Oasis Investments II Master Fund Ltd v Jardine Strategic Holdings Ltd

• Jurisdiction: Bermuda
• Judge: Mussenden CJ
• Judgment Date: 31 July 2024
• Docket Number: 2021: Nos. 107-109, 111-121, 123-125
• Court: Supreme Court (Bermuda)

IN THE MATTER OF JARDINE STRATEGIC HOLDINGS LIMITED

AND IN THE MATTER OF THE AMALGAMATION AGREEMENT BETWEEN JMH INVESTMENTS LIMITED AND JMH BERMUDA LIMITED AND JARDINE STRATEGIC HOLDINGS LIMITED

AND IN THE MATTER OF SECTION 106 OF THE COMPANIES ACT 1981

BETWEEN:

Oasis Investments II Master Fund Ltd. and others

Plaintiffs

and

(1) Jardine Strategic Holdings Limited

(2) Jardine Strategic Limited

Defendants

RULING of Mussenden CJ

2021: Nos. 107-109, 111-121, 123-125

In The Supreme Court of Bermuda

Appearances:

Jonathan Adkin KC (Instructed by Carey Olsen Bermuda Limited, Trott & Duncan Limited and Kennedys Chudleigh Limited), Matthew Watson, Carey Olsen Bermuda Limited, for the Plaintiffs in each of Nos. 107 and 108 of 2021

Delroy Duncan KC, Ryan Hawthorne, Trott & Duncan Limited, for the Plaintiffs in No. 109 of 2021

Laura Williamson, Kennedys Chudleigh Limited for the Plaintiffs in Nos. 111-121 and 123 - 125 of 2021

Martin Moore KC (Instructed by Appleby (Bermuda) Limited), John Wasty, Appleby (Bermuda) Limited, for the Defendants

RULING

Introduction

1 This matter appears before me on the Summons by the Plaintiffs in Nos. 107-109, 111-121 and 123-125 of 2021 (the “ Dissenters”) dated 6 November 2023 in which they ask the Court to resolve what was decided and not decided pursuant to the Order of Chief Justice Hargun (“ Hargun CJ”) (as he then was) dated 12 November 2021 (the “ Directions Order”) made in these proceedings and his related judgment dated 12 November 2021 (the “ Directions Judgment”) (the “ Application”).

2 The Application sought a declaration, for the avoidance of doubt, that the Directions Judgment and the Directions Order:

• a. Did not address the question of discovery from any third parties (including Evercore Inc. (“ Evercore”));

• b. Did not decide that documents held by Evercore or Evercore Partners International LLP (“ Evercore UK”) were not relevant to the determination of the fair value of the Plaintiffs' shares in Jardine Strategic Holdings Limited (the “ Company”); and

• c. Did not decide that discovery of documents held by Evercore or Evercore UK would be disproportionate for the purposes of the determination of the fair values of the Plaintiffs' shares in the company.

3 The Dissenters had asked Hargun CJ to grant the declaration on the papers. However, at the directions hearing for this Application on 16 November 2023, Hargun CJ refused to do so, and directed that the matter be set down for a hearing. Hargun CJ retired from office in December 2023.

Background

4 These proceedings are 18 separate actions commenced by the Dissenters by way of Originating Summonses in which they seek appraisal of the fair value of their shares in the Company pursuant to section 106(6) of the Companies Act 1981. The central issue in the proceedings is the fair value of the Dissenters' shares in the Company which were acquired through an amalgamation concluded on 14 April 2021 between the Company and JMH Bermuda Limited (the “ Amalgamation”). The two amalgamating companies continued as Jardine Strategic Limited.

5 Prior to the Amalgamation, Jardine Matheson Holdings Limited (“ Jardine Matheson”) held, indirectly, approximately 84.9% of the shares in the Company. Jardine Matheson is, and the Company was prior to the Amalgamation, a company incorporated in Bermuda and listed on the Main Market of the London Stock Exchange, with secondary listings in Singapore and Bermuda. The Jardine Matheson Group of companies (the “ Group”) is comprised of a broad portfolio of businesses operating principally in China and Southeast Asia. Across the Group, over 400,000 employees work in a wide range of businesses.

6 On 8 March 2021, the Company and Jardine Matheson announced plans to simplify the structure of the Group.

7 The Company's board delegated responsibility for considering the Amalgamation to a committee of directors referred to as the “ Transaction Committee”. Evercore UK advised the Transaction Committee as to the financial terms of the Amalgamation. Evercore UK is a subsidiary of Evercore. At the general meeting of the Company held on 12 April 2021, a resolution approving the Amalgamation was passed. The Amalgamation became effective on 14 April 2021.

