 |
[Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback] [DONATE] | |
Jersey Unreported Judgments |
||
|
You are here: BAILII >> Databases >> Jersey Unreported Judgments >> In the matter of Siena Properties (Jersey) Limited and Ors (Royal Court : Hearing (Civil)) [2025] JRC 067 (10 March 2025) URL: https://www.bailii.org/je/cases/UR/2025/2025_067.html Cite as: [2025] JRC 067, [2025] JRC 67 |
||
[New search] [Help]
Liquidation - Applications under The Companies (Jersey) Law 1991
|
Before : |
Sir Timothy Le Cocq, Bailiff, and Jurats Christensen, MBE. and Le Cornu |
IN THE MATTER OF AN APPLICATION PURSUANT TO ARTICLE 155 OF THE COMPANIES (JERSEY) LAW 1991
AND IN THE MATTER OF SIENA PROPERTIES (JERSEY) LIMITED
AND IN THE MATTER OF SIENA PROPERTIES (BARDEAUX) LIMITED
AND IN THE MATTER OF SIENA PROPERTIES (OSJ) LIMITED
AND IN THE MATTER OF LES BARDEAUX DEVELOPMENTS LIMITED
AND IN THE MATTER OF CEDAR CONSTRUCTION LIMITED
AND IN THE MATTER OF NOUVELLE DEVELOPMMENTS LIMITED
AND
IN THE MATTER OF AN APPLICATION UNDER ARTICLE 157A OF THE COMPANIES (JERSEY) LAW 1991
AND IN THE MATTER OF SIENA PROPERTIES (BARDEAUX) LIMITED
Advocate H. B. Mistry for the Representors.
Advocate S. B. Wauchope for Mr Stone.
Advocate A. T. H. English for Mr McPherson and Mrs McQueeney.
Advocate N. H. MacDonald for Hawk Lending Limited.
Advocate D. R. Wilson for the Viscount of the Royal Court.
judgment
the bailiff:
1. The Court has before it two conflicting applications. The first is the Representation of Siena Properties (Jersey) Limited; Siena Properties (Bardeaux) Limited ("Bardeaux"); Siena Properties (OSJ) Limited ("OSJ"); Les Bardeaux Developments Limited; Cedar Construction Limited and Nouvelle Development Limited ("the Representors" or "the Siena Group") for a just and equitable winding up pursuant to Article 155 of the Companies (Jersey) Law 1991 ("the Companies Law").
2. The second application is by Hawk Lending Limited ("Hawk") that resists the application for a just and equitable winding up and seeks a creditors' winding up of Bardeaux pursuant to Article 157A of the Companies Law.
3. The principle assets of the Siena Group appear to be held in Bardeaux, which owns a site located on La Rue de Haut, St Lawrence, on which it has developed and built a luxury apartment block comprising of eleven apartments, and OSJ which owns a site located on the Old St John's Road, St Helier and on which it has built an apartment block comprising of seven apartments. During the course of the hearing before us, it was unclear precisely how OSJ owns the site, but we are satisfied and proceed on the assumption that it does so own the site for the purposes of the matter before us.
4. The property owned by Bardeaux had, as of November 2023, a red book valuation of approximately £21,000,000 and the property owned by OSJ had a value of approximately £2,850,000. The red book valuations are described as "conservative" by the Representors who posit a more optimistic value of approximately £27,800,000 for the Siena Group as a whole.
5. The Representors also inform us that its Group debts are approximately £26,360,416 and it has no income to service those debts. The debts include £21,879,729.59 due to Hawk and that debt is secured over Bardeaux and the property it owns. Unsecured creditors make up approximately £4.8 million.
6. It is entirely clear, therefore, that the Siena Group is cashflow insolvent and may very well be balance sheet insolvent as well, and certainly is so on the basis of the red book valuations.
