Magwitch LLC v Pusser's West Indies Ltd
| Jurisdiction | British Virgin Islands |
| Judge | Wallbank, J. |
| Judgment Date | 15 April 2019 |
| Judgment citation (vLex) | [2019] ECSC J0415-4 |
| Docket Number | CLAIM NO. BVIHCM 2017/0006 |
| Court | High Court (British Virgin Islands) |
| Date | 15 April 2019 |
EASTERN CARIBBEAN SUPREME COURT
IN THE HIGH COURT OF JUSTICE
COMMERCIAL DIVISION
CLAIM NO. BVIHCM 2017/0006
Mr. Michael Fay, QC, for the Claimant
Mr. Sydney Bennett, QC, with him Ms. Pauline Mullings for the Defendant
Wallbank, J. (Ag.): This judgment concerns an application for summary judgment brought by the claimant and an application for reverse summary judgment and/or for the claim to be struck out brought by the defendant. The claimant's application asserts that there is no realistic defence to the claim. The defendant's application, and amended defence, asserts that the claim is statute barred, being filed out of time. If the defendant is correct, that is the end of the matter. It is therefore appropriate to treat limitation as a preliminary legal issue. For the reasons below I conclude that the claim is indeed statute barred.
The following is a simplified background summary. The issues proliferated during these interlocutory proceedings, but there is no need for each of these to be addressed in order to determine these applications.
On 20 th January 2017 the claimant, Magwitch LLC (‘Magwitch’), filed a claim form bringing a claim against the defendant, Pusser's West Indies Limited (‘PWI’), together with a statement of claim. Magwitch filed an amended statement of claim on 11 th July 2017.
The claimant alleged the following. Magwitch is a limited liability company registered in New York, United States of America. A company called Pusser's Ltd (‘Ltd’) was incorporated in the Territory of the Virgin Islands (‘TVI’) on 25 th May 1979. Up until 30 th June 2003 Ltd owned and operated the Pusser's business in the TVI. This is a beverage, restaurant and retail business related to a brand of rum of the same name. PWI was incorporated on 11 th January 2002. On 30 th June 2003 PWI assumed ownership and control of the Pusser's business in the TVI. There were other companies in what can loosely be called the Pusser's group, incorporated and operating in the United States of America. One of these was a Florida corporation, called Pusser's Inc. (‘Inc.’)
On a number of dates from 1 st July 2003 Inc. paid various sums to PWI. The claimant claims that these were advanced by way of loan. The claimant says the best particulars for the alleged loans derive from an unaudited balance sheet of Inc. dated 27 th June 2004, as well as subsequent daily cash flow reports and messages. These were prepared by PWI's and Inc.'s financial comptroller, Mr. Kert Tennikait.
Magwitch says the balance sheet records show that there is a net balance due from PWI to Inc., as at 30 th June 2004, of US$1,800,411. Furthermore, the daily cash flow reports and messages record that further sums were advanced, bringing the total for sums advanced from Inc. to PWI since 1 st July 2003 to at least US$2,470,167.
Magwitch claims that PWI has admitted and/or averred, through affidavit evidence of Mr. Tennikait filed on 14 th March 2017 (Mr. Tennikait's first affidavit), that the loans were repayable by transfers of goods, services, cash or things of value going from PWI to Inc. The claimant contends that it follows as a matter of law that the loans were not repayable immediately they were made, but that they only became repayable in cash on Inc. making a demand that the loans be repaid. The claimant contends, further or alternatively, that the loans became repayable, as a matter of inferred fact and/or law, within a reasonable time of a demand being made. The claimant claims a reasonable time would be fourteen days of a demand being made.
The claimant further states that it obtained a judgment against Inc. and Ltd in Florida on 17 th November 2009 for a sum of approximately US$2.3million. On 29 th November 2011 the Florida court appointed a receiver over Inc. On 14 th May 2012 the Florida court authorized the receiver to sell all Inc.'s claims and choses in action against PWI to Magwitch. This transfer and assignment was effected pursuant to a bill of sale dated 30 th October 2012. Magwitch relies upon this assignment as the basis for this claim against PWI.
The claimant claims that it demanded repayment of the loans on or about 14 th February 2013 and that PWI has failed to repay any of them. The specific event the claimant relies upon as constituting its demand was its commencement of legal proceedings on that date in the Florida State Court against PWI to recover the alleged loans or debts.
