Bhp International Markets Ltd v Wason Holdings Ltd

CourtSupreme Court (Bahamas)
JudgeWinder, J.
Judgment Date15 August 2016
Docket Number2016/COM/bnk/0038
Date15 August 2016

Supreme Court

Winder, J.


Bhp International Markets Limited
Wason Holdings Limited

John Delaney QC with Minna Soles-Hunt for Wason Holdings Limited

Thomas Evans QC for BHP International Markets Limited

Company Law - Petition to set aside statutory demand — Whether there is a substantial dispute sufficient to set aside the statutory demand — Winding up petition — Terms of the financing agreement — Whether a foreign arbitral award could found the basis of a statutory demand — Abuse of process — Whether the demand was defective because it sought the payment of interest which had not been included in the award — Whether the Arbitral award was final — Whether there was a failure to comply with Order 2 of the Company Liquidation Rules — Content of a statutory demand — Whether the Company was insolvent — Whether it was just and equitable for the company to be wound up — Whether there was any misrepresentation in evidence presented to the court relating to the directors of the company and its registered office — Particulars of the debt claimed — Section 188 of the Companies Act — Section 88 of the Arbitration Act.

Winder, J.

On 25 July 2016, I acceded to the Winding Up Petition filed in 2016/COM/bnk/0038 by Wason Holdings Limited (Wason) and dismissed the Petition of BHP International Markets Limited (the Company) filed in 2016/COM/bnk/0035 seeking to set aside the statutory demand. I promised to put the reasons for my decision in writing and I do so now.


On 1 April 2016 the Company filed a Petition to this Court seeking to set aside a statutory demand dated 24 March 2016. The Company's Petition was settled in the following terms:


The humble petition of BHP International Markets Limited, the Company, shows as follows:

    The Company was incorporated on 3 March 2011 with registration number 1 1483 and its registered office is Cumberland House, 15 Cumberland Street, P O. Box SS 6837, Nassau Bahamas. 2. In February 2014 the Company and Wason Holdings Limited entered into a Stock Secured Financing Agreement, which contained a clause for arbitration of disputes arising out of or related to the Stock Secured Financing Agreement in Hong Kong under the UNCITRAL Arbitration Rules. The g veining law of the Agreement therein was the law of Hong Kong. 3. There arose disputes between the Company and the respondent which arose out of or related to the Stock Secured Financing Agreement, and arbitration was commenced by the respondent in relation to those disputes on 14 November 2014. Thereafter the company submitted a counterclaim against the respondent. 4. The oral hearing of the arbitration took place over the period from 18 January 2016 to 28 January 2016. The resulting award was produced on 15 March 2016 by the single arbitrator, Mark Strachan SC, QC. It was declared as follows: (i.) that the terms of the agreement made between the Company and the respondent are those contained in the Wason Agreement; and (ii) that the company committed a repudiatory breach of the Wason Agreement which was accepted by the respondent's solicitors' letter dated 26 September 2014. 5. In the Award it was ordered as follows: (i.) that the Company pay to the respondent damages in the sum of US$33,053,345; and (ii.) that the Company's counterclaim be dismissed. 6. The arbitrator stated in paragraph U of the Award that the Award only dealt h issues of liability and quantum, and that the issue of costs would be dealt h in a separate Award to be made in due course. 7. On or about 24 March 2016 the respondent by their attorneys, Delaney Partners, served a statutory demand pursuant to Section 88 of the Companies Act on the Company at its former registered office in The Bahamas. The demand called for the Company to pay to an account in Hong Kong the sum of US$ 33,111,301 comprised of: (i) the sum of US$ 33,053,345 granted in the Award, and (ii) interest of US$57,956 calculated at the rate of 8% per annum to the date of the statutory demand and continuing to accrue). 8. The demand specified that of the sum of US$33,111,301 was not paid by Company to the respondent within 21 days of the date upon which the mend was served, the company would be deemed to be insolvent and a ding up petition might be presented against the Company in accordance h Section 1869(c) of the Companies Act. 9. The Company by its director have observed that there are several defects the statutory demand dated 24 March 2016 or alternatively that here exists r reasons by substantial injustice would be caused to the Company if the mend is not set aside by the Supreme Court of The Bahamas. Such defects or other reasons are summarized as set out below: (i) By issuing a statutory demand the respondent has utilized an inappropriate method of enforcing or recovering its debt and is precluded from doing so by Bahamian law. As a foreign arbitral award made in connection with a foreign transaction in foreign currency the award should have properly have been enforced pursuant to the terms of the Arbitration (Foreign Arbital Awards) Act 2009. The Award must first be recognized and domesticated as a Bahamian debt before it can be recovered in The Bahamas. As such, the statutory demand is not one made within the meaning and intent of Section 188 of the Companies Act and should be set aside. (ii.) For the purpose of enforcement of the Award, a Bahamian statutory demand does not commence legal proceedings and does not of itself constitute legal proceedings. Therefore it does not trigger the mechanism under Section 4(2) of the Arbitration (Foreign Arbitral Awards) Act 2009 for reliance upon the award necessary to the enforcement process. The statutory demand is defective. (iii) The respondent by its statutory demand sought to recover an amount in excess of that which was awarded to it by the Award. The Order made by the arbitration in the award dated 15 March 2016 was for the sum of US$33,053,345 only. No award of interest was made by the arbitrator. Contrary to the Award the respondent has demanded interest in the amount of US$57,956. The statutory demand is defective. Alternatively, there exists a substantial dispute as to whether the amount stated in the demand is owed. The statutory demand should therefore be set aside. (iv) The statutory demand is based upon an award which deals only with quantum and liability but the issue of costs in relation to the arbitration still remains to be ruled upon. The award is therefore not final or complete in terms of disposing of the entire slate of arbitration issues until costs are dealt with. Further, seeking to enforce or recover the Award without completion of the costs award will give rise to expense and inconvenience if pursued piecemeal. In the circumstances the statutory demand should be set aside, or alternatively stayed, until the complete award is made in relation to the arbitration which was commenced on 14 November 2014.

