Re Dragon Capital Ltd (Shrimpton and anr v Scriven and ors)
02 Jun 2016
Robin Hollington QC and Adrian Pay are instructed for the Petitioners in a claim under section 184I BVI Business Companies Act 2004 to have their shares in Dragon Capital Ltd bought. Dragon Capital Ltd is a large Vietnamese investment fund, of which Mr Shrimpton, the First Petitioner, was the co-founder. Mr Shrimpton owns approximately 35% of the issued shares (personally and through a company, the Second Petitioner). Mr Shrimpton claims, inter alia, that he was unfairly excluded from management.
Mr Shrimpton claims that Dragon Capital Ltd was, from its inception, a quasi-partnership between him and Mr Scrivener, the co-founder, subject to equitable understandings, including a right to participate in management. A number of Vietnamese individuals subsequently became partners, but with their shareholdings held indirectly by Mr Shrimpton and Mr Scrivener.
Some time thereafter, the International Finance Corporation (part of the World Bank) (‘IFC’) and Promotion et Participation pour la Cooperation Economique (‘Proparco’) acquired shareholdings, at which time formal shareholders’ agreements were executed. The Vietnamese partners did not execute the shareholders’ agreements.
Mr Scrivener and Mr Pasikowski, the First and Second Respondents, applied for summary judgment on the issue of whether Dragon Capital Ltd was a quasi-partnership and/or whether the quasi-partners were bound by equitable understandings. They relied upon two principal arguments (1) the allegation of the existence of a quasi-partnership was so weak as to have no real prospect of success; and (2) in any event, the Petitioners had no real prospect of showing that the quasi-partnership survived the execution of the shareholders’ agreements.
The application was dismissed, the judge ordering the applicants to pay the Petitioners’ costs. As to the first ground, the Judge held that the question of whether a quasi-partnership existed was highly fact-sensitive and unsuitable for summary disposal and that there was ample evidence to suggest that Dragon Capital Ltd was a quasi-partnership. As to the second ground, there was a real prospect that, looking at the shareholders’ agreement in its proper context, the quasi-partnership survived the execution of the shareholders’ agreements (or that it revived, thereafter). The Judge commented ‘ This application for summary judgment… is a particularly good example of how such an application can delay and derail proceedings as they progress towards trial and how such an application can increase costs.’.
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