Hickox and others v Brilla Capital Investment Master Fund SPC Limited and others

In a court-supervised sale of property in a liquidation, fairness does not require bidding to remain open indefinitely. A judge may set a clear cut-off and indicate that the highest bid by that time will ordinarily be accepted, subject to any good reason to depart from that course. Whether late communication of sale terms makes the process unfair depends on the circumstances, including what the parties knew, the time pressure, whether terms were expected to be equal, and whether an objection or extension was sought. Liquidators must seek the best price properly obtainable, but that duty is compatible with completing a sale produced by a marketing method objectively expected to yield a conclusive offer. A formal reasoned judgment should normally be given, but an order need not be set aside where the judge’s reasons were clear from the hearing and later explanation.

The joint liquidators of Leeward Isles Resorts Ltd sought authority to sell resort property by private treaty. Brilla offered US$8.25m, followed by competing offers from Hickox and Brilla. After directing that the bidders should compete on equal terms and indicating a time by which final bids would be considered, Jaques J authorised the sale to Hickox for US$10.3m under the 30 April Order. He confirmed that decision on 2 May.

The Court of Appeal of the Eastern Caribbean Supreme Court (Anguilla) allowed Brilla’s appeal and set aside the order, holding that the hearing was uncertain, that no reasonable judge could have acted as Jaques J did, and that the judge had given no reasons. Hickox appealed to the Privy Council. The central issues were whether the order was procedurally unfair, whether the liquidators were obliged to proceed with the sale, and whether the absence of a formal reasoned judgment invalidated the order.

Disposition

The appeal was allowed and the 30 April Order was restored. The Court of Appeal’s grounds for setting it aside could not be sustained.

1. Clear cut-off. Jaques J had made it clear before adjourning that he proposed to authorise acceptance of the highest bid made by the time the hearing resumed, unless a good reason was advanced for doing otherwise. His references to the highest offer and the need to conclude the matter before the banks closed gave adequate warning. It was therefore fair to accept Hickox’s US$10.3m bid.
2. Late communication of terms. The fact that the final terms were supplied only four minutes before the cut-off had considerable force at first sight. The issue was nevertheless fact-sensitive. No binding contract arose merely from a bid; the parties knew that terms were still being finalised and that time was pressing; Brilla had indicated that the terms were not a difficulty; and Brilla neither sought an extension nor specifically argued that it could not bid without further time. The process was not unfair.
3. Liquidators’ duty. The liquidators had to seek the best price they could properly obtain. That duty did not prevent the court from completing a sale once a marketing method objectively expected to produce a conclusive offer had produced one. The later US$10.4m and US$11m offers did not invalidate the order. The Board did not decide whether the bidding could properly have been reopened.
4. Confusion and reasons. Cases in which a hearing is so confused that the resulting order must be set aside will be rare. This was not such a case. A reasoned judgment should normally be given, including in an interlocutory dispute, but it would be a triumph of form over substance to set aside an order where the judge’s reasons were clear from the hearing and were also arguably explained on 2 May.

The Board added that a judge taking ultimate de facto control of a contested bidding process would normally be well advised to use either an open auction or sealed bids. Brilla was provisionally ordered to pay Hickox’s costs before the Board and in the Court of Appeal, subject to written submissions.

• Privy Council: Appeal allowed and the 30 April Order restored.
• Court of Appeal of the Eastern Caribbean Supreme Court (Anguilla): On 25 April 2013, allowed Brilla’s appeal and set aside the 30 April Order.
• High Court of Anguilla: Jaques J authorised the liquidators on 30 April 2012 to sell the property to Hickox for US$10.3m and confirmed that decision on 2 May 2012.