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

The High Court (Chancery, Insolvency & Companies List) considered extensive claims by the joint liquidators of a BVI company (MBI International & Partners Inc) arising from transactions between 2008 and 2016. The court resolved (i) that under BVI law (IA 2003 s.175) directors generally cease to have powers on liquidation but may continue to hold a limited fiduciary obligation not to intermeddle with company property in their possession or control; (ii) that whether a purported post‑liquidation disposition is void depends on the director's authority under s.175 IA 2003 and the facts; and (iii) equitable remedies for misapplied company assets are governed by established principles (Target Holdings, AIB v Redler and related authorities) with substitutive relief generally available where trust/company assets have been misapplied.

Applying those principles the court:

• dismissed the pre‑liquidation/"2009 disposition" claims because the contemporaneous evidence did not establish that the Company had been stripped of the asserted subsidiaries or assets;
• found that the March 2009 transfer documents, properly construed, had transferred legal and beneficial title in the 891,761 JJW Inc shares to the Company;
• found on the balance of probabilities that the Sheikh caused dated/undated share transfer instruments to be completed and registration to occur in March 2016 (the court regarded this as a "void disposition" under s.175 IA 2003);
• held that JJW Guernsey received those shares and was liable for knowing receipt and must account as a constructive trustee; and
• awarded equitable compensation in respect of the 891,761 shares (calculated from JJW Inc's 2016 accounts) against the Sheikh and JJW Guernsey but dismissed most other claims, including those against Ms Al Jaber.

The applicants were the joint liquidators of MBI International & Partners Inc (a BVI company). They sought remedies in England pursuant to the Model Law/Cross‑Border Insolvency Regulations and a Letter of Request from the BVI court for a complex series of claims arising out of transactions between c.2008 and 2016. The principal allegations were that (i) pre‑liquidation disposals had denuded the Company of substantial assets; (ii) a series of March 2009 share transfer agreements and related documents gave rise to an 11.2% interest in JJW Inc and a contested position as to payments due; (iii) after the Company entered liquidation in October 2011 the Sheikh and others caused a post‑liquidation "re‑transfer" or other disposition of 891,761 JJW Inc shares (registered in March 2016) in breach of fiduciary duty; and (iv) knowing receipt and unlawful means conspiracy claims arose against a number of group companies.

The court framed the issues very narrowly around the authenticity and legal effect of key documents, the date on which instruments of transfer were executed, the position of beneficial ownership and the legal consequences of any post‑liquidation dealing. The trial required findings on (among other matters) whether the Company had owned the subsidiary and related assets disclosed in its draft accounts; whether the March 2009 agreements unconditionally transferred beneficial and legal title; whether the share transfer instruments underlying the 2016 registration were executed in 2010 or 2016; and whether, if executed after liquidation, they were void under s.175 of the BVI Insolvency Act 2003.

The court analysed BVI law (with English authorities applied where appropriate) and concluded that:

• the pre‑liquidation "2009 disposition" case failed because contemporaneous evidence did not show the Company had been the absolute owner of the businesses asserted in its internal schedules;
• the March 2009 transfers, on proper construction and against the commercial background of the planned IPO, effected an unconditional transfer of legal and beneficial title to the Company; the later Demand Letters and a June 2010 letter did not displace that conclusion;
• the Sheikh's evidence was unreliable in key respects and the court accepted the liquidators' primary factual case that the undated share transfer forms were not genuinely signed in July 2010 but were completed and registered in March 2016, after the Company went into liquidation; those acts were void under s.175 IA 2003 because the liquidator had custody and control of the Company's assets;
• as a result, JJW Guernsey, which received registered title in March 2016, was a knowing recipient and liable to account as a constructive trustee; the Sheikh was liable for breach of his limited post‑liquidation fiduciary stewardship in respect of the misapplied shares; and
• given the practical position (value of JJW Inc shown in the 2016 accounts and subsequent restructuring that dissipated value), equitable compensation was awarded (on a substitutive basis) in respect of the 891,761 shares, calculated from the 2016 JJW Inc consolidated accounts.

The judgment emphasises the narrowness of post‑liquidation fiduciary obligations in the BVI (directors become largely functus officio under s.175 IA 2003, but may not intermeddle with company assets they improperly retain), the importance of contemporaneous documentary evidence and the limits of inferences where material documents or witnesses are absent.

The claim was allowed in part. The court dismissed the pre‑liquidation "2009 disposition" claims and multiple other pleaded causes of action, but held that the purported re‑registration of 891,761 JJW Inc shares in March 2016 was void under s.175 of the BVI Insolvency Act 2003 and that JJW Guernsey was a constructive trustee/knowing recipient of those shares. The Sheikh was held liable for causing the void disposition; equitable compensation was awarded against the Sheikh and JJW Guernsey (see judgment for valuation and rationale). The court rejected claims against Ms Al Jaber and several other pleaded heads of relief.