Margaret Cumberbatch v David John Standish

• Jurisdiction: Barbados
• Judge: Madam Justice Shona O. Griffith
• Judgment Date: 06 December 2022
• Neutral Citation: BB 2022 HC 58
• Docket Number: Civil Suit No: BRI004 of 2021
• Court: High Court (Barbados)
• Year: 2022

IN THE SUPREME COURT OF JUDICATURE

HIGH COURT

CIVIL DIVISION

Before:

The Hon. Madam Justice Shona O. Griffith, Judge of the High Court

Civil Suit No: BRI004 of 2021

IN THE MATTER of the Property Act, Chapter 236 of the Laws of Barbados

IN THE MATTER of Section 57(2) of the Bankruptcy and Insolvency Act, Chapter 303 of the Laws of Barbados

AND IN THE MATTER of the Bankruptcy of Lindsay Adolphus Cumberbatch

Between:

Margaret Cumberbatch

1 ^st Claimant

Lindsay A. Cumberbatch Snr.

2 ^nd Claimant

and

David John Standish (as Trustee of the Estate of Lindsay Adolphus Cumberbatch in Bankruptcy)

1 ^st Defendant

Neil David Gostelow (as Trustee of the Estate of Lindsay Adolphus Cumberbatch in Bankruptcy)

2 ^nd Defendant

Craig Lawrence Waterman (as Interim Receiver pursuant to the decision Of Griffith J dated 12 June 2020)

3 ^rd Defendant

Appearances:

Mr. Leslie Haynes KC in association with Ms. Karen Pereira for the Claimants.

Mr. Garth Patterson KC in association with Ms. Taylor Laurayne and Mr. Khayyam Nakhuda of Lex Caribbean for the Defendants.

Claim for beneficial interest in property — Property formerly owned by foreign bankrupt — Foreign Representatives and Interim Receiver appointed in prior proceedings to administer property — Property sold by Interim Receiver — Claim for beneficial interest extended to proceeds of sale — Application to strike out Claim by virtue of prior proceedings — Prior proceedings and issue estoppel — Prior proceedings and abuse of process.

DECISION

Introduction

1 By Fixed Date Claim filed in July 2021, Margaret Cumberbatch and Lindsay Cumberbatch Sr. filed a Claim against the Defendants, concerning property situate in Heywoods, St. Peter, Barbados. That property was formerly held in the name of the Claimants' son Lindsay A. Cumberbatch, an adjudged bankrupt, by virtue of proceedings in Bristol, England, United Kingdom. The 1 ^st and 2 ^nd Defendants are the United Kingdom Trustees in Bankruptcy of the Estate of Lindsay A. Cumberbatch, and were in prior local proceedings 1, appointed as Foreign Representatives to Mr. Cumberbatch's Estate, pursuant to the provisions of Barbados' Bankruptcy and Insolvency Act. 2 At the time of the filing of the Claim, the 1 ^st and 2 ^nd Defendants were the legal owners of the said property as Mr. Cumberbatch's Trustees in Bankruptcy. The 3 ^rd Defendant, was by the same prior proceedings, appointed as Interim Receiver, to administer Mr. Cumberbatch's property here in Barbados, in furtherance of the UK bankruptcy process.

2 The Claimants inter alia, assert ownership of the property on the basis of a trust existing in their favour against the former owner of the property, Mr. Cumberbatch. More specifically, the Claimants assert that they were the beneficial owners of a 90% share in the property, arising from the financial contributions to the construction and development thereof. The property was ordered sold in furtherance of enforcement of the court's order in the prior (cross-border) proceedings. As a result of the sale of the property, the Claimants advance their entitlement to a beneficial interest against the proceeds of that sale, and accordingly seek to restrain the disposal of such proceeds, by means of an injunction pending the determination of this Claim.

The Defendants have declined at this stage to file an answer to the Claim, and instead counter the application for the injunction with an application to strike out the said Claim. These two applications form the basis of the Court's decision.

Issues

3 The issues to be decided (broadly defined) are:-

• (i) Should the claim be struck out and if so on what ground/s?

• (ii) If no to issue (i), should an injunction be granted to restrain the Defendants from disposing of the proceeds of sale of the subject property pending determination of this Claim?

Background

4 This matter does not exist in a vacuum. It is connected by its subject matter and parties, to a claim previously determined by this Court as presently constituted, namely - David John Standish et anor v Lindsay Adolphus Cumberbatch 3 (‘the cross-border insolvency proceedings’ or ‘the prior proceedings’). It is necessary to provide a background to the prior proceedings and to explain the relevant connections of the subject matter and the parties, in order to place these current proceedings in their appropriate context.

