OFFSHORE CASE DIGEST - conyers.com · that the Digest will be a useful reference tool for clients...

JURISDICTION UPDATE - ISSUE NO. 2

BERMUDABRITISH VIRGIN ISLANDSCAYMAN ISLANDSDUBAIHONG KONGLONDONMAURITIUSMOSCOWSINGAPORESÃO PAULOconyersdi l l .com

n MAY 2012 – SEPTEMBER 2012

n ISSUE NO. 2

OFFSHORECASEDIGEST:• BERMUDA • BRITISH VIRGIN ISLANDS • CAYMAN ISLANDS

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ABOUTTHEDIGEST

TheDigestattemptstogivethereaderahighlevelsummaryofthemajorcommercialcasesdecidedinBermuda,theBritishVirginIslandsandtheCaymanIslandsinthelastfivemonths.WehopethattheDigestwillbeausefulreferencetoolforclientsandpractitionerswhoareinterestedinthedevelopmentofcaselawineachofthesejurisdictions.

Thecasesaredigestedbyjurisdiction,foryoureaseofreferencewehavealsocreatedacasesubjectmatterindexonpage15.

JURISDICTION PAGE

Bermuda 3CaymanIslands 4BritishVirginIslands 6

Wewouldwelcomeanyfeedbackandsuggestionsfromreadersonthecontent.IfyouwouldliketoobtainfurtherinformationonanyofthecasesfeelfreetocontactanyoftheConyersDill&Pearmanlitigationteam.

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BERMUDA

BERMUDA

SupremeCourt

May

COMPANIES-WINDINGUP–JPLs’APPLICATIONFORALETTEROFREQUEST–STATUTORYBASISOFJURISDICTION

IntheMatterofSeaContainersLtd.[2012]SC(Bda)26Com(10May2012)

Inthiscase,theCompanyinquestionwaswound-upbyGroundCJinJanuary2010.TheCompanyistheparentoffourUKcompaniesundergoingliquidationproceedingsintheEnglishHighCourt.Assuch,thesettlementoftheseclaimsturnsonissuesofEnglishlaw.

TheJPLs’soughtanapplicationforaLetterofRequesttoseekassistancefromanoverseascourt.TheCourttooktheopportunitytomakeclearthestatutorybasisofjurisdictiontodirectthatliquidatorsmayseekassistancefromanoverseascourtundertheCompaniesAct1981andthecommonlawprinciplesgoverningtheexerciseoftheCourt’sdiscretiontosanctionthatassistance.

First,theCourtacknowledgedthatthereisnodirectauthorityrelatingtotheCourt’sjurisdictiontoissueaLetterofRequest.Assuch,thecourtreferredtosection175(1)(a)oftheCompaniesAct1981whichallowsfortheJPLs’toseekthepermissionoftheCourttobring“any action or other legal proceeding in the name

and on behalf of the company”.Further,itwasnotedthatitisknownpracticeforliquidatorstobringproceedingsbothlocallyandabroad,andthatinsolvencyproceedingsoverseasmaybemotivat-edbyamorepracticalapproachofhavingtheappropriateforumdeterminetheissuesathand.

Second,theCourtpointedoutthattheexerciseoftheCourt’sdiscretionwhenpermittingoverseasassistancefromaforeigncourtisbaseduponcommonlaw.TheCourtfurthernotedthatwhilelettersofrequestinrelationtoobtainingforeignevidenceinlocalcourtsisprovidedforunderOrder39Rule3oftheRulesoftheSupremeCourt,thereishowevernostatutoryequivalentunderinsolvencylaw.Whatismore,theCourtexpressedthattheissueshouldalsobedeterminedbypractical“casemanagement”andthattheCourtshouldtakeintoaccountthemostsuitableforumfordeterminingtheissues.Assuch,theCourtgrantedtheapplicationmade.

June

POSSESSIONORDER–STRIKE-OUTAPPLICATION–RESJUDICATA–FRAUDULENTINVASION-ABUSEOFPROCESS

LJunosvHSBC&KTaylor[2012]SC(Bda)33Civ(29June2012)

Thiscaseconcernedanobjectionbyamortgageeinproceed-ingsissuedbytheBankseekingpossessionandsaleagainstthePlaintiffmortagee.ThePlaintiffsoughtastrike-outapplicationforthefollowingreasons:firstthattheSecondDefendantobtainedapossessionorderintheactionbyfraudulentmeans;secondtheBankobtainedthepossessionorderfraudulently;thirdthepossessionorderwasunenforceablebecauseitfailedtospecifyadateofcompliance;andlastlytheWritofPossessionandallstepstakentoenforceitwereunlawfulandanullitybyvirtueofthefailuretospecifyadateofcompliance.Further,thePlaintiffissuedaSummonsforinterimrelieftorestraintheBankfromexercisingitsrightsofpossessionpursuanttothepossessionorder.

InregardstotheSecondDefendant,alawyer,theCourtstruckouttheclaimunderOrder18rule9(1)(b)oftheRulesoftheSupremeCourt1985and/orundertheinherentjurisdictionoftheCourt,theCourtheldthattheallegationthatthepossessionhadbeenob-tainedfraudulentlybytheSecondDefendantwasboundtofail.TheCourtconsideredwhetherthedoctrineofres judicatawouldapplytotheallegationthatthepossessionorderhadbeenobtainedbyfraudandrefusedtostriketheclaimoutonthatbasis.Howev-er,itdidstrikeouttheclaimagainsttheFirstDefendantonthebasisthatitwasboundtofailandrefusedthePlaintiff’sinjunctionapplicationtorefraintheBankfromexercisingitsrights.Thecasecontainsahelpfulstatementoftheprinciplesofthedoctrineofresjudicatawhenthattermisusedinitswidersense.

July

COMPANIES–WINDINGUPPETITION–INSOLVENCY-NON-AS-SIGNMENTCLAUSE–COLLATERALPURPOSE

IntheMatterofGerovaFinancialGroup[2012]SC(Bda)35Com(6July2012)

Thiscaseconcernedthewinding-uppetitionofthenamedCompany,whichwassoughtbyoneofitscreditors(Maxim).InMarchofthisyeartheSupremeCourthadheldthatMaximhadstandingtopeti-tion.TheCompanyarguedthatMaxim’sproceedingswere“tainted


BERMUDA|CAYMANISLANDS

byimpropermotives”.FurthermuchoftheCompany’sargumentwasdependentuponthefactthattheothercreditorssupportedtheirmotion;thattheapplicationforwinding-upshouldbere-fused.ThePetitionersoughtawinding-uporderonthebasisthattheCompanyisinsolventonacash-flowandbalance-sheetbasisandthatasanunpaidcreditorisentitledtoawinding-uporderasofright.

ItwasheldthatthePetitionerwasentitledtoanorderthattheCompanybewound-up,butsolelyonthebasisthattheCompanywasunabletopayMaxim’sdebtwhichwasdueandpayableanditgavetheCompanythecompanytimetosecurethepetitiondebt.