7. It is common ground in connection with both of these applications that one or all of the companies should be wound up. As we have indicated, the Representors seek a winding up of the Siena Group on a just and equitable basis, and Hawk seeks a creditors' winding up of Bardeaux alone. During the course of submissions before us, the Representors' advocate confirmed that were we to order a creditors' winding up with regard to Bardeaux, the application for a just and equitable winding up for the remainder of the Siena Group assets would not be pursued.
8. Accordingly, the question before the Court is whether or not there should be a creditors' winding up of Bardeaux alone, with the remainder of the Siena Group being left to be dealt with subsequently, or a just and equitable winding up of the Siena Group.
9. The Representors seek a just and equitable winding up on two main grounds. Firstly, it would allow the Siena Group to keep trading for a limited period with the hope of selling the assets for the benefit of the companies' creditors as a whole and / or investigating the affairs of Bardeaux in connection with some of the alleged actions of Hawk and the making, so it is claimed, of preference payments to unsecured creditors and matters of clawback.
10. The Court's jurisdiction under Article 155 of the Companies Law is well known. The extent of the Court's jurisdiction under Article 155 has been the subject of considerable discussion in Jersey case law and the Representors have put before us a number of cases to illustrate the ambit of the general terms "just and equitable". We will mention but a few examples.
11. In Financial Technology Ventures II (Q) LP and Others v ETFS Capital Limited and Graham Tuckwell [2021] JRC 025, the Court recognised that whilst there was no exhaustive list of all the circumstances in which it may be just and equitable to wind up a company, it recognised the following specific examples:
(i) Where the substratum of the company (i.e. its purpose / main objects on which the company were formed) has been lost or abandoned;
(ii) Where there is a deadlock between the members and / or directors preventing decisions being made;
(iii) Where there is a breakdown of relations between participants in a quasi-partnership preventing cooperation in the conduct of the company's affairs; and
(iv) Where an insolvent company needs to be investigated.
12. In the matter of Poundworld [2009] JRC 042, the Royal Court made the following observations at paragraphs 15 and 16:
13. In the matter of Centurion Management Services [2009] JRC 227 at paragraph 9, the Court stated:
14. In the case of Aston Martin [2024] JCA 071, the Jersey Court of Appeal, at paragraph 44, stated when considering alternative remedies to an application under Article 155 of the Companies Law:
15. In Re Myfuel Limited [2013] JRC 169A, the Court of Appeal held that a valid reason was required for a liquidation to take place other than by creditors' winding up or summary judgment. In the case of Re Charles Le Quesne [1956] Limited [2011] JRC 155, the Court there held that insolvent companies are ordinarily wound up by way of creditors' winding up unless the just and equitable winding up would provide a particular advantage.
16. Accordingly, for the purposes of this application, we proceed on the following basis:
(i) The presumption with regard to the winding up of an insolvent company is a creditors' winding up;
(ii) There needs to be a good reason not to proceed through a creditors' winding up and instead to proceed through a just and equitable winding up;
(iii) Among the reasons that the Court will take into account will be the interests of the creditors as a body and the possible need to investigate the affairs of the company.
17. We do not intend to go into all of the factual details underpinning the various allegations and suggestions made in argument before us and contained in the skeleton arguments and affidavits. We are not in any position definitively to determine any of these points, many of which, we are sure, will be hotly contested should they ultimately fall to be litigated.
18. The Representors allege, for example, that Hawk has acted as a de facto director of Bardeaux and therefore may have taken on liabilities that should not fall to be paid by Bardeaux, has preferred other creditors and has charged interest rates to such a high level that it will be susceptible to review by the Court (and if appropriate, significant abatement) following the case of Doorstop Limited v Gillman and Le Pervier Holdings Limited [2012] JRC 199 where, at paragraph 51 of the judgment, the Court stated:
19. For its part, Hawk asserts that there is no basis at all for it to be alleged that it has acted as a de facto director of Bardeaux, nor that it has preferred certain creditors. Anything it has done, it asserts, has been done with the express permission of Mr Stephen Neal who was the ultimate beneficial owner of the Representors and who indeed provided a number of affidavits before us.
