TNT v Logispring

• Jurisdiction: Cayman Islands
• Judge: (Chadwick, P., Mottley and Vos, JJ.A.)
• Judgment Date: 08 September 2009
• Court: Court of Appeal (Cayman Islands)
• Date: 08 September 2009

Court of Appeal

(Chadwick, P., Mottley and Vos, JJ.A.)

TNT N.V.

and

LOGISPRING GP L.P. (A CAYMAN ISLANDS EXEMPTED LIMITED PARTNERSHIP)

R. Hacker, Q.C., J.P. Walton and C.J.K. McNeil for the appellant;

J.R. McDonough for the respondent.

Case cited:

(1) Colquhoun v. BrooksELR(1887), 19 Q.B.D. 400; 57 L.J.Q.B. 70; on appeal (1888), 21 Q.B.D. 52; 57 L.J.Q.B. 439; 59 L.T. 661, dicta of Wills J. and Lopes, L.J. applied.

Legislation construed:

Exempted Limited Partnership Law (2003 Revision), s.7(5) (as amended by the Exempted Limited Partnership (Amendment) Law 2009, s.5): The relevant terms of this sub-section are set out at paras. 18 and 19.

s.15 (as amended by the Exempted Limited Partnership (Amendment) Law 2009, s.10): The relevant terms of this section are set out at paras. 18 and 20.

Partnership-exempted limited partnership-winding up-appointment of liquidator-power of partner to appoint or replace liquidator in winding up under Exempted Limited Partnership Law, s.7(5) not excluded by partnership agreement except by explicit provision-court reluctant to rely on maxim expressio unius est exclusio alterius and impractical to exclude right of partner (e.g. application might be necessary if no creditors able or willing to apply)

The appellant applied to the Grand Court for the appointment of a new liquidator in the winding up of a Cayman exempted limited partnership.

The appellant was a limited partner in the exempted limited partnership, which had been established to invest in various start-up companies. The respondent was the general partner which had made a call for a further capital contribution from the appellant. Consequently, the appellant served a notice on the respondent requiring it to dissolve the partnership and it then issued a summons seeking the appointment of a new liquidator. The limited partnership agreement contained a term (art. 10.1) providing that a creditor could apply to the court to appoint another liquidator but did not give that right to a limited partner.

The Grand Court (Foster, Ag. J.) refused the application for the appointment of a new liquidator on the ground that art. 10.1 of the agreement overrode the statutory right of the limited partner under s.7(5) of the Exempted Limited Partnership Law and prevented it from applying to appoint or replace the liquidator. Further, the court determined that even if it had had the discretion to appoint a new liquidator, it would have declined to do so.

On appeal, the appellant submitted that the lower court had been wrong (a) to interpret the agreement as excluding a limited partner”s right to apply to the court under s.7(5) to seek a liquidator other than the general partner to be appointed; (b) to hold that the agreement could oust the jurisdiction of the court; and (c) to declare that it would have not exercised its discretion to replace the respondent as liquidator.

Held, allowing the appeal and permitting the limited partner to apply for the appointment of a new liquidator:

(1) The limited partnership agreement did not prevent a limited partner from applying to appoint or replace a liquidator under s.7(5) of the Exempted Limited Partnership Law. By including in art. 10.1 the express reference to the power of a creditor to apply to the court to appoint another liquidator, the parties would not be taken to have intended to exclude granting an equivalent power to a limited partner. The agreement purported to be consistent with the Exempted Limited Partnership Law rather than exhaustive and exclusionary and therefore, had the parties intended to exclude the statutory right of a partner to make such an application, it would have been expected to do so explicitly. The court would be reluctant to rely on the maxim expressio unius est exclusio alterius since the draftsman”s omission would often be inadvertent rather deliberate (paras. 24–29).

(2) Moreover, it would be impractical for the parties to have excluded the power of the court to appoint a liquidator on the application of a limited partner, since it was foreseeable that if a general partner were removed for misconduct a partnership might have no creditors or none willing or able to apply to fill the vacancy. Another anomalous consequence of this interpretation would be that a general partner would be unable to apply to the court when it was conceivable that in certain circumstances such an application would be a necessity. Further, at the time of the drafting of the agreement, none of the provisions of the Exempted Limited Partnership Law deferred to the terms of the partnership agreement-as the amended equivalent provisions did following the 2009 Amendment Law-which would have also highlighted to the draftsman the need for explicit exclusion and this strengthened the view that the omission was inadvertent rather than deliberate. It was therefore improbable that the parties intended to exclude the statutory right through the partnership agreement and a limited partner would therefore not be prevented from making an application to the court to appoint or replace a liquidator pursuant to s.7(5) of the Law (paras. 30–34).

1 VOS, J.A., delivering the judgment of the court:

Introduction

This is an appeal, with the leave of the judge, from Foster, Ag. J.”s order dated June 5th, 2009, whereby he refused TNT N.V.”s (‘TNT’) application for an order appointing Mr. Hugh Dickson of Grant Thornton Specialist Services (Cayman) Ltd. as liquidator of Logispring II, LP, a Cayman Islands exempted limited partnership (the ‘partnership’ or ‘Logispring II’). The detailed reasons were given on July 28th, 2009. As appears hereafter, the only issue which this court is now asked to decide is whether or not the court has the power to appoint or replace a liquidator of Logispring II.

Parties and corporate structure

2 TNT is a well-known Netherlands-based listed corporation operating in some 65 countries. It is a limited partner in Logispring II. Logispring II was established in 2006 as a Cayman Islands exempted limited partnership under the Exempted Limited Partnership Law (2007 Revision). The abbreviation ‘ELPL’ is used in this judgment to mean that Law as amended from time to time. Logispring II was governed by a detailed limited partnership agreement entered into in or about 2006 (the ‘LPA’), to which we shall return in due course.

3 Logispring GP, L.P., the defendant to this action and respondent to the appeal (the ‘general partner’ or ‘Logispring GP’) is...