Black Swan Investments I S.A. Applicant v 1. Harvest View Ltd 2. Southern Enterprises Ltd 3. Luxor Properties Ltd 4. Cloud Air Ltd 5. Sablewood Real Estate Ltd 6. Ridgepointe Overseas Developments Ltd 7. Shaford Capital Ltd Respondents

• Jurisdiction: British Virgin Islands
• Judge: Bannister J [ag],Bannister J
• Judgment Date: 25 November 2009
• Neutral Citation: VG 2009 HC 26,[2009] ECSC J1125-2,[2009] ECSC J1125-1
• Date: 25 November 2009
• Docket Number: CLAIM NO: BVIHCV 2009/348
• Court: High Court (British Virgin Islands)

EASTERN CARIBBEAN SUPREME COURT

IN THE HIGH COURT OF JUSTICE (CIVIL)

CLAIM NO: BVIHCV 2009/348

BETWEEN

Black Swan Investments I S.A.

Applicant

and

1. Harvest View Limited

2. Southern Enterprises Limited

3. Luxor Properties Limited

4. Cloud Air Limited

5. Sablewood Real Estate Limited

6. Ridgepointe Overseas Developments Ltd

7. Shaford Capital Limited

Respondents

Appearances:

Mr David Chivers QC; and Mr John Carrington of McW. Todman & Co for the Applicant

(Freezing injunction in aid of foreign proceedings — whether assets of Respondent sufficiently identifiable — delay)

JUDGMENT IN CHAMBERS

1 Bannister J [ag]: The Applicant (“Black Swan”) is a company incorporated in the Republic of the Marshall Islands. It is the assignee of a debt allegedly due to a now defunct Belgian bank by a BVI registered company called Hyundai Motors Distributors Ltd (“HBVI”). The debt was incurred before August 2000 and amounted, it is said, to US$15.4 million. It appears that HBVI carried on its business in Southern Africa, but I understand that there may be issues about that.

2 I am told that HBVI went into liquidation in the BVI on 1 August 2000, but I do not recall having been shown a copy of the relevant order. I am also told that on 11 November 2000 one Theodor van den Heever (“Mr van den Heever”) was appointed in the BVI as liquidator of HBVI and that on the very same day his appointment was recognized by the South African Court. There is in evidence a copy of an apparently unsealed order made in the High Court of South Africa (Witwatersrand Local Div [letters obscured]). I had better set out the terms of that document in full:

“IN THE HIGH COURT OF SOUTH AFRICA (WITWATERSRAND LOCAL DIV.)

JOHANNESBURG 10 November 2000

BEFORE THE HONOURABLE JUDGE BLIEDEN

In the Matter between:-

VAN DERN HEEVER THEODOR WILHELM N.O.

1 ^st Applicant

MARK CHAPMAN N.O.

2 ^nd Applicant

HAVING read the documents filed of record and having considered the matter:

THE COURT GRANTS AN ORDER:-

• 1. Recognising the appointment of the First Applicant (in terms of the laws of the British Virgin Islands) as liquidator in the insolvent estate of Hyundai Motor Distributors Limited (in liquidation) on the terms set out herein, within the Republic of South Africa until such recognition is withdrawn by order of this Court.

• 2. Directing that the First Applicant provides security to the satisfaction of the Master of this Court for the proper performance of his administration by virtue of this order and for the herein mentioned Master's costs and damages.

• 3. Declaring that thereafter the First Applicant shall by virtue of this recognition be empowered to administer the said estate in respect of all assets of the said estate which are situation within the Republic of South Africa.

• 4. That service of this order be effected by one publication forthwith in the Government Gazette and in one publication forthwith in each of The Star and the Beeld newspapers.

• 5. Costs of this application.

BY THE COURT

REGISTRAR

/bbn”

3 On 31 May 2007 the Belgian bank purported to assign to a company called Africa Edge SARL (Africa Edge) the debt of US$15.4 million and “all rights title and interests relating thereto including but not limited to any security interests”.

4 It is not in evidence whether the Belgian bank proved in the winding up of HBVI—although that fact must be within the capacity of Mr van den Heever to establish. Whether it did or not, interest (if any) must have stopped running on the claim on 1 August 2000 when HBVI went into insolvent liquidation.

5 On 12 December 2008 Africa Edge made an assignment in identical terms to Black Swan, except that the Africa Edge assignment purported to add on an additional sum of US$ 8.7 million said to represent interest “up to 31 May 2007”. For the reasons given in the preceding paragraph, there was no such interest to assign.

