By Daniel Keane
The Supreme Court has upheld an order restoring Deauville Communications Worldwide Limited to the Register of Companies so that Orlaford Limited can continue legal proceedings against it in Bermuda.
The appeal arose after the High Court ordered Deauville restored to the register and required its former officers to deliver outstanding annual returns and tax documentation. Orlaford said it was a creditor because it was pursuing Deauville for damages over an alleged conspiracy connected with royalty payments for a patented system of lights used in footwear.
The former directors challenged the restoration on three grounds. They argued that the application could only have been brought in the Circuit Court, that Orlaford was not a creditor within the relevant legislation, and that there was insufficient evidence that its claim against Deauville was genuine.
Chief Justice Keane rejected all three arguments.
On jurisdiction, the court examined section 12B of the Companies (Amendment) Act 1982 as amended in 1999. Although the provision referred to the Circuit Court, the Supreme Court held that it did not remove the High Court's jurisdiction. In practical terms, the legislation gave creditors and the Registrar of Companies an additional forum rather than an exclusive one.
The court also held that creditor should not be read narrowly. Orlaford's claim was for unliquidated damages rather than an already fixed debt, but the Supreme Court found that prospective or contingent creditors could still seek restoration where they needed the company returned to the register in order to enforce a potential liability.
Finally, the court found enough evidence that Orlaford's Bermuda proceedings were bona fide. Affidavits from lawyers acting for the company described investigations into Deauville's alleged involvement and exhibited material from earlier litigation.
The court said the High Court was entitled to conclude that Orlaford's claim might succeed and was neither frivolous nor vexatious. The appeal was dismissed.