TheCourtfirstlyconsideredthethreereasonswhythepetitionshouldbedismissed,asarguedbytheCompany:1)becausetheCompanyhasacross-claimbasedonbreachbyMaximofanon-as-signmentclause;2)becauseMaximlackedsufficientinterestintheproceedinghavingassigneditsclaimtoanotherentity;and3)becausetheproceedingsarebeingpursuedforacollateralpur-pose.Withregardtothebreachofthenon-assignmentagreement,theCourtdidnotfindtheargumentextensiveenoughtodismissthepetition.InrelationtotheargumentofsufficientinteresttheCourtfoundthatMaximdidinfacthavesufficientinterestintheproceedingsastheywereanunpaidcreditorwithapresentlyduedebt.Additionally,onthecollateralpurposeargument,theCourtconcludedthattherewascircumstantialevidencewhichsug-gestedthatthePetitionerwasactingforanimproperpurpose.WhendealingwithsuchallegationstheCourtadoptedananalogywiththeapplicationofthe“cleanhandsdoctrine”incaseswhereinjunctivereliefissought.ItheldthatthePetitionershouldnotbeaffordedreliefwhichgoesbeyondthescopeofthepetitionand“theovertstandinguponwhichthePetitionerrelies”whichwasthenonpaymentofadebtduetothepetitioner.

Furthertotheabove,theCourtdeclinedtomakefindingsastobalancesheetinsolvencywithoutanyexpertevidence.Italsodeclinedtomakeanorderonthebasisofthelossofsubstratumissuesraisedbythecreditorsindicatingthatitwasusuallytheshareholderswhoraisesuchcomplaintsandnotcreditors.TheCourttookintoaccountthefactthatsomeofthecreditorsopposedthepetition.TheCourtfurtherheldthatapaymentunderpressureoflegalproceedingsbytheCompanytoMaximwouldnotconsti-tuteafraudulentpreference.

CAYMANISLANDS

July

COMPANIES–INVESTMENTFUNDS–CONSTITUTIONALDOCUMENTS-SIDELETTERS–PRIVITYOFCONTRACT

IntheMatterofMedleyOpportunityFundLtd.GrandCourtoftheCaymanIslands(FinancialServicesDivision),CauseNo.FSD23of2012,QuinJ.,June21,2012

FintanMasterFund(“Fintan”)investedinMedleyOpportunityFund(the“Fund”)throughitsnominee,NauticalNominees(“Nautical”).Nauticalwastheregisteredshareholder.Fintanhad,initsownrightandname,enteredintoanagreement(the“SideLetter”)withtheFund.TheSideLetterprovidedthatalldistributionstoFintanuponredemption,liquidationorotherwiseshallbepaidincashand,ifcashisnotimmediatelyavailable,throughsecuritiesheldinaseparateliquidationaccountonFintan’sbehalf,theproceedsofwhichwillbedistributedtoFintanincashassuchsecuritiesareliquidated.

DuringthefinancialcrisistheFundfacedarunonredemptionsandpresenteditsinvestorswithtwosuccessiverestructuringplans.Inbothcases,Nautical,onbehalfofFintan,electedtostayinitsshareclass,rescindallpreviousredemptionrequests,andbenefitfromorderlypayoutsthroughquarterlydistributions.

FintanbecamedissatisfiedwiththepaceofthewindingdownoftheFundandNauticalsubmittedaredemptionrequestonbehalfofFintanrequestingtheredemptionofallitsshares.FintantookthepositionthattherestructuringshadnotmodifieditsredemptionrightsundertheSideLetter.TheFundarguedthatNauticalwasnotapartytotheSideLetterandthuscouldnotrelyonit.TheFundfurtherarguedthattheeffectofenteringintotherestructuringagreementswastoreplaceanypre-existingredemptionrights.

TheCourtdeterminedthatwhileNauticalwasthenomineeforFintanandFintanwastheultimatebeneficiary,Nauticalwastheshareholder.TheSideLetter,towhichNauticalwasnotaparty,didnotprovideNauticalwithanyenhancedrightsorfavouredstatusasaregisteredmemberoftheFund.NauticalhadthesamerightsandobligationsasanyotherregisteredshareholderundertheArticles.


CAYMANISLANDS

TheunderlyingcommercialpurposeoftherestructuringwastorequireNauticaltoexchangeitsexistingredemptionrightsforperiodiccashdistributionseffectedproratawithallotherinves-torsacceptingthisoption.ThisallowedtheFundtominimizealiquiditysqueezeandavoidedafiresaleofassetsandallowedthememberstobenefitfromtheexpectedrecoveryinassetpricesandavoidadisorderlyscrambleforassetsunderliquidation.Nauticalunderstoodthesetermsandoptedtoacceptthemandisthereforeboundbythem.Theredemptionrequestwasdeclaredinvalidandofnoeffect.

COMPANIES–INVALIDISSUEOFSHARES–MISTAKE–RECTIFICATONOFREGISTER

IntheMatterofS.46oftheCompaniesLaw(2011Revision)andintheMatterofFulcrumUtilityInvestmentsLimited,GrandCourtoftheCaymanIslands(FinancialServicesDivision),CauseNo.FSD82of2012,QuinJ.30July2012

Fulcrumestablishedashareincentiveschemetomotivateitsmanagementteamtoachievecertaintargets.However,anadministrativeerroroccurredwhentheincentiveshareswereissued.Fulcruminadvertentlypurportedtoissuecertainsharesatlessthanparvalue,anddidnotfollowtheproceduresetoutinsection35oftheCompaniesLawtolawfullyissuethesharesatadiscount.Sometimepassedbeforetheerrorwasdiscovered.Inordertoensurethatitsstaffcouldnotbeconsideredliableforanyperceivedunpaidbalanceontheincentiveschemeshares,Fulcrumsoughtadeclarationthattheissueoftheshareswasvoidforillegalityaswellasunderthedoctrineofmistake.Fulcrumwassolventatthetimeoftheapplicationanditscreditorsconsentedto

theapplication.

Section46oftheCompaniesLawpermitsacompanytoapplytotheCourtforanorderthattheregisterofmembersberectifiedandtheCourtmaymakesuchanorderifsatisfiedofthejusticeofthecase.Inthisinstance,theCourtfoundthatthesubscriptionletterswerevoidcontracts,astheyamountedtotheunlawfulissueofsharesatadiscount.Further,QuinJconfirmedthatunderCaymanIslandslawthereisnodistinctiontobemadebetween‘mistakeoflaw’and‘mistakeoffact’.Theshareswereissuedunderamistakethatrenderedthecontractimpossibletoperform.Inthiscase,themutualmistakeofFulcrumanditsmanagementteamresultedinsomethingsubstantiallydifferentfromwhatthepartiesintendedandthoughttheyhadachieved.Accordingly,theapplicationwassuccessfulonbothgroundsandanorderwasmadetorectifytheregister.

August

COMPANIES–INVESTMENTFUNDS–CONSTITUTIONALDOCU-MENTS–SIDELETTERS–PRIVITY–MANNEROFREDEMPTIONOFSHARES–COMPANIESLAWSECTION37

LandsdowneLimitedandSilexTrustCompanyLimitedv.Mata-dorInvestments,EnglefieldHoldingsCorp.andMaritimeGuer-rand-Hermès,GrandCourtoftheCaymanIslandsFinancialSer-vicesDivision,CauseNo.FSD103of2011,Quin,J.23August2012

ThePetitionerswereinvestorsinMatadorInvestmentsLimited,aCaymanIslandsinvestmentfund(the“Fund”).TheFundwasincorporatedwithatypicalformofmemorandumandarticlesofassociation.Thearticlesreferencedaprivateplacementmemo-


CAYMANISLANDS|BRITISHVIRGINISLANDS

randum(“PPM”)thatcontainedanumberofdetailedprovisions,includingthepowertoimposeagateonredemptionsincertaincircumstances.

