1 IN THE GRAND COURT OF THE CAYMAN ISLANDS 2 FINANCIAL SERVICES DIVISION 3 CAUSE NO. FSD 95 OF 2013 (AJEF) 4 5 The Hon. Mr. Justice Angus Foster 6 In Chambers 7 15th and 28th August 2013 8 9 10 IN THE MATTER OF THE COMPANIES LAW (2012 REVISION) (AS AMENDED) 11 12 AND 13 14 IN THE MATTER OF ARAMID ENTERTAINMENT FUND LIMITED 15 16 Appearances: Ms. Laura Hatfield and Mr. Kai McGriele of Solomon Hanis for the Petitioner 17 18 19 20 Mr. Stephen Alexander and Mr. Aristos Galatopoulos of Maples and Calder for the Company 21 RULING 22 Introduction 23 24
This ruling concems the liability, if any, in the particular circumstances, for costs on the 25 withdrawal of a creditor's winding up petition. The company concemed contended that 26 the petitioner should pay the company's costs of and incidental to the petition. The 27 petitioner contended that there should be no order for costs so that the petitioner and the 28 company would each bear their own costs or, altematively, that a decision on liability for 29 costs in respect of the withdrawn petition should await the outcome of certain litigation 30 between the petitioner and the company in New York. 31 lof28 1 Background 2 3
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30 31 32 On 10th July 2013 KBC Investments V Limited ("KBC") presented a petition for the winding up of AI·amid Entertainment Fund Limited ("the Company"). The Company is an exempted company and canies on business as a mutual fund registered with the Cayman Islands Monetary Authority under the Mutual Funds Law (2009 Revision). The Company invests by providing principally ShOli and medium term financing to producers and distributors of film, television and other enteliainment media secured by various means over assets of the borrower. The Company is involved in several types of such financing one of which is known as "slate" financing. This involves investment in the production by a selected film studio of a specified number of films over several years. As at April 2011 Charles Frederic & Co LLC ("CFC"), in its capacity as custodian for The Stillwater Market Neutral Fund 111 SPC on Behalf of Stillwater Matrix Segregated POlifolio ("Stillwater"), was the registered owner of 88,730.4950 Class B redeemable shares in the Company ("the Shares"). On celiain dates from 23rd May 2011 until 16th April 2012 a propOliion of the shareholdings in the Company, including the Shares, were compulsorily redeemed by the Company. However, on 11th July 2011 the Company informed CFC by email that it would hold back all amounts due in respect of the compulsory redemption of the Shares until the "Wimbledon" proceedings which the Company had initiated in New York were finally determined. For convenience I shall refer to those proceedings as "the Stillwater Proceedings", which is how they were referred to during the hearings before me. The Stillwater Proceedings were initiated by the Company and two other related entities against Stillwater, CFC and others, but not KBC, on 25th July 2011 in the Supreme COUli of the State of New York. I shall consider the Stillwater Proceedings later in this ruling. The amount due by the Company in respect of the redemptions of the Shares is US$I,068,530.31 ("the Distribution Proceeds"). Although the redemption proceeds due to all other shareholders involved in the redemption process were paid by the Company, payment of the Distribution Proceeds was and remains withheld by the Company. 2of28 1 2
In 2007 KBC had provided certain financing to Stillwater in security for which the Shares 3 were pledged as collateral. As a result KBC was entitled to exercise celiain rights over 4 the Shares. During 2012 KBC foreclosed on the Shares and all of Stillwater's rights and 5 interest in the Shares were transferred to KBC and the Shares became beneficially owned 6 by KBC. CFC remained the registered owner of the Shares but thereafter as custodian for 7 KBC. 8 9
On 8th Febmary 2012 the trial judge of the Supreme Comi of the State of New York 10 dismissed all the claims made by the Company and the other plaintiffs in the Stillwater 11 Proceedings. The Company and the other plaintiffs subsequently appealed to the 12 Appellate Division of the New York Supreme Court against the order for dismissal of 13 their claims 14 15
On 18th April 2013 the right to the Distribution Proceeds was expressly assigned by CFC 16 to KBC. It was not disputed on behalf of the Company at the hearings before me that this 17 was a valid assignment. 18 19
On 24th April 2013 KBC wrote to the Company giving notice of the assignment of 18th 20 April 2013 and demanding payment of the Distribution Proceeds by 1 st May 2013. 21 22
On 30th April 2013 the Appellate Division of the New York Supreme Comi refused the 23 appeal by the Company and the other plaintiffs in the Stillwater Proceedings and affilmed 24 the dismissal of all the claims by the court at first instance. 25 26
On 3rd May 2013 a statutory demand dated 2nd May 213, pursuant to Section 93 of the 27 Companies Law (2012 Revision) ("the Law"), for payment of the Distribution Proceeds 28 was served on the Company on behalf of KBC. Under the statutory demand payment of 29 the Distribution Proceeds was due on or before 24th May 2013. KBC subsequently 30 voluntarily extended the time for payment to 30th May 2013. No payment of the 31 Distribution Proceeds was or has since been made. 32 30f28 1 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32
On 30th May 2013 the Company and the other plaintiffs in the Stillwater Proceedings applied to the New York State Court of Appeals, which is the comi oflast resoli in New York State, for reconsideration of the decision of the Appellate Division affirming the dismissal of the claims and in the alternative for leave to appeal against that decision. Those applications were heard by the New York State Conrt of Appeals on i h June 2013 but as yet no decision has been issued. On 10th July 2013 KBC's petition for the winding up of the Company based on the non- payment of the Distribution Proceeds pursuant to the statutory demand was filed and then served on the Company the same day. Later the same day, lO'h July 2013, but after service of the petition, the Company filed electronically proceedings against KBC and certain related entities in the Supreme Comi of the State of New York, ("the KBC Proceedings"). In those proceedings the Company alleges claims against KBC and the other defendants which, if established, would exceed the amount of the Distribution Proceeds. I shall consider the KBC Proceedings as well later in this mling. It is not disputed that the KBC Proceedings have not yet been served on KBC itself, although there is a dispute in the affidavit evidence as to whether the proceedings have been validly served on the associated entities ofKBC in New York which are also named as defendants. The evidence on behalf of KBC is that it first became aware that the KBC Proceedings had been filed when a press release about the commencement of the proceedings was issued on 12th July 2013. The primary evidence of the Company in opposition to the petition (the affidavit of one of its directors, Mr. Roger Hanson) was served on KBC on 24'h July 2013 and re-served in revised form on 30th July 2013. KBC says that Mr. Hanson's revised affidavit was the first time it became aware that the Company was seeking to rely on the KBC Proceedings to found a cross-claim and set-off against the Distribution Proceeds. On 1 s, August 2013 KBC applied for leave to withdraw its petition in light of the Company's evidence served in response. KBC say that it accepted that it would be 40f28 1 inappropriate to seek to have the Company's claim to set-off detelmined in winding up 2 proceedings. 3 4
