Court name
Supreme Court of Turks and Caicos Islands
Case number
CL 90 of 2009

Dellis Construction Ltd. v. Dreadging TCI Ltd. (CL 90 of 2009) [2009] TCASC 8 (18 September 2009);

Law report citations
Media neutral citation
[2009] TCASC 8
Williams, J

IN THE SUPREME COURT OF THE                                                            Case No CL 90/09








Hearing:                                                     1 -2 September 2009

Decision:                                                        2 September 2009

Written Reasons Circulated:                        18 September 2009

For the Plaintiff:                 Mr Clayton Greene- Stanfield Greene

For the Defendant:            Mr Martin Green - McCollum & Newlands



1.             This application was originally brought by a Summons dated 24th August 2009. The order that the Plaintiff, Dellis Construction Ltd (“Dellis”), was seeking under that Summons was that all further proceedings in the matter including the presentation of any Petition to wind up the Plaintiff be stayed pending the determination of the Plaintiff's Appeal against the decision of this Court given on 20th August 2009. The Court indicated that the hearing of the Summons could be accommodated on any date from and including 26th August 2009 but Mr Smith reuqested a hearing for 28th

2.             Subsequently, a second Summons was filed on 31st August 2009. The order that Dellis is seeking under this Summons is for an injunction restraining the Defendant, Dredging TCI Lid (Dredging TCI), whether by itself its servants or agents or otherwise howsoever from presenting a petition to wind up the Plaintiff, or placing any advertisement or otherwise commencing or continuing any proceedings in relation to the winding up pending determination of the Appeal.

3.             Although Mr Clayton Green, Counsel for Dellis, stated that both Summonses and affidavits in support were before the Court, he only made submissions in relation to the latter Summons.


4.             The applications are predicated on the following grounds:

a.             That the Plaintiff has on 24th August 2009 filed a Notice of Appeal against the order dismissing the Plaintiffs application for an injunction to prevent the presentation of the winding up petition.

b.             That the Plaintiff will suffer irreparable harm unless there is an order restraining the progression of the winding up proceedings.

c.             That the Plaintiffs appeal will be rendered nugatory unless there is an order restraining the progression of the winding-up proceedings.

5.             The applications are further supported by the annexed affidavits of Oguz Serim dated 24th August 2009, 28th August 2009 and 1st September 2009. Leave was given at the 1st September 2009 hearing to file the latter affidavit following an opposed application made by Dellis; a contemporaneous oral ruling was then given.

6.             In so far as any contention that there has been a delay in Dellis bringing these proceedings is concerned, the ruling against which Dellis wishes to appeal was circulated on 20th August 2009. The Notice of Appeal in respect thereof is dated 24th August 2009. The Summons seeking an order of stay is dated 24th August 2009 and the Summons seeking an injunction filed on 31st August 2009. I do not find that there has been undue delay in bringing these summonses before the Court and, if required, it satisfies the requirement as to the timely making of an application. I do not criticise the fact that the applications initially for a stay and thereafter an injunction were not made ex parte, as it is clearly preferable for the Court, if possible, to hear from both parties before making an informed decision in such matters.


7.             The procedural history and factual background relating to this matter are set out in detail in this Court’s detailed judgment circulated to the parties on 20th August 2009. As a consequence, there is no need to further narrate that detail herein.

8.             On 20th August 2009 this Court dismissed Dellis’ application for an injunction that Dredging TCI be restrained whether by themselves, or by their servants or agents or otherwise howsoever from presenting any petition to the Court for the winding-up of the Plaintiff and from placing any advertisement based on the sum of $8,667,598.30 claimed in the Statutory Demand pursuant to S93 of the Companies Ordinance, dated March 30, 2009 served on Dellis.

9.             Being dissatisfied with that ruling, Dellis intends to appeal to the Court of Appeal against the whole ruling, and to that end it filed a Notice of Appeal dated 24th August 2009. There is no requirement for leave to file the appeal.

10.          At 4.05pm on 27th August 2009 Dredging TCI presented a winding-up petition relating to the relevant Statutory Demand.

11.          On 27th August 2009 the Court received a written skeleton argument from Mr Oliver Smith, who then appeared on behalf of Dellis.

