Multibank Fx International Corporation v Von Der Heydt Invest S.A. — (Conditional Applications)

• Jurisdiction: British Virgin Islands
• Judge: Farara JA
• Judgment Date: 07 July 2023
• Judgment citation (vLex): [2023] ECSC J0707-3
• Docket Number: BVIHCVAP2022/0008 BVIHCMAP2022/0032
• Court: Court of Appeal (British Virgin Islands)

Between:

Multibank FX International Corporation

Applicant/Intended Appellant

and

Von Der Heydt Invest S.A.

Respondent

Heard together with:

Between:

Multibank FX International Corporation

Applicant/Intended Appellant

and

Von Der Heydt Invest S.A.

Respondent

Heard together with:

Between:

MEX Clearing Limited

Claimant

and

MEX Securities S.A.R.L.

First Defendant

Multibank FX International Corporation

Second Defendant/Applicant/Intended Appellant

Von Der Heydt Invest S.A.

Third Defendant/Respondent

Naser Taher

Ancillary Defendant

Before:

The Hon. Mr. Mario Michel Justice of Appeal

The Hon. Mr. Trevor Ward Justice of Appeal

The Hon. Mr. Gerard St.C Farara Justice of Appeal [Ag.]

BVIHCVAP2022/0008

BVIHCVAP2021/0009

BVIHCMAP2022/0032

THE EASTERN CARIBBEAN SUPREME COURT

IN THE COURT OF APPEAL

Motions for conditional leave to appeal to His Majesty in Council — Section 3(2)(a) of the Virgin Islands (Appeals to Privy Council) Order 1967 — Whether the questions involved in the proposed appeals by reason of their great general or public importance or otherwise, ought to be submitted to His Majesty in Council — Fortification of cross undertaking in damages — Type of loss — Whether the Court erred in holding that the only type of loss that was relevant to the question of fortification was loss caused by the coercive or preventive effect of the Worldwide Freezing Order (“WFO”) — Disentanglement of losses — Whether the Court erred in concluding that it was necessary to ‘disentangle’ losses caused by the WFO from losses caused by the underlying proceedings at this stage — Intelligent estimate of loss — Whether the Court erred in finding that no intelligent estimate of the loss could be made from the evidence for the purposes of ordering fortification — Discharge of WFO — Standing — Whether the Court erred in determining that the respondent had standing at the ex parte hearing to obtain an injunction on behalf of parties that it did not then represent on the basis that it would in the future be entitled in a representative capacity — Whether the Court took into account irrelevant matters and/or failed to take into account relevant matters in concluding that the elements for the continuation of the WFO had been made out — Risk of dissipation — Whether the Court failed to properly assess the issue of risk of dissipation and that such risk must be established by solid evidence — Just or convenient — Whether the judge having failed to consider whether it was just or convenient to grant the WFO the Court erred in concluding de novo that it was just and convenient at the ex parte stage to grant the WFO — Duty of full and frank disclosure and fair presentation — Whether the Court erred in declining to deal with the question of fair presentation in relation to the issue of fortification and to make reasonable inquiries at the ex parte stage — Representative party — CPR Part 21 — Conflict of interest — Whether the Court erred in adopting too narrow an approach in considering the issue of conflict of interest in VDHI — Whether the court failed to properly consider the potential conflict of interest between the Noteholders and their representative VDHI and the Noteholders and VDH AG, a company closely associated with VDHI — Irrelevant factors — Case management considerations — Whether the Court erred in finding that the judge did not base his decision to make the Representative Order purely or mainly on case management grounds

On 14 ^th March 2023, Multibank FX International Corporation (“MBFX”) filed three separate applications for conditional leave to appeal to His Majesty in Council against the individual judgments and orders of this Court dated 21 ^st February 2023, made in three separate but related appeals. Each of the three applications was made on the ground that the proposed grounds of appeal to be relied on, if permission to appeal is granted, raise questions or issues which by reason of their great general or public importance or otherwise, ought to be submitted to His Majesty in Council.

MBFX sought conditional leave to appeal against the Fortification Judgment on the grounds that the Court of Appeal erred in holding that the only type of loss that was relevant to the question of fortification was loss caused by the restraining or preventive provisions of the WFO; concluding that it was necessary to ‘disentangle’ losses caused by the WFO from losses caused by the underlying proceedings generally at this stage; and concluding that on the evidence, the Court could not (even applying a liberal approach) come to an intelligent estimate of loss for the purposes of ordering fortification.

