Hon. Judith Jones-Morgan Attorney-General of The State of Saint Vincent and the Grenadines Applicant v Horizon Bank International Ltd Respondent an Appeal by The Applicants Against The Disallowance of Their Proofs of Claim [ECSC]
| Jurisdiction | Caribbean States |
| Judge | Thom, J |
| Judgment Date | 15 February 2007 |
| Judgment citation (vLex) | [2007] ECSC J0215-2 |
| Court | Eastern Caribbean Supreme Court |
| Docket Number | HIGH COURT CIVIL CLAIM NO. 194 OF 2005 |
| Date | 15 February 2007 |
THE EASTERN CARIBBEAN SUPREME COURT
IN THE HIGH COURT OF JUSTICE
HIGH COURT CIVIL CLAIM NO. 194 OF 2005
In The Matter of Horizon Bank International Limited
And
In The Matter of The International Banks Act No. 40 of 2004
And
In The Matter of The Companies Act No. 8 of 1994
And
In The Matter of The International Business Companies Act No. 18 of 1996
and
and
Thom, J(IN CHAMBERS): This is an application for a stay of an appeal against the disallowance by the Liquidator of proofs of claim filed in the liquidation of Horizon Bank International Ltd and for leave to amend their claim against the Liquidator in proceedings in Bermuda to include a claim for damages.
Horizon Bank International Ltd (hereinafter referred to as "Horizon Bank") is a company incorporated under the laws of Saint Vincent and the Grenadines.
In August 2004 the Applicants instituted proceedings in Bermuda against Horizon Bank (hereinafter referred to as the Bermuda proceedings). Those proceedings are still pending in Bermuda.
On April 20, 2005 the Attorney-General of Saint Vincent and the Grenadines filed a petition for the winding up of Horizon Bank.
On April 21, 2005 Mr. Marcus Wide was appointed provisional liquidator of Horizon Bank.
On June 9, 2005 the High Court made a winding up order in relation to Horizon Bank and appointed Marcus Wide as Liquidator.
On June 30, 2006 the Applicants filed proofs of claim in the liquidation of Horizon Bank.
By letter dated July 18, 2006 the Liquidator notified the Applicants that their proofs of claim were rejected.
On October 17, 2006 the Applicants filed an appeal against the decision of the Liquidators. This appeal is still pending.
On November 2, 2005 the Liquidator commenced ancillary winding up proceedings in Bermuda.
On December 9, 2005 the Liquidator consented to the lifting of the automatic stay of proceedings in relation to the Bermuda proceedings.
On November 10, 2006 the Applicants filed this application in which they sought four reliefs, but on the hearing of the application only the following reliefs were pursued:
(1) An Order that all proceedings on the Applicant's Appeal before the Court in Saint Vincent and the Grenadines be stayed pending the final determination of all proceedings between the parties hereto currently pending in Bermuda in the Supreme Court of Bermuda (Commercial Court) Suit No. 257 of 2004 ("the Bermuda proceedings") including the final determination of any appeal from any ruling or decision of the Bermuda proceedings.
(2) An order that the Applicants be at liberty to pursue their claims for damages in the proceedings pending the Supreme Court of Bermuda, and Civil Jurisdiction Suit No. 257 of 2004 ("the Bermuda proceedings").
Learned Queen's Counsel for the Applicants submitted that the Court should grant the relief sought for the following reasons:
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(a) The facts and matters underlying the claim in these proceedings and in the Bermuda proceedings are the same.
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(b) There will be a full trial in Bermuda on the issues underlying the propriety claim.
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(c) If the appeal proceeds in Saint Vincent and the Grenadines there will be a full trial involving a parallel set of proceedings in Saint Vincent and the Grenadines on the underlying facts as are being determined in Bermuda.
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(d) Costs to the parties would be significantly reduced.
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(e) The proceedings in Bermuda are already at the discovery stage.
Learned Counsel for the Respondent submitted that the relief sought should not be granted for the following reasons:
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(a) The relief sought amounts to a request that the Court should delegate jurisdiction over this matter to the Bermuda Court.
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(b) There was procedural error in making this application.
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(c) The Applicants have no locus standi.
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(d) If the relief sought is granted the unsecured credites of Horizon Bank would be prejudiced.
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(e) The appeal can be determined sooner than the Bermuda proceedings.
Learned Counsel for the Respondent submitted that the Applicants had adopted the wrong procedure in seeking relief. The application is made under Sections 395 and 399 of the Companies Act, while the appropriate provision is Rule 4.93 of the United Kingdom Insolvency Rules 1986 and Part 26.2 (a) of CPR 2000.
