On 12 February 2015, the Court of Appeal of the Cayman Islands allowed the appeal of Stefan Peterson and Hans Ekstrom, the non-executive directors of the collapsed Weavering Macro Fixed Income Fund, in a long-running dispute about the duties of non-executive directors in hedge funds. In August 2011, following a six day trial, the fund’s liquidators obtained judgment against the directors and damages of US$111 million, on the basis that they had wilfully neglected their duties and were therefore not entitled to rely on the (commonly found) exclusion clause found in the fund’s articles. The directors’ appeal was heard over 3 days in April 2012. In a detailed, and widely awaited, 70-page judgment, Sir John Chadwick, the President of the Cayman Islands Court of Appeal (with whom the other Justices agreed), held that the evidence given by the directors at trial provided no support for the Judge’s findings of wilful neglect, and set aside the trial judge’s judgment with costs. The judgment contains a detailed exposition of the law in this area, which will be of interest to practitioners and fund directors operating in jurisdictions which permit the exclusion of liability for breach of duty, save in cases of wilful neglect or default. Ben Valentin appeared on behalf of the directors, with Kirsten Houghton (Campbells), instructed by Travers Smith (Andrew King). A copy of the judgment can be found here.
