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THE REPUBLIC OF TRINIDAD AND TOBAGO
IN THE HIGH COURT OF JUSTICE
No. CV 2019-05161
BETWEEN
KEITH ARJOON First Claimant
SHANDON ARJOON
Second Claimant
KGC COMPANY LIMITED
Third Claimant
AND
MARIA DANIEL (Receiver) Defendant
Date of Delivery 08 April 2020
Before The Honourable Madam Justice Margaret Y Mohammed
Appearances
Mr. Devesh Maharaj and Chandrica Sharma instructed by Ms. Kandace Bharath Attorneys
at law for the Claimants.
Mr. Kerwyn Garcia instructed by Mr. Adrian Byrne Attorneys at law for the Defendant.
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TABLE OF CONTENTS
Pages
1) Introduction 3
2) Background 3
3) The Breaches alleged by the Claimants Against The Defendant 6
4) The Orders Sought 8
5) Should The Action By the Third Claimant be Struck Out 11
6) Should The First And Second Claimants Action be Dismissed 24
7) Should the Injunction Order Be Discharged 31
8) No good reason for failing to give notice of interim application 34
9) Reasons for discharging the Injunction Order 37
(a)Pre-condition for restraining the receiver was not met 38
(b)The Defendant has a stronger Defence 40
(i)The decision taken by the Defendant to sell the assets of the
Third Claimant and the proposed sale of assets. 52
(ii)The failure to take steps, including the institution of proceedings,
to recover monies owing to the Company from Petrotrin;
the failure to participate in the Nagico Claim and the decision
to settle claims against Aggreko on unfavourable terms 57
(iii)The failure to carry on the business of fabricating 61
(iv)The failure to adequately maintain and secure the Third Claimant’s
assets 64
(v)The failure to supply potential investors with information critical
to a refinancing of RBL’s debt 66
(vi)The failure to keep accounts and to prepare financial statements 69
(c)Damages is an adequate remedy 69
(d)The balance of convenience lies with discharging the
Injunction Order 70
10) Costs 74
11) Order 74
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RULING
INTRODUCTION
1. The Third Claimant is a company involved in marine construction, fabrication,
equipment rentals in the oil and gas sector. The First and Second Claimants are the
only directors of the Third Claimant and the Defendant is the Receiver of the Third
Claimant having been so appointed by an order of the Court on the 9 December 2016
and by a Deed of Appointment made on 16 April 2017.
2. On the 16 December 2019 the Claimants applied (“the Claimants’ Injunction
Application”) and obtained ex parte and order against the Defendant (“the Injunction
Order”) which prohibited her, her servants and or agents from selling or attempting
to sell the Third Claimant’s assets or businesses until the hearing and determination
the Claimants Injunction Application. The Defendant applied on the 21 January 2020
(“the Defendant’s Striking Out Application”) (i) to strike out the Third Claimant as a
Claimant in these proceedings; (b) to strike out the First and Second Claimants’ claims
against the Defendant and (c) to discharge the “Injunction Order”.
3. In support of the Claimants Injunction Application was an affidavit of the Second
Claimant1 (“the Claimants’ First Injunction Affidavit”) and an affidavit in response of
the Second Claimant2(“ the Claimants’ Second Injunction Affidavit”). In opposition was
an affidavit filed by the Defendant3 (“the Defendant’s Injunction Affidavit”).
4. In support of the Defendant’s Striking Out Application was an affidavit of the
Defendant4 (“the Defendant’s Striking Out Affidavit”) and in opposition was an
affidavit of the Second Claimant5 (“the Claimants Striking Out Affidavit”).
BACKGROUND
5. During the period 2008 to 2014 the Claimants were granted certain loan facilities by
Republic Bank Limited (“RBL”) which were secured by RBL as follows:
1 Filed on the 16 December 2019 2 Filed on the 3 March 2020 3 Filed on the 22 January 2020 4 Filed on the 21 January 2020 5 Filed on the 3 March 2020
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i. Deed of Debenture dated 15 August, 2008 (“the Deed of Debenture”) which
initially secured the sum of $4,500,000.00) and for which further sums were
advanced by RBL until the period 2014, unstamped to cover further loan sums
in the sum of $60,000,000.00 for which the collateral securities set out below
were also given to RBL by the Claimants;
ii. Deed of Mortgage dated 15 August, 2008 registered as DE2008024480 in
favour of RBL stamped to secure the sum of $4,500,000.00 collateral to the
above Debenture for which two (2) parcels of land situate in La Brea described
as Lot No. 150 by Deed of Conveyance registered as No. 11809 of 1997 and
Lot No. 106 on Deed of Conveyance registered as No. 24649 of 1996.
iii. Deed of Mortgage dated 31 July, 2013 with respect to Marine Vessel
“Topazio” for the sum of $25,000,000.00.
iv. Deed of Mortgage dated 31 July, 2013 with respect to Marine Vessel
“Amazon”;
v. Deed of Mortgage dated 31 July, 2013 with respect to Marine Vessel “Beo”;
vi. Deed of Mortgage dated 23 July, 2013 with respect to Marine Vessel “Mary
Hannah”;
vii. Deed of Mortgage dated 10 April 2014 with respect to Marine Vessel “Rook”;
viii. Deed of Chattel Mortgage dated 31 July, 2013 registered as DE
201302169559D001 secured Koberlco Crawler Crane, Sumitomo Crawler
Crane and a Hydrohammer IHC S200.
6. The Debenture provided for the appointment of a receiver if the Claimants defaulted
in their obligations to RBL.
7. During the period 2009 to 2015 the Third Claimant was awarded several contracts
from Petrotrin and the said projects were financed with the assistance of loans from
RBL as secured by the Debenture and the Mortgage.
8. From around the end of 2014 the Claimants encountered difficulties in receiving
payments from Petrotrin which adversely affected their ability to service their loan
payments to RBL. On the 10 December, 2016, the First and Second Claimants became
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aware of the appointment of the Defendant as interim receiver and on the 26 April
2017 RBL pursuant to the Debenture and the Mortgage appointed the Defendant the
receiver of the Third Claimant. At the date of the appointment of the Defendant as
receiver the Third Claimant was indebted to RBL in the sums of TT$72,957,758.12 and
US$808,629.71.
9. In or about November, 2019, the Defendant advised the Second Claimant of her
intention to sell the Third Claimant’s assets for the sum of TT $35,500,000.00 within
30 days. By this sale, the Claimants did not have the option to form a partnership with
a potential purchaser to allow the Third Claimant to continue any of its operations in
the marine construction and offshore services.
10. The First and Second Claimants became very concerned with this decision by the
Defendant since they had made efforts to continue the operation of the Third Claimant
since the appointment of the Receiver and they had generated income in the sum of
$35,681,927.68 which was paid to RBL and they had recently received permission from
the Defendant to commence legal action against Petrotrin to recover the sum of
$328,000,000.00 which was owed by Petrotrin to the Third Claimant.
11. By letter dated the 20 November, 2019, the Claimants’ Attorney at Law Messrs Devesh
Maharaj & Associates issued a pre-action protocol letter to the Defendant in her
capacity as Receiver. The Defendant was informed of that she breached several duties
as a Receiver under the Bankruptcy and Insolvency Act6 (“the BIA”). The Claimants’
Attorney at law requested to reconsider her decision to sell the Third Claimant’s assets
to a Company she had chosen and instead to give further consideration to two
prospective financiers who were willing to partner with the First and Second Claimants
and save the Third Claimant. The Claimants Attorney at law indicated to the
Defendant in the pre-action letter that if she had failed to comply with their request
they intended to seek an order of the Court to stop the sale.
6 Chapter 9:70
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12. The Defendant failed to respond to the pre-action letter and instead she embarked on
actions which the Claimants saw as calculated to oppress and frustrate them. On the
said 20 November, 2019, upon receiving the Claimants’ Attorney at law letter via
email, the Defendant contacted the Second Claimant and expressed her anger.
Subsequent telephone calls to the Defendant’s phone by the Second Claimant were
not answered. The Defendant’s assistant Ms. Keesha Sahadeo was then called the
Second Claimant and expressed her dissatisfaction at receiving the pre-action letter.
Ms Sue-Ellen Mohamed who works for the Claimants received a call from Ms. Keesha
Sahadeo who indicated to her that the Defendant instructed that no one was allowed
to go to the facility in Claxton Bay (“the Claxton Bay land”).
13. On 21 November 2019, the Second Claimant was advised by the security at the Third
Claimant’s La Brea facility (“the La Brea land”) that the Defendant notified her security
on the 20 November, 2019 that the Claimants and their staff are not allowed on any
of the Third Claimant’s compounds.
14. By an Asset Sale Agreement dated 25 November 2019 made between the Defendant
as Receiver of the Third Claimant of the One Part and Sammy’s Multilift Services Ltd
(“Multilift”) of the Other Part, the Defendant agreed to sell the Third Claimant’s assets
as described therein to Multilift for the sum of $26,000,000.00 with completion
scheduled to take place on 16 December 2019.
15. On 29 November 2019, the Defendant also entered into an agreement for sale of the
La Brea land to Inland and Offshore Contractors Limited (“Inland”) for the sum of
$8,500,000.00 with completion of the sale to take place within 90 days of the date of
the agreement. On the 16 December 2019 the Injunction Order stopped the sale.
THE BREACHES ALLEGED BY THE CLAIMANTS AGAINST THE DEFENDANT
16. Both parties agreed that the Claimants set out the substance of the breaches, which
they alleged against the Defendant at pages 10 to 13 of their submissions, which I now
summarise.
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17. The alleged breach of the Defendant’s equity duty to manage the business of the Third
Claimant and or act with due diligence in managing its business were:
(a) Her failure to pursue Petrotrin for monies due and owing in the approximate
sum of $328,000,000.00.
(b) Her failure to claim storage against Petrotrin.
(c) Her failure to act in a commercially reasonable manner pursuant to section
14 (b) of the Bankruptcy and Insolvency Act7 (“the BIA”) as she opted to,
continue to the business of the Third Claimant by limiting its operations to
rental of equipment only and in making poor commercial decisions for
example as it pertained to the issue of standby charges for a job with Aggreko,
leading to losses to the Third Claimant in the sum of $1,200,000.00
(d) Her failure to maintain and secure the property and equipment of the Third
Claimant which led to the deterioration of the property and equipment and
substantial losses to the equipment caused by persistent incidents of theft.
(e) Her failure to take steps to defend the Third Claimant in the proceedings of
CV 2017-03297 Petroleum Company of Trinidad and Tobago Limited and
Nagico Insurance (Trinidad and Tobago) Limited (“the Nagico claim”) which
led to judgment against the Third Claimant in the sum of $8,807,867.78 and
proceedings being commenced against all Claimants, including personal
action against the First and Second Claimants in the High Court proceedings
of CV 2019-03578.
18. The allegations of the Defendants breach of her statutory duties were:
(a) Contrary to section 297 (e) Companies Act8 her failure to keep accounts of
the Third Claimant and allow inspection of same by the Claimants.
(b) Contrary to section 297 (f) of the Companies Act her failure to prepare
financial statements. These breaches of the Defendant’s statutory duty had a
direct impact on the Claimants’ ability to secure financing for the liquidation
of the RBL debt and the Defendant continued to withhold critical financial
information from the First and Second Claimants despite their continued
7 Chapter 9:70 8 Chapter 81:01
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requests for such information.
(c) Contrary section 14 (f) of the BIA her failure to provide regular reports to the
First and Second Claimants.
19. The Claimants also alleged a combination of breach of equitable and statutory duty by
failing to:
a. To act in good faith pursuant to section 14 (a) of the BIA and section 295(a)
of the Companies Act by failing to provide information to the Claimants and
to prospective financiers of the Third Claimant which made securing financing
for the Third Claimant virtually impossible.
b. The Defendant refused to provide critical financial information to Maritime
Life Caribbean (“Maritime”), JMMB and KCL Capital Market Brokers Limited
(“KCL”) and only provided such information in February, 2019.
c. Her failure to act in good faith pursuant to section 14 (a) of the BIA and
section 295(a) of the Companies Act in circumstances which the Defendant
intends to sell the assets of the Third Claimant at a gross undervalue.
THE ORDERS SOUGHT
20. In the substantive claim, the Claimants have sought several reliefs which can be
summarized as declarations, injunctions, the provision of statement of accounts,
damages and costs.
21. The declarations which the Claimants seek are:
(a) The Defendant’s failure to prosecute the Petrotrin for monies due and owing
to the Third Claimant in the sum $328,360,989.51 or any part thereof is in
breach of her equitable duty owed to the Claimants individually or collectively
in not properly managing the business of the Third Claimant or acting with
due diligence in managing the business of the Third Claimant;
(b) The Defendant’s failure to claim against Petrotrin for storage and security on
behalf of the Third Claimant in the sum of $2,227,484.00 or any part thereof
is in breach of her equitable duty owed to the Claimants individually or
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collectively in not properly managing the business of the Third Claimant or
acting with due diligence in managing the business of the Third Claimant;
(c) The Defendant’s failure to adequately protect the equipment and/or
machinery of the Third Claimant in the sum from theft resulting in losses in
the sum of $3,472,300.00 is in breach of her equitable duty owed to the
Claimants individually or collectively in not properly managing the business
of the Third Claimant and/or acting with due diligence in managing the
business of the Third Claimant;
(d) The Defendant’s failure to allow Third Claimant to pursue business other than
rental business approximately resulting in losses in the sum of
$44,981,312.00 is in breach of her equitable duty owed to the Claimants
individually or collectively in not properly managing the business of the Third
Claimant and/or acting with due diligence in managing the business of the
Third Claimant.
(e) The Defendant’s failure to properly defend the Third Claimant’s interests in
the Nagico Claim resulted in action being taken against the Claimants in CV
2019-03578 in the sum of $8,807,867.78
(f) The Defendant’s failure to allow the Claimants to refinance the debt of the
Third Claimant resulted in losses to the Claimants.
(g) The impending sale by the Defendant to a Third Party will result in losses to
the Claimants.
(h) The Defendant’s failure to make available for inspection the accounts of her
administration in breach of her duty under reached Section 297 (e) of the
Companies Act.
(i) The Defendant’s failure to provide regular reports to the First and Second
Claimants is in breach of section 14 (f) of the BIA and/or section 297(f) of the
Companies Act.
(j) The Defendant failure to provide statutory notice pursuant to the First and
Second Claimants section18 a. and section 18 d. of the BIA of her intended
disposition of the assets of the Third Claimant.
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22. The orders which the Claimants seek are:
(i) The removal of the Defendant as receiver and the appointment of a new
Receiver.
(ii) Damages for breach of the Defendant’s equitable and statutory duties owed
to the Claimants.
(iii) To allow the Claimants 21 days with due consideration of the accounts and
financial statements and to raise any issues or queries arising therefrom;
(iv) To Order the receiver to explain how the sum of $35,000,000.00 for the sale
of the Third Claimant’s assets was arrived;
(v) To allow the Claimants 90 days within which the said sum of $35,000,000.00
or any other mutually agreed figure for the liquidation of RBL’s indebtedness;
(vi) To the First and Second Claimants a statement of account showing the
following:-
i. All monies whether cash or cheques paid to the Third Claimant since
the 9 December, 2016.
ii. How all monies earned by the Third Claimant was utilized and how
much money was allocated toward reducing the Third Claimant’s
debt to RBL since the 9 December, 2016.
iii. Copies of all bank statements from all of the Third Claimant’s
bankers issued to the Third Claimant since the 9 December, 2016.
