Canadiana Ltd ((in Liquidation))

• Jurisdiction: Anguilla
• Court: High Court (Saint Christopher, Nevis And Anguilla)
• Judge: Edwards, J.
• Judgment Date: 12 May 2002
• Neutral Citation: AI 2002 HC 7
• Docket Number: AXAHCV 0022 of 2002
• Date: 12 May 2002

High Court

Edwards, J.

AXAHCV 0022 of 2002

Canadiana Limited (in Liquidation)

Appearances:

Mr. Robert Hildyard Q.C and Mr. Tim Clark instructed by Harney Westwood & Riegels; Solicitors for the Joint Official Liquidators;

Mr. Saul Froomkin, Q.C. and Ms. Merlin Barrett instructed by Keithley Lake and Associates, Solicitors for the two Companies;

Mr. Bruce Drummond instructed by Caribbean Juris Chambers for Silicon Isle Limited;

Mr. Harry Wiggin instructed by Webster Dyrud Mitchell, Solicitors for Cinar Corporation.

Conflict of laws - Application to confirm appointment as liquidators in winding — up proceedings — Basis of the court's jurisdiction to recognize foreign liquidators in Anguilla — Anguilla International Business Companies Act — Assessment of the evidence — Foreign joint liquidators confirmed as having powers specified in s.103 of the Act.

Edwards, J.

1 These proceedings have raised difficult, complex and novel issues of far reaching general importance involving private international law, cross border insolvency, comity, the extra-territorial effects of law, rights, and recognition.

INTRODUCTION

2 Mr. Clifford Johnson and Mr. Wayne Aranha have made an Application to this Court. They wish that their appointment in the Bahamas as joint liquidators in winding-up proceedings for the companies Globe-X Canadiana Ltd. and Globe-X Management Ltd. be recognized and confirmed by this Court. This is necessary if they are to collect and effectively administer the assets of these two companies in Anguilla under the foreign winding up order.

3 They also wish that the powers of a Liquidator under the laws of Anguilla be conferred on them. Their application is supported by a letter of request from the Bahamas Supreme Court. The letter asks the court to recognise the liquidators and give them the assistance necessary for them to perform their duties in Anguilla.

4 An Ex parte Order was made by the Honourable Justice Mitchell on the 8th April, 2003 granting their request.

5 The 5th May, 2003 was the date set for further consideration of the Application. On this day, the court also had before it for hearing, an Application to set aside the ex parte Order made on the 8th April 2003. This application has been made by the two Globe-X Companies.

6 Before the Court also are the submissions of Counsel for Silicon Isle Ltd., which had been affected by the ex parte Order, and under the Order is permitted to intervene.

7 It is necessary at this stage to state the factual background to these proceedings in more detail before dealing with the issues and the law.

FACTUAL BACKGROUND

8 Globe-X Canadiana Ltd. and Globe-X Management Ltd. (the two companies/the Globe-X Companies) were both incorporated as International Business Companies in the Bahamas on the 31st December, 1991 and the 27th August, 1990 respectively.

9 The primary business of both companies was to invest monies, trade, hold, sell and deal in commodity future contracts and other related instruments, including stocks, bonds and government securities globally.

10 On the 12th of July, 2002, both Companies re-domiciled to Anguilla as international Business Companies when at about 4:00 pm the Registrar of Companies in Anguilla issued certificates of continuation for them.

11 During the course of this same day and before 4:00 pm, a Canadian company, Cinar Corporation, filed two petitions to wind up both Globe-X companies in the Bahamas Supreme Court.

12 Cinar Corporation alleged that both companies were insolvent and unable to pay a debt of US$4,662,602.00 under a settlement agreement between the parties.

THE BAHAMIAN COURT PROCEEDINGS

13 On the 5th September, 2002 the Bahamian Court made winding up orders for both companies and the Joint Liquidators, Mr. Aranha and Mr. Johnson were appointed to act on their behalf.

14 The two companies, by limited appearance, challenged the jurisdiction of the Bahamas Court to make a winding up order, contending that they were no longer companies under Bahamian law, having on the 12th July, 2002 re-domiciled in Anguilla,

15 The court on the 29th August, 2002 heard this application, dismissed it on the 3rd September, 2002 and thereafter the two companies took no further part in the winding up proceedings in the Bahamas.

16 On the 17th September, 2002 they appealed against the dismissal of the Application and this appeal is still pending.

17 In giving effect to the winding-up order, the joint liquidators began to investigate the affairs of the companies in order to collect and administer the assets.