On lSI August 2013 I duly gave KBC leave to withdraw its petition pursuant to 0.3, 1'.7 of 5 the Companies Winding Up Rules (2008) (as amended). The application was not opposed 6 by the Company except costs which were clearly in dispute. That detelmination of costs 7 was adjourned for hearing on a future date. The hearing ultimately took two full days, 8 over a week apart. 9 10 The Relevant Legal Principles 11 12
Section II (I) of the Grand Court Law (2008 Revision) ("the Grand Court Law") 13 provides inter alia: 14 15 " The [Grand] Court ................................ , ............ ..... shall possess and 16 exercise... ... ... ... the like jurisdiction ....... which is vested in or capable of being 17 exercised in England by- 18 19 (a) Her Majesty's High Court of Justice ........................................................ . 20 as constituted by the Supreme Court of Judicature (Consolidation) Act 1925, 21 ["the 1925 Act"] and any Act of the Parliament of the United Kingdom 22 amending or replacing that Act". 23 24
25 26 27 28 29 30 31 The 1925 Act was replaced by the Supreme Court Act 1981 ["the 1981 Act"]. Section 51(1) of the 1981 Act provides: " Subject to the provisions of this or any other enactment and to rules of COllrt, the costs of and incidental to all proceedings in- (b) the High Court, and ... ....... .. shall be in the discretion of the court" 5 of28 1 Accordingly, by virtue of Section 11 (10) of the Grand Court Law, subject to any other 2 Law and to rules of cOUli, the costs of and incidental to all proceedings in the Grand 3 Court are in the discretion of the Court. 4 5
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Section 24 (1) of the Judicature Law (2007 Revision) is in viltually identical terms to Section 51(1) of the 1981 Act and provides: "Subject to the provisions of this or any other Law and to rules of court, the costs of and incidental to all civil proceedings in- (b) The Grand Court, shall be in the discretion of the relevant court. " It is therefore clear from the relevant legislation (and it is well-established), that, subject 18 to the provisions of any relevant Law or rules of court, the costs of and incidental to any 19 civil proceedings in this court are a matter for the court's discretion. In the English case 20 Aiden Shipping Ltd v. Interbulk Ltd [1986J AC 965 the House of Lords held that the 21 discretionary power to award costs contained in section 51 (1) of the 1981 Act (which is 22 applicable to the Grand Court pursuant to the Grand COUli Law and effectively replicated 23 in the Judicature Law, as I have explained above) was expressed in wide tenllS and that 24 therefore there was no justification for implying a limitation to the effect that costs could 25 only be ordered to be paid by parties to the proceedings, which was the issue in that case. 26 27
The Grand Court Rules ("GCR") are largely based on the English Rules of the Supreme 28 Court 1991 at which time the 1981 Act was in force. They are the relevant rules of court 29 in this jurisdiction to which the cOUli's general discretion as to costs is subject. O. 62 of 30 the GCR is the order relating to costs. Rule 4 provides inter alia as follows: 6 of28 1 2 3 4 5" 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31
(1) This rule shall have effect unless otherwise provided by any Law [There is no Law which provides otherwise in the instant case 1 (2) The overriding objective oj this Order is that a sllccessfiil party to any proceeding should recover fi"OIn the opposing party the reasonable costs incurred by him in conducting that proceeding in an economical, expeditious and proper manner unless otherwise ordered by the COllrt. If the Court in the exercise oj its discretion sees fit to make any order as to the costs oj any proceedings, the Court shall order the costs to Jollow the event, except when it appears to the COllrt that in the circumstances oj the case some other order should be made as to the whole or any part oj the costs N, In the present case it was submitted on behalf of the Company and conceded by counsel for KBC that, in light of the terms OCR 0.62, r.4 (2) and (5) above, on the withdrawal of a winding up petition by the petitioner, as on the dismissal of such a petition, the Court would ordinarily order costs to follow the event and the petitioner would be required to pay the company's costs of and incidental to the withdrawn winding up petition. In my view that is consistent with the rules and is clearly COlTect. However, sub-rule (5) provides for the possibility of an exception to this usual rule, namely that when it appears to the Court that some other order as to costs should be made in the circumstances of the case concerned, the Court may make such other order. This possibility of an exception to the usual rule, which was relied upon by counsel for KBC in the present case, was rightly accepted in principle by counsel for the Company, although, of course, it was his case that it had no application in the circumstances ofthe present case. The express power of the Court to make some order other than the usual order that costs shall follow the event is clearly consistent with and an aspect of the Court's wide general discretion in relation to costs. It is clearly by the terms of sub-rule (5) of OCR 0.62, r.4 itself. The various cases concerning costs on the dismissal or withdrawal of a winding up 7of28 1 2 3 4 5 6
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23 24 25 26 27 28 29 30 31 32 petition to which I was referred at the hearing were, in my view, illustr~ii~~C~f 'V""'"k,~" exercising or declining to exercise that discretion to depart fi'om the usual rule that costs follow the event in circumstances where it appeared to the cOUli that it should or should not do so. In Re M McCarthy & Co (Builders) Ltd (No 2) [I976} 2 All ER 339 a petition for winding up was dismissed on the telIDS that the company concerned should pay the petitioner's costs. Brightman J. considered that the company was responsible for the confusion over the identical names of two companies, the wrong one of which the petitioner had innocently petitioned to wind up. The petition was dismissed but in the view of the judge the responsibility for the error lay with the company artd it should therefore meet the petitioner's costs. The circumstances of that case are, of course, different from the circnmstances of the present case but in my view it is nonetheless an example of the cOUli depatiing from the usual rule on costs in the exercise of its discretion. According to the judgment (page 340): "It was conceded on both sides that the court has a discretion in relation to the costs of the substituted petitioner. The court in the proper exercise of its discretion might dismiss the petition, which has now been amended, without costs, or it could order that the costs of the substituted petitioner are paid by the 1975 company." I was also refelTed to an Australian authority, Re Mailrite Ply Ltd [I985} 9 ACLR 863 from the Queensland Supreme Court. In that case the creditor petitioner consented to the dismissal of its winding up petition in light of the material filed by the company in opposition to the petition. However, the petitioner contended that it had acted reasonably in presenting the petition in light of the company's failure to comply with a statutory demartd and the fact that the petitioner had had no notice prior to the