Removal of liquidator – liquidator failing to apply for licence to hold land on trust, report to court or creditors – loss of confidence in liquidator

On 2 May 2012, the former liquidator of Leeward Island Resorts Ltd (“LIR”) entered into, and received the full purchase price under, a contract for sale of some of LIR’s assets (an hotel in Anguilla) to CJL&C Ltd. On 4 May 2012, a new liquidator (“L”) was appointed over LIR. CJL&C Ltd did not obtain an alien landholder’s licence within the three months stipulated by certain Anguillan legislation, as a result of which, L, in breach of the criminal law of Anguilla, held the assets on trust for CJL&C Ltd (i.e. the bare trust of the registered legal title to the hotel that existed between LIR and CJL&C Ltd until the latter was registered with title to the hotel).

Further, despite his appointment in May 2012, and an application for his removal in January 2013, L did not properly report to the creditors until three days before the hearing against the Master’s refusal to remove him. Nor did he comply with a statutory provision to apply to the Court, within one year of his appointment, for approval of final accounts (or an extension of time to do so, if, as was the case, he was not in a position to file final accounts).

Allowing the appeal against the Master’s refusal to dismiss L, the Court of Appeal applied a three step process: (1) Did the applicant have standing? (2) Had due cause been shown? (3) If so, should the Court exercise its discretion (bearing in mind that it does not lightly remove its own officers)?

The Court held that on the facts of the case L should be removed. L had simply ignored the obligation to report to the Court (or seek an extension of time for doing so). His report to creditors was late (and he did not give any proper explanation therefor), and he never called any meeting of creditors. Also, he had exposed LIR to criminal liability for holding the legal estate of the hotel on trust for CJL&C Ltd without a licence under the relevant legislation. As a result, the applicant’s loss of confidence in L was reasonable, and L should be removed immediately.

This case is a rare case of an office holder being removed by the Court following a series of errors which had resulted in creditors losing confidence in him.