Doyle J
IN THE GRAND COURT OF THE CAYMAN ISLANDS
FINANCIAL SERVICES DIVISION
CAUSE NO: FSD 271 OF 2023 (DDJ)
IN THE MATTER OF THE COMPANIES ACT (2023 REVISION)
AND IN THE MATTER OF AUBIT INTERNATIONAL
Before:
Heard:
Draft Judgment
Circulated:
Judgment Delivered:
The Hon. Justice David Doyle
On the papers
28 November 2023
1 December 2023
HEADNOTE
Determination of costs issues in respect of a Winding-Up Petition and a Strike-Out Application
JUDGMENT
1.
On 16 October 2023, for reasons stated in a judgment delivered that day, I made a winding-up order
and at paragraphs 14 and 15 gave LedgerScore International Pte Ltd, LS Litigation Holdings LLC
and Earn Guild Pte Ltd (the "Petitioners") and AuBit International (the "Company") the
opportunity to file concise written submissions regarding orders as to the Company's costs of the
Petition and the Strike-Out Application as defined in such order.
231201 In the matter of AuBit International - FSD 271 of 2023 (DDJ) - Judgment
Page 1 of4
FSD2023-0271
2023-12-01
FSD2023-0271
2023-12-01
FSD2023-0271
2023-12-01
FSD2023-0271
2023-12-01
Digitally signed by Advance Performance Exponents
Inc
Date: 2023.12.01 09:57:58 -05:00
Reason: Apex Certified
Location: Apex
2.
By written submissions dated 30 October 2023 the Petitioners accept that ordinarily the Company's
costs would be paid from the Company's assets. The Petitioners maintain that in this case the costs
of the Company should not be met from funds needed to pay the creditors. The fonn of order
sought by the Petitioners is that the Company's costs should not be paid out unless and until all
other creditors have been paid, in effect becoming last in the order of distribution priorities, a so
called Bathampton Order named after Bathampton Properties Ltd [1976] 1 WLR 168 which was
followed in the Cayman Islands in Banco Economico SA v Allied Leasing and Finance Corporation
1998 CILR 333 with the Companies Winding Up Rules ("CWR") being introduced subsequently.
Banco Economico was an exceptional case. Graham J at page 337 referred to the company's
"hopeless, not to say egregious, opposition to the petition". The "clearest possible warnings" had
been given to the company and its legal representatives. A finding was made that an alleged
agreement and side letter were part and parcel of a "put-up job" to mislead the court (at page 338).
The Petitioners say that a Bathampton Order can only be made in "exceptional and special
circumstances". The Petitioners say that as explained by Kawaley J at paragraph 17 in Re Principal
Investing Fund (FSD unreported judgment 27 July 2023) under CWR Order 24 rule 8 the court
essentially applies the test as for indemnity costs by analogy.
3.
The Petitioners submit that the conduct of the Company's defence to the Petition was unreasonable
in that the costs which were incurred were designed to keep the directors and/or management in
place and were not incurred for the benefit of the unsecured creditors.
4.
By written submissions dated 13 November 2023 the Company refers to CWR Order 20 rule 1
(l)(a) and submits that upon the making of a winding-up order, the usual order is that the company's
costs shall be paid out of the assets of the company as an expense of the official liquidation and
there is no reason in this case to deviate from what the Company describes as the "usual rule".
Order 20 rule 1 (l)(a) (which was not provided with the Company's written submissions) provides
that the expenses of the liquidation are payable out of the assets of the company in the following
order of priority "the costs of the petitioner and of any person appearing on the petition whose costs
are allowed by the Court". It begs the question as to whether the costs "are allowed by the Court."
5.
The Company submits that companies should, in the interests of justice and fairness, always be
permitted to defend winding-up petitions as vigorously as the facts will allow and having regard to
creditors' interests.
231201 In the matter of AuBit International-FSD 271 of 2023 (DDJ) - Judgment
Page2 of4
FSD2023-0271
2023-12-01
FSD2023-0271
2023-12-01
FSD2023-0271
2023-12-01
FSD2023-0271
2023-12-01
FSD2023-0271
2023-12-01
FSD2023-0271
2023-12-01
6.
The Company submits that the court should make the "usual compulsory order" in relation to the
Company's costs of the Petition and the Strike Out Application and direct that they are to be paid
out of the assets of the Company as an expense of the liquidation.
7.
I should record that by email dated 14 November 2023 5:35PM Kobre & Kim on behalf of the Joint
Official Liquidators (the "JOLs") brought to the court's attention that the submissions filed by the
Company "were neither authorised by them nor provided to them in draft ahead of being filed" and
indicated that "The JOLs are available to provide concise submissions ... ". Sinclairs, who had filed
the Company's submissions, responded at 6:14PM and in effect maintained that the Company's
written submissions had been properly and timely filed. By email dated 16 November 2023
9: 16AM my PA communicated to counsel as follows:
"Justice Doyle is minded to give the JOLs 7 days to file any concise written submissions
(no more than 5 pages) with any concise written submissions in response (no more than 5
pages) to be filed within 7 days thereafter."
8.
In an email dated 23 November 2023 9:20AM Kobre & Kim stated "the JOLs wish to remain
neutral on the issue of whether a Bathampton order is appropriate", and "they do not consider they
can helpfully add to the points already taken by those interested."
9.
I should also add that on 23 November 2023 10:07AM Sinclairs filed, outwith the order made on
16 October 2023 and with no permission from the court, submissions on behalf of "Sinclairs in its
capacity as creditor and as attorneys of record for the Company in the petition proceedings." I have
nevertheless considered such submissions.
10.
Although I have found much of the conduct of the Company unimpressive ( as should be plain from
this and previous judgments) I have not been persuaded that there are in this case "exceptional and
special circumstances" or, if applicable by way of analogy as suggested by the Petitioners,
unreasonable conduct to a high degree outside the norm or that otherwise a Bathampton Order is
justified. Each case, of course, must be decided on its own facts and circumstances. I have not
been persuaded on the facts and circumstances of this case that an exceptional Bathampton Order
would be justified and I do not make such an order.
231201 In the matter of AuBit International-FSD 271 of 2023 (DDJ) - Judgment
FSD2023-0271
2023-12-01
FSD2023-0271
2023-12-01
FSD2023-0271
2023-12-01
FSD2023-0271
2023-12-01
FSD2023-0271
2023-12-01
FSD2023-0271
2023-12-01
FSD2023-0271
2023-12-01
FSD2023-0271
2023-12-01
11.
I therefore make an order that the Company's costs of the Petition (which, of course, includes the
Amended Petition) and the Strike-Out Application should be paid out of the assets of the Company
as an expense of the official liquidation.
12.
Counsel should within 5 days from the delivery of this judgment provide an agreed draft order
reflecting the determinations in this judgment.
The Honourable Justice David Doyle
Judge of the Grand Court
231201 In the matter of AuBit International - FSD 271 of 2023 (DDJ) - Judgment
FSD2023-0271
2023-12-01
FSD2023-0271
2023-12-01
FSD2023-0271
2023-12-01
FSD2023-0271
2023-12-01
FSD2023-0271
2023-12-01
FSD2023-0271
2023-12-01
FSD2023-0271
2023-12-01
FSD2023-0271
2023-12-01