presentation of the petition that the debt concerned was disputed by the company. The petitioner sought art order that the company therefore pay its costs. On the other hand the comparty contended that in the circumstances the petitioner, who bore the risks of presenting the petition and who at the hearing consented to the dismissal of the petition, ought to pay the company's costs of the petition. There were therefore some similarities to the circumstances in the 8of28 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 present case. Reference was made in the judgment (page 867) to HalsblllY Vol. 7, 4'hEdn, para 1035 where it is said inter alia: "A petition may be dismissed without costs and this is now the general rule where a creditor, whether he is a judgment creditor or simple creditor, has acted reasonably in presenting the petition. " The judgment continues: " It is therefore a question of discretion in all the circumstances of the case " There is then a quotation (page 868), with approval, from an Australian text on company law as follows: "From the foregoing decisions it clearly emerges that the fimdamental consideration of the court in the exercise of discretion whether as to the petition or as to costs is the reasonableness of the presentation of the petition. if the presentation is unreasonable, such as to constitute an abuse of process, the proceeding will be stopped: Re a Company [l894} 2 Ch 349 and see Re Parke}~ Davies and Hughes r1953} 1 WLR 1349. A petition presented with a view to enforcement of payment a debt bonafide disputed is an abuse of process and should be dismissed with costs: London and Paris Banking Corporation (1875) LR 19 Eq 444" ......................................................................................... . And the judgment goes on: "Whilst it is clear that the company is able to pay its debts and that it now appears that there is a dispute as to the debt, it cannot be said that the petition was presented with a view to enforcement of a debt bona fide dispute. No sllch dispute was drffivn to the allention of the receivers of the petitioning company at any time before the petition was 90f28 3 4 5 6 7 8 9 10 11 12 13 14
15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 presented. Indeed. this did not appear until velY late in the proceedings when the affidavit of Mr. 0 'Brien was filed and served on 23 April 1985. In all the circumstances of this case, I am not prepared to hold and I do not hold that the petition was presented unreasonably. I have derived assistance ji'01ll the passage quoted in Halsbury above to the effect that that a petition may be dismissed without costs. It is there said that this is the general rule where a petitioning creditor has acted reasonably in presenting his petition and that a petitioning creditor will not be awarded costs where the petition is dismissed. 1 see no distinction between dismissal or withdrawal in this context .......................... Accordingly, in the overall exercise of my discretion, I dismiss the petition by consent but make no order as to costs". I found this a relevant and helpful analysis. In Re Lanaghan Bros Ltd [l977} 1 All ER 265 Brightman J. again ordered that in the circumstances of that case, which satisfied him of the propriety of the presentation of a winding up petition, the petitioner's costs of the petition, which had to be dismissed, should be paid by the respondent company. He said: "It so happens that on 9th March 1976, I heard another case, Re M McCarthy & Co (Builders) Ltd (No 2), in which a petition had been properly presented but was dismissed in the particular circumstances. In the present case I intend to direct that the petition be dismissed on the terms that the costs of [the petitioning creditor] are to be paid by the company. I take the same view as I took in the different circumstances of Re M McCarthy & Co [ibid]. The petitioning creditor has proceeded without any fault whatever on his part ... ................................................... ..... Now that the petition must be dismissed it seems to me only just that the petitioning creditor, ifhe be a creditor, should be given his costs of the petition, which he presented with complete propriety. I propose therefore to make an order not only that the petition be 10 of 28 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30
dismissed but also that the company should pay the costs of the petitioner. If this is a second departure fi'om what is said to be the general rule, then once again I say, so be it." I was also referred by counsel for KBC to the repOlt of a case in the Bermudan Commercial COUlt: Re Gerova Financial Group Limited [2012J SC (Eda) 18 Com (19 March 2012) in which the test of the reasonableness of the petitioner in presenting a winding up petition which was withdrawn without opposition save as to costs was endorsed and applied. The circUlllstances, in brief, were that there were three petitioners for the winding up of the company concerned. The second petitioner was the assignee by the first petitioner of an unpaid default judgment against the company. The third petitioner was a judgment creditor in respect of another unpaid summary judgment against the company in respect of an entirely different debt. Only the second and third petitioners were relevant for purposes of the judgment. Counsel for all parties summarised the legal principles applicable in respect of costs on the withdrawal of a winding up petition in a way which the cOUlt considered to be correct. The COUlt agreed with the submission that "where a petition has been reasonably and properly presented, the withdrawing petitioner is entitled to their costs" and reference was made to the decision of Brightman J. in the Lanaghan Bros case (supra). The judge (Kawaley J.) went on (para 23) to confirm: " Of course where a petition is dismissed because it was improperly presented, for instance, being based on a disputed debt, the petitioner will ordinarily be required to pay the costs of the abortive petition ... ......................................... " And at para 27: " Despite Harman J's ritual incantation to the effect that winding-up proceedings ought not to be used for debt collection purposes, [In Re a Company [1983] BCLC 492 at 495] in my judgment there can be no impropriety in threatening or bringing winding-up proceedings where a company fails within a reasonable time 11of28 1 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29
30 31 to pay what reasonably appears to the unpaid creditor to be an undisputed debt ........................................................................... ............................. . What is and will likely always be recognised as abusive is the actual or threatened presentation of a petition based on a debt which is in fact disputed in good faith on substantial grounds. Between these two boundmy marks, however, lies a middle ground in which an infinite variety of potential instances of abusive or unreasonable conduct by a petitioning creditor may be found to exist." After considering all the pmiicular circumstances of the case Kawaly J. continued (para 41): "Nonetheless, the cumulative effect of the intensive tactical manoeuvring which Aramid [the second petitioner and, coincidentally, the Company in the present case] has deployed in relation to its prosecution of the present Petition passes a tipping point which requires this Court to find that it has acted unreasonably and should not be ml'arded its costs inl'elation to its abortive Petition. .............. " In relation to the third petitioner the judge said: " Applying recognised principles, Marseilles [the third petitioner] is entitled to its costs. I do not find that Marseilles' conduct of the petition was to any extent unreasonable in light of the circulllstances in which it withdrew its supportfor the present proceedings" The cOUli in that case too had regard to the reasonableness and propriety of the presentation of the petition in the pmiicular circumstances. These authorities and others to which I was referred but have not thought it necessary to cite since they all essentially turned on their own particular circumstances, do make it clear that it is well established that the court has a broad discretion to depmi from the 12 of 28 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31
