The Companies Act (2022 Revision) Avendis Global Fund Ltd (in Official Liquidation) and Avendis Enhanced Fixed Income Trading Ltd (in Official Liquidation) and Avendis Global Strategies Trading Ltd (in Official Liquidation)
| Jurisdiction | Cayman Islands |
| Judge | Justice Kawaley |
| Judgment Date | 25 October 2022 |
| Docket Number | CAUSE NO: FSD 149 OF 2010 (IKJ) CAUSE NO: FSD 24 OF 2012 (IKJ) CAUSE NO: FSD 25 OF 2012 (IKJ) |
| Court | Grand Court (Cayman Islands) |
IN THE GRAND COURT OF THE CAYMAN ISLANDS
FINANCIAL SERVICES DIVISION
The Hon. Justice Kawaley
CAUSE NO: FSD 149 OF 2010 (IKJ)
(Originally Cause No: 383 of 2007)
CAUSE NO: FSD 24 OF 2012 (IKJ)
CAUSE NO: FSD 25 OF 2012 (IKJ)
Mr Chris Keefe and Mr Chaowei Fan,
Walkers, on behalf of the Joint Official Liquidators of the Companies (“JOLs”)
Coficap SA (“Coficap”) did not appear
Liquidators' summons to dismiss shareholder's application for their removal on grounds of want of prosecution-principles governing dismissal of summons filed within a winding-up- Companies Act (2022 Revision) sections 105(1), 107-Companies Winding Up Rules 2018 Order 1 rule (1A), (2), Order 5 rule 6-Grand Court Rules 41 rules 1 (1) (8) and 4-FSD Users Guide
IN CHAMBERS
The JOLs were appointed in respect of Avendis Global Fund Ltd (“AGF”) on 1 February 2008 and in respect of Avendis Enhanced Fixed Income Trading Ltd (“AEFIT”) and Avendis Global Strategies Trading Ltd. (“AGST”) on 20 March 2012. On 6 September 2007, the JOLs had been appointed as joint provisional liquidators of AGF. On 4 October 2007, the JOLs had been appointed as joint voluntary liquidators of AEFIT and AGST. By a Summons dated 19 November 2020 but issued on 18 December 2020 (the “Removal Application”), Coficap “ on its own behalf and derivatively as a shareholder on behalf of [AGF]” sought the following primary Order:
“ 1. THAT Mr Malcolm Cohen and Glen Trenmouth (the ‘BDO-JOLs’) be removed as joint official liquidators of Avendis Global Fund Ltd (in Official Liquidation) (“AGF”), Avendis Enhanced Fixed Income Trading Ltd (in Official Liquidation) (“AEFIT”) and Avendis Global Strategies Trading Ltd (in Official Liquidation) (“AGST”) and replaced by Geoff Varga and Mark Longbottom of Duff & Phelps (The ‘D&P Liquidators’).”
Supplementary relief included (a) a direction that the Sanction Order made by Clifford J on 24 February 2016 be partially set aside, (b) a direction that the D&P Liquidators recover certain assets of AGF (relating to the Charles Jourdan Group) said to have been paid in error by the JOLs to AEFIT and AGST, and (c) a direction that the D&P Liquidators investigate whether a claim should be brought against the JOLs in relation to their “ wilful, alternatively negligent” categorisation of the said assets as belonging to AEFIT and AGST. No (admissible) evidence was ever filed or served in support of the Removal Application although an unsworn draft of an 86 page Affidavit, which was purportedly intended to be sworn by Coficap's principal, Philippe Rebourg, was provided to the JOLs on 24 December 2020. The Removal Application was never to any material extent actively pursued.
On 19 March 2021, the JOLs served Coficap's attorneys, Sinclairs, with a Summons seeking security for costs. This Court granted Sinclairs leave to come off the record as the Coficap's attorneys, pursuant to an Order which was served on the JOLs on 1 July 2021. Sinclairs had not been replaced as attorneys of record for Coficap by the date of the present hearing.
By a Summons dated 18 August 2022 (the “Dismissal Application”) the JOLs sought the following Orders:
“ 1. The Summons dated 19 November 2020 filed by Coficap SA (“Coficap’) seeking, among other things, the removal of the JOLs as liquidators of the Avendis Companies, be dismissed for want of prosecution.
2. Coficap shall pay the Avendis Companies' costs of and incidental to the Removal application, to be taxed on the indemnity basis if not agreed.
3. Such further or other alternative relief as the Court may consider necessary.”
This Summons was supported by the 8 th Affidavit of Malcolm Cohen (“Cohen 8”), one of the two JOLs. Both documents were emailed to Coficap on 31 August 2022, Mr Fan of Walkers deposed, together with confirmation that the Removal Application had been listed for hearing on 4 October 2022 at 10.00am. Coficap did not appear at the assigned hearing of the Removal Application. I dismissed the Removal Application on abuse of process grounds, relying upon a somewhat different legal ground than the want of prosecution ground originally relied upon by the JOLs.
