Cayman Islands: Failure To Launch: Cayman Court Has "Scant Sympathy" For Plaintiff Who Did Not Serve Writ In Time

Last Updated: 16 May 2014
Article by Jeremy Walton and Paul Kennedy

Weavering Macro Fixed Income Fund Limited (In Official Liquidation) (the "Plaintiff") was a Cayman investment fund which made headlines in 2009 when it emerged that the counterparty for its biggest trading position was controlled by the fund's manager. An allegation that the fund's NAV was artificially inflated due to a sham transaction with a related party has led to criminal proceedings in the UK, a civil claim by the Plaintiff against its administrator in Ireland, and separate proceedings before the Grand Court of the Cayman Islands against its directors and, in this case, against Ernst & Young (the "Defendants").

The Plaintiff's case against the Defendants is that they acted negligently or in breach of contract in auditing the Plaintiff's financial statements which contained the alleged sham transactions in the period 2005 to 2007 resulting in losses of up to $400 million. The Defendants deny the claim.

On 18 March 2014, Justice Quin of the Grand Court ruled that the Plaintiff should not be granted an extension of the period of validity of a Writ as they had not shown good reason for their failure to serve the Writ on the Defendants in the allotted time.

The parties entered into a series of standstill agreements during 2012 – a common device for claimants who are not yet ready, willing or able to pursue their claims but wish to protect them from becoming time-barred. A Writ was issued by the Plaintiff in November 2012 (the "November 2012 Writ") and served on the Defendants' attorneys in March 2013. However, the Defendant's attorneys complained that by issuing the November 2012 Writ the Plaintiff had acted in breach of the relevant standstill agreement between the parties.

In August 2012 a hearing took place pursuant to GCR O.14(a) in relation to the question of construction of the relevant standstill agreement and whether the Plaintiff had acted in breach of that agreement by issuing the November 2012 Writ. In the meantime, however, the attorneys for the Plaintiff issued but did not serve a further (virtually identical) Writ of Summons dated 7 May 2013 (the "May 2013 Writ") in order to protect their position should the November 2012 Writ be struck down. The Plaintiff was successful on the issue of whether it had breached the standstill agreement; however, the Defendants later appealed that decision.

The rules of the Grand Court of the Cayman state that a Writ is valid for four months from the date of issue, however, the Court may order an extension of that time period in certain circumstances. In November 2013 the Plaintiff applied for an extension of the validity of the May 2013 Writ. While this was obviously after the expiry of the four month period, this extension was granted in December 2013 by Quin J on an ex parte basis. When the Defendants were subsequently served with the May 2013 Writ in January 2014 they applied to the Court for an order setting aside the extension of validity of the May 2013 Writ which had previously been granted to the Plaintiff.

The significance of this application was as follows: The appeal in relation to the standstill agreement meant that the Court of Appeal could ultimately strike down the November 2012 Writ which would leave the Plaintiff either entirely reliant on the May 2013 Writ or having to issue and serve yet another Writ. The May 2013 Writ preserved the Plaintiff's claim in respect of the 2006 audit carried out by the Defendant, but any Writ subsequently issued by the Plaintiff in respect of that audit would fall foul of the Cayman Limitation Law. The claim in respect of the 2006 audit was estimated by the Plaintiff to have a value of between $50 million and $200 million so the importance of the validity of the May 2013 Writ was clear.

The Plaintiff argued that it had consciously refrained from serving the May 2013 Writ in order to save time and expense as it may never have been necessary to serve it depending on the outcome of the dispute in relation to the standstill agreement. The Defendants argued that no attempt had been made by the Plaintiff to either serve the Writ within its period of validity or to engage with the Defendants or the Court during that period and, indeed, the attempt to save costs and time had proven to be misplaced given that a further hearing was necessitated.

Quin J stated that as a matter of Cayman law "it is the duty of the plaintiff to serve the writ promptly. He should not dally for the period of its validity; if he does so and gets into difficulties as a result he will get scant sympathy." An extension will only be granted where there is good reason for so doing such as where there is agreement between the parties or difficulty in finding or serving the Plaintiff. An application for an extension will involve the Court first enquiring as to whether such a good reason existed. If that is found to be the case the Court will then apply itself as to the question of whether judicial discretion should be exercised in favour of renewal having regard to all of the circumstances including the balance of prejudice or hardship.

Quin J concluded that the 'good reason' advanced by counsel for the Plaintiff (of saving costs and unnecessary pleadings) was, in fact, "weak and of little substance". Given the size of the claim arising from the 2006 audit there was clearly a duty on the Plaintiff to serve the Writ promptly. The Plaintiff could have approached the Defendants within the period of validity to agree an extension or if that did not prove possible it could have served the Writ and sought a stay on proceedings. The Plaintiff did neither. Given that the Court's enquiry had not passed the first stage – i.e. no good reason for the grant of an extension had been found to exist on the facts – it was not necessary for the Court to examine whether the balance of prejudice or hardship was in favour of an extension. However, the Court did indicate that if such a finding had been necessary it would follow the strict approach of the English Courts whereby a Writ will not normally be renewed so as to deprive a Defendant of the benefit of a limitation period.

Having heard argument from both sides, Quin J therefore set aside his previous Order extending the validity of the May 2013 Writ.


The judgment of Quin J is a stark reminder and warning for practitioners of the importance of validity periods for service. Much as failure to issue a Writ promptly may deprive a Plaintiff of a claim due to the expiry of a limitation period, failure to serve a Writ on a Defendant in time can have similarly calamitous effects on a Plaintiff's ability to seek redress. In this case, the Plaintiff's liquidators now face the very real prospect of being unable to pursue any claims against the Defendants in respect of their audits for the years 2005 and 2006 when the sham transactions are alleged to have occurred.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Jeremy Walton
Paul Kennedy
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.