IsZo Capital LP v Nam Tai Property Inc. et Al
| Jurisdiction | British Virgin Islands |
| Judge | Mangatal J |
| Judgment Date | 28 September 2023 |
| Judgment citation (vLex) | [2023] ECSC J0928-1 |
| Docket Number | CLAIM NO. BVIHC (C0M) 2020/165 |
| Court | High Court (British Virgin Islands) |
CLAIM NO. BVIHC (C0M) 2020/165
EASTERN CARIBBEAN SUPREME COURT
IN THE HIGH COURT OF JUSTICE
COMMERCIAL DIVISION
Mr. John Machell, KC with him Mrs. Kimberly Crabbe-Adams and Ms. Jhneil Stewart for the Ancillary Claimant
Mr. David Chivers, KC with him Miss Arabella di Iorio, Mr. Jack Rivett, and Miss Jodi-Ann Stephenson for the Ancillary Defendant
This matter came on for hearing before me on 28 March 2023 pursuant to the order of Jack J (Ag.) dated 8 June 2022 (“ the June Order”) to assess the loss and damage recoverable by the Applicant, West Ridge Investment Company Limited (“ the Applicant”) from Nam Tai Property Inc (“ the Company”), pursuant to a Deed of Indemnity dated 14 December 2020 (“ the Deed”) and to deal with interest.
There have been various related proceedings, and different stages to this matter, but the essential procedural background is as follows.
The underlying proceedings concern a requisition for the holding of a meeting of the Company's shareholders and the validity of two private investments in public equity entered into by the Company (“ the Placements”):
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(1) The allotment of 16,051,219 shares by the Company to Greater Sail Limited (“ Greater Sail”) for a subscription amount of US$150 million; and
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(2) The allotment of 2,603,366 shares to the Applicant for a subscription amount of US $23,820,798.90 (“ the Subscription”).
On 13 October 2020, IsZo Capital LP (“ IsZo”), a shareholder in the Company, issued proceedings challenging the validity of the Placements and seeking an order requiring the Company to convene a meeting of members.
On 26 November 2020, the Applicant issued an Ancillary Claim against the Company by which the Applicant sought an indemnity and/or restitution and/or equitable compensation in the event of the Subscription being set aside.
On 14 December 2020, the issues between the Applicant and the Company were compromised on the terms of the Deed. In one of the Recitals to the Deed, it is set out (at (I)) that “West Ridge does not wish to participate further in the Proceedings and proposes that the Proceedings against it and the Ancillary Claim be stayed on terms that Nam Tai will indemnify West Ridge” on the terms set out in the Deed. Also that Nam Tai has agreed to indemnify West Ridge on those terms.
On 15 December 2020, the parties filed a Tomlin Order by Consent dated 14 December 2020 which provides that the Ancillary Claim be stayed except for the purpose of bringing into effect the terms of the Deed.
On 3 March 2021, the Commercial Court, Jack J (Ag.), ordered that the allotment of shares to the Applicant and Greater Sail be set aside and that the share register be rectified (“ the First Instance Judgment and Order”).
The setting aside of the subscription triggered liability under the Deed. Following the hand down of the First Instance Judgment and Order, the Applicant served demands on the Company for payment of the money due pursuant to the Deed. The Company did not satisfy the demands and the Applicant issued an application for judgment on 17 May 2021 (“ the Judgment Application”).
This application was adjourned by the Court pending the outcome of an appeal against the First Instance Judgment and Order. On 4 October 2021, the Court of Appeal upheld the First Instance Judgment and Order and dismissed the appeal.
Following the decision of the Court of Appeal, the Application was listed to be heard on an urgent basis on 6 December 2021. At the hearing on 6 December 2021, the Court granted the Company's request for an adjournment. The Application was relisted for 27 January 2022 but the Company requested a further adjournment so it could challenge the validity of the Deed.
By order dated 27 January 2022, Jack J (Ag.) directed the Company to file and serve Points of Claim challenging liability under the Deed by no later than Friday 25 February 2022. On 25 February 2022, the Company filed a Defence and Counter-claim. Following a hearing on 16 March 2022, Jack J (Ag.) gave judgment on 7 April 2022 (“ the Judgment”) upholding the validity of the Deed. On 8 June 2022, the Court entered judgment against the Company for the subscription amount (“ the Subscription Sum”) and ordered that the issues of costs and expenses (together, “ Costs”) and interest be resolved at a damages assessment hearing. The Company appealed against the Judgment.
