Asiacorp Development Ltd v Green Salt Group Ltd; Firstlink Investments Corporation Ltd

• Jurisdiction: British Virgin Islands
• Judge: HARIPRASHAD-CHARLES J,Indra Hariprashad-Charles
• Judgment Date: 31 May 2006
• Docket Number: Claim No. BVIHCV2005/0189
• Court: High Court (British Virgin Islands)
• Date: 31 May 2006

THE EASTERN CARIBBEAN SUPREME COURT

IN THE HIGH COURT OF JUSTICE (CIVIL)

Her Ladyship the Honourable Justice Indra Hariprashad-Charles

Claim No. BVIHCV2005/0189

In the matter of Green Salt Group Limited

AND in the matter of the International Business Companies Act, Cap. 291

AND in the matter of the Insolvency Act, 2003

Asiacorp Development Limited

Applicant/ Respondent

and

Green Salt Group Limited

First Respondent

Firstlink Investments Corporation Limited

Second Respondent/ Applicant

Appearances:

Mr. Mark J. Forte for the Applicant, Firstlink Investments Corporation Limited

Mr. Samuel Jackson Husbands for the Respondent, Asiacorp Development Limited

The following cases are referred to in the Judgment

1. Base Metal Trading Limited v Novokuznetsk Aluminium Plant and Rual Trade Limited (BVIHCV2004/0084)—unreported.

2. In the Matter of RBG Global S.A. (Civil Appeal No. 2 of 2003)—Judgment of the Eastern Caribbean Supreme Court—unreported—judgment delivered on 12 January 2004.

3. Rochamel Construction Limited v National Insurance Corporation (Civil Appeal No. 10 of 2003)—Judgment of the Eastern Caribbean Supreme Court—unreported—judgment delivered on 24 November 2003.

4. Barrow v Caribbean Publishers Company Limited (No. 1) (1967) 11 W.I.R. 171.

CATCHWORDS

Company liquidation — Liability for costs — Application deemed dismissed pursuant to Section 168 Insolvency Act 2003 — Whether applicant liable for costs — Appropriate method for determining costs.

HEADNOTE:

AC applied by Originating Application dated 5 August 2005 for an order appointing joint liquidators in respect of GS. F, a shareholder in GS, was granted permission to file and serve evidence in opposition to the Originating Application. The matter came before the Court on a number of occasions, but at no time was an application made to extend time under s.168 (2) 1 A, nor any order extending time made. On 5 May 2006 the Court declared, upon F's application, that the Originating Application was deemed dismissed pursuant to s. 168(3). The issue of costs was heard subsequently.

AC argued that it was not liable to pay any costs, and, in the alterative, if it was so liable, then such costs should be prescribed costs at the prescribed level. F applied to the court to fix a higher value for the claim.

HELD:

As the applicant in respect of an Originating Application that was deemed dismissed, AC was liable for F's costs of resisting the application. The present was not a straightforward case. In all the circumstances, the level of costs that would be recoverable if prescribed costs at the prescribed level were to be awarded would not be reasonable. A reasonable sum was the $65,000 claimed by F, and it was entitled to an award of costs in that sum. Additionally, it was entitled recover costs of the application since the declaration that the Originating Application was deemed dismissed.

HARIPRASHAD-CHARLES J

1 This court is concerned with two applications for costs namely: (i) Costs in the action on the application to appoint liquidators and (ii) costs of the application to dismiss the application to appoint liquidators.

Procedural history of case

2 The procedural history of the case is germane to these applications. It all started when on 5 August 2005, the Respondent (‘Asiacorp’) filed an application to appoint joint liquidators to the Company, Green Salt Group Limited (‘the Company’) (‘the application’). The first hearing of the application was on 18 October 2005. At that hearing, the Applicant (‘Firstlink’) filed a Notice of Intention to appear and objected to the application. The Court gave case management directions including the filing of evidence by Asiacorp, Firstlink and the Company. Firstlink sought an order that the application be stayed or adjourned pending resolution of Action No. 2026 of 2005 commenced in the High Court of the Hong Kong Special Administrative Region, Court of First Instance (the ‘Hong Kong Proceedings’). The principal allegations relate to the fraud and conspiracy between Asiacorp, the Company and others to remove Firstlink's power as majority shareholder and to remove money from the Company which was money directly invested by Firstlink.

