BRITISH VIRGIN ISLANDS
EASTERN CARIBBEAN SUPREME COURT
IN THE HIGH COURT OF JUSTICE
CLAIM NO: BVIHCV 245/2009
IN THE MATTER OF THE INSOLVENCY ACT 2003
IN THE MATTER OF THE TAMARIND CLUB II LIMITED
WESLEY BORK JR.
THE TAMARIND CLUB II LIMITED
Appearances: Mr Robert Foote and Ms Clare-Louise Whiley for Wesley Bork Jr, Ms Michelle Worrel for Ms Cynthia
Clayton and Mrs Tana’ania Small-Davis for Mr Ashbell Lettsome and Kathy Wright
[2009: 23 November; 1 December]
(Statutory demand – demand not challenged within 14 day limit – company unrepresented –
members appearing to dispute debt – whether sums advanced by applicant investments or loans – whether
 Bannister J [ag]: This is an application by Wesley Bork, Jr (‘Mr Bork’) for the appointment of a
liquidator over a company called The Tamarind Club II Limited (‘the company’). Mr Bork claims to
be a creditor of the company in the sum of US$643,175. On 14 May 2009 Mr Bork served a
statutory demand on the company at its registered office. The company, which has had no
directors since 8 May 2009, did not challenge that demand. The originating application was issued
on 7 July 2009. It first came on on 22 September 2009 and has been adjourned on at least two
occasions with a view to the parties compromising their differences. Regrettably, that has proved
impossible, so that it has become necessary for the Court to determine the application.
 Apart from Mr Bork, who appeared by Mr Robert Foote, I heard submissions from Ms Michelle
Worrell, who appeared for Cynthia Clayton (‘Ms Clayton’) and from Ms Tana’ania Small-Davis, who 2
appeared for Mr Ashbel Lettsome (‘Mr Lettsome’) and his wife, Kathy Wright (‘Ms Wright’). Ms
Wright is Ms Clayton’s sister. On 18 September 2009 Ms Clayton issued an application asking for
leave to be heard as a member of the company; for a stay of Mr Bork’s application on the basis of
an arbitration clause contained in a partnership agreement which I shall mention in a moment; and,
in the alternative, for Mr Bork’s application to be dismissed. This application is before me today.
 The company was incorporated on 12 May 2004 with an issued share capital of 5,000 shares. Of
these, Mr Lettsome is registered as the holder of 3,400, Mr Bork and Ms Clayton as the holders of
500 each and Ms Wright as the holder of 200. Two other individuals, who have played no part in
these proceedings, hold the remaining 400. The only director of the company has been Mr
Lettsome. He was appointed on incorporation and resigned, as I have indicated, on 8 May 2009.
 On 3 December 2004 the company took a transfer from one Dawn Rosenberg (‘Ms Rosenberg’) of
the land and buildings comprised in parcel 3239B in the Long Look Registration Section. This is
the land upon which the hotel and restaurant business known as The Tamarind Club is situated.
The transfer document states the consideration for the transfer as US$900,000. Of that sum,
US$500,000 was provided by way of a commercial mortgage loan from First Caribbean
International Bank (Cayman) Limited (‘the bank’) granted pursuant to a facility letter dated 18
November 2004, under which the bank agreed to advance $550,000 to the company. US$500,000
was to be applied towards the purchase of the land and the balance was for working capital. The
land was charged to the bank as security for the loan, which was also secured by guarantees given
by each of the members of the company. That given by Mr Bork was limited to US$550,000. The
others were unlimited.
 The facts set out in paragraphs  and  above are the only facts known with any sort of certainty
about the company and its dealings.
 In order to examine Mr Bork’s claim to be a creditor of the company it is necessary to go back to
events that took place from about 2002 onwards.
 Prior to 2002 Ms Clayton had worked in the United States for a company controlled or owned by Mr
Bork. It seems to have been agreed between them that they should undertake a business venture
in the British Virgin Islands. Ms Clayton says that she found that the Tamarind Club was for sale
and in January 2003 she began negotiations with Ms Rosenberg for its purchase on behalf of 3
herself and Mr Bork. Mr Bork (in an affidavit in reply to that of Ms Clayton) says that it was agreed
that he should provide ‘loan finance’ for the acquisition; in the following sentence he says that he
agreed to Ms Clayton’s proposition that they would be partners and fund the acquisition jointly.