TheultimatebeneficialownerofthesharesheldbythePetitioners,Ms.Waters,andtheprincipaloftheFund,Ms.Guerrand-Hermès,wereclosepersonalfriends.Ms.Guerrand-Hermèswasallegedtohavemadecertainrepresentationstoherfriendtotheeffectthatthegatingprovisionsandotherrestrictionsonredemptionsintheconstitutionaldocumentswouldnotapplytoherinvestment:sheshouldbeabletowithdrawasmuchmoneyfromtheFundassheneededeachquarter.Ashareholder’sagreementwascontemplated,butnevercompleted.FollowingabreakdowninthefriendshipandtheretentionofanewfinancialadvisorforMs.Waters,thePetitionersmadearedemptionrequestforalltheirsharesintheFund.TheFundresolvedtoimposea10%gate.TheFundenteredwindingup,andthePetitionerspresentedproofsofdebtforthefullredemptionvalueofalltheirshares.Theproofswererejectedbytheliquidator,whoreliedonthegateprovisions.

TheCourtexpressedsympathyforMs.Waters,acknowledgingthatshewasinducedbyherfriendtoplacehermoneywiththeFundanddescribingherasaverynaïveandunsophisticatedinvestor.However,thePetitionersweretheshareholdersintheFund,andassuchanyagreementbetweenMs.WatersandMs.Guerrand-HermèswouldnotbindtheFundortheliquidatorinrelationtotheredemptionrequestsofthePetitioners.EvenifoneweretoacceptthecontentionthattherepresentationsmadebyMs.Guerrand-Hermèsamountedtoa‘sideletter’,itcouldnotoperatetoachievetheveryoppositeofwhatwasexpresslycontainedintheArticlesandsubscriptiondocuments.TheCourtacceptedthesubmissionthatsection37oftheCompaniesLawprovidesacompleteanswertothePetitioners’submissions.ThissectionrequiresthatthemannerinwhichanyredemptionmaybeeffectedmustbeauthorisedbyorpursuanttotheArticlesandfurtherthetermsandmannerofredemptionmustbesetout(orsufficientlysetout)intheArticles.TheagreementrelieduponbythePetitionersplainlyfallfouloftheseentrenchedrightsandforthatreasoncouldnotbindtheFundortheliquidator.Anypur-portedagreementwasunlawfulandofnoeffect.

BVI

CourtofAppeal

May

INSOLVENCY–BVIAPPEALS–LIQUIDATOR’SREMUNERATION

Pacific China Holdings Limited (the Company) v Grand Pacific

Holdings Limited HCVAO2010/039 (BVI) (Court of Appeal)

Theissueinthiscasewaswhoshouldbeartheultimateliabilityforthejointliquidators’remuneration,costs,feesandexpenses(the“Liquidators’Remuneration”)wheretheirappointmenthadbeensubsequentlysetasidebytheCourtofAppeal.TheappealwastheCompany’sfromthedecisionoftheCommercialJudgewhofoundthathedidnothavejurisdictiontoorderthatape-titioningcreditorbemadeultimatelyliablefortheliquidators’remuneration.TheCompanyarguedonappealthatjurisdictionexistedundereithers.233(4)oftheInsolvencyAct(thestatutoryjurisdictionpoint)oralternatively,intheexerciseoftheCourt’scostsjurisdictionunderCPR64.3(thecostsjurisdictionpoint).Further,itacceptedthattherewasnogoodreasoninprincipleorpolicywhyapetitioningcreditorshouldnotbeorderedtopaytheliquidatorsremunerationespeciallywheretheappointmenthadbeensubsequentlysetasidebecauseithadbeenwronglyobtainedandwasconsequentlyanabuseofprocess.

TheCourtofAppealdidnotagreethattherewasstatutoryjurisdictionascontendedforbytheCompany.Initsviewasuccessfulappealagainstthemakingofawindinguporderresultinginthesettingasideofthatorderdidnotandcouldnotequatetoaterminationoftheliquidationundersection233oftheInsolvencyAct.Whollydifferentconsiderationsareengagedonasection233terminationwhichspecificallystatesthatthecourtmayordertheterminationofliquidationifitissatisfiedthatitisjustandequitabletodoso.

TheCourtofAppealhoweverdidallowtheappealonthecostsjurisdictionpoint.ItheldthattheCourtbyvirtueofrule64.3oftheCivilProcedureRules2000hadthepowertoawardcostsarisingoutoforrelatedtoanyproceedingstoapersonwhoisnotnecessarilyapartytotheproceedings.CruciallyitheldthattheCourthadawidediscretioninallmattersrelatingtoexpenses


BRITISHVIRGINISLANDS

includingthepowerwhennecessarytodirectwhichofthepartiesistobearthecostsoftheremunerationandexpensesofanyprofessionalmanorotherofficerappointedbythecourttoactintheproceedingswhichhavecometoanend.

Theimportanceofthisresultcannotbeoverstated.Untilthisdecisiontherewerenoreportedcasesinthejurisdictionwhichdealtcomprehensivelywiththequestionofliabilityforliquidator’sremunerationinsuchcircumstances,andverylittleinthewayofEnglishorotherCommonwealthauthorityonpoint.ThisisperhapsattributabletothefactthatnotmanyappointmentsofliquidatorsoverBVIcompaniesareultimatelysetasideandsotheissuedoesnotarise.Itmeansthatwhereofficeholdersareappointedbythecourtandtheappointmentorderisunderappeal,partiesseekingtheappointmentareatriskofpayingtheofficeholderscosts.

TheRespondentshaveissuedamotionforleavetoappealthisdecisiontoHerMajestyinCouncil.

June

SHAREREDEMPTION–BVIAPPEAL–MISTAKEOFFACT–CERTIFICATEOFVALUE–RESTITUTION

Quilvest Finance Limited & others v Fairfield Sentry Limited (in Liquidation)HCVAP2011/041-062BVI(CourtofAppeal)June2012

Between1997and2008,FairfieldSentryLimitedhadinvestedalargeportionofitsfundsintoBernardLMadoffInvestmentSecuritiesLLC(“BLMIS”)onbehalfofitsshareholders.ThecollapseofBLMISresultedintheliquidationofFairfieldSentryLimited(“Fairfield”).Fairfield’sliquidatorsbroughtproceedingsintheBritishVirginIslands(andelsewhere)againstformershareholderswhohadredeemedtheirsharesinFairfieldpriortoitscollapse(“theShareholders”).ThearticlesofassociationofFairfieldprovidedthatthepriceatwhichsharesweretoberedeemedwastobecalculatedbyreferencetoFairfield’snetassetvalue(“NAV”)andthatvaluewouldneedtobecertified.Fairfield’sarticlesalsoprovidedthatacertificateofNAV“giveningoodfaithbyoronbehalfoftheDirectors”wastobebindingonallparties.

TheliquidatorsarguedthattheNAVcalculatedforthepurposeoftheredemptionsinquestionhadbeencalculatedunderamistakeoffactsinceBLMISwasinfactoperatingaPonzischemeandFairfield’sinvestmentswerelost,andthereforevalueless,fromthepointatwhichtheywereinvested.ItfollowedthattherelevantNAVwasnilornominalandtheredemptionpriceoughtsimilarlytohavebeennilornominal.TheliquidatorscontendedthattheShareholdershadbeenunjustlyenrichedbytheredemptionatFairfield’sexpenseandwereliabletomakerestitutionofthesumspaidtothemonredemption.

