Re Cayman Capital Trust Company

• Jurisdiction: Cayman Islands
• Judge: (Harre, J.)
• Judgment Date: 28 September 1989
• Court: Grand Court (Cayman Islands)
• Date: 28 September 1989

Grand Court

(Harre, J.)

IN THE MATTER OF CAYMAN CAPITAL TRUST COMPANY

N.W. Hill, Q. C. and G. Hampson for the liquidator;

D. Muirhead, Q.C. and A. McLaughlin for the applicants.

Cases cited:

(1) Chief Constable (Hants.) v. A. Ltd., [1985] Q.B. 132; [1984] 2 All E.R. 385; (1984), 79 Cr. App. R. 30.

(2) Chief Constable (Kent) v. V., [1983] Q.B. 34; [1982] 3 All E.R. 36.

(3) Chief Constable (Leics.) v. M., [1989] 1 W.L.R. 20; [1988] 3 All E.R. 1015, dicta of Hoffmann J. considered.

(4) Johnson (B.) & Co. (Builders) Ltd., In re, [1955] Ch. 634.

(5) Lloyds Bowmaker Ltd. v. Britannia Arrow Holdings PLC, [1988] 1 W.L.R. 1337; [1988] 3 All E.R. 178.

(6) Mediterranean Reffineria Sicilliana Petroli S.p.A. v. Mabanaft GmbH, Court of Appeal (England), December 1st, 1978, unreported, dicta of Templeman, L.J. applied.

(7) North London Ry. Co. v. Great N. Ry. Co.ELR(1883), 11 Q.B.D. 30, dictum of Cotton, L.J. applied.

(8) Simpkin Marshall Ltd., In re, [1959] Ch. 229; [1958] 3 All E.R. 611.

(9) Siskina v. Distos Cia. Naviera S.A., The SiskinaELRUNK, [1979] A.C. 210; [1977] 3 All E.R. 803; sub nom. Shanker (Ibrahim) & Co. v. Distos Cia. Naviera S.A., [1978] 1 Lloyd”s Rep. 1, distinguished.

(10) Third Chandris Shipping Corp. v. Unimarine S.A., [1979] Q.B. 645; [1979] 2 All E.R. 972.

Legislation construed:

Companies Law (Laws of the Cayman Islands, 1963, cap. 22), s.93: The relevant terms of this section are set out at page 450, lines 34–36.

s.96: The relevant terms of this section are set out at page 455, lines 10–13.

s.166: ‘Where, in the course of the winding up of any company under this Law, it appears that any past or present director . . . has

misapplied or retained in his own hands or become liable or accountable for any moneys of the company, or been guilty of any misfeasance or breach of trust in relation to the company, the Court may, on the application of any liquidator . . . examine into the conduct of such director . . . and compel him to repay any moneys so misapplied or retained, or for which he has become liable or accountable, together with interest at such rate as the Court thinks just, or to contribute such sums of money to the assets of the company by way of compensation in respect of such misapplication, retainer, misfeasance or breach of trust as the Court thinks just.’

Grand Court (Civil Procedure) Rules, r.3: The relevant terms of this rule are set out at page 450, lines 24–26; lines 30–32.

Supreme Court Act 1981 (England, c.54), s.37(1)-(3): The relevant terms of this section are set out at page 447, line 33 – page 448, line 4.

s.151: The relevant terms of this section are set out at page 451, lines 4–7.

Companies-compulsory winding up-Mareva injunction-winding-up proceedings commenced by petition are ‘civil proceedings’ by Grand Court (Civil Procedure) Rules, r.3 and court has jurisdiction to grant Mareva injunction if ‘just and convenient’

Companies-compulsory winding up-‘party’ to proceedings-person giving notice of intention to appear to oppose winding up is by Supreme Court Act 1981, s.151 ‘party’ to proceedings within meaning of s.37(3) and court has jurisdiction to grant Mareva injunction against him

Companies-liquidators-powers and duties-application for injunction-liquidator has sufficient legal and equitable interest in winding-up proceedings to apply for Mareva injunction-may proceed against delinquent director either by Mareva injunction or under Companies Law (cap. 22), s.166

Companies-compulsory winding up-Mareva injunction-court may grant injunction against any person in position to intervene in affairs of company and defeat objective of Mareva injunction granted against director

The applicants, a director and contributory of a company and his wife, applied for the raising of a Mareva injunction which had been granted against them.

