Stanford v Akers: asking a BVI court to reverse a liquidator's decision

Facts
Decision

In Stanford v Akers the BVI Court of Appeal addressed standing in the context of applications under Section 273 of the Insolvency Act 2003, whereby an aggrieved person can ask the court to reverse or vary a liquidator's decision.

Facts

The liquidators of Chesterfield entered the company into a global settlement agreement with Deutsche Bank AG and Kaupthing, which included the admission of Kaupthing's claim in Chesterfield's liquidation.

Mr Stanford appealed the liquidators' decision to enter into the agreement on the basis that they should have settled with Deutsche Bank directly, without admitting Kaupthing's claim. Had they done so, Chesterfield would have retained the full benefit of the payment from Deutsche Bank (and from which Sanford would have benefited as an ultimate beneficiary of Chesterfield).

The trial judge dismissed the Section 273 application on the following grounds:

• Stanford lacked standing as he was not a person aggrieved by the liquidators' decision.
• Even if Stanford had standing, the liquidators' decision did not meet the test of perversity; therefore, there was no jurisdiction for the court to interfere.

Decision

The BVI Court of Appeal dismissed the appeal, agreeing with the trial judge on the following grounds:

• As a shareholder of the company in liquidation, Stanford was an outsider to the liquidation with no legitimate interest entitling him to standing under Section 273.
• The threshold for perversity is high and Sanford could not overcome the judge's factual findings that the global settlement was the only one available to the liquidators. It was a commercial decision at their discretion and there was no basis for impugning that. The court criticised Stanford's failure to appeal those findings of facts, highlighting the importance of appellants appealing findings of fact if they intend to appeal decisions based on those factual findings.

Stanford also sought to obtain disclosure on appeal and simultaneously adduce it as fresh evidence under Ladd v Marshall principles. The application was dismissed on the following grounds:

• Having failed in his application to obtain some of the documents at the trial, Stanford should not be permitted disclosure on appeal when he had not appealed the case management decision of the judge.
• The documents were irrelevant as they post-dated the contested decision and were privileged.
• The application was bound to fail as Stanford knew of the documents' existence at the time of the trial, but did not seek to use them, thus offending Ladd v Marshall principles.

For further information on this topic please contact Andrew Thorp at Harney Westwood & Riegels' Tortola office by telephone (+1 284 494 2233) or email (andrew.thorp@harneys.com). Alternatively, contact Vicky Lord or Laura De Heer at Harney Westwood & Riegels' Hong Kong office by telephone (+852 5806 7800) or email (vicky.lord@harneys.com or laura.deheer@harney.com). The Harneys website can be accessed at www.harneys.com