Between: (1) Kuwait Ports Authority (on its own behalf and on behalf of The Port Fund L.P) (2) The Public Institution for Social Security (on its own behalf and on behalf of The Port Fund L.P) (3) The Port Fund L.P. Plaintiffs v (1) Port Link GP Ltd (in Voluntary Liquidation) (2) Mark Eric Williams (3) Wellspring Capital Group, Inc. (4) KGL Investment Company Asia (5) Golden Shahin General Trading & Contracting Company (6) Apache Asia Ltd (A Hong Kong Company) (7) Ronald Henry Ayliffe (8) KGL Investment Company KSCC (9) Apache Asia Limitada (A Macao Company) Defendants (10) Christopher Kennedy (11) Barry Lynch Proposed Defendants
| Jurisdiction | Cayman Islands |
| Judge | Raj Parker |
| Judgment Date | 16 June 2023 |
| Docket Number | Cause No. FSD 236 of 2020 (RPJ) |
| Court | Grand Court (Cayman Islands) |
The Hon. Raj Parker
Cause No. FSD 236 of 2020 (RPJ)
THE GRAND COURT OF THE CAYMAN ISLANDS
FINANCIAL SERVICES DIVISION
Injunction-pending Judgment to be handed down-maintenance of status quo-abuse of process-jurisdiction-discretion- Section 11 of the Grand Court Act (2015 Revision)- Section 37 of the English Senior Courts Act 1981—GCR Order 30-breach of undertaking-serious issue to be tried-appointment of joint voluntary liquidators.
Ms Rachael Reynolds KC instructed by Ms Jennifer Fox and Mr Harry Clark of Ogier (Cayman) LLP for the Plaintiffs
Mr Graham Chapman KC instructed by Mr Andrew Pullinger and Ms Katie Logan of Campbells LLP for the Second, Third and Fourth Defendants
The Court has now determined a joinder and receivership application heard on 24 April 2023, having reserved Judgment (the “Receivership Application” and the “Joinder Application”).
The Judgment was handed down on 25 May 2023. The Court ruled in favour of joinder and the appointment of Receivers to manage litigation on behalf of D1 (the General Partner). It also gave some guidance on the terms of the Receivership which the parties are to use to agree an appropriate Order for the Court's approval. The Court gave further directions as to the terms of the Order on 29 May 2023.
According to Mr Williams (D2), after the hearing and, among other things, in light of the Plaintiffs' conduct in not informing the Court or D2–D4 of what he says was critical information in relation to the Receivership Application, namely the terms of the Receivers' engagement letter, he determined that the most appropriate course of action was for voluntary liquidators (JVLs) to be appointed.
The Plaintiffs brought an application for interim relief following the appointment of the JVLs to stop the ensuing process continuing (which they feared would likely lead to the application for a supervision order and an application for official liquidators to be appointed in due course) which they argued would undermine the Receivership Application on which Judgment had been reserved.
The Court dismissed the application for interim relief. These are the reasons for that decision.
Ms Rachael Reynolds KC appeared for the Plaintiffs.
She applied for an interim order for a short period of time until the Court had handed down judgment on the Receivership Application to ensure the maintenance of the status quo as it existed before the actions of Mr. Williams to appoint JVLs.
In summary, she argued that Mr Williams had abused the process of the Court and breached undertakings he had given:
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(a) On 28 March 2023 the Plaintiffs issued the Receivership Application on an urgent ex parte basis, but put the other existing defendants (“D2–D4”) on notice. The Receivership Application was originally listed to be heard at 8am on 31 March 2023.
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(b) In order to secure the Plaintiffs' agreement to vacate the original hearing date, D2–D4 (acting by Mr Williams) gave an undertaking not to procure the appointment of directors, officers or officeholders to the General Partner and/or not to seek default judgment or to take steps to have the General Partner admit the Crossclaim, “ pending the hearing” of the Plaintiffs' Receivership Application and Joinder Application (the “Undertaking”) if the Plaintiffs agreed to the original ex parte hearing date being vacated.
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(c) The Plaintiffs agreed on the basis of the Undertaking, to vacate the ex parte listing of the Receivership Application, and the Receivership Application was listed to be heard on an inter partes basis at a hearing on 24 April 2023 (the “Hearing”).
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(d) At the Hearing, in response to an observation from Parker J that “ with funding comes an element of control” Leading Counsel for the Plaintiffs, Mr Allison KC, explained that this concern is addressed “ by not having a funding agreement which fetters what the officers can do” and offered to “ provide the funding agreement if it would assist” further confirming that in this particular instance “ there are no fetters on how [the proposed receivers] use the money. It is up to them”.
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(e) Following the Hearing, the Plaintiffs provided a copy of the funding agreement entered into between themselves and the proposed receivers (the “Funding Agreement”). They also confirmed various factual points concerning the Funding Agreement including the lifting of a USD 300,000 cap with immediate effect.
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(f) On 28 April 2023 the attorneys to D2–D4 wrote to the Court stating that Mr Williams had suffered a personal bereavement and requested that the Court refrain from handing down judgment on the Receivership Application until they had responded to the attorneys to the Plaintiffs.
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(g) On or before 1 May 2023 Mr Williams allegedly canvassed views from the General Partner's alleged creditors seeking their support for the voluntary liquidation (without canvassing the views of its largest contingent creditor, namely the Plaintiffs); and
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(h) On 2 May 2023 Mr Williams placed the General Partner into voluntary liquidation without any prior notice to the Court or the Plaintiffs. Mr Williams did so having asked the Court to delay judgment on the Receivership Application on compassionate grounds and without responding to the attorneys to the Plaintiffs.
Ms Reynolds KC argued that by placing the General Partner into voluntary liquidation in this way Mr Williams both (a) acted in clear breach of the Undertaking (because the hearing of the Receivership Application had not yet concluded as judgment was reserved), and (b) sought to frustrate the Receivership Application when judgment on it was pending.
She argued that Mr Williams' apparent aim is to have the business of the General Partner conducted by his own nominees based on information provided solely by those who are accused of conspiring with the General Partner to defraud the Limited Partners rather than by a truly independent and Court supervised office holder.
Moreover, she submitted, by placing the General Partner into voluntary liquidation, Mr Williams has triggered a statutory time line which will force the JVLs to take certain steps by the end of May 2023.
One of those steps is a Court application which could be heard and determined before a different Court. This gives rise to a risk of inconsistent judgments and an outcome which could be difficult to unwind.
Ms Reynolds KC submitted that, taking into account all of these circumstances, Mr Williams' conduct clearly amounts to an abuse of process 1 and it would be manifestly unfair to the Plaintiffs should they be left without redress. 2
Mr Graham Chapman KC appeared for D2–D4. In summary he submitted:
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a) The wording of the undertaking limited the undertaking in terms of time to the commencement of the hearing only. After the 24 April hearing, the undertaking was spent and no longer effective.
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b) The belated disclosure of the Engagement Letter and its terms caused Mr Williams' concerns about the Plaintiffs' motives and objectives in seeking to appoint the proposed Receivers only to increase and it is this that informed his decision to cause the JVLs to be appointed. That decision was one that was freely open to him to make and was an entirely reasonable one.
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c) There are no grounds for seeking the injunctive...
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