Tensor Endowment Ltd and UBS Fund Services (Cayman) Ltd v New Stream Capital Fund Ltd (No 2)

• Jurisdiction: Bermuda
• Judgment Date: 17 June 2010
• Date: 17 June 2010
• Docket Number: Commercial Jurisdiction 2010 No. 42
• Court: Supreme Court (Bermuda)

In The Supreme Court of Bermuda

Commercial Jurisdiction 2010 No. 42

BETWEEN:

(1) TENSOR ENDOWMENT LIMITED; (2) UBS FUND SERVICES (CAYMAN) LTD

Plaintiffs

v

NEW STREAM CAPITAL FUND LIMITED

Defendant

Mr A Martin for the Plaintiffs

Mr C Hill for the Defendant

The following cases were referred to in the judgment:

Aldi Stores Ltd v WSP Group plcWLR [2008] 1 WLR 748

Jupiter Asset Management v The Asset Management GroupBDLR [2005] Bda LR 1

Abstract:

Claim for summary judgment - Earlier proceedings - Strike out application - Interest

JUDGMENT of KAWALEY, J

Introductory

1. The Plaintiffs ("Tensor") applied by Summons dated February 26, 2010 for Summary Judgment in respect of their claim set out in a Specially Indorsed Writ issued on February 5, 2010. According to the Prayer, the Plaintiffs claimed "payment of the price due upon the redemption of redeemable shares in a segregated account maintained by the Defendant and known as Class K", being "a liquidated sum of $8,820,838.03". This claim was further elaborated upon in the Statement of Claim filed on February 5, 2010 together with the Writ.

2. The Defendant filed its Defence on March 11, 2010. It is admitted that the redemption sum payable to Tensor is the amount claimed, but averred that this amount is only payable under the Bye-laws "as soon as practicable". It is averred that Tensor is estopped from asserting the present claim because it ought to have brought the claim before, no later than when it brought its application to appoint a receiver under section 19 of the Segregated Accounts Companies Act 2000, which was refused in Tensor Endowment Limited et al v New Stream Capital Fund Ltd.BDLR[2009] Bda LR 74 ("Tensor I"). It is also averred that the Plaintiffs are not entitled to interest in any event.

3. By Summons dated March 16, 2010, the Defendant applied to strike out Tensor's action on the grounds that it was frivolous and vexatious and/or otherwise an abuse of the process of the Court under Order 18 rule 19(1)(b),(d) of the Rules. The parties' respective Summonses came on for hearing together. At the hearing it became clear that no dispute existed in relation to Tensor's claim for payment as such. Rather the Defendant challenged the Plaintiffs' right to bring the present proceedings on technical grounds and, alternatively, their right to claim interest on any judgment this Court might enter in Tensor's favour.

The Plaintiffs' claim

4. Although Tensor's claim is not disputed on its merits, it must be understood in order to evaluate the interest issue. It is undisputed that from around July 1, 2007, the Tensor beneficially owned segregated account Class K shares in the Defendant Fund as a result of investing US$8 million. The Statement of Claim places reliance on two matters in support of the averment in paragraph 14 that "on or before 31st May 2008 the Shares were redeemed and the Defendant was immediately liable to pay the Redemption Price to the First or Second Plaintiff calculated on the Valuation date in the sum of US$ 8,820,838.03". One is a matter of record and has no bearing on the interest controversy. This is the reliance pleaded in paragraph 13 on the finding in

Tensor I that "Tensor became an actual (redemption) creditor on May 31, 2008 in respect of its redemption request in the agreed amount." However, it is also averred that:

"12. By his affidavit sworn in [Tensor I] at paragraph 75 Mr. Perry Gillies, President of New Stream Capital LLC deposes as follows;

'The [Second Plaintiff] served notice of redemption on 22nd January 2008 in relation to its shares in Class K for a 31 May 2008 redemption. On 29 May 2008, [New stream Capital LLC] offered the [First Plaintiff] the chance to 'float' its redemption, which would have allowed interest to continue to accrue on the balance of the redeemed amount until payment, which would be made in due course based on the effective date of redemption. The [First Plaintiff] declined to respond and the net asset value (NAV) of its redemption was therefore fixed and became effective as of 31 May 2008 in the amount of US$ 8,820,838.03'"

5. Tensor nevertheless claimed either compound interest or interest pursuant section 10 of the interest and Credit Charges (Regulation) Act 1975 at the rate of 7.5% from June 1, 2008 until judgment or sooner payment. The Defendant averred in paragraph 23 of its Defence that : (a) the right to interest had been waived; (b) under the terms of the Amended Loan Notes, Tensor...