Allied Leasing & Fin Corporation v Banco Economico SA

• Jurisdiction: Cayman Islands
• Judge: (Zacca, P., Georges and Collett, JJ.A.)
• Judgment Date: 23 February 2001
• Court: Court of Appeal (Cayman Islands)
• Date: 23 February 2001

Court of Appeal

(Zacca, P., Georges and Collett, JJ.A.)

ALLIED LEASING AND FINANCE CORPORATION

and

BANCO ECONOMICO S.A.

J.V. Martin, Q.C., T.W.G. Lowe and Mrs. L.D. DaCosta for the appellant;

R.H. Hildyard, Q.C., G.A. Locke and Ms. S.J. Collins for the respondent.

Cases cited:

(1) Aiden Shipping Co. Ltd. v. Interbulk Ltd., [1986] 1 A.C. 965; [1986] 2 All E.R. 409, distinguished.

(2) Bathampton Properties Ltd., In re, [1976] 1 W.L.R. 168; [1976] 3 All E.R. 200, applied.

(3) Company (No. 004055 of 1991), In re aWLR, [1991] 1 W.L.R. 1003; sub nom. Re Record Tennis Centres Ltd., [1991] BCC 509, distinguished.

(4) Fairfax (John) & Sons Pty. Ltd. v. De Witt (E.C.) & Co. (Australia) Pty. Ltd., [1958] 1 Q.B. 323; [1957] 3 All E.R. 410.

Legislation construed:

Judicature Law (1995 Revision) (Law 11 of 1975, revised 1995), s.24(2): The relevant terms of this sub-section are set out at para. 8.

Supreme Court Act 1981 (c.54), s.51(1): The relevant terms of this sub-section are set out at para. 6.

Companies-compulsory winding up-costs-‘Bathampton order’-under Judicature Law (1995 Revision), s.24(2), may order company”s costs of opposing petition not to be paid from company”s assets before payment of petitioner and other unsecured creditors-order made only if company guilty of unjustifiable opposition and wasting costs

Companies-compulsory winding up-costs-no costs award to peti-tioner against principals of company directing unjustified opposition to petition if not parties to winding-up proceedings

The respondent applied for an order for the winding up of the appellant company.

The petition was opposed by the company on the instructions of two of its directors and the owner of its corporate shareholder. After lengthy litigation, the Grand Court found (in proceedings reported at 1998 CILR 292) that there was no proper basis for opposing the petition and that considerable costs had been wasted. It ordered that the company be wound up.

The court (Graham, J.) later ordered that the respondent”s costs be paid from the company”s funds as an expense of the liquidation, and also made

orders for payment of those costs jointly and severally by the three persons on whose instructions the petition had been opposed, notwithstanding that they were not parties to the proceedings. In addition, the court ordered that the appellant company”s costs should only be paid from its assets after payment in full of the company”s liabilities to the respondent and any other unsecured creditor (a ‘Bathampton order’). Those proceedings are reported at 1998 CILR 333. The appellant”s appeal against the order for winding up was dismissed in proceedings reported at 2000 CILR 118.

On appeal against the costs orders, the appellant submitted that (a) the court had no power under s.24(2) of the Judicature Law (1995 Revision) to order payment of costs by non-parties, since the Law conferred no discretion to determine by whom costs should be paid; (b) the Bathampton jurisdiction, which had arisen in England when the power to award costs against non-parties was not recognized, and had since been discredited, did not exist in the Cayman Islands; and (c) the company”s costs should be paid from its assets as an expense of the liquidation, in priority to creditors” claims.

Held, allowing the appeal in part:

(1) The Grand Court had no jurisdiction, either in statute or at common law, to award costs against persons who had not been made parties to the winding-up proceedings. The power to do so in England had originated...