Cash Plus Ltd v Madam A
| Jurisdiction | Jamaica |
| Judge | Harris JA,Phillips JA,Brooks JA,Harris Ja |
| Judgment Date | 05 October 2012 |
| Neutral Citation | JM 2012 CA 87 |
| Court | Court of Appeal (Jamaica) |
| Docket Number | SUPREME COURT CIVIL APPEAL NO 122/2011 |
| Date | 05 October 2012 |
[2012] JMCA Civ 40
JAMAICA
IN THE COURT OF APPEAL
The Hon Mrs Justice Harris JA
The Hon Miss Justice Phillips JA
The Hon Mr Justice Brooks JA
SUPREME COURT CIVIL APPEAL NO 122/2011
In The Matter of Section 213a of the Companies Act
In The Matter of an Application by Madam a for an Order in Respect of Cash Plus Limited
Hugh Wildman For The Appellant
Mrs Melrose Reid and Mrs Kayann Balli For The Respondent
John Vassell Qc , Courtney Williams and Mrs Julianne Mais-cox Instructed By Dunncox For The Former Co-interim Receiver-managers Of Cash Plus Ltd
BANKRUPTCY - Receivers - Appointment of co-interim receivers - Whether appointment of co-interim receivers is invalid where the Trustee in Bankruptcy is appointed liquidator - Companies Act, S. 213A
I have read, in draft, the judgment of my brother Brooks JA and agree with his reasoning and conclusion. There is nothing I wish to add.
I too have read the draft judgment of Brooks JA and agree with his reasoning and conclusion and have nothing to add.
In order to protect her identity, for reasons of personal safety, a former employee of the appellant, Cash Plus Limited (Cash Plus), was allowed to use the pseudonym, ‘Madam A’, to maintain a claim that she had filed against Cash Plus, in the Supreme Court. In that claim, which was also said to have been filed, in part, to secure the personal safety of the employees of Cash Plus, Madam A asked the court to appoint receivers for the company. Two co-interim receivers were appointed in accordance with her request but the Trustee in Bankruptcy, who is liquidator of the company, (hereinafter called ‘the liquidator’) and was subsequently appointed in place of the receivers, has challenged the appointment of the co-interim receivers, as being invalid. On 4 November 2011, Sinclair-Haynes J dismissed the challenge and Cash Plus, at the instance of the liquidator, has appealed against that decision.
The essence of the liquidator's challenge is that the appointment of the receivers is in breach of the provisions of section 213A of the Companies Act (the Act) which governs such appointments. The submissions made by Cash Plus, before this court, contained a number of threads. These included the complaint that the appointment was made without notice of the application having been given to Cash Plus, the complaint that part 51 of the Civil Procedure Rules (CPR), under which auspices the appointment was made, was inappropriate for such applications and the complaint that no security was given by the co-interim receivers in respect of their appointment. Cash Plus also complained that the learned judge was wrong in refusing to set aside a previous order of the court approving the fees of the receivers.
The respondents to the appeal, Madam A and the former co-interim receivers, have strenuously resisted the appeal. Issue was joined in respect of all the matters outlined above.
Very few of the contested issues turn on the background facts of the instant case. It would, however, assist in understanding Madam A's motivation for filing the claim and the motivation of the liquidator for making the challenge, if a few facts were set out.
Cash Plus has been described as providing alternative investment opportunities to those traditionally available on the financial landscape. It offered high interest rates to members of the public and used the funds acquired by that means, to finance investments made by companies affiliated to Cash Plus. The income generated by the affiliates was to have provided the means by which Cash Plus would repay its creditors.
Eventually, Cash Plus ran into severe difficulties. These, perhaps, started on 28 December 2007, when the Financial Services Commission issued a Cease and Desist Notice, ordering Cash Plus to cease transacting business with its lenders. In January 2008, National Commercial Bank (NCB) closed all the accounts that Cash Plus and its affiliates held with NCB. The situation facing Cash Plus on 31 March 2008, when Madam A filed her claim, was described by Sinclair-Haynes J, at paragraph [5] of her judgment:
‘During the period between the service of the Cease and Desist Order…and the 31 st March 2008…[Cash Plus] was unable to transact business with its lenders. Consequently, no payments were made to its over [45,000.00] creditors.’