TheShareholdersarguedthatthecertificateastotheNAVinaccordancewiththeprovisionsofthearticleswasconclusiveandbindingonFairfield(the“Articlespoint”).Theyalsoarguedthat,insurrenderingtheirsharesforredemption,theyhadgivengoodconsiderationforthepaymentofthepriceandthatthisconstitutedacompletedefencetotheliquidators’claim(the“Considerationpoint”).

ThesetwoargumentsweretriedasapreliminaryissuebyBannisterJwhofoundinfavouroftheliquidatorsonthearticlespointbutinfavouroftheShareholdersontheConsiderationpoint.OntheapplicationofoneoftheShareholdersforsummaryjudgmentonthebasisoftheJudge’sdeterminationoftheConsiderationpoint,BannisterJthendismissedtheliquidators’claims.

TheliquidatorsappealedtheJudge’sfindingsontheConsiderationpointandonsummaryjudgment.TheShareholdersappealedontheArticlespoint.

TheCourtofAppeal(Pereira,BaptisteJJAandMitchellJA(Ag))dismissedboththeliquidators’appeals.SofarastheArticlespointwasconcerned,theCourtofAppealagreedwithBannisterJ’sconclusion.Itfoundtherehad,asamatteroffact,beenno“certificate”.TheShareholdershadarguedthata“certificate”couldbespelledoutfromvariouscontractnotesissuedbytheFundadministratorsbutBannisterJdismissedthesearguments.Thecontractnotesandotherdocumentswerenotdescribedascertificates,theywerenotsignedandtheirpurposewastoevidencethetermsuponwhichFairfieldwaspurchasingsharesnottocertifyadeterminationofNAVbythedirectors.



MitchellJA(Ag),givingthejudgmentoftheCourtofAppealonthisissue,agreedwiththeJudgethattherewasnocertificate:thecontractnoteswerenotcertificationsofadeterminationofNAVgivenbythedirectors.

TheCourtofAppealalsoagreedwiththeJudge’sconclusionontheConsiderationpoint.PereiraJA,whogavethejudgmentoftheCourtonthisissue,concludedthattheeffectofthearticlesofassociationwastocreateacontractualobligationonthepartofFairfieldtoredeemthesharesandtopaytheredemptionprice,calculatedasprovided,whichwastriggeredbyasubmissionoftheshareholderofarequestforredemption.Themistake,whichwentonlytotheNAV,thereforepost-datedtheformationofthecontractatapointatwhichthetenderingshareholderhaddoneeverythingwhichitwasrequiredtodoundertheprovisionsofthearticles.This,theCourtheld,gaverisetoadebtatthepointatwhichtherequestforredemptionwastenderedinrespectofwhich,theshareholdershavingfullyperformedtheirpartofthecontract,gavegoodconsideration.

ThisJudgmentisofrelevanceforliquidatorsoffundsseekingtorecoverfrominvestorswhohaveredeemedtheirinvestment.ItisclearthatthefactthattheFundmayhaveinvestedinafraudulentschemewillnot,withoutmore,meanthatredemptionpaymentscalculatedinignoranceofthefraudwillbeforfeited.Itisalsoofwiderinterestbecauseitprovidesanalysisofhowandwhenacompanybecomescontractuallyboundtoaredeemingshareholderandwhatdoesandwhatdoesnotconstitutea“certificate”forthepurposeofabindingcalculationofNAVwherethevalueofsharesistobedetermined.

July

INSOLVENCYACT–BVIAPPEALS–WHETHERASSIGNEEOFREDEMPTIONPROCEEDSCANATTAINTHECHARACTEROFACREDITORWITHLOCUSSTANDITOSEEKLIQUIDATIONOFACOMPANY

Spectrum Galaxy Fund Ltd v Xena Investments Ltd HCVAP2011/40(BVI)(CourtofAppeal)

XenaInvestmentLimited(“Xena”)appliedforandwasgrantedanorderappointingjointliquidatorsoverSpectrumGalaxyFundLtd(“Spectrum”)onthebasisthatXena,asanassigneeofredemptionproceedshadlocusstanditoseektheliquidationofSpectrum.Spectrumappealed.Thesolequestionarisingontheappealwaswhetheranassigneeofredemptionproceedsstoodinabetterpositionthantheredeemingshareholderandbyvirtueoftheassignmentattainedthecharacterofacreditorwithlocusstanditoseektheliquidationofacompany.

ThecourtfolloweditspreviousdecisioninWestford Special

Situations Fund Limited v Barfield Nominees Limited et alandallowedtheappeal.Itheldthataclaimforredemptionproceedsisprecludedbyvirtueofsection197oftheInsolvencyAct(the“Act”)frombeinganadmissibleclaimandcaughtbytheprescriptioncontainedinsection12(c)oftheAct.Section197providesthata“ … member and a past member, of a company may not claim in the

liquidation of a company for a sum due to him in his character as a

member, whether by way of dividends, profits, redemption proceeds

or otherwise….”

WhilsttheCourtacceptedthatXenawasnotamemberoftheSpectrumFund,itwasoftheviewthatallthatsection197soughttodowastocapturethosetypeofclaimswhichapersonmaymakeandwhichwouldonlyarisebyvirtueofthatperson’smembershiporshareholdinginacompanyandthatitwasdescriptiveofthecharacteristicoftheclaim.TheCourtfurtherheldthattheassignmentofaclaimhavingthatcharacteristic(andthereforeanon-admissibleclaim)doesnottherebyconvertitsimplybyvirtueofhavingbeenassigned,intoaclaimofadifferentcharacter.Asaresult,Xena’sclaimasanassigneeoftheredemptionproceedswasfoundtobeanon-admissibleclaimintheliquidationandnotcapablethereforeofconferringonXenathecharacterofacreditorwithlocusstanditoapplyfortheappointmentofliquidatorsoverSpectrum.



JUDGMENTINDEFAULT–JUDGMENTNOTSERVED–MASTERDISMISSINGAPPLICATIONTOSETASIDEDEFAULTJUDGMENTONTHEBASISTHATTHEAPPLICATIONWASNOTTIMELYNORWASADRAFTDEFENCEEXHIBIT–WHETHERMASTERRIGHTTOAPPLYCPR13.3AND13.4

Anison Rabess and Joyce Rabess v National Bank of Dominica HCVAP2011/30(BVI)(CourtofAppeal)

InthiscasetheAppellant,AnisonRabessandJoyceRabesssoughttoappealtheMaster’srefusaltosetasideJudgmentinDefault.TheJudgmentinDefaultwasneverservedontheAppellantsandinanyeventwasforthewrongamount.InallowingtheappealMitchellJA(AG)heldthatifadefaultjudgmentistobecapableofbeingenforceditmustbepersonallyservedonthedefendants:CPR42.6applies.Furtherthatifitisallegedbyadefendantthatadefaultjudgmenthasbeenenteredagainsthimforanexcessiveamountandthatthejudgmentoughttobesetaside,CPR13.3and13.4donotapplytolimitthediscretionofthemaster.TheLearnedJusticeofAppealfoundthatCPR13.3merelylimitedadefendant’srighttosetasideadefaultjudgmentwhenitisintendedtofileadefence.ApplyingthereasoninginAnthony Eugene v Joseph Jn

Pierre and Joseph Jn Pierre(No.1)et al v The Attorney General et al

Saint Lucia High Court Claim Nos.SLUHCV2004/0097andSLUHCV2006/0708(delivered21stFebruary2007),theJudgeheldthataclaimantwhoobservesthathehasobtainedadefaultjudgmentinanexcessiveamounthasthedutytoapplytosetitasideandtoenterinitsplaceacorrectedjudgment.Adefendantwhohasnothadthedefaultjudgmentservedonhimisentitledex debito

justitiaetoapplyatanytimeuptoandincludinganapplicationfortheenforcementofthejudgment,tohavethejudgmentsetasideonthesamebasis.

