Michael Wilson & Partners Ltd Applicant v (1) Temujin International Ltd (2) Temujin Services Ltd (3) Hakkisan Finance Corporation Ltd (4) Myrzaly Ltd (5) Norgulf Holdings Ltd (6) Incomeborts Ltd (7) Tigerkhan Ltd Respondents

• Jurisdiction: British Virgin Islands
• Judge: HARIPRASHAD-CHARLES J
• Judgment Date: 11 August 2008
• Neutral Citation: VG 2008 HC 21
• Judgment citation (vLex): [2008] ECSC J0811-1
• Court: High Court (British Virgin Islands)
• Docket Number: Claim No. BVIHCV2006/0307
• Date: 11 August 2008

[2008] ECSC J0811-1

THE EASTERN CARIBBEAN SUPREME COURT

IN THE HIGH COURT OF JUSTICE

(CIVIL)

Claim No. BVIHCV2006/0307

Between:

Michael Wilson & Partners Limited

Applicant

and

(1) Temujin International Limited

(2) Temujin Services Limited

(3) Hakkisan Finance Corporation Limited

(4) Myrzaly Limited

(5) Norgulf Holdings Limited

(6) Incomeborts Limited

(7) Tigerkhan Limited

Respondents

Appearances:

Mr James Drake of 7 King's Bench Walk, London and with him Mr Philip Kite and Mr Andrew Thorp of Harney Westwood and Riegels for the Applicant

Mr David Lord of 3 Stone Buildings, London and with him Mr Richard Evans of Conyers Dill & Pearman for the 3 ^rd and 4 ^th Respondents

Mr Samuel J. Husbands and Ms Julie Engwirda of Walkers BVI for the Receiver, Mr William Tacon

In attendance, Ms Sarah Caroline Rees, solicitor of Blake Lapthorn Tarlo Lyons, London and Mr William Tacon, the Receiver

HARIPRASHAD-CHARLES J

1 "Everything has an end" is a variant to the old English proverb that "all good things must come to an end." In this case, this may not be wholly accurate but the Court is comforted that there has been a marked reduction in the torrent of applications which flooded the BVI Courts over the last 20 months as the parties have shifted their focus and legal skirmish to the New South Wales Court which is seized of the substantive proceedings.

2 Before me now are two discrete but related applications by the Applicant, MWP for an order that unless and until the 3 ^rd Respondent, Hakkisan and the 4 ^th Respondent, Myrzaly [collectively "the Respondents"] comply with the freezing orders and co-operate with the court-appointed Receiver, they should be debarred from defending or taking any further steps in these proceedings. It appears that these applications may have been triggered not only by the Receiver's Second Report of 18 September 2007 but also by the fact that the Respondents have applied for the striking out of the claims against them and/or (reverse) summary judgment. The Court heard the two applications in December 2007. It was agreed that judgment should be reserved until the hearing and determination of the applications to strike out the claim: the logic being that if the claims are struck out, the receivership order will be set aside and the Receiver discharged with immediate effect. Thereafter, there would be no need for the Respondents to comply with any orders if the Court were to find that there was non-compliance. The applications to strike out commenced on 13 December 2007 but unfortunately were not completed until mid-March 2008: Having dismissed those applications, 1 the Court can now hand down this judgment.

3 The Myrzaly notice of application will be dealt with first since it was filed before the Hakkisan notice of application. Both applications are supported by affidavits of Michael Earl Wilson ("Mr Wilson") and the Reports of the Receiver.

Chronological history

4 On 30 January 2007, this Court made an ex parte order freezing the assets of Myrzaly. It ordered that Myrzaly must not remove from the British Virgin Islands ("the BVI") or in any way dispose of, deal with or diminish the value of certain assets which are defined as Specific Assets and its assets (other than the Specific Assets) which are in the BVI up to the value of

US$30 million. 2 Paragraph 8 of the Order requires Myrzaly to provide within three days of being notified of the Order (a) all their assets worldwide, whether in their own name or not and whether solely or jointly owned, giving the value, location and details of all such assets and (b) the nature details and location of the Specific Assets. Myrzaly must also within seven days after being notified of the Order, swear and serve on MWP's solicitors an affidavit setting out such information

5 The Freezing Order was made returnable on 28 February 2007. The Order was served promptly on Mossack, the registered agent of Myrzaly. Myrzaly did not comply with the Order. It did not provide MWP with the information nor did it swear the required affidavit. Additionally, it did not appear on the return date. On that date, Mr Lawrence Cohen QC, then Counsel for MWP, applied for the appointment of a receiver over the assets of Myrzaly. As a result of the disregard for the Freezing and Disclosure Orders, this Court appointed Mr Tacon as the Receiver over the undertaking and assets of Myrzaly.

