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You are here: BAILII >> Databases >> The Judicial Committee of the Privy Council Decisions >> Fairfield Sentry Ltd v Migani & Ors (British Virgin Islands) [2014] UKPC 9 (16 April 2014) URL: https://www.bailii.org/uk/cases/UKPC/2014/9.html Cite as: [2014] 1 CLC 611, [2014] UKPC 9 |
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[2014] UKPC 9
Privy Council Appeal No 0061 of 2012 and Nos 0058, 0059, 0060 and 0061 of 2013
Fairfield Sentry Limited (in Liquidation) (Appellant) v Migani and others (Respondents)
Lombard, Odier & Cie and others (Appellants) v Fairfield Sentry Limited (in Liquidation) (Respondent)
Credit Suisse London Nominees Limited and another (Appellants) v Fairfield Sentry Limited (in Liquidation) (Respondent)
Quilvest Finance Limited and others (Appellants) v Fairfield Sentry Limited (in Liquidation) (Respondent)
UBS AG New York and others (Appellants) v Fairfield Sentry Limited (in Liquidation) (Respondent)
Lombard, Odier & Cie and others David Lord QC Robert Christie (Instructed by Blake Lapthorn) |
Fairfield Sentry Ltd (in Liquidation) Jonathan Crow QC Andrew Westwood Stephen Midwinter (Instructed by Macfarlanes LLP) |
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Credit Suisse London Nominees Ltd and another Laurence Rabinowitz QC Arabella di Iorio Maximilian Schlote (Instructed by Herbert Smith Freehills LLP) |
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UBS AG New York and others Lord Falconer QC Paul Webster QC (Instructed by Gibson Dunn & Crutcher LLP) |
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Quilvest Finance Ltd and others Mark Hapgood QC Phillip Kite Alan Roxburgh (Instructed by Latham & Watkins) |
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LORD SUMPTION:
Introduction
The contractual documentation
"The issue of Shares pursuant to this Article shall be effected at not less than the Subscription Price determined in accordance with paragraph (2) of this Article but in no event shall a Share be allotted or issued at a price less than its par value."
Article 9(2) provides that the Subscription Price per share is to be the
"Net Asset Value of each Share (as determined in accordance with Article 11) as at the close of business in Amsterdam, The Netherlands, on the Valuation Day immediately preceding the Dealing Day on which such issue is made."
"Subject to the provisions of the Memorandum, these Articles and the Act and subject as hereinafter provided, the Company shall on receipt by it or its authorised agent of a request in writing (or in such other form as the Directors may determine) by a Member ('the Applicant') specifying the number and class of Shares to be redeemed redeem or purchase all or any portion of the Shares registered in the Applicant's name, PROVIDED THAT:
(a) subject as hereinafter provided, the redemption or purchase of Shares pursuant to this Article shall be made on the Dealing Day on which, or immediately following the day on which, the written request is received provided that the said request is received on or before the Dealing Time."
Article 10(1)(b) provides (so far as relevant) that
"the redemption or purchase of Shares pursuant to this article shall be effected at the Redemption Price determined in accordance with paragraph (2) of this article."
Article 10(1)(c) provides for the Redemption Price to be paid "as soon as practicable after the Dealing Day", being normally 30 days after the Dealing Day, subject to extension in certain special cases. Article 10(2) deals with the Redemption Price. It provides:
"(2) The Redemption Price for each Share shall be the Net Asset Value per Share (as determined in accordance with Article 11) as at the close of business in Amsterdam, The Netherlands on the Dealing Day on which such redemption is effected less such sum (if any) as the Directors may consider represents the appropriate provision for fiscal and sale charges which would be incurred on the sale of assets of the Company, in each case rounded to the nearest minimum integral unit of the Base Currency."
"[a] The Net Asset Value per Share of each class shall be determined by the Directors as at the close of business on each Valuation Day (except when determination of the Net Asset Value per Share has been suspended under the provisions of paragraph (4) of this Article), on such other occasions as may be required by these Articles and on such other occasions as the Directors may from time to time determine.
[b] The Net Asset Value per Share shall be calculated at the time of each determination by dividing the value of the net assets of the Fund by the number of Shares then in issue or deemed to be in issue and by adjusting for each class of Shares such resultant number to take into account any dividends, distributions, assets or liabilities attributable to such class of Shares pursuant to paragraph (2) of Article 4, all determined and calculated as hereinafter provided.
[c] Any certificate as to the Net Asset Value per Share or as to the Subscription Price or Redemption Price therefor given in good faith by or on behalf of the Directors shall be binding on all parties."
The sub-paragraph numbers [a], [b] and [c] have been added for ease of reference. Article 11(2) identifies the assets and liabilities to be included in the calculation of the NAV. In effect they are all the assets and liabilities of the Fund. Article 11(3) contains detailed supplementary provisions governing certain aspects of the valuation.
Redemption procedure
i) Citco calculated an estimated NAV weekly and a final NAV on each Valuation Day, i.e. on the last business day of each month. All of these figures were posted by Citco on a password-protected website which it maintained and which was accessible to Members.
ii) The final NAV per share for the last business day of each month was communicated in about the middle of the following month by the Fairfield Group client desk at Citco by e-mail to all Members. The operative part of the representative e-mail before us reads:
"Please be advised that the final net asset value per share of Fairfield Sentry Limited, Class A, is USD 957.8430 as at December 2003.
Should you have any questions or require further information, please do not hesitate to contact us."
iii) Upon each redemption, the redeeming Member received from Citco in about the middle of the month following the relevant Valuation Day a contract note recording the transaction. The operative part began:
"In accordance with your instructions, we confirm having REDEEMED the following voting shares from FAIRFIELD SENTRY LIMITED."
There followed the relevant Valuation Day, the number of shares redeemed, the Redemption price per share and the total net redemption proceeds.
iv) Each Member received from Citco in about the middle of each month a monthly statement of his account. This recorded, among other things, the opening and closing NAV per share for the previous calendar month, and a summary of activity (if any) over the previous calendar month recording subscriptions and redemptions in the month and the NAV per share corresponding to each one.
Each of these documents is said by the Defendants to be a "certificate" for the purpose of Article 11(1) [c] of the Fund's Articles.
Restitution
What was the Fund obliged to pay upon redemption
Certification
Conclusion
The Board will humbly advise Her Majesty that the appeals against the decision of Bannister J and the Court of Appeal on Preliminary Issues 1, 2 and 3 should be allowed, save as to information posted on the Citco website, and that the appeal against their decision on Issue 4 should be dismissed. The parties are invited to agree an appropriate form of declaration on all four issues.