In the Matter of Tait International Limited

¶ IN THE GRAND COURT OF THE CAYMAN ISLANDS
HOLDEN AT GEORGE TOWN, GRAND CAYMAN
CAUSE NO. 217 OF 2001

¶ IN THE MATTER OF THE COMPANIES LAW (2001 Second Revision)

¶ AND IN THE MATTER OF TAIT INTERNATIONAL LIMITED
(In Liquidation)

¶ Proceedings in Chambers had and taken before
The HONOURABLE MR. JUSTICE GRAHAM on the 18th
day of April 2002, at George Town, Grand Cayman.

¶ APPEARANCES:

¶ Mr. A. Foster & Mr. S. Andrew of Walkers for the Liquidators

¶ Mr. N. Clifford and Mr. J. Walton of Hunter & Hunter for the Petitioner
CHAMBERS COMMENCED ON THURSDAY,
APRIL 18th, 2002 AT 8:51 A.M.

¶ THE COURT: Mrs. Myren, the case is called cause number 217/01 in the matter of the Companies Law, and in the matter of Tait International Limited.

¶ The representation is Mr. Andrew for the liquidators. Present is the senior partner of Walkers in the litigation department, and similarly Mr. Walton and his senior partner, Mr. Clifford, is also present.

¶ Gentlemen, I have you here today -- and I spoke to Mr. Foster on the telephone -- I asked him to communicate what I said to Mr. Clifford. My concern is that the ruling that I made looks as if it is per incuriam. I am not going to go into any kind of recrimination today, but I will make one comment which is recriminatory. I would have expected that when the Kellock judgment was published -- particularly as I was sick at the time and off work -- that would it have been referred to me after the events so that I could look at any order that I had made. Now I make that comment, and it is a considered
comment. I would have expected that, because if you look at what the learned acting judge has said in his judgment -- which I may say I only read three days ago, as it was not drawn to my attention because I was off work -- but in any event, it is not for me to do that, it is for the parties to bring matters before me. If I had been at work and I had read that judgment, I would have recalled the parties instantly. As it is now drawn to my attention, I now do so. I will tell you the order I propose to make so that any representations can be made to me as to why I shouldn't make it.

¶ The order I propose to make is to revoke the order that I made, and to order that the status quo ante be restored, and that the matter be listed as soon as possible before the learned acting judge for whatever order he sees fit to make in his discretion.

¶ Now, does anybody wish to argue against that proposed order? Mr. Andrew.

¶ MR. ANDREW: My Lord, can I tell Your Lordship what was done by the official liquidators upon receipt of Mr. Justice Kellock's judgment? Your Lordship knows that
it was received by the parties after we had been in front of Your Lordship.

¶ THE COURT: Yes, of course.

¶ MR. ANDREW: The decision that was taken was to deal with Mr. Justice Kellock's judgment by way of a full report to the court responding to the point that Mr. Justice Kellock had raised.

¶ THE COURT: Yes.

¶ MR. ANDREW: That report is in draft form. It's before me now, My Lord. I've got it with me.

¶ THE COURT: It is in the form which it can be put before the bench, even though it has the caveat "this is a draft".

¶ MR. ANDREW: It is a draft, My Lord. What I would propose to do, because it is quite a lengthy report, is to finish it and have it before Your Lordship later -- or certainly have it before the court later today.

¶ THE COURT: I think I would prefer to have it before Judge Kellock. When do you think it can be ready?

¶ MR. ANDREW: My Lord, it can be finalised today.
THE COURT: That's absolutely fine.

¶ MR. ANDREW: Yes.

¶ THE COURT: Yes. Well that's a happy confluence of events, isn't it?

¶ MR. ANDREW: Well, My Lord --

¶ THE COURT: I don't want to get into an investigation here. That is not my role at all. It is simply -- I am extremely unhappy about the order that I have made, and feel that it shouldn't be looked at, that I should revoke it, and permit the judge who expressed strictures to deal with it, as he happens to be here.

¶ MR. CLIFFORD: My Lord, could I make an observation about that?

¶ THE COURT: Yes.

¶ MR. CLIFFORD: Of course we must do whatever Your Lordship decides is best in the final analysis, but I'm not sure that, with great respect, referring it back to an acting judge is the right matter. I have some concerns in these more complex ongoing liquidation matters. We are not just going to have one or two hearings, it's going to go on for a year or two, and there is going to be a
lot of toing and froing on different aspects.

¶ There should be some --

¶ THE COURT: I understand the general principle behind your submission, but this is a special case. I am not saying in any sense a precedent, it is simply the best way I can think of, as I say having discussed it with my brethren, as to how this matter can properly be dealt with.

¶ MR. CLIFFORD: Your Lordship probably is aware that it only came in front of Mr. Justice Kellock -- and we were very grateful that he was here and able to take it, because Your Lordship was ill --

¶ THE COURT: Well I understand that.

¶ MR. CLIFFORD: -- and the matter had been before both, as I understand from Mr. Walton, Mr. Justice Sanderson and yourself on different occasions, and you were the two judges who were really seized of the matter --

¶ THE COURT: Well, that's not quite right.

¶ MR. CLIFFORD: -- and really what happened, as I understand it, when it came in front of Mr. Justice Kellock, of course he knew nothing of the background to the matter at
all --

¶ THE COURT: Of course he knows a great deal about it now, because his judgment indicates that he does --

¶ MR. CLIFFORD: Well yes but I think --

¶ THE COURT: You can argue with him about that.

¶ MR. CLIFFORD: I'm only trying to make a suggestion as to case management.

¶ THE COURT: Well I understand that.

¶ MR. CLIFFORD: But I don't know what's in the draft report. I haven't seen the liquidators' report.

¶ THE COURT: Nor have I.

¶ MR. CLIFFORD: I'm sure they will be dealing with a number of points.

¶ THE COURT: Well I dare say they will.

¶ MR. CLIFFORD: I also just say this, My Lord, the point Mr. Walton makes -- and he can amplify if necessary -- I think it's fair to say that the judgment, when it came out after the hearing of Your Lordship, came as a surprise in the sense that maybe as a result of further thought on the part of Mr. Justice Kellock, it went a lot further than any point
that had come out during the hearing. So that's why --

¶ THE COURT: A fortiori is the correct course to refer it back to him.

¶ MR. CLIFFORD: My Lord --

¶ THE COURT: A fortiori.

¶ MR. CLIFFORD: If Your Lordship says so. I have some problems about case management in these longer cases.

¶ THE COURT: Well I understand that. No one is more keen on case management than I am --

¶ MR. CLIFFORD: I know.

¶ THE COURT: -- but sometimes there are exceptions to the general rule.

¶ MR. CLIFFORD: I just think it's very difficult for a visiting judge to suddenly be thrown into an ongoing complex liquidation matter.

¶ THE COURT: It is, but he has vast experience of company litigation as a former leading silk in Canada, and partner in one of the biggest firms in Toronto, so he's not exactly a baby in these matters --

¶ MR. CLIFFORD: I'm sure not.
THE COURT: -- as indeed I expect the judgment will make it only too plain, but I want to say no more about that.

¶ MR. CLIFFORD: That's all I wanted to say.

¶ THE COURT: It's a very proper comment, Mr. Clifford, but in the circumstances -- I am going to hear from Mr. Walton of course -- but at the moment I am still adhering to what I had decided to do on a preliminary basis. Mr. Walton, do you want to make any comment?

¶ MR. WALTON: My Lord, I would simply have said along similar lines to that said by Mr. Clifford, which is simply that this matter was a matter dealt with in the interlocutory stages by Your Lordship. It was the trial. The petition itself was heard by Mr. Justice Sanderson, and indeed, he heard a contested hearing for the appointment of --

¶ COURT REPORTER: Sorry, I'm not hearing you.