12.          At the hearing on 28th August 2009, Mr Smith, on becoming aware, on the Court’s disclosure to the parties, of the case of Erinford Properties Ltd v Cheshire County Council [1974] 2 ALL E.R., sought an adjournment to enable him to review the form of the Plaintiff's application. The Summons was adjourned to be heard on 1st September 2009. Mr Martin Green, Counsel for Dredging TCI, did not oppose the adjournment but reaffirmed that his client still intended to submit the advertisement of the Petition to the Gazette on Wednesday 2nd September 2009. Mr Green also indicated that he would expect Dellis to file evidence addressing the issue of their solvency.

13.          Roger Fina, Director of Dredging TCI, filed his affidavit dated 31st August 2009. Mr Martin Green filed his skeleton argument on 1st September 2009.

14.          The summonses were heard on 1st September 2009 when the Court sat until 8.35pm to conclude the submission stage of the hearing as Dredging TCI were adamant that it would be submitting the advertisement of the Petition to the Gazette no later than 11am on 2nd September. The Court reserved its decision to be given at 9.30am on 2nd September 2009.

15.          On 2nd September 2009 the Court ordered:

(a)           That pending the hearing of the Plaintiff's appeal to the Court of Appeal against the decision made by the Supreme Court dismissing the Plaintiff's application for an injunction to restrain the Defendant from filing a winding up petition against the Plaintiff, the Defendant, whether by itself, its agents or servants be restrained from taking further steps in the Winding Up Petition

(b)           That the cost of this proceeding shall be costs in the cause.

Dellis indicated, through Counsel, that they would be willing to give an undertaking if the Court felt that to be a condition for granting the injunction. Dredging TCI submitted that the undertaking should be fortified. Dellis opposed fortification. I stated that I would give written reasons for my order and for any decision I made in relation to the form of the undertaking and do so now.


16.          On its part, Dellis contend that they have an arguable appeal on the law which is neither frivolous or vexatious. However, Dellis contend that they need not establish this as a prerequisite for obtaining an Erinford Injunction. Leave is not required for the appeal and it is submitted that Dellis have a right to have it heard before the winding up proceedings proceed any further.

17.          Although it may be argued that Dellis will have another forum during the hearing of the winding up cause, the Court’s ruling based on submissions made to date, may have destroyed their substratum and made it almost impossible for them to respond to a winding up petition. It is submitted by Mr Smith that the Court erred in law in making what he termed as “findings” at an interlocutory stage. Consequently, failure by the Court to grant a holding injunction pending appeal will not only destroy any defence Dellis may have to the winding up petition, but will also render the appeal nugatory

18.          It is contended by Dellis that it is trading and solvent. It is argued that Dredging TCI have wrongly attempted to reverse the burden by submitting that as they have raised ‘naked assertions” that Dellis are insolvent, it is for Dellis to now prove their solvency. It is further contended that Dellis can meet its financial obligations, that it is not indebted to any financial institution and that there are no other debt proceedings being brought against it. It is submitted that, as in Celcom (Malaysia) BHD v Inmiss Communications BHD [2003] 3 MLJ 178, “the claim was nothing more than a monetary claim which was being disputed by the Plaintiff. There was no evidence that the Plaintiff was not financially able to pay if indeed it was subsequently found that the said amount was due.”

19.          Dellis contend that, on the balance of convenience, the injunction should be granted and initially argued, and if it is, there should be no requirement for an undertaking to be given. It is contended that ongoing winding up proceedings, as is the norm for construction companies, would have a devastating effect on Dellis. It is contended that, apart from “crippling cash flow”, it would, in such a small jurisdiction, affect the ability to purchase materials, employ staff and to sell properties. It is submitted that this damage could not be compensated in a monetary way. It is submitted that this is a large and significant project for the Islands and that the consequences that would flow from winding up proceedings would not only affect the company but would be detrimental to the country.


20.          For its part, Dredging TCI, although conceding that the Court has the power to make an Erinford Injunction, opposes the appropriateness of granting the same in this case.

