British Virgin Islands: Fairfield Sentry Limited (In Liquidation) – Court Of Appeal Decision – 20 November 2017

Last Updated: 28 November 2017
Article by Guy Manning, Jeremy Lightfoot and Liam Faulkner

In a significant decision, the Court of Appeal of the Eastern Caribbean Supreme Court has rebuffed attempts by former shareholders in Fairfield Sentry to challenge the continuance of claims brought against them in the US. In doing so, the Court of Appeal clarified two important points of BVI law and practice which will be of widespread application: the meaning of persons aggrieved under section 273 of the Insolvency Act, 2003 and the availability of avoidance relief pursuant to section 249 of the Insolvency Act, 2003 outside of the BVI.


Actions against redeemed former shareholders in Fairfield Sentry (in liquidation) (the Appellants) to recover redemption monies paid out based on a mistaken calculation of the relevant net asset value (caused by the Madoff Ponzi scheme) were dismissed in the BVI following the Privy Council's widely reported decision in Fairfield Sentry Ltd (in liquidation) v Migani and others [2014] UK PC 9. Notwithstanding this adverse outcome, the liquidators of Fairfield Sentry (the Liquidators), with the sanction of the Court of Appeal, commenced further claims in the US which included the Appellants amongst a large number of redeemer defendants (the US Proceedings). Although these claims concerned a different set of redemptions, they were said to be based on the same factual matrix grounded in restitution for unjust enrichment, monies had and received, mistaken payment and constructive trust. The US Proceedings included claims for relief pursuant to section 249 of the Insolvency Act, 2003 (the Act) on the basis that the redemptions and/or payment of the redemption proceeds constituted unfair preferences and undervalue transactions and were therefore voidable.

The Appellants disagreed with the commencement of claims in the US which they saw as re-litigating issues already finally decided in the BVI. In addition to taking steps in the US Proceedings to have those claims dismissed, the Appellants sought to restrain the Liquidators by applying to the BVI Court on two bases.

First, the Appellants applied pursuant to section 273 of the Act on the basis that they were persons aggrieved by the Liquidators' decisions and actions in pursuing the US Proceedings. They asked the BVI Court to exercise its supervisory powers to restrain the Liquidators from pursuing the US Proceedings.

Secondly, the Appellants sought an anti-suit injunction on the basis that the US Proceedings were vexatious and/or oppressive. This application argued that (i) the issues arising in the US Proceedings had already been determined by the BVI Court and (ii) the claims in the US Proceedings were hopeless because the US Court was unable to grant relief under section 249 of the Act, those powers being for the BVI Court alone to exercise.

At first instance the Appellants were unsuccessful. By Judgment of 10 March 2016, Leon J dismissed the Appellants' applications. The Appellants appealed and the Court of Appeal has now given its judgment, handed down on 20 November 2017.

(i) Section 273: "persons aggrieved"

Section 273 of the Act provides:

A person aggrieved by an act, omission or decision of an office holder may apply to the Court and the Court may confirm, reverse or modify the act, omission or decision of the office holder.

The Court of Appeal considered the meaning of a person aggrieved, finding that the phrase must take its meaning and colour from the context of the particular statute in which the words appear. It concluded that a person cannot be considered as aggrieved unless the person has a sufficient interest in the outcome of the act, omission or decision of a liquidator. When considering the issue, the capacity in which the person is seeking relief must be identified. Merely because a person may have technical capacity, which would otherwise entitle it to standing, this 'alone would not suffice if the circumstances demonstrate that the relief is sought not in that capacity but in some other'.

On the facts, the Court of Appeal found that the Appellants had failed to show that they were persons aggrieved within the meaning of section 273. The Court was not persuaded that the Appellants, as alleged debtors, would be concerned or affected by the ultimate distribution of an estate in liquidation. It observed that the Appellants 'do not suggest that they have any interest in the assets of Sentry or the manner in which they are distributed or spent' and found that the Appellants were applying in their capacity as mere defendants in the US Proceedings. In that capacity, the Appellants were strangers to the liquidation and they had no legitimate interest in the relief sought. The Court also noted that the Appellants had an obvious alternative remedy (mounting applications in the US Proceedings) which was sufficient to prevent the Appellants from falling within an exception to the general approach or otherwise qualifying as persons aggrieved.

This conclusion denied the Appellants standing to apply under section 273 of the Act and disposed of this application. This left the Appellants falling back on their application for an anti-suit injunction.

(ii) Anti-suit injunction

The Court of Appeal proceeded to consider the Appellants' application for an anti-suit injunction on the basis that the US Proceedings were vexatious and/or oppressive. The Court noted that the decision at first instance was the exercise of a discretion and there were limited circumstances in which it is appropriate for an appellate court to interfere. In the circumstances, the Court was not satisfied that this threshold was met.

The Court found that the claims in the US Proceedings were not in respect of the same redemption payments as were previously before the BVI Courts. It took the view that the scope and effect of the Privy Council's decision was, in the circumstances, arguable and that this was an issue which as a matter of comity and common sense should be addressed in the US Proceedings. The Court decided that it would be wrong for the BVI Court to determine these claims summarily.

As to the argument on section 249 of the Act, this provides that 'where it is satisfied that a transaction entered into by a company is a voidable transaction the Court, on the application of the office holder' may make a variety of orders. The Appellants argued that this section could only be operated by the BVI Court; any claim purportedly brought pursuant to the same in the US Proceedings was therefore doomed to fail.

The Court of Appeal disagreed. The Court had regard to the importance of cross-border cooperation and was satisfied that section 249 was not subject to the exclusive jurisdiction of the BVI Court. Rather the use of the word "Court" in that section was a procedural provision which merely directs where a claim may be made. In the premises, the Court saw no good reason to prohibit the US Bankruptcy Court from rendering assistance to the BVI main insolvency proceedings and refused to make the Order sought.

The last word

It remains to be seen whether this decision will be the subject of a further appeal. As matters stand, the decision is a disappointing one for the Appellants in their long-running dispute with the Liquidators which shows no sign of coming to an end as we approach the nine year anniversary of Madoff's arrest on 11 December 2008.

As for the practical significance of the decision, the market is likely to pay close attention to the comments on the scope of sections 249 and 273 of the Act, particularly given the widespread application of these provisions.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions