Wastell and Another v Stanford International Bank Ltd and Another Serious Fraud Office (Intervening)
| Jurisdiction | England & Wales |
| Judge | Lord Justice Lloyd |
| Judgment Date | 25 February 2010 |
| Neutral Citation | [2010] EWCA Civ 692,[2010] EWCA Civ 137 |
| Docket Number | Case No: A3/2009/1565 A3/2009/1566,A3/2009/1565 & 1643 |
| Court | Court of Appeal (Civil Division) |
| Date | 25 February 2010 |
IN THE MATTER OF THE PROCEEDS OF CRIME ACT 2002 (EXTERNAL REQUESTS AND ORDERS) ORDER 2005
Other Affected Parties
[2010] EWCA Civ 137
Before: In the Matter of Stanford International Bank Ltd
and
In the Matter of the Cross Border Insolvency Regulations 2006
A3/2009/1565 & 1643
CAO No. 13091
IN THE COURT OF APPEAL (Civil Division)
ON APEAL FROM THE HIGH COURT OF JUSTICE CHANCERY DIVISION
(COMPANIES COURT)
IN THE COURT OF APPEAL (Criminal Division)
MR W TROWER QC & MR D BAYFIELD (instructed by CMS Cameron McKenna) for the Antiguan Liquidators on the Civil Appeal
MR R KOVALEVSKY QC & MR D BAYFIELD (instructed by CMS Cameron McKenna) for the Antiguan Liquidators on the Criminal Appeal
MR S ISAACS QC & MR J GOLDRING (instructed by Baker Botts) for the US Receivers
MR A MITCHELL QC & MR C CONVEY for the Serious Fraud Office
The Chancellor
Introduction
Stanford International Bank Ltd (“SIB”) was incorporated in Antigua and Barbuda on 7th December 1990. At all times its registered office has been there. It is alleged that SIB was involved in a fraudulent ‘Ponzi’ scheme operated by Sir Allen Stanford and his associates under which some 27,000 investors, primarily from North, Central and South America, bought certificates of deposit from SIB for some $104bn. The scheme collapsed at the beginning of 2009. Thereafter the following events material to these appeals occurred:
(1) On 16th February 2009 the United States Securities Exchange Commission (“the SEC”) filed a complaint (“the SEC Complaint”) in the US District Court for the Northern District of Texas Dallas Division against, among others, Sir Allen Stanford, James M. Davis, Laura Pendergest-Holt and SIB alleging fraudulent breaches of securities laws. On the same day the SEC applied for and obtained an order for the appointment of Mr Ralph S. Janvey (“the US Receiver”) as receiver of the assets, wherever situate, of those defendants and interim freezing and other orders against them.
(2) On 19th February 2009 the Financial Services Regulatory Commission of Antigua and Barbuda (“FSRC”) appointed Messrs Peter Wastell and Nigel Hamilton-Smith joint receiver-managers of SIB and an associate company and conferred on them the powers and duties previously vested in the directors of SIB. The appointment was made under the power contained in s.287 International Business Corporations Act.
(3) On 26th February 2009, on the application of FSRC, the High Court of Antigua and Barbuda granted freezing and other orders against SIB and the associate company and under the power conferred by s.220 International Business Corporations Act, appointed Messrs Wastell and Hamilton-Smith to be joint receiver-managers of SIB and the associate company with such powers as the court might determine.
(4) On 16th March 2009 the joint receiver-managers reported to the High Court of Antigua and Barbuda that SIB was insolvent, incapable of being reorganised via a receivership and should be put into liquidation.
(5) On 24th March 2009 a petition for the compulsory winding up of SIB under s.300 International Business Corporations Act was presented to the High Court of Antigua and Barbuda by FSRC. A petition to wind-up SIB under s.220 International Corporations Act had already been presented to that court by an investor, Mr Fundora, on 9th March 2009 and was being opposed by the joint receiver-managers.
(6) On 27th March 2009 the SEC applied, without notice, to the High Court in England and obtained from Jack J orders over 6th April 2009 freezing the assets of, amongst others, SIB. The injunction was continued by Stadlen J on 6th April, Bean J on 27th April and Stadlen J on 18th May before being discharged by Jack J on 24th July 2009 (see paragraph 1(16) below).
(7) On 1st April 2009 the US Receiver applied to the High Court in Antigua and Barbuda for an order entitling him to intervene in the winding-up petitions in respect of SIB presented to that court by Mr Fundora and FSRC. That application came before the court in Antigua on 6th and 7th April 2009 and dismissed on 7th April.