23. The injunctive relief the Claimants seek are to restrain the Defendant whether by her
officers, nominees, servants and/or agents or otherwise howsoever from:
i. From selling or attempting to sell the Third Claimant’s assets or businesses
until the Defendant has complied with the relevant provisions of the
Companies Act namely section 292(d) and (e) to provide the accounts and
financial statements to the Claimants within 7 days of this order;
ii. From selling or attempting to sell the Third Claimant’s assets and/or business
until the Defendant has complied with section 18 of the BIA.
iii. From entering the La Brea land for the purpose of taking an inventory,
inspection and or otherwise tampering with assets belonging to the Third
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Claimant for the specific purpose of effecting a sale or otherwise disposing of
said assets.
iv. From entering the Claxton Bay land for the purpose of taking an inventory,
inspection and or otherwise tampering with assets belonging to the Third
Claimant for the specific purpose of effecting a sale or otherwise disposing of
said assets.
v. From destroying, defacing, tampering with, changing, altering, hiding,
removing, transferring, mortgaging, pledging or selling or otherwise disposing
of any or all of the said assets belonging to the Third Claimant which are either
kept stored or detained on the La Brea land and the Claxton Bay land or
elsewhere by the Defendant.
vi. From issuing any directions preventing either the First and Second Claimants
and/or the servants or agents from accessing the Third Claimant facilities
whether at the La Brea land, the Claxton Bay land or elsewhere belonging to
the Third Claimant.
24. The Claimants also sought their costs.
SHOULD THE ACTION BY THE THIRD CLAIMANT BE STRUCK OUT?
25. The first limb of the Defendant’s Striking out Application is to strike out the Third
Claimant’s claim against the Defendant. It was submitted on behalf of the Defendant
that the instant action by the Third Claimant should be dismissed pursuant to Rule
26.2 (1)(b) of the Civil Proceedings Rule 1998 (“the CPR”) and the inherent jurisdiction
of the Court since there was no indemnity offered by the Claimants in the event the
Third Claimant is faced with an adverse costs order in the instant action which will
imperil the assets of the Third Claimant and prejudicially impact the ability of the
mortgagee, RBL, to recover the sum owed to it.
26. Counsel for the Claimants argued that the action on behalf of the Third Claimant ought
not to be struck out. Counsel submitted that the indemnity was not required as there
is no peril or threat to the mortgagee, RBL, as the assets of the Third Claimant in the
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2015 audited financial statements were valued at approximately $192,000,000 which
are substantial.
27. Rule 26.2(1) (b) of the CPR provides that:
“the court may strike out a statement of case or part of a statement of case if it
appears to the court-
(a) …
(b) that the statement of case or the part to be struck out is an abuse of the
process of the court.”
28. The striking out of a party’s claim is a draconian step which the Court thread cautiously
when exercising its discretion to do so.
29. At paragraphs 22 to 24 of the Defendant’s Striking Out Affidavit she deposed:
“22. The Company’s liabilities as at the date hereof include:
a. The secured debt due to Republic which as at 20th January 2020
amounted to $78,799,979.48;
b. Debts due to unsecured creditors based on proofs of claim
submitted to me which amount to $56,458,804.32;
c. Outstanding VAT, penalties and interest due to the Inland
Revenue which as at 18th May 2017 amounted to $12,825,657.44;
d. Unsatisfied High Court judgments which amount to
$8,456,458.83; and
e. A claim by Plipdeco against the Company for unpaid storage
charges which as at August 2017 amounted to $42,406,538.04.
A true copy of Republic’s letter to my assistant, Ms. Keesha Sahadeo, dated 20th
January 2020 confirming the outstanding balance due from the Company is now
produced and shown to me and hereto exhibited marked “M.D.11”.
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23. The Company is currently operating on an account with an overdraft
facility provided by Republic. Its approximate average monthly running
expenses, met by the overdraft facility where necessary, is $250,000.00
made up of the licence fee payable for the Claxton Bay land, insurances,
utilities, security and overdraft interest.
24. It is therefore readily apparent and incontrovertible that the assets of the
Company are not sufficient to liquidate Republic’s secured debt and that
the short fall is in the vicinity of $42,000,000.00.”
30. The Claimants response to paragraphs 22 to 24 of the Defendant’s Striking Out
Affidavit was set out at paragraphs 16 of the Claimants Striking out Affidavit which
stated:
“16. In response to paragraph 22 I wish to state as follows:
i. 22(a) - We do not agree with the figure as at the time of
receivership the balance was Seventy-Nine Million. The interest
accrued may be judgment interest and I am sure RBL would have
written off amounts every year due to financial regulations.
ii. 22(b) - We are not aware of the figure cited by the Defendant and
puts the Defendant to strict proof of same.
iii. 22(c) - the VAT figure is Four Million, Five Hundred Thousand
Dollars and as we seen over the years, there have been many
periods of VAT amnesties which KCG could have benefitted from
when ready to settle. It must also be noted that while VAT is
owed, another state company Petrotrin is indebted to KCG in the
average sum of Three Hundred and Twenty-Eight Million Dollars.
iv. 22(d) - This sum could be negotiated with the Judgment Debtors
for a reduction of monies due and owing.
v. 22(e) - By letter dated 17th November 2015 from the Claimant of
Plipdeco, Mr Ian Atherly, Mr Atherly wrote to the Minister of
Works and Transport, the Honourable Mr Fitzgerald Hinds,
advising that due to non-payment by Petrotrin KGC was not in a
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position to pay additional port charges and seeking a waiver of
these charges in the sum of Eight Million Dollars
($8,000,000.00). By letter dated 31st October, 2016, Minister
Hinds responded indicating that he has sent the matter to
Corporation Sole for intervention. At the time of the appointment
of the Defendant, it therefore seems that this matter was under
investigation by Corporation Sole to which we are unaware as to
whether any decision has been made, in circumstances where the
monies remain due and owing by Petrotrin to KCG.
It should also be noted that if Petrotrin monies received or part off, these above
debts can be settled. They could also be settled if KCG was restructured and
allowed to work and repay over time. If the Defendant liquidates all the assets for
Thirty Four Million, Five Hundred Thousand Dollars ($34,500,000.00), the effect
would be that no other companies, the State, workers, or any other persons owed
monies would be paid.”
31. The Defendant continued at paragraph 25 of the Defendant’s Striking Out Affidavit
that:
“In the Claim form filed herein the Claimants have claimed against me for my
alleged breach of an equitable duty to properly manage the business of the
Company. In this regard I note that:
(a) I have not authorized the commencement of these proceedings by the
Company and that as far as I am aware, no indemnity against the liability
of the Company’s assets to satisfy a hostile order for costs made against
it has been provided. The Claimants have no power to conduct legal
proceedings on the Third Claimant’s behalf in the absence of any
indemnity to protect the Third Claimant’s assets in the event of costs
being awarded or of a hostile costs order being made against them in this
action, In those circumstances the assets of the Company subject to the
receivership are directly imperiled; ”
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32. The Claimants did not respond to paragraph 25 of the Defendant’s Striking Out
Affidavit in the Claimants Striking out Affidavit.
33. It was not in dispute between the parties that the directors of a company can institute
an action against a receiver of the company. The nature of the dispute was centered
on if such action by the directors can be done without an indemnity first being
provided to the receiver to cover any adverse costs order which may be made against
the company. The divide between the parties was based on the applicable principle of
law which they relied on.
34. Counsel for the Defendant relied on the learning in the English cases of Newhart
Development Limited v Co-operative Commercial Bank Limited9 and Tudor Grange
Holdings Limited v Citibank N.A.10, the local Court of Appeal judgment of Busy
Printery Limited v Bank of Commerce Trinidad and Tobago Limited, Dieffenthaller &
Buxo11 and the Canadian case of Maple Leaf Foods Inc. v North Atlantic Sea Farms
Corp12 to support his position.
35. Newhart Development Limited was a judgment of the English Court of Appeal
delivered in 1978. In that case, N Ltd entered into a property development scheme
with C Bank whereby the latter would provide the former with the finance. The
scheme ran into difficulties. C Bank withdrew its financial support and appointed a
receiver of N Ltd under a mortgage debenture creating a charge of its undertaking and
property. N Ltd issued proceedings against C Bank claiming damages for breach of the
contract to provide financial support for the scheme. C Bank applied to have the writ
set aside on the ground that it was issued without the consent of the receiver, who
alone was entitled to proceed with the action. The Registrar dismissed the application.
Chapman J. reversed the decision of the Registrar and set aside the writ for
irregularity. N Ltd appealed.
9 [1978]2 All ER 896 10 [1991] 4 All ER 1 11 Civil Appeal No. 134 of 1993 12 2005 NLT 36
Page 16 of 74
36. On appeal C Bank contended that on the appointment of the receiver, N Ltd, was
divested of all power to bring an action and only the receiver could institute and
pursue the action in question.
37. The Court of Appeal allowed the appeal and held that a provision in a debenture
empowering the receiver to bring an action in the name of the company where the
assets were charged was merely an enabling provision, investing the receiver with the
capacity to bring such an action, and did not divest the company’s directors of their
power to institute proceedings on behalf of the company, provided that the
proceedings did not interfere with the receiver’s function of getting in the company’s
assets or prejudicially affecting the debenture holder by imperiling the assets. Further,
the directors were under a duty to bring an action which was in the company’s interest
because it was for the benefit of creditors generally, and to pursue that right of action
did not amount to dealing with the company’s assets so as to require the receiver’s
consent or concurrence. As the action would not stultify the receiver’s function of
gathering in the assets, N Ltd was not required to obtain his consent to bring the
action.
38. Tudor Grange Ltd was a decision of the English Court. In that case, two associated
company groups obtained financing from two banks on the basis of certain
commitments and agreements. The companies became insolvent and the lead bank
appointed administrative receivers of both companies in September 1989.
Subsequently, the companies and their controlling shareholders instituted
proceedings against the banks claiming inter alia, damages for misrepresentation and
duress in respect of the execution of various documents.
39. The Court held, inter alia, that directors had no power to bring proceedings on behalf
of a company following the appointment of a receiver where the receiver’s position
would be prejudiced by their decision to start the action. In Tudor Grange Ltd since
the action commenced by the directors in the name of the plaintiff companies could
directly impinge on the property subject to the receiver’s powers (because the
directors held no indemnity against the liability of the companies’ assets to satisfy a
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hostile costs order) it followed that the directors had no power to start the
proceedings.
40. In delivering the judgment of the Court, Browne-Wilkinson V.–C. distinguished the
facts in Tudor Grange Ltd from Newhart Development Limited and he noted at page
11 letters a and b:
“[W]hen two directors of the plaintiff companies decided to start proceedings in
the name of the company they were starting proceedings which could directly
impinge on the property subject to the receiver’s power in that they held no
indemnity against the liability of the companies’ assets to satisfy a hostile order
for costs. That brings this case outside both the decision and the reasoning in the
Newhart case since, unlike the Newhart case, the receiver’s position was
prejudiced by the decision taken. In my judgment, the directors had no power to
start the proceedings in those circumstances.”
41. The Court of Appeal in Trinidad and Tobago adopted the legal principles as outlined in
Newhart Development Limited and Tudor Grange Ltd in Busy Printery Ltd. In Busy
Printery Ltd the Appellant commenced proceedings against the Respondents (the
Bank and 2 receivers) as a result of the appointment by the First Respondent of 2
receivers, the Second and Third Respondents) of the Appellant under a debenture.
The Appellant paid the debt owed to the First Respondent 7 days after the
appointment of the receivers. After the debt was paid, the Appellant then sought to
restrain the Second and Third Respondents from selling, leasing, mortgaging, charging,
disposing and/or parting with possession of the Appellant’s plant, machinery,
equipment, assets and property until the hearing and determination of the action.
42. The Appellant’s proceedings were stayed in the High Court until arrangements were
made by the Appellant for the discharge of the costs of the Second and Third
Respondents. The Appellant appealed the stay granted by the High Court. The
application was dismissed with costs by a single judge of the Court of Appeal. The
Appellant then applied to the Full Court of the Court of Appeal to have the order of
dismissal set aside and the stay vacated.
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43. The issues before the Court of Appeal were whether the proceedings instituted in the
name of the Appellant interfered with the Second and Third Respondents’ function of
getting in the assets and whether the proceedings prejudicially affected the First
Respondent, the debenture holder, by imperilling the assets.
44. The Court of Appeal dismissed the Appellant’s motion and found that despite the
direct debt having been paid, the Appellant’s liability with respect to costs, charges
and expenses under the debenture continued, and accordingly, the Appellant
debenture debt was not fully discharged. The Court of Appeal also found that the
Appellant held no indemnity against the liability of its assets to satisfy costs incurred
by it in the pursuit of the instant action nor to satisfy a hostile order for costs made
against it. Its liability with respect to costs continued and the Appellant’s assets
remained subject to the charge, and so the impending action could directly impinge
on the property subject to the receivers’ powers and therefore, prejudicially affected
the debenture holder by imperilling the assets charged.
45. At page 17 of the judgment the Court of Appeal explained its position as:
“In view of the foregoing, I think the crucial factor in determining whether,
subsequent to the appointment of a receiver pursuant to the terms of a
debenture, directors of a company have the power to institute and maintain
proceedings is whether any prejudice would be occasioned to the debenture
holder. Such prejudice would occur either if the proceedings would interfere with
the receiver’s function of getting in the assets of the company or if the
proceedings would prejudicially affect the debenture holder by imperiling the
assets of the company which are subject to the charge. It plainly emerges as well
from the decisions in Newhart and Tudor Grange Holdings Limited that if the
company in receivership is called upon to finance proceedings brought by its
directors out of its own resources or may have to meet any claim for costs if the
action brought by its directors fails then the debenture holder would be affected
adversely and as a corollary the rights or functions of the receiver would similarly
be affected. However, if the company is indemnified by outside sources against
all liability, not only for its own costs of the action but also for costs which the
Page 19 of 74
company might be ordered to pay on a hostile order as to costs made against it,
then the action commenced by the directors of a company in the company’s name
would not impinge directly on the property subject to the receiver’s powers.
Conversely, unless the directors of the company hold such an indemnity against
the liability of the company’s assets, then the mere institution of proceedings by
directors of the company would, ipso facto, prejudicially affect the debenture
holder by imperiling the assets of the company subject to the charge. Accordingly,
it would be unnecessary to either the debenture holder or the receiver to adduce
any other evidence to show that the assets of the company are likely to be
depleted thereby.” (Emphasis Added)
46. Maple Leaf Foods Inc. v North Atlantic Sea Farms Corp13 was a decision of the High
Court emanating from the Supreme Court of Newfoundland and Labrador in Canada.
In Maple Leaf Food Inc the Defendant, Maple Leaf applied to strike out the statement
of claim of North Atlantic which was issued after the latter was placed into
receivership by the Maple Leaf, its main creditor. The basis was that the directors of
North Atlantic did not have the capacity to bring the action once Maple Leaf had
appointed a receiver pursuant to a security document between the parties.
47. North Atlantic had entered into a security arrangement with Maple Leaf under which
the latter advanced credit to the former. During 2004, North Atlantic had undertaken
extensive discussions with Maple Leaf to increase its credit limit for the purpose of
expanding its operations. However, by September 2004 Maple Leaf issued a demand
for payment of amounts outstanding. On 1 October, 2004, Maple Leaf appointed a
receiver of the operations and undertaking of North Atlantic, pursuant to a General
Security Agreement (“the GSA”) between the parties. Immediately prior to the
appointment, on 28 September, 2004, an officer of North Atlantic indicated its
unconditional consent to the appointment of a receiver, as it “... has exhausted all
13 2005 NLT 36
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available cash and financing resources to support the Corporation’s operations for the
next 30 to 60 days,....”.
48. North Atlantic caused a statement of claim to be issued against Maple Leaf alleging
that its conduct was contrary to the security documents. Maple Leaf applied to strike
out the claim before filing a Defence and for security for costs.