8 The Dissenters contend that they have not received fair value for those shares and the Company refutes this. In short, Jardine Matheson paid approximately US$5.5 billion to acquire the minority shareholdings (including those of the Dissenters) who were paid US$33 per share. The Dissenters maintain that three days after the Amalgamation was announced, the Company reported in its Preliminary Results Announcement that the net asset value per share of the Company was US$58.22 per share as at 31 December 2020, (76% higher than the price it paid the minority shareholders). They claim that had the Company paid out the minority shareholders at US$58.22 then it would have had to pay US$4.2 billion more than the $5.5 billion that it did pay out, for a total of US$9.7 billion.

The Issue before the Court in the Application

9 The issue is whether the Directions Judgment and the Directions Order addressed the question of third-party discovery from Evercore and Evercore UK, and in particular whether Hargun CJ decided that such documents were irrelevant to the issues in the action or that their disclosure would be disproportionate.

The Dissenters' Submissions

10 The Dissenters submit that the Directions Judgment and the Directions Order were concerned only with the disclosure to be given by the Company. They contend that in the Directions Judgment, Hargun CJ rejected the Dissenters' argument that the Company should give general discovery, and held that the Company should be required to give initial disclosure of Evercore UK's valuation opinion and the documents provided to Evercore UK by the Company and that the parties' experts should thereafter be empowered to make requests to the Company for relevant documents which they reasonably required for preparation of their reports.

11 The Dissenters submit that Hargun CJ did not consider, and made no finding in his Directions Judgment or Directions Order on, whether Evercore should give discovery (it not being an issue before him) and made no finding on whether documents held by Evercore were relevant to the fair value of the Dissenters' shares or whether disclosure of them by Evercore would be proportionate. They submit that it is clear that the Directions Judgment and the Directions Order did not:

• a. Address the question of discovery from any third parties (including Evercore UK or Evercore);

• b. Decide that documents held by such parties (i.e. Evercore UK or Evercore) were not relevant to the determination of fair value of the Dissenters' shares in the Company; or

• c. Decide that discovery of documents held by Evercore UK or Evercore would be disproportionate for the purposes of the determination of the fair value of the Dissenters' shares in the Company.

12 The Dissenters submitted that they seek declarations to this effect.

13 The Dissenters submitted that the reason why it had become necessary to seek such declarations was because of certain representations made to the US Court on behalf of the Company. There, commencing on 25 May 2022 certain Dissenters made applications for disclosure from Evercore of documents which Evercore held but which the Company did not, before the District Court of Delaware pursuant to 28 U.S.C. 1782 (“ Section 1782”) (the “ 1782 Application”). The Dissenters submitted that the Company successfully intervened in that application to resist such disclosure being given by Evercore. Further, in doing so, the Company made a number of representations as to what Hargun CJ had decided in the Directions Judgment and Directions Order which, the Dissenters believe, were simply wrong. That 1782 Application was dismissed on 26 October 2023.

14 In light of the position taken by the Company before the Delaware Court, the Dissenters therefore issued the present application pursuant to the liberty to apply provision in the Directions Order to put the position as to what was and was not decided by the Directions Judgment and Directions Order beyond doubt.

15 The Dissenters submitted that the Company has taken an obstructive approach to the application. They claim that the Company objected to the Dissenters' efforts to have Hargun CJ resolve the issue before he retired. They claim that after some correspondence between the parties, the Company accepted in a letter dated 5 January 2024 (the “ Company Letter”) that the Judgment was clear in the sense that although the issues were not expressly addressed by Hargun CJ, the Directions Judgment and the Directions Order had the effect of precluding disclosure from Evercore, without further explanation. On that basis, the Dissenters argue that the declarations should be made.

What was decided (and not decided) by the Directions Judgment and the Directions Order

16 The Dissenters submitted that Hargun CJ held in the Directions Judgment the following:

“ 79. … that large parts of Appendix 2, some of which are referred to at paragraphs 41-57 above, are overly broad, unfocused and will produce a massive amount of documentation (possibly as much as 35 million pages in response to the requests made in paragraphs 5.14 to 5.19 of Appendix 2) with little or no relevance to the valuation exercise required to be carried out for the purposes of section 106(6) of the Act. … that a large number of the requests in Appendix 2 are also disproportionate to the reasonable requirements of arriving at fair valuation of the shares in the Company.

81. The appropriate approach, in the exceptional circumstances of this case, is that as suggested by the Company. Within 14 days of the Order (as provided for by paragraph 8 of the Company's proposed order), the Company shall upload to the Data Room the...