usual rule in relation to the costs of a winding up petition which is dismissed or withdrawn if it considers that some other order should be made in the particular circumstances. The usual rule, which is expressly stated in the GCR, is that costs should follow the event. It is almost trite law that the winding up jurisdiction of the court may not be invoked in respect of a debt which is disputed on bona fide and substantial grounds and if the court is satisfied that such is the case there will be no doubt that the company concerned will have its costs in the event that the petition is dismissed or withdrawn as a result. However, the court has an express discretion to depati from the usual rule on costs if it considers that some other order should be made in the particular circumstances. The question which it is usually appropriate for the cOUli to consider in the case of a dismissed or withdrawn winding up petition when the petitioner opposes the company getting its costs and seeks no order for costs or applies for its own costs or makes some other application in relation to costs, is whether the presentation of the petition was reasonable in all the circumstances. If the court is so satisfied the court may in its discretion depati from the usual rule and make such other order in relation to the costs of the petition as it considers appropriate in the circumstances. In the present case KBC opposed the Company being awarded its costs of the withdrawn petition but did not seek its own costs. Its case was that no order for costs should be made and consequently that each pmiy should bear its own costs. The Company, on the other hand, argued that the circumstances of this case did not justify the cOUli departing from the usual rule, which, it submitted, by reference particularly to Re Fernjorest Ltd [J990} BCLC 693, the cOUli should be reluctant to do. I should also mention here, while considering the relevant legal principles, that KBC submitted, as an alternative to its principal position that there should be no order for the costs of the petition, that the decision on costs should await the outcome of the KBC Proceedings in New York, which would determine whether or not the Company does or does not have a valid set -off against the debt on which the petition was founded. In that respect counsel for KBC relied upon the judgment in Re Sykes & Sons Ltd [20l2} EWCH 1005 (Ch); [20J3} Bus LR 106 in the English High Court. In that case the winding up petition was dismissed on the ground that the debt on which it was based was subject to a 13 of28 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 dispute which it was not appropriate to resolve in the winding up proceedings but the compauy had only belatedly produced documentation in suppOli of its dispute of the debt. Moreover the genuineness of that documentation was questioned. The company applied for its costs of the petition aud of its application to restrain advertisement of the petition. The Deputy High COUli Judge adjourned the company's application to await the outcome of separate proceedings at which the disputed issues could be resolved. At paragraph 26 of the judgment he said: " Turning to the facts of the instant case, I accept Mr. Nersessian's submissions [for the petitioner] to the effect that, notwithstanding that the petitioner gave it evelY reasonable opportunity to do so, the company did not set out the basis for its dispute in relation to the final account in any, or any meaninf,ful the presentation of the petition. " And at paragraph 31 : "Whilst havingfiill regard to the principles set out in In re Fernforest Ltd [1990 BCLC 693 and in In re UK (Aid) Ltd [2003} BCLC 351 which I have discllssed above, I do regard the combination of these circumstances in which the company did not give any meaningfiil account of its defence prior to the petition and only belatedly produced documents which might, if authentic, be capable of supporting its case, as wholly exceptional and as justifYing a departure fi'om the general rule as to costs which I have considered above. " He continued at paragraph 35 and then at paragraph 39: "35. Because I cannot resolve the crucial factual issues now, it seems to me that I have a choice. I can either adopt a necessarily rough and ready approach and make no order as to costs, which at least balances the risk of injustice to each side and reflects the inadequacies of the company's response to the petitioner's claim and the unsatisfactOlY manner in which it adduced certain important parts 14of28 1 2 3 4 5 6 7 8 9 10 11
12 13 14 15 of its evidence. 01' ] can adjourn the question of costs to await the outcome of proceedings to resolve the dispute ............................................................ .... . 39. For these reasons, whilst making a decision now would be expedient, in my judgment, given the exceptional circumstances of this case, the most appropriate course to ensure that justice is achieved between the parties is to adjourn the issue of costs to ml'ait the outcome of proceedings in which there can be disclosure and cross-examination and (in particular) the issue of the authenticity of the manuscript valuations can be addressed" The Sykes & Sons case, is, in my view another illustration of the extent of the court's discretion to adopt whatever course in relation to the costs of a dismissed 01' withdrawn winding up petition that it considers most equitable and appro circumstances 16 The Parties' cases 17 18
19 20 21 22 23 24 25 26 27 28 29 30 31 The Company contends that the usuallUle that costs should follow the event as provided for in GCR 0.62, 1'.4 (2) and (5) should apply, that the court should be reluctant to depart from it and that therefore the costs of the petition which has been withdrawn should be the Company's. It is submitted for the Company that there is nothing in the circumstances of this case to justify departing from the usual lUle where KBC has inevitably had to withdraw its petition because the debt on which it is founded is clearly disputed, being subject to set-off of the Company's cross-claims, which greatly exceed the amount of the Distribution Proceeds. Those claims derive indirectly from the Stillwater Proceedings in the one case and are made directly in the KBC Proceedings in the other case. The Company argues that both these claims and the resulting set -offs were known to KBC before it presented its petition and that KBC went ahead with the petition at its own risk. In such circumstances, it was contended, it was not reasonable or proper for KBC to have presented its petition when it did and the costs of the petition, which inevitably had to be withdrawn, should accordingly be awarded to the Company. The Company argues in 150f28 1 2 3 4 5
