News Publication Date: 09 February 2016
IN THE HIGH COURT OF JUSTICE OF THE ISLE OF MAN
(1) EDWARD WATKIN GITTINS
(2) MONTPELIER (TRUST AND CORPORATE) SERVICES LIMITED
(3) BAYRIDGE INVESTMENTS LLC
(4) BAYRIDGE (ISLE OF MAN) LIMITED
(5) MONTPELIER PROFESSIONAL LIMITED
(6) MITCHAM DEVELOPMENTS LIMITED
(7) MONTPELIER INSURANCE COMPANY INC
(8) MONTPELIER HOLDINGS LLC Claimants
MICHAEL SIMPSON liquidator and deemed official receiver of The Spirit of Montpelier Limited (in liquidation) Defendant
Judgment summary issued by the High Court of Justice of the Isle of Man
This summary is provided to assist in understanding the judgment of the court. It does not form part of the judgment. The judgment itself is the only authoritative document. The full judgment is available at www.judgments.im.
On 5 February 2016 His Honour the Deemster Doyle, First Deemster and Clerk of the Rolls, delivered a judgment in respect of a claim seeking damages and an order to quash a decision of a liquidator and deemed official receiver to sell an asset of a company.
Deemster Doyle dismissed the claim for the reasons stated in his judgment.
The claim sought relief pursuant to sections 184(3) and 185(5) of the Companies Act 1931 (the “1931 Act”) and on doleance grounds. It was common ground that the relevant test in the context of section 185(5) of the 1931 Act was:
'… did the liquidator do something so utterly unreasonable and absurd that no reasonable person would have done it?'
In the particular circumstances of that case the Deemster commented at paragraph 69 of his judgment as follows:
'… Mr Simpson cannot justifiably be criticised for, having properly considered the views of the secured and unsecured creditors (as they asserted themselves to be) and the contributory of the Company, taking expert advice and reaching the pragmatic and sensible commercial view that a definite immediate sale of the Yacht in an un-refurbished condition was better for the Company than a speculative hope that at some future date, if all went well and the refurbishment proceeded, there may be a sale in the future in the refurbished state at an appropriate increased value. Mr Simpson did consider and explore the option of a survey of the Yacht and its refurbishment and reasonably rejected such option. Mr Simpson did properly consider the proposals, comments, views and advice put to him for consideration. Mr Simpson did not give any undue weight to any such matters. It was reasonably open to Mr Simpson to decide to sell the Yacht for £450,000 on 15 July 2015. It is not for this court to second-guess the commercial decisions of a liquidator as to when to sell an asset of a company and for how much such asset should be sold, or as to whether such asset should be refurbished before it is sold.'
The Deemster provided a short summary of his conclusions at paragraph 71 of his judgment as follows:
'… I have not been persuaded that in respect of Mr Simpson’s actions and decisions the Claimants have jumped the high hurdle provided by the Edennote test in the context of statutory relief sought, nor that they have established any doleance grounds which would entitle them to the relief sought.'