Although these two ways of putting the matter are not mutually exclusive, they would ordinarily be
taken to be describing two entirely different methods of proceeding, one involving Mr Bork as
creditor, the other as involving him as a furnisher, together with Ms Clayton, of partnership capital.
 Ms Clayton says that some time after the negotiations with Ms Rosenberg, she learned that as
Non-Belongers she and Mr Bork would need a licence to acquire the land on which the Tamarind
Club stood. The upshot was that Mr Lettsome, who is a Belonger, offered in return for a payment
of US$1,000 per month to set up a company with himself as majority shareholder and sole director
and to acquire the Trade Licence in his name. Ms Clayton says that she discussed this scheme
with Mr Bork and that it was agreed that the company would be incorporated on this basis.
 It is not now in dispute (although surprisingly Mr Bork makes no mention of the fact in his affidavit
in support of the originating application) that on 2 June 2003 Ms Clayton and Mr Bork entered into
a form of written partnership agreement. That document gives as the object of the partnership the
purchase and conduct of the Tamarind Club. The partnership is expressed to be terminable at will.
The agreement provides that the capital should be provided by the partners. The initial capital was
to be US$20,000, with additional deposits to be made into a capital savings or checking account as
determined by the partners. Ms Clayton was authorised to seek on behalf of the partnership any
necessary funding from local financial institutions (emphasis added). The final sentence of clause
7 of the partnership agreement provided as follows:
‘Additionally, Ms Clayton shall be responsible for the successful
incorporation to [sic] the business, The Tamarind II LTD, as provided by
 Finally, I must mention that the partnership agreement provided that any controversy or claim
arising out of or relating to the agreement, or breach of the agreement,
‘should be settled by arbitration in accordance with the rules, then
obtaining of the Royal Magistrates Supreme Court, in the British Virgin 4
Island [sic], and judgment upon award rendered may be entered in any
court having jurisdictions [sic] thereof.’
 Ms Clayton insists in her evidence that it was agreed between herself and Mr Bork that (put very
shortly) the partnership agreement would govern ‘the conduct of the business of the company’.
 From about mid July 2003 onwards Ms Clayton says that Mr Bork paid some US$200,000 into her
private savings account with the bank and says that it was agreed that this would represent Mr
Bork’s half share of the expenses to be incurred in preparation for the takeover of the Tamarind
Club. She produces evidence of some of these payments. Ms Clayton also says that she herself
wired some US$130,000 into the same account, but produces no bank documents in evidence of
this. She says that it was agreed that this money should represent her ‘half’ of the expenses.
 On 5 January 2004 Ms Clayton, purporting to be a director of a company called Marisol System
Limited (‘Marisol’) signed an agreement with Ms Rosenberg for the purchase of the land and
business of the Tamarind Club for US$1 million. Marisol was, she says, a company belonging to
Mr Lettsome. The contract refers to a deposit of US$100,000. Ms Clayton says that it was agreed
between her and Mr Bork that this would be provided equally between them. There are no
transactional documents to evidence how the deposit was in fact met.
 On 12 May 2004 the company was incorporated. The membership and shareholdings, which I
have already set out above, were, according to Ms Clayton, as recommended to her by Maples &
 Some time before 30 August 2004 Mr Bork paid a further US$400,000 into Ms Clayton’s savings
account. This money she paid to Maples & Calder on 30 August 2004 towards the purchase price
of the Tamarind Club. As I have said, the land on which the Tamarind Club stands was transferred
to the company on 3 December 2004.
 It seems likely that the sum of US$400,000 referred to above was used, together with US$500,000
of the Bank mortgage loan, to fund the payment of the US$900,000 balance of the purchase price.