Parties

• (i) The Claimants in these proceedings - Margaret Cumberbatch and Lindsay Cumberbatch Sr., are the parents of Lindsay A. Cumberbatch who is the defendant in the prior proceedings. The Claimants were not parties to the prior proceedings and all references herein to the Claimants mean Mr. and Mrs. Cumberbatch;

• (ii) The 1 ^st and 2 ^nd Defendants herein - David John Standish and Neil David Gostelow are the claimants in the prior proceedings, which they filed in their capacity as Trustees in bankruptcy for the Estate of Lindsay A. Cumberbatch. They are sued in the same capacity in this Claim and will be referred to with reference to both proceedings, as ‘the Trustees’;

• (iii) Lindsay A. Cumberbatch is the defendant in the prior proceedings, but is not a party in the current proceedings. Mr. Cumberbatch was at the institution of the prior proceedings in 2016, an adjudged bankrupt, by virtue of bankruptcy proceedings in Bristol, England;

• (iv) The 3 ^rd Defendant herein, Craig Waterman was appointed in the prior proceedings as Interim Receiver over the subject property, which at the time of those proceedings, was owned by Mr. Cumberbatch. Mr. Waterman is sued herein in the same capacity, and shall be referred to with reference to both matters, as ‘the Interim Receiver’;

Subject matter

• (v) Mr. Cumberbatch had been adj udged bankrupt in England in June 2015, and was the owner of real property situate in Heywoods, St. Peter, Barbados (‘the property’). In order to administer Mr. Cumberbatch's bankrupt estate in Barbados, the Trustees filed the prior proceedings pursuant to Part XI of the Bankruptcy and Insolvency Act of Barbados, Cap. 303, for the appointment of an Interim Receiver for that purpose;

• (vi) The prior proceedings were heard and determined by this Court as presently constituted, and an order was made therein appointing Mr. Waterman as Interim Receiver of Mr. Cumberbatch's property in Barbados;

• (vii) The property in respect of which the Interim Receiver was appointed in the prior proceedings - that situate in Heywoods, St. Peter, Barbados — is the said property in respect of which the Claimants have filed this Claim on the basis that they are the beneficial owners in larger part thereof;

• (viii) Since the filing of this Claim, it is common ground that the property has (with the permission of the court), been sold and the net proceeds of sale in the sum of $484,098.84 are currently held by the Interim Receiver.

The prior proceedings

5 In the introductory and background remarks of its decision dated 12 June, 2020, the court in the prior proceedings states that Mr. Cumberbatch's answer to the Trustees’ claim for appointment of a receiver to the property was that the order sought should not be granted on the basis that the property was ‘subject to significant equitable interests in favour of his parents. 4 Additionally, the court related that Mr. Cumberbatch had - ‘filed an affidavit setting out the basis of the equitable claim asserted on behalf of his parents, but filed no ancillary claim seeking relief from the Court based on his assertions’ 5 The court noted however that Mr. Cumberbatch's parents remained third parties, not before the court, and in its substantive consideration on the issue of the appointment of the Interim Receiver 6, expressly 7 ruled that Mr. Cumberbatch's assertion of a trust in favour of his parents was not effectively put before the court.

6 More particularly, the court expressly ruled that having not been moved, the court could not be asked to declare rights asserted on behalf of third parties, who were not themselves before the court.

The court in the prior proceedings also ruled 8 that the proceedings therein were limited in scope to Part XI of the BIA, 9 which amounted to a further reason why the issue of the beneficial ownership of the property was not before the court for determination. Most importantly however, the court's determination in favour of exercising its power to appoint the Interim Receiver was made with reference to the nature of, and legal principles applicable to cross-border insolvency proceedings.

7 In that regard, the court's consideration and determination of the appointment of the Interim Receiver took into account several pertinent factors and principles found to underpin cross-border insolvency proceedings, particularly, proceedings seeking the enforcement of foreign orders in a local court, against assets located in the local court's jurisdiction. Still addressing the prior proceedings, the court's consideration therein took into account the recognition of the role of comity as the necessary basis of a sovereign court's recognition and enforcement of a foreign order; and the jurisprudential approaches of ‘universalism’, ‘modified universalism’ and ‘territorialism’ in doing so. 10

8 At paragraph 32 of the decision in the prior proceedings, the court set out its understanding of the legal approach and context to Part XI of the BIA as that dubbed as ‘modified universalism’. Specifically, the court ruled its interpretation of Part XI of the BIA principally as follows:-

“(a) The legislative framework that is Part XIII (Barbados' Part XI), continued the balanced approach of the Canadian courts towards giving effect to foreign bankruptcy proceedings whilst maintaining appropriate protections envisaged by domestic law; and

(b) Eschewing a mechanical application of deference to the foreign proceedings based on comity, in favour of deference only after due consideration of all relevant...