6 7 8 9 10 11 12 13 14 15 16 17 addition that it was umeasonable of KBC to have presented its petition to wind up the Company when the Company is clearly solvent and also because KBC had acquiesced in the Company withholding payment of the Distribution Payments. KBC does not accept that the claims in the Stillwater Proceedings, to which it is not a party, give rise to a cross-claim against it. However, in any event it contends that, the claims in those proceedings having been dismissed both at first instance and on appeal by the New York Supreme COUli, there was no cross-claim or substantial or valid dispute about the Distribution Proceeds based on the Stillwater Proceedings when its petition was presented. KBC's case also is that it had no notice of the claims against it by the Company as subsequently set out in the KBC Proceedings before it presented its petition. It says it was only when it became aware of those claims that it applied to withdraw its petition. As far as the solvency of the Company is concerned KBC relies on the non- payment of the statutory demand. In relation to acquiescence KBC contends that the facts do not bear out such an allegation. Accordingly, KBC submits that in all the circumstances it was reasonable for it to present the petition when it did. 18 The Stillwater Proceedings 19 20
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28 29 30 31 The Company contends that it has a right to set-off the amount of the Dh;trilolition Proceedings against the amount of its claim against Stillwater in the Stillwater Proceedings which, if upheld, would greatly exceed the amount of the Distribution Proceedings. KBC was not named as a defendant in the Stillwater Proceedings, indeed was not even mentioned, but the Company argues that KBC is in the same position as Stillwater as its assignee. The claim in the Stillwater Proceedings is for damages of US$80m on grounds of alleged tOliious interference, intentional harm and another similar alleged cause of action principally in respect of a proposed transaction in 2010 between the Company and a third party, AERY Partners, for the sale of the Company's pOlifolio of assets. It is alleged that certain of the defendants, though not expressly the Stillwater entities, deliberately made 16 of 28 3 4 5 6 7 8 9
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23 24 25 26 27 28 29 30 31 32 claims to the Company's shareholders that they were being defrauded, which caused "discord" between the Company and its shareholders concerning the proposed transaction as a result of which the Company ultimately felt compelled to withdraw from the transaction to its loss. However, as the judge of the Supreme Court of New York State said in his written ruling of 8th February 2012 dismissing the complaint, the purported basis for any alleged liability of the Stillwater entities or of CFC as defendants is not clear. Be that as it may, the uncontested evidence before me is that tmder New York law a decision and order of a trial court at first instance is final and binding notwithstanding that the party affected has appealed. The fact that there is an appeal pending against a judgment or order does not alter the finality or enforceability of that judgment or order, unless there is a stay. The law is that "a judgment pending appeal is entitled to the same effect as a final judgment". That, of course, is also the position under Cayman Islands law. The undisputed evidence is also that in the Supreme Comt of the State of New York there is no stay recorded of either the decision and order by the Supreme Comt at first instance dismissing the Stillwater Proceedings or of the order of the Appellate Division affirming that decision. Accordingly those decisions are final and binding as against the Company notwithstanding the Company's pending application for re-argmnent or alternatively for leave to appeal. In light of the position as explained above, it seems to me that it was reasonable for KBC to take the view that the Company's claims in the Stillwater Proceedings were no longer extant and that they could properly proceed on that basis. Counsel for the Company argued that it was not reasonable for KBC to present a winding up petition until the Stillwater Proceedings were "finally" determined and that those proceedings give rise to a genuine dispute over whether the Distribution Proceeds are payable of which KBC were obviously aware prior to presentation of the petition. However, the claim on which that alleged dispute is based has been dismissed (twice) and that dismissal is to be treated as final and binding on the Company. It was not disputed that such dismissal acts as an estoppel against the Company from fmther asserting its alleged claim against Stillwater. The fact that the Company has applied for re-argument or, alternatively, leave to appeal is 17 of 28 1 not relevant. I therefore do not accept the at'gument of counsel for the Company in this 2 regard. I aIll of the opinion that it was not umeasonable in the circumstances for KBC to 3 proceed on the basis that there was no substantial valid dispute with respect to payment 4 of the Distribution Proceeds based on the claim in the Stillwater Proceedings. 5 6 The KBC Proceedings 7 8
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15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 The principal dispute between the patiies was whether KBC knew of the claim made against it, now pleaded in the KBC Proceedings, before its service of the petition. As I have already explained, the KBC Proceedings were filed in New York after the petition was served but the Company contends that KBC knew of the Company's claim against it as now made in the KBC Proceedings before it presented the petition. The defendants named in the KBC Proceedings are not only KBC but five associated entities of KBC, including its ultimate parent, KBC Bank NV, the well-known Belgian bank, as well as Stillwater and CFC. In the New York Complaint KBC and its associated entities are together referred to as the KBC Defendants and the relevant claims are made against the KBC Defendants rather than KBC individually. The principal claims alleged against the KBC Defendants, apali from certain injunctive type relief in respect of the Shares, are firstly that the KBC Defendants have no rights in respect of the Shares, which, it is contended still belong to Stillwater and in respect of which only Stillwater has any rights. However, the claim of which the Company argues KBC was aware prior to its presentation of the petition relates to alleged misuse by KBC of confidential financial information relating to the Company's investments and in particular its investment made in 2008 by way of contribution to patiial financing of a "slate" of films (see paragraph 2 above) by a specific film studio in California, known as the "Beverly Slate". It is alleged by the Company that the KBC Defendants, including KBC, as investors in the Company, obtained confidential infOlmation conceming the Company's investments, in particular the Beverly Slate investment, which KBC passed to its "agent", Fortress Investment Group LLC ("Fortress"), who then allegedly misused that information to wrongfully 18 of 28 3 4
5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27