49. Maple Leaf’s main argument was that North Atlantic had no capacity to bring the
action as under the terms of the GSA, the power to commence an action on behalf of
North Atlantic was abridged by virtue of the appointment of a receiver and that such
power was transferred to a receiver. There was no disagreement about the terms of
the GSA. However, the disagreement was about the about the interpretation of the
terms in respect of the residual powers of the directors once a receiver had been
appointed.
50. The Court dismissed Maple Leaf’s application to strike out North Atlantic’s claim on
the basis that the security documents did not give the receiver authority to bring the
action on the interpretation of the GSA. The Court found that North Atlantic was
effectively insolvent and it was reasonable that those behind the litigation took some
risk associated with it. The Court also ordered North Atlantic to pay security for costs.
The Court’s ruling in dismissing Maple Leaf’s application to strike out North Atlantic’s
claim turned on the Court making the order for North Atlantic to pay security for costs.
51. At paragraph 36 the Court explained:
“Debenture-holders should be protected from the negative consequences of
litigation on the security document itself. Where as in this case, the costs of any
action are likely to diminish the value of the security, the courts will attempt to
ensure that litigation does not proceed on the backs of the debenture-
holders…Generally it would be considered as a condition for allowing the action
to continue that the directors, or the guiding minds of the respondent, put up
security.”
Page 21 of 74
52. The Court also found that shareholders cannot have it both ways - they cannot hide
behind the persona of the corporation and plead impecuniosity, but at the same time
use it for their own benefit.
53. Counsel for the Claimants relied on the learning in a High Court judgment of Jamaica
in Ocean Chimo Ltd And Royal Bank (Jamaica) Ltd (RBC )And Royal Bank (T &T) Ltd
(RBC) And Royal Bank Of Canada14.
54. In Ocean Chimo the Claimant was placed in receivership on 19 August, 2011 pursuant
to mortgage debentures issued by it on 16 September 2005 and 28 April 2008 as part
of the security for loans made to the Claimant by the First and Second Defendants.
Pursuant to the mortgage debentures, the Claimant’s assets were charged as security
for all the monies due and owing from it. The debenture dated 28 April 2008 was in
essence the same as the one made in 2005.
55. The Claimant had commenced separate proceeding against the First and Second
Defendants in 2010, before the appointment of the receiver seeking damages based
on allegations of breach of the loan agreement, fraudulent manipulation of the
interest rate and conspiracy. Following the appointment of the receiver, the Claimant
applied to amend the claim to commence proceedings against the Third and Sixth
Defendants who are servants and or agents of the First and Third Defendants.
56. The Defendants applied to stay the Claimant’s claim until it provided proof of consent
by the receiver, appointed by them in August 2011, to continue the claim before the
court.
57. The first issue to be determined was whether the consent of the receiver was required
for the claim to be allowed to continue and the second issue was whether the directors
must provide an indemnity against the dissipation of company assets.
14 [2014] JMCC Comm7
Page 22 of 74
58. The Court examined the principles in Newhart Development Limited and Tudor
Grange Ltd and concluded the following at paragraphs 45 to 47 of the Ruling:
“[45] In the round then the court holds that the directors of a company in
receivership, as the governing organ of the company, still retain a residual power
to bring action on behalf of the company in the interest of the company and its
shareholders. This power exists alongside and in tandem with the independent
power to do so which also resides in the receiver and no consent is required of a
receiver to do so. However, if the receiver consents or joins with the organs of the
company in bringing an action, then the claim by the directors will be deemed to
be a claim by the receiver.
[46] Where the directors take action independently of the receiver without his
consent or participation and there is evidence that the assets of the company
would be imperilled to the detriment of the debenture holders, the directors of
the company in receivership may be required to provide an indemnity against any
diminution in the value of the assets under receivership, before such a claim will
be allowed to proceed. The onus is on the applicant to show, by credible evidence,
that, the assets of the company are insufficient to satisfy the debt and any costs
orders which may be made against it and that the rights of the debenture holder
would be in jeopardy if no indemnity was provided.
[47] The receiver has the power to take or continue an action at the expense of
the assets of the Claimant Company and the debenture holder would not be in a
position to prevent the receiver from continuing the said action against them at
the costs of the assets. It therefore follows that they should not be able to prevent
the Claimant’s actions against them continuing unless they can show that the
costs of the action would far exceed the value of the debenture. The only thing
standing between them and the Claimant’s case is the appointment of the
receiver by them.” (Emphasis Added).
59. In my opinion Ocean Chimo does not assist the Claimants since it can be distinguished
on the facts and law from the instant case. With respect to the facts, in Ocean Chimo
the action was commenced before the claimant was placed in receivership whereas
Page 23 of 74
the instant action was started almost 2 years after the Defendant was appointed
Receiver of the Third Claimant. Also in Ocean Chimo the action was against the
debenture holder and the allegation was that the debenture holder conspired to
destroy the claimant company. In the instant case the allegations are not made against
RBL, the debenture holder but against the Receiver’s conduct in in the receivership.
Further, in Ocean Chimo there was no evidence that the action of brought by the
Claimants would frustrate the receivers action in realizing the assets of the company.
In the instant case, the Defendant set out in the Defendant’s Striking Out Affidavit that
the instant action would frustrate her efforts in repaying off the debts of the Third
Claimant and in satisfying RBL’s debt.
60. With respect to the differences in law, in Ocean Chimo the Court found that the onus
was on the Bank to show by credible evidence that the assets of the company which
was in receivership were insufficient to satisfy the debt and any costs which would
jeopardize the debenture holder, the bank if no indemnity was provided. In the instant
case the Court of Appeal in this jurisdiction, established at page 17 in Busy Printery
Ltd, unlike in Ocean Chimo that the mere institution of an action without the
indemnity is sufficient evidence prima facie to establish that the assets of a company
in receivership would be imperiled. Unlike in Ocean Chimo in this jurisdiction there is
no burden on the Receiver or Bank to show that the assets of the company are
imperiled by the court action.
61. In my opinion the approach to be taken in this jurisdiction where a company is already
in receivership and the directors choose to institute and action is that set out by the
Court of Appeal in Busy Printery Ltd. It is without the appropriate indemnity, directors
are not at liberty to commence proceedings on behalf of a company in receivership in
circumstances where the assets of the company are insufficient to meet the debt
owed to the debenture holder since the consequence is there may be inevitable costs
orders against the company which will prejudicially deplete the assets available to the
secured debtor for satisfaction of his debt.
Page 24 of 74
62. It is not in dispute in the instant matter that the Defendant has not authorised the
institution of the instant action on behalf of the Third Claimant and the Defendant has
not received any indemnity against the liability of the Third Claimant to satisfy a hostile
order for costs15.
63. In my opinion, the Claimants evidence as set out in paragraph 16 of the Claimants
Striking Out Affidavit did not dispute that the secured debt as at January 2020 owed
by the Third Claimant to RBL is still substantial and it is still in excess of the realisable
value of the Third Claimant’s assets by approximately $42,000,000.0016. In my opinion
given the undisputed facts in the instant action, and that the Third Claimants secured
debt to RBL is significant, in the absence of the indemnity, the Third Claimant’s action
against the Defendant is dismissed on the basis of abuse of process since any adverse
costs order which is made against the Third Claimant in the instant action would
imperil the assets of the Third Claimant which would ultimately prejudice RBL, the
debenture holder.
SHOULD THE FIRST AND SECOND CLAIMANTS ACTION BE DISMISSED?
64. The second limb of the Defendant’s Striking Out Application is with respect to the First
and Second Claimants claim against the Defendant. It was submitted on behalf of
Counsel for the Defendant the action brought by the First and Second Claimants ought
to be struck out pursuant to Rule 26.2 (1) (c ) of the CPR since the claims advanced by
them against the Defendant are that the latter breached her equitable duties owed to
them but that this claim is flawed as all the damages pleaded at paragraph 20 (xxiii)
of the Statement of Case are damages/ loss suffered by the Third Claimant and not by
the First and Second Claimant personally. As such they have no maintainable cause of
action. Further, the First and Second Claimants cannot recover any loss suffered by
them personally as damage done to the Third Claimant which resulting in a reduction
in the value of their shareholding.
15 Paragraph 25 of the Defendant’s Striking Out Affidavit. 16 Paragraphs 13-24 of the Defendant’s Striking Out Affidavit
Page 25 of 74
65. In response the Claimants argued that although it is not necessary to prove actual loss,
the Defendant’s action in her conduct of the Nagico case caused both the First and
Second Claimants to be sued for over $8,000,000.000 by Nagico by the failure of the
Defendant to act with due diligence in her equitable duty in managing the affairs of
the Third Claimant.
66. Rule 26.2 (1) (c ) provides:
“The court may strike out statement of case or part of a statement of case if it
appears to the court-
(a) …
(b) …
(c) that the statement of case or the part to be struck out discloses no grounds
for bringing or defending a claim.”
67. In striking out a claim where there is no reasonable ground for bringing, it Potter LJ in
Partco Group Ltd v Wragg17 stated that cases where striking out are appropriate
include:
(b) where the statement of case raises an unwinnable case where continuing
the proceedings is without any possible benefit to the respondent and
would waste resources on both sides (Harris v Bolt Burdon18); and
(c) where the statement of case does not raise a valid claim or defence as a
matter of law ( Price Meats Ltd v Barclays Bank plc19).
68. More recently this jurisdiction Wilson J in Anthony Amoroso Centeno v Victor Jattan
and ors20 described the approach to be taken as:
“18. The principles to be applied in relation to the summary disposal of cases are
well established. The objective of resolving issues at an early stage is to save time
and costs, which is an important feature of active case management. In deciding
whether to exercise powers of summary disposal, the court must consider
17 [2002] EWCA Civ 594 18 [2000] CPLR 9 19 [2000] 2 All ER (Comm) 346 20 CV 2016-03360 Decision dated 15 February 2018
Page 26 of 74
whether the overriding objective of dealing with cases justly is better served by
the summary disposal of a particular issue or by letting all matters go to trial so
that they can be fully investigated and an informed decision reached: Three Rivers
District Council v Bank of England [2001] 2 All ER 513. Although the above
principles were adumbrated in relation to the summary dismissal of cases, the
discretion to strike out is subject to similar considerations and, where the
allegation involves the failure to disclose grounds for bringing or defending a
claim, is exercisable where the claim is bound to fail on its merits or as a matter
of law. An important consideration is that the court, when faced with an
application to strike out, must consider whether the justice of the case militates
against this nuclear option and requires a more proportionate response: Real
Time Systems Limited v Renraw Investments Ltd. [2014] UKPC 6.
19. The authorities postulate that in many cases there will be alternatives which
enable the court to deal with a case justly without taking the draconian step of
striking it out, having regard to the armoury of powers available under the CPR,
including the power to order a party to supply further details or to file an amended
pleading within a specified time subject to conditions stating the consequences of
non-compliance (which may also include striking out): Asiansky Television Plc. v
Bayer [2001] EWCA Civ. 1792; Real Time Systems Limited v Renraw Investments
Ltd. (supra).”
69. It is a settled principle of law that a cause of action grounded in the law of tort arises
when a party first sustained loss/ damage. Lord Nicholls of Birkenhead discussed this
explained this principle of law in Nykredit Mortgage Bank plc v Edward Erdman Group
Ltd (No. 2)21 at page 308 lines a-f:
“As every law student knows, causes of action for breach of contract and in tort
arise at different times. In cases of breach of contract the cause of action arises
at the date of the breach of contract. In cases in tort the cause of action arises,
not when the culpable conduct occurs, but when the plaintiff first sustains
21 [1998] 1 All E.R. 305
Page 27 of 74
damage. Thus, the question which has to be addressed is what is meant by
“damage” in the context of claims for loss which is purely financial (or economic,
as it is sometimes described).
In Forster v Outred & Co (a firm) 2 All ER 753 at 760, [1982] 1 WLR 86 at 94
Stephenson LJ recorded the submissions of Mr. Stuart-Smith Q.C.:
‘What is meant by actual damage? Counsel for the defendants says that is any
detriment, liability or loss capable of assessment in money terms and it
includes liabilities which may arise on a contingency, particularly a
contingency over which the plaintiff has no control; things like loss of earning
capacity, loss of a chance or bargain, loss of profit, losses incurred from
onerous provisions or covenants in leases, They are all illustrations of a kind
of loss which is meant by “actual” damage. It was also suggested in
argument……that “actual” is really used in contrast to “presumed” or
“assumed”. Whereas damage is presumed in trespass and libel, it is not
presumed in negligence and has to be proved. There has to be some actual
damage.’
Stephenson LJ ([1982] 2 All ER 753 at 764, [1982] 1 WLR 86 at 98) accepted this
submission. I agree with him.” (Emphasis added)
70. In Tudor Grange Ltd the English Court applied the aforesaid principle when it struck
out an action brought by a controlling shareholder C as not having a maintainable
cause of action. The Court found that C, did not have any cause of action against the
Defendant unless he could allege and prove damage suffered by him as opposed to
the companies in which he was involved. The Court also found in Tudor Grange Ltd
that C could not recover as damage suffered by him personally damage done to the
company resulting in a reduction in the value of his shareholding. Browne – Wilkinson
V.-C. explained the position as:
“[C] can have no cause of action against the banks…unless he can allege and prove
damage suffered by him. As I have said, all the damage pleaded in the statement
of case is damage suffered by the company. Mr. Sheridan has accepted, quite
Page 28 of 74
rightly, that [C] as shareholder cannot recover as damage suffered by him
personally damage done to the company resulting in a reduction in the value of
his shareholding.” (page 9 letters g-j).
71. International Leisure Ltd and Anor v First National Trustee Co. U.K. Ltd and Ors22 was
a decision of the High Court in the Chancery Division in England which was an appeal
of the decision of a District Trial Judge. The First Appellant (L) operated a leisure resort,
providing short-term lettings of holiday accommodation and timeshare lettings. The
Second Appellant, a lender (C) provided funding to L under the terms of a debenture
and legal mortgage. L's business failed, and C appointed the Fourth Respondent (K)
administrative receiver. C was dissatisfied with the manner K conducted the
receivership. Both C and L commenced separate proceedings, each claim mirroring the
relief sought in the other, and each alleged various breaches of the receiver's duties.
A district judge ordered that both claims be consolidated with L's claim to be the lead
claim. K, and the Third Respondent successfully applied to strike out C's claim, on the
basis that as a secured debenture holder, it offended against the reflective loss rule.
The principle of reflective loss states that where a company suffers loss caused by a
breach of duty owed to it, only the company may undertake proceedings in respect of
that loss; and no action lies in favour of a shareholder suing in that capacity, and no
other, to make good a diminution in the value of the shareholder's shareholding by
taking action against the responsible party where that merely reflects the loss suffered
by the company.23
72. L and C appealed against the decision striking out their claims on the basis that losses
claimed offended the rule against reflective loss.
73. The appeal was allowed. The Court found that the primary duty owed by an
administrative receiver was to the appointed debenture holder and not to the
company. None of the duties owed to a company could restrict the primary duty of a
receiver to protect, and act in the best interests of, his appointer, even if that were to
22 [2014] 1 BCLC 128 23 Foss v Harbottle (1843) 2 Hare 461; Prudential Assurance v Newman Industries (No. 2) [1982] 1 Ch 204
Page 29 of 74
cause damage to the company. It followed that as long as a receiver acted in good
faith it was unlikely that the duties he owed to a company would be wider in ambit
than those he owed to a debenture holder. The administrative receiver's primary duty
was to bring about a situation in which the secured debt could be repaid and the
receiver owed no duties whatsoever to a company's unsecured creditors.