MBFX sought conditional leave to appeal against the WFO Discharge Judgment on the grounds that the Court of Appeal erred in concluding that Von Der Heydt Invest SA (“VDHI”) had standing to and was in all the circumstances entitled to obtain a freezing injunction on behalf of parties that it did not represent, on the basis that it would in the future be entitled to pursue claims in a representative capacity; finding that the basis upon which the WFO was granted was that an EGM of Noteholders was to be held to appoint VDHI as representative for the purposes of these proceedings; and in taking into account irrelevant matters and/or failing to take into account relevant matters in respect of the basic elements for granting a WFO.

MBFX also sought conditional leave to appeal against the Representative Judgment on the ground that, the Court of Appeal limited its consideration of the question of conflict of interest to whether there was a conflict of interest within the confines of the proceedings, and in concluding that the judge's approach was correct because, while VDHI and VDH AG may have a conflict of interest with the Noteholders (who VDHI purports to represent), they have the same interest in pursuing this litigation.

VDHI strongly opposed all three of these applications and asserted that none of the proposed grounds of appeal gave rise to issues or questions of great general or public importance or which otherwise ought to be submitted for consideration by the Privy Council. Accordingly, the applications for conditional leave to appeal to His Majesty in Council ought to be dismissed.

Held: dismissing the applications, except to the extent set out at paragraph 154(1) below to which permission to appeal to His Majesty in Council is granted, that:

• 1. Section 3(2)(a) of The Virgin Islands (Appeals to Privy Council) Order 1967 (“1967 Order”) stipulates that conditional leave to appeal to the Privy Council may be granted if the matter in issue is one which involves a question or issue of ‘great general or public importance’; or if the issue, while not being considered one of great general or public importance, is ‘otherwise’ of such significance that it ought, nevertheless, to be submitted to the highest appellate body for its guidance and determination. An applicant for conditional leave to appeal to His Majesty in Council is required to establish that the grounds of the proposed appeal satisfy one or the other of the limbs of the section. In seeking to do so, a particular ground advanced need only satisfy one of the two limbs of the section. Alternatively, certain grounds may fail to satisfy either limb while others may satisfy one or both limbs. In such circumstances, leave to appeal should be granted only with respect to the proposed grounds of appeal which satisfy a limb of section 3(2)(a).

  The Virgin Islands (Appeals to Privy Council) Order 1967 S.I. No. 234 of 1967 applied; Renaissance Ventures Ltd et al v Comodo Holdings Ltd BVIHCMAP2018/0005; BVIHCMAP2018/0008 (delivered 8th October 2018, unreported) followed; Imran Siddiqui and others v Athene Holding Limited [2019] CA (Bda) 15, Civ, 22nd November 2019, unreported considered.

• 2. MBFX's first intended ground of appeal against the Fortification Judgment, that the Court of Appeal erred in holding that the only loss which it could take into account for the purposes of fortification was loss caused by the ‘coercive or preventative effect of the freezing injunction’, does not raise a difficult or serious question of law, or point to an area of law in dispute, or a legal question the resolution of which poses dire consequences for the public. Likewise, this proposed ground of appeal does not concern a principle of law which is not settled at a level which is authoritative and/or highly persuasive, or with respect to which there are differing views or conflicting dicta either from this Court or the other courts of the region, or in the United Kingdom and the wider Commonwealth. It also does not relate to the interpretation or application of a procedural rule, or the draconian effect of a rule of court, such that it can be said to satisfy the ‘or otherwise’ requirement under section 3(2)(a). The Court of Appeal relied on settled principles of causation in relation to recoverable loss or likely loss under the cross-undertaking in damages. The principle enunciated by the Court that to be recoverable, the loss must be caused by the ‘coercive or preventive effect of the freezing order’, is a well-established and accepted criterion of causation, and the Court was simply identifying this criterion before applying it to the facts of the instant matter.

  Martinus Francois v The Attorney General of Saint Lucia Civil appeal No. 37 of 2003 (delivered 7th June 2004, unreported) followed; Renaissance Ventures Ltd et al v Comodo Holdings Ltd BVIHCMAP2018/0005; BVIHCMAP2018/0008 (delivered 8th October 2018, unreported) followed; Pacific Wire & Cable Company Limited v Texan Management Limited et al BVIHCVAP2006/019 (delivered 6th October 2008, unreported) followed; Harley Street Capital Limited v Tichigirinski [2005] EWHC 2471 (Ch) applied; PJSC National Bank Trust v Mints [2021] EWHC 1089 Comm applied; Energy Venture Partners Ltd v Malabu Oil and Gas Ltd ...