(1) FCS Asian Millennium Ltd; (2) FCS Thailand Fund Ltd; (3) Waidberg Millennium Fund Ltd v (1) FCS Asian Millennium Ltd; (2) FCS Thailand Fund Ltd; (3) Waidberg Millennium Fund Ltd

• Jurisdiction: Caribbean States
• Court: Eastern Caribbean Supreme Court
• Judge: Hariprashad-Charles J
• Judgment Date: 09 February 2007
• Neutral Citation: VG 2007 HC 1
• Docket Number: Claim Nos. BVIHCV2005/0274, BVIHCV2005/0275, BVIHCV2005/0276
• Date: 09 February 2007

THE EASTERN CARIBBEAN SUPREME COURT

IN THE HIGH COURT OF JUSTICE (CIVIL)

Before: Her Ladyship Justice Indra Hariprashad—Charles

Claim Nos. BVIHCV2005/0274, BVIHCV2005/0275, BVIHCV2005/0276

Claim No. BVIHCV2005/0274

BETWEEN

(1) FCS Asian Millennium Ltd

(2) FCS Thailand Fund Ltd

(3) Waidberg Millennium Fund Ltd

Applicants

and

(1) FCS Asian Millennium Ltd

(2) FCS Thailand Fund Ltd

(3) Waidberg Millennium Fund Ltd

Respondents

BETWEEN

The Waidberg Currency Fund and Capital Advantage Plan Independent Investors Action Group (an unincorporated association acting by its Chairman, Jayne Beaumont)

Applicant

and

FCS Thailand Fund Limited (In Liquidation)

Respondent

Appearances

Mr. Michael Pringle [of Maples and Calder] for the Joint Liquidators of FCS Asian Millenium Fund, FCS Thailand Fund Limited and Waidberg Millenium Fund Limited.

Mr. Christopher Young [Harney, Westwood and Reigels] for the Waidberg Currency Fund and Capital Advantage Plan (Independent Investors Action Group) (an unincorporated association acting by its Chairman, Jayne Beaumont)

Cases referred to and considered in the Judgment

1. Adams v Naylor [1946] 2 All E.R. 241, H.L.

2. Campbell v Thompson and Another [1953] 1 All E.R. 831.

3. Quellin and others v Harney, Westwood and Reigels(No1) [1999] 58 W.I.R. 143.

4. Harold Simon v Carol Henry et al [Civil Appeal No. 1 of 1995] (Antigua and Barbuda) [unreported].

CATCHWORDS

Commercial Law — Claim in the liquidation of three Funds — Liquidators of Funds rejected claim — Alleged creditor notified of rejection — Liquidators apply to court to distribute assets to admitted creditors and members — alleged creditor's application to appeal made approximately 14 weeks after claim was rejected — Act does not stipulate a time limit within which to appeal — Whether application to appeal can be brought ‘anytime’ before distribution is made or within a reasonable time — whether alleged creditor, an unincorporated association has locus standi to file application to appeal.

Court's power at First Hearing in dealing with ordinary application in insolvency proceedings.

HEADNOTE

The Applicants were investment funds incorporated in the BVI. They ceased to be actively managed in August 2002 after their sole director was sent to prison. On 18 January 2006 on application of the BVI Financial Services Commission, Joint Liquidators (‘the Liquidators’) were appointed over the Applicants. IIAG is an unincorporated association formed in 2001 to recover monies due to investors in Waidberg Currency Fund (‘WCF’) which is also connected to the sole director of the Applicants. IIAG asserted that it had claims against the Applicants in respect of monies invested in WCF which were allowed to have been transferred to the Applicants. After a number of emails between IIAG and the Liquidators, the Chairman of IIAG filed a formal proof of debt in IIAG's name in the Applicants' liquidation.

The Liquidators were not satisfied with the evidence in support of IIAG's claim and its authority or the chairman's authority to act on behalf of the members of IIAG. They requested further information from IIAG to clarify those issues. When cogent evidence was not forthcoming, by letter dated 11 October 2006, they rejected IIAG's claim on the grounds that they were not satisfied with the evidence in support of its claim, its authority to represent the investors of WCF and that it has not stated with any lucidity the legal basis of its claim. By letter dated 19 October IIAG gave the Liquidators notice of its intention to appeal. The Liquidators filed an ordinary application seeking an order that they be at liberty to distribute the Applicants' assets to their admitted creditors and shareholders without further regard to the claim of IIAG. This application was set for hearing on 29 January 2007.

