Financial Services Regulatory Commission Applicant v Peter Queeley Hugh Henry Respondents [ECSC]
| Jurisdiction | Antigua and Barbuda |
| Judge | Blenman: J; |
| Judgment Date | 12 June 2006 |
| Judgment citation (vLex) | [2006] ECSC J0612-1 |
| Docket Number | CLAIM NO ANUMSC2005/0400 |
| Court | High Court (Antigua) |
| Date | 12 June 2006 |
IN THE HIGH COURT OF JUSTICE
CLAIM NO ANUMSC2005/0400
In the Matter of Bank of Europe Limited (In Receivership)
And
In the Matter of the International Business Corporations Act, Cap. 222 (as amended)
And
and
Mr Septimus Rhudd and Ms Gail Pero for the Applicant
Mr Kevin John and Ms Stacy-Ann Saunders for the Respondents
Blenman: J; These are rulings based on two applications by the Financial Services Regulatory Commission (the Commission).
The first application seeks to have Mr Peter Queeley and Mr Hugh Henry (Messrs Queeley and Henry) removed as liquidators of the Bank of Europe Limited (In receivership) (the bank). In the second application, the Commission seeks an interim injunction to suspend the liquidation and dissolution of the bank with immediate effect. In addition, the Commission applies to restrain Messrs Queeley and Henry from accessing, transferring or drawing or otherwise removing any funds held by the bank in various accounts at banks in Antigua and Barbuda.
The Bank of Europe Limited (the bank) was incorporated on the 3 rd day of November 1996 in accordance with the International Business Corporation Act Cap 222 Laws of Antigua and Barbuda (as amended) (the Act). On the 3 rd day of November, 1996, the Supervisor of International Banks and Trust Corporation (the supervisor) granted the bank a licence to conduct international (offshore) banking.
The initial authorized capital of the bank is US$1,000,000 divided into $1,000,000 common shares of US$1.00 per share. The directors of the bank were Hubert Edward Secretan, Edison Ferrena Da Silva, Maria Del Carmen Forcella and Marve Christian. The shares of the bank were owned by Euro Trust Group (also known as the Bedford Group).
By 1 st December 2004, the bank's assets were felt to be less than its liabilities and the directors of the bank by this time were unwilling to continue the operations of the bank.
Section 287 of the Act states as follows:
"The appropriate official may appoint a receiver-manager under Part II for a corporation when any of the following circumstances apply to the corporation, namely-
The realizable value of the corporation's assets is less than the aggregate of its liabilities and capital accounts or the corporation's financial condition suggests that it will shortly be in that circumstance."
Section 219 of the Act states that:
"A receiver or receiver-manager of a corporation must —
(a) Act honestly and in good faith;
(b) Deal with any property of the corporation in his possession or control in a commercially reasonable manner."
The Supervisor appointed Messrs Queeley and Henry as receiver-managers.
At the time of their respective appointments as receiver-managers, Mr Queeley was employed by the Commission as a senior research officer while Mr Henry was employed by the Commission as a senior examiner.
The material terms of their appointment as receiver-manages were as follows:
- During the period of the appointment as Receiver-manager, your salary and other entitlements, as per existing terms of your employment with the Commission, will be paid by the Financial Services Regulatory Commission (Commission) and the Bank of Europe (In Receivership) (hereinafter referred to as the bank) will reimburse these expenses to the Commission. You will not be entitled to salary or any other payment form the bank, except for the necessary and legitimate expenses incurred by you in discharge of your duties as Receiver-manager. 2. You will prepare, in consultation with the appropriate official, a scheme of dissolution of the bank, which will include an appropriate provision for compensating the Commission for making available your services to the bank as Receiver-manager. 3. Your appointment as Receiver-Manager will terminate in the event you leave your employment with the Commission. 4. You will act in good faith and in the best interest of the creditors of the bank and the integrity of the Commission and the jurisdiction.
Section 219 of the Act states that:
"A receiver of any property of a corporation, may, subject to the rights of the secured creditors, receive the income from the property, pay the liabilities connected with the property, and realize the security interest of those on behalf of whom he is appointed; but except to the extent permitted by the court, he may not carry on the business of the corporation".
