Hoss Holding Ltd v Energy Concepts International Ltd

• Jurisdiction: British Virgin Islands
• Court: High Court (British Virgin Islands)
• Judge: Webster J
• Judgment Date: 07 June 2024
• Neutral Citation: VG 2024 HC 10
• Docket Number: CLAIM NO. BVIHCM 2023/0051

By way of Claim

Between:

Hoss Holding Limited

Claimant / Respondent

and

Energy Concepts International Limited

Defendant / Applicant

And by way of Counterclaim

Energy Concepts International Limited

Claimant by way of Counterclaim / Applicant

and

[1] Hoss Holdings Limted

[2] Jacob Agam

[3] Ruth Agam

[4] Pio Vallenta

[5] Vertical Group Holding Limited

Defendants by way of Counterclaim / Respondents

[1] Paul Favahelmut Goerling

(Also known as Helmut Görling)

Defendants by way of Counterclaim

CLAIM NO. BVIHCM 2023/0051

EASTERN CARIBBEAN SUPREME COURT

IN THE HIGH COURT OF JUSTICE

COMMERCIAL DIVISION

Contempt of court — civil contempt — aiding and abetting — burden and standard of proof — section 10 Contempt of Court Act — CPR 2023 part 53.

Appearances:

Andrew McLeod with Murray Laing of Walkers for the Defendant/Applicant

No appearance by the Respondents

1 Webster J [Ag.] On 26 April 2024 the Defendant/Applicant, Energy Concepts International Limited (“ ECI”), applied to this court for declaratory and other relief that the 1st to 5th Respondents be found to be in contempt of court by breaching in various ways orders of this Court made on 6 October 2023 (“ the 6 October order”), 14 December 2023 (“ the 14 December 2023 Order”) and the 11 January 2024 r (“ the 11 January 2024 order”). The application was made under section 10 of the Contempt of Court Act, CAP 14, rules 53.3, 53.4, 53.5, 53.7 and 53.9 of the Eastern Caribbean Supreme Court Civil Procedure Rules (“ CPR”), and/or the common law, and/or the inherent jurisdiction of the Court (“ the Application”). An outline of the factual and procedural background is essential to understand the Application.

Background

2 The claim in these proceedings arises out of divorce proceedings between Alexandra Linda Dorrenstein (“ Alexandra”) 1, a director of ECI, and Jacob Agam (“ Jacob”), the estranged husband of Alexandra and the sole director

and representative of the Claimant, Hoss Holding Limited (“ Hoss”), a Maltese Company. During the marriage Jacob purchased an apartment in Johannesburg as a gift for Alexandra (“ the Property”). The Property was acquired in the name of ADA Property Enterprises Pty Limited (“ ADA”), a subsidiary of ECI. The shares in ADA were held by Vertical Financial Holdings (formerly Clean Air Limited), an entity formed under the laws of Lichtenstein, in trust for ECI. Alexandra was at all material times either the legal or beneficial owner of the shares in ECI

3 In October 2022 Jacob's sister, Ruth Agam (“ Ruth”), acting with Mr. Paul Fava, a business associate of Jacob (“ Mr Fava”), and Vertical Group Holdings Limited, a Maltese Company (“ Vertical Malta”), attempted to seize control of ADA and ECI by calling a meeting of the shareholders of ADA with the intention of removing Alexandra as a director and otherwise taking control of the company. As a result Alexandra caused ADA and ECI to apply to the High Court in South Africa on an urgent basis for an injunction to prevent Jacob, Ruth, Mr. Fava and Vertical Malta from calling and/or holding the threatened meeting of the shareholders ADA. The defendants to the claim relied on two documents in the South African proceedings:

• (1) a beneficiary agreement dated 3 May 2011 which purported to cancel the share in Alexandra's name or held on her behalf in ECIL if Jacob and Alexandra ceased to be married to each other, or cohabitate, or either one filed divorce proceedings (“ the Beneficiary Rights Agreement”); and

• (2) an agreement dated 18 May 2011 signed by Jacob by which ECI purported to give Ruth and Vertical Malta an irrevocable power of attorney to take steps in relation to the assets of ECI (“ the IPOA Agreement”). On 15 October 2022 Ruth and Vertical Malta purported to assign the benefit of the agreements to Hoss. The Beneficiary Rights Agreement, the IPOA Agreement and the assignment are referred to together in this judgment as “ the Documents”.

4 On the 4 November 2022 the High Court in South Africa granted an injunction restraining the defendants from proceeding with the meeting of the directors or shareholders of ADA and/or from holding themselves out as authorised representatives of ADA.

5 Having failed to gain control of ADA and the Property in South Africa Jacob turned his attention to the Virgin Islands where ECI is incorporated and domiciled. On 16 March 2023 Hoss initiated these proceedings by filing a claim seeking, among other things, a declaration that Alexandra holds the shares in ADA and the Property in trust for Hoss, and for orders that Alexandra transfer the shares in ADA to Hoss.

