Between: 1. Canterbury Securities, Ltd (in Official Liquidation) 2. Karen Scott as Joint Official Liquidator of Canterbury Securities, Ltd 3. Russell Homer as Joint Official Liquidator of Canterbury Securities, Ltd Plaintiffs v (1) Erin Winczura (2) PFS Ltd (3) Canterbury Group Defendants

JurisdictionCayman Islands
JudgeJustice Kawaley
Judgment Date04 June 2024
Docket NumberCAUSE NO. FSD 133 OF 2024 (IKJ)
CourtGrand Court (Cayman Islands)
Between:
1. Canterbury Securities, Ltd. (In Official Liquidation)
2. Karen Scott as Joint Official Liquidator of Canterbury Securities, Ltd
3. Russell Homer as Joint Official Liquidator of Canterbury Securities, Ltd
Plaintiffs
and
(1) Erin Winczura
(2) PFS Ltd
(3) Canterbury Group
Defendants
Before:

The Hon. Justice Kawaley

CAUSE NO. FSD 133 OF 2024 (IKJ)

IN THE GRAND COURT OF THE CAYMAN ISLANDS

FINANCIAL SERVICES DIVISION

Injunctions-ex parte application for freezing order-claims for breach of fiduciary duty, wrongful dissipation of assets, unlawful means conspiracy and fraudulent trading-Companies Act (2023 Revision), section 147

Appearances:

Mr Tom Lowe KC of counsel with Mr John Harris of Nelsons, for the Applicants/Plaintiffs

IN CHAMBERS
REASONS FOR DECISION
Background
1

By an Ex Parte Summons dated 23 April 2024, supported by the First Affidavit of Karen Scott (“Scott 1”), the Applicants (now Plaintiffs herein) applied for an ‘Injunction Prohibiting Disposal of Assets’. The present action application was contemplated but had not yet been formally commenced when the Summons was heard on 24 April 2024.

2

For completeness I should mention that paragraph 2 of the 23 April 2024 Ex Parte Summons sought permission to serve the proposed Writ on Mr Eric Miller, a former director of the Company, out of the jurisdiction pursuant to Grand Court Rules (“GCR”) Order 11 rule 1 (1) (c) and 1 (1) (ff). In the course of the hearing on 24 April 2024, I indicated my provisional view that I was unwilling to grant that application because there was insufficient evidence before the Court about his involvement in the relevant events to enable me to conclude that there was a serious issue to be tried on the merits of the claims it was proposed to pursue against him.

3

As I recall, Mr Lowe KC indicated that this application as against Mr Miller (and, consequentially, the Injunction application as well) would not be pursued. The Generally Indorsed Writ of Summons herein was issued on 25 April 2024. Mr Miller was not named as a Defendant.

4

On 24 April 2024, at the conclusion of the ex parte hearing, I orally granted the Injunction sought in terms which were not perfected until 26 April 2024 (“Freezing Order”) against the 1 st Defendant (“EW”) and the two corporate Defendants. The Freezing Order most significantly (under the heading “ DISPOSAL OF ASSETS”) restrained each Respondent from disposing of any assets up to the value of US$ 30 million and specified one piece of real property in the Cayman Islands in the case of the 1 st Respondent.

5

These are the short reasons I promised to give for my decision to grant the Freezing Order.

Governing legal principles
6

Although the law was dealt with summarily in oral argument, a bundle of Authorities was provided to the Court in advance of the hearing. The relevant principles governing applications for interim freezing orders are most clearly summarised in Ovaskainen v Ovaskeinen, FSD 138/2023 (MRHCJ), Judgment dated 21 June 2023. Ramsay-Hale CJ opined as follows:

16. Section 11 of the Grand Court Act provides that,

‘(1) The Court shall be a superior court of record and, in addition to any jurisdiction heretofore exercised by the Court or conferred by this or any other law for the time being in force in the Islands, shall possess and exercise, subject to this and any other law, the like jurisdiction within the Islands which is vested in or capable of being exercised in England by

(a) Her Majesty's High Court of Justice; and

(b) the Divisional Courts of that Court, as constituted by the Senior Courts Act, 1981, and any Act of the Parliament of the United Kingdom amending or replacing that Act…’

17. Section 37 of the English Senior Courts Act 1981 relevantly provides that,

‘(1) The High Court may by order (whether interlocutory or final) grant an injunction or appoint a receiver in all cases in which it appears to the court to be just and convenient to do so.’

18. W's application was for interim relief ancillary to the Writ, seeking to restrain H, a party to the proceedings, from removing or otherwise dealing with assets within the jurisdiction of the Court, if the Court were satisfied it was just and convenient to grant it.

19. In the recent judgment of the Privy Council in Broad Idea International Ltd (Respondent) v Convoy Collateral Ltd, [2021] UKPC 24, an appeal from the British Virgin Islands, Lord Leggatt set out the current practice for granting a freezing injunction at [101] summarized as follows:

(1) A good arguable case for the payment of a sum of money that will be enforceable through the process of the court;

(2) The existence of assets belonging to or under the control of the defendant against which judgment could be enforced; and

(3) A real risk that the defendant will dissipate those assets and the judgment will be left unsatisfied if the order is not given.

20. The authorities are clear that there must be cogent evidence to show that there is a risk of dissipation. As it was put by Doyle J in Trezevant v Trezevant (Unrep) 10 November 2021 at [19] and [20] adopting the comments of Chadwick P in AHAB v Saad Investments Company Limited 2011 (1) CILR 178 at [69], the applicant must provide,

‘“solid evidence” to the effect that, without such relief, there was a real risk that the judgment would not be satisfied by some process of enforcement” noting that “…in appropriate cases it is possible to infer the risk from evidence of surrounding ci rcumstance s.’

7

In summary, the Applicants needed to establish:

  • (a) a good arguable case on the merits of...

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