On 16 September 2011 judgment was handed down by the BVI Commercial Court in a number of cases that have been brought by the liquidators of Fairfield Sentry Limited (Fairfield), a "feeder fund" into Bernard L Madoff Investment Securities Limited (BLMIS), against a number of investors that historically redeemed out of the fund (the Fairfield judgment).
Subject to any appeal, the Fairfield judgment should put an end to the liquidators’ claims in the BVI. The answer to that question will, however, ultimately depend on how the Commercial Court rules in the defendants’ reverse summary judgment application, which has been listed for hearing in the week commencing 26 September 2011. Ogier represents a significant number of defendants being sued in these proceedings.
Justice Bannister decided that none of the documents that the defendants relied upon constituted certificates within the meaning of article 11 of Fairfield’s articles of association. The defendants therefore lost on this argument but won overall.
Michael J Fay (pictured), Partner Ogier BVI, says: "it was the good consideration argument that found favour with Justice Bannister QC. The Judge found that in surrendering their shares (and therefore the rights that attached to the shares) the defendants provided good consideration for the redemption payments that they received. Justice Bannister QC could not see how the later discovery of the Ponzi scheme could vitiate the bargain. He also noted that he could not understand how Fairfield could recover the redemption price when the parties would not be able to be restored to the positions that they were in before they entered into the contract."
In light of his determination on the preliminary issues, Justice Bannister QC ordered that the defendants involved should bring an application for summary judgment for final disposal of the BVI actions. Provided this is successful, that should be the end of the BVI proceedings and will perhaps be the beginning of the end for the claims that have been brought against many of the same defendants in New York.
