that there was a clear gap in the Procedure Order, which could lead to absurd or unjust results. As a result it found that it was a necessary part of the Tribunal's case management powers, under Article 89 of the Employment (Jersey) Law 2003, for it to have the power to set-aside a judgment in default of a response.

As the Tribunal had misdirected itself in holding that it did not have this power, and therefore did not consider what steps it should take in response to Ladbrokes' application, the Royal Court held that the matter should go back to the Tribunal for it to consider afresh. It is anticipated that the Tribunal will give directions on how it expects an application to set-aside a judgment in default to be dealt with in the future.

The Royal Court's decision brings the power in the Tribunal in line with not only the Royal Court and Petty Debts Court, but also the practice in the English Employment Tribunal.

Comment

This decision should be welcomed by employers in Jersey. Whereas previously an employer that missed the 21 day deadline would be absolutely barred from contesting the merits of the claim, in appropriate circumstances the Tribunal may now allow a response to be brought out of time and therefore set-aside judgment in default of a response. There will still be cases however, where an employer either has no justifiable reason for missing the deadline, or has filed no arguable defence. In either of these scenarios we would anticipate that the Tribunal would refuse to set-aside the judgment.

This case is a salutary reminder that correspondence from the Tribunal needs to be dealt with immediately. If you receive a claim from the Tribunal, you need to:

  1. Prepare and submit your response within the 21 day time limit;
  2. If you know you need longer, you should apply for an extension of this time limit within the 21 day period; and
  3. Although the Tribunal does have the ability to set-aside a judgment in default, it is likely that this is a power that it will use sparingly and you will need to have a good reason for not filing a response and an arguable defence.

We recommend taking legal advice as soon as possible on receipt of a claim to ensure that the necessary steps are taken in time. Walkers' specialist contentious employment law team have significant experience in advising clients on responses to Tribunal claims.

Note

Daniel Read, Senior Counsel in the Employment Team at Walkers, acted for the Respondent on a pro bono basis due to the importance of the issues.

New Judgment Clarifies Use of Tech in e-discovery Exercises in Jersey

For more than two years, parties to litigation in Jersey have been required to make "appropriate use of technology" to minimise the costs of e-discovery – now, for the first time since the introduction of a Royal Court Practice Direction in 2017, practitioners have guidance from the Court on what qualifies as "appropriate use".

The introduction of Royal Court Practice Direction 17/08, dealing specifically with the discovery of documents held in electronic form, provided practitioners with the first formal procedural framework for the use of electronic discovery platforms in the Island.

Amongst other things, parties to litigation are now required to minimise the costs of e-discovery by efficiently managing the process and making appropriate use of technology, adopting a collaborative approach to identify the scope of disclosure and the approach to be taken.

Although the Practice Direction came into force on 1 June 2017 there has been limited judicial consideration of what constitutes "appropriate use of technology". Useful guidance has however now been provided in a recent unreported decision of Advocate Matthew Thompson, Master of the Royal Court.

In the context of a large scale e-discovery exercise, potentially covering several million documents, the Master made clear that increased use should be made of technology to narrow down relevant documents for review before the process of manual review by lawyers. In particular, predictive coding should be employed to help the parties meet intended timeframes for disclosure.

Predictive coding, in very general terms, involves the use of technology as a preliminary step to reduce the number of documents which are to be manually reviewed within the disclosure process. At the start of the predictive coding cycle, a small number of senior reviewers will consider representative samples of documents and identify which documents within the sample sets are relevant and those that are not. The results are used to ‘train’ artificial intelligence software which then uses this information and applies it to another set of documents which the senior reviewers check for accuracy. Any incorrect results are corrected, with the process being repeated until the results are sufficiently accurate.

Once the results produced by the system are sufficiently accurate, the predictive coding will be applied to all of the electronic documents to be reviewed and only those that are relevant will be produced for the lawyers to consider and be listed for disclosure. The predictive coding process is able to significantly reduce the volume of documents that are reviewed by lawyers which is a useful tool when the volumes of documents to be reviewed are very high.

This approach to disclosure follows the approved use of predictive coding in England and the Master's judgment makes clear that in large scale e-discovery exercises, the "appropriate use of technology" requirement will necessitate an understanding and use of predictive coding methods.

Advocate James Turnbull is part of Walkers' Jersey Insolvency and Dispute Resolution practice group. He has almost ten years' experience as an offshore disputes specialist, having trained with a Magic Circle firm in the City. James has experience of cases relating to fraud, regulatory breaches and trust disputes before all levels of the Jersey court system including the Privy Council.

Walkers is the first law firm to sign Guernsey Employer's Disability Charter

Walkers is the first Guernsey law firm to sign up to the Guernsey Employment Trust's Employer's Disability Charter. The charter is an initiative to encourage employers to make positive commitments about the recruitment, training and retention of workers with disabilities, and raising awareness about disability issues within their organisations.

Sarah Ash, senior counsel in Walkers' specialist Guernsey employment law team, has been the lead lawyer in Walkers' Equality Awareness Series (run in association with The States of Guernsey).