18 They discovered that the Directors of the Anguillian Company, Silicon Isle Ltd. (Silicon) were contending that Silicon had acquired the shares in Globe-X companies under a stock purchase Agreement, on the 14th May, 2002. Further, that Silicon is a creditor of the Globe-X Companies in the sum of approximately US$29 million under another agreement.

19 As a result of the uncooperativeness of the Silicon Directors and other obstacles encountered, the joint Liquidators applied for and obtained an ex parte Order with a Letter of Request from the Bahamas Court on the 4th April, 2003. The order included certain directions for the filing and service of documents, which will be discussed later.

20 The letter of Request is from His Lordship, Mr. Justice John Lyons of the Bahamas Supreme Court, and it is addressed to the competent and proper Judicial Authority of this Court. The Bahamas Court requests this Court to assist the Joint Liquidators in the interests of Justice and good international relations, by recognizing their appointment and giving full effect to it in the jurisdiction of Anguilla.

21 Armed with an unsealed, unstamped, unsigned, uncertified copy of this order, and a signed unsealed, unstamped, uncertified copy of the letter of Request, the Joint Liquidators approached this court on the 7th April, 2003.

THE ANGUILLA COURT PROCEEDINGS

22 Allegorically speaking, Cinar Corporation left no stones unturned. Having presented the winding up petition to the Bahamas Court on the 12th July 2002, this company on the 26th August 2002, made an Application without notice to the court in Anguilla for an interlocutory injunction against the two Globe-X companies in Claim No. 55 of 2002.

23 By then, the Registrar of International Business Companies in the Bahamas had struck the two companies off the Register on the 19th August, 2002. Apparently, Cinar Corporation was not aware of this.

24 It is convenient at this point to summarize the terms of the Order that this court made on the 26th August, 2002 in Claim No. 55 of 2002.

25 The two Globe-X companies were restrained from “continuing their jurisdiction of incorporation out of Anguilla, without prejudice to their continuing incorporation in Nassau Bahamas.” They were restrained from dissipating their assets or doing any business transactions which will prejudice the interests of Cinar Corporation as their creditor. They were restrained from doing any transactions at any commercial bank in Anguilla, relating to their bank accounts at such banks up to a cumulative total of US$50,942,645.45 until further order of the court. This injunction was to remain in force until the 24th September, 2002. The date set for inter partes hearing was the 20th September, 2002.

26 The Application without notice to discharge this injunction, filed on the 3rd September, 2002 was never heard by this Court.

27 On the 24th September, 2002 the court made a further order extending the injunction “until determination of the applicant's claim or until completion of the liquidation of the respective companies, whichever is later.” The Registrar of Companies was also restrained from permitting the two Globe-X companies to file any documents “which is or might be referable to a transaction in contravention of the foregoing injunctions.”

28 It should be noted also that on the 13th September, 2002 Cinar Corporation filed a Claim Form and a Statement of Claim. On the 24th October, 2002 they filed an Application for Summary Judgment.

29 On the 31st December, 2002 the two Globe-X Companies filed a Defense and Counterclaim.

30 On the 9th of January, 2003, when the court was scheduled to hear the application for summary judgment the two liquidators sought to be heard through counsel, Mr. Hare, who was instructed by the solicitors Harney Westwood and Riegels.

31 The court ruled that written submissions should be fled and served by the Solicitors for the joint liquidators, as to the legal basis and the court's jurisdiction to recognize and hear the foreign liquidators. Further directions were given concerning these submissions, and the hearing of the Application was adjourned for a date to be set by the Registrar.

32 Against this background, the joint liquidators filed the present application for recognition.

33 In the Absence of any Statutory provisions or Rules in Anguilla which expressly govern the recognition of Foreign Liquidators, since a matter such as this has never been considered by this court before, before dealing with the other substantive issues raised in counsel's submissions, it is necessary to determine:–

• (a) The bases of the court's jurisdiction to recognise foreign Liquidators in Anguilla;

• (b) The procedure governing such applications;

• (c) The principles governing the exercise of the jurisdiction.

34 Counsel for the parties provided this Court with the authorities they were relying on in support of their submissions. I wish to thank counsel for their considerable assistance.

JURISDICTION

35 Among the authorities provided were several English cases, none of which concerned a case where a Court in England has been requested to recognise the appointment of a foreign liquidator. The cases show that the course generally followed in England has been to institute English...