In terms of relief prayed for in the amended statement of claim, save for a general prayer for further or other relief and costs, there are four other heads of the prayer. These specifically concern and are consequent upon the claimant's claim in debt against the defendant for repayment of the alleged loans. Consequently, if PWI is correct that the claim was filed out of time, the entire claim should be struck out.
On 2 nd March 2017 PWI applied for summary judgment and/or for the claim be struck out on the basis (amongst others) that the claim is statute barred.
By section 4 of the Limitation Ordinance, Chapter 43 of the Revised Laws of the Virgin Islands (‘the Limitation Ordinance’), no action founded on simple contract and no action for an account shall be brought after the expiration of six years from the date on which the cause of action accrued.
On PWI's case, any loans it may have made to Inc. were repayable immediately upon the loans being made. The last date of the loans pleaded by the claimant is 14 th April 2005. This is on a sensible reading of the amended statement of claim. It is true that paragraph 9(a)(i) of that pleading refers to amounts due as at 30 th June 2013, but that must be an error, because paragraph 9(a) states that those amounts were reflected in a balance sheet dated 27 th June 2004, which would be impossible. It is uncontroversial that the claimant's claim, and its application for summary judgment, are based upon that 2004 balance sheet. On PWI's case, therefore, the claim became statute barred on or about 15 th April 2011. This underlines the importance of the issue whether, as the claimant argues, the loans were repayable a reasonable time after demand for repayment has been made.
PWI's evidence in support of this application was first an affidavit of Mr. Charles Tobias, the moving spirit behind the Pusser's enterprise. This was filed on 2 nd March 2017. In this, Mr. Tobias takes issue with Magwitch's characterization of the commencement of the Florida proceedings as a demand for repayment of a loan. He says no mention is made in those proceedings of any loan, merely of an alleged debt. He argues that Magwitch's reliance on the issue of those proceedings as a demand is a ‘gimmick’ in an attempt to re-set the clock on the ‘obvious’ six-year statutory limitation period applicable to these claims. He says that Mr. Tennikait would address the detail of Magwitch's allegations concerning the sums claimed with reference to PWI's accounting information and materials.
A few days later, on 15 th March 2017, PWI filed an affidavit dated 14 th March 2017 of Mr. Tennikait, his first affidavit. This was only two and a half pages in length and exhibited no documents. After explaining some of the history behind the companies, Mr. Tennikait stated:
“8. Any intercompany transactions involving transfers of goods, services, cash or other things of value from one company to the other since I took on the role of comptroller [from about 2000], have been consistently recorded and were never booked, regarded, or treated as “loans payable on demand.” The first time I heard them described that way was in Magwitch's statement of claim against PWI filed in the BVI. Rather they were always considered and treated as liabilities of the receiving company that could be offset by transfers of goods, services, cash, or other things of value going the other way.
9. I have been shown and have read, a copy not only of Magwitch's statement of claim but also of its response to PWI's request for further information and can say, based on the foregoing, that the notion that the sums claimed by it were transfers made by way of loan, let alone as loans payable on demand, is quite misleading and simply has no basis in reality or in fact.” [Emphasis added.]
Magwitch relies upon this statement, and the emphasized part in particular, as an admission that the amounts claimed constituted liabilities due from PWI to Inc. Magwitch then purports to apply a legal or factual inference deriving from English law authorities to contend that they should be treated as loans repayable within a reasonable time after demand for repayment is made.
On 5 th April 2017 Magwitch filed an affidavit responding to PWI's two affidavits. Magwitch's affidavit was by its manager, Mr. Lloyd De Vos. Mr. De Vos maintained that the proceedings commenced in 2013 against PWI in Florida were consistent with the present claims and that they had been dismissed for lack of personal jurisdiction without any consideration of the substantive merits.
On 14 th June 2017 Magwitch filed a second affidavit of Mr. De Vos. In this he seeks to address an apparent discrepancy in the balance sheet of Inc. for 27 th June 2004. In that balance sheet there was a section listing ‘Current Assets’ and ‘Current Liabilities’ of Inc. respectively. In the ‘Current Assets’ section, there is a line stating ‘Due from Pusser's Inc. and Pusser's Ltd’. In the ‘Current Liabilities’ section there was a line stating ‘Due to Pusser's Inc. and Pusser's Ltd.’ The apparent discrepancy is that it would make no sense for Inc.'s balance sheet to show amounts due to and from itself. Mr. De Vos gives evidence that he brought this discrepancy to Mr. Tennikait's attention and that the latter indicated to him that...
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