She said: "We are focusing on advising clients about incoming multi-ground discrimination law in the Island which, in our view, will be the most significant change for Guernsey's employers in recent years.

"One of the protected grounds which has received a lot of media attention is the proposed introduction of disability discrimination legislation. We raised awareness of the charter during our Equality Awareness seminar "Disability: What does it mean in practice for Employers" and explained to our clients how signing up to the charter could assist them in becoming more disability confident within their organisations. Consequently, signing up to the charter ourselves was a natural step in demonstrating best practice.

"We have one of the biggest employment law teams in the Channel Islands, with significant experience of advising on discrimination issues in Guernsey, Jersey and in Dublin. Prior to joining Walkers' in October 2018 I spent 13 years specialising in employment law in the UK and regularly advised clients on multi-ground discrimination law and so as a team we're well placed to support clients in terms of advising on the possible impact of the proposed discrimination legislation and how they should be preparing for it." she said.

Walkers' Guernsey office has almost doubled in size since the start of 2018 as part of a strategic growth plan in the Channel Islands – the additions to the office include the lateral partner hires of Rajah Abusrewil and Kate Storey from other Guernsey firms, as well as lawyers from other Guernsey firms, London, South Africa and transfers from within Walkers' international network of offices.

Weavering: Privy Council Rules on Preferences in the Cayman Islands

The Privy Council's recent judgment in Skandinavska Enskilda Banken AB v Conway and another (as Joint Official Liquidators of Weavering Macro Fixed Income Fund Limited) dated 29 July 2019 raises some issues of broad interest in relation to the "clawback" provisions in the Cayman Islands insolvency regime.

Background

Skandinavska Enskilda Banken AB ("SEB") was a shareholder in the Weavering Macro Fixed Income Fund Limited (the "Fund"), acting as custodian and nominee for various underlying investors. In October 2008, SEB placed redemption requests for the entirety of that investment, payable in December 2008. Further substantial redemption requests were made for that, and subsequent, redemption dates by other investors. It transpired that the CEO of the Fund, Magnus Peterson, had perpetrated a fraud which was discovered in March 2009, and that the NAV of the fund had been grossly overstated- consequently, the Fund was not in a position to fully meet the redemption requests due in December 2008, let alone those payable on subsequent dates.

In mid-December, Mr Peterson directed that certain redemption requests be paid immediately, including those made by SEB. Subsequently, the Fund announced that 25% of the amount due to the December redeemers would be paid initially, with the remainder to be paid in instalments thereafter. Ultimately, approximately one third of December 2008 redemption requests, and the entirety of those submitted afterwards, were left unpaid.

Following the Fund's inevitable collapse, its liquidators sought to claw back the redemption payments made to SEB under section 145 of the Companies Law, alleging that they were voidable preferences. That claim succeeded both at trial and before the Court of Appeal.

The Privy Council decision

The key points arising from the Privy Council's unanimous dismissal of SEB's further appeal were as follows:

  1. There was a difference between the situation where a fund struck an inaccurate NAV because of "external fraud" (i.e. where directors strike a NAV in good faith which subsequently proves to be overstated because of fraud in an investment outside of the fund) and "internal" fraud (where the NAV is struck in the full knowledge that it is in fact misleading because of fraud within the fund).The former was binding and could not be challenged, but the latter was capable of being set aside on the application of an aggrieved investor by bringing an application against the liquidators on notice to all affected parties. However, this did not assist SEB because they had not been defrauded; in fact, they had received more than would have been the case had the NAV been accurate.
  2. The principle derived from Strategic Turnaround v Culross that redemption proceeds became a liability of the Fund on the redemption day, irrespective of any provision setting out a period within which payment would actually be made, was reaffirmed.
  3. The finding of the Court of Appeal that a "dominant intention to prefer" could be inferred from the fact the SEB was paid in circumstances where it was known that other redeemers were unlikely to be paid, was approved.
  4. Section 145 rendered preferences voidable, as opposed to void, and did not create a statutory remedy requiring the repayment of monies: instead the liquidators' claim lay at common law, in this case a restitutionary remedy in unjust enrichment. That remedy was available against a shareholder even where they acted as a nominee and had paid money on to an underlying client: as the registered shareholder the Fund owed its debt to them and thus they could properly be said to have been enriched by its payment. Their status as a nominee was irrelevant, whether or not it was known to the Fund.
  5. The laws of the Cayman Islands do not recognise a defence of change of position in respect of "clawback" claims of this type as it would be inconsistent with the policy underlying section 145 that favoured pari passu distributions. Accordingly, the fact that monies may have been remitted by a nominee to an underlying client against whom they may have no recourse (as was the case with SEB) does not afford a defence to a clawback claim.

Whilst there was a recognition that in some cases this could result in "harsh results", addressing that issue was said to be a matter for statutory rather than judicial intervention. The net effect of the Privy Council's decision is to strengthen the position of liquidators considering claims of this sort, and to reiterate the importance of a pari passu distribution amongst creditors in an insolvent company. The approach taken to nominee shareholders is particularly instructive: any party acting as a nominee should be aware that the Court will not draw a distinction between them and a party holding shares in its own right: they will be liable in precisely the same way.

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