 I should mention some other documents. In an e-mail sent on 13 July 2005 to Ms Clayton by a Mr
Mark Lownds, who appears to have been an accountant acting for Mr Bork and to have been
preparing tax returns for him, Mr Lownds asked Ms Clayton to clarify some material which she 5
appears to have sent him a few days earlier. He tells her that he has forwarded the information to
some other person, whose role in these matters is unexplained ‘for an explanation or clarification of
the business arrangement as it relates to the balance sheet and income statement’. He says that
he needs further clarification as to the amount [Mr Bork] paid for his shares. In reply, Ms Clayton
told Mr Lownds that ‘[Mr Bork] has invested 650K for the purchase of the property and business’.
This does not appear consistent with an understanding that Mr Bork’s contribution had been by
way of loan.
 Mr Bork exhibits to his second affidavit copies of certain financial statements purporting to describe
the position of the company as at 31 December 2004 and prepared by Deloitte & Touche
(‘Deloitte’) in October 2005. In a letter dated 7 October 2005, Deloitte accepted no responsibility
for these statements, saying that they had been put together on the basis of information supplied
‘by management’. The balance sheet as so compiled shows ‘Directors’ loans’ amounting to
US$787,964. The loans are described as interest free. The copy balance sheet in evidence is
signed by Ms Clayton purportedly by way of board approval. Ms Clayton was not a member of the
board. Nor was Mr Bork. So that if the US$787,964 was intended to represent indebtedness of
the company to Ms Clayton and Mr Bork, it was wrong to describe it as due to ‘Directors’.
 On 10 February 2006, Ms Clayton sent a fax to Mr Lownds, which included two pages of figures
apparently setting out some of the payments made by Ms Clayton and Mr Bork during 2004 in
respect of ‘The Tamarind Club’ (sic). Someone, who may or may not have been Mr Lownds, has
made a number of manuscript annotations and calculations on Ms Clayton’s fax. Although I cannot
and do not make any findings based upon these manuscript notes, they appear to be attempts to
adjust the contributions of Ms Clayton and Mr Bork, taking into account sums to be attributed (on
various bases) to capital and suggesting that ‘Director loans’ carry interest at 9%. The content of
some of the annotations suggests that they may have been made with a view to Mr Bork being
bought out by Ms Clayton. Ms Clayton says in her affidavit that such discussions did take place,
although she says that that happened in or around July 2008.
 Finally, each of Ms Clayton and Mr Bork signed a schedule dated 20 October 2006, headed ‘The
Tamarind Club II Limited’. It shows a ‘Balance due to ‘Wes Bork’ as at 31 December 2004 of
US$643,474, and to Ms Clayton at the same date of US$144,490. The aggregate figure is
US$787,964 – the same figure which appears in the balance sheet signed by Ms Clayton as 6
representing directors’ loans. Ms Clayton says that that represents their respective investments
into the partnership. Mr Bork says that the figure of US$643,474 represents a loan made by him to
 As I have said, the company has had no de jure directors since 8 May 2009, although it may be
that Ms Clayton, who appears to have managed the Tamarind Club, has been and perhaps
remains a de facto director. Ms Clayton certainly has locus as a member to appear on the
application and the same applies to Mr Lettsome and Ms Wright. I have listened to submissions
from both their counsel in opposition to Mr Bork’s application. Were I to accept that Mr Bork was
an undoubted creditor of the company and that the company was insolvent, it would, of course, be
most unlikely that I would allow the views of members to override his wish that liquidators be
appointed, but in any event I decided that I should hear them on the question whether the debt was
to be considered as disputed.
Analysis and conclusion
 It is obvious from the bare recital of the main parts of the evidence which I have attempted to
provide that the situation has been confused from the outset. It seems to me, however, that the
simple question which I have to resolve on this application is whether I am satisfied that there can
be no substantial dispute that the company owes Mr Bork US$643,175, or, if not that amount, an
amount in excess of the statutory minimum of US$2,000.