CONTRACT–BVIAPPEALS–CONSTRUCTIONOFCONTRACTS–ESTOPPEL–UNJUSTENRICHMENT–TRIALJUDGE’SPRIMARYFINDINGSOFFACT–FUNCTIONOFAPPELLATECOURT

Ocean Conversion (BVI) Limited v Attorney General, Attorney General

v Ocean Conversion (BVI) Limited HCVAP2009/19and2009/20(BVI)(CourtofAppeal)

ThecaseconcernedanagreementbetweentheBVIGovernmentandOceanConversion(BVI)Limited(“Ocean”)forOceantoproducepotablewateruptoamaximumquantityforpublicconsumption.

TheGovernmenthadanoptiontopurchasetheplantforanagreedsumattheendofthefirstseven-yearterm.Iftheagreementwasrenewedforanothersevenyears,attheendofthatperiodtheplantwouldbelongtotheGovernmentwithoutfurtherpayment.Attheendofthefirstsevenyearterm,theGovernmentpurportedtoexercisetheoptiontopurchasetheplant.EventstranspiredthatledOceantobelievethatthecontracthadbeenrenewedforafurthersevenyears.Overthecourseofthefirstandsecondseven-yeartermsandattherequestoftheGovernment,Oceanspentanadditional$4.765millionexpandingtheplantinordertoincreaseOcean’scapacitytoprovidemorepotablewaterforpublicconsumption.TheplantthatwaseventuallyturnedovertoGovernment,morethansevenyearsaftertheexerciseoftheoption,wasnottheoriginalplantsubjecttotheagreement.TheoldplantforwhichGovernmenthadagreedtopaythesumof$1.42millionwasentirelyreplaced.TheGovernmentrefusedtopaytheadditionalsumandclaimeditwasentitledtopossessionoftheplantwithoutcompensationtoOcean.Oceanclaimedtobeentitledtotheadditionalsumof$4.765million.

TheCourtdismissedOcean’schallengetoanorderofthetrialjudgegivingimmediatepossessionoftheplantandallowedOcean’sappealagainstthetrialjudge’sdismissalofitscounterclaimforcompensationforthemoniesspentinreplacingtheoldplantbyanewoneanddirectedaninquiryastothevalueoftheplantasatthedatewhentheOceangaveupdeliverytoGovernmentandfurtherdirectingthattheinitialpurchasepriceof$1.42millionbeoffsetagainstthatvalueasfound.TheGovernment’sappealagainstvariousfindingsoffactbytheCourtbelowwasalsodismissed.

TheCourtheldthatOcean’sexpectationforanextendedtenureorforanallowancefortheexpenditurehadbeencreatedorencouragedbyGovernmentandthatitcouldnothavebeenthecommonintentionofthepartiesthatGovernmentcoulddemandimmediateposses-sionofthenewlyexpandedplantwithoutcompensation.TheCourtapplyingPlimmer and Another v The Mayor, Councillors and Citizens of

the City of Wellington[1884]9App.Cas.699(P.C.)foundthatitwouldbeinequitablefortheGovernmenttoexpectownershipofthenewplanttobetransferredtoitwithoutcompensation.

TheCourtalsofoundthattheconstructionofadisputedcontractwasamatterfortheCourtanddoesnotdependontheunderstandingoftheparties.ThetestappliedbytheCourtinconstruingthedisputedcontractisthatsetoutinBahamas International Trust Company Limited



and Another v Threadgold[1974]3AllE.R.881andInvestors Compensa-

tion Scheme Ltd. v West Bromwich Building Society[1998]1AllE.R.98wasapplied.

TheCourtcommentedonthefunctionoftheappellatecourtfollowingJanice Reynolds-Greene v Community First Co-operative Credit Union

Antigua and BarbudaHCVAP2008/027(delivered25thOctober2010,unreported),holdingthatitwillnoteasilyinterferewithatrialjudge’sprimaryfindingsoffact,especiallywheresuchfindingsderivedfromseeingandhearingthewitnesses.However,whereafindingwasaninferencedrawnfromprimaryfactsanddependedonthevaluetobegiventotheevidence,theappellatecourtisaswellplacedtodeterminetheproperinferencestobedrawn.

September

PROCEDURE–BVIAPPEALS–STRIKEOUT

Tawney Assets Limited v East Pine Management Limited et al HCVAP2012/07217.(BVI)CourtofAppeal

On17September2012,theCourtofAppealtooktheopportunitytoreassertthewellestablishedprinciplesinthetesttobeappliedforstrikingout,andthebreadthofpowerundercasemanagementpowersinthediscretionofthetrialjudge.TheAppellantbasedaclaimonbreachofcontract,tortforunlawfulconspiracyandunfairprejudiceunders184(i)oftheBVIBusinessCompaniesAct2004.Havingfoundnoarguablecaseforbreachofashareholdersagreementonconstructionofthatagreement,noranyargumentjustifyingafindingofimpliedtermsthetrialjudgeproceededtostrikeoutthemajorityofthestatementofclaim.Indoingsothetrialjudgeresistedthesubmissionthatdespitetherebeingsomeagreementthatthefactspleadedinaidofthebreachoverlappedwithrelevantfactsinsupportoftheunfairprejudiceclaim,thosefactswouldhavetobere-pleadedinsupportoftheonlysurvivingcauseofactionforunfairprejudice.

TheCourtofAppealheldthatthestrikingoutofaparty’sstatementofcase,ormostofit,isadrasticstepwhichshouldonlybeusedinclearandobviouscases,whenitcanclearlybeseen,onthefaceofit,thattheclaimisobviouslyunsustainable,cannotsucceedorinsomeotherwayisanabuseoftheprocessofthecourt.Thecourtmustthereforebepersuadedeitherthatapartyisunabletoprovetheallegationsmadeagainsttheotherparty;orthatthestatement

ofcaseisincurablybad;orthatitdisclosesnoreasonablegroundforbringingordefendingthecase;orthatithasnorealprospectofsucceedingattrial.

Baldwin Spencer v The Attorney General of Antigua and Barbuda

Antigua and Barbuda

High Court Civil AppealNo.20Aof1997followedinrespectofthestrikeouttest.

ThetestastowhentheCourtofAppealwillinterferewiththeexerciseofdiscretionbythejudgebelowwasalsore-stated.TheCourtofAppealwilldosowhenthejudgefailstotakeintoaccountorgivestoolittleortoomuchweighttorelevantfactorsandconsider-ationsortakesintoaccountorisinfluencedbyirrelevantfactorsandconsiderationsandthatasaresultoftheerrororthedegreeoftheerrorinprinciple,thetrialjudge’sdecisionexceededthegenerousambitwithinwhichreasonabledisagreementispossibleandmaythereforebesaidtobeclearlyorblatantlywrong.Inthepresentcasethecasemanagementdecisiontostrikeoutandforcere-pleadingwasdiscretionaryandforthetrialjudgetobestdecide.