74. The Court also found that nothing required the extension of the no reflective loss rule
to cover the position of a secured creditor. The positions of an unsecured creditor and
a secured creditor were fundamentally different. The secured creditor's position, such
as C's as a debenture holder, was fundamentally distinct from that of a shareholder
who sought to sue for loss primarily belonging to and suffered by a company. The
primary loss in C's case belonged to C, the legal person to whom an administrative
receiver's primary duties were owed. Further, the issues of causation and policy
considerations underpinning the no reflexive loss rule were absent in the instant case.
Moreover, the court's need to be astute to ensure that a party who had suffered loss
was not arbitrarily denied fair compensation which mandated that C's claims not be
struck out. The sums due to C under the assignment agreement meant that C had a
cause of action in respect of those sums that vested solely in C and those claims ought
not be struck out.
75. The Court referred with approval to the learning of Lord Bingham in Johnson v Gore
Wood24 who stated:
“A claim will not lie by a shareholder to make good a loss which would be made
good if the company’s assets were replenished through action against the party
responsible for the loss, even if the company, acting through its constitutional
organs, has declined or failed to make good that loss”
76. The Particulars of loss pleaded by all the Claimants at paragraph 20 (xxiii) of the
Statement of Case states:
Particulars of loss or damage
i. Failure to prosecute Petrotrin claim promptly – to be calculated
24 [2001] 1 BCLC 313 at 337
Page 30 of 74
ii. Failure to claim storage and security $2,227,484
iii. Failure to adequately protect KGC’s
Equipment from theft $3,478,300
iv. Failure to adequately provide maintenance of
Equipment and machinery of KGC to be calculated
v. Failure to adequately defend Nagico $8,807,867.78
vi. Failure to allow KGC to pursue business
Other than rental business approximately $44,981,312.00
vii. Failure to allow the Claimants to
Refinance the debt to be calculated
viii. Selling KGC’s business at an undervalue to be calculated
77. At paragraph 25 (b) of the Defendant’s Striking Out Affidavit she stated that:
“25. In the Claim form filed herein the Claimants have claimed against me for
my alleged breach of an equitable duty to properly manage the business of the
Company. In this regard I note that:
(a) …
(b) any damage arising out of my alleged breach to properly manage the
business of the Company will be suffered by the Company itself and not
by the First and Second Claimants who therefore have no cause of action
against me under this head. The First and Second Claimants can have no
cause of action against me under this head unless they can allege and
prove any damage suffered by them personally under this head and the
First and second Claimants do not allege and cannot prove such damage.
All the damage claimed and pleaded in the statement of claim under this
head, is damage suffered by the Company itself.”
78. The Claimants Striking Out Affidavit failed to address the aforesaid paragraph of the
Defendant’s Affidavit.
Page 31 of 74
79. It seems to me from an examination of the entire Statement of Case that all the loss
which the Claimants have alleged against the Defendant was suffered by the Third
Claimant. The Claimants did not specifically plead that any loss suffered by the First
and Second Claimants personally as a result of the alleged breach of the equitable
duties owed to them by the Defendant. In my opinion the failure to plead any such
loss in the Statement of Case is fatal to the First and Second Claimants maintaining a
claim against the Defendant for breach of equitable duties and her removal as the
Receiver of the Third Claimant since the absence of pleading such loss means that no
cause of action arose by them against the Defendant.
80. Having found that the Statement of Case has failed to disclose any cause of action by
the First and Second Claimants in their personal capacity it follows that their claim
must be struck out against the Defendant. In light of this ruling and my position that
Third Claimant’s action is struck out for abuse of process, it follows that the entire
action against the Defendant is struck out which includes the Injunction Order.
However even I erred in arriving at the aforesaid position it is still imperative that I
consider the discharge of the Injunction Order.
SHOULD THE INJUNCTION ORDER BE DISCHARGED?
81. The principles in law which the Court must consider in granting an injunction were not
in dispute by the parties. The Privy Council established in National Commercial Bank
v Olint Corp. Ltd25 that an injunction order should only be granted ex parte in
exceptional circumstances and there must be good reason for doing so since a party
is deprived of his right to be heard.
82. In this jurisdiction Aboud J in Niquan Energy Trinidad Limited v World GTL Trinidad
Limited and others 26 considered the principles in Jetpak Services Ltd v BWIA
International Airways27 and Olint and observed at paragraph 81:
“81. In applying these principles, as I understand them, to the facts of this
25 [2009]UKPC 16 26 CV 2013-02699 27 (1998) 55 WIR 362
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case I must first evaluate the relative strengths of each party’s cases as
disclosed on the affidavits, paying particular regard to the evidence against
which there is no credible dispute, and being cautious, where there is such
dispute, to void a mini-trial on untested affidavit evidence. All the authorities
agree that this first step is a threshold test and a “fail” here on the relative
strengths of each party’s cases will certainly be fatal. The question to be asked
is whether there is a serious issue to be tried. As Lord Hoffman said in Olint,
echoing his earlier words in Films Rover that were approved by Chief Justice
de La Bastide in Jetpak (page 370), the court must feel a “high degree of
assurance” that the injunction sought at the interlocutory stage will be
granted at the trial. I am also guided by the way Sir Robert Megarry V.C put it
in Mother Care Ltd v Robson Books Ltd [1979] FSR 466:
“The prospects of the plaintiff’s success are to be investigated to a limited
extent, but they are not to be weighed against his prospects of failure. All that
has to be seen is whether the plaintiff has prospects of success which, in
substance and reality, exist. Odds against success no longer defeat the
plaintiff, unless they are so long that the plaintiff can have no expectation of
success, but only a hope. If his prospects of success are so small that they lack
substance and reality, then the plaintiff fails, for he can point to no question
to be tried which can be called ‘serious’ and no prospect of success which can
be called real.”
83. More recently in Savitri Doone v Rajendra Doone28 Kokaram J (as he then was)
provided the following guidance in exercising its discretion in granting interim orders.
He stated:
“The following general considerations culled from Cyanamid as explained in Olint
and Niquan provide a useful guide to the Court in exercising its discretion in
granting an interim injunction:
a) The essential objective is to preserve the Court’s freedom to do justice at
28 CV2018-04401
Page 33 of 74
the trial;
b) Whether there is a serious issue to be tried is determined upon an
evaluation of the relative strength of the parties case;
c) The weaknesses of a party’s case must be taken into account;
d) The prejudice the claimant may suffer if no injunction is granted or the
defendant may suffer if it is. A claimant can reduce the potential injustice
to the defendant by drafting the terms of the injunction as narrowly as is
consistent with preserving the claimant’s interests, or by offering
undertakings to provide extra safeguards for the defendants29;
e) The likelihood of such prejudice actually occurring;
f) The extent to which a party may be compensated by an award of
damages or enforcement of the undertakings in damages. Lord Diplock
in American Cyananid Co. v Ethicon Ltd said the extent to which the
disadvantages to each party would be incapable of being compensated
in damages is always a significant factor in assessing where the balance
of convenience lies. In Dyrlund Smith AIS V Tuberville Smith Ltd [1998]
FSR 774 the apparent inability of the defendants to meet an award of
damages was regarded as the decisive factor in favour of granting an
interim injunction. However, there is no general rule that if damages are
an adequate remedy an injunction will not be granted;
g) The likelihood of whether a party is able to satisfy such an award.
However the indigent ought not to be penalised where there are merits
to their claim or in the balance it is just to grant interim relief.
h) In determining this question the Court should not confine itself to
damages in the sense only of special damages, but should also consider
damages to reputation and loss of goodwill. In fact, all damages, special
and general, are on the table;
i) Where does the balance of convenience lie;
29 See Blackstone’s Civil Practice 2018
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j) The likelihood that the injunction will turn out to have been wrongly
granted or withheld (i.e. the Court’s view of the relative strengths of the
parties’ cases). This last matter may be considered if the other matters
are evenly balanced or where it is possible to form such a view on facts
which are clear or not in dispute.30
k) Other special relevant factors recognising that human activity is to
idiosyncratic and the range of disputes and complexity of them are too
unpredictable to ignore special factors which will impact in weighing the
relative justice in granting or refusing relief.
l) None of these factors are to be considered as isolated modules. The
Court adopts “a wide angle lens” to answer the organic question “where
does the balance of justice lie” or “what course seems likely to cause the
least irremediable prejudice to one party or the other.”31
84. In this case, the Injunction Order was granted on an ex parte application. In Doone, it
was highlighted that “Unless there is some urgency which makes it literally impractical
to give notice of an application for an interim injunction, or to do so will defeat the
purpose of the injunction, our Courts should generally insist on inter partes rather
than ex parte applications.” Simply put, ex parte applications are exceptional. Rule
17.3 of the CPR also states that “The court may grant an interim remedy on an
application made without notice if it appears to the court that there is good reason
for not giving notice.”
No good reason for failing to give notice of interim application
85. The “good reason” advanced by the Claimants for bringing ex parte proceedings were
set out at paragraph 22 of the Claimants First Injunction Affidavit. In summary the
Second Claimant stated that in November 2019 the Defendant advised him of her
intention to sell the Third Claimant’s assets for the sum of TT $35,500,000.00 within
30 See Blackstone’s Civil Practice 2018 31 American Cyanamid Co. v Ethicon Ltd [1975] A.C.396. National Commercial Bank Jamaica Ltd v Olint Corporation Ltd [2009] 1 WLR 1405, Jetpak Services Ltd v BWIA International Airways Ltd (1998) 55 WIR 362, Niquan Energy Trinidad Limited v World GTL Trinidad Limited and others CV2013-02699
Page 35 of 74
30 days. By this sale, the Claimants did not have the option to form a partnership with
a potential purchaser to allow the Third Claimant to continue any of its operations in
the marine construction and offshore services.
86. On the 19 November 2019 the Defendant advised the Second Claimant that she was
giving the Third Claimant until the 20 November 2019 as it related to her decision to
sell the Third Claimant’s assets.
87. The First and Second Claimants became very concerned with this decision by the
Defendant since (a)they had made efforts to continue the operation of the Third
Claimant since the appointment of the Defendant as receiver and they had generated
income in the sum of $35,681,927.68 which was paid to RBL; (b)they had recently
received permission from the Defendant to commence legal action against Petrotrin
to recover the sum of $328,000,000.00 which was owed by Petrotrin to the Third
Claimant and (c) the 2015 Audited Financial Statements of the Third Claimants showed
that its assets were valued at $192,273,646.00.
88. By letter dated the 20 November, 2019, the Claimants’ Attorney at Law Messrs Devesh
Maharaj & Associates issued a pre-action protocol letter to the Defendant in her
capacity as Receiver. The Defendant was informed of that she breached several duties
as a receiver under the BIA. The Claimants’ Attorney at law requested to reconsider
her decision to sell the Third Claimant’s assets to a Company she had chosen and
instead to give further consideration to two prospective financiers who were willing
to partner with the First and Second Claimants and save the Third Claimant. The
Claimants Attorney at law indicated to the Defendant in the pre-action letter that if
she had failed to comply with their request they intended to seek an order of the Court
to stop the sale.
89. According to the Claimants First injunction Affidavit, the Defendant failed to respond
to the pre-action letter and instead she embarked on actions which the Claimants saw
as calculated to oppress and frustrate them. On the said 20 November, 2019, upon
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receiving the Claimants’ Attorney at law letter via email, the Defendant contacted the
Second Claimant and expressed her anger. Subsequent telephone calls to the
Defendant’s phone by the Second Claimant were not answered. The Defendant’s
assistant Ms. Keesha Sahadeo then called the Second Claimant and expressed her
dissatisfaction at receiving the pre-action letter. Ms Sue-Ellen Mohamed who works
for the Claimants received a call from Ms. Keesha Sahadeo who indicated to her that
the Defendant instructed that no one was allowed to go to the facility in Claxton Bay.
90. On 21 November 2019, the Second Claimant was advised by the security at the Third
Claimant’s La Brea land that the Defendant notified her security on the 20 November,
2019 that the Claimants and their staff are not allowed on any of the Third Claimant’s
compounds.
91. On the 22 November 2019 persons from the Defendant’s work place visited the Third
Claimant’s La Brea land and marked all the equipment.
92. The First and Second Claimants were advised that Inland had entered into an
agreement with the Defendant for the Third Claimant’s La Brea land but no down-
payment had been made. On the 24 November officials from De Novo Energy
Corporation visited the Third Claimant’s Claxton Bay facility and saw the Defendant’s
security and Junior Sammy Contractors security who both indicated that the Third
Claimant no longer operated there; the Claimants had no authority; and the Claimants
have to deal with Junior Sammy Contractors.
93. On the 26 November 2019, Mr Singh from Yara International Company called the
Second Claimant and asked him for a meeting. Mr Singh was responsible for granting
clearances for vessels to depart and enter the Claxton Bay TCL Sufferance Wharf
where the Third Claimant’s vessels and yard facilities are located. Mr Singh indicated
that he saw a few men performing work on the cranes and they indicated to him that
they were from Junior Sammy Contractors and they were doing surveys. Mr Singh
observed that they were not doing surveys but he heard engines starting and running.
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94. At 4 pm on the 26 November 2019 the Second Claimant received a telephone call from
the Defendant who indicated that the sale was in the final stages and would be
completed by 16 December 2019.
95. In my opinion, there were no exceptional circumstances for the Claimant’s Injunction
Application to be made and dealt with ex parte. Based on the Claimants own evidence
the Second Claimant was in communication with the Defendant since November 2019
about the impending sale. I accept that the Defendant did not respond to the pre-
action letter but I am not of the opinion that her failure to respond was unreasonable
since the letter which was dated 20 November 2019 consisted of 11 pages of serious
allegations made against her and she was called upon to respond by the end of the
same working day the letter was written.
96. Further even with the Defendant’s failure to respond by the end of the 20 November
2019, based on the Claimants own evidence the sale was due to be completed on the
16 December 2019 which meant that the Claimants had at least 2 weeks before the
completion of the sale to file the instant action and notify the Defendant of the
Claimants’ Injunction Application. Therefore based on the Claimants own evidence it
was not literally impractical to notify the Defendant of the Claimant’s Injunction
Application since they knew since after the 20 November 2019 that they intended to
approach the Court to stop the sale scheduled to be completed on the 16 December
2019.
97. In any event, there was absolutely no credible evidence that the Defendant was going
to take any steps to defeat the purpose of the injunction.
Reasons for discharging the Injunction Order
98. On considering an application to discharge ex parte orders the approach of the Court
at this stage is not to conduct a mini trial on affidavits but to re-examine the question
of interim relief in light of the submissions made by the parties and the facts that have
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been disclosed by them. The Court is entitled to exercise its discretion on any relevant
factor in a manner different from when the ex parte orders were first granted32.
99. Having considered all the relevant factors in my opinion the Injunction Order must be
discharged for the following reasons.
Pre-condition for restraining the receiver was not met
100. First, the pre-condition for restraining a receiver has not been met. It was submitted
by the Defendant that in the absence of a payment into court of the amount which is
still owed to RBL i.e. the sum of $78,799,979.48 (as at 20 January 2020) the Injunction
Order ought never to have been granted and must now be discharged. Counsel relied
on the learning in the cases of Inglis v Commonwealth Trading Bank of
Australia33;National Westminster Bank plc v Skelton34 and Strategic Nominees Ltd
(in receivership) v Gulf Investments (Fiji) Ltd and Ors35.
101. Inglis was a decision of the High Court in Australia in 1972. In Inglis a mortgagor
sought, inter alia, an interim injunction to restrain his mortgagee from exercising its
powers under the mortgage deed. He did not pay off the amount of the mortgage debt
or pay into court the amount claimed by the mortgagee but he sought to set off
against the mortgage debt a claim for damages which he had against the mortgagee.
The Court refused the application for injunctive relief on the basis that the amount of
the mortgage debt claimed by the mortgagee was not paid into court before the
injunctive relief was sought and that the claim for damages by the mortgagor was not
a valid reason for granting the injunctive relief sought.