(8) On 6th April 2009 the US Department of Justice (Criminal Division) (“DoJ”) wrote to the Central Authority of the United Kingdom (“the Letter of Request”), pursuant to the US/UK Mutual Assistance in Criminal Matters Treaty, requesting the immediate assistance of the UK in relation to the investigation by the DoJ of alleged violations of US criminal laws involving fraud on investors committed by, amongst others, Sir Allen Stanford, James M. Davis, Laura Pendergest-Holt and SIB. The Letter of Request, to which I shall refer in detail later, sought the restraint of all assets of those defendants in the UK so that they might be secured for confiscation at a later date.
(9) On 7th April 2009 in-house counsel for the Serious Fraud Office (“the SFO”) applied to HH Judge Kramer QC sitting at the Central Criminal Court for a restraint order against those named in the Letter of Request under Article 8 the Proceeds of Crime Act 2002 (External Requests and Orders) Order 2005 SI 3181 (“the ERO”). The evidence in support of the application consisted of a witness statement of Mr Tanvir Tehal, a barrister employed by the SFO, to which was exhibited the Letter of Request. HH Judge Kramer QC made the orders sought until further order of that court or of the Court of Appeal. He gave to any person affected by the order leave to apply on not less than three clear days notice to vary or discharge it. The restraint order and the evidence in support of the application for its grant were not served on SIB until, respectively, 27th April and 24th July 2009.
(10) On 15th April 2009 the High Court of Antigua and Barbuda made an order on the petition of FSRC for the liquidation and dissolution of SIB under the supervision of the court and appointed Messrs Wastell and Hamilton-Smith to be joint liquidators (“the Antiguan Liquidators”). Paragraph 5 of the order vested all assets of SIB of whatever nature and wherever situated in the Antiguan Liquidators. On the same day the petition presented by Mr Fundora was dismissed for lack of standing. The applications of the US Receivers had already been dismissed on 7th April. We were told that appeals to the Court of Appeal of the East Caribbean are pending in respect of those dismissals.
(11) On 22nd April 2009 the Antiguan Liquidators applied to the High Court in England under article 15 of the UNCITRAL Model Law on Cross-Border Insolvency (“Uncitral”), given the force of law in the United Kingdom by the Cross-Border Insolvency Regulations 2006 SI No: 1030, for recognition of the Antiguan liquidation of SIB as a foreign main proceeding, as defined in Article 2(g), and for an order entrusting the distribution of the assets of SIB situate in Great Britain to them in their capacity as such liquidators.
(12) On 8th May 2009 the US Receiver also applied to the High Court in England under article 15 of Uncitral for recognition of the US Receivership of SIB (and other Stanford entities) as the foreign main proceeding and of himself as the foreign representative of SIB.
(13) On 18th June 2009 an indictment against Sir Allen Stanford, James Davis, Laura Pendergest-Holt and an employee of FSRC Leroy King, but not SIB, was laid in the US District Court for Southern Texas, Houston Division. It avers a number of offences of mail, wire and securities fraud contrary to the laws of the US.
(14) The recognition applications of the Antiguan Liquidators and the US Receiver were heard by Lewison J on 10th to 12th June. Lewison J was not then told of the restraint order, nor did he give SFO the opportunity to be heard on the applications which he should and would have done if the provisions of ERO Article 17(6) had been brought to his attention. Lewison J handed down his reserved judgment on 3rd July 2009. I shall refer to it in detail later. In summary he acceded to the application of the Antiguan Liquidators but dismissed that of the US Receiver. In addition he indicated that the Antiguan Liquidators should secure the assets of SIB within this jurisdiction and remit them to Antigua to be administered in the winding-up there. There was a subsequent hearing on 9th July to determine the form of order Lewison J should make at which he was told of the existence of the restraint order and modified his order so as to take effect subject to the restraint order.
(15) On 17th July 2009 the Antiguan Liquidators applied to HH Judge Kramer QC for a variation of the restraint order to enable the directions of Lewison J to be carried out. Immediately before the hearing of that application on 24th July the evidence before the court on 7th April when the restraint order was made was produced for the first time to those representing the Antiguan Liquidators. They then and there expanded their application to HH Judge Kramer QC so as to seek the discharge of the restraint order altogether on grounds of misrepresentation and material non-disclosure.
(16) On the same day, namely 24th July 2009, on the application of the Antiguan Liquidators Jack J discharged the...
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