Brilla Capital Investment Master Fund Spc Ltd et Al v Greenwood et Al

• Jurisdiction: Anguilla
• Judge: Webster, J.A.
• Judgment Date: 24 November 2014
• Neutral Citation: AI 2014 CA 2
• Docket Number: AXAHCVAP 7 of 2013
• Court: Court of Appeal (Anguilla)
• Date: 24 November 2014

Court of Appeal

Michel, J.A.; Thom, J.A. (Ag.); Webster, J.A. (Ag.)

AXAHCVAP 7 of 2013

Brilla Capital Investment Master Fund Spc Limited et al

and

Greenwood et al

Appearances:

Mr. Robert Levy, QC with him Mr. Edward Knight and Mr. Ravi Bahadursingh instructed by Chancery Lane Chambers for the appellants.

Mr. Christopher Pymont, QC with him Ms. Dia Forrester instructed by Daniel Brantley & Associates for the first and second respondents.

Mr. Allan Wood, QC with him Ms. Tan'ania Small Davis and Mr. Kerith Kentish instructed by Joyce Kentish & Associates for the third, fourth and fifth respondents Mr. J. Alex Richardson instructed by Alex Richardson & Associates for the sixth respondent.

Company law - Liquidation — Interlocutory appeal against the Master's decision dismissing the application for directions — Failure to give reasons for decisions — Whether the Master erred in failing to give reasons for the findings in the decision where the magistrate gave reasons but not as detailed — Jacques Order — Jurisdiction — Power to remove liquidators — Whether the Court had the power to remove a liquidator — Test for Removal — Consideration of Nam Tai Electronics Inc. v. David Haque et al BVIHCVAPP2000/0021 — Due Cause — Whether the Appellants had established that there was due cause for removing the liquidator — Whether the failure to produce report was a good reason for removing the liquidator where the liquidator did not report to credits on the progress of liquidation — Licence — Fiduciary Duty — Whether the SPA should have been rescinded — Bias — Whether the allegation of bias could be sustained where the liquidator was appointed by the Court — Delays — Whether there was unreasonable delay in pursuing the application for a licence — Pursuing issues with vigour — Loss of Faith — Whether the creditors’ loss of confidence in the liquidator was reasonable — Whether the Court should have ordered the liquidator to be removed in the circumstances — Appeal allowed — Finding that the appellants had established due cause for removal of the liquidator and ordered that the Liquidator be removed — Section 223 of Companies Act, Cap C65.

By order dated 30th April 2012, the court authorised the joint liquidators to sell certain assets of LIR to the fifth respondents, Mr. Charles Hickox and Ms. Linda Hickox (“the Hickoxes”) for $10.3 million (the “Jaques Order”). On 2nd May 2012, pursuant to the Jaques Order, the joint liquidators entered into an agreement with the Hickoxes and the third respondent, Cap Juluca L & C Limited to sell the assets of LIR for the price of $10.3 million (the “SPA”). The assets to be sold included real property registered as West End Registration Section Block 17808B Parcel 11/1. The property was purchased with $6.3 million in cash and the balance was offset against sums owing to the Hickoxes by LIR. The SPA was completed on or about 3rd May 2012 when the joint liquidators received the payment and a signed transfer of land.

On 4th May 2012 the court appointed Mr. John Greenwood (“the Liquidator or “Mr. Greenwood”) as the liquidator of LIR in place of the joint liquidators and on 4th June 2012 the Hickoxes and Cap Juluca L & C Limited assigned its rights under the SPA to a related company, Cap Juluca L & C Properties Limited (“L & C Properties”).

The purchaser under the agreement, L & C Properties (as assignee from Cap Juluca L & C Limited and the Hickoxes), is an alien under the Laws of Anguilla. As a result, in order to own Parcel 11/1 L & C Properties has to have a license under the Aliens Land Holding Regulation Act (“the Act”), therefore, the transfer of land could not be registered until the licence was acquired. L&C Properties applied for the licence on 5th September 2012 but has not received it to date. As a result, Parcel 11/1 is still registered in the name of LIR.

On 17th January 2013 the appellants applied to the High Court for removal of the Liquidator or orders directing him to issue proceedings and for a number of declarations. The learned master refused the appellants’ application and ordered costs to the respondents. The appellants subsequently applied for and were granted leave to appeal the learned master's decision.

