Conyers Offshore Case Digest (Issue No.11 April - December 2015)

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BRITISH VIRGIN ISLANDS In relation to the Summary Judgment hearing the Court of Appeal held that while CPR 27.2(3) empowered the Court to treat the first hearing as a trial of the Claim, and that trial could be dealt with summarily, that doing so did not mean entering Summary Judgment. The process contemplated by Rule 27.2 (3) required the Claimant to prove its case and a trial conducted. The Respondent did not attend, so the Court was wrong to enter judgment. INTERLOCUTORY APPEAL - STAY OF SPECTRUM AWARD 2015 PROCESS - CIVIL PROCEDURE RULES - RULE 56.4(8) OF THE ENGLISH CIVIL PROCEDURE RULES, 2000 (the “ECPR”) - WHETHER A ‘STAY OF PROCEEDINGS’ UNDER ECPR 56.4(8) INCLUDES A STAY OF AN ADMINISTRATIVE DECISION OR PROCESS - EXERCISE OF JUDICIAL DISCRETION IN GRANTING INTERIM RELIEF - INTERIM INJUNCTION AGAINST PUBLIC BODY - ASSESSING WHERE BALANCE OF CONVENIENCE LIES - DETERMINING RISK OF INJUSTICE Telecommunications Regulatory Commission -v- Caribbean Cellular Telephone Limited Claim No. BVIHCVAP 2015/0015 (December 2015) This Appeal by the Telecommunications Regulatory Commission (the “TRC”) was against the decision of the Judge below to stay the implementation of the Spectrum Award, 2015 process. The Spectrum Award Process as it was called by the TRC was the procedure to be adopted for the allocation of spectrum under various bans to mobile network operators in the BVI. The Respondent, Caribbean Cellular Telephone Limited (“CCT”) was one such operator and successfully obtained leave to make a Claim for judicial review of TRC’s conduct, generally, including in relation to the Spectrum Award Process. The Respondent also obtained a stay of the Spectrum Award Process purportedly pursuant to Section 56.4(8) of the ECPR and applied for interim injunctive relief. Injunctive relief was refused and the Respondent cross-appealed in relation to same. In allowing the Appeal and setting aside the stay of the Spectrum Award 2015, the Court held following the decision in Ministry of Foreign Affairs, Trade and Industry -v- Vehicles and Supplies Ltd [1991] 1 WLR 55 that the term “proceedings” as used in ECPR 56.4(8) was to be confined to proceedings before a lower court or tribunal exercising judicial or quasi-judicial functions and would not include an administrative decision or action such as the decisions and actions of the TRC. The Court also found that if the evidence (as it had done) failed to meet the quality for the grant of injunctions, it would similarly fail the test for the grant of a stay as the tests for satisfying either were to be treated as essentially the same. Consequently, the Court found that there was no basis in law or as a matter of discretion for the Judge to grant a stay pursuant to Rule 56.4(8). As it related to injunctive relief, the Court held applying Regina -v- Secretary of State for Transport, Ex parte Factortame Ltd. And Others (No. 2) [1991] 1 AC 603 that when dealing with restraining a public body, whether from enforcing the law or from performing their public duties as required and contemplated by the law, the balance of convenience must be looked at more widely by taking into account the public interest in the performance of those responsibilities and duties with which the public body is tasked and in seeking to arrive at a just result in all the circumstances. The Court found that TRC should not be restrained from undertaking and performing its duties in serving the wider public interest and the balance of convenience was not in CCT’s favour when considered in the wider context having regard to what the TRC had sought to accomplish given its mandate and that allowing the Spectrum Award 2015 process posed the least risk of injustice. INTERLOCUTORY APPEAL - LOAN AGREEMENT BETWEEN APPELLANT AND RESPONDENT - INTERPRETATION OF CLAUSES OF MEMORANDUM OF UNDERSTANDING - CONVERSION OF LOAN INTO EQUITY - APPOINTMENT OF LIQUIDATORS - WINDING UP - WHETHER APPELLANT BECAME SHAREHOLDER OF RESPONDENT BY IMPLIED AGREEMENT TO CONVERT LOAN TO EQUITY IN RESPONDENT OR WHETHER APPELLANT CONTINUED TO BE CREDITOR OF RESPONDENT AND WAS ENTITLED TO APPOINT LIQUIDATORS OF RESPONDENT - WHETHER LEARNED JUDGE ERRED IN STRIKING OUT APPELLANT’S APPLICATION TO WIND UP RESPONDENT ON JUST AND EQUITABLE GROUND - STANDING - ARBITRATION - EFFECT OF ARBITRATION Jinpeng Group Limited -v- Peak Hotels and Resorts Limited Claim No. BVIHCMAP2014/0025 This was an Appeal against the decision of the Judge below to strike out an application to appoint liquidators over the Respondent (the “Application”) on just and equitable grounds. The Respondent applied to strike out the Application on the grounds that the Appellant had impliedly agreed to convert the loan which it had given to the Respondent into equity and therefore was not a creditor and did not have standing to apply for liquidators on the just and equitable ground. The Court below in striking out the Application and after carrying out a very limited analysis on the nature of the dispute between the parties, said that any challenge by the Respondent to the Appellants 10