Learned Queen's Counsel for the Applicants referred the Court to Section 9 of the Eastern Caribbean Supreme Court (St. Vincent and the Grenadines) Act Cap. 18, section 5 of the Application of English Law Act Cap. 8 and Part IV of the Companies Act No. 8 of 1994 and submitted that the U.K. Insolvency Rules 1986 are to be applied in Saint Vincent and the Grenadines subject to the provisions of the Companies Act 1994.
The Applicants' application which was filed on November 10, 2006 stated that it is made under sections 395 and 399 of the Companies Act and under the inherent jurisdiction of the Court. InHalsburvs Laws ofEngland 4th Edition Volume 37 in dealing with the grant of a stay of proceedings the learned Authors stated at paragraph 437:
"The court's power to stay proceedings may be exercised under particular statutory provisions, or under the Rules of the Supreme Court or under the Court's inherent jurisdiction, or under one or all of these powers, since they are cumulative, not exclusive, in their operation."
Learned Counsel for the Respondent stated in paragraph 32 of his written submissions and I agree with Learned Counsel that:
"Essentially, the Court has inherent jurisdiction to order, where the circumstances dictate, that certain proceedings be stayed until such time as it is fair and just that they be heard and determined. In this regard, the Court engages in a balance of the respective prejudice to be suffered by the parties should the stay application not be determined in their favour. The fundamental principle to be observed by the Court in this regard is to ensure that justice is being done between the parties in the exercise of its discretion."
Further under Part 26.9 of CPR 2000 the Court has a discretion to rectify an error of procedure where the consequence of failure to comply with a rule, practice direction, court order or direction has not been specified.
In view of the above I find that the submission has no merit. I also find that there is no merit in the submission that the granting of a stay would amount to a delegation of jurisdiction. I agree with the submission of Learned Queen's Counsel for the Applicants that the statutory winding up scheme contemplates that the Court in the exercise of its supervisory authority may direct that certain matters be dealt with in other jurisdictions. If a stay of proceedings is granted this will not mean that at the end of the Bermuda proceedings the Court would not have jurisdiction to hear the appeal if the Applicants wish to pursue their appeal.
Learned Counsel for the Respondent submitted that the Applicants have no locus standi since they are not creditors of Horizon Bank. Learned Counsel further submitted that a person is only a creditor if his claim is accepted by the liquidator or if his claim succeeds before the Court on appeal. Where persons are not creditors then they must have a relevant interest in the estate and that relevant interest can only arise upon recognition as a creditor. In support of this proposition Learned Counsel referred the Court to the decision of the Privy Council inDeloitte and Touche AG v. Christopher D Johnson and Another (Cayman Islands) [1999] UKPC 25 10TH June, 1999.
Learned Queen's Counsel for the Applicants submitted in response that the Applicants have standing pursuant to Section 399 (5) of the Companies Act to appeal against the rejection of their proofs, this was confirmed by the Liquidator in his letter of July 18,2006 to the Applicants and his affidavit of October 30,2006. Learned Counsel referred the Court to the case ofRe Capital Project Home Ptv [1992] 10 ACLC P 75. Re David Lloyd and Co. (1877) 6ch. O. P339 and Mahomed V Morris [2000] BCLC P 536 and Macpherson's Law of Company Liquidation 2001 ed. Paragraph 9.87.
It is settled law that when the Court makes a winding up order in relation to a company a statutory scheme for dealing with the assets of the company comes into force. The statutory scheme is outlined in Part IV of the Companies Act No. 8 of 1994.
Section 399 (5) of the Companies Act No. 8 of 1994 provides that:
"If any person is aggrieved by any act or decision of the liquidator that person may apply to the Court and the Court may confirm reverse or modify the act or decision complained of and make such order as it thinks fit.
This provision is similar to section 168 (5) of the UK Insolvency Act 1986. Section 168(5) of the UK Insolvency was considered by the Court of Appeal inMahomed V Morris. Peter Gibson LJ in considering whether the claimants came within the section stated:
"In general I respectfully agree with the sentence which I have cited fromRe Edennote Ltd [1996] 2BCHC p 389. It could not have been the intention of parliament that any outsider to the liquidation, dissatisfied with some act or decision of the liquidator, could attack that act or decision by the special procedure of Section 168 (5). However I would accept that someone like the landlord in Re Hans Place Ltd (1993) BCLC 768 who is directly affected by the exercise of a power...
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