As the central grievance which underpinned the JOLs' application was a failure to prosecute or withdraw an unmeritorious application causing wasted costs for the three liquidation estates, I considered it appropriate for the Court of its own motion to dismiss the application on alternative legal grounds in the exercise of the Court's inherent jurisdiction to ensure that its processes are not misused. Requiring the JOLs' counsel to amend their application or prepare supplementary submissions would only have exacerbated rather than mitigated the mischief the substantively meritorious application was intended to alleviate. Counsel for the JOLs sensibly welcomed this abbreviated approach.
The Removal Application was accordingly dismissed on 4 October 2022 on the alternative abuse of process ground. These are the reasons for that decision.
Cohen 8, after explaining that Coficap is the assignee of one of the investors in AGF at the time of its liquidation, deposes as follows:
“ 20. Other than service of the Removal Application, Coficap has taken no substantive steps to prosecute the Removal Application. In circumstances where Coficap had taken no steps to engage alternative Cayman islands counsel for the purposes of responding to the Security for Costs Application or otherwise prosecute the Removal Application, Walkers sent a letter to Coficap on 18 May 2022 (almost 11 months after Sinclairs ceased to act for Coficap), as follows:
24. Plainly, Coficap has no intention of prosecuting the Removal Application and it elected not to avail itself of the JOLs' offer to terminate the Removal Application without any costs implications.”
-
(a) Noting that:
-
(i) Coficap has failed to take any steps to prosecute the Removal Application in the period since it was filed on 19 November 2020;
-
(ii) This delay is unacceptable and is in breach of the Overriding Objective contained in the Grand Court Rules, which requires that matters are dealt with in a just, expeditious and economical way, including by ensuring that the normal advancement of the proceeding is facilitated rather than delayed;
-
(iii) It is clear from its conduct that Coficap has no intention of prosecuting the Removal Application; and
-
(iv) The JOLs wish to complete the winding up of AGF and are now seeking to resolve all issues in the liquidation, including the conclusion of the Removal Application; and
-
-
(b) Offering to agree that there be no orders as to costs in respect of the Removal Application and the Security for Costs Application if Coficap agreed to withdraw the Removal Application within 21 days…
Cohen 8 exhibited Walkers' letter of 18 May 2022 sent to Coficap offering to agree to the withdrawal of the Removal Application with no order as to costs if the offer was accepted within 21 days otherwise an application would be made to dismiss the Removal Application for want of prosecution or to restore the JOLs' Security for Costs application. The letter went on:
“… In the event that it is necessary for our clients to take such steps, our clients will seek an order that Coficap pay the costs of those applications on the indemnity basis.”
Coficap replied by letter dated 9 June 2022, which was clearly an open letter despite its “ Without Prejudice” heading. An additional 14 days to respond substantively was sought on the grounds that Coficap was “ currently in the process of retaining a new local counsel in order to properly respond to your proposition”. No response was ever forthcoming, either before the service of the Removal Application on 31 August 2022 (nearly 12 weeks after Coficap's own deadline) or at or before the hearing on 4 October 2022 four weeks later.
It is apparent from paragraph 8 of Cohen 8, that the Removal Application was served together with an Affidavit sworn by a Sinclairs attorney which exhibited the unsworn Rebourg Affidavit. There was in effect no evidence served with the Removal Application which substantively supported it; rather there was evidence which identified potential evidence which might at some future date be filed.
Cohen 8 further explains the prejudice flowing from the failure to prosecute the Removal Application:
“ 25. The Trading Companies were first placed into voluntary liquidation in 2007, with provisional liquidators having been appointed over AGF pursuant to an Order of this Honourable Court dated 6 September 2007. AGF was then subsequently ordered to be wound up by this Honourable Court on 1 February 2008 (that is, over 14 years ago).
26. The winding up of AGF was substantially concluded prior to the filing of the Removal Application and the JOLs were preparing to seek its dissolution. All of its assets have been realized and distributed, with a small amount of cash at bank retained to pay the JOLs' remuneration and to facilitate its dissolution.
27. AGF cannot be dissolved whilst the Removal Application remains extant. Moreover, the JOLs have incurred significant costs in responding to the Removal Application on behalf of AGF which may ultimately mean that there are insufficient assets in the liquidation of AGF to meet the JOLs' remuneration. This is entirely the result of an unmeritorious application filed almost 2 years ago, which Coficap has taken no...
To continue reading
Request your trial