(1) Iceberg Transport SA; (2) Space Incorporated SA; (3) Aquarius Holdings Ltd; (4) Orbital Recovery Corporation; (5) One World Properties SA; (6) Comverge Ltd; (7) The Smaller World Foundation v Meade Malone (in his capacity as Liquidator of Gold & Appel Transfer SA)
| Jurisdiction | British Virgin Islands |
| Judge | HARIPRASHAD-CHARLES J,Indra Hariprashad-Charles |
| Judgment Date | 23 March 2006 |
| Docket Number | Claim No. BVIHCV2004/0130 |
| Court | High Court (British Virgin Islands) |
| Date | 23 March 2006 |
THE EASTERN CARIBBEAN SUPREME COURT
IN THE HIGH COURT OF JUSTICE (CIVIL)
Her Ladyship the Honourable Justice Indra Hariprashad-Charles
Claim No. BVIHCV2004/0130
IN THE MATTER OF THE INTERNATIONAL BUSINESS COMPANIES ACT
IN THE MATTER OF THE INSOLVENCY ACT 2003
AND IN THE MATTER OF GOLD & APPEL TRANSFER SA
Mr. Michael Fay and Mr. Donal Blaney for the Applicants.
Mr. Mark Forte and Mr. Richard Evans for the Respondent.
1. Re Sidebotham, ex parte Sidebotham (1880) 14 Ch.D. 458.
2. Attorney General of Gambia v N'Jie [1961] AC 617, P.C.
3. Re Edennote Ltd; Tottenham Hotspur plc and others v Ryman and another [1996] 2 BCLC 389, C.C.
4. Mahomed and another v Morris and others [2002] 2 BCLC 536.
5. Re Hans Place Ltd [1993] BCLC 768.
6. Associated Provincial Picture Houses Ltd v Wednesbury Corp [1947] 2 All ER 680.
7. Leon v York-O-Matic, Ltd and Others [1966] 3 All ER 277, Ch. D.
8. Hamilton v The Official Receiver [1998] BPIR 602.
9. Castanhov Brown & Root (U.K.) Ltd [1981] A.C. 557.
10. Societe Nationale Industrielle Aerospatiale v Lee Kui Jak [1987] A.C. 871, P.C.
11. Airbus Industrie G.I.E. v Patel [1999] 1 A.C 135.
12. The Spiliada Maritime Corporation v Cansulex Limited [1987] 1 A.C. 460.
13. Barclays Bank plc v Homan and Others [1993] BCLC 680.
Corporate insolvency — challenge to liquidator's decision — related foreign proceedings commenced by liquidator — liquidator's choice of attorney — reasonableness of decision — applicable principles — locus standi to bring challenge —‘person aggrieved’ meaning — separate forum challenge against foreign proceedings — applicable principles — primacy of natural forum test — Insolvency Act 2003 section s.273
Liquidator (‘L’) was appointed to the affairs of Gold & Appel (‘GA’) on 14th February 2005. Following preliminary investigations, he issued proceedings against 42 defendants, including the Applicants in the U.S. Bankruptcy Court, seeking to set aside/ seek restitution in respect of a number of transactions entered into with GA.
The Applicants sought to challenge L's decision to bring these proceedings, and, in the alternative, to prevent him from using his attorney of choice, a specialist US bankruptcy attorney. They argued that L's conduct was susceptible to challenge under s.273 of the Insolvency Act 2003. L argued that the Applicants have no locus standi to bring the application, and there are no merits to the application.
Further, and/or alternatively, the Applicants sought an anti-suit injunction against L on the grounds that as the liquidation concerned a BVI company, this Court ought to exercise its discretion to restrain the US proceedings considering it, inter alia, ancillary to the liquidation's primary jurisdiction.
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(1) The application is dismissed (with direction for restoration of the matter as to costs).
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(2) L's preliminary issue succeeded; none of the Applicants had locus standi to raise a challenge under s. 273.
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(3) In any event, L's decision to institute and continue the US proceedings could not be categorised as so utterly unreasonable and perverse that no reasonable liquidator would have taken it. L was acting on the basis of bona fide legal advice.
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(4) The allegation that L's freewill had been overborne by his US attorney was without foundation.
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(5) So too was the allegation of conflict of interest or bad faith on the part of that attorney.
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(6) There was no cogent criticism of L's conduct.
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(7) The relief of anti-suit injunction also failed. Failure to demonstrate BVI was not the natural forum for the dispute.
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(8) Moreover, as a matter of the court's discretion, there was no warrant for the granting of an injunction.