The appeal was heard on 10 February 2023, with judgment reserved. Prior to the hearing before me, the Company had invited the Applicant to agree to adjourn the hearing until after the parties had received judgment in that appeal. This was on the basis that, in the Company's view, if the appeal were allowed, the time and costs involved in this hearing would have been wasted. The Applicant rejected that proposal.
I enquired about this point in Court and Mr. Machell KC's position was that the Company had not made an application before me for an adjournment, and that in any event, even were the appeal to succeed, the points raised in this hearing and the application before me would nevertheless need to be resolved. Further, that the Applicant would not wish to have this application delayed. I decided that the assessment should proceed.
As it turns out, before I was able to deal with my ruling in this matter, on 27 July 2023 the Court of Appeal delivered its reserved judgment, dismissing the Appeal, with costs to the Applicant to be assessed by the court below unless agreed within 21 days.
It should be noted that references to the CPR here are to the ECSC CPR 2000, which were the Rules applicable at the time of the hearing. Part 75 of the CPR 2023, expressly seems to preserve the applicability of the 2000 Rules. In any event there has been no change / material change to the terms of either Rule 65.2(1) or Rule 8.6(4) and (5), or to any of the other CPR Rules referred to in this judgment.
The issues at this hearing are essentially as follows:
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(1) Whether the Company should be ordered to pay interest on the Subscription Sum and/or Costs pursuant to (a) the Court's inherent jurisdiction or (b) as damages, and, if so, at what rate and from what date or dates. This issue arises from the fact that on 8 June 2022, judgment was entered on the Judgment Application in favour of the Applicant against the Company for the Subscription Sum; and
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(2) The quantum of Costs payable by the Applicant to the Company pursuant to the Deed. In that regard, this will require the Court to construe the terms of the Deed. The main dispute is whether the burden is on the Company to establish unreasonableness, or whether the burden is on the Applicant to prove reasonableness. There is also a very important dispute as to the interplay between the Deed and the CPR Rules on costs. The Company has raised a number of objections to a large proportion of the Costs claimed. These objections can be succinctly grouped into the following bases (referred to in the Company's skeleton argument as “headline points”):
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(a) the costs claimed by the Applicant are disproportionate, such that costs should only be allowed insofar as the Applicant satisfies the Court that they were both necessary and reasonable;
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(b) the Applicant's claim for the costs of the hearing on 7 June 2021 should be refused, in accordance with paragraph 3 of the Order of Jack J (Ag.) dated 28 June 2021;
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(c) the Applicant's claim for the costs of its amendments to the Judgment Application and for making its application to amend the Judgment Application should be refused, pursuant to paragraph 3 of the Order of Jack J dated 3 rd November 2022;
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(d) The costs of related proceedings are irrecoverable;
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(e) Excessive number of fee earners, duplication of costs, excessive costs and charge-out rates;
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(f) Administrative and unnecessary costs; and
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(g) Counsel's Fee Notes, Sidley Austin's Fees and Harneys' Professional Fees and Disbursements.
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It was conceded by the Applicant that its claim regarding the costs of the Company's appeal against the decision of Jack J (Ag.) should be dealt with after the decision of the Court of Appeal and dealt with separately. As the decision of the Court of Appeal has now been delivered, I would ask the parties to discuss and deal with this issue themselves, based upon my rulings on other relevant headline points. The parties need only revert to the Court if they are unable to work those costs out. This is in the interests of ensuring a proper allocation of the Court's resources, and in acknowledgement of the parties' duty to cooperate with the Court in fulfilling the overriding objective of dealing with cases justly.
It is settled law that the BVI Court has jurisdiction to award pre-judgment interest on general damages at a rate it considers appropriate from the date of the loss to the date of judgment. Interest payable under the Court's jurisdiction is awarded to compensate claimants for being kept out of money which ought to have been paid to them.
The Applicant suggests that interest should be awarded at the rate at which persons with the general attributes of the Applicant could be taken to have borrowed, which has been taken to be one percent above the base lending rate. This follows a long line of cases, such as Tate & Lyle Food and Distribution Ltd. v Greater London Council. 1 Learned Counsel...
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