The first applicant was a director and contributory of a company which was being compulsorily wound-up. He gave notice of his intention to appear at the hearing of the petition in order to oppose it. The petition succeeded and a Mareva injunction was granted to restrain him and his wife (the second applicant) from disposing of their assets until further order.

During the preliminary investigations by the liquidator it had been found that substantial funds may have been removed from the company in a manner which implicated the director and which could have made him the subject of specific proceedings under the Companies Law, s.166. It was also found that together with his wife he controlled assets and property in several other companies and entities which could have been manipulated to defeat the functions of the liquidator with respect to the company against which the winding-up order had been made.

The applicants submitted that the court had no jurisdiction to grant the injunction because (a) under the Supreme Court Act 1981, s.37(1)-(3), it could only do so to protect a right which was already the

subject of an action before it in which substantive relief was being sought and, since the only proceedings extant were a winding-up petition, there was therefore no ‘action’ against them as defined by s.151 (i.e.‘civil proceedings commenced by writ or in any other manner prescribed by rules of court’); (b) the liquidator was not a proper person to invoke the court”s jurisdiction in this way; (c) the Companies Law (cap. 22), s.96 (giving the court certain powers to restrain actions after the presentation of a winding-up petition) was comprehensive and the court had no other jurisdiction to grant an injunction in the course of winding-up proceedings; and (d) in the case of the second applicant, there was the additional reason that she was neither an officer nor a contributory of the company being wound up.

The liquidator submitted in reply that (a) the court”s general jurisdiction to grant injunctions under the Supreme Court Act 1981, s.37(1)-(3) could be exercised in all cases in which it thought it ‘just and convenient’; (b) winding-up proceedings commenced by petition were ‘civil proceedings’ within the meaning of the Grand Court (Civil Procedure) Rules, r.3 and should therefore be treated as being an ‘action’ for the purposes of the Supreme Court Act; (c) the first applicant had given notice to appear to oppose the winding-up petition and was therefore a ‘party’ to the proceedings within the Supreme Court Act, s.151; and (d) a liquidator had the power to seek a Mareva injunction as part of his duty in winding-up proceedings to take all steps, backed by injunction if necessary, to protect the interests of the company”s creditors.

Held, dismissing the application:

(1) The granting of the Mareva injunction had been within the jurisdiction of the Grand Court. It had a general discretion under the Supreme Court Act 1981, s.37(1) to grant an injunction whenever it was ‘just and convenient’ to do so and this discretion was not restricted in winding-up proceedings by the Companies Law (cap. 22), s.96. Although it was the case that an injunction should only be granted as an adjunct to other proceedings before the court, it was immaterial what kind of proceedings those were: winding-up proceedings commenced by petition were regarded as ‘civil proceedings’ by the Grand Court (Civil Procedure) Rules, r.3 and were therefore a sufficient foundation on which to base the granting of the injunction as an ancillary matter (page 450, lines 3–37; page 455, lines 2–22).

(2) Moreover, the court had been entitled to grant the injunction against the first applicant since, by virtue of the Supreme Court Act 1981, s.151, he was a ‘party’ to the winding-up proceedings (within the meaning of s.37(3)) in consequence of his giving notice of his intention to appear to oppose the winding up (page 450, line 37 – page 451, line 11).

(3) However, it was not enough to determine the question of the appropriateness of the injunction by reference to procedural definitions. The most important test was whether the applicant had a sufficient legal or equitable interest to make the application. It was clear that the

liquidator had such an interest since he was vested-statutorily under the Companies Law, s.166, as an officer of the court, and as trustee for the creditors as a general body-with the power to proceed against a contributory and delinquent director in order to protect the assets of the company for the benefit of all on whose behalf he acted. He had therefore been entitled to apply to the court to prevent those assets from being dissipated and it was immaterial that he had chosen to do so by seeking a Mareva injunction rather than proceeding under the Companies Law, s.166 (page 453, lines 19–29; page 454, lines 21–34).

(4) The application to set aside the injunction against the first applicant would therefore be dismissed and, in so far as the injunction related to the second applicant, it should also remain in force in the same terms. Although she was not an officer or contributory of the company being wound up and could not...