Conyers Offshore Case Digest (Issue No.11 April - December 2015)
The Offshore Case Digest offers readers a high level summary of the major commercial cases decided in Bermuda, the British Virgin Islands and the Cayman Islands between April 2015 and December 2015. Our goal is to provide a useful reference tool for clients and practitioners who are interested in the development of case law in each jurisdiction.
The Offshore Case Digest offers readers a high level summary of the major commercial cases decided in Bermuda, the British Virgin Islands and the Cayman Islands between April 2015 and December 2015. Our goal is to provide a useful reference tool for clients and practitioners who are interested in the development of case law in each jurisdiction.
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BRITISH VIRGIN ISLANDS<br />
INTERLOCUTORY APPEAL - DERIVATIVE PROCEEDINGS -<br />
INTERPRETATION OF SECTION 184C(2)(C) OF BVI BUSINESS<br />
COMPANIES ACT, 2004 (AS AMENDED) - MEANING OF ‘LIKELY’ IN<br />
WORDING ‘WHETHER THE PROCEEDINGS ARE LIKELY TO<br />
SUCCEED’ - APPEAL AGAINST FINDINGS OF FACT MADE BY<br />
LEARNED JUDGE<br />
Basab Inc. -v- Accufit Investment Inc. and Double Key International<br />
Limited Claim No. BVI HCMAP 2014/0020(November <strong>2015</strong>)<br />
The Appeal concerns the refusal by the Court to grant leave to the<br />
Appellant pursuant to Section 184C(2)(c) of the BVI Business<br />
Companies Act, 2004 (as amended) (the “BCA”) to commence<br />
derivative proceedings on behalf of the first Respondent, for what it<br />
contends was the sale at an undervalue of the shares in its wholly<br />
owned subsidiary.<br />
The Learned Judge’s refusal was based on his Judgment that the<br />
intention and effect of Section 184C(2)(c), was that for a claim to be<br />
”likely to succeed” it must be obvious, without any substantial<br />
consideration of or debate on the merits that it is likely to succeed and<br />
the proposed Claim must appear to the Court to be self-evidently<br />
strong without conducting an inquiry. He observed the application for<br />
leave under Section 184C was not an occasion for painstaking analysis<br />
of valuation or other evidence and based on a limited examination of<br />
the evidence found that the Appellant’s Claim was not likely to<br />
succeed.<br />
The Court of Appeal dismissed the Appeal. They found that the<br />
Learned Judge’s interpretation and application of Section 184C(2)(c)<br />
of the BCA was wrong because it seemed to be moving into the realm<br />
of requiring a strong likelihood or almost requiring certainty that the<br />
proceedings would succeed. Applying the case of Cream Holdings<br />
Limited and Others -v- Banjeree and Others [2004] UKHL 44, the<br />
Court found that the correct meaning of the phrase “whether the<br />
proceedings are likely to succeed” in Section 184C(2)(c) of the BCA<br />
was “whether it is more probable than not that the proceedings will<br />
succeed”. The Applicant was therefore not required to demonstrate<br />
that success was an absolute certainty, or that the probability of<br />
success was very strong. The Court further held that with regard to<br />
the level of examination of the evidence required in the present case,<br />
the threshold for the grant of leave to bring derivative proceedings –<br />
“whether it is more probable than not that the proceedings will<br />
succeed” – would require a full and proper examination of the<br />
evidence then before the Court. The Court further held that the<br />
potential nature of derivative claims, especially those that may be<br />
both complex and defended, did not predispose themselves to a<br />
cursory review and required the Court to evaluate the evidence before<br />
it and the arguments advanced by both parties in order to determine<br />
“whether the proceedings are likely to succeed”.<br />
However, having exercised its discretion afresh, the Court held that the<br />
evidence did not show that the proceedings were likely to succeed<br />
and dismissed the Appeal on that basis.<br />
INTERLOCUTORY APPEAL - CIVIL PROCEDURE RULES -<br />
APPELLANTS’ DEFENCE STRUCK OUT IN COURT BELOW BY<br />
LEARNED JUDGE FOR NON-COMPLIANCE WITH PREVIOUS ORDER<br />
OF COURT WHICH REQUIRED THAT COSTS BE PAID PRIOR TO<br />
LATE FILING OF DEFENCE - JUDGMENT ENTERED FOR<br />
RESPONDENT IN HER ABSENCE - WHETHER LEARNED JUDGE<br />
ERRED IN STRIKING OUT APPELLANTS’ DEFENCE AND ENTERING<br />
JUDGMENT FOR RESPONDENT IN HER ABSENCE - WHETHER<br />
STRIKING OUT OF DEFENCE AND ENTRY OF JUDGMENT BY<br />
LEARNED JUDGE WAS CONTRARY TO CIVIL PROCEDURE RULES<br />
(“CPR”) 27.2(3) AND RULES OF NATURAL JUSTICE<br />
Agnes Danzie et al -v- Cecil Anthony Claim No. SLUHCVAP<br />
<strong>2015</strong>/0009 (<strong>December</strong> <strong>2015</strong>)<br />
This Appeal is against the decision of the Court below to strike out a<br />
defence following the failure by the Respondent to satisfy an Order<br />
that costs be paid prior to the filing of its defence, and to enter<br />
summary judgment in the Respondent’s absence without taking<br />
evidence.<br />
In allowing the Appeal, the Court of Appeal held that while Civil<br />
Procedure Rule (“CPR”) 26.3(1)(a) gave the Court a discretion to strike<br />
out a statement of case or part of one where it appears to the Court<br />
that there has been a failure to comply with a rule, practice direction,<br />
order or direction given by the Court in the proceedings, it is a<br />
well-established principle that this power should only be used<br />
sparingly. The Court further held that in exercising his discretion, the<br />
Learned Judge was required to consider what was the appropriate<br />
response having regard to all of the circumstances, including whether<br />
there were other alternatives available that would be just in the<br />
circumstances and that having regard to the very wide case<br />
management powers of a Judge, striking out the Appellants’ defence<br />
was not an appropriate response to the breach of the order of the<br />
Learned Judge by the Appellants. (Real Time Systems Limited -v-<br />
Renraw Investments Limited and Others [2014] UKPC 6 applied).<br />
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