Alan Roberts (the Liquidator) was the liquidator of both Kingston Management (Guernsey) Limited (KMGL) and Amazing Global Technologies Limited (AGTL). He was appointed on 27 May 2009 and 31 May 2010 respectively.
The Liquidator made two applications to the Court in similar form dated 27 March 2012. Pursuant to section 420(1) of the Companies (Guernsey) Law, 2008, he applied for orders declaring both of the companies to be dissolved. Further, pursuant to section 426 of the 2008 Law, he applied for an order in respect of each company that "upon dissolution of the Company the Liquidator be discharged and released from all liability both in respect of his acts or omissions and otherwise in relation to his conduct as Liquidator of the Company, save to the extent, if any, that he had in relation to the Company been fraudulent, reckless or grossly negligent or has acted in bad faith whilst he was Liquidator of the Company" (the Discharge and Release Applications).
The Court dealt with an application from the Guernsey Financial Services Commission (the Commission) to "be given leave to make submissions" (rather than being joined as a party) in respect of the Discharge and Release Application relating to KMGL only, as KMGL had formerly been an entity regulated by the Commission, whereas AGTL had not been.
Section 34 of the Regulation of Fiduciaries, Administration Businesses and Company Directors etc. (Bailiwick of Guernsey) Law, 2000 makes provision for the Commission to apply to the Court for the winding-up of a licensed fiduciary or former licensed fiduciary among other grounds.
The difficulty for the Commission was that its application was not an application to wind up KMGL or even a wish to be heard on an application by another person to wind up KMGL. The Deputy Bailiff decided that the application to make submissions against the Liquidator's Discharge and Release Application in respect of KMGL could not, in his judgment, be made relying on section 34 of the 2000 Law.
The Commission further relied on the provisions of the Financial Services Commission (Bailiwick of Guernsey) Law, 1987, submitting that the provisions of the 1987 Law require the Commission to apply to be heard in respect of the Liquidator's Discharge and Release Application, due to the overarching supervisory function of the Commission. The Deputy Bailiff said that although the Commission was making no comment about the Liquidator's performance of the winding up of KMGL, any order granting discharge and release would potentially have an impact on the future conduct of liquidations of regulated entities. In short, the breadth of the Commission's general functions is such that it should seek to be involved when any order is made affecting regulated entities.
Advocate Hill, for the Commission, contended that, having regard to the provisions of the 1987 Law, the rest that should be applied is whether it can be demonstrated that the Commission has a "sufficient interest" in the Discharge and Release Application to give the leave sought. He did not seek to support that submission by reference to any authority. The Deputy Bailiff was prepared to proceed on the basis that he should be seeking to identify a level of interest in the subject matter of the proceedings (which is lower than the level required before a person can properly be joined as a party).
The Deputy Bailiff said that in deciding the level of interest, if any, the Commission had in the Liquidator's application, the time at which it was made is of significance. By that time, KMGL was no longer a business in the financial services sector and the Commission had no supervisory functions in respect of it. He further concluded that the Commission's interest was too far removed from the subject matter of the Liquidator's specific application in respect of KMGL.
Discharge and Release Applications
Originally, the Liquidator was jointly appointed with Adrian Rabet, who then resigned as joint liquidator on 30 November 2010. On that date, the Ordinary Court ordered that upon Mr Rabet's resignation from office "he shall be discharged and released from all liability both in respect of his acts or omissions in each liquidation and otherwise in relation to his conduct as a Joint Liquidator of the Companies, save to the extent, if any, that he has in relation to a Company been fraudulent, reckless or grossly negligent or has acted in bad faith whilst he was one of the Joint Liquidators of such Company". The Court noted Mr Rabet's resignation and permitted Mr Roberts to continue to hold office as sole liquidator of AGTL. In relation to KMGL, Mr Rabet was replaced as joint liquidator with Mr Roberts by John Pirouet. On 12 July 2011, the Ordinary Court approved Mr Pirouet's resignation from the office of joint liquidator of KMGL and permitted Mr Roberts to continue to hold office as sole liquidator. The Court also made an order discharging and releasing Mr Pirouet in comparable terms to the order made in respect of Mr Rabet on 30 November 2010.
The significance of those two earlier orders is that they demonstrate that the Court was amenable to granting the relief sought when a joint liquidator resigned from office. Advocate Newman, for the Liquidator, submitted that section 426 of the 2008 Law is a wide provision enabling the Liquidator to make the Discharge and Release Applications. The Deputy Bailiff held that section 426 is not broad enough to enable a liquidator to apply for the type of order envisaged by the Liquidator's Discharge and Release Applications. In the Deputy Bailiff's opinion, the natural meaning of the words enable a liquidator to seek assistance from the Court in relation to how to deal with something that has arisen during the course of the winding up of the company in question and which the liquidator has to resolve as part and parcel of the liquidation.
The Deputy Bailiff found support from that conclusion in the guidance in McPherson and noted in particular the assertion that the type of directions capable of being sought "is essentially concerned with action which is future at the time of the application being heard". The Liquidator's Discharge and Release Applications were not seeking assistance from the Court as to something the Liquidator needed to do in the future in the context of ongoing liquidations.
The Deputy Bailiff took the view that there was a substantive difference between making an application to give a liquidator who retires or resigns from office his discharge and release, where the continuing liquidator assumes sole responsibility for the ongoing conduct of the liquidation and is party to that application, or where he is joined by a new liquidator, and the Liquidator's current position as sole liquidator having completed his functions as such. Accordingly, the Liquidator's Discharge and Release Applications were dismissed as being beyond the scope of section 426 of the 2008 Law.
The Deputy Bailiff held that if he were wrong about the scope of section 426, he would dismiss the substance of the applications. There are no provisions in the 2008 Law making provision for the discharge and release of a liquidator. However, under Chapter VII of Part IV of the Insolvency Act 1986, liquidators are entitled to their release. The Deputy Bailiff stated that due to differences in the legislation, including the provisions governing the creditors' meetings, the English law insolvency regime cannot be compared like for like with the Guernsey law regime under the 2008 Law. In addition, he added that it was relevant that the 2008 Law was only enacted comparatively recently and the absence of such release provisions in the 2008 Law implies that, at the time of enacting the 2008 Law, the legislature can be regarded as having had the opportunity to legislate, but chose to defer making any decision on whether a liquidator should be able to obtain his release and discharge. In addition, the Deputy Bailiff added that he would be cautious about purporting to develop an area of the law where the States of Deliberation have been informed that a Department of the States of Guernsey intends to bring forward proposals for amendment. He further stated that an appropriate approach to the Commerce and Employment Department may be more fruitful than these applications to the Court.