EASTERN CARIBBEAN SUPREME COURT
BRITISH VIRGIN ISLANDS
IN THE HIGH COURT OF JUSTICE
CLAIM NO. BVIHC (COM) 2020/0138
IN THE MATTER OF HATFIELD PROPERTY LTD
AND IN THE MATTER OF THE INSOLVENCY ACT 2003
WEST BROMWICH COMMERCIAL LTD
HATFIELD PROPERTY LTD
Mr. Shane Donovan and Mr. Greg O’Keefe-Davis of Mourant Ozannes for the
No appearance for the Respondent
2020: November 9,
 JACK, J [Ag.]: In Re Meribelle Investments Ltd
I pointed to the problem of appointing liquidators of companies
incorporated in this Territory, where the BVI company owed monies to Her
Majesty’s Commissioners of Revenue and Customs (“HMRC”) in the United
 This case raises similar difficulties. The respondent (“the Company”)
is a single purpose vehicle. I can take the facts from Mr. Donovan’s
skeleton argument served on behalf of the applicant (“West Brom”).
“3. The Company was incorporated pursuant to the provisions of the International Business Companies Act
on 28 October 2005 with Mossack Fonseca & Co. (BVI) Ltd… as its
registered agent. The Company was automatically re-registered pursuant to
the provisions of the [BVI Business Companies Act 2004]
with effect from 1 January 2007.
- By a Loan Agreement dated 9 December 2005, entered into between the
Company (as borrower) and West Brom (as lender), West Brom made available
to the Company a loan facility of up to £28.55 million (the Loan) for
the purpose of the purchase of the freehold and leasehold land and
buildings being Cannock Shopping Centre, Market Hall Street, Cannock and
25, 27 and 29 Market Hall Street, Cannock and Cannock Shopping Centre,
Market Hall Street, Cannock, Staffordshire, United Kingdom (the Property).
As part of the security for the Loan, the Company entered into a Legal
Charge dated 19 January 2006 (the Charge), pursuant to which it granted
West Brom a mortgage over the Property. The Charge was entered in the
Company’s register of mortgages, charges and other encumbrances on 1
On 17 March 2009, LPA Receivers were appointed by West Brom over the
whole of the Property under the [UK] Law of Property Act 1925.
The Company was unable to meet its [Value Added Tax] liabilities to
[HMRC]. On 4 December 2012, HMRC presented a petition to wind up the
Company to the High Court of England and Wales. There was no appearance by
or on behalf of the Company at the hearing of the petition. By Order of the
English High Court dated 15 April 2013, it was ordered that the Company be
wound up pursuant to the provisions of the Insolvency Act 1986 (UK).
The Official Receiver was appointed as liquidator of the Company.
Kevin Hellard of Grant Thornton UK LLP was subsequently appointed as
liquidator of the Company by the Secretary of State with effect from 20 May
Mossack Fonseca ceased operations in the BVI in or about March 2018, as
a result of the reputational fallout from a major leak of sensitive Mossack
Fonseca group client data that occurred in 2016, commonly known as the
On 7 May 2018, Matthew Richardson of Grant Thornton (British Virgin
Islands) Ltd asked the Financial Services Commission (the Commission) if it
would permit Mr. Hellard, in his capacity as the liquidator of the Company
as appointed by the English Court, to change the Company’s registered
agent. The Commission’s response was to the effect that Mr. Hellard would
not have authority to cause the Company to change its registered agent
unless and until the Order of the English Court was recognised in the BVI.
Alternatively, if an order appointing liquidators were to be made by the
BVI Court, the effect of section 91(5) of the BVI Business Companies Act, 2004 would be that the Company
would not then require a registered agent.
On 1 June 2018, the Registrar published a notice in the Virgin Islands Official Gazette by which she required various companies,
including the Company, to appoint a new registered agent within 45 days,
failing which they would be struck off. The Company was subsequently struck
off the Register on 16 July 2018 because it did not have a registered
 The English winding-up order was made by Registrar Derrett (as she then
was) based on a sum of £134,227.00 in unpaid Value Added Tax owed to
HMRC. The Company’s only asset is the property in Staffordshire, which is
worth about £6,115,000. The Company owes West Brom about £33.7
million. In addition to the Revenue, there is a debt to Investec Bank
(Channel Islands) Ltd for over £2 million. West Brom propose that Mr.
Hellard, the current English liquidator, and Mr. Richardson be appointed by
this Court as joint liquidators.
 The problem with making such a joint appointment is that Mr. Hellard is
answerable to the English Court which appointed him. In Meribelle the liquidator appointed by the English Court
was a Mr. Gregson. Substantially the only debts proved before this Court in
that case was the debt owed by the company to HMRC. I said:
“ Mr. Gregson’s application was listed to be heard today. Whilst reading
the papers over the weekend, I noticed a potential problem. By recognizing
Mr. Gregson’s appointment, this Court would be indirectly enforcing UK
revenue law. In QRS 1 ApS and others v Frandsen
, the defendant had been the owner of five Danish companies, who were the
plaintiffs in the action brought in England. He stripped the companies of
their assets and then changed his own domicile to England. The Danish tax
authorities put the five companies into liquidation. The liquidator brought
proceedings in the name of the five companies for restitution and breach of
Danish company law against the defendant. The English Court of Appeal held:
‘It is a fundamental principle of English law that our courts will not
directly or indirectly enforce the penal, revenue, or other public laws of
another country – see rule 3 of Dicey & Morris
and the comment upon it in that work. On the English authorities it is
clear that the present action falls foul of that rule: in substance it
involves the indirect enforcement of Denmark’s revenue law.’
The Court rejected an argument based on European Union law, which [was] not
relevant to the current case, and proceeded to dismiss the action.
 The current case may potentially fall foul of that principle as well.
The only reason for the Court to recognize Mr. Gregson’s appointment would
be so that he can restore the company to the register. He would then use
his recognition to appoint himself (or his nominee) as a director of
Meribelle and proceed to sell Wheatley Oast [real estate in England and
Meribelle’s only asset], thus being able to reimburse the UK Revenue.
 I originally wondered whether the Court’s refusal to enforce foreign
revenue law also applied as between the United Kingdom and the British
Overseas Territories. What limited research I have done suggests that it
does. In Municipal Council of Sydney v Bull
, New South Wales legislation
provided for the owners of property on Moore St in Sydney to contribute to
improvement works. The Council sought to recover £3,919.4s.3d. from
the defendant in the English High Court. The monies were owed over the
period 1898 to 1904. Grantham J held:
“The action is in the nature of an action for a penalty or to recover a
tax; it is analogous to an action brought in one country to enforce the
revenue laws of another. In such cases it has always been held that an
action will not lie outside the confines of the last-mentioned State.”
 It should be noted that Grantham J does not distinguish between the
debt owed prior to 1st January 1901 to that owed after. That
date was when New South Wales ceased to be a colony of the United Kingdom
and, on the founding of the Commonwealth of Australia, became an Australian
 In Attorney-General for Canada v William Schulze & Co
, there had been proceedings in Canada for the forfeiture of goods imported
in breach of Canadian customs law. The Attorney-General was successful in
the Canadian proceedings and forfeiture was ordered. The Canadian court
awarded him his costs. He then sought to recover the costs in the Court of
Session. He lost, for similar reasons to the Sydney Municipality case. Lord Stormonth Darling pointed
‘It is no doubt rather anomalous that the King, through his Courts in
Scotland, should refuse to recognise a debt due to himself in Canada,
merely because it arises out of the execution of a Revenue Statute. But it
was not maintained, and I think is not maintainable that in the sense of
international law, the mother country and her self-governing colonies stand
in different relationship from that which exists between two foreign
states. If that relationship is ever to be modified it must be done by
 These views do not seem to depend on the question whether the
sovereign when claiming taxes was acting in right of New South Wales, or
Australia, or Canada. It may thus not matter whether the Queen acts in
right of the Virgin Islands or in right of the United Kingdom when the
question of enforcement of UK tax obligations in this jurisdiction is in
 If that is right, then a liquidator appointed by this Court would not
be entitled to distribute to the UK Revenue such assets as found their way
to him. He could only distribute the assets to non-sovereign creditors. In
those circumstances, it would not be appropriate to appoint Mr. Hellard as
liquidator, because he would be put in an impossible position, owing duties
to the English court to distribute to HMRC pari passu and duties
to this Court, not to distribute to HMRC at all.
 It might be possible to appoint Mr. Richardson as sole liquidator. The
main problem is that putting the Company into liquidation in the BVI has
the effect of reviving the Company without the need for a new registered
agent to be appointed. Once the Company was revived, then Mr. Hellard, when
he acts in England, would be clothed with full power to collect and realise
assets and then (insofar as there are any recoveries for distribution) to
distribute them, inter alia, to the Commissions of Revenue and
Customs. It is not clear to me whether it would be proper to put the
Company into liquidation in this Territory if the practical result was that
a foreign liquidator could distribute to a creditor, who under the laws of
this Territory would not be entitled to payment.
 As I pointed out in Meribelle there are a number of
uncertainties. I was not sure in that case and am still not sure, whether
there is any relevant tax legislation between the United Kingdom and the
BVI. I referred in that case to the
International Tax Enforcement (British Virgin Islands) Order 2014
, which relates to the exchange of information between the relevant tax
authorities, but I was referred to nothing on the reciprocal enforcement of
tax debts in the respective jurisdictions. Further I considered the
question as to whether the public policy expressed in the Sydney Municipality and Schulze cases is
still good law may be a difficult issue.
 In the light of these uncertainties, I have adjourned this matter for a
short time. I have directed that the papers be served on the
Attorney-General and the Registrar of Corporate Affairs, so they can
consider whether they want to make representations, either in their own
right or as amicus curiae.
Commercial Court Judge [Ag.]
By the Court
BVIHC (COM) 2020/0013 (the second judgment in the matter,
determined 16th March 2020).
Cap. 291, Revised Laws of the Virgin Islands.
No 16 of 2004, Laws of the Virgin Islands.
15 & 16 Geo V c. 20.
1986 c. 45.
 1 WLR 2169.
Then 12th Ed, 1993, Vol 1 p 97; now rule 3 of Dicey,
Morris and Collins on the Conflict of Laws (15th Ed,
2018) at para 5R-019.
 1 KB 7.
The Moore Street Improvement Act 1890 (54 Vict No 30 of the
Statutes of New South Wales) and the Moore Street Improvement Act
Amendment Act 1892 (55 Vict No 13).
(1901) 9 SLT 4.
SI 2014 No 1359.