YOUR PETITIONER therefore humbly prays:

    That the statutory demand dated 24 March 2016 issued by the respondent to the Company be wholly set aside; 2. Alternatively, that the statutory demand be stayed pending the issuance of the award on costs; 3. That the file in this matter be sealed by the Court; and 4. For such further Orders or directions as the Court thinks fit.

The petition was supported by the Affidavit of Gregory Ndlovu. In the affidavit Mr. Ndlovu, who purported to make the affidavit in his capacity as a director of the Company, merely confirmed the statements in the Petition and enclosed the documents referred to in the Petition.


On 2 April 2016 Wason filed a creditor's Petition for the winding up of the Corn any on the grounds that it was insolvent and/or otherwise that it is just and equitable to do so. Wason's Petition was settled in the following terms:”



The humble petition of WASON HOLDINGS LTD (the “Petitioner”) whose registered office is situated at Kingston Chambers, P 0 Box 173, Road Town, Tortola, British Virgin Islands, shows that –

    BHP International Markets Ltd (the “Company”), an International Business Company, was incorporated on 03 March 2011 under the International Business Companies Act, Ch. 309 of the Statute Laws of the Commonwealth of The Bahamas and having Registration number 161483B. 2. The Company's Registered Office of record at the Companies Registry, is and was at all material times to the date of this Petition situated at Templeton Building, Lyford Cay, P.O. Box N-9204, Nassau, New Providence, The Bahamas with its Registered Agent as Euro-Dutch Trust Company (Bahamas) Limited of the same address. 3. The authorized capital of the Company is issued in the currency of the United States of America (USD) and is Fifty Thousand Dollars (USD 51,000.00) divided into 50,000 shares each having a par value of one dollar USD1.00. 4. The principal objects for which the Company was established, per Article 4 of the Memorandum of Association… 5. By Article 5 of the Memorandum of Association, it is provided that:
  • “5. The Company has no power to:

    • a) carry on banking or trust business;

    • b) carry on business as an insurance or reinsurance company;

    • c) carry on the business of providing the registered office for companies; or

    • d) carry on the business of “dealing” or “trading” in securities as an agent or providing “securities investment advice” as these terms are defined in the Securities Industry Act, 1999.”

    At all material times (presumably operating from within The Bahamas) the Company has purported specifically to carry on the business of providing non-recourse financing and conducting its business in or from The Bahamas, Hong Kong, London, Seoul amongst other places. 7. In or around February 2014, the Company and the Petitioner (collectively the “Parties”) entered into a Stock Secured Financing Agreement (the...

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