6 The relevant paragraphs of the Receivership Order are set out below:

3. The Receiver shall take all steps which he considers necessary or desirable,including (without limitation) to:-

• (a) identify and secure the Myrzaly Assets

• (b) transfer into his own name any of the Myrzaly Assets including any shares or other rights in Max Petroleum plc or the proceeds of sale of such shares or any other asset into which they have been applied and, if necessary, to apply for the cancellation and replacement of all and any share certificates or other documents of title

• (c) investigate the affairs of Myrzaly for the purposes of the discharge of his duties under this Order and in order to cause Myrzaly to comply with other Orders made against it

4. The Receiver shall have the power to do all acts and things necessary for the purpose of complying with this Order including (without limitation) each of the following powers, namely to:

• (a) manage the business and affairs of Myrzaly;

• (b) require any director or officer or former director or officer of Myrzaly to supply all and any information and documents to him (in both a physical and electronic format) concerning the affairs of Myrzaly including the shareholder, director, pledgeholders and other registers of Myrzaly as well as its financial statements and books of account;

• (c) take control of all bank accounts and any other property included within the Myrzaly Assets;

• (d) supply to the Claimant all information which Myrzaly has been ordered to give to it and any other information which he shall think appropriate of expedient.

5. Myrzaly through its Sole Director and other officers shall cause to be forthwith delivered up and transferred to the Receiver any share certificates or other documents of title and its shareholder, director, pledgeholders and other registers, as well as all of its accounting and other books, records and dates.

6. The Receiver be authorized:

6.1 to take such steps as may seem to them [sic] to be appropriate for the purpose of getting in, recovering and preserving all assets;

6.2 …..

6.3 ….

6.4 to enter any premises of Myrzaly and have access to all documentation, files whether held electronically or not, and the cooperation of all employees, agents, consultants, contractors, sub-contractors and directors of Myrzaly with respect to their investigations;

6.5 to exercise all of the corporate powers of Myrzaly which would be vested in its Board of Directors save for power to defend these proceedings or other powers which the Court on an application on notice permits it to exercise.

9. The powers of the Receiver in relation to the Myrzaly Assets shall be vested in him to the exclusion of the powers of its Board of Directors and other officers save that the Board of Directors and other officers may cause Myrzaly to make applications and take other steps in these proceedings and otherwise with the permission of the Court."

7 The terms of the Order required Mr Tacon to provide a Report by Wednesday, 25 April 2007. On 23 March 2007, he lodged a Preliminary Report. Myrzaly made no application to vary or discharge either the Freezing Orders (that were continued on the return date) or the Receivership Order at this stage of the proceedings. The significant aspects of Mr Tacon's Report are:

• 1. He wrote to David Risbey on 2 and 8 March 2007respectively. He did not receive any response. As a result, he telephoned Mr Risbey who denied any knowledge of Hakkisan and Myrzaly.

• 2. He considered Mr Risbey's responses to be inadequate, misleading and deceitful as he had seen affidavits sworn by Mr Risbey as a director of Hakkisan as well as documents executed by him in that capacity.

• 3. He contacted a Mr Adrian Harvey, the Company Secretary at Max Petroleum, who initially stated that he had no record of either Hakkisan or Myrzaly but later recanted and indicated that he was advised that he could not provide him (Mr Tacon) with any further information.

• 4. He obtained information that the Max shares held by Hakkisan and Myrzaly were transferred out to ODL (Nominees) Limited ("ODL"). He is continuing his investigation.

• 5. He attached the statutory information for Myrzaly to his Report. The copy of register of directors shows that Mr Risbey was the director previously but he has been replaced by Tigakhan Limited ("Tigakhan") which in turn was replaced by Mr Ozusaogullari ("Mr Musa"). Tigakhan appears to operate from the address of Mr Risbey or his company in Zug, Switzerland.

• 6. He believes that neither the Register of Directors nor the Register of Members of Myrzaly are genuine records. His suspicion is premised on the following:

  • i. Mossack only received notification of the change in directorship of Myrzaly from Mr Risbey to Tigakhan after the freezing order was made.

  • ii. The Register of Directors purports to indicate that Mr Risbey ceased to be a director of Myrzaly in May 2006. However, the publicly available list of current directorships of Mr Risbey on 12 June 2006 included Myrzaly.

  • iii. The Register of Directors and the Register of Members do not appear to be genuine documents. They appear to be documents produced on a single occasion by a computer rather than document that are updated from time to time.

  • iv. As far as the letters of resignation are concerned, Mr Risbey's letter appears to have been adapted very slightly for the later resignation of Tigakhan. Further, there is no evidence in the file of the acceptance of the directorship by Mr Musa, the director...