6 On 10 March 2009 Black Swan applied in the High Court of South Africa (South Gauteng High Court, Johannesburg) for an order under s 424 of what I understand to be a part of the South African Companies Act 61 of 1973 dealing with insolvency (although commentary to which I have been referred suggests that the provision is capable of being operated whether or not the company in question is currently subject to a recognized insolvency regime). Section 424 is in the following terms:

“ 424 Liability of directors and others for fraudulent conduct of business

• (1) When it appears, whether it be in a winding-up judicial management or otherwise, that any business of the company was or is being carried on recklessly or with intent to defraud creditors of the company or creditors of any other person or for any fraudulent purpose, the Court may, on the application of the Master, the liquidation, the judicial manager, any creditor or member of contributory of the company, declare that any person who was knowingly a party to the carrying on of the business in the manner aforesaid, shall be personally responsible, without any limitation of liability, for all or any of the debts or other liabilities of the company as the Court may direct.”

7 Black Swan's application is for an order that an individual called Muller Rautenbach (“Mr Rautenbach”) be made personally liable to pay to the Applicant the whole of the US$ 15.4 million debt plus, for good measure, the imaginary interest of US$ 9.7 million.

8 The basis of Black Swan's application under section 424 is that Mr Rautenbach owns assets in South Africa through nominees (as I understand it, this allegation is made with a view of founding jurisdiction); that HBVI had carried on business in South Africa; that with the knowledge and under the direction of Mr Rautenbach, that business was carried on fraudulently; that as a result of the assignments to which I have referred Black Swan is a “proven” creditor of HBVI for the principal and interest mentioned above; that by his alleged nefarious activities Mr Rautenbach has defrauded various creditors of HBVI, including the Belgian bank; and that as a result Mr Rautenbach is liable to Black Swan as cessionary of the Belgian bank for all the debts due from HBVI the Bank, including the US$ 9.7 million “interest”.

9 The state of the South African proceedings is that Mr Rautenbach is challenging the jurisdiction of the South African Court, but has yet to file a defence.

10 On 9 October 2009 I dismissed an application in support of the South African proceedings made by Mr John Carrington on behalf of Black Swan for the appointment of a receiver of 8 companies which were said to be wholly or partly owned or controlled by Mr Rautenbach. I summarized my reasons, which in the first instance were given orally, in a note made on the same day. Although it will involve some repetition of what has gone before, I think that I had better set it out here in full:

“JUDGMENT

• [1] The Applicant is the assignee of a debt allegedly due to a now defunct Belgian bank by a BVI registered company called Hyundai Motors Distributors Ltd (“HBVI”). The debt was incurred before August 2000 and amounted to US$15.4 mio.

• [2] Hyundai BVI went into liquidation in the BVI in August 2000. It is not in evidence whether the Belgian Bank proved in the winding up. Whether it did or not, the amount of any claim must be limited to the principal sum of US$15.4 mio. The US$9 mio or so of interest cannot on any footing be the subject of of a claim by the Applicant.

• [3] On 10 November 2000 the South African court made an order recognizing the BVI liquidator and directed that he be empowered to administer the estate of HBVI situate in SA.

• [4] On 31 May 2007 the Belgian Bank purported to assign to a company called Africa Edge SARL the debt and “all rights title and interests relating thereto including any security interests”.

• [5] On 12 December 2008 Africa Edge made an assignment in identical terms to the Applicant.

• [6] On 10 March 2009 the Applicant applied in the SA court for an order under s 424 of the SA insolvency legislation that an individual called Muller Rautenbach be made personally liable to pay to the Applicant the whole of the debt plus, for good measure, some US$9 mio accrued after HBVI went into liquidation.

• [7] Mr Rautenbach has indicated an intention to defend the proceedings on various grounds, including forum and that he had never acted as a director of HBVI.

• [8] I am invited on behalf of the Applicant to appoint a receiver over the assets of 8 BVI registered companies alleged to have been wholly or partly owned or controlled by Mr Rautenbach. The grounds for the application is that Mr Rautenbach is a dishonest individual likely to spirit away the assets of these companies to frustrate any order obtained in the SA court on the s 424 application.

• [9] I have to say first that I am wholly unpersuaded that the assignments to which I have referred conveyed to the Applicant any interest in the potential fruits of a judgment obtained under the SA s 424. By the time the first assignment was made, the Belgian Bank had no more than a right of proof in HBVI's liquidation. That was all it could assign. The position might have been different if the assignment had been made before HBVI went into liquidation.

• [10] Even if that is wrong, it seems to me that it is now far too late for the Applicant to seek equitable relief from the Court in respect of events which took place over 9 years ago. Were the Belgian Bank to have approached this Court now and asked for orders identical to those sought by the assignee, there can be no doubt that they would have been refused on the grounds of delay. The Applicant can be in no better position.

• [11] I might add that the evidence of connection between Mr Rautenbach and certain of the respondent companies is itself so stale as to make it unreliable as a basis now for making an order...