21.          It is submitted, relying upon Ketchum International Plc v Group Public Relations Holdings Ltd and Others [1996] 4 all ER 374, [1997] 1 WLR 4 that an injunction should not be granted unless, if it had been required, leave to appeal would have been granted. It is contended by Dredging TCI that the appeal is unarguable.

22.          Mr Martin Green submits that, even if the Court were to consider the balance of convenience, the scales would tip in favour of Dredging TCI. Mr Martin Green submits in support of this submission that, in the Ruling under appeal, the Court found that there was not a debt that could be said to be genuinely disputed on substantial grounds. As a consequence of that Ruling, it is forcefully stated that there is now a presumption, pursuant to S92 of the Companies Ordinance, that Dellis are insolvent. Interestingly, Mr Martin Green reinforces the difficulty that Dellis find themselves in as a consequence of this Court’s ruling when he states: “It is not open for them to revisit it (at the winding up hearing on the issue as to whether debt disputed) on the same basis on a substantial winding up.... all things being equal winding up order in due course be made, as night follows day.”

23.          It is contended that Dellis has not established that it is solvent and has not even disclosed what funds it holds. It is submitted that Dellis is insolvent and would be unable to pay Dredging TCI in January or thereafter if the Erinford injunction is now granted and the Court of Appeal later refused the appeal. It is suggested that the project is behind schedule and that the developers, due to a cash flow problem, are primarily concentrating on constructing residential properties for sale to generate revenue rather than working on the non-income generating infrastructure, some of which should already be in place, including the hotel. It is also contended that the lower number of staff apparently now working on the project is not supportive of the contention that the development is progressing as expected and that salaries may have been paid late and that the regularity of payment of National Insurance dues is questionable.


24.          Dellis, in its Summons to stay dated 24th August 2009, did not draft a prayer for a stay of the order dismissing his application dated May, 11th 2009. This may well be due to the fact that it recognised that all the Court did in its Judgment dated 20th August 2009 was dismiss an application for an order of injunction. However, the prayer set out in the first Summons seeks a stay of winding up proceedings which have not already commenced and therefore would have similar consequences as successfully applying for an injunction restraining the presentation or advertising of the winding-up petition. Dellis has actively pursued, having regard to the nature and content of Mr Clayton Greene’s submissions, the second Summons in which an Erinford Injunction is sought.

25.          For the avoidance of any doubt, as conceded by Mr Martin Green, the Court has jurisdiction to grant an injunction pending the hearing of an appeal against the dismissal of an application seeking an injunction. I pay strong regard to Megarry J.’s guidance in Erinford Properties Ltd v Cheshire County Council [1974] 2 ALL E.R. page 448. Megarry J. started by distinguishing between interlocutory injunctions, final injunctions and injunctions pending appeal, stating:

“Putting it shortly, on a motion the question is whether the applicant has made out a sufficient case to have the respondent restrained pending trial. On the trial, the question is whether the plaintiff has sufficiently proved his case. On the other hand, where the application is for an injunction pending an appeal, the question is whether the judgment that has been given is on upon which the successful party ought to be free to act despite the pendency of an appeal”

Megarry J. then went on to justify the jurisdiction that the court had to grant an injunction pending appeal when he stated:

“One of the important factors in making such a decision, of course, is the possibility that the judgment may be reversed or varied. Judges must decide cases even if they are hesitant in their conclusions; and at the other extreme a judge may be very clear in his conclusions and yet on an appeal be held to be wrong. No human being is infallible, and for none are there more public and authoritative explanations of their errors than for judges. A judge who feels no doubt in dismissing a claim to an interlocutory injunction may, perfectly consistently with his decision, recognize that his decision might be reversed, and that the comparative effects of granting or refusing an injunction pending an appeal are such that it would be right to preserve the status quo pending the appeal. I cannot see that a decision that no injunction should be granted pending the trial is inconsistent either logically or otherwise, with holding that an injunction should be granted pending an appeal against the decision not to grant the injunction or that by refusing the injunction pending the trial the judge becomes functus officio quoad granting any injunction at all.”