 In his first affidavit, Mr Bork swore simply that the debt arose pursuant to a loan agreement
between himself and the company. Mr Lettsome, who has been the only de jure director of the
company since its incorporation, says that no such loan agreement was ever entered into. There is
certainly no evidence as to how any such loan agreement was entered into. What seems to have
happened was that Mr Bork put Ms Clayton in funds to acquire the land, in the contemplation that
the acquisition would be made by a company to be incorporated some time after the partnership
agreement of 2 June 2003 had been entered into. In his second affidavit Mr Bork says that it was
Ms Clayton who liaised with Deloitte in the production of unaudited financial statements which I
have mentioned above and that the references they contain to directors loans accord with his firm
belief at the time that he was making payments by way of loan to the company. Mr Bork cannot, of 7
course, be expected to know that payments made before the company was incorporated on 12
July 2004 cannot, as a matter of law, conceivably have been made to the company, whether by
way of loan or otherwise. Subsequent payments were not, as a matter of payment, made to the
company, either. They were made to Ms Clayton.
 In his second affidavit, Mr Bork relies upon a draft of a letter which was dated 30 November 2004
and was intended to be sent to Mr Bork by Ms Clayton on her letterhead. Mr Bork relies upon this
draft as supporting his contention that he is a creditor of the company. Having stated, correctly,
that the draft says that the funds for the acquisition of the land had been provided ‘by both of us’
and that his ‘contribution’ had been roughly US$600,000, he goes on to say that the letter
acknowledges that ‘a further’ loan of US$550,000 was required from the Bank. He thus suggests
that the draft confirms that his contributions to date had been by way of loan. What the draft letter
actually says is not that ‘a further loan’ was required, but that ‘an additional $550,000 is required’
and that it was to be provided by way of a loan from the Bank, which is something quite different.
 It is not known who prepared this draft, but it contains a paragraph in the following terms:
‘The agreement between us is that you will bear the risk in relation to 50%
of the cash of the Acquisition. This sum is comprised of cash sums you
will have advanced (to the extent not reduced by myself) and any liability
under the Limited Guarantee (the “Exposure’).’
 It seems to me that the draft letter (for what it is worth), so far from corroborating Mr Bork’s
contention that his contribution was by way of loan to the company, is more consistent with the
view that it was by way of introduction of joint venture capital.
 I do not overlook the balance sheet and schedule to which I have referred earlier. But these
documents, prepared for what purpose is not explained, were prepared long after the money was
paid over by Mr Bork and Ms Clayton says that the schedule of 20 October 2006 was intended to
state the amounts of the investments of herself and Mr Bork in the partnership. Were this issue to
go to trial, Ms Clayton would clearly have questions to answer about her signature of these
documents. The critical question, however, is how and under what circumstances the company
bound itself to repay to Mr Bork the money he had sent to Ms Clayton during 2004 – some of it
before the company was even incorporated. There is no evidence that the company ever did that.8
 I have not overlooked, either, the fact that the facility letter of 18 November 2004 provides for
‘postponement of claim from Wesley Bork, Jr, in an amount that is unlimited’. Mr Foote relied
heavily on this wording as showing that Mr Bork must have been a creditor of the company,
otherwise the Bank would not have required the inclusion of the provision. I do not think that
follows. It is to be inferred that the Bank would have inquired how the balance of the purchase
price was to be funded and would have been told, no doubt, that it was being provided by Mr Bork.
The Bank would have wished to protect itself against any claim by Mr Bork to priority and will have
insisted on this term accordingly. That is insufficient to establish that as between Mr Bork and the
company there existed the legal relationship of creditor and debtor.
 It may be that Mr Bork could establish that he is entitled to some restitutionary claim against the
company in respect of the contributions made by him; or that the company holds the equity in the
Tamarind Club on a resulting trust for himself and Ms Clayton in the proportions of their cash
contributions to its acquisition. But neither of these entitlements would sound in debt – let alone a
debt that was payable at the time that the statutory demand was served.
 Mr Foote, sensibly, did not rely upon the fact that no application had been made to set aside the
statutory demand as establishing that the company is insolvent. Had he done so, I would not have
accepted such submission, for the reasons which I set out in Fogerty v Island Point Properties
 It seems to me that there is a substantial dispute whether Mr Bork is a creditor of the company,
whether in the sum claimed or at all. If he wishes to proceed against the company, Mr Bork must
establish his claim in proceedings brought for the purpose. Meanwhile, this application must be
 In these circumstances I do not need to consider paragraph (ii) of Ms Clayton’s application of 18
September 2009, seeking a stay of Mr Bork’s application and I say no more about it.
Commercial Court Judge
1 December 2009