102. National Westminster Bank Plc was a judgment of the English Court of Appeal in
1989.The Defendants mortgagors charged their home to a bank as security in respect
32 Pre-emptive Remedies Second International Edition paragraph A2-20.
33 [1972] 126 CLR 161 34 [1993] 1 All ER 242 35 [2011] 5 LRC 173
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of debts owed by a company to the bank. The mortgage agreement provided that the
Defendants were deemed to stand charged with the liabilities secured ‘as if they were
primarily due from the mortgagor’. The bank subsequently began possession
proceedings. The Defendants alleged in their defence and counterclaim that the
company was entitled to recover unliquidated damages against the bank for an
alleged breach of duty and that, as the sum claimed would exceed the amount of the
arrears, that claim could be set off against the sums owing by the company to the
bank, thus extinguishing the company’s debt and discharging the mortgage. The bank
applied successfully to strike out the defence. The Defendants appealed.
103. The Court of Appeal held, the general rule that, subject to contractual or statutory
limitations, the existence of a cross-claim, even if it exceeded the amount of the
mortgage debt, would not itself defeat the right to possession of a mortgagee was
applicable both where the cross-claim was a mere counterclaim and where it was a
cross-claim for unliquidated damages which, if established, would give rise to a right
by way of equitable set-off. Any potential right of set-off to which the Defendants
might be entitled as sureties was excluded by the mortgage agreement since the
mortgage was deemed to be a primary security and the Defendants were deemed to
be in the position of primary debtors rather than guarantors. Accordingly, there was
no defence to the bank’s claim to possession.
104. Strategic Nominees Ltd (in receivership) was a decision of the Court of Appeal of Fiji
in 2010. In Strategic Nominees Ltd G, a property developer, in partnership with O,
wished to borrow commercially. G, as landowner, entered into a deed of mortgage in
favour of S, a finance house, so that S would have ample security if the loan from S to
O was not paid on schedule. G also guaranteed that in the event of non-payment by
O, G would meet the debt. O defaulted under the loan agreement. S proceeded
against the mortgagor, G, who defaulted. S sought to exercise its power of sale under
the mortgage. The High Court made an interlocutory order restraining S, as
mortgagee, from proceeding with the sale of the land. S, in receivership, appealed to
the Court of Appeal.
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105. The Court of Appeal allowed the appeal and vacated the injunction orders granted in
the High Court. The Court of Appeal found that there was no violation of a mortgagor's
rights when a mortgagee sought to enter into possession or to exercise its right of sale.
It was simply a question of realising the security, which was freely granted so that a
commercial loan would be made to the mortgagor and his associates. In that case,
under the deed of guarantee and the mortgage deed it was clear that the obligations
of G were those of a primary debtor and that in any dispute between S and G as
mortgagors it was not open to G to rely upon any right of cross-claim or set-off to
which the principal debtor, O, might be entitled as against S. At no time had the
principle been considered as involving or being affected by the law relating to quia
timet interim injunctions where the plaintiff faced loss and damage to proprietary or
other established legal rights. On the facts, there was no threatened breach of an
existing and established proprietary or other legal right and hence no basis for
invoking the interim injunction jurisdiction.
106. It was submitted on behalf of the Claimants that although the general rule in the text
on mortgages Fisher and Lightwood’s Law of Mortgage was that payment into court
is a condition of a grant of an injunction to restrain a sale by a mortgagee there were
exceptions such as the mortgagor need not offer to redeem where the mortgagee is
not exercising his powers in good faith. In support Counsel referred the Court to 3
cases but he did not provide the citations nor copies to the Court for consideration. In
the absence of the citations and the copies I concluded that here was no merit in the
submission made by Counsel for the Claimants and no basis to deviate from the
general rule as set out in the cases cited by Counsel for the Defendant.
The Defendant has a stronger Defence
107. Second, at this stage of the action from the evidence in the Claimant’s First Injunction
Affidavit, the Claimants’ Second Injunction Affidavit and the Defendant’s Injunction
Affidavit, the Defendant has a stronger case than the Claimants.
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108. The Claimants have alleged that the Defendant has breached her equitable, and
statutory duties in the conduct of the receivership in several aspects. Before I address
the merits of the Claimants allegations in light of the evidence in the Defendant’s
Injunction Affidavit, it is necessary that I first set out the relevant law which must be
considered where such allegations are made against a receiver.
109. The Court’s role in considering the action and decisions of a receiver was considered
in a decision of the Ontario Supreme Court in Crown Trust Company v Rosenberg et
al36. In that case, C Inc. was appointed by court order as interim receiver and manager
of the Defendants' properties. Subsequently in 1983, an order was made with respect
to the marketing of the properties pursuant to a disposition strategy. Pursuant to the
disposition strategy, C Inc. received approximately 200 offers on 3 September, 1986
and approximately 230 sealed bids on 10 September. The receiver selected 26 offers
by 14 offerors and brought a motion recommending approval of those offers by the
court.
110. L Inc. submitted 4 draft offers on 3 September and 4 sealed bids on 10 September.
The receiver rejected 3 of them and held the fourth open pending the disposition of
this motion, but did not recommend it. L Inc. was the highest bidder. The reason the
receiver did not recommend L Inc’s. fourth offer was because the receiver was
concerned to maintain the integrity and fairness of the tender process and because it
believed that the offer, as supplemented by letters, was not in acceptable form, nor
in accordance with the rules of the process. Among other things, L Inc. proposed to
finance the purchase in a novel fashion by the use of a promissory note, which caused
problems with the discount rate and the sale and purchase of the note; inserted a
financing condition in the sealed bid which was not in its offer; failed to identify the
mortgages to be discharged; and waived the financing condition on 18 September by
letter from its solicitors. Further, the terms and conditions of the offer were unclear
and were not clarified by L Inc. to the satisfaction of the receiver.
36 1976 Carswell Ont 235
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111. The receiver was also concerned, in view of the history of the properties and the
attention they attracted in political circles, among the tenants of the properties, in the
media and from the public, that L Inc.'s inflated nominal purchase price might be
regarded as intended to raise mortgage money without adequate security, or to lay
the groundwork for an application for an excessive rent increase. If so, this might
cause intervention in the transaction which would imperil a successful closing.
112. On the return of the motion, L Inc. moved to be added as an intervener and several
days later presented an entirely new offer for a still higher amount.
113. The Court held that the offers recommended by the receiver should be approved; L
Inc.'s motion to be added as an intervener should be dismissed, and L Inc.'s newest
offer should not be considered. At paragraphs 65 and 66 of the judgment the Court
stated that:
65 The court ought not to enter into the market-place. In this case it ought
not to become involved in the implementation of the Disposition Strategy and
the attendant negotiations. The court ought not to sit as on appeal from the
decision of the Receiver, reviewing in minute detail every element of the
process by which the decision is reached. To do so would be a futile and
duplicitous exercise. The court ought not to embark on a process analogous
to the trial of a claim by an unsuccessful bidder for something in the nature
of specific performance. The court should not proceed against the
recommendations of its Receiver except in special circumstances and where
the necessity and propriety of doing so are plain. Any other rule or approach
would emasculate the role of the Receiver and make it almost inevitable that
the final negotiation of every sale would take place on the motion for
approval.
66 In all of this it is necessary to keep in mind not only the function of the
court but the function of the Receiver. The Receiver is selected and
appointed having regard for experience and expertise in the duties which
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are involved. It is the function of the Receiver to conduct negotiations and
to assess the practical business aspects of the problems involved in the
disposition of the assets.” (Emphasis added)
114. At paragraphs 77, 82, 83 and 84 the Court also stated:
“77 It is equally clear, in my view, though perhaps not so clearly enunciated,
that it is only in an exceptional case that the court will intervene and proceed
contrary to the Receiver's recommendations if satisfied, as I am, that the
Receiver has acted reasonably, prudently and fairly and not arbitrarily…
…..
82 If I were persuaded, and I am not, to conclude that as a result of this
hearing the objections of the Receiver had been fully and satisfactorily met, I
should still have much hesitation in rejecting the Receiver’s recommendation.
83 Its decision was made as a matter of business judgment on the elements
then available to it. It is of the very essence of a receiver’s function to make
such judgments and in the making of them to act seriously and responsibly so
as to be prepared to stand behind them.
84 If the court were to reject the recommendation of the Receiver in any but
the most exceptional circumstances, it would materially diminish and weaken
the role and function of the Receiver both in the perception of receivers and
in the perception of any others who might have occasion to deal with them.
It would lead to the conclusion that the decision of the Receiver was of little
weight and that the real decision was always made upon the motion for
approval. That would be a consequence susceptible of immensely damaging
results to the disposition of assets by court-appointed receivers.” (Emphasis
added).
115. Section 14 of the BIA sets out the duties of a receiver appointed under the BIA as:
“A receiver shall
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(a) Act honestly and in good faith;
(b) Deal with the property of the debtor in a commercially reasonable
manner;
(c) Not later than ten days after becoming a receiver, send a notice of that
fact, in the prescribed form and manner-
(i) To the Supervisor, accompanied by the prescribed fee;
(ii) Where the debtor is bankrupt, to the trustee; and
(iii) Where the debtor is not bankrupt, to the debtor, and to all creditors
of the debtor that the receiver, after making reasonable efforts, has
ascertained;
(d) Send notice of his becoming a receiver to any creditor whose name and
address he ascertains after sending the notice referred to in
subparagraph (c)(iii);
(e) forthwith after taking possession or control, whichever occurs first, of
property of a debtor, prepare a statement containing prescribed
information relating to the receivership, and shall forthwith provide a
copy of the statement to the Supervisor, the debtor, the trustee, in the
case of a bankrupt, and to any creditor of the debtor who requests a copy
at any time up to six months after the end of the receivership shall
provide copies of to.;
(f) in accordance with the Bankruptcy Rules, prepare interim reports
relating to the receivership, and shall provide copies of those reports to
the Supervisor, the debtor, the trustee, in the case of a bankrupt, and to
any creditor of the debtor who requests a copy ant any time up to six
months after the end of the receivership; and
(g) prepare, forthwith after the completion of his duties as receiver, a final
report and a statement of accounts, in the prescribed form and
containing the prescribed information relating to the receivership, and
forthwith provide a copy of that Report and statement of accounts to the
Supervisor, the debtor, the trustee, in the case of a bankrupt, and to any
creditor of the debtor or the bankrupt who requests a copy at any time
up to six months after the end of the receivership.
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116. Section 16 of the BIA sets out the rights of the receiver as:
A receiver
(a) may, subject to the rights of secured creditors, receive the income from
the property, pay the liability connected with the property, and realise
the security interest of those eon behalf of whom he is appointed; and
(b) may not, unless appointed a receiver-manager or unless the Court orders
otherwise, carry on the business of the debtor for more than fourteen
days after his appointment.
117. In Re B Johnson37 the English Court of Appeal explained the duties of a receiver. BJ
Ltd, issued to a bank a debenture in ordinary banker’s form, containing a floating
charge on all the assets of the company, to secure an overdraft. In August 1947, the
bank appointed A as receiver and manager. A immediately terminated the active
operations of the company and in January 1948, the unsecured creditors of the
company presented a petition for the compulsory winding up of BJ Ltd. A winding-up
order was made on 27 January 1948, and later B and another (who died in 1952) were
appointed joint liquidators. A contributory of the company, who held 700 of the total
issued share capital of 1000 shares of £1 each, issued a summons in the winding up
under section 333 of the Companies Act 1948 to have examined the conduct of A while
acting as receiver and manager from August 1947, until the winding-up order was
made and of B while acting as liquidator since the date of that order, on the footing
that A and B had been guilty of misfeasance.
118. The principal grounds of the application in relation to A were (a) on his appointment
he stopped all building work notwithstanding that he was told that it would entail
great loss to the company; (b) he made an incorrect application for loss of
development value in respect of land at H to the Central Land Board; and (c) he failed
to make an application under section 80 of the Town and Country Planning Act 1947
for a certificate of exemption in respect of other land and to make a claim for loss of
development value in respect of that land. In relation to B, the principal ground alleged
37 [1955] 1 Ch 634
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was that the claim in respect of the land at H was taken over by the liquidators, who,
although the incorrectness of the claim was pointed out, failed to put in a proper
application, so that the compensation received was £4,500 instead of £8,600. The
claims of unsecured creditors amounted to about £10,000 and only £83 was available
after satisfaction of the debts having priority.
119. The Court of Appeal found that a receiver was not a manager of the company within
the words ‘director, manager or liquidator ... of the company’ in section 333 of the
Company Act 1948 Act because he was not concerned to manage for the benefit of
the company but, as receiver and manager of the property of the company appointed
out of court by the debenture-holder, was concerned to realise the debenture-
holder’s security; accordingly, section 333 did not extend to A. the Court also held that
the grounds of complaint alleged against A were not within section 333 because a
receiver and manager appointed by a debenture-holder was under no duty to the
company or its contributories to preserve the goodwill and business of the company,
and allegations (b) and (c) were in substance charges of negligence, not of any
misapplication or misfeasance for which a charge could be sustained under the
section. Further, the ground of complaint alleged against B was also not of
misapplication or misfeasance within section 333. Even if £8,600 had been received as
compensation in respect of the land at H there would still have been nothing available
for contributories, and, therefore, the contributory had not sufficient interest in the
subject-matter of his claim to entitle him to proceed under section 333.
120. At page 662 Evershed MR stated:
“In determining whether a receiver and manager for the debenture holders
of a company has broken any duty owed by him to the company, regard must
be had to the fact that he is a receiver and manager - that is to say, a receiver,
with ancillary powers of management - for the debenture holders, and not
simply a person appointed to manage the company's affairs for the benefit
of the company. A receiver without powers of management would, I
apprehend, clearly be outside section 333, and it is difficult to see why
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superadded powers of managing the property comprised in the security
should bring him within it.
The duties of a receiver and manager for debenture holders are widely
different from those of a manager of the company. He is under no obligation
to carry on the company’s business at the expense of the debenture holders.
Therefore he commits no breach of duty to the company by refusing to do
so, even though his discontinuance of the business may be detrimental from
the company’s point of view. Again, his power of sale is, in effect, that of a
mortgagee, and he therefore commits no breach of duty to the company by
a bona fide sale, even though he might have obtained a higher price and
even though, from the point of view of the company, as distinct from the
debenture holders, the terms might be regarded as disadvantageous.”
(Emphasis added)
121. He then discussed at page 662 the limited bases on which it is available to assert that
the duties of a receiver-manager to act honestly and in good faith had been breached:
“In a word, in the absence of fraud or mala fides (of which there is not the
faintest suggestion here), the company cannot complain of any act or
omission of the receiver and manager, provided that he does nothing that he
is not empowered to do, and omits nothing that he is enjoined to do by the
terms of his appointment. If the company conceives that it has any claim
against the receiver and manager for breach of some duty owed by him to the
company, the issue is not whether the receiver and manager has done or
omitted to do anything which it would be wrongful in a manager of a company
to do or omit, but whether he has exceeded or abused or wrongfully omitted
to use the special powers and discretions vested in him pursuant to the
contract of loan constituted by the debenture for the special purpose of
enabling the assets comprised in the debenture holders’ security be
preserved and realized.” (Emphasis added)
122. A more recent English Court of Appeal decision examined the law on the Receiver’s
duty to act in a commercially reasonable manner in the context of an obligation to
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determine consent to an early termination provision in a guarantee in a “commercially
reasonable manner”. In Barclays Bank plc v UniCredit Bank AG and another38
UniCredit had entered into 3 synthetic securitizations of loan portfolios with Barclays,
embodied in 3 deeds of guarantee. The term of the longest of the guarantees was 19
years. At the time of execution, Barclays entered 5 years’ fees as profit in its books.
