Legal Update - Spring 2015

Nilon Limited v Royal Westminster Investments SA [2015] UKPC 2

Lennox Paton acted for Nilon Limited who succeeded in their defence of a claim to rectify their share register brought by Royal Westminster Investments SA. The background facts are somewhat complex but essentially they concerned a purported oral agreement between a Mr Varma on the one hand and members of the Mahthani family on the other. The Mahtani family alleged that Mr Varma had agreed to incorporate Nilon Limited in the BVI and to issue shares to the Mahtanis in return for consideration. Nilon Limited denied that such an agreement existed and argued that the money received from the Mahtanis was a loan. Nilon further argued that sums paid to the Mahtanis from Nilon were interest payments and not dividends. The Privy Council had to decide whether the Mahtani family had "a good arguable case" against Nilon for rectification of the share register. This was important because if the claim against Nilon was struck out any claim against Mr Varma would also fail because Nilon was the "anchor defendant" in the BVI and the BVI Court would not otherwise have jurisdiction over Mr Varma who was not resident in the jurisdiction.

The Manhanti family relied upon the English Court of Appeal decision in Re Hoicrest Ltd [2000] 1 WLR 414. At first instance, Bannister, J...