Alexander Vik v Shane Crooks
| Jurisdiction | Turks and Caicos Islands |
| Judge | Adderley, JA. |
| Judgment Date | 01 January 2020 |
| Neutral Citation | TC 2020 CA 1 |
| Docket Number | CL-AP 2/2018 (On appeal from CL-44/2017) |
| Court | Court of Appeal (Turks and Caicos) |
(acting by Shane Crooks and Malcolm Cohen as joint receivers)
(acting by Shane Crooks and Malcolm Cohen as joint receivers)
and
(Joint receivers of the First Respondent)
The Hon. Mr Justice Sir Elliott Motley, JA President
The Hon. Mr Justice Neville Adderley, JA
The Hon. Mr Justice Roger Hamel-Smith, JA
CL-AP 2/2018 (On appeal from CL-44/2017)
CL-AP 3/2018 (on appeal from CL-44/2017)
IN THE COURT OF APPEAL
Mr Tim Penny Q C, Mr Tony Gruchot with him for the Applicants/Respondents
Mr Duncan Mathews Q C, Mr Tony Beswetherick and Ms Deborah John-Woodruffe with him for the Appellant
. On 26 September we dismissed the application of the Respondents for a stay of the costs orders made against them on 29 th August 2018 and perfected on 6 September 2018 and the other on 15th March 2019. We promised to give our reasons and now do so.
. The costs orders were consequent upon a successful appeal by the Appellant from the Order of the Supreme Court which had given permission to the Respondents to serve the Appellant outside the jurisdiction without first seeking recognition in this jurisdiction in accordance with the terms imposed by the Commercial Court of England (“The Commercial Court”) in rendering a judgment in favour of Deutsche Bank Group AG (“DBAG”) against Sebastian Holdings Ltd (“SHI”) in the sum of US$243 million (“the Judgment Sum”).
. SHI has not paid any part of the Judgment Sum which as at 9 October 2018 stood at about US$337 million with interest and is now proportionately more.
. The commercial court also ordered costs against the Appellant to be assessed if not agreed and ordered that a payment on account of those costs in the sum of £32 million be paid by the Appellant on behalf of SHI. Those costs on account have been paid by the Respondent.
. The Appellant was ordered to pay the non-party cost because SHI, a Turks and Caicos Islands (“TCI”) special purpose vehicle was found to be the personal investment vehicle of the appellant, a wealthy resident of Monaco, and he was found to be its controlling mind.
. Prior to 2008 SHI entered into trading relationships with DBAG which led to increasing liability.
. In the English proceedings SHI is said by the Appellant to have no assets but in its application to appeal in the English proceedings the Court of Appeal made the observation that after 2008 the Appellant caused SHI to transfer its valuable assets in an amount of US$896 million to third parties with the intention of making SHI judgment proof. The Respondents point out that at paragraph [9] of the Judgment setting the conditions for the Appellant to appeal, the court of Appeal summarized the position as follows:
“…the judge nonetheless made an unequivocal finding that on and after October 2008, when Mr Vik had a clear idea that SHI's trading liabilities ran to many hundreds of millions of dollars, he caused US$896m of funds and assets to be transferred from SHI either to himself or to companies closely associated with him or with his family. In particular, very substantial sums were transferred to C M Beatrice, Inc. (Beatrice”), and to VBI Corporation (VBI”). The judge found that Mr Vik procured these transfers for no bone fide commercial reasons, and that he did so with a view to depleting SHI's assets and making it more difficult for DBAG to seek recovery of the amounts owed to it by SHI. The judge concluded at paragraph 1461:
“I therefore find that all these funds are available to SHI (some US$896 million) prior to transfer and that, moreover, Mr Vik could, at a moment's notice, produce the transfer of those funds back to SHI should he have chosen to do so. There was no good bone fide commercial reason for the transfers.”
. As part of its effort to enforce the Judgment Sum against SHI, DBAG applied for and obtained an Order in the English commercial court on 17 February 2017 for the appointment of joint Receivers of SHI in England. The Receivers are Mr Crooks and Mr Cohen the second and third Respondents. They were appointed as joint receivers of SHI's rights and powers in or respect to SHI's interest in certain funds which we call the “Reiten Interests”. They have an estimated value in excess of €45 million. The Receivers were empowered to commence action on SHI's behalf in jurisdictions outside England after first procuring recognition in those jurisdictions, and If SHI is successful in its claim in its entirety.