Held: allowing the appeal as to the removal of the Liquidator; refusing the directions sought; setting aside the master's decision; and ordering that the appellants, the first respondent and the sixth respondent have their assessed costs paid out of the assets of LIR, that:

1

When deciding whether to exercise its discretion to remove a liquidator, the court must be satisfied that the retention of the liquidator will be against the liquidation or conversely, that the removal of the liquidator is in the interest of the liquidation. In making this determination, the court should follow a three step process. Firstly, the court must determine whether the applicant has the standing to apply for the removal of the liquidator. This issue is usually uncontroversial and an application by a creditor or contributory will often meet the requirement. Secondly, the court has to decide whether due cause has been shown for the removal of the liquidator. Due cause does not necessarily mean that there is misconduct on the part of the liquidator or unfitness for purpose, but rather, the court should take all the circumstances into consideration and decide whether, on the whole, the liquidator should be removed. Thirdly, if due cause has been shown, the court should then decide whether to exercise its discretion to remove the liquidator. This is a difficult balancing exercise and the court will have regard to the considerations in determining whether the applicant established due cause for the removal of the liquidator, bearing in mind that the court does not lightly remove its own officer and the likely impact of the removal on the professional standing of the liquidator, although these concerns will not be a bar to removal in appropriate cases. The instant appeal was brought by creditors of LIR, which satisfies the standing requirement. However, the Liquidator failed to report to the creditors on the progress of the liquidation and had no acceptable reason for this failure. The Liquidator also failed to comply with section 10 of the Act and lacked vigour in dealing with the issues surrounding the liquidation. As a result, there was a reasonable loss of confidence in the Liquidator by the creditors. Taking all these circumstances into consideration, the appellants have shown due cause for the removal of the Liquidator. 2. An appellate court will only upset the exercise of discretion of a judge if it is satisfied that in exercising his or her discretion the judge failed to take into account or gave too little or too much weight to relevant factors and considerations, or by taking into account or being influenced by irrelevant factors and considerations, and that as a result of the error or degree of error in principle, the judge's decision exceeded the generous ambit within which reasonable disagreement is possible and as a result, may be said to be clearly or blatantly wrong. If the appellate court is so satisfied it may exercise its own discretion afresh. In dealing with the application for the removal of the Liquidator the learned master did not deal with the failure of the Liquidator to cause LIR to apply for a licence under section 10 of the Act; failed to deal with the complaint against the Liquidator's failure to report to the creditors in the reasons for her decision; and did not deal with the issue of delays in the reasons for her decision. Accordingly, the learned master erred in principle in not dealing with these considerations and it was open to the Court to exercise its discretion afresh taking these factors into account.

1 Webster, J.A. [AG.]: This is an interlocutory appeal against the decision and orders of the learned master dismissing the appellants’ application for directions to be given to Mr. John Greenwood, the Liquidator of Leeward Isles Resorts Limited, regarding the conduct of the liquidation of the company, or the removal of Mr. Greenwood as the liquidator of the company.

BACKGROUND

2 The second respondent, Leeward Isles Resorts Limited (“LIR”), is the registered owner of real property comprising a part of the luxury resort in Anguilla known as Cap Juluca (“the Resort”). LIR was put into voluntary liquidation by its sole shareholder, Mr Adam Aron, on 7th November 2011. The voluntary liquidation was converted to a court supervised liquidation on 12th November 2011 and Messrs. William Tacon and Stuart McKellar appointed joint official liquidators (“the JLs”).

3 By a further order made on 30th April 2012 the court authorised the JLs to sell certain assets of LIR to the 5th respondents, Charles and Linda Hickox (“the Hickoxes”), for $10.3 million (“the Jaques Order”). Pursuant to the Jaques Order the JLs entered into an agreement with the Hickoxes and the third respondent, Cap Juluca L & C Limited, on 2nd May 2012 to sell the assets of LIR to them for the stated price of $10.3 million (“the SPA”). The assets to be sold comprise real property registered as West End Registration Section Block 17808B Parcel 11/1, personal and intangible properties and the right to manage the Resort, and are referred to in this judgment collectively as “the Properties”. The real property is referred to individually as “Parcel 11/1”. The purchase price was paid to the JLs in the form of $6.3 million in cash and the balance being offset against amounts owing to the Hickoxes by LIR.

4 On 4th May 2012 the court appointed the first respondent, Mr. John Greenwood (“the Liquidator” or “Mr. Greenwood”) in place of the JLs as the liquidator of LIR. Mr. Greenwood was proposed by the Hickoxes.

5 On 4th June 2012 the Hickoxes and Cap Juluca L & C Limited assigned its rights under the SPA to a related company, Cap Juluca...