There were optional early termination clauses in each guarantee in the event of a
regulatory change resulting in less favourable capital treatment of the guarantee,
provided that UniCredit obtained prior consent from Barclays “such consent to be
determined by [Barclays] in a commercially reasonable manner”. UniCredit sought
early termination under this provision and Barclays refused to give its consent unless
it was paid the 5 years’ fees. UniCredit claimed Barclays had unreasonably refused
consent and discontinued payment under the guarantees. Barclays maintained that
the guarantees had not been terminated and remained in force.
123. At first instance, the Court found that Barclays was entitled to the 5 years’ fees on the
basis that the contractual requirement for a discretion to be exercised in a
“commercially reasonable” manner was to be assessed against an objective standard
of reasonableness and that, a commercial party may still favour its own interest to the
exclusion of its counterparty’s and be acting commercially reasonably. UniCredit
appealed.
124. On appeal, Longmore LJ, gave the leading judgment and noted that there had been
much debate as to whether the clause in question was to be regarded:
(i) as conferring a contractual discretion on Barclays so that the principles of
contractual discretion cases applied so that a discretion must be exercised
honestly and in good faith for the purposes for which it was conferred and
not in a way that is capricious or arbitrary or so outrageous in its defiance of
reason that it can properly be categorised as perverse;
38 [2014] 1 BCLC 417
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(ii) as equivalent to conferring a discretion to which the principles of
Wednesbury reasonableness apply, namely that the exercise of the discretion
is not “so unreasonable that no reasonable authority could ever have come
to it”;
(iii) as analogous to landlord and tenant cases where, while a landlord need
usually consider only his own relevant interests, there may be cases where
there is such disproportion between the benefit to the landlord and the
detriment to the tenant if the landlord withholds his consent to an
assignment, that it is unreasonable for the landlord to refuse consent; or
(iv) as subject to an objective determination of what was “commercially
reasonable”.
125. Longmore LJ concluded, that the provision fell within Wednesbury reasonableness.
The Court of Appeal upheld the decision of the High Court in finding that Barclays had
not unreasonably refused to give its consent where it was required to act in a
“commercially reasonable manner” by demanding 5 years’ fees in return for
consenting to early termination of some guarantees.
126. The type of evidence which is required to be provided by a party who alleges that a
receiver has not acted in a commercially reasonable manner was discussed in a
judgment of the British Columbia Supreme Court in Canada in HSBC Bank Canada v
Kupritz39 . In that case the Plaintiff bank applied for summary judgment against the
Defendants on their guarantees. The Defendants were shareholders and directors of
a company and had obtained credit facilities from the Plaintiff bank and as security,
the company provided the Plaintiff bank with a General Security Agreement and both
Defendants gave unlimited personal guarantees of ‘all present and future debts and
liabilities’ of the company.
39 (2011) BCSC 788
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127. Under section 68(2) of the Personal Property Security Act, the bank as guarantor had
a duty to act in a “commercially reasonable manner” in the disposition of the collateral
it seized. The Court held:
“34 Unlike the standard of "good faith", which is subjective, the standard of
"commercially reasonable" is objective, and depends on what is
considered reasonable in the particular industry. Considerations include:
(a) The method of sale (private sale or public auction);
(b) The extent to which the sale was advertised;
(c) Time and place of the sale;
(d) Whether an opportunity to inspect the goods was provided;
(e) Whether the collateral was sold as one parcel or in smaller lots;
(f) The costs associated with a sale or delaying a sale; and
(g) Whether collateral should have been repaired or improved prior to
sale.
(Greyvest Leasing Inc. v. Merkur (1994), 8 P.P.S.A.C. (2d) 203 (Ont. Gen. Div.), at
para. 45 [Greyvest]; Connex Press Inc. v. International Airmotive Inc., 436 F. Supp.
51 (U.S. Dist. Ct. 1977))
35 The question in each case is whether the secured party took all
reasonable steps to obtain the best price for the collateral: Greyvest, at
para. 45. A debtor alleging failure of a secured party to deal with
collateral in a commercially reasonable manner bears the burden of
proving not only that the manner of selling the collateral was
improvident, but also that the failure to act in a commercially
reasonable manner resulted in recovery of less money (and therefore
an increased deficiency) than would otherwise have been the case: J. &
W. Investments Ltd. v Black (1963), 38 D.L.R. (2d) 251 (B.C. C.A.), at 264.
36 In practical terms, this onus of proof requires the debtor to establish
both that the secured party departed from industry norms, and that a
higher price would have been obtained if the secured party had done
what is considered to be reasonable in that particular sector or
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industry. Generally, meeting that burden will require the debtor to
provide expert evidence on the industry standard against which the
debtor's allegation of substandard conduct can be measured. However,
it will not always be the case that expert evidence is required; in some
cases the conduct of a secured party may so obviously depart from
commercial common sense that evidence of what was done alone will
suffice. Although it is not clear from the reasons for judgment, Case
Credit Ltd. v. Rhodan Contracting Ltd., 2004 BCSC 1783 (B.C. S.C.), may
have been such a case. But I do not find, as the defendant suggests, that
Case Credit stands for the proposition that the secured party has the
burden of proving it acted in a commercially reasonable manner.”
(Emphasis added)
128. In another Canadian case, Canadian Western Bank v Quigley40 the Defendant argued
that CWB had breached its obligation to act in a commercially reasonable manner in
respect of publicly traded shares which he owned and which CWB held as security for
his judgment debt, contrary to Personal Property Security Act and the common law.
CWB agreed with the Defendant that section 68(2) of the Personal Property Security
Act imposed statutory obligations on it as a holder of security pursuant to a security
agreement and that it must act in a commercially reasonable manner in dealing with
its security. The section provided that all rights, duties or obligations arising under a
security agreement, the Personal Property Security Act or any other law applicable to
security agreements or security interests must be exercised or discharged in good faith
and in a commercially reasonable manner. Likewise, at common law, a creditor who
takes control of an asset as security must act in a commercially reasonable manner. It
may not act to worsen the position of the surety, and if it does, the debtor is entitled
to be discharged to the extent of the prejudice it suffers. After citing Kupritz the British
Columbia Supreme Court stated:
40 (2019) BCSC 1020
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“53 Commercial reasonableness refers to the actions of a reasonably prudent
business person in similar circumstances. In Richard H. McLaren, Secured
Transactions in Personal Property in Canada, 23rd ed., loose-leaf (Toronto:
Carswell, 2015 release no. 5) vol. 2 at 29-9 the author states:
[T]he concept of commercial reasonableness can best be described as the
actions of the reasonably prudent businessperson in similar
circumstances. It is both an objective and pragmatic standard of conduct,
conditioned by the established practise of the business community. The
concept is not fixed and rigid, but rather is shaped by changing
circumstances.”
129. Based on the aforesaid case law, in order to sustain a claim breach of the duties in
section 14 of the BIA, the onus is on the party making the allegations, in the instant
case, the Claimants to adduce evidence which establishes fraud or mala fides on the
part of the receiver, or that establishes that the receiver’s actions and decisions have
been so absurd that no sensible person could have made such decisions. The courts
will not interfere with the decisions and actions of receivers, in the absence of such
evidence even if there is evidence that a reasonable opposite conclusion is available
on the same set of facts. The courts will not look further into its merits and will not
interfere as long as a receiver’s actions and decisions are within the confines of
reasonableness.
130. I will now consider the specific allegations made by the Claimants against the
Defendant.
The decision taken by the Defendant to sell the assets of the Third Claimant and the
proposed sale of assets.
131. The Claimants alleged that the Defendant acted in breach of her statutory duty under
section 14 of the BIA and section 295 (a) Companies Act since she intends to sell the
assets of the Third Defendant at a gross undervalue. The Claimants set out the
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evidence in support of this allegation at paragraph 22 of the Claimants’ First Injunction
Affidavit.
132. They stated that on the 19 November 2019 the Defendant advised the Second
Claimant that she was giving the Third Claimant until the 20 November 2019 as it
related to her decision to sell the Third Claimant’s assets. The First and Second
Claimants became very concerned with this decision by the Defendant since (a)they
had made efforts to continue the operation of the Third Claimant since the
appointment of the Receiver and they had generated income in the sum of
$35,681,927.68 which was paid to RBL; (b)they had recently received permission from
the Defendant to commence legal action against Petrotrin to recover the sum of
$328,000,000.00 which was owed by Petrotrin to the Third Claimant and (c) the 2015
Audited Financial Statements of the Third Claimants showed that its assets were
valued at $192,273,646.00.
133. The Claimants First injunction Affidavit also deposed that it was not commercially
reasonable because if the Defendant allows the Third Claimant to acquire a business
partner, RBL can have its debt satisfied and the Third Claimant can continue operating.
It was only in February 2019 RBL indicated to the Third Claimant that it owed
$76,000,000.00 but it was reduced to $56,000,000.00 in October 2019 when the Third
Claimant submitted a proposal. As such the Claimants stated that the Defendant will
be in breach of her equitable duty to the Claimants if she sells the assets of the Third
Claimant for a price which is significantly less than the market value.
134. The Defendant’s Injunction Affidavit at paragraphs 49 to 64 set out the details of the
action which she took in obtaining a proper price for the Third Claimant’s assets. The
Defendant stated that in July 2019 she took the decision, with RBL’s approval, to go
back out to the market for a sale of the Third Claimant’s assets. On the 30 July 2019
she informed the Claimants by letter that she intended to take immediate steps to sell
the assets of the Third Claimant. She issued to an assembled list of 16 industry leaders
capable of buying and utilising the Third Claimant’s specialised equipment and office
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building, a Confidentiality Agreement for signature and to be returned to her. She
received 11 executed originals of the Confidentiality Agreement and those 11 entities
were provided with a Confidential Information Memoranda (“CIM”). She then
arranged multiple visits to the La Brea land and the Claxton Bay land for the purpose
of facilitating viewing of the Third Claimant’s assets by the interested parties.
135. The Defendant stated that before she received and responses from the persons she
had sent the Confidentiality Agreements to, she received a letter dated 15 August
2019 from Business Recovery and Advisory Services Limited. The writer advised her
that he had been retained by the Claimants to assist with a financial solution for the
Third Claimant and, following preliminary discussions with an equity provider, Aspire
Fund Management Company Limited (“Aspire”), he proposed a solution involving RBL
writing down the Third Claimant’s existing debt to $45,000,000.00; Aspire injecting
the sum of $20,000,000.00 in part liquidation of the reduced debt; and the remaining
$25,000,000.00 being refinanced by RBL over 12 years.
136. According to the Defendant, RBL was not interested in a financial proposal where it
continued to be engaged in a financing arrangement with the Third Claimant while
writing off approximately $30,000,000.00 worth of debt. RBL rejected the proposal,
137. The Defendant then stated that by the September 2019 deadline she had received
non-binding expressions of interest from 10 of the 11 entities which had received the
Confidential Agreements. According to the Defendant, the 2 highest total bids were
received from ANSAD Services Limited (”ANSAD”) and Multilift while the only 2 bids
received for the La Brea land were in the sums of $8,500,000.00 from Inland and
$3,000,000.00 from ANSAD.
138. The Defendant deposed that in early October 2019, and following a meeting which
she had with RBL, she invited ANSAD and Multilift, as the 2 highest overall bidders, to
resubmit revised bids for an entire asset buyout of the Third Claimant less the La Brea
land. On 29 October 2019, she received these revised bids. ANSAD bid $27,000,000.00
for all of the assets of the Third Claimant less the La Brea land (of which $2,000,000.00
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was allocated to the purchase of the licence for the Claxton Bay land); Multilift bid
$25,000,000.00 for the Third Claimant’s assets less the La Brea land and the Claxton
Bay land. Both bidders were prepared to make a 10% down payment with closing to
be effected within 30 days.
139. The Defendant stated that after she received those 2 bids she obtained advice from
her Attorneys-at-Law that the licence to occupy the Claxton Bay land, which was in
favour of Worldwide Caribbean Limited, could not be sold as one of the assets of the
Third Claimant.
140. According to the Defendant, by letter dated 21 October 2019, KCL wrote to RBL copied
to her, confirming that it had been approached by the Claimants and requested to
arrange and place financing to settle the Third Claimant’s debt to RBL. KCL proposed
payment of the sum of $32,500,000.00 in full and final payment of the debt with
closing to take place within a period of 90 to 120 days. She replied to KCL by letter
dated 31 October 2019, where she confirmed that RBL was prepared to accept the
sum of $35,500,000.00 in liquidation of its facilities with the Third Claimant provided
that a 10% deposit was paid, and an appropriate agreement signed, by 7 November
2019 and closing was scheduled to take place within 90 days thereafter. She also
indicated that if an agreement was not concluded by 7 November 2019, she would
proceed with the sale of the Third Claimant’s assets.
141. The Defendant indicated that by letter dated 7 November 2019, KCL accepted the
liquidation figure of $35,500,000.00 but counter-proposed the payment of a 5%
deposit and a closing window of 120 days and required that upon payment of the
deposit it be granted a licence to occupy and operate the Third Claimant’s assets for
its own benefit. She stated that she was concerned that KCL’s counter-proposal
offered an inadequate deposit and required an excessive closing window. She also
considered that any licence to operate the Third Claimant’s assets would have to be
carefully controlled by the agreement granting that licence. She pointed out her
concerns to KCL in an email dated 11November 2019. KCL responded by an email sent
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on 14 November 2019 maintaining its deposit and closing requirements but agreeing
to assume the costs of the Third Claimant during the licence period.
142. According to the Defendant, she was not prepared to accept KCL’s counter proposal
due to her concerns that KCL’s assumption of the operations of the Third Claimant’s
assets pending completion could seriously imperil RBL’s security in circumstances
where there was an extended completion date and a reduced deposit; ANSAD and
Multilift had expressed an interest in an asset buyout of the Third Claimant (less the
La Brea land) for $25,000,000.00 with a 30 day closing and a 10% deposit; and Inland
was prepared to close on the purchase of the La Brea land for $8,500,000.00 with a
similar 10% deposit. She therefore reverted to ANSAD, Multilift and Inland with a view
to concluding agreements with them.
143. The Defendant stated that by letter dated 19 November 2019, Multilift wrote to her
increasing its offer to purchase all of the assets of the Third Claimant (less the La Brea
land) from $25,000,000.00 to $26,000,000.00. The letter also offered a 10% deposit
and a closing timeline of 21 days. RBL accepted Multilift’s revised offer and by an
Asset Sale Agreement dated 25 November 2019 made between the Defendant as
receiver of the Third Claimant of the One Part and Multilift of the Other Part, she
agreed to sell the Third Claimant’s assets as described in the said agreement to
Multilift for the sum of $26,000,000.00 with the completion scheduled to take place
on 16 December 2019. The Defendant stated that on 29 November 2019, she also
entered into an agreement for sale of the La Brea land to Inland for the sum of
$8,500,000.00 with the completion of the sale to take place within 90 days of the date
of the agreement.
144. The Claimants Second Injunction Affidavit indicated that a company KCL made a
counter offer to the Defendant to purchase the assets for the sum of $35,500,000.00
which was $1,000,000.00 more than the offer made by Multilift and Inland.
Page 57 of 74
145. In my opinion, the Claimant’s evidence in the Claimant’s Second Injunction Affidavit
did not paint an accurate picture of the offer made by KCL given the aforesaid
Defendant’s evidence. When I considered the evidence of both parties I cannot find
that the Defendant acted unreasonably with respect to the proposed sale of the Third
Claimant’s assets to Multilift and Inland.
The failure to take steps, including the institution of proceedings, to recover monies
owing to the Company from Petrotrin; the failure to participate in the Nagico Claim
and the decision to settle claims against Aggreko on unfavourable terms.
