Greig William Alexander Mitchell & Anor v Sheikh Mohamed Bin Issa Al Jaber & Ors

On the liquidation of a BVI company, directors cease to have ordinary powers, functions and duties under the BVI Business Companies Act 2004, subject to duties required or permitted by the insolvency legislation. A limited fiduciary stewardship obligation may nevertheless continue where a director retains or controls company property and deals with it adversely to the company. A director who purports to transfer company assets after liquidation, without authority, acts in breach of that obligation; the disposition is void.

There is no general post-liquidation duty to co-operate, deliver up shares, disclose wrongdoing or provide a broad account of stewardship. Equitable compensation for an unauthorised misappropriation of trust property is ordinarily substitutive and is assessed by reference to the value of the property lost, without hypothetical counterfactuals that the property might otherwise have been lost.

The joint liquidators of MBI International & Partners Inc, a BVI company, brought claims against its former directors and associated companies concerning shares in JJW Hotels & Resorts Holding Inc. The principal allegations concerned pre-liquidation dispositions, the effect of share-transfer agreements, and a purported 2016 transfer of 891,761 shares to JJW Limited after the company had entered liquidation.

The court also considered alleged failures to deliver up or disclose information concerning the shares, knowing receipt, unlawful means conspiracy, equitable compensation, limitation, contributory negligence, indemnity and the rule in ex parte James.

1. Pre-liquidation claims. The liquidators failed to prove that the Company owned the wider group entities said to have been disposed of in 2009. The pre-liquidation claims and the claim for approximately US$3.6 billion were dismissed.
2. Directors’ duties after liquidation. Under section 175 of the BVI Insolvency Act 2003, the liquidator obtains custody and control of company assets and directors cease to have ordinary powers, functions and duties. The reasoning in Re Systems Building Services Group Ltd concerned a different English statutory framework and did not apply.
3. A limited fiduciary stewardship obligation may survive in relation to company property which a director retains or controls. It prohibits unauthorised adverse dealing and may render the director liable to account as a category 1 constructive trustee. It does not create a general duty to co-operate, deliver up shares, disclose wrongdoing or provide a broad account.
4. Share ownership. The March 2009 transfers unconditionally transferred legal and beneficial ownership of the 891,761 shares to the Company. The consideration was an unsecured debt. No vendor’s lien or equitable security survived the express transfer free from encumbrances.
5. Void disposition. The Sheikh signed the transfer forms after liquidation and caused registration of JJW Guernsey as owner on 8 March 2016. The transaction was unauthorised, dishonest and adverse to the Company. It was void under section 175(3) of the BVI Insolvency Act 2003. There was no sufficient evidence implicating Ms Al Jaber.
6. JJW Guernsey knowingly received the shares. The Sheikh’s knowledge was attributable to it, and it was liable to account as constructive trustee.
7. Compensation. The appropriate remedy was substitutive equitable compensation. The court rejected hypothetical arguments that the shares would not have been realised. On the available accounts, compensation of €67,123,403.36 was awarded against the Sheikh and JJW Guernsey.
8. The general conspiracy claim failed. The void disposition was already established as a breach of duty and knowing receipt, but the court found it unnecessary to characterise those facts separately as conspiracy. Claims against Ms Al Jaber and JJW UK failed.

• High Court (Insolvency and Companies List) [2023] EWHC 364 (Ch): claim succeeded in part. The pre-liquidation, delivery-up, disclosure and most conspiracy claims were dismissed. The 2016 disposition was declared void, and equitable compensation was awarded against the Sheikh and JJW Guernsey.
• The judgment records earlier procedural decisions, including [2021] EWHC 912 (Ch) , [2021] EWCA Civ 1190 and refusal of permission to appeal the PTR decision in [2022] EWCA Civ 1454.