Megarry J. then went on to set out the principles governing whether or not an injunction pending appeal should be granted, stating:

“There will, of course, be many cases where it would be wrong to grant an injunction pending appeal, as where the appeal would be frivolous, or to grant the injunction would inflict greater hardship than it would avoid, and so on. But subject to that, the principle is to be found in the leading judgment of Cotton L.J. in Wilson v Church (no.2) (1879) 12 Ch.D.454, where, speaking of an appeal from the Court of Appeal to the House of Lords, he said at 458, "... When a party is appealing, exercising his undoubted right of appeal, this court ought to see that the appeal, if successful, is not nugatory.’ That was the principle which Pennycuick J. applied in the Orion case [1962] 1 W.L.R. 1085; and although the case had not then been cited to me, it was on that principle, and not because I felt any real doubts about my judgment in the motion, that I granted Mr Newsom the limited injunction pending appeal that he sought. This is not a case in which damages seem to me to be a suitable alternative.”

Megarry J further went on to draw a parallel between applying for an injunction pending appeal and a stay pending appeal, stating:

“Although the type of injunction I have granted is not a stay of execution, it achieves for the application or action which fails the same sort of result as a stay of execution achieves for the application or action which succeeds. In each case the successful party is prevented from reaping the fruits of his success until the Court of Appeal has been able to decide the appeal. Except where there is good reason to the contrary (and I can see none in this case), I would apply the convenience of the procedure for the one to the other.”

26.          In Celcom (Malaysia) Bhd v Inmiss Communication Sdn Bhd (2003) 3 MLJ 178, the above principles were applied in granting an Erinford Injunction to restrain the defendant from taking further steps in a winding up petition pending hearing of the plaintiffs appeal to the Malaysian Court of Appeal against the decision made by the High Court dismissing the plaintiff's application for an injunction to restrain the defendant from filing a winding up petition against the plaintiff. This should be compared to the position where an injunction against presentation of a winding-up petition has been granted, for in those cases the court is unlikely to stay it pending appeal.

27.          There were no Malaysian cases placed before the Court dealing with the Erinford principles in winding up proceedings decided after Celcom. The reason for this may be due to the fact that in Malaysia, unlike England and Wales, it has since been held that the Courts do not have the power, after the presentation of a petition, to restrain the advertising of the same. This was reinforced by the decision in People Realty SDN BHD v Red Rock Construction SDN BHD [2008] 1 CLJ 632.

28.          It is submitted by Mr Martin Green that the Court of Appeal case of Ketchum International Plc v Group Public Relations Holdings Ltd [1997] 1 W.L.R 4; [1996] 4 All E.R 374 is an authority for his contention that the Court must not grant an Erinford injunction unless it is satisfied that it would have granted leave to appeal if leave was required. Mr Green submits that this contention is supported in Erinford when Megarry J stated: “There may, of course be many cases where it would be wrong to grant an injunction pending appeal, as where any appeal would be frivolous, or to grant the injunction would inflict greater hardship than it would avoid, and so on.” Mr Green particularly relies upon the phrase “and so on” to mean that the list was not exhaustive and covered the need to establish that, if leave to appeal had been required, it would have been given.

29.          In Ketchum, the plaintiffs argued that when an appeal is sought, the Court of Appeal should ensure that this is not hindered by the successful party disposing of its assets. The Court held that in a case where a plaintiff unsuccessfully sought an injunction to restrain a defendant from dealing with the proceeds of sale which were the subject matter of an appeal, the Court still had jurisdiction to grant an injunction restraining a defendant from disposing of assets pending the hearing of the appeal against the refusal to grant the said injunction. It was held that the jurisdiction was similar to that exercised where an unsuccessful defendant sought a stay of execution pending appeal, as justice required that there not be an unjustifiable disposal of assets thus making a judgment of the court valueless. It was suggested that there was no reason why the considerations applicable to the grant of a Mareva injunction should not be applied in favour of such a plaintiff. Stuart-Smith L.J. held that:

“This jurisdiction [of granting injunctive relief] is not limited to cases concerned with the preservation of a fund or property the subject of an action, but is based on the wider principles enunciated by Cotton L.J. that justice requires that the court should be able to take steps to ensure that its judgments are not rendered valueless by an unjustifiable disposal of assets.”