146. The Claimants First Injunction Affidavit and the Claimants Second Injunction Affidavit
set out the reasons they considered the Defendant breached her duty as the receiver
with respect to failing to take steps to recover monies owing to Petrotrin. According
to the Claimants, from the time the Defendant was appointed interim receiver until
February, 2019 she knew that the crux of the Third Claimant’s problems were with
Petrotrin breaching their contractual obligations to the Third Claimant; at that time
the Third Claimant was preparing to launch legal action against Petrotrin through its
then Attorney at Law; the Defendant’s Attorneys at law took approximately 2 years
from February, 2017-February, 2019 to produce a final opinion on the likelihood of
success of the Third Claimant’s claim; the First and Second Claimants, the sole
directors and shareholders of the Third Claimant were constantly pressing the
Defendant to pursue the claim against Petrotrin; and advice received by the
Defendant from her attorneys against instituting a claim against Petrotrin for monies
due and owing did not address all claims the Third Claimant had against Petrotrin and
in total the sum of 328,360,989.51 was due and owing.
147. The Claimants First Injunction Affidavit and the Claimants Second Injunction Affidavit
set out the reasons they considered the Defendant breached her duty as the receiver
with respect to the Nagico claim. They contended that the Defendant failed to take
steps to defend the Third Claimant which led to a judgment against it in the sum of
$8,807,867.78 and proceedings being commenced against all Claimants, including
personal action against the First and Second Claimants in the High Court proceedings.
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148. In the Claimants First Injunction Affidavit and the Claimants Second Injunction
Affidavit they asserted that they considered the Defendant breached her duty as the
receiver when she accepted from Aggreko on behalf of the Third Claimant, the sum of
$1,000,000.00 for the standby charges owed to the Third Claimant. It was their
position that the said terms were unfavourable.
149. The Defendant’s response to the aforesaid contentions was set out at paragraphs 19
to 32 of the Defendant’s Injunction Affidavit. The Defendant explained that as part of
her receivership duties, in deciding if to pursue legal action in respect of any rights to
payment which the Third Claimant may have against third parties, she took into
account the profitability of such action to RBL and the Third Claimant.
150. The Defendant stated that with respect to the steps to recover monies from Petrotrin
on behalf of the Third Claimant, in December 2016, she met with the Claimants and
the Third Claimant’s then Attorneys-at-law, Mr. David Rajkumar and Ms. Nazima Ali-
Knox, to discuss 3 claims arising out of a submarine pipeline and risers contract which
the Third Claimant was advancing against Petrotrin. These claims were explained to
her and she requested a written opinion from Mr. Rajkumar on their merits. She did
not recall at this time any conversation with Ms. Ali Knox concerning any additional
claims which the Third Claimant may have against Petrotrin.
151. According to the Defendant, she received Mr. Rajkumar’s opinion dated 15 December
2016 at or around the time it was issued and subsequently instructed him, pending
her further consideration, to send to Petrotrin a pre-action protocol letter in respect
of the 3 claims. In or around March 2017, she formed the view that, since Mr.
Rajkumar represented the Claimants as ‘interested parties’ in the High Court Action
pursuant to which she had been appointed interim receiver, he was potentially
conflicted in his ability to represent the Third Claimant acting on her instructions,
against Petrotrin. She wrote to him on 28 March 2017 advising that his services were
no longer required for the purpose of prosecuting the Third Claimant’s claims against
Petrotrin. She then approached the firm of Fitzwilliam Stone, Furness-Smith and
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Morgan (“Fitzwilliam”) to obtain an opinion on the merits of the Third Claimant’s
claims against Petrotrin. She received a first opinion on 17 November 2017 and a
second opinion on 31 January 2018. Both opinions expressed qualified prospects of
success on the Third Claimant’s claims. As such she was reluctant to authorise the
commencement of proceedings with respect to these claims. She stated that she took
into account the cost and uncertainty of litigation and the Third Claimant’s already
precarious financial position. She also considered that an adverse or hostile costs
order in such litigation would result in the diminution of the Third Claimant’s assets,
would imperil the Third Claimant’s assets and prejudicially impinge on the debenture
holder, RBL.
152. The Defendant stated that on 12 June 2018, her assistant, Ms. Keesha Sahadeo, met
with the Claimants and an Attorney-at-Law from Fitzwilliam to further discuss the
Third Claimant’s claims against Petrotrin. She did not recall that any view was
expressed by Fitzwilliam that the claims were good but she recalled that the Claimants
were required to provide the Third Claimant’s Attorneys at law with further
instructions on certain identified issues. On 11 January 2019, Fitzwilliam issued a third
and final opinion which concluded that the Third Claimant’s 3 claims against Petrotrin
arising out of the submarine pipeline and risers contract were unlikely to be
successful. As a result of the opinions, the Defendant stated that she decided not to
institute proceedings against Petrotrin as she was of the view that it would not to be
in the interest of RBL or the Third Claimant. She was also concerned that all of
Petrotrin’s assets relative to its exploration and production operations, its terminal
operations and its refinery operations had been transferred to third party entities
pursuant to Act No. 17 of 2018.
153. With respect to the storage claims against Petrotrin, the Defendant explained that in
her capacity as receiver of the Third Claimant, she received a letter dated 21 December
2017 from Petrotrin’s Attorneys-at-Law, J.D. Sellier & Co. In the letter, Petrotrin
requested inspection and removal of certain equipment stored on the La Brea land on
the basis that such equipment belonged to it. In response to that letter, and to a
reminder sent on 29 January 2018, the Third Claimant’s Attorney-at-Law by letter
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dated 30 January 2018 confirmed that Petrotrin would be permitted to inspect the
items claimed verified by the appropriate affidavit.
154. The Defendant stated that Petrotrin never attended the La Brea land to inspect items
claimed by it and it did not submit a proof of claim verified by affidavit. In those
circumstances, she formed the view that all equipment and other materials on the La
Brea land and the Claxton Bay land belonged to the Third Claimant and for those
reasons she declined to make any demand against Petrotrin for storage of any items.
155. With respect to the Nagico claims, the Defendant stated that or about 9 March 2017
she received a letter from Nagico addressed to the Second Claimant advising that
Petrotrin had made a second demand for payment of the full value of a Performance
Bond issued in connection with Petrotrin’s submarine pipeline and risers contract in
the sum of $8,059,294.65. She replied to this letter on 29 March 2017 confirming that
the Third Claimant had not been permitted the opportunity to complete the contract
and that she did not believe Petrotrin was entitled to call on the Performance Bond
for its full value. She also requested a copy of the terms of the Performance Bond so
that she could determine the validity of the payment requested.
156. According to the Defendant, subsequent to the aforementioned correspondence she
obtained a copy of the Performance Bond and thereafter she met with the Attorney-
at-Law for Nagico to discuss Petrotrin’s demand in a general way. She also sought
legal advice on the terms of the Performance Bond and was she advised that it was in
the form of a demand instrument payable without obligation on the part of the
beneficiary to prove grounds or reasons for the demand. She stated that in light of the
advice she received she considered that it was not in the interests of RBL or the Third
Claimant to incur legal costs in opposing the Performance Bond on grounds which
were unlikely to prove successful and that the effect of an adverse or hostile costs
order in such litigation would have in terms of the diminution of the Third Claimant’s
assets. The Defendant stated that based on those reasons she decided against the
Third Claimant taking part in Petrotrin’s claim CV2017-03297 against Nagico, which
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resulted in a judgment in favour of Petrotrin for the full value of the Performance
Bond. She also indicated that the Third Claimant also does not intend to participate in
the High Court proceedings referred to in the Claimant’s First injunction Affidavit in
which Nagico seeks recovery of the value of the Performance Bond from the Claimants
and the Third Claimant under an alleged counter indemnity.
157. The Defendant’s response with respect to the allegations on the Aggreko claim was
that she was of the opinion, having considered the merits of the Third Claimant’s claim
and the advantages of prompt payment over a prolonged dispute, the settlement
achieved was commercially reasonable and in the interests of both RBL and the Third
Claimant.
158. In my opinion, the Defendant has given a detailed and reasonable explanation for her
actions with respect to her decision not to pursue the Petrotrin claim, not to
participate in the Nagico claim and to settle the Aggreko claim. She sought legal advice
and she considered the financial consequences of her action on the debenture holder,
RBL and the Third Claimant’s assets. While the Claimants may have had a difference
in opinion, in how the Defendant acted, in my opinion given her explanation, I cannot
conclude that she acted Wednesbury unreasonable.
The failure to carry on the business of fabricating
159. The Claimants alleged that the Defendant breached her duty as receiver of the Third
Claimant by failing to carry on the business of fabricating at paragraph 16 of the
Claimants First Injunction Affidavit. The Claimants stated that the Defendant informed
them that she would still carry out the operations of the Third Claimant as a going
concern but she refused to allow the Third Claimant to operate as a contracting
company, even for short-term projects. Instead the Defendant insisted that the Third
Claimant carry out equipment rental only which caused the Third Claimant to lose
work and revenue.
160. The Defendant set out her reasons to for shutting down the fabrication and
installation arm of the Third Claimant’s business at paragraphs 13 to 18 of the
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Defendant’s Injunction Affidavit. According to the Defendant, the Third Claimant’s
pre-receivership business of fabrication and installation were insufficiently profitable
to enable it to pay its debts as and when they became due; the Third Claimant had
experienced serious difficulty in receiving prompt or any payment from its main client,
Petrotrin, since 2013; proper supervision of new jobs would have required her to
engage suitable experienced project managers to oversee the performance of these
jobs at a cost to the Third Claimant; the existing market conditions were not conducive
to new fabrication and installation work; and the Company’s equipment required
substantial servicing.
161. The Defendant stated that based on those reasons, she took the decision that it would
not be in the interest of RBL or the Third Claimant to continue its full business activity
after her appointment. She stated that there was no documentation to support the
Claimant’s assertion that at the time the Third Claimant went into receivership in 2016
it had a total turnover of $50,000,000.00. According to the Defendant, at the time she
was appointed interim receiver, the Third Claimant had no proper financial records
and the Claimants thereafter failed to provide her with any statement of affairs to
assist in obtaining a full picture of the Third Claimant’s business to that time.
162. The Defendant also stated that she decided that it was the interest of both RBL and
the Third Claimant for the latter to continue a restricted form of business, namely the
rental of equipment. This business was undertaken by the Claimants under her close
supervision and, for this purpose, she engaged Ms. Sue-Ellen Mohammed to assist the
Claimants in documenting, coordinating and sourcing rental opportunities. According
to the Defendant, the rental business undertaken by the Third Claimant under her
supervision proved profitable and yielded a total turnover of $35,681,927.68. Of this
sum approximately $31,000,000.00 was received by January 2018 from which
approximately $17,500,000.00 was paid in operating and job related expenses (all of
which were requested and agreed to by the Second Claimant) and taxes with the result
that the debt due to RBL was reduced at that point in time by around $13,300,000.00.
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163. The Defendant indicated that there was no basis for the assertion by the Claimants
that if she had permitted the fabricating and installation works to be carried out by
the Third Claimant, it could have made an estimated profit of approximately
$45,000,000.00 as the Claimants did not identify the provenance of the contract prices
set out in the Claimant’s First injunction Affidavit; and if those contract prices are from
the successful bidders. She stated that if the contract prices are the Claimants’ own
estimate of the prices from which they would have tendered the jobs, and not the
prices of the contracts as awarded, then they are irrelevant.
164. The Defendant explained that she was not prepared to continue with the Third
Claimant’s pre-receivership business of fabricating and installation, but she was
prepared to complete the Third Claimant’s projects with Petrotrin in train at the time
of the interim receivership Order which she indicated to Petrotrin at the meeting on
6 February 2017. She stated that the Claimants were excluded from this meeting at
the request of Petrotrin. According to the Defendant, these projects were terminated
by Petrotrin on 16 February 2017 (as to the submarine pipeline and risers contract)
and on 22 March 2017 (as to all other contracts) on the basis of the Third Claimant’s
insolvency.
165. The Defendant also stated that she kept the First and Second apprised of important
developments taking place in the Third Claimant’s business since the Second Claimant
was primarily engaged in identifying and exploring possible rental opportunities with
the assistance of Ms Sue-Ellen Mohammed who was hired for this specific purpose.
Apart from monthly operating expenses such as rent, insurance, security and utilities
all other expenses, including for repairs and maintenance and contract workers used
on specific jobs, were requested and managed by the Second Claimant under her
supervision. The Defendant stated that the Second Claimant selected suppliers (unless
she was able to secure better prices or terms of credit) and he was in almost daily
email, WhatsApp and telephone communication with either or both the Defendant
and her assistant, Ms. Keesha Sahadeo. She also stated that face-to-face meetings
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were arranged and held whenever it became necessary to discuss issues which needed
resolution and the First Claimant also attended some of these face-to-face meetings.
166. In my opinion from the affidavit evidence on this issue there is a difference of opinion
between the Claimants and the Defendant with respect to her decision not to carry
on with the installation and the fabrication business of the Third Claimant. The duty
of the Defendant as receiver of the Third Claimant was to action rationally and
objective in her decisions with respect to the Third Claimant and her primary
responsibility was to RBL. Based on the detailed explanation given by the Defendant
in the Defendant’s Injunction Affidavit for her actions taken with respect to the
fabrication business of the Third Claimant, I am not of the opinion at this stage that
the Defendant’s action were not reasonable. In this regard there is more merit in the
reasons advanced by the Defendant actions when compared to the Claimants
assertions.
The failure to adequately maintain and secure the Third Claimant’s assets
167. The Claimants alleged at paragraph 17 of the Claimants First Injunction Affidavit and
the Claimants Second Injunction Affidavit that the Defendant failed to maintain and
secure the property and equipment of the Third Claimant which led to their
deterioration and the significant depreciation of their value. They asserted that this
failure also reduced the Third Claimant’s prospect in obtaining jobs. The Claimants
also asserted that the Defendant failed to take steps to secure the Third Claimants
equipment as there were persistent incidents of theft of the said equipment.
168. The Defendant responded to the Claimants’ allegations on this issue at paragraphs 33
to 38 of the Defendant’s Injunction Affidavit. According to the Defendant, since her
appointment as receiver of the Third Claimant, she has maintained a full security
service for the La Brea land and the Claxton Bay land in order to secure the buildings
and equipment located thereon. The Defendant stated that those services have
continued for the months of December 2019 and January 2020 and the total security
costs to sufficiently secure and maintain the Third Claimant’s assets as at that date
was approximately $2,193,503.21.
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169. The Defendant denied that the assets identified as allegedly stolen in paragraph 17
(vi) of the Claimants First Injunction Affidavit were in the possession of the Third
Claimant at the time of her appointment as interim receiver. She stated that the
Claimants continuously failed and/or refused to submit a statement of affairs of the
Third Claimant as at the date of her appointment. She noted that neither of the
Claimants has ever previously advised her that the items which they asserted were
stolen were missing.
170. According to the Defendant, the machinery and equipment of the Third Claimant were
already dilapidated and in need of substantial servicing at the date of the interim
receivership Order made on 9 December 2016. She stated that following her
appointment as interim receiver, maintenance of the Third Claimant’s machinery and
equipment was generally carried out in accordance with the following procedure. The
Second Claimant notified her of the required maintenance and repair works, typically
for machinery and equipment needed for rental projects identified and in respect of
which bids were contemplated. Once she was satisfied that the cost were reasonable
she authorized the works which were then carried out.