The amended fixed date claim form filed by Madam A stated as follows:
‘The Claimant Madam ‘A’ Officer of the Defendant, of 10 Holborn Road, Kingston 10 in the parish of Saint Andrew claim (sic) against the Defendant, CASH PLUS LIMITED of 10 Holborn Road, Kingston 10, in the parish of St. Andrew an order under Section 213A of the Companies Act to rectify the matters that are oppressive and/or unfairly prejudicial to the officers and creditors of the Defendant.’
In the affidavit that Madam A filed in support of the claim, she deposed that the debt that Cash Plus owed to its creditors was ‘in excess of JA$26 Billion’. She also stated that Cash Plus' chairman, Mr Carlos Hill, had previously, ‘made a public commitment to commence discharging this indebtedness on March 31, 2008’. It was, however, apparent to her that the funds to facilitate fulfilling that commitment would ‘not materialize in time for the commencement of the payment on the much publicised deadline, and that unless immediate arrangements [were] put in place under the supervision of the Court, the disappointed creditors may well take matters into their own hands and endanger both the staff and property of [Cash Plus] and its affiliates’ (paragraph 5).
With the large number of creditors, the amount of the debt and the tone of various telephone calls and approaches made to her by creditors, Madam A spoke of her ‘fears for the safety of the staff’, the ‘threat of phyical danger’ from irate creditors and the risk to the staff of criminal and civil prosecution. She was also of the view that the company's assets would be at risk from irate creditors. She opined that the conduct of Cash Plus' affairs was ‘oppressive in relation to me and other senior members of management’ (paragraph 9). She, consequently, sought the appointment of interim receiver-managers until the determination of the claim.
The application was placed before M. McIntosh J on 31 March 2008. No formal notice had been previously given to Cash Plus but its legal officer, who had filed the claim on behalf of Madam A, secured the attendance at the hearing, albeit at short notice, of Mr Christopher Goulbourne, Cash Plus' vice-president of operations. McIntosh J made the order appointing co-interim receiver-managers and granted an injunction preventing Cash Plus, for a period of 28 days, from disposing of its assets. McIntosh J also ordered that all the court documents in the matter be served on Cash Plus within seven days of her order.
McIntosh J's order was amended on 7 April 2008, to, among other things, extend its reach to all the affiliates of Cash Plus. A number of applications were made to the Supreme Court during the progress of the claim and eventually the liquidator was appointed as provisional liquidator for Cash Plus and the affiliates. By order made on 28 October 2008, the liquidator replaced the co-interim receiver-managers as receiver for Cash Plus and the affiliates. There was, nonetheless, thereafter, some level of cooperation between the former co-interim receiver-managers and two successive holders of the office of Trustee in Bankruptcy.
As a result of that co-operation, certain assets were disposed of and certain fees claimed and expenses incurred by the former co-interim receiver-managers were paid. These were, however, to be important issues leading to a breakdown of comity between the former co-interim receiver-managers and the third holder of the office of the Trustee in Bankruptcy.
During the time of their appointment, between 31 March 2008 and 28 October 2008, the former co-interim receiver-managers had racked up fees of $39,422,704.75 and expenses amounting to $246,361,952.50. The overwhelming majority of those expenses was payable to PricewaterhouseCoopers Ltd, a Jamaican company, and PricewaterhouseCoopers (US) International LLC, having an address in the United States of America. Both of these firms had an association with either one or both of the former co-interim receiver-managers.
On a without notice application, heard on 11 November 2008, R. Anderson J
approved those fees and costs. The sum of $100,000,000.00 has been paid, so far, in respect of those debts. On the application of the former co-interim receiver-managers, the affidavit in support of their application for the approval of their fees was ordered sealed.
On 27 November 2008, at a hearing at which the liquidator was present, Anderson J ordered that the ‘fees charged, and to be charged, by the co-interim Receiver/ Managers…and all expenses, debts and liabilities incurred by [them]…be paid in priority, on an indemnity basis, out of the collective assets of [Cash Plus]…’ (paragraph (a) of the order). The second of the three liquidators appointed to that post did not object to the calculation of the sums or to the liability to pay them.
That individual was, however, succeeded by the third holder of the office of liquidator. Although he did join in an application by the former co-interim receiver-managers to sell one of the properties in order to pay the fees and expenses incurred by them, the successor was unable to reach agreement with the former co-interim receiver-managers in respect of a number of other issues, including the amount of the fees and expenses incurred....
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