A recent decision of Mr Justice Doyle has provided welcome guidance in relation to the scope and extent of playuzu casino review applications brought by official liquidators. In a judgment handed down on 3 November 2022 in the matter of Ascentra Holdings, Inc. (in playuzu casino review Liquidation), the Grand Court has confirmed that it has jurisdiction pursuant to section 110 playuzu casino review Companies Act (2022 Revision) (the “Act”) to entertain playuzu casino review applications made by official liquidators for directions in relation to the exercise of their powers. Although the issue had been previously addressed by Segal J in first instance in Re Direct Lending Income Feeder Fund Inc (FSD unreported judgment of 9 May 2022) (“Re Direct Lending”) that application was not the subject of argument before the playuzu casino review. The playuzu casino review’s decision in Re Ascentra confirms, for the first time, that this is an appropriate route for official liquidators to take and, further, that the Court may, in appropriate circumstances, give directions to official liquidators within the context of a playuzu casino review application even where those directions may determine parties’ substantive rights.
Background
The application in question had arisen as a result of a dispute between the joint playuzu casino review (“JOLs”) of Ascentra Holdings, Inc. (in playuzu casino review Liquidation) (the “Company”) and a third party, Shang Peng Gao Ke, Inc. SEZC (“SPGK”) regarding the ownership of approximately US million in funds (the “Funds”) which were, as at the commencement playuzu casino review Company’s liquidation, held by a third party in a US bank account. In the circumstances, it was agreed that the Funds would be transferred to a liquidation account, to be held in escrow pending the resolution playuzu casino review dispute with SPGK.
When the dispute with SPGK could not be resolved through correspondence, the JOLs issued a summons (the “Summons”) pursuant to Order 11 playuzu casino review Companies Winding-up Rules, 2018 (the “CWR”). The Summons sought orders and directions that the JOLs be authorised to treat the Funds as unencumbered assets playuzu casino review Company, pursuant to section 110(2) playuzu casino review Act and paragraph 7 of Part I of Schedule 3 playuzu casino review Act (“Schedule 3”), and/or that the JOLs be authorised to take possession, collect and/or get playuzu casino review Funds, pursuant to paragraph 1 and/or paragraph 7 of Part II of Schedule 3.
Schedule 3 sets out the powers exercisable by official liquidators; the powers under Part 1 of Schedule 3 require the playuzu casino review of the Court, whilst the powers under Part II of Schedule 3 may be exercised with or without Court playuzu casino review. Paragraph 7 of Part 1 of Schedule 3 grants official liquidators the power to deal with all questions in any way relating to or affecting the assets of the company, insofar as sanctioned by the Court. Paragraphs 1 and 7 of Part II of Schedule 3 grant official liquidators the power to take possession of, collect and get in the property of the company and for that purpose to take all such proceedings as the liquidators consider necessary, and to do all other things incidental to the exercise of such power.
It was (initially, at least) common ground between the parties that the Court had jurisdiction to hear the Summons and, if deemed appropriate, make the orders sought. However, SPGK argued that the determination of the Summons would materially affect its substantive rights and that, as such, it was inappropriate for the matter to be dealt with in the context of a playuzu casino review application; instead, it submitted that directions should be given for the application to be treated as a full inter partes action, with formal pleadings, discovery and cross-examination. Nevertheless, at the outset playuzu casino review hearing, the question of whether the Court had jurisdiction to entertain the Summons was raised Doyle J, and SPGK then “somewhat opportunistically” adopted the position that the playuzu casino review had no such jurisdiction.
A Statutory Lacuna
Mr Justice Doyle identified that, although the Act includes an express provision which allows voluntary liquidators to apply to the Court with any general query in relation to the voluntary liquidation and the exercise of his/her powers, there is no corresponding provision for official liquidators. Section 129 playuzu casino review Act allows a voluntary liquidator to make an application to the Court to “determine any question arising in the voluntary winding up of a company or to exercise … all or any playuzu casino review powers which the Court might exercise if the company were being wound up under the supervision playuzu casino review Court”. If the Court is satisfied (on such an application) that the determination playuzu casino review question or the exercise of power is just and beneficial, it may accede to the application on such terms and conditions as it deems appropriate (section 129(2) playuzu casino review Act). Curiously, however, there is no equivalent provision for official liquidations.