28 29 30 31 interfere with the Company's investment in the Beverly Slate to the detriment of the Company. The Company argues that KBC was aware of its claim in relation to the Beverly Slate fi'om or about Febmary 2012 when the Company brought proceedings in Los Angeles, California against Fortress relating to its involvement in the circumstances sUlTounding the Beverly Slate (the "Fortress Proceedings"). Although KBC is not a defendant to or even mentioned in the Fortress Proceedings, the Company argues that KBC must have become aware of the Fortress Proceedings soon after they were commenced and that it knew that it was implicated in the allegations against F011ress relating to its actions in relation to the Company's investment in the Beverly Slate. In the circumstances I found this suggestion somewhat far-fetched. The Fortress Proceedings made no claim against or even any reference to KBC and nothing was done by the Company at that time to assert, still less substantiate or pmlicularise, any claim against KBC relating to the Beverly Slate. The F011ress Proceedings were initiated some 18 months before the KBC Proceedings were commenced in New York. In my view the Fortress Proceedings did not clearly indicate to KBC that the Company was making a claim against it of the kind now alleged in the KBC Proceedings. In fact the circumstances suggest rather the contrary, namely that no claim was being made against KBC. I do not accept the argument that it should somehow have been obvious to KBC from that time that the Company was making such a claim against it. No such claim was in fact made by the Company until it filed the KBC Proceedings in New York on 10th July 2013. Notice thereof was brought to KBC's attention thereafter. I do not consider that the contention that KBC knew that the Company was making the claim which it now makes against it in the KBC Proceedings from February 2012 is made out. The Company also contends that its claim against KBC as now made in the KBC Proceedings was made clear to representatives of KBC in correspondence or discussions prior to the presentation of the petition. The chairman of the entity which provides technical service to the Company, Mr. David Molner, stated in his affidavit that in the course of a telephone call during the first week of June 2012 fi'om Mr. Tom Melsens, the 190f28 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 dl' .. I'/·
managing director of KBC, to discuss the release of the Distribution Proceeds, he ! explained to Mr. Melsens that the Company held KBC partly responsible for damage caused to the Company in connection with the Beverly Slate. According to Mr. Molner, Mr. Melsens denied that KBC was liable to the Company and that the Company would have to prove any such liability in cOUli and that "the prospect of litigation between [the Company] and [KBC] would be expensive, messy ... ..... time conslilning and uncertain". In his affidavit Mr. Melsens contended that this telephone conversation was only one of many telephone conversations, emails and meetings between him and Mr. Molner thereafter regarding the withholding by the Company of the Distribution Proceeds. He said that he expressly recollected that his reference in the telephone conversation to prospective litigation between the Company and KBC being "expensive, messy ...... time consuming and uncertain" was to court proceedings to enforce payment of the Distribution Proceeds. Mr. Melsens denied that at any time had Mr. Molner asselied that the Company held KBC partly or at all responsible in relation to the alleged actions of FOliress in connection with the Beverly Slate. He said that if Mr. Molner had done so it would have changed the whole context of their subsequent discussions concerning possible settlement in relation to the Distribution Proceeds. In the circumstances I find what Mr. Melsens says to be more plausible and probable. If, as Mr. Molsen claims, he had raised with Mr, Melsens in that telephone conversation the allegation that KBC was partly responsible for damage caused to the Company in connection with the Beverly Slate and Mr. Melsens had denied that allegation and made his comment about having to litigate over that claim, that does not seem at all consistent with the fact that the Company took no steps of any kind against KBC thereafter to substantiate or pursue that alleged claim, particularly having regard to KBC's demands for payment of the Distribution Proceeds and, later, in light its formal written demand for payment, followed by the statutory demand. Furthermore, Mr. Melsens says the telephone conversation in June 2012 was only one of many between him and Mr. Molner, as well as emails and meetings, concerning release of the Distribution Proceeds, yet Mr. Molner says nothing in his evidence about saying anything more to Mr. Melsens about the alleged claim against KBC. The fact that there were indeed many such 20 of 28 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31
. communications between Mr. Molner and Mr. Melsens during 2012 is confirmed in the evidence of Mr. Hanson. Overall I fmd Mr. Melsens' evidence more likely and persuasive in this respect and I am not at all convinced that the Company's alleged claim against KBC in connection with Fortress and the Beverly Slate was raised with KBC in any meaningful or significant way in the communications between Mr. Molner and Mr. Melsens. Counsel for the Company also relied upon the evidence of Mr. Hanson in this respect. As already mentioned, Mr. Hanson is a director of the Company. In his third affidavit Mr. Hanson refers to an email which he sent to Mr. Me1sens on 3rd July 2013 requesting confirmation from KBC that no rights of KBC in the Shares or distributions in respect thereof would be included in any sale of assets by KBC in which he required that: " ... ... following the sale of KBC's investment portfolio, no less than $75 million of cash or readily liquidated assets will be maintained within KBC to satisfY a damages mfaI'd that is likely to be entered in favour of [the Company] in respect oUts multiple claims against KBC." (my emphasis). Mr. Hanson says that this was a reference to the Company's various claims against KBC in connection with its involvement with Fortress and the Beverly Slate, which he had referred to in his first affidavit. He says that he did not specify these claims in his email to Mr. Melsens because "1 believed that Mr. Melsens was already aware of these claims." He went on to say that he was aware that Mr. Molner had had a number of discussions with Mr. Melsens and that "as far as 1 was mvare, David Molner had made it velY clear to Mr. Melsens the nature of [the Company's] claims. 1 saw no need to repeat these points in correspondence." Of course Mr. Hanson had not been a party himself to any of the discussions (as refelTed to in paragraph 42 above) between Mr. Molner and Mr. Melsens. In my opinion it cannot be said that KBC was made properly or meaningfully aware of the claim against it which the Company now makes in the KBC Proceedings simply by Mr. Hanson's reference in his email of3 rd Julyto .. multipleclaimsagainstKBe..Mr. Hanson mayor may not have believed that Mr.Melsens was already aware of such a claim but that is nothing to the point. In fact Mr. Melsens responded to Mr. Hanson's email on 10th July 2013, prior to the filing of the winding up petition, and said inter alia: "As to your second point, 1 am 21 of 28 4 5 6 7 8
9 10 11 12 13 14 15 16 17 18