6 ECI filed a defence and counterclaim. The counterclaim joined Jacob, Dr Pio Valetta, a Maltese lawyer for Jacob (“ Dr Valletta”), Vertical Malta, Mr Fava and Helmut Goerling as defendants by way of counterclaim. The counterclaim sought declarations that ECI is the sole legal and beneficial owner of the shares in ADA and that the Documents are void and of no effect. The counterclaim also sought an injunction prohibiting the defendants to the counterclaim from commencing, pursuing, prosecuting, continuing, taking any steps otherwise participating in any proceedings in any jurisdiction in respect of or connected with the ADA shares and/or the Property.

7 Alexandra had serious concerns about the authenticity of the Documents and on 9 May 2023 ECI served a notice to inspect under CPR 28.16 requiring Hoss to make the original forms of the Documents available for inspection within seven days. Hoss did not make the Documents available and on 21 June 2023 this Court made an inspection order requiring Hoss to make the Documents in their original form available for inspection at the offices of Hoss' Maltese lawyers, Messrs. Farruga, Gatt & Falzon (“ FGF”). Dr Valletta is a partner in FGF.

8 On 25 August 2023 Hoss agreed that the inspection could occur on 9 – 10 October 2023. However, Hoss did not comply with the inspection order on 9 – 10 October 2023, or at all. Instead, it took the following steps in relation to the BVI proceedings:

• (1) on 18 September 2023 it terminated its relationship with its BVI legal practitioners, Sterlington;

• (2) on 19th September 2023 it filed a notice of discontinuance of the BVI claim; and

• (3) on 20th September 2023 it filed fresh proceedings against ECI in Malta for substantially the same relief as in the BVI claim, also relying on the Documents (“the Maltese Action”).

9 In light of the developments summarised in the preceding paragraph, ECI applied ex parte and on an urgent basis in these proceedings for a temporary anti-suit injunction restraining Hoss from pursuing, prosecuting, continuing or taking any steps in or otherwise participating in the Maltese Action, or from commencing or taking any steps in any other proceeding concerning the shares in ADA (“ the ASI”). The application was granted initially on the papers on 5 October 2023 with a return date on 6 October 2023. The ASI was served on Hoss. Late in the day on 5 October 2023 Hoss' new legal practitioners, Ogier BVI (“ Ogier”), filed and served a notice of acting on behalf of Hoss and a second notice of discontinuance of the proceedings. Learned counsel from Ogier appeared for Hoss at the return date hearing on 6 October and opposed the continuation of the ASI. Mangatal J heard both sides and made orders that:

• (1) the two notices of discontinuance filed by Hoss be set aside and confirmed that the BVI proceedings had not been brought to an end;

• (2) continued the ASI;

• (3) required Hoss to make the Documents in their original form available for inspection by ECI's representatives at the offices of FGF in Malta between 8:30 am and 4:00 pm on the 8 and 9 October 2023, and to permit ECI's representatives to take photographs, images or other copies of the original forms of the Documents and make a room with natural light and a colour photocopier available to ECI's representatives for the duration of the inspection. This is the 6 October Order.

10 A penal notice in the usual form was endorsed on the 6 October Order expressly warning Hoss that any failure to comply with the terms of the Order could result in a finding of contempt of court (“ the Penal Notice”) and warning Jacob, Dr. Goerling and Dr. Valletta (by name) that they could be fined or imprisoned if they knowingly did anything that helps, causes or permits Hoss to breach the terms of the Order.

11 There was no appeal against the 6 October Order.

12 Hoss' legal representative at the inter partes hearing on 6 October 2023, Ogier, received a copy of the 6 October Order directly from the Court on the same date. In addition, ECI's legal representative, Walkers BVI (“ Walkers”), arranged for a copy of the 6 October Order to be served by hand on Ogier on Monday 9 October 2023. Upon receiving sealed copies of the 5 October Order and 6 October Order from the Court on 12 October 2023, Walkers served copies of both Orders on Hoss by hand the same date.

13 On 6 October 2023 at 16:24 Walkers sent the 6 October Order to Jacob, Dr Valletta and Dr Goerling by email. Jacob acknowledged receipt of the 6 October Order and by email on 8 October 2023 to Walkers said that he could not open the attachments. Further, that he disputed service of the Order and the BVI court's jurisdiction and referred to the transfer of rights under the Documents with the result that possession of the Documents had reverted to Ruth and Vertical Malta as of 7 October 2023. He also said that ECI was no longer entitled to inspect the Documents.

14 Walkers also arranged for a copy of the 6 October Order to be delivered by hand to Dr Valletta at FGF's offices in Malta on 6 October 2023. ECI had not been able to identify Jacob's ordinary place of residence and was unable to effect personal service of the 6 October Order on him.

15 Walkers also sent copies of the 6 October Order to Jacob, Dr Valletta, Mr. Fava, and lawyers...