171. The Defendant agreed that one of the barges owned by the Third Claimant, the “BEO”,
is in need of drydocking. She explained that the “BEO” has been engaged on hire on
several of the larger projects executed while the Third Claimant has been in
receivership and drydocking is a normal part of the maintenance and repair process
for marine vessels which are consistently submerged in salt water. The Defendant
stated that the costs associated with drydocking are substantial. She gave an example
that a tug owned by the Third Claimant was drydocked in October and November 2017
at a cost to the Third Claimant of $944,179.31. A barge is a larger vessel and the costs
of drydocking is much greater. She stated that at the time it became apparent that the
“BEO” was ready to undergo this maintenance procedure, she had already taken the
decision to sell the assets of the Third Claimant and for that reason she decided that
it was not in the interests of RBL that the “BEO” be drydocked but that it should be
sold “as is, where is”.
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172. The Defendant also agreed that the tugboat “Mary Hannah” is at present drydocked
and that repairs are yet to be completed. She stated that the “Mary Hannah” is the
least capable, and hence the least utilised, of the Third Claimant’s marine vessels and
in light of her decision to sell the Third Claimant’s assets and the likely costs of
completing the repairs, she decided that it is in the interests of RBL that this tugboat
should also be sold “as is, where is”.
173. In my opinion, the Defendant gave a detailed and reasonable explanation that the
Third Claimant’s equipment and machinery were already dilapidated and in need of
substantial servicing at the date of her appointment as interim receiver. She also
indicated that they were subsequently repaired and maintained in accordance with an
established process which recognised and protected the interest of RBL the debenture
holder and secured creditor which appointed her. With respect to the Claimants
allegations of the theft of the Third Claimants assets, the Defendant indicated that she
took steps to ensure the safety and preservation of the Third Claimant’s assets during
her tenure as receiver and she annexed supporting invoices. In my opinion, the details
set out by the Defendant in the Defendant’s Injunction Affidavit demonstrated the
actions she took were reasonable and she and provided a comprehensive rational
explanation where she did not take any action.
The failure to supply potential investors with information critical to a refinancing of
RBL’s debt
174. The Claimants stated at paragraph 19 of the Claimants First Injunction Affidavit that
the Defendant breached her duty as receiver of the Third Claimant by failing to supply
potential investors with information critical to a refinancing of RBL’s debt by failing to
supply the First and Second Claimants with information on the amount to be paid to
RBL from its on-going works or works carried out since the Third Claimant went into
receivership. The Claimants asserted that due to this failure by the Defendant , they
were not able to secure financing for the Third Claimant as the First and Second
Claimants on their own sought financiers including Maritime and KCL, but the
Defendant was not co-operative.
Page 67 of 74
175. However at paragraph 22 (vii) of the Claimants First Injunction Affidavit the Claimants
admitted that since February 2019 they have been aware of the amount owed to RBL
and that since October 2019 the sum that RBL was prepared to accept in settlement
of that debt.
176. In the Defendant’s Injunction Affidavit, the Defendant set out the details of her
response to inquiries which she received from potential investors namely Mr Ferguson
of Maritime, Aspire and KCL.
177. According to the Defendant she was informed by the First and Second Claimants that
Mr Ferguson of Maritime was approached by them to consider the possibility of
refinancing RBL’s debt. She sent the Confidentiality Agreement to Mr Ferguson in
February 2018. Mr. Ferguson signed the Confidentiality Agreement and he was
supplied with a CIM. She emailed him on 13 March 2018 to indicate that all of the
information necessary for a refinancing proposal was contained in the CIM and that
she had understood that Maritime’s interest was not to purchase the Third Claimant’s
assets. On 14 March 2018, Mr. Ferguson responded that he needed cash flows (and
not just revenue figures), for a refinancing along with information on the principal
balance outstanding on RBL’s loan. She was of the opinion that the CIM contained
sufficient information for a refinancing as (a) page 6 of that document expressly stated
that for the 9 months since her appointment as receiver in April 2016 the Third
Claimant had rented out its assets (this being its only business) and earned
$31,000,000.00 and (b) the “Fixed Assets” section of the CIM provided daily rental
rates for the equipment identified therein. She verbally informed Mr. Ferguson that
she thought RBL might be prepared to accept the sum of $50,000,000.00 in settlement
of its debt. She did not receive any concrete refinancing proposal or letter of interest
from Mr. Ferguson.
178. The Defendant stated that on or about 15 August 2019, and before she had received
and responses to the CIM, she received a letter dated 15 August 2019 from Business
Recovery and Advisory Services Limited where she was informed that it had been
Page 68 of 74
retained by the Claimants to assist with a financial solution for the Third Claimant and,
following preliminary discussions with an equity provider, Aspire, wished to propose
a solution involving RBL writing down the Third Claimant’s existing debt to
$45,000,000.00; Aspire injecting the sum of $20,000,000.00 in part liquidation of the
reduced debt; and the remaining $25,000,000.00 being refinanced by RBL over 12
years.
179. According to the Defendant she rejected the proposal from Aspire since RBL was not
interested in any solution under which it continued to be engaged in a financing
arrangement with the Third Claimant while writing off approximately $30,000,000.00
worth of debt.
180. The Defendant stated that by letter dated 21st October 2019, KCL wrote to RBL, copied
to her confirming that it had been approached by the Claimants and requested to
arrange and place financing to settle the Third Claimant’s debt to RBL. KCL proposed
payment of the sum of $32,500,000.00 in full and final payment of the debt with
closing to take place within a period of 90 to one 120 days. She replied to KCL by letter
dated 31 October 2019, where she confirmed that RBL was prepared to accept the
sum of $35,500,000.00 in liquidation of its facilities with the Third Claimant provided
that a 10% deposit was paid; an appropriate agreement signed by 7 November 2019;
and closing was scheduled to take place within 90 days thereafter. She also indicated
that if an agreement was not concluded by 7 November 2019, she would proceed with
the sale of the Third Claimant’s assets.
181. By letter dated 7 November 2019, KCL accepted the liquidation figure of
$35,500,000.00 but counter-proposed the payment of 5% deposit and a closing
window of 120 days. KCL required that upon payment of the deposit it be granted a
licence to occupy and operate the Third Claimant’s assets for its own benefit. The
Defendant stated that she pointed out her concerns to KCL on 11 November 2019 that
KCL’s counter-proposal offered an inadequate deposit, required an excessive closing
window and that any licence to operate the Third Claimant’s assets would have to be
Page 69 of 74
carefully controlled by the agreement granting that licence. KCL responded by an
email sent on 14 November 2019 maintaining its deposit and closing requirements but
agreeing to assume the costs of the Third Claimant during the licence period.
182. In light of the Defendant’s detailed response to the assertions made by the Claimants,
it was clear that the Defendant provided potential investors namely Maritime, Aspire
and KCL with information concerning the refinancing of the Third Claimant’s debt with
RBL’s. As such at this stage of the action, I cannot find any merit in the assertion made
by the Claimants under this heading.
The failure to keep accounts and to prepare financial statements
183. At paragraph 20(xxiii) of the Statement of Case the Claimants pleaded the particulars
of the loss they claimed. They did not set out any loss suffered by them for the
Defendant’s alleged failure to keep account and to prepare financial statements. In
the absence of pleading such loss there is no merit in this allegation made against the
Defendant.
Damages is an adequate remedy
184. Third, damages is an adequate remedy. Apart from the other orders which the
Claimants seek for the Defendant to provide statements of accounts and to have her
removed as the receiver of the Third Claimant, in each of the declarations which the
Claimants seek against the Defendant they have stated a money value . If the
Claimants are successful at trial in proving that the Defendant acted in breach of her
equitable and statutory duties as the receiver of the Third Claimant, the substance of
the Claimants claim is that the Defendant’s liability to them would be at least $
387,849,953.29 based on the sums pleaded in the reliefs of the Statement of Case.
The Claimants also pleaded a claim in damages. In my opinion there is no evidence
from the Claimants First Injunction Affidavit and the Claimants Second Injunction
Affidavit that if they are successful at trial that the payment of the sums which they
claimed as damages would not be an adequate remedy for their loss.
Page 70 of 74
The balance of convenience lies with discharging the Injunction Order
185. Fourth, in considering the balance of convenience, the Court must take into account
the prejudice to the Claimants and RBL respectively. It was submitted on behalf of the
Claimants that if the Injunction Order is discharged they would suffer irreparable
prejudice. At paragraph 23 of the Claimants First Injunction Affidavit the Second
Claimant deposed that if the Injunction Order was not granted to restrain the
Defendant from selling the Third Claimant’s assets, they would be sold at a gross
undervalue and the operation of the Third Claimant would ceasing causing extreme
prejudice and hardship for the First and Second Claimants. The Second Claimant did
not set out any details of the extreme prejudice and hardship which the First and
Second Claimants would suffer apart from a reference to an action brought by Nagico
against them. Based on the Claimants case the extent of the prejudice is that Third
Claimant’s assets would be sold at an undervalue. However this must be considered
against the backdrop that if the Claimant are successful at trial, all the losses which
they pleaded the Third Claimant would have incurred as a result of any alleged sale of
those assets at an undervalue would have to be assessed and paid to the Claimants.
186. On the other hand the Defendant deposed in the Defendant’s Injunction Affidavit at
paragraphs 67 to 73 the nature of the prejudice which RBL will suffer as a result of the
Injunction Order. She stated:
“67. Since 20th November 2019, I have secured the La Brea land and the Claxton
Bay land and the Claimants are not permitted to enter thereon. I
understand from paragraphs 19 (xii) and (xiii) and paragraph 20 of the
Arjoon affidavit that the Claimants allege that, if they receive information
of the exact payment Republic would accept in full settlement of its
facilities with the Company, they are “fairly certain” they can identify a
financier to secure a suitable loan. The fact is, however, that the Claimants
have been unable to date to procure any financing to settle Republic’s
facilities notwithstanding that they were aware:
Page 71 of 74
a. from the date of my appointment as receiver, because I told them
so, that they were free to identify a financier prepared to make a
firm refinancing commitment;
b. since 28th February 2019 that Republic was then prepared to
accept the sum of $50,000,000.00 in settlement of its secured
debts. A true copy of Republic’s letter to the Claimants dated 28th
“February 2019 confirming its position is now produced and
shown to me and hereto exhibited marked “M.D. 41”, and
c. since my letter dated 31st October 2019 to KCL (exhibited hereto
as “M.D.33”) that Republic had reduced its settlement figure to
$35,500,000.00 with a ten percent (105) deposit and a ninety (90)
day closing period.
The only financiers identified by the Claimants (namely Maritime, AMG
and KCL – I have received no communication from Ramps Logistics Limited
notwithstanding the statements made at paragraphs 19 (xix) and (xx) of
the Arjoon affidavit) have been unable to advance any concrete proposals
acceptable to Republic and did not submit any serious letters of offer. The
Claimants’ evidence that they are “fairly certain” they can identify a
financier to secure a suitable loan, is not an absolute and unconditional
offer to provide immediate refinance.
68. It appears from paragraph 22 of the Arjoon affidavit that the Claimants
believe that the right of Republic to enforce its security should be
postponed by me to the interests of the Claimants in maintaining the
Company as a going concern. However, to adopt such a course would be
inconsistent with my primary duty to Republic, particularly where further
delay will inevitably result in continued deterioration of the Company’s
machinery and equipment (there being no revenue to service same) and
consequent imperilling of the assets available to satisfy (in part only) the
debt due to the secured creditor.
69. The Company’s liabilities as at the date hereof include:
Page 72 of 74
a. The secured debt due to Republic which as at 20th January 2020
amounted to $78,799,978.48;
b. Debts due to unsecured creditors based on proofs of claim
submitted to me which amount to $56,458,804.32;
c. Outstanding VAT, penalties and interest due to the Inland
Revenue which as at 18th May 2017 amounted to $12,825,657.44;
d. Unsatisfied High Court judgments which amount to
$8,456,458.83; and
e. A claim by Plipdeco against the Company for unpaid storage
charges which as at August 2017 amounted to $42,406,538.04.
A true copy of Republic’s letter to my assistant, Ms. Keesha Shadeo,
dated 20th January 2020 confirming the outstanding balance due from
the Company is now produced and shown to me and hereto exhibited
marked “M.D.42”.
70. The Company is currently operating on an account with an overdraft
facility provided by Republic. Its approximate average monthly running
expenses, met by the overdraft facility where necessary, is $250,000.00
made up of the licence fee payable for the Claxton Bay land, insurances,
utilities security and overdraft interest.
71. Given that the Company’s equipment and machinery are deteriorating
assets and that the best price currently obtainable on the marker for a
total asset buyout is $34,500,000.00 I am fearful that, if the injunction
granted herein on 16th December irretrievable affected.
72. I am also mindful that the Claimants have provided the Company with no
indemnity in support of their undertaking to abide by any Order that the
Court may make as to damages in case the interim injunction is discharged
or for any costs that it may be found liable to pay should the action herein
be dismissed. I the absence of such an indemnity, these proceedings
themselves further endanger the Company’s assets.
73. Further, as far as I am aware, the Claimant have not paid to the court the
amount said by Republic to be owing, as a condition for the injunction.”
Page 73 of 74
187. In my opinion, the greater prejudice will be to RBL, the secured creditor which
appointed the Defendant as receiver of the Third Claimant. The Claimants have not
provided any evidence that they are in a position to satisfy the secured debt owed to
RBL; or that the assets of the Third Claimant which consist of machinery and
equipment are not deteriorating or that there is a better price obtainable on the
market for the total asset buyout which the Defendant has secured in the sum of
$34,500,000.00.
188. Further, there was no evidence from the Claimants of the likelihood that the
Defendant would not be able to satisfy any award for damages if awarded at the trial.
It was not in dispute that the Defendant is acting in her capacity as receiver of the
Third Claimant as she was appointed by the secured creditor RBL. The Third Claimants
secured debt to RBL as at 20 January 2020 is the sum of $78,799,978.48. In my opinion
the Court can take judicial notice that if the Claimants are successful in their action,
RBL would be in a position to satisfy any award of damages which they will be
awarded.
189. In any event, the Injunction Order if not discharged would maintain a status quo as of
the 16 December 2019 which from the Claimants own evidence they do not desire.
The Injunction Order stated:
“IT IS ORDERED:
1. An interim injunction to restrain the Defendant whether by her officers,
nominees, servants and/or agents or otherwise or otherwise howsoever
from selling or attempting to sell KCG’s assets or business until hearing
and determination of a further hearing of the Notice of Application filed
on 16th December, 2019, which hearing is fixed for the 20th December
2019 at 10:00am.
IT IS HEREBY DIRECTED that the Defendant may apply to the court at any time to
vary or discharge the order, but if she wishes to do so, she must first inform the
claimant’s Attorney-at-law.”
Page 74 of 74
190. The Claimants position as articulated in the Claimants First Injunction Affidavit and the
Claimants Second Injunction Affidavit is that they are attempting to secure persons to
purchase the assets of the Third Claimant for a higher sum than which the Defendant
has entered into agreements for sale. However, the Injunction Order stops the
Defendant from selling the assets of the Third Claimant to any entity including the First
and Second Claimant or their investors.
COSTS
191. At the hearing it was submitted on behalf of the Claimants that the costs of the
Defendants Striking Out Application should be costs in the cause. Counsel for the
Defendant submitted that the costs should be paid by the First and Second Claimants.
192. I have decided that there are no exceptional circumstances to not follow the usual rule
that costs must follow the event. I have concluded that the First and Second Claimants
are to pay the costs of the Defendants Striking Out Application since they instituted
the instant action with the Third Claimant without obtaining the appropriate
indemnity from the Defendant with respect to the Third Claimant being a party. In my
opinion, to order the Third Claimant to also pay the said costs would imperil its assets
and ultimately prejudice RBL.
ORDER
193. The Third Claimant is struck out as a Claimant in this action.
194. The First and Second Claimants claims against the Defendant is struck out.
195. The First and Second Claimants to pay the Defendant the costs of the Defendant’s
notice of application filed on the 21 January 2020 to be assessed by the Registrar in
default of agreement.
Margaret Y. Mohammed
Judge