. This was not the usual application for stay of a judgment pending determination of an appeal. This was an appeal for stay of the costs ordered to be paid. Different principles apply. The respondents say that if they are successful in gaining recognition in the TCI of their appointment as receivers in the English court, they intend to sue in this jurisdiction. The claims concern the transfer of SHI's interest in the Reiten LPs which were transferred to Sarek Holdings Ltd. They claim that the assets were transferred by Mr Vik on 9 th October 2008 in breach of statutory duty with assistance of Mr Johansson and Otto Inc. (another company incorporated in the TCI. Should that action be successful the quantum of the costs now claimed will be insignificant compared to the claim and costs which will be recoverable against the Appellant. The writ was issued before (“TCI1”) but its issue by the Respondent was ruled ultra vires by this court because recognition had not first been obtained in accordance with the terms of the English receivership Order.
. They are now in the process of seeking the recognition and issuing the writs again.
. The Respondents are of the view based on the findings in the English proceedings that there is a real likelihood that the ordered costs when paid by them would be dissipated by the Appellant before the determination of the Action and they say that they are not aware of any other assets within the jurisdiction owned by the Appellant against which they would be able to recover those costs or to pursue their costs if the action was successful. This would frustrate the recovery of their costs or at the very least make recovery of the costs more difficult.
. They claim that there is no prejudice to the appellant if such a stay were to be granted. They made certain proposals and the Appellant certain counter proposals as an alternative to staying payment of the costs but the parties have been unable to agree.
. The court must therefore consider the principles upon which a stay of costs is granted and apply the law to the facts of this case.
. The application is made under Order 45 r 11 or alternatively under Order 47 r 1 of the RSC 2000 or Order CPR 83.7(4) of the Civil Procedure rules of England and Wales
. The amended Notice of Motion dated 17 September 2019 reads as follows:
“1. Upon the Respondents having paid into escrow to be held by Graham Thompson the sum of US$300,000.00 plus such additional sum (if any) which they are otherwise liable to pay as a result of taxation of the Appellants' costs of the within appeals and the action below, then pursuant to Order 45, r11 and /or Order 4, r1 of the Rules of the supreme court 2000 (“‘the RSC’) or r.83.7(4) of the Civil Procedure Rules of England and Wales (‘the CPR’), there be a stay of execution until further Order of the court of the payment obligations in paragraph 4 of each of the Orders of this Honourable Court of Appeal dated 6 September 2018 (‘the Appeal Orders’ whereby it was ordered that the Respondents do pay the Appellant's costs of the actions here and below, such costs to be taxed if not agreed; and (2) paragraph 2 of the Order of this Honourable Court of Appeal made on 15 March 2019 and dated July 2019(‘the Joinder Order’).”
. This Court's jurisdiction derives from section 4 of the Court of Appeal Ordinance which gives it jurisdiction, subject to its provisions, to hear and determine appeals from any judgment or order of the Supreme Court, and in so doing have all the powers authority and jurisdiction of the Supreme Court. The only proviso is that no judgment or order of the Supreme Court shall be altered or reversed in any case in which the court is satisfied that the effect of the judgment or order is to effect substantial justice between the parties.
. Its jurisdiction further derives from sections 3(1) and (3) of the Supreme Court Ordinance.
. Section 3(1), subject to the jurisdiction being exercised in accordance with any rules made under the Ordinance, vests in the Supreme Court the same jurisdiction vested in the High Court of Justice in England and in the Divisional Court of the High Court of Justice as constituted by the Supreme Court of Judicature Act 1925, and any replacement of that Act.
. Section 3(3) provides that in cases where no provision is made by the Ordinance or any law or any rules, the practice and procedure in similar matters in the High Court of Justice of England shall apply so far as local circumstances permit and subject to any directions the Court may give in any particular case in any matter of practice and procedure upon it by such Ordinances or any law is conferred with the jurisdiction conferred upon the High Court of Justice of England and Wales, and in matters of practice and procedure for which no provision is made by such Ordinances or other law the practice and procedure in similar matters in the High Court of England and Wales can be imported.
. Section 22 of the Court of Appeal Ordinance like...
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