Sempacher Foundation v Lark Services Inc.
| Jurisdiction | British Virgin Islands |
| Judge | Farara J |
| Judgment Date | 17 January 2020 |
| Judgment citation (vLex) | [2020] ECSC J0117-2 |
| Docket Number | CLAIM NO. BVIHC (COM) 2018/0027 |
| Court | High Court (British Virgin Islands) |
| Date | 17 January 2020 |
THE EASTERN CARIBBEAN SUPREME COURT
IN THE HIGH COURT OF JUSTICE
COMMERCIAL DIVISION
CLAIM NO. BVIHC (COM) 2018/0027
Mr. Andrew Willins and Mr. Ryan Hocking of Appleby for the Claimant
Mr. Robert Nader of Forbes Hare for the Defendants
Whether the claimant has standing to bring the Claim — whether it was permissible after the transition date to convert or to exchange bearer shares for registered shares under the BVI Business Companies Act, 2004 (BVIBC Act) — what is the legal effect of section 38(2) of the BVIBC Act and does it permit a company to convert or to exchange bearer shares for registered shares after the transition date — Is redemption of bearer shares the only remedy available after the transition date — Whether BVI law pursuant to s. 245 of the BVIBC Act or Swiss law or the law of another country applied to the transfer of ownership of the bearer share certificate on the relevant date — whether the transfer of the bearer shares to claimant was effective pursuant to a deed of appointment under Swiss law — whether the claimant received legal title to the bearer shares — whether legal title to the bearer shares remained with the person in Switzerland in physical possession of the share certificate — whether the person in physical possession of the share certificate became the custodian thereof under Swiss law pursuant to the Custodian Holding Agreement and legal title to the bearer shares was transferred to the claimant-whether there was a transfer of possession of the bearer share certificate to the claimant under Swiss law — whether at most the claimant became the beneficial owner of the bearer shares — whether the claimant became entitled under section 38(2) of the BVIBC Act and article 23 to have the bearer shares immediately converted to or exchanged for registered shares — what is the validity of various resolutions made by the registered agent, by the claimant as a member and by the first and second defendants as directors of the first defendant company — whether the claimant is an “aggrieved person” under s. 43 of the BVIBC Act — whether the claimant is entitled to an order for rectification of the register of members of the company to show it as the holder of registered shares — what reliefs are the claimant entitled to and can the court grant such reliefs as were not included in the Claim Form — what is the scope of the court's powers under section 20 of the Eastern Caribbean Supreme Court (Virgin Islands) Act.
Farara J (Ag): This action was commenced by Claim Form filed 16 February 2018. The Statement of Claim (also dated 16 February 2018) was first amended on 18 June 2018. A Defence was filed and served on behalf of all four Defendants on 19 September 2018. A Re-Amended Statement of Claim was filed and served on 20 August 2019.
Paragraph 5(i) of the Re-Amended Statement of Claim, by which the Claimant had originally pleaded that Attendus Trust Company AG (“Attendus”) held Bearer Share Certificate No. 2 in the Frist Defendant, Lark Services Inc. (“Lark BVI”) “on trust” for Curatus Trust Company (Mauritius) Limited (“Curatus”), was amended to state that Attendus held the said bearer share certificate “ as custodian” for Curatus. An Amended Defence was filed and served on 5 September 2019. It states, at paragraph 10, in response to the amended paragraph 5(i), that “ at all material times Attendus has been the legal owner of bearer share certificate number 2. The Claimant has at no time been the legal owner of bearer share certificate number 2. It is denied that [sic] Attendus held bearer share certificate number 2 as custodian for Curatus Trust Company (Mauritius) Limited (“Curatus”) or later as custodian for the Claimant. It is noted that the Claimant's Amended Statement of Claim pleaded, prior to re-amendment, that Attendus held the bearer share on trust for Curatus and then later on trust for the Claimant.” This issue, as to who held the legal title to Bearer Share Certificate No. 2 on or around 27 January 2004, is of some importance to the determination of this matter, and will be addressed in greater detail later in this judgment.