The Court of Appeal therefore had an original jurisdiction to grant injunctive relief whenever the interests of justice required the court to maintain the value of its judgments by not allowing an indefensible disposal of assets. In doing so Stuart-Smith L.J. stated that the test when dealing with a grant of a Mareva injunction the question is simply “Does he have a good arguable appeal?” instead of “Does he have a good arguable case?” The threshold in those cases must be at least as high as that which has to be satisfied when the court considers whether or not to grant leave to appeal. The test therefore in those cases should be whether there exist good arguable grounds of appeal.

30.          It is clear that the views expressed in Ketchum relate to matters in which the injunction in question is one designed to prevent the unjustifiable disposal of assets. Ketchum is partly the authority for Courts having the jurisdiction to make Erinford injunctions in such circumstances. The class of plaintiffs primarily referred to in Ketchum are plaintiffs in matters where there is a concern of unjustifiable disposal of property, who are afforded the opportunity to apply for an injunction applying the Mareva considerations pending the appeal of the refusal to grant an injunction. I am not satisfied in the matter before me that that a concerns of unjustifiable disposal of assets has been established.

31.          Steven Gee “Commercial Injunctions” Fifth Edition at Paragraph 23.038 writes:

“(iii) The principle to be applied to granting an injunction pending appeal 23.038 - The general principle is that the court will seek to preserve the status quo so that the appeal, if successful, is not rendered nugatory.1

Applied to the Mareva jurisdiction where the applicant is the unsuccessful complainant for substantive relief, the principle is that “.... justice requires that the court should be able to take steps to ensure that its judgments are not rendered valueless by an unjustifiable disposal of assets''  2 the questions are (1) whether the applicant has a good arguable appeal and (2) whether there is a real risk of dissipation of assets such that an eventual judgment may not be satisfied. ”

32.          In Erinford and in the later case of Celcom neither Court felt it necessary to satisfy itself that the test for granting leave to appeal had to be satisfied as a prerequisite for granting the appeal. I have considered the Grounds of Appeal. This Court is still of the view that the ruling under appeal was the appropriate one. However, having regard to the Erinford principles applied to the circumstances of this case, the Court must still have regard to the fact that the Court of Appeal may think otherwise. There is a contention that the Court erred in law and in proceedings of this nature, it would be appropriate for the Plaintiff to have that considered by the Appellate Court.

1“Erinford Properties Ltd v Cheshire County Council [1974] Ch. 261; paring Mining and Exploration Company plc v North Flinders Mines Ltd (No.2) (1988) 165 C.L.R 45”

2“Ketchum plc v Group Public Relations Ltd [1997] 1 W.L.R. 4 at 10”

33.          Dellis submit that the presentation and advertising of a winding-up petition will have an irreversible negative impact on them, its parent company and the ongoing major development at Dellis Cay. This echoes the view expressed in Shepherd Hill Civil Engineering Ltd (Applicant) v Brophy Landscape (Respondent) Sum Nom RE A Company No 007020 of 1996 (1997) where the generally applicable statement that the “advertisement of a winding up petition against a construction company must be calculated to do very serious damage to that business of the company” was made. In addition, as to whether Dellis will suffer substantial loss that could not be cured unless the order is made may depend on four variables. If the injunction order is not granted, there is the latent risk that the winding up process of Dellis will proceed in the Supreme Court parallel with the hearing of the appeal in the Court of Appeal who are not scheduled to sit again until January 2010. Such a process can lead to four possible consequences:

(a)           both parties may win their respective cases in the respective courts, or

(b)           both parties may lose their respective cases, or

(c)           Dellis might win in the Court of Appeal, while Dredging TCI loses in the Supreme Court

(d)           Dellis might lose in the Court of Appeal while Dredging TCI succeeds in the Supreme Court