Michel Dufour et al v Helenair Corporation Ltd. et al(1996)52WIR188followed.

INSOLVENCYACT–BVIAPPEALS–SUBMITTINGACLAIMINLIQUIDATIONISSUBMITTINGTOTHEJURISDICTIONOFTHEBVICOURT–INSOLVENCYRECOGNITION

Kenneth M. Krys and Johanna Lau (as Joint Liquidators of Fairfield

Sentry Limited, in liquidation) v Stichting Shell Pension Funds HCVAP2011/36(BVI)CourtofAppeal

Inanimportantdecisionreflectingontheuniversalityprincipleofoneliquidationhavingeffectivecrossborderimpactonthegatheringofassets,theCourtofAppealallowedanappealbytheliquidatorsofFairfieldSentry(thelargestfundinvestorintoMadoff,andaBVIcompany)grantingananti-suitinjunctionagainsttheDutchrespondentrestrainingitfromcontinuingDutchproceedingsbasedonpre-judgmentgarnisheeordersobtainedinHollandforthepurposeofelevatingStichtingPensionFunds(“Shell”)toapreferredcreditorpositionoverthegeneralbodyofcreditors.



Thisdecisionhastwoparticularfindingsofinterest.Thefirst,apointoflaw,isthatbysubmittingaclaimintheBVIliquidationprocess,ShellhadinfactsubmittedtothejurisdictionoftheBVIinsolvencyprocess.SuchindicatedShell’sacceptanceofthestatutoryschemeundertheInsolvencylawsoftheVirginIslandsforthebenefitofallunsecuredcreditors(foreignandlocal)tobetreatedequally.Second,insupportoftheprinciplesofuniversalityandcrossborderinsolvencyrecognition,theCourtheldthattheendsofjusticeinthecircumstancesofthiscaserequirethattheintegrityoftheCourt’sprocessinthesupervisionandadministrationofthestatutoryschemeundertheInsolvencylawsbeprotected:

“Itisimportantfortheliquidationtobeacollectiveproceedinghavinguniversalapplication,suchthatnoadvantageshouldbegiventoacreditorbecausehehappenstolivein(orinShell’scase,happentohaveaccesstothecourtsof)anotherjurisdiction.”ChiefJusticePeriera,para22.

Ofequalimportancewasthejudicialdiscussionontheprinciplesofanti-suitinjunctiverelief.FollowingwellestablishedprinciplesofAirbus Industrie GIE v Patel & Ors[1998]CLC702andapplyingananalogytostatutoryequivalenttosection183oftheEnglishInsolvencyAct,theCourtofAppealconcluded“thatonaproperapplicationoftheprinciplesandhavingdueregardforcomity,thecircumstancesofthiscasewarranttheexerciseofthejurisdiction.Thiscourtshouldnotflinchfromsodoinginachievingtheendsofjustice.

DISCOVERY–BVIAPPEALS–DOCUMENTSPASSINGBETWEENPARTYANDLEGALADVISERS–WHETHERDOCUMENTSAREPRIVILEDGED–CASEMANAGEMENTDISCRETIONOFTHETRIALJUDGE–BASISONWHICHANAPPEALLATECOURTWILLINTERFERE

Sheikh Mohamed Ali M Alhamrani et al v Sheikh Abdullah Ali Alhamrani

HCVAP2012/26(BVI)CourtofAppeal

SevenbrothersownedaBVIcompany.AdisputearosebetweenthesixappellantsandtheotherbrotherwhichwassettledbythesinglebrotherbuyingallsharesintheCompany.Inthebuy/sellprocesstheAppellantsreceivedadvicefromalawyerengagedbytheCompany.TheRespondentfoundthesedocumentsontheCompany’scomputerequipmentnowownedbyhim.Hewishedtorelyonsuchdocumentsinthesubsequentdisputeastoownership

oftheCompany.TheAppellantsarguedthetermsofengagementwiththelawyeradaptedovertimetobehisadvicetothemasshare-holdersandnottheCompany,andthatsuchvariationtothetermswereauthorisedbythemasdirectors.ThetrialjudgedisagreedandfoundnoprivilegeorconfidentialityandorderedattheCaseManagementhearingthatdisclosurebemade.

OnadecisionofthesingleJusticeofAppealdeliveredon10September2012,theCourtofAppealdismissedanappealfromtheCommercialJudge’sdecision.JusticeMitchellruledthatthedirectorswereunderadutytoactbonafideandintheinterestsoftheCompany,andthatwasnotthecasewheretheytookstepstohavetheCompanyhirealawyertoadviseonegroupofshare-holdersalone.Thiswasnecessarilysowhentherewascompleteoverlapofidentitybetweentheshareholdersanddirectors.Further,thatprivilegecanonlyattachtoaconfidentialdocumentandthattherewasnoconfidentialitybecausethelawyerknewtheadvicewasbeingprovidedtoaCompanynowownedbytheRespondent,andthatthelawyeralsoknewtheRespondentobjectedtotheadvicebeingprovidedtotheAppellantswhenhewaspayingforthatprocess.

TheCourtalsoheldthatthetrialjudgewasperformingacasemanagementfunctioninwhichhewascalledontoexercisediscretioninwhetherornottoallowdiscovery.FollowingthedecisioninDufour and Others v Helenair Corporation Ltd and Others(1996)52WIR188,theCourtheldthatanappealagainstajudgmentofatrialjudgeintheexerciseofajudicialdiscretionwillnotbeallowedunlessthecourtissatisfiedthat(1)inexercisinghisorherjudicialdiscretionthejudgeerredinprinciplebyeitherfailingtotakeintoaccountorbytakingintoaccountorbeinginfluencedbyirrelevantfactorsandconsiderations;and(2)thatasaresultoftheerrororthedegreeoftheerrorinprinciple,hisdecisionexceededthegenerousambitwithinwhichreasonabledisagreementispossibleandmaythereforebesaidtobeclearlywrong.

Theappealwasdetermineddaysbeforethestartofasixweektrialontheunderlyingissuebetweentheparties.TheAppellantshaveaskedforareviewofthedecisionbythefullcourtandthatistobedeterminedonanexpeditedbasis.Itisnotyetclearwhenthathearingwilloccur.



BVI

HighCourt

June

PROCEDURE–BVI–STRIKEOUT–PROPERPLEADINGOF“WILLFULDEFAULT”

Appleby Corporate Service (BVI) Limited (as Trustee of the Clef Trust) v

CITCO Trustees (BVI) Limited

TheissueinthiscasewaswhetherCITCOTrusteesBVILimited(CITCO)wasentitledtosummaryjudgmentunderCPR15.2(a)dismissingtheclaimoftheApplebyCorporateServices(BVI)Limited(“Appleby”)onthegroundthatApplebyhadnoreasonableprospectofsucceedingonitsclaimforbreachoftrust;oralternativelyforanorderunderCPR26.3(1)(b)or(c)strikingoutthestatementofclaimonthegroundsthatitdoesnotdiscloseanyreasonablegroundforbringingtheclaimorisanabuseofprocess.TheallegationagainstCITCOwasthatitfailedtomonitortheperformanceofport-folioinrespectofwhichthefundsoverwhichitactedasTrusteeswereadministeredanddeliberatelyorrecklesslyandnegligentlyfailedtoapprisethebeneficiariesofunderperformanceofthein-vestmentswhichresultedinanetreductioninvalueoftheassetsofsomeUS$5.6million.