¶ MR. WALTON: Mr. Justice Sanderson had heard a contested inter-parties hearing earlier in the year. He was the judge who was particularly familiar with all the facts of the case.
Mr. Justice Kellock, with respect, made a number of observations in his judgment which was simply already, by that stage, overtaken by events, and events which would have been within the knowledge of certainly Mr. Justice Sanderson, and almost certainly Your Lordship, if Your Lordship had heard the matter.

¶ So in that respect, it makes a great deal of sense for the question of the propriety of the fees for the provisional liquidators to be determined by the judge that appointed them -- both on the ex parte basis, and after an inter-parties hearing. Mr. Justice Sanderson is the appropriate judge to hear that application in my submission.

¶ THE COURT: Yes.

¶ MR. WALTON: My Lord, I would also add that in relation to the liquidators' approach to the judgment of Mr. Justice Kellock, I did discuss it with Mr. Andrew briefly after the judgment was received, and I agreed that the approach taken by the official liquidators was the proper one. One cannot appeal against the judgment by itself, the order being for an adjournment was also not appealable -- there
being a point in the appeal, the appropriate matter -- the appropriate way of dealing with the matter, My Lord, I submit would be, and remains, for it to be dealt with by way of a report to the court. The observations made by Mr. Justice Kellock are strictly dicta, and they can be answered by a report. It does not require any order that was subsequently made to be revoked, in my submission.

¶ THE COURT: Yes well thank you very much indeed.

¶ MR. ANDREW: My Lord, may I add to the comments of Mr. Clifford and Mr. Walton, a concern which comes really from my client, the official liquidators, and that is to add to something Mr. Clifford said -- the practical difficulty which they have faced in trying to get the fee application listed at all, and in particular, having it listed before the judge whom they considered to be the liquidation judge, which was Mr. Justice Sanderson, who had heard the winding up petition itself -- although it was decided by consent -- My Lord, but on each case when they have tried to list the matter, they have tried to list it before
in the first place Mr. Justice Sanderson, and in the second place before another judge of the Grand Court who was available, and it is for that reason that Your Lordship had this matter before him last year --

¶ THE COURT: Yes.

¶ MR. ANDREW: -- but having said that, once it was before Your Lordship, and Your Lordship was seized of the matter, and once Your Lordship had finally decided it, in my respectful submission, it doesn't then follow that Your Lordship's decision is affected by the comments of Mr. Justice Kellock --

¶ THE COURT: Not ex-hypothesi, no.

¶ MR. ANDREW: -- made upon an application or made upon an occasion when he simply adjourned the matter. So, My Lord, once one accepts the principle that the case is before a certain judge of the Grand Court, and that judge has exercised his discretion in what we respectfully say is a proper manner, upon the proper materials, having taken the correct approach, having applied the law correctly, it would, in my respectful submission, be wrong, in fact, to take into account the views of
another Grand Court judge on an occasion when the matter wasn't fully dealt with, but the matter was simply dealt with by way of an adjournment.

¶ THE COURT: Thank you.

¶ MR. ANDREW: If I may add to that, the point that the fees, having been authorised, have now been paid. So the official liquidators will have been paid their fees, and the same in respect of the Walkers' element of that, and so one is trying to undo something that has already been executed.

¶ THE COURT: Well thank you very much indeed. The date of my order was the -- is there something else you wish to add?

¶ MR. FOSTER: Yes, My Lord, if I may.

¶ THE COURT: Of course.

¶ MR. FOSTER: I don't wish to prolong matters --

¶ THE COURT: No, not at all.

¶ MR. FOSTER: -- but could I say firstly, My Lord, that following Your Lordship's kind explanation on the telephone of why Your Lordship wanted us to appear before you today, I did discuss this in great depth with
Mr. Seamus, Mr. Seamus Andrew.