20. Furthermore, so Hawk asserts, the interest that it has charged was entirely that interest mandated by the agreements voluntarily entered into with the borrower and with Mr Neal. It is further argued that the terms of the borrowing could not be said to have been negotiated by someone who was under pressure as these were the same terms that had existed in all of the instruments that Hawk had executed between Bardeaux and Mr Neal in respect of this development over a significant period. We make no observations about that.
21. Moreover, Mr Marcus Stone, one of the creditors in respect of legal fees, makes the allegation that a company was transferred out of the Group into the hands of Mr Neal and the Group's advocate, Advocate Hiren Mistry, and that a property had been acquired into that company. Mr Mistry explained in Court before us that the company was of no value and all of the value had been put into it by him after it had been transferred into his and Mr Neal's joint names. The fact is, however, this is a matter that to our mind may need to be investigated.
22. We view the idea that additional funding may be forthcoming to enable the Group or part of it to trade with some serious measure of incredulity. It seems to us on any conservative analysis that there is no equity left in order to do that.
23. Furthermore, we see the very real possibility that the costs of a just and equitable winding up may well substantially exceed the costs of a creditors' winding up if it leads the liquidator to conduct a detailed investigation of the affairs of the Siena Group.
24. We have had the benefit of hearing from Advocate Wilson on behalf of the Viscount through certain written observations made for the directions hearing on 9 October in this matter, including that it was not apparent to the Viscount why a creditors' winding up would not be an appropriate remedy. Advocate Wilson also represented the Viscount at this hearing, but did not make any primary submissions in favour of either application before us, merely offering to assist the Court as and when required.
25. Advocate Wauchope appeared for Mr Stone who has a substantial claim of approximately £100,000. Mr Stone had previously made an application for a creditors' winding up, but it had not been pursued. Mr Wauchope's submissions were that a court-supervised winding up could be very wasteful with regard to costs, but he also made the point that the structure as a whole should be wound up, which of course is not an option currently before the Court. He thought that Grant Thornton should be appointed as liquidators, rather than the liquidators proposed by the Representors.
26. Advocate English appeared for Mr McPherson and another and made submissions relating to the concerns that in a creditors' winding up Hawk would in effect take all of the available assets and that there will be a benefit to the process of a just and equitable winding up from the Court's oversight. He suggested that a report should perhaps be made every six months. He too was concerned about the rates of interest apparently charged by Hawk and he thought that the allegations relating to shadow directors and preferences should be investigated. There were, he submitted, very real concerns and these should be addressed.
27. Advocate MacDonald, for Hawk, argued that the allegations made against his client were obviously ill-founded and designed to move the Court in the direction of a just and equitable winding up without proper justification.
28. He indicated that his client was not wedded to the default interest terms and that there may be some flexibility there. Any question of refinancing was simply unrealistic and, indeed, no evidence had been provided in support of that possibility. Liquidators in a just and equitable winding up and those in a creditors' winding up would realise the assets in precisely the same way.
29. We have deliberately not gone into all of the arguments, nor indeed all of the factual matters deployed before us. As we have indicated already, we are not, we think, in a position to make any final determination on those factual matters.
30. The reality is that we have seen no evidence that there is a realistic prospect of refinancing and, that being the case, the assets of the Group and of Bardeaux are likely to be realised in the same way and with, in the case of the Bardeaux assets, the same results.
31. It would theoretically be open to liquidators in any form of winding up to investigate the activities of the company and those connected with it and assess whether there were any claims that might be considered as realisable assets of the company. Whether it will be realistic to pursue such claims, and litigation funding will be available to do so, is of course another matter.
32. However, if we do not order a just and equitable winding up certain serious questions may not be investigated and there could be nothing left for the unsecured creditors -� it may be that nothing can be salvaged for them but in our view we should not at this point make that assumption.
33. In our judgment the best course is to order a just and equitable winding up of the Siena Group and we so order.
34. We also approve the liquidators sought by the Representors and would expect a report after 6 months and thereafter at similar intervals. We will consider any consequential orders sought on the papers.