By Order of the Court dated 14 February 2005, the Respondent, Mr. Meade Malone was appointed Official Liquidator (‘the Liquidator’) to Gold & Appel Transfer SA (‘Gold & Appel’). Since his appointment, he has retained several law firms in several different jurisdictions to advise him in respect of his rights and obligations arising from actions he wishes to take. One such action has been the proceedings issuedout of the United States Bankruptcy Court for the District of Columbia, Washington D.C. (the ‘US Proceedings’) which are the subject of the present application.
On 14 December 2005, the Applicants filed an amended ordinary application seeking the following:
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(i) An order that the decision of the Official Liquidator herein to commence proceedings in the United States Bankruptcy Court (and all acts undertaken and proceedings commenced thereon) (‘the US Proceedings’) be reversed or stayed, pursuant to section 273 of the Insolvency Act 2003 (‘the Act’) and/or
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(ii) An anti-suit injunction against the Official Liquidator and/or
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(iii) An order that the decision of the Official Liquidator herein to retain Daniel Litt and/or Dickstein Shapiro Morin and Oshinsky LLP as his Counsel be reversed and that the Official Liquidator be ordered to instruct independent Counsel in respect of the US Proceedings and in respect of any other US legal advice required by the Official Liquidator, pursuant to section 273 of the said Act.
The Applicants seek the Orders on the following grounds:
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1. The US Proceedings are causing and will cause damage and prejudice to the Applicants unless the Liquidator is ordered by this Court to stay the US Proceedings pending determination of the Applicants' application for an order pursuant to section 273 of the Act and/or an anti-suit injunction.
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2. The decision of the Liquidator to commence the US Proceedings is a decision that is so unreasonable and absurd that no properly advised liquidator would have taken that decision.
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3. The decision of the Liquidator to commence the US Proceedings is oppressive to the Applicants herein such that in the interests of justice it is appropriate that theCourt should grant an injunction restraining the Liquidator from proceeding with the US Proceedings and instead ordering the Liquidator to litigate any claims he may have as against the Applicants in the British Virgin Islands.
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4. The courts of the British Virgin Islands are the appropriate forum in which to determine issues as to the propriety or otherwise of transfers made by a British Virgin Islands company that was placed into liquidation at the behest of the British Virgin Islands Court.
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5. Daniel Litt (‘Mr. Litt’) and Dickstein Shapiro Morin & Oshinsky LLP (‘Dickstein Shapiro’) have a manifest and irreparable conflict of interest such as disqualifies them from acting as independent counsel to the Liquidator in respect of the US Proceedings or otherwise in connection with the liquidation, such that this conflict of interest prejudices the Applicants herein variously as defendants in the US Proceedings, creditors of Gold & Appel Transfer SA (‘Gold & Appel’) and/or members of Gold & Appel. This Court has already refused to appoint Mr. Litt as a Liquidator because of concerns about this conflict.
As a precursor to this application, it is helpful to set out the dramatis personae. But before I do so, I find it necessary to present Mr. Walter C. Anderson (‘Mr. Anderson’) who is not a party to this application but who features extensively. Mr. Anderson, also known as Walt Anderson, William Prospero, Mark Roth, Robert Zzylch, Robert Zzyllick, R. Langer, Ragnor Danksjold and Dr. Paul Anderson was the sole operator behind Gold & Appel for all of the Company's existence. The Liquidator's evidence filed in this application shows even at this early stage of investigation and prior to substantive disclosure, the links that these Applicants had and still have with Mr. Anderson. Indeed, the Liquidator believes that the evidence demonstrates the active involvement of Mr. Anderson in some of the Applicants even to this date. The Liquidator alleges that it is important to determine two things (i) the credibility the Court can put on the Applicants' evidence filed to date and (ii) the irrefutable evidence that Mr. Anderson operated these businesses and where these businesses actually conducted their affairs at all material times.
It is the foundation of the U.S. criminal justice system that a man is presumed innocent until proven guilty but one cannot disregard the fact that Mr. Anderson is indicted for what has been characterized as the largest tax evasion case ever brought against an individual taxpayer in the United States. He is currently on remand in a Washington jail and has been denied bail. The criminal indictment of Mr. Anderson follows a massive investigation relating to his personal tax affairs directly related to the activities of Gold & Appel.
Iceberg Transport S A (‘Iceberg’) is a Panamanian corporation with its residential address at all material times at Mr. Anderson's premises in Washington D.C. Its President and sole director is Mr. Jean-Claude Chalmet (‘Mr. Chalmet’) who was made President and sole director on 3 March 2005.1 It appears that Mr. Anderson formed Iceberg and controlled the Company through nominee directors since its incorporation. 2
Space Incorporated S A (‘Space Inc’) is an BVI International Business Company with residence at all material times at Mr. Anderson's premises in Washington D.C. Its sole director is Mr. Chalmet who assumed this position in March 2005.
Aquarius Holdings Limited (‘Aquarius’) is a Guerney Company formed in 1994 with its...
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