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18 September 2018
In Fairfield Sentry Limited (In Liquidation) v Farnum Place LLC the BVI Court of Appeal varied a costs order based on a material change of circumstances – namely, a decision of the US Court of Appeals for the Second Circuit.
BVI company Fairfield Sentry was a feeder fund of Bernard Madoff's company BLMIS, which went into liquidation pursuant to the US Securities Investor Protection Act. Sentry sold its claim in the liquidation of BLMIS to Farnum Place under an agreement (the trade confirmation).
Farnum subsequently sought orders:
In the BVI proceedings, Farnum's expert gave testimony on the nature and scope of US bankruptcy law. At first instance, the BVI court approved the trade confirmation and the assignment of the Securities Investor Protection Act claim, and directed that Sentry make an application to the US Bankruptcy Court. The application was made and the US Bankruptcy Court held that there was no basis on which the trade confirmation should be disproved because:
Accordingly, the BVI court awarded Farnum its costs in respect of the BVI proceedings.
On appeal, the US Court of Appeals for the Second Circuit overturned the decision on the grounds that:
Sentry then appealed the BVI costs decision on the basis that the BVI court had relied on the expert's report. The BVI Court of Appeal held that the US Court of Appeals for the Second Circuit decision was a "material change of circumstances" which allowed it to vary the costs order by disallowing the costs of Farnum's expert.
For further information on this topic please contact Phillip Kite or Francesca Gibbons at Harney Westwood & Riegels' London office by telephone (+44 20 7842 6080) or email (firstname.lastname@example.org or email@example.com). Alternatively, contact Claire Goldstein at Harney Westwood & Riegels' Tortola office by telephone (+1 284 494 2233) or email (firstname.lastname@example.org). The Harney Westwood & Riegels website can be accessed at www.harneys.com.
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