19 20 21 22 23 24 25 26 27 28 29 30 31 admittedly at a loss. You refer to "multiple claims against KEC". But unless my lawyers have been deleterious or we have not been duly served, I am not aware of a single claim of [the Company] against KBC 01' any of its affiliates. The absence of any sllch claim 01' claims is also self-evident, as KBC has gone out of its way repeatedly to work together with [the Company] in resolving any and all issues and has never been in a position to harm [the Company]." I was also referred by counsel for KBC to the affidavit of Mr. Aviam Navo, who is an Executive Vice President of and internal legal counsel to KBC. Mr. Navo's evidence is that at no stage during the communications between KBC and the Company from July 2011 onwards did the Company give any notice to KBC of any of the allegations now made in the KBC Proceedings. While Mr. Navo was not himself party to most of those communications, it does seem to me highly likely that if any representative of KBC had been given notice that the Company was making a claim against KBC based on the allegations now made in the KBC Proceedings, Mr. Navo, as internal counsel to KBC, would have been infOlmed ofthat. Even after service upon the Company of the statutory demand, which is an obvious precursor to a winding up petition, the Company still did not give any indication to KBC of the claim which it now makes in the KBC Proceedings. There was correspondence between the attorneys representing the Company and the attorneys representing KBC following service of the statutory demand in which the attorneys for the Company set out in considerable detail their reasons for contending that a winding up petition was unjustified and inappropriate and the basis on which it would be opposed. They placed considerable emphasis on the cross-claim which they claim derives from the Stillwater Proceedings and raised various other points as well but they made no reference at all to any claim against KBC based on what is now contented by the Company in the KBC Proceedings. That is all the more significant in my opinion in light of the fact that the KBC Proceedings must have been in the course of preparation for some time in the period between service of the statutory demand and the service of the petition, yet no mention of any such claim was made in response to the statutory demand or in the 22of28 1 2 3 4 5 6 7 8 subsequent correspondence. There was no indication that the Company was about to file the KBC Proceedings. Indeed one might infer from the circumstances with some justification that this was intentional and that there was a deliberate tactic on the patt of the Company not to give any prior notice to KBC of the KBC Proceedings and the claims made therein before they were filed. I find the Company's case that KBC was made awat'e of the claim now made in the KBC Proceedings before it filed and served the petition to be unconvincing and not established. 9 Insolvency 10 11
12 13 14 15 16 17 18 19 20 21 22 23 24
25 26 27 28 29 30 31 It was also argued on behalf of the Company that the Company is clearly solvent on a cash flow basis (which counsel for each of the patties agreed is the appropriate basis on which to detelmine solvency for these purposes, rather than on a balance sheet basis) and that it would therefore be inappropriate and prejudicial to wind up the Company and therefore umeasonable of KBC to petition for such winding up. This was one of the objections to a winding up petition raised on behalf of the Company in response to service of the statutory demand. Mr. Hanson exhibited to his first affidavit an unaudited statement of the Company's financial position as at 30th June 2013 which showed the Company had cash and cash equivalents of some USD 19m, although with significant liabilities. Counsel for the Company submitted that if a company is clearly solvent, as it was said the Company is, the comt can and usually will dismiss a petition for the winding up ofthe company. It was pointed out on behalf of KBC that section 93 of the Law provides that a company shall (my emphasis) be deemed unable to pay its debts if it neglects to pay the sum specified in a statutory demand within t1n'ee weeks of its service. The statutory demand served on the Company on 3rd May 2013 remains unpaid, although it was accepted on behalf of KBC that ultimately the Court has a discretion as to whether to make a winding up order (see section 92 of the Law). KBC's position was that the court can rely on an undisputed and unpaid statutory demand, notwithstanding evidence of the company's solvency. 23 of 28 1
2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 In the present case, even taking the Company's evidence of its financial position at face value, it does not seem to me inevitable in the circumstances, having regard in particular to the unpaid statutory demand, that the Court would have dismissed KBC's winding up petition had it proceeded. If there is a failme to pay a statutory demand and the company alleges it is nonetheless solvent and should not be wound up simply on that ground, the obvious answer is for the company to pay the demand or risk being wound up. In my view it is only if the company contends bona fide that the debt demanded is disputed on some substantial ground that it could properly seek to justify non-payment; its solvency may be a factor in those circumstances but its ability to pay cannot be a good grOlmd alone for non-payment of a debt. I do not consider that a company could properly justify non-payment of the debt on which a petition is based pmely and simply on the basis that it is solvent and can pay but just choses not to pay without more. In the present case I do not agree that the Company's apparent solvency, assuming it was known to KBC, of itself made it unreasonable for KBC to issue its winding up petition when it did. The real issue is whether the Company has legitimate cross-claims against KBC which, if established, would exceed the amount of the Distribution Proceeds (being the debt specified in the statutory demand and the petition) such that the debt would be extinguished and whether KBC was aware of such cross-claims before it filed and served its petition. 21 Acquiescence 22 23
24 25 26 27 28 29 30 The Company also submits that KBe's presentation of the winding up petition was unreasonable because, it argues, KBC had acquiesced in the withholding of payment of the Distribution Proceeds by the Company. On 11th July 2011 Mr. Hanson on behalf of the Company emailed CFC as registered holder of the Shares and, having made reference to the Stillwater Proceedings, stated: "Given the pending litigation [the Stillwater Proceedings] against [Stillwater and another defendant] no distribution payments were made, or will be made by [the 24of28 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31
Company] to or for the benefit of [Stillwater] until such time as the litigation is finally determined" On 9th August 2011 Mr. Melsens ofKBC emailed Mr. Hanson and one of his co-directors and said: "As you may be ffil'are, KEC is a leverage provider to [Stillwater], which is an investor in [the Company]. We understand that [the Company] has initiated litigation against Stillwater (among other parties) and that this legal action is pending in the NY courts. It has come to our attention that [ the Company] has suspended the distribution of redemption proceeds to Stillwater. Despite the on-going litigation, we have not seen any similar precedent of a jimd withholding redemption proceeds to just one of its investors. As we are not aware of the legal grounds you base yourselves on to deny such distributions, can you kindly specifY the background in jilll and identifY the legal grounds (plus any relevant provisions in [the Company's] constituent documents) you are relying on to deny these distributions to Stillwater? Can you please also detail what you are doing with these redemption proceeds in the interim? Are these jitnds being held in a segregated escrow account? Are they part of [the Company's] NAV calculations"? Mr. Hanson contends in his affidavit evidence that this email dated 9th August 2011 from Mr. Melsens did not amount to an objection or challenge to the withholding of payment of the Distribution Proceeds by the Company but was simply a request for infotmation. He says that nothing was heard from KBC challenging the non-payment of the Distribution Proceeds until its letter demanding payment on 24th April 2013, some 18 months later (see paragraph 9 above). However, this evidence is not consistent with Mr. Hanson's evidence that there were many communications between Mr. Melsens and Mr. Molner throughout 2012. Mr. Hanson says he assumed that in those communications Mr. Molner made the Company's allegations against KBC concerning the Company's 25 of 28 1 2 3 4 5 6 7