CITCOsoughttorelyonanindemnityagainstthetrustassetsinrespectofanybreachoftrustwhichitmayhavecommittedinthecourseofitstrusteeship.TheresultitsayswasthatifjudgmentwasgivenagainstCITCOtheamountthatCITCOwouldberequiredtopaywouldbecomeanassetofthetrustandthereforeavailabletosatisfyanyindemnity;sothatanyobligationwouldbeselfcancelling.TheCourtheldthattheindemnityreliedonwassupersededbyamorenarrowindemnitysubsequentlyagreedbetweenthepartiesinadeedofretirementandappointment.ThejudgealsofoundthatbecausetheissueontheapplicationunderCPR15.2(a)iswhetherornottheClaimanthasarealprospectofsucceedingonitsclaim,onceitappearstotheCourtthattheClaimanthasarealprospectofsucceeding,theCourtisnotconcernedwiththepossibilitythattheclaimmightfail.Further,citingLJMillettinArmitage v Nurse[1998]Ch41at252thatthatremainedtruewhethertheriskoffailureisonapointwhichtheCourtconsiderstohavearealprospectofsuccessorsomeotherpoint.

TheCourtalsoacceptedthatwhileaclaimallegingwillfuldefaultmustbeproperlyparticularizedonthosefactsthepleadingwasperfectlyadequatesinceCITCOwastoldincleartermswhatitisallegedtohavedonewrongandthatthatconductamountedtowillfuldefaultonitspart.

UNJUSTENRICHMENT–BVILAW–TOTALFAILUREOFCONSIDERATION–PROPERLAWOFTRANSACTION–WHETHERSUBJECTTOBVILAWORRUSSIANLAW–WHETHERRECOVERYAVAILABLEUNDERBVILAW–WHETHERRECOVERYAVAILABLEUNDERRUSSIANLAW

Fraunteld Management Limited v Featherwood Trading Limited

Thiswasacaseofunjustenrichmentandconflictsoflaw.ThecaseconcernedtwoprominentRussianbusinessmen,aRussiandistilleryandseveraloffshorecompanies.TheClaimantCompanyclaimedthatithadpaidover$13millionintoaCypriotbankaccountbelongingtotheDefendant,aBVIcompany,andreceivednothinginreturn.TheClaimanthadexpectedthatitsaffiliates,inexchangeforthepayment,wouldreceivesharesintheRussiandistillerybuttheshareshadneverbeentransferred.TheClaimantthereforeclaimedthemoneybackundertheprinciplesofunjustenrichment.TheDefendantdidnotclaimanypositiveentitlementtothemoneybutclaimedthat,asamatterofBVIandRussianlaw,itwasnonethelessentitledtokeepthemoney.

Theevidencesurroundingthepaymentofthe$13millionwashighlycontentiousandthe(multiple)witnessesgaveevidenceentirelyviavideolinkfromRussia.

Intheevent,BannisterJwasnottroubledbytheissuespresentedbyRussianlaw,concludingthattheproperlawfordeterminingaclaimofunjustenrichmentwastheplacewheretheenrichmentoccurred.SincetheactualenrichmentoccurredinCyprusandnoevidenceofCypriotlawwasadduced,heconcludedthatBVIlawgovernedthetransactionbydefault.

Further,BannisterJwasabletobasehisconclusions,despitethecomplicatedandcontentiousfactualbackground,onthecoreprinciplesofunjustenrichment,namelythattheClaimantneededonlytoprovethattheDefendanthasbeenenriched,thatitwasunjustandthatitwasattheexpenseoftheClaimant.



IntheeventhefoundfortheClaimantandorderedrepaymentofthe$13million.

Thecaseisnotableforexemplifyingtheuseofmoderntechnologyinoffshorecommerciallitigationanddemonstratingthesimplicityofunjustenrichmentasaremedyinoffshoretransactions.

BLACKSWANJURISDICTION–BVILAW–ANTISUITINJUNCTION–WHETHERTOTALFAILUREOFCONSIDERATION–PROPERLAWOFTRANSACTION–WHETHERSUBJECTTOBVILAWORRUSSIANLAW–WHETHERRECOVERYAVAILABLEUNDERBVILAW–WHETHERRECOVERYAVAILABLEUNDERRUSSIANLAW

Inna Gudavadze et al v Carlina Overseas Corporation, Azerbaijan (ACG)

Limited, Ivane Chkhartishville

TheClaimantsclaimtobetheheirsunderGeorgianlawofBadriPatarkatsishvilleandbeneficiallyentitledto49sharesintheFirstDefendant,aBVIregisteredcompanycalledCarlinaOverseasCorporation(“Carlina”).Theseshareswereallottedandissuedon10December2006totheSecondDefendant,IvaneChkhartishvillewhoremainedatthedateofthejudgment,theirlegalowner.TheClaimant’sallegethattheSecondDefendantheldthesharesasbaretrusteesforthem.TheseproceedingswereancillarytoproceedingsthatwereongoinginGeorgiaandbroughtundertheCourt’sBlackSwanjurisdiction.Nosubstantivereliefwasclaimed.

OntheSecondDefendant’sapplicationforsummaryjudgmenttheCourtheldthattheClaimantshadnoprospectofsustainingtheirclaimforpurelyancillaryinjunctionspreventingdealingswiththeCarlinashareholdingssincetheyhadbeenchargedtoAzerbaijan(ACG)Limitedandhavingexecutedanddeliveredablanktransferofshares,theLearnedJudgewasnotabletodealwiththem.TheCourtalsoheldthattheClaimantshadnoprospectofestablishingthatthesecuritygrantedbytheSecondDefendanttoACGwasgrantedinbreachoftrustespeciallysincetheClaimant’soriginalpleadingdidnotevenallegethatbreach.OntheissueoftheCourt’sjurisdictiontograntsummaryjudgmentonwhatinrealitywasaclaimforancillaryrelief,theCourtheldthatthiscasefellwithinthewordingofCPR15.TheLearnedJudgefeltthatevenifhewaswrongonthatthatitisinanyeventclearthatthereisnotandneverwillbeanymaterialtojustifythecontinuationoftheinjunction.

TheSecondDefendantalsosoughtaninjunctionrestrainingtheClaimantsfrompursingtheirproceedingsinGeorgia.TheCourtheldthatwhiletheBVIisobviouslyanappropriateforumfortheresolutionofadisputeastoultimatebeneficialownershipofthesharesinquestion,theauthoritiesareclearthatthatisnotasufficientgroundforthegrantofaninjunctionrestrainingapartyfromcommencingorcontinuingproceedingsinanotherjurisdiction.AdoptingtheanalysisofToulsonLJintheCourtofAppealofEnglandandWalesinDeutsche Bank AG v Highland Crusader

Offshore Partners LLP.

TheLearnedJudgeheldthatthemerefactthatproceedingsareonfootindifferentjurisdictionsisnotitselfasufficientreasonforgrantingananti-suitinjunction.InanyapplicationseekingthestayofforeignproceedingsthepartyseekingtheinjunctionmustshowthattheBVIisclearlythemostappropriateforumandthatitwouldbevexatiousoroppressivefortheotherpartytocommenceorcontinueparallelproceedingsinanotherjurisdiction.Hehastheburdenofestablishingthatjusticerequiresthattheforeignproceedingsbestayed.TheCourtfeltthatitwouldnotbevexatiousoroppressiveeveniftheSecondDefendantwouldnotobtainafairhearinginGeorgia.RelyingonthejudgmentofChadwickLJinAl Bassam v Al BassamtheLearnedJudgefoundthattheimmediateandprobableconsequenceswasthatanyjudgmentobtainedagainsthimasaresultofahearingthatwasunfairwouldbedifficulttoenforceoutsideGeorgia.