¶ THE COURT: Yes. I hope it didn't spoil his holiday.

¶ MR. FOSTER: I was entirely satisfied that nothing improper had been done on this occasion.

¶ THE COURT: I was very careful. I have been very careful this morning to avoid making any comment.

¶ MR. FOSTER: I appreciate that, My Lord.

¶ THE COURT: The only comment that I have made, and I repeat, I would have expected that judgment to be referred to me --

¶ MR. FOSTER: I appreciate that, My Lord. I didn't want to go into that --

¶ THE COURT: -- but beyond that, I am not going to make any comment.

¶ MR. FOSTER: However, My Lord, I would wish, if I may, to endorse wholly what Mr. Clifford has said. This is a matter that Your Lordship originally dealt with on the 1st of November, and it was the understanding -- and I understand that Your Lordship confirmed that understanding -- that the matter had been adjourned by Your Lordship simply to ascertain
whether there was any share holder objection to the costs. It's unfortunate that the matter was relisted in front of -- on the adjourned hearing -- in front of Mr. Justice Kellock while Your Lordship was unfortunately ill. Mr. Justice Kellock adjourned the application on the understanding that it was going to come back to Your Lordship, which it duly did. And in my respectful submission, My Lord, from a case management point of view, it must be right that Your Lordship dealt with the matter on the 30th of January, and that's been dealt with, and it is not appropriate, in my submission, to send it back now to Mr. Justice Kellock, given that the matter has already been dealt with by Your Lordship, who is the judge seized with the matter. The matter is now academic in that sense, and I respectfully submit that it is not appropriate for Your Lordship to revoke or purport to revoke an order that Your Lordship has made in circumstances in which it was made entirely properly.

¶ The liquidators, as Your Lordship has heard, are preparing a report dealing fully with the issue that -- or issues raised by
Mr. Justice Kellock in his judgment, which came as a great surprise to all concerned, and I would urge Your Lordship now to let matters lie as they stand, and let your order stand on the basis that Your Lordship is the appropriate judge to deal with this matter and that, as my learned friend Mr. Andrew has said, comments made by Mr. Kellock in a matter that he himself adjourned should not impact on Your Lordship's decision, and that I would urge Your Lordship to allow matters to rest now as they stand.

¶ THE COURT: May I have a copy of the order that I made, please?

¶ MR. FOSTER: That you made.

¶ THE COURT: The order that I made. The final order that I made.

¶ MR. FOSTER: On the 24th of -- on the 30th of January?

¶ THE COURT: If I can just have a quick look. Thank you Mr. Clifford. I will hand it straight back to you. It just seems to be absent from the file. Thank you very much.

¶ Well this is a difficult matter. There is force in what is said to me by both parties. The fact of the matter is this matter had been
before another judge who appears to have made a number of comments -- or so he tells me -- which have been incorporated in an order he made. I appreciate he adjourned the matter, but he adjourned it with a view to certain concerns that he adumbrated and gave full reasons for later to be taken into account. Those are not before me. The question I have to ask myself is would I have made the order inevitably that I made had I seen that judgment, and the answer to that is "no". Accordingly, I made that decision per incuriam, and I revoke it.

¶ So the order dated the 30th of January of 2002 is revoked, and the status quo ante is to be restored.

¶ The costs of this matter are reserved.

¶ I direct that the matter be listed before the learned acting judge Kellock ASAP. Thank you all very much. Mr. Clifford I will hand you back the order.

¶ MR. CLIFFORD: Thank you.

¶ THE COURT: Mrs. Myren, would you prepare a perfected copy of that from what just happened and circulate it to the parties --
myself for approval -- and then to the learned acting judge. Thank you very much indeed.

¶ (PROCEEDINGS ADJOURNED AT 9:09 A.M.)
REPORTER'S CERTIFICATE

¶ Certified correct to the best of my skill and ability,

¶ dated the 19th day of April 2002.

¶ Karen Ann Myren