Doyle J also noted that Order 11, rule 3 provides that a playuzu casino review may direct that, when a playuzu casino review application gives rise to an issue in respect of substantive rights as between the company and any creditor or contributory (or any class thereof), the application shall be adjudicated as an inter partes proceeding, for which purpose the playuzu casino review may give directions.
The playuzu casino review’s Decision
Having conducted a detailed review of Cayman, English and Australian authorities, Doyle J ultimately concluded that, despite the lack of a statutory equivalent to section 129 of the Act, the Grand Court does have jurisdiction to entertain playuzu casino review applications for directions by official liquidators in the context of section 110 of the Act. Doyle J based his decision on Segal J’s judgment in Re Direct Lending, in playuzu casino review Segal J noted that although there is “no explicit power to seek directions [in the Cayman Islands] as there is in the UK Insolvency Act 1986 (see section 112(1) …), an application for an order seeking playuzu casino review for the exercise of (and permission to exercise) their powers is, as a matter of practice, referred to as an application for directions in this jurisdiction.” Support for Segal J’s conclusion in Re Direct Lending could also be found in Kawaley J’s judgment Re Polarcus Limited (in playuzu casino review Liquidation) FSD 31 of 2021, 6 July 2022 (“Polarcus”), in playuzu casino review he said: “Official liquidators, creditors and/or contributories are entitled to have the playuzu casino review determine whether the proposed exercise of a liquidator’s powers is legally permissible or not.”
Although there is no statute or common law rule by which a playuzu casino review is bound to follow the decision of another playuzu casino review of co-ordinate jurisdiction, Doyle J followed the approach taken by Cresswell J in Re Alibaba.com Limited (2012 (1) CILR 272), Mangatal J in China Shanshui Cement Group Limited (2015 (2) CILR 255) and Parker J in Padma Fund[1] where the Grand playuzu casino review endorsed the general practice that has been adopted by the courts of England and Wales whereby courts of coordinate jurisdiction will ordinarily follow previous decisions unless convinced that they are wrong. Having regard to that principle, Doyle J decided that he should follow both Re Direct Lending and Polarcus playuzu casino review interest of judicial comity and certainty in circumstances where he did not consider those decisions to be “plainly wrong”. The Honourable Judge found that, although not ideal, section 110 of the Act plainly places the exercise of the powers of an official liquidator under the control of the Court, and that (in that context) the Court has jurisdiction to entertain playuzu casino review applications for directions. As the Summons concerned the assets or potential assets of the Company, the Court’s jurisdiction was properly engaged.
In addition, the playuzu casino review did not find SPGK’s arguments that a full inter partes action was required convincing. The Honourable Judge placed significance on the fact that, prior to the date playuzu casino review hearing, SPGK had agreed directions and various consent orders but had not applied for additional pleadings, specific discovery or cross-examination. Doyle J did not consider that SPGK would be prejudiced by any determination on the Summons in light playuzu casino review two-day hearing in which SPGK had a full opportunity to put in relevant evidence and submissions. He found that any further delay in determining the issues would be contrary to the overriding objective.
Doyle J’s finding cleared the way for a determination on the merits playuzu casino review Summons, which concerned a simple question of interpretation playuzu casino review terms of a Deed, and which was decided in the JOLs’ favour.
Conclusion
The decision in Re Ascentra will provide comfort and reassurance to official liquidators; not only does it confirm that the Grand Court does indeed have jurisdiction to hear a playuzu casino review application for directions as to how playuzu casino review should exercise their powers, it also confirms that such questions may extend to issues which will result playuzu casino review determination of substantive rights, provided (it appears) that the relevant parties have had a sufficient opportunity to be heard.
Campbells represents the JOLs playuzu casino review Company.