TheLearnedJudgeexpressedtheviewthattheCourtplainlycouldnotentertainapplicationstorestrainforeignnationals,whohappentobesubjecttoitsinpersonamjurisdiction,fromtakingproceedingsintheCourtsoftheirhomejurisdictiononthegroundsonlythatthoseCourtscannotbetrustedtotrycasesfairlyor,forthatmatter,thatattendanceattrialbytheapplyingpartywouldbeimpossiblewithoutpersonalrisk.NordidhethinkthatthepositionchangesmerelybecauseadefendanttotheforeignproceedingssubsequentlyinstitutesproceedingsintheBVI.Inhisjudgmenttheissueindecidingwhetherananti-suitinjunctionshouldbegrantedisnotwhethertheapplicantfortheinjunctionwillgetafairtrialabroadbutwhetherthependencyoftheforeignproceedingsintandem(or,possibly,insequence)withproceedingsinthejurisdictioninwhichtheapplicationismadeisinandofitselfvexatiousoroppressive,soastocreateinjustice.


BERMUDA|BRITISHVIRGINISLANDS|CAYMANISLANDS

CONTACTUS

Bermuda NarinderK.Hargun

[email protected]+14412994928

BritishVirginIslands MarkForté


CaymanIslands NigelK.MeesonQ.C.


Editor ChristianLuthi


Thisupdateisnotintendedtobeasubstituteforlegaladviceoralegalopinion.

Itdealsinbroadtermsonlyandisintendedtomerelyprovideabriefoverview

andgivegeneralinformation.

AboutConyersDill&Pearman

ConyersDill&PearmanadvisesonthelawsofBermuda,theBritishVirginIslands,

CaymanIslandsandMauritius.Conyers’lawyersspecialiseincompanyand

commerciallaw,commerciallitigation,restructuring,insolvencyandprivate

clientmatters.ThecombinationofConyers’internationalstructureencompassing

11officesinjurisdictionsaroundtheworld,itscultureandunrivalledexpertise

enablesthehighestquality,responsive,timelyandthoroughlegaladvice.Conyers’

affiliatedcompanies(theCodanGroupofcompanies)providearangeoftrust,

corporatesecretarial,accountingandmanagementservices.Foundedin1928,

Conyershas550staffandapproximately150lawyers.


INDEX

INDEX

CasesbySubject

SECTION:

Companies

Windingup

3 Bermuda-WindingUp-JPLs’ApplicationForALetterOfRequest-StatutoryBasisOfJurisdiction

3 Bermuda-WindingUpPetition–Insolvency-Non-AssignmentClause

6 BVI-Appeals-Liquidator’sRemuneration

8 BVI-Appeals-InsolvencyAct–WhetherAssigneeofRedemptionProceedsCanAttainTheCharacterOfACreditorWithLocusStandiToSeekLiquidationOfACompany

6 BVI-Appeals-InsolvencyAct-SubmittingaClaiminLiquidationIsSubmittingToTheJurisdictionOfTheBVICourt-InsolvencyRecognition

Investmentfunds

4 CaymanIslands-InvestmentFunds-ConstitutionalDocuments-SideLetters-PrivityofContract

5 CaymanIslands-InvestmentFunds–ConstitutionalDocuments-SideLetters–Privity-MannerOfRedemptionOfShares-CompaniesLawSection37

Other

5 CaymanIslands-InvalidIssueOfShares-Mistake-RectificationofRegister

7 BVI-Appeal-ShareRedemptionMistakeofFact-CertificateOfValue-Restitution

INDEX

CasesbySubject

SECTION:

GeneralCivil/Commercial

3 Bermuda-PossessionOrder-Strike-OutApplication–ResJudicata-FraudulentInvasion-AbuseofProcess

9 BVI-Appeals-Contract-ConstructionofContracts-Estoppel-UnjustEnrichment-TrialJudge’sPrimaryFindingsOfFact-FunctionOfAppellateCourt

12 BVI-UnjustEnrichment-TotalFailureOfConsideration-ProperLawOfTransaction-WhetherSubjectToBVILawOrRussianLaw-WhetherRecoveryAvailableUnderBVILaw-WhetherRecoveryAvailableUnderRussianLaw.

Jurisdiction

13 BVI-BlackSwanJurisdiction-WhetherTotalFailureOfConsideration-ProperLawofTransaction-WhetherSubjectToBVILawOrRussianLaw-WhetherRecoveryAvailableUnderBVILaw-AntiSuitInjunction-WhetherRecoveryAvailableUnderRussianLaw.

Procedure

10 BVIAppeals-Procedure-StrikeOut

9 BVI-JudgmentInDefault-JudgmentNotServed-MasterDismissingApplicationToSetAsideDefaultJudgmentOnTheBasisThatTheApplicationWasNotTimelyNorWasADraftDefenceExhibit-WhetherMasterRightToApplyCPR13.3And13.4

11 BVI-Appeals-Discovery-DocumentsPassingBetweenPartyandLegalAdvisers-WhetherDocumentsArePrivileged-CaseManagementDiscretionoftheTrialJudge-BasisOnWhichanAppellateCourtWillInterfere

10 BVI-Procedure-StrikeOut-ProperPleadingOf“WillfulDefault”

BERMUDA

ClarendonHouse2ChurchStreetHamiltonHM11Bermuda

Contact:JohnCollisTel:[email protected]

LONDON

10DominionStreetLondonEC2M2EE

Contact:CharlesCollisTel:+44(0)[email protected]


CommerceHouse,WickhamsCay1P.O.Box3140RoadTown,TortolaBritishVirginIslandsVG1110

Contact:RobertBriantTel:[email protected]

MAURITIUS

Level3,TowerINexteracomTowersCybercity,EbeneMauritius

Contact:StephenScaliTel:[email protected]

CAYMANISLANDS

BoundaryHall,2ndFloorCricketSquareP.O.Box2681GrandCaymanKY1-1111CaymanIslands

Contact:KevinButlerTel:[email protected]

MOSCOW

DucatPlaceIII6GashekaStreetMoscow125047RussianFederation

Contact:ClaireMcConwayTel:[email protected]

DUBAI

Level2GateVillage4DubaiInternationalFinancialCentreP.O.Box506528Dubai,U.A.E.

Contact:KerriLefebvreTel:[email protected]

SÃOPAULO

EdificioPlatinum,7AndarRuaJerônimodaVeiga384SãoPaulo,SP04536-001Brasil

Contact:AlanDicksonTel:[email protected]

HONGKONG

2901OneExchangeSquare8ConnaughtPlaceCentralHongKong

Contact:ChristopherBickleyTel:[email protected]

SINGAPORE

9BatteryRoad#20-01StraitsTradingBuildingSingapore049910

Contact:TanWoonTiangTel:[email protected]

BERMUDABRITISH VIRGIN ISLANDSCAYMAN ISLANDSDUBAIHONG KONGLONDONMAURITIUSMOSCOWSINGAPORESÃO PAULOconyersdi l l .com

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