Section 218 of the Act provides:
"A receiver or receiver-manager of a corporation appointed under an instrument must act in accordance with that instrument and any directions of the court made under section 220."
Messrs Queeley and Henry accepted the terms and conditions referred to above and commenced their work as receiver/managers.
Section 215 of the Act states:
"A receiver of a corporation may, if he is also appointed manager of the corporation, carry on any business of the corporation to protect the security interest of those on behalf of whom he is appointed."
On 28 th January 2005, Messrs Queeley and Henry petitioned the High Court to be appointed as liquidators of the bank and sought increases in remuneration from the court.
On 8 th February, 2005 Lewis Hunte J granted their petition and ordered as follows:
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(a) That Bank of Europe Limited (In Receivership) be liquidated and dissolved pursuant to Section 287(1) (a) of the International Business Corporations Act, Cap. 222 of the Laws of Antigua and Barbuda.
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(b) That the Petitioners, Peter Queeley and Hugh Henry, be and are hereby immediately appointed as the Liquidators of Bank of Europe Limited (In Receivership) for the purposes of carrying out the liquidation and dissolution of he Bank.
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(c) That the Petitioners be and are hereby granted an Indemnity out of the assets of the Bank, which said assets shall include deposits.
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(d) That the Petitioners be and are hereby permitted to postpone and/or delay payment to creditors and/or depositors if in their discretion the Petitioners think it is in the best interest of all depositors and/or creditors of the Bank.
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(e) That the Petitioners be and are hereby permitted to act in any jurisdiction to recover assets and property of the Bank including the right to bring or defend any action related or associated therewith subject to compliance with the laws of any such jurisdiction.
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(f) That the remuneration of the Petitioners and immediate staff appointed by them from December 2 nd 2004 be set at an hourly rate of US$200 for each of your Petitioners and senior consultants, US$100 for senior management and staff and that these sums be paid from the assets of the Bank, which said assets shall include deposits.
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(g) That the Petitioners be reimbursed for such reasonable out of pocket expenses as are incurred by them during the liquidation.
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(h) That the reasonable costs to Legal Counsel for the Petitioners be paid out of the assets of the Bank, which said assets, shall include deposits."
Messrs Queeley and Henry embarked on the process of liquidation purporting to act pursuant to the order of the court.
Further, purporting to act in accordance the court order, Messrs Queeley and Henry are alleged to have fixed their estimated monthly allowance at EC$3,000.00. As liquidators they incurred expenses include traveling, rental for premises, telephone and other miscellaneous expenses. They have paid themselves remuneration at a rate of US$200 per hour.
The Commission filed the applications referred to above and made several complaints including that Messrs Queeley and Henry have acted in breach of their fiduciary duties and that by their actions they will dissipate the bank's funds available to pay the bank's creditors and depositors.
I do not propose to address all the complaints in detail; suffice it to say that the Commission says that Messrs Queeley and Henry continued to incur very high telephone and rental expenses, in relation to their execution of their duties, as liquidators. The Commission complains, further, that the operational expenses which they were incurring are unreasonable and operates against the interest of the creditors and depositors.
Another complaint raised by the Commission is that Messrs Queeley and Henry have issued "a policy directive through which they are not required to produce receipts for their expenditure". The Commission says that this is unreasonable and can possibly lead to committal of fraud on the creditors/depositors.
The Commission also complains that Mr Queeley and Mr Henry were wrong to have sought and obtained approval from the court in the terms they did, the effect of which is to benefit themselves personally while at the same time breaching their fiduciary duties to the creditors/depositors.
The issues that arise for the court's determination are:
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(a) What the terms and conditions are applicable to the liquidators;
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(b) Whether, based on the circumstances that exist, the court should remove the liquidators and replace them as requested by the Commission;
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(c) Whether the Commission has locus standi to bring these applications;
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(d) Whether the court should grant the injunctions restraining the liquidators from accessing and transferring monies that are held in accounts of the bank;
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(e) Whether the Commission ought to have filed a separate claim.
I find it convenient to refer to some of the other relevant legal provisions at this point. I do not propose to quote the entire provisions of the legislation but would refer only to the material parts.
Section 217 of the Act stipulates:
"A receiver or receiver-manager of a corporation appointed by the court must act in accordance with the directions of the...
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