BRITISH VIRGIN ISLANDS standing, other than a hopeless one, would be sufficient to establish a sufficient dispute for the purpose of removing the Appellant’s status as a creditor. In setting aside the order striking out the Appellants Application the Court held, inter alia, (i) following Sparkasse Bregenz Bank AG -v- In the Matter of Associated Capital Corporation BVIHCVAP2002/0010, that while the Learned Judge was correct to observe that the winding up Court should not be used to resolve disputes about debts or to decide issues of fact on a summary basis, the Court had a duty to carry out a preliminary investigation of the facts to determine whether a dispute that a debtor company raises in relation to a debt in winding up proceedings is one which has been raised on genuine and substantial grounds and thus he erred in failing to apply the correct legal test in the circumstances, which was whether the dispute raised by the Respondent, was one that was raised on genuine and substantial grounds, (ii) notwithstanding that the Application was presented by the Appellant as creditor on the just and equitable grounds alleging misconduct, it was still a creditor’s application and therefore, the applying creditor was seeking a collective remedy on behalf of itself and all the other creditors of the Respondent, accordingly this was not a Claim by the Appellant to recover its debt from the Respondent Company and (iii) while the arbitration clauses were designed to resolve disputes between the contracting parties, once the Appellant had submitted its dispute to the Court as the basis of a creditor’s winding up application, it became an issue between the Respondent and its creditors over the Company’s ability to pay its debts as they fall due and therefore fell outside the scope of Section 18(1) of the Arbitration Act (i.e. the Section which provides for a stay of arbitration proceedings). decision to dismiss the Appellant’s application for permission to serve the Claim out of the jurisdiction on the foreign defendants. The Court dismissed the Appeal on the basis that on the alleged scheme taken at its highest was nothing more than a failed investment in an illiquid real estate development and did not have the trappings of a conspiracy to deliberately deprive the Appellants of their investment. However, the Court did find that the Learned Judge erred in finding that the relationship of principal and agent between the Company and its direct/sole shareholder defeated the allegation of conspiracy. The Court of Appeal applying Belmont Finance Corporation Ltd. -v- Williams Furniture Ltd. and Others [1979] Ch. 250 and Lim Leong Huat -v- Chip Hup Hup Kee Construction Pte Ltd [2009] 2 SLR 318 that a director, even if he/she is the controlling mind of a company, could combine with that company to injure a third party in circumstances where the company was not the victim, but the beneficiary of the conspiracy. In so far, it concerned the application for service out of the jurisdiction the Court of Appeal held that the Learned Judge was right in finding that the BVI was not the appropriate forum for the trial of the conspiracy claim notwithstanding that some of the alleged conspirators were BVI companies because the Appellants and the main parties to the alleged conspiracy were not resident in the BVI and the events underlying the claims for breach of trust and conspiracy all occurred in Singapore. (Nilon Limited and Another -v- Royal Westminster Investments SA and Others [2015] UKPC 2 applied.) INTERLOCUTORY APPEAL - CONSPIRACY - LAWFUL MEANS CONSPIRACY - INTENTION TO INJURE - AGENCY - LIABILITY OF DIRECTOR FOR CONSPIRACY TOGETHER WITH COMPANY OF WHICH HE/SHE IS DIRECTOR - WHETHER LEARNED JUDGE EXERCISED HIS DISCRETION IMPROPERLY - APPLICATION BY RESPONDENT TO STRIKE OUT APPELLANTS’ CLAIM IN COURT BELOW - APPLICATION BY RESPONDENT FOR SUMMARY JUDGMENT - APPLICABLE LEGAL TESTS - WHETHER BVI IS APPROPRIATE FORUM FOR TRIAL OF APPELLANTS’ CONSPIRACY CLAIM Lin Chee Keen and Steven Ng -v- Fam Capital Management Limited Claim No. BVIHCMAP2015/0002 (December 2015) This was an Appeal against the decision of the Learned Judge below to strike out the Claim for conspiracy on the basis that a conspiracy could not arise between a company and its sole controller and his 11
Page 1 and 2: APRIL 2015 - DECEMBER 2015 ISSUE NO
Page 3 and 4: ABOUT THE DIGEST The Offshore Case
Page 5 and 6: BERMUDA the parties involved can be
Page 7 and 8: BERMUDA apply to many cases, and as
Page 9 and 10: BRITISH VIRGIN ISLANDS INTERLOCUTOR
Page 11: BRITISH VIRGIN ISLANDS INTERLOCUTOR
Page 15 and 16: CAYMAN ISLANDS On 18 September 2012
Page 17 and 18: CAYMAN ISLANDS J (applying Section
Page 19 and 20: CAYMAN ISLANDS The Judgment of the
Page 21 and 22: INDEX Arbitration 7 BVI - CIVIL APP

Conyers Offshore Case Digest (Issue No.11 April - December 2015)

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