By Rachael Reynolds, Marc Kish
The Cayman Islands Court of Appeal has unanimously allowed every ground of an appeal by the liquidators of Argyle Funds SPC Inc. (“Argyle”), holding that its former auditors, BDO Cayman Ltd (“BDO Cayman”), had no sustainable basis for restraining Argyle from continuing claims of fraud and gross negligence against three of BDO Cayman’s affiliate entities in the New York courts. This decision will therefore be of particular interest to Cayman Islands professional service providers who delegate some or all of their work to be undertaken outside of the jurisdiction.
The Court of Appeal’s decision in Argyle Funds SPC Inc. (In Official Liquidation) v BDO Cayman Ltd1, delivered on 8 October 2018, overturns an anti-suit injunction ordered by Mr Justice Raj Parker in the Grand Court of the Cayman Islands (the “Grand Court”) earlier this year preventing Argyle from bringing proceedings against BDO Trinity Limited, BDO USA LLP and Schwartz & Co LLP (together, the “Affiliates”) in New York for their alleged failure to alert Argyle in the course of four audits between 2010 and 2013 to two catastrophic frauds which resulted in Argyle’s collapse (the “New York proceedings”). Argyle claims compensatory damages of over US$86 million and punitive damages of not less than US$260 million.