8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Beverly Slate related investment clear to Mr. Melsens (which is denied by Mr. Melsens), but if that was so it seems to me almost inconceivable that such allegations would not have been made to Mr. Melsens in response to and in the context of attempts by Mr. Melsens to obtain payment of the Distribution Payments (which Mr. Melsens anyway says was what the communications were in fact about). Mr. Melsens' email dated 9th August 2011 does not seem to me to amount to an acceptance by him of the withholding of the Distribution Proceeds. It appears from what he says that he had only recently become aware that the Company was not going to make the Distribution Payments. He was indeed seeking information about the Company's entitlement not to pay but the tenor and tone of his comments go further than that and do not, in my view, indicate any acknowledgment or recognition that the Company was so entitled; on the contrary he appears to me clearly to be objecting to the Company's action. In my opinion M1'. Melsens' comments do not support the Company's argument that KBC acquiesced in the Company's withholding payment of the Distribution Proceeds. I also consider that the communications between M1'. Melsens and Mr. Molner throughout 2012 are inconsistent with any acquiescence or waiver by KBC of its entitlement to payment of the Distribution Proceeds. In fact it is clear that almost as soon as the Stillwater Proceedings were dismissed by the cOUli in New York, shOlily after which the right to the Distribution Proceeds was assigned to KBC as beneficial owner of the Shares, KBC took active steps to recover payment. 23 Conclusions 24 25
26 27 28 29 30 31 KBC's first position is that in this case there should be no order for Tliecosts of the withdrawn petition. The Company's position is that the usual rule on costs should apply, so the Company should have its costs of the petition. KBC's altemative case is that the COUli's decision on the costs of the petition should await the outcome of the KBC Proceedings in New York. This submission was based upon the course adopted in the Re Sykes case referred to at paragraph 27 above. In my view the decision as to which party, if any, should pay the costs of the petition would not obviously be assisted by whether the 26of28 4 5 6 7 8 9 10 11 12 13 14 15
16 17 18 19 20
21 22 23 24 25 26 27 28 29 30 31
32 Company or KBC is successful before the Court in New York. The issue in New York will be whether or not KBC is liable to the Company in respect of the Company's claims made against it. In my view the answer to that has no real bearing on whether or not it was reasonable in all the circumstances for KBC to present its winding up petition when it did. In my view that is not to be determined with the benefit of hindsight. In the circumstances of this case I do not believe the outcome of the KBC Proceedings would be relevant to or should affect a decision on liability for the costs of the petition. In my opinion deferring the decision on costs to await the outcome of the KBC Proceedings would not be helpful or appropriate. I also agree with counsel for the Company that it is possible that the KBC Proceedings, like any court proceedings, could possibly continue for a long time before a final decision is reached. I consider that it would be undesirable to defer the question of liability for the costs of the petition until some unknown date possibly long in the future. In the circumstances of this case, which I have summarized, explained and discussed above, and having regard to the arguments and submissions which I have considered to be relevant for these purposes, I have reached the view that it was reasonable for KBC to have filed and presented the winding up petition, now withdrawn, when it did. As I have already explained, I am satisfied on the evidence that the only objections by the Company to KBC's attempts to obtain payment of the Distribution Proceeds of which KBC was aware prior to the filing of its petition, were the alleged cross-claim arising from the Stillwater Proceedings and, latterly, the Company's solvency and KBC's alleged acquiescence in the withholding of payment of the Distribution Proceeds. In my opinion KBC were entitled to treat the Stillwater Proceedings as having been dismissed and no longer extant. For the reasons I have explained as well, I do not consider that the Company's arguments based on its solvency and KBC's alleged acquiescence are sufficiently meritorious to have made it umeasonable for KBC to proceed with a winding up petition in the knowledge thereof. In addition I am satisfied on the evidence overall that it is probable that KBC was not made aware at all, and certainly not in any sufficient or meaningful way, before filing its 27 of 28 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17
18 19 20 21 22 23 24 winding up petition, that the Company was relying upon a claim against KBC based on the allegations now made in the KBC Proceedings. I have already considered and commented on this and made my views clear. I should add that KBC's attorneys obviously recognized, as soon as KBC became aware of the KBC Proceedings, that the claims made by the Company therein, which, if established, would exceed the amount of the Distribution Proceeds, would be inappropriate for determination in winding up proceedings. KBC's attorneys were clearly familiar, as would be expected, with the law that the winding up jurisdiction of the court may not be invoked in respect of a disputed debt. Consequently, quite properly, they then applied on behalf of KBC for leave to withdraw the winding up petition. While I do not make too much of this, I consider it reasonable to infer that if KBC had previously been made aware of the claims which the Company now makes in the KBC Proceedings it would not have filed the petition in the first place. Knowing of the possible cross-claim by the Company based on the Stillwater Proceedings, as it obviously did, KBC did not file its petition before those proceedings had been dismissed. I have considered and applied the legal principles as set out above and in the exercise of my discretion I have concluded that in the paliicular circumstances of this case it is appropriate and fitting for the court to depart from the usual rule in relation to costs, which I accept the court should be slow to do. In my view the fairest and most just course in this case is to require each party bear its own costs of and incidental to the withdrawn petition, including the costs of this hearing. I shall therefore make no order for costs. -v. 25 26 27 28 DATED this 25 day of October 2013 29 The Hon. Mr. Justice Angus Foster 30 Judge of the Grand Court 280f28