Jersey Unreported Judgments

[2011]JRC122

Royal Court

(Samedi)

24 June 2011

Before     :

J. A. Clyde-Smith, Esq., Commissioner, and Jurats Tibbo and Le Cornu.

 

IN THE MATTER OF THE REPRESENTATION OF GREGORY BRANCH AND NICOLA ROBINSON ("THE JOINT LIQUIDATORS")

IN THE MATTER OF ALTERNATE INSURANCE SERVICES LIMITED (IN LIQUIDATION)

AND IN THE MATTER OF ARTICLE 155 OF THE COMPANIES (JERSEY) LAW 1991

Advocate A. J. N. Dessain for the Representors.

judgment

the commissioner:

1.        On 16^th February, 2007, the Jersey Financial Services Commission ("the Commission") obtained judgment in Jersey against Alternate Insurance Services Limited (in liquidation) (the "Company") in the sum of £1,564,128.56 and over £325,000 for costs.  The principal sum claimed represented the sum of those losses suffered by members of the public who had been misled by the Company in relation to sales of certain financial products. 

2.        As a result of the judgment the Commission became a creditor of the Company.  The Commission demanded payment, which the Company was unable to meet. 

3.        The Commission applied to Court for a winding-up order under Article 155(1)(a) of the Companies (Jersey) Law 1991 (as amended) ("the Law"). 

4.        On 1^st March, 2007, the Royal Court ordered that the Company be wound up on just & equitable and/or public interest grounds pursuant to Article 155(1)(a) of the Law and appointed Mr Gregory Branch and Mrs Nicola Anne Robinson as joint liquidators (the "Joint Liquidators"). 

5.        The resultant winding up order had the effect of vesting in the Commission the rights of the Company under its insurance policies under the provision of the Third Parties (Rights Against Insurers)(Jersey) Law 1948.  This enabled the Commission to pursue the Company's insurers to attempt to enforce recovery in respect of monies due to the Commission on behalf of the investors concerned.  The Commission reached a settlement agreement with the Company's insurers resulting in the recovery of some of the funds from the insurers.  The funds recovered were distributed to investors.  In addition, the investors each received further but partial compensation directly from the States of Jersey Compensation Scheme. 

6.        The Commission had filed with the Joint Liquidators a claim amounting to £610,504.22, representing the outstanding loss of the investors following the recoveries from both the insurers and the Compensation Scheme.  Four other creditor claims have been filed totalling £68,646.51. 

7.        The Commission entered into a Deed of Indemnity with the Joint Liquidators ("the Indemnity") to fund the winding up.  The only recovery in the winding up comprises £40,000 (repayment of a loan to a shareholder) and bank interest of £22.09. 

8.        Professional fees and expenses of the Joint Liquidators (incurred and estimated) comprise:-

(i)        fees of the Joint Liquidators and of their English lawyers Addleshaw Goddard in the aggregate sum of £32,306.59 (which were discharged by the Commission);

(ii)       professional fees of £9,739.96 (which were discharged from the recovery of the shareholder loan); and

(iii)      additional fees and expenses estimated at the date of this application to bring the winding up to a conclusion of approximately £10,500. 

9.        Once estimated professional fees and costs to conclusion (£10,500) have been deducted from the remaining cash available (£30,282.13) the Joint Liquidators will hold the balance of £19,782.13.  It is proposed that this sum is paid to the Commission by way of partial reimbursement of their funding, under the Indemnity, of the initial professional fees and expenses of £32,306.59.  The Commission will therefore be out of pocket in its funding of this matter in the sum of £12,524.46. 

10.      Aside from its funding deficit, the Commission is the main creditor.  Given uncertainty about the recoverability of assets, the Joint Liquidators have not adjudicated on creditor claims generally.  There will be no assets available for creditors as the remaining cash held by the Joint Liquidators will be paid to the Commission in part satisfaction of its claim under the Indemnity. 

11.      Accordingly, the Joint Liquidators wish to bring the winding up to a close, inform the creditors of the outcome and have the Company dissolved.  In the Joint Liquidators' opinion, no purpose is served by holding a final meeting of creditors, whose claims have not been adjudicated and who would receive a zero dividend.  Such a meeting is not a statutory requirement (as it is in a creditors' winding up) see Article 169 of the Law.  In the opinion of the Joint Liquidators there are no further tasks to be carried out by them. 

12.      When the Court sat on the 28^th April it heard from one of the creditors, Mr Oeillet, who expressed concern as to the steps taken to recover monies from the directors of the Company one of whom, Mr Douglas Clark, apparently owned property jointly with his wife, and she had apparently received a recent inheritance.  We heard evidence briefly from Mrs Robinson but it was not clear to us what steps the Commission had taken and we adjourned the application so that we could receive a report in this respect. 

13.      We have now received that report in the form of a letter of 8^th June, 2011 from the Commission from which it is clear that it reached a settlement with both directors Mr Clark and Mr Robert Le Fustec, which was approved by the Royal Court.  It is also clear that Mrs Clark has never been a director of the company; she has been secretary from June 1999 to July 2003.  The report had attached to it the court-approved settlement and the affidavit of means of Mr Clark and Mr Le Fustec.  The Liquidators have given careful and separate consideration to any causes of action that they could bring on behalf of the Company, and have given cogent reasons for those causes of actions not being pursued. 

14.      Mr Oeillet was given leave to address the Court again.  He has taken us to certain paragraphs of the judgment of the Court in Jersey Financial Services Commission-v-Alternate Insurance Services Limited [2007] JLR 095.  It is clear that he and his wife, who have no doubt lost precious savings through this Company, feel very critical of the actions of the Commission.  As Mr Dessain said anyone involved in this matter has sympathy for those who have lost money but the Commission is not before us and any criticism of the Commission must be pursued separately.  The Company was wound up by order of this Court and it was this Court which appointed the Joint Liquidators.  They have now returned to us with their task completed.  We are satisfied with their report and have no grounds to keep this company on the register.  The Company must therefore be dissolved and the Joint Liquidators discharged. 

15.      We will therefore give the orders sought which are as set out in the draft order prepared by Mr Dessain:-

(i)        that no final creditors' meetings be held for the winding up of the Company;

(ii)       that the Joint Liquidators reasonable fees and disbursements and other outstanding liquidation expenses be paid from the cash held by the Company;

(iii)      that the remainder of the Company's assets being the balance of the cash held be paid to the Commission as partial reimbursement of costs paid under the indemnity;

(iv)      that all parties who have submitted creditors' claims receive written confirmation from the Joint Liquidators of the final liquidation costs and the costs reimbursed to the Commission;

(v)       that upon completion of these steps:-

(a)       the Joint Liquidators' to write to the Registrar of companies requesting that the Company be removed from the register;

(b)       upon receipt of confirmation from the Registrar that the Company has been removed from the register, the Joint Liquidators are released and discharged as Joint Liquidators of the company;

(vi)      that there be liberty to apply; and

(vii)     that the costs, including legal costs of and incidental to this representation, be paid on a full indemnity basis. 

Authorities

Companies (Jersey) Law 1991 (as amended).

Third Parties (Rights Against Insurers)(Jersey) Law 1948.

Jersey Financial Services Commission-v-Alternate Insurance Services Limited [2007] JLR 95.