34.          Starting with the last possible outcome, if Dellis loses in the Court of Appeal and the Dredging TCI wins in the Supreme Court, Dellis will be wound up without suffering any additional substantial loss except, possibly the costs of appeal. In regard to outcome (c), if Dellis wins in the Court of Appeal while Dredging TCI loses in the Supreme Court, then again Dellis will not suffer any substantial loss, as it will not be wound up. However, Dellis may be seriously affected by the damaging consequences of the publicity of the fact that they are subject to actively ongoing winding-up proceedings. Thirdly, under outcome (b), if both parties lose their respective matters in the respective courts, Dellis will not suffer any additional substantial loss. However, again the effect of damaging publicity about the proceedings to Dellis would be damaging. Lastly, if Dellis wins its appeal in the Court of Appeal and Dredging TCI successfully petitions to have Dellis wound up in the Supreme Court, this would have disastrous consequences for Dellis, as it could lead to the winding up that company while the Court of Appeal were of the view that it should not be wound up. It would be even more disastrous, as is possible, if the winding up proceedings were to be completed before the appeal is determined by the Court of Appeal. This would render the appeal nugatory.

35.          The Court should lean against a decision which would have the result of rendering any further proceedings by Dellis nugatory. This doctrine was first enunciated by Cotton L.J. in Wilson v Church No. 2 [1879] 12 ChD 454 at 458:

“I will state my opinion that when a party is appealing, exercising his undoubted right of appeal, the Court ought to see that the appeal, if successful, is not nugatory.”

36.          This Court must take cognisance of this doctrine and a number of cases dealing with it involved money judgments where the unsuccessful party at first submitted that if his appeal was successful he would have little chance of the money being recovered back. The Court will often have to strike a balance between the risk of rendering an appeal nugatory and the principle that a successful litigant should not normally be deprived of the fruits of his judgment without just cause. The passage from Wilson v Church was cited by Megarry J. at page 454 in Erinford Properties v Cheshire County Council.

37.          Although the exhibits to Ogus Serim’s affidavits of August 28, 2009 and September 1, 2009 may not have been in the most desirable form, I have regard to the contents. There is force in Mr Martin Green’s submissions that Dellis’ submission would have greater force if they had given details of the balance in their bank accounts, ft appears from the documents that work is still ongoing at the development, albeit on an apparently scaled down level compared to the past. Although the project does not appear to be progressing on schedule, this is a pattern developing as the real estate market has slowed down and this Court is seeing this trend in a number of cases involving developments of this nature currently before it.

38.          There is evidence of construction staff still working at the project.3 There is evidence from Mda Consulting that ongoing works were being carried out up to and including the date of their August 2009 letter. Dellis’ bank statements and transaction statements, although regretfully not showing any balances, show salaries and National Insurance premiums being paid, although some possibly belatedly. They also show payments being made for materials. It also shows that not insignificant payments are being made to suppliers and service providers. The statements illustrate that Turks Limited are paying sums into the account, no doubt to facilitate such payments. From the period 31st July 2009 to 31st August 2009 the account has been credited by just over $1 million with roughly the same amount coming out of the account. This is evidence of a company that is still trading and apparently paying its related debts. There is no evidence, save for the debt which is the subject matter of these proceedings, of any other debts proceedings or claims by other debtors.


39.          Having regard to all of the circumstances of the case the only way to circumvent the situation outlined above is to regretfully stay the winding up process pending appeal. I say regretfully due to the fact that the Court of Appeal are not scheduled to next sit until January 2010 and this will constitute a lengthy delay in recovering the debt Dredging TCI claim they are owed. However, balancing all the factors, the potential disaster posed by continuing with the winding up process constitutes sufficient cause for the granting of an injunction restraining the progression of the winding up proceedings pending appeal. The balance of convenience is in favour of granting the injunction. Dellis, unlike Dredging TCI, could not be compensated by monetary payment. If the Injunction is not granted, the loss and damage to Dellis would be beyond monetary compensation.

3 Page 9 exhibits

40.          The status quo should be preserved pending the determination of the Plaintiff's appeal. The status is, as the winding up petition was presented on the eve of the hearing of the Summons to stay pending appeal, that the petition has not been advertised. As in Celcom (Malaysia) Bhd, the integrity of the appeal will be preserved and the appeal will not be rendered nugatory. Although the Court has not been persuaded that its decision was wrong, it accepts that there appears to be an appeal grounded on an issue of law. The fact that the appeal would be rendered nugatory in this matter is a very significant factor when carrying out the balancing exercise in this case. For the above reasons, it is just and equitable to grant the injunction order restraining the progression of the winding up proceedings, which includes the advertising of the petition, pending the appeal. However, the granting of the injunction is dependent upon Dellis giving the normal undertaking as to damages


41.          Dellis were initially unwilling to give an undertaking. However, Mr Clayton Greene eventually stated that if the Court felt that the granting on the injunction was dependent upon an undertaking being given, then his client was willing to give the normal undertaking as to damages.