IIAG filed its application appealing the decision of the Liquidators on 26 January 2007. Mr. B, in his affidavit in support of IIAG's application stated that since the rejection of the claim IIAG has identified 4 transactions with no mixing of funds as being transfers directly from Waidberg Investment Management (WIM) sterling and US accounts to one of the Applicants. He conceded that IIAG has no claims against the other Applicants. He also stated in regards to any concerns about the lateness of the application that IIAG did not receive the Liquidators' application until 14 December 2007 and 2 of the main representatives of IIAG reside in Thailand and Vienna and he needed time to consult with the other members of IIAG. He also stated that following receipt of the Liquidators' application he was out of office for 7 days, then came the Christmas and New Year break.

On the date of hearing, Counsel for the Liquidators took two preliminary objections to the application brought by IIAG. He submitted that IIAG is an unincorporated association and therefore has no locus standi to apply to the court for the relief sought and the application is brought out of time without proper explanation.

HELD

• 1. An unincorporated association cannot sue or be sued in its name. Where proceedings are necessary, there are 2 options (i) to have individual members of the club bring proceedings against the defendant or (ii) to bring a representative action. However, by virtue of Rule 4 (2) and Schedule 1 of the Insolvency Act 2003, representative actions are not applicable in insolvency proceedings. The only option available to IIAG is to have individual members named as applicants in the application.

• 2. The name of the applicant in IIAG's application is IIAG, an unincorporated association acting through its Chairman Ms. B. Any judgment will only bind Ms. B and not the other members of IIAG as her name appears on the application. The proper parties need to be before the Court.

• 3. Section 273 of the Insolvency Act allows a person who is aggrieved by an act, omission or decision of an office holder [liquidator] to apply to the court for relief. The section does not prescribe a time limit to make such an application.

• 4. The Court cannot legislate for Parliament. However, when an act is silent, guidance can be sought from general legal principles.

• 5. In determining whether a time period within which an application was filed was reasonable or inordinately long, the court has to consider the length of the delay and the reasons for the delay. The application was filed some 14 weeks after IIAG was notified of the Liquidators' decision.

• 6. Mr. B has failed to give any explanation for the delay between 14 October 2006 and 19 December 2006. IIAG had plentiful time during this period to file an appeal. It did not do so. The reasons given for the delay between 19 December 2006 and 26 January 2007 are unacceptable. The delay was unreasonable and as such, the application was brought out of time.

• 7. An originating or ordinary application made in insolvency proceedings shall be regarded as a fixed date claim and CPR 27.2 which deals with the procedures in relation to fixed date claims are applicable to Insolvency proceedings. The Court can treat the first hearing of IIAG's application as the trial of the claim if it considers that the claim can be dealt with summarily.

• 8. The Liquidators were provided with Rule 10 of the Rules of IIAG. This Rule does not give the Chairman or IIAG authority to begin or defend any proceedings on behalf of the members. The Court was provided with a complete copy of the Rules which purports to give such authority to the Chairman. The document that was provided was not signed by the members or anyone for that matter, and as such, cannot be considered a legal document. IIAG has failed to show that IIAG or its Chairman had authority to claim on belief of IIAG's members in the Applicants' liquidation.

• 9. IIAG has failed to set out with certainty the nature and legal basis of its claim. There is no clear indication as to how IIAG's monies went to the Applicants or that the monies said to have been transferred to the Applicants' account represent funds belonging to its members. It has also failed to show that the monies received by the Applicants were received without consideration or have not been redeemed.

• 10. The Liquidators are at liberty to make distributions of the Applicants' assets to the Applicants' admitted creditors and members without further regard to the claim of IIAG.

Hariprashad-Charles J

1 There are before the Court two applications namely:

1

An ordinary application for directions by the Joint Liquidators, Mr. Kenneth Krys and the Official Receiver (‘the Liquidators’) of FCS Asian Millennium Ltd, FCS Thailand Fund Limited and Waidberg Millennium Fund Ltd (‘the Applicants’) for an order that they be at liberty to make distributions of the Applicants' assets to the Applicants' admitted creditors and members without further regard to the claim of Independent Investors Action Group (IIAG) which was rejected by the Liquidators on 11 October 2006. 2. An ordinary application by IIAG for: (i) a declaration and order that IIAG acting by its Chairman, Jayne Beaumont on behalf of members of Waidberg Currency Fund (‘WCF’) and/or the Capital Advantage Plan (‘CAP’) is a creditor of FCS Thailand Fund Ltd (‘FSCTFL’); (ii) a declaration and order setting aside the Liquidators' decision of 11 October 2006 rejecting IIAG's proof of debt lodged in the liquidation of FSCTFL; (iii) an order that pending the resolution of the matters referred to above, there be directions given that the liquidators of FSCTFL do not distribute a dividend to creditors, or alternatively, may only proceed to distribute a dividend having taken account of IIAG's claim; (iv) Costs.

2 Both applications came up for First Hearing on 29 January 2007. At the hearing, Mr. Pringle for the Liquidators raised two preliminary objections to IIAG's application which was brought by Ms. Jayne...