3 On 22 and 29 November 2005, the Court heard Firstlink's application and reserved judgment. During the intervening period, some pertinent information surfaced which necessitated the Court's reconsideration of the evidence. So, on 12 January 2006, the parties moved the Court again. Both sides presented further submissions. Once again, judgment was reserved. On 23 March 2006, the Court delivered its judgment. Amongst other things, it adjourned the application to appoint joint liquidators1 and ordered that Firstlink shall no later than two weeks from the making of this Order instruct accountants to conduct a full audit of the Company's business and to report on the conclusions of such audit. It also ordered Asiacorp to pay to Firstlink reasonable costs of opposing the application to date to be assessed if not agreed.

4 On 7 April 2006, Asiacorp filed a Notice of Application for variation of the 23 March 2006 Order. It also came to light that Asiacorp had filed an appeal against the 23 March Order about the same time. The application for variation was scheduled for hearing on 4 May 2006. One day prior to its hearing, Firstlink filed an ordinary application pursuant to section

168 (3) of the Insolvency Act 2003 seeking (i) a declaration that the application to appoint a liquidator dated 5 August 2005 is deemed to have been dismissed and (ii) an order that Asiacorp shall pay Firstlink's costs of and incidental to this application as well as the action. On 5 May 2006, the Court declared the application to appoint a liquidator to have been dismissed and ordered Asiacorp to pay to Firstlink costs of the action to be assessed if not agreed at a hearing on Thursday, 11 May 2006 which was subsequently changed to 12 May 2006.

The present application for costs

5 On 12 May 2006, Firstlink approached the Court seeking its costs of and incidental to this application as well as the action. Firstlink applied for costs to be assessed or alternatively, if costs are to be determined on the prescribed basis, the value of the claim be fixed in the sum of $435,000 (being the value of the claim required to provide a cost award in the sum of $65,000 being the sum claimed for costs by Firstlink) or such other sum greater than $50,000 as shall seem just pursuant to CPR 65.6 on the grounds that if the default value of the $50,000 is ascribed to the Claim [by reason of CPR 65.2 (b) (iii)] the value of costs is likely to be considerably inadequate.

The submissions of Firstlink

6 The gravamen of Firstlink's submission is that it is entitled to costs on the assessed basis. Asiacorp opposes both applications. It is resolute that it should not be condemned in the payment of any costs at all following the Order of the Court made on 5 May 2006 wherein the Court declared the Originating Application for the appointment of liquidators filed on 5 August 2005 dismissed pursuant to section 168 (3) of the Insolvency Act 2003. In any event, Asiacorp submits, even if it has to pay any costs, they should be determined on the prescribed basis in accordance with CPR 65.5.

7 Mr. Mark Forte appearing as Counsel for Firstlink submits that a party aggrieved at the behest of another party should be entitled to costs. Mr. Forte contends that the actual costs of the action is estimated at $65,000 and therefore the Court should fix the value of the claim in the sum of $435,000 (being the value of the claim required to produce a costaward in the sum of $65,000). Learned Counsel accentuates that Asiacorp cannot say that the amount of $65,000 is an unreasonable figure given the fact that the application was not an ordinary ‘run of the mill’ matter. The whole claim arose out of a statutory demand of HK$26.6 million.

8 Learned Counsel contends that the Court should pay little heed to Mr. Husbands' submission that the present application should have been done at Case Management. According to Mr. Forte, Firstlink was not a party to this action and as such, it could not be required to do something if it were not a party. What Firstlink did, according to Mr. Forte was to apply to the Court to fix a value to the claim at the first available opportunity.

9 Mr. Forte submits that the case ofIn the Matter of RBG Global S.A.2 which was substantially relied upon by Learned Counsel for Asiacorp, Mr. Husbands is enlightening. However, it is distinguishable from the present case in that there was no application before that Court to consider whether or not to ascribe a different value to the claim pursuant to CPR 65.6. Consequently, the Court was constrained to award costs to the appellant in accordance with the general rule set out in CPR 65.5 (2) (iii).

Asiacorp's submissions

10 Mr. Husbands vigorously challenges the present application. He submits that Asiacorp should not be condemned at all in the payment of any costs as a result of the Order of this Court made on 5 May 2006. In any event, he submits, if Asiacorp has to pay any costs, it should be prescribed costs in accordance with CPR 65.5 and not assessed costs. He...