42.          Mr Martin Green submitted that this was a case in which the Court should order that the undertaking be fortified based on a risk of loss or damage. Mr Martin Green submitted that the Court has already ruled, when refusing the injunction, that there is a debt which is entitled to be paid. Mr Green submitted that this cannot now be paid pending the Appeal. It is submitted that there is a real and substantial risk that by January, February or March 2010 that Dellis will be insolvent and unable to pay if their appeal is unsuccessful and the Company wound up.

43.          Mr Clayton Greene argues that this is not a suitable case for fortification as it is a trading company and there is no evidence that it will be unable to meet the “alleged debt” if the Company is wound up. Mr Greene argues that the sum of $775, 825.50 has not been paid as a security to date because Dellis, until the time of the ruling under appeal and subsequently, feel that this is a disputed debt. Dellis state that to unexpectedly be required to tie up $775,825.50 in the circumstances would not make financial sense and may cause cash flow problems.

44.          Fortification is frequently requested in cases in which there are cross-undertakings in Mareva injunction proceedings or where an order is made restraining a party from dealing with property.4 This would then compensate the party for damage flowing from the restrictions placed upon them. In the matter before me, it is claimed that the Court has found that there is a debt as it is not bona fides disputed. It is then argued that this means that Dredging TCI is entitled to the amount and is in the same position as a judgment debtor. It is right that, if the appeal is unsuccessful and there is not a change of circumstances, Dellis will have great difficulty challenging the granting of a winding up order at the hearing of the petition. However, that integral and concluding stage of the proceedings has still not been reached.

45.          Where an order for security is made, the amount in respect of which security is to be provided should reflect future losses and not the losses already incurred at the time of the application for security.

46.          Before the application to fortify an undertaking can succeed, Dredging TCI must show that there is a likelihood of a significant loss arising as a result of the injunction and a sound basis for the belief that the undertaking will be insufficient.

47.          There is force in Mr Martin Green’s submission that, if the debt is found not to be properly disputed and the amount sought, albeit a lower figure, in the statutory demand has not been met, that there is a statutory presumption that Dellis is insolvent. I have regard to that submission. However, I also have regard to the contents of paragraphs 37 and 38 above concerning the apparent status of this Company. I also have regard to the fact that Dellis is a not an overseas company. This is not an undertaking the performance of which may cost Dredging TCI money. In considering all of the circumstances, including the nature of the injunction and related proceedings, I do not find that the evidence is sufficient to require fortification of the undertaking and I do not order the same.

4 See Bhimji v Chatwani [1992] 4 All ER 912. Sec Sinclair Investment Holdings SA v Cushnie and others

48.          Mr Martin Green made a number of insightful and helpful submissions during this hearing. Dellis would be most wise to consider carefully some of these submissions. In particular, if a winding-up order is made, all dispositions of property of Dellis since the date of presentation of the petition will be void, unless the Court otherwise directs. Following a winding up order, a person who received property from the company after the date of presentation of the petition can be required to restore that property to the company if it would be for the benefit of creditors generally. If the banks become aware that the petition has been presented they may, as frequently happens, freeze the company’s account to ensure that it will not have to account for drawings made during that period between the date of presentation of the petition and the date when winding-up order is made. Mr Martin Green is right to alert the Court to the problems that this may cause to any possible future creditors and those in a business relationship with Dellis. I have had regard, when considering all the circumstances of this case, to the fact that Dellis have hitherto not sought to seek the additional relief for validation. I am cognisant of the evidential burden that would be placed upon Dellis if they sought such an order and have regard to Mr Martin Green’s concern that this may en a reason why such an application has not been made.

48.          Costs will be costs in the cause.


Richard Williams J