In the course of these proceedings, there have been several interlocutory applications, hearings and orders. On 22 March 2018 permission to serve the Claim Form and Amended Statement of Claim on the Second, Third and Fourth Defendants out of the jurisdiction was granted by Chivers J. On 22 November 2018 the Defendants' application for summary judgment striking out the Claim on the ground, inter alia, of lack of standing to bring the Claim, was dismissed by Wallbank J, with costs to the Claimants. On 14 February 2019 the said costs were assessed by Green J in the sum of $41,152.00. At that hearing, permission was given for the parties to adduce expert evidence of Swiss law “ in relation to the meaning and effect of the Custody Agreement dated 5 February 2004”. In fact, the correct description of that agreement, which will be used throughout this judgment, is the “Custodian Holding Agreement”.
The Defendants' interlocutory appeal from the dismissal of their application for summary judgment was dismissed by the Court of Appeal on 26 March 2019, with costs to the Claimant/Respondent to be assessed by a judge of the Commercial Division 1. The Defendants also made a ‘Barrell’ application on 5 April 2019, which was dismissed on 15 May 2019, and they were ordered to pay the Claimant's costs. Both of these costs orders were assessed by Adderley J on 12 June 2019 in the sum of $29,570,23 with respect to the dismissed interlocutory appeal, and $11,513.50 with respect to the dismissed ‘Barrell’ application. 2.
By an order of Jack J dated 31 July 2019 3, the Claimant was granted permission to rely on its Re-Amended Statement of Claim wherein at paragraph 5(i) the words “as custodian” were substituted for the words “on trust”. Permission was also granted for the Defendants to respond to this amendment. This is an issue of some significance, particularly as it relates to one of the two preliminary issues of standing raised by the Defendants at the trial. By the said order, Justice Jack also provided for the Claimant to rely on the expert evidence as to Swiss law of Dr. Balz Gross, and for the Defendants to rely on the expert evidence as to Swiss law of Ms. Carmen Oehri.
Various other orders and directions leading to and providing for the conduct of the trial were made by Jack J. These include an order for the Defendants' to provide a list of the documents held by the previous registered agent of Lark BVI, Patten, Moreno & Asvat (BVI) Limited (“PMA”), identifying which they say are not disclosable, and for Ms. Daphne Durrand to attend
In its Claim Form filed 16 February 2018, the Claimant seeks certain declaratory and injunctive reliefs, as well as orders pursuant to section 43 (rectification) of the BVI Business Companies Act 2004 (“the BVIBC Act”), and under the inherent jurisdiction of the court. The Claimant also seeks, “ subject to a case management directions from the Court”, certain orders pursuant to section 184I (unfair prejudice) of the BVIBC Act, and damages for conspiracy against the Fourth Defendant. In brief, at the core of its claim is an entitlement to have Bearer Share Certificate No.2 converted to or exchanged for registered shares in its name and, as a consequence thereof, to be registered as a shareholder of Lark BVI. The Claimant also seeks declarations as to the invalidity of certain resolutions purportedly passed in relation to Lark BVI by (i) the then outgoing “PMA directors”, and (ii) subsequently, by the Second and Third Defendants the “Moe Directors”, purportedly as directors or, alternatively, as de facto directors of Lark BVI, to, inter alia, appoint themselves as directors of Lark BVI, to remove directors appointed by the Claimant, to redeem the Claimant's bearer shares held by virtue of Certificate No. 2, to allot 9,900 ordinary shares in Lark BVI to the Fourth Defendant, Lark Services (Norway) AS (“Lark Norway”), and to transfer all of Lark BVI's assets represented by various patents and alleged claims to royalties and penalty interest to Lark Norway, a company owned by the Second Defendant's wife, and effectively managed and controlled by the Second and Third Defendants. These various resolutions and steps taken by the Second and Third Defendants in relation to Lark BVI, have precipitated the Claimant's section 184I application.
By their Amended Defence, the Defendants contend that (1) the Claimant has no standing or no proper standing to bring the Claim because: (a) it never obtained legal title to Bearer Share
Certificate No. 2; (b) Swiss law does not apply to the question whether the legal and beneficial title to Bearer Share Certificate No. 2 was transferred to the Claimant on or about 27 January 2004, and the proper law for determination of this issue is either BVI law or the law of Mauritius; (c) it was not possible or permissible, as a matter of BVI law, to convert the bearer shares held pursuant to Certificate No. 2 to registered shares after the Transition Date of 31 December 2009, so as to give to the Claimant an entitlement to be a registered...To continue reading
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