Trans Pacific Aluminium Joinery Ltd v B L Naidu & Sons [1997] FJHC 244; HBF0023.1996l (22 October 1997)

IN THE HIGH COURT OF FIJI
AT LAUTOKA
CIVIL JURISDICTION

CIVIL ACTION NO. HBF0023 OF 1996L

BETWEEN:

TRANS PACIFIC ALUMINIUM JOINERY LTD
PETITIONER

AND:

BL NAIDU & SONS LTD
DEFENDANT

Mr Young for the Petitioner
Mr A Patel for the Respondent

Date of Hearing: 22nd October 1997
Date of Ruling: 22nd October 1997

RULING

This is an application for stay pending appeal.

By ruling delivered on the 15th August 1997, I ordered the winding up of the Applicant company.

On the 20th August an order was sealed.

On the 9th September 1997 the Applicant filed a Notice of Motion seeking a stay of the order pending appeal and other ancillary relief. One such relief was a "non-publication" Order. This point has past as I believe the Order of the 15th August 1997 was in fact being published.

I thus concern myself with the stay application only.

The material before me is:

1. Notice of Motion filed on the 9th September 1997;

2. Affidavits of Mr Naidu for the Applicant filed the 9th September and the 10th October 1997;

3. Affidavit of Mr SANT KUMAR for or the Respondent filed the 11th September and the 21st October 1997;

Firstly I accept that the Court has the power to order a stay of a Winding Up order. (See TOBERUA ISLAND v. JIMINEZ - CIVIL APPEAL NO. 75/86 1986 FCA VOL. p574).

The first point raised by the Respondent is that any application for stay of the Winding Up order must be made pursuant to Section 252 of the Companies Act (Cap 247).

That Section reads:

"(1) The court may, at any time after an order for winding up, on the application either of the liquidator or the official receiver or any creditor or contributory, and on proof to the satisfaction of the court that all proceedings in relation to the winding up ought to be stayed, make an order staying the proceedings, either altogether or for a limited time, on such terms and conditions as the court thinks fit.

(2) On any application under this section the court may, before making an order, require the official receiver to furnish to the court a report with respect to any facts or matter which are in his opinion relevant to the application.

(3) A copy of every order made under this section shall forthwith be forwarded by the company, or otherwise as may be prescribed, to the registrar for registration."

Counsel for the Respondents submitted for my consideration, that Section means, in effect, that the present Applicant has no locus standi to bring this application. Counsel accepted that he could not find any authority to back this.

In my view Section 252 applies to a stay of the winding up order per se. This may be sought, for example, if the winding up order is prejudicial to a contractual arrangement which, in the liquidator's opinion, will bring some positive return to the wound up company if completed. In that case, for the benefit of the company, the creditors and the contributories, the winding up may be stayed to allow the company to "trade out". (Since delivering this Judgment, I have had reference to the following cases, re: TALLY SCRIPTOR SYNDICATE LTD [1903] UKLawRpCh 65; [1903] 2 CH. 174 re: CALGARY & EDMONTON LAND CO. [1975] 1 WLR 355 and re: DIAMOND FUEL CO [1879] UKLawRpCh 322; (1879) 13 CH. D 400 (COURT OF APPEAL). Fortunately, these cases tend to support my view of Section 252 when it conflicts with the right to appeal).

This is a different situation from a stay pending appeal to the Court of Appeal from a Judge's decision. In such instance an aggrieved party has a right to appeal. This is a right which attaches to a party directly from the Court's action. I consider this right to be separate from and unaffected by S.252.

The difference is to be made between the right of an aggrieved litigant, the rights of creditors, contributories and the company in its wound up state, to which S.252 applies (Again since delivering judgment I have had causes to refer to some authorities where appeal is made by the company is made by the Directors not the liquidator - re : DIAMOND FUEL CO, (supra), but the Court ordered security for costs, re PHOTOGRAPHIC ARTISTS CO.-OPT. SUPPLY ASSOCIATION [1883] UKLawRpCh 91; (1883) 23 CH. D 370 (COURT OF APPEAL) and in the event of an unsuccessful appeal the Directors may be personally liable for costs (re CONSOLIDATED SOUTH RAND MINES NO. 2 [1989] W.N. 66. Creditors and contributories who appear at a hearing of a petition can appeal (re: SOAP STONE FAWL COLLIERY CO. [1875] UKLawRpCh 144; (1876) 1 CH. D. 38, for those who did not appear cannot appeal without special leave (re: SECURITY INSURANCE CO. [1894] UKLawRpCh 68; [1894] 2 CH 410 - See GENERALLY PALMERS COMPANY LAW para 15.304).

Looked at in that light, the matters falling to be considered are those general principles applicable to an application for stay pending appeal. These principles are well known and have been established in Fiji in the Court of Appeal decision in RAM LATCHAN -v- L.R. MARTIN FCA 56/82 (1983) FCA VOL. p233.

In considering the competing rights of the Applicant and the Respondent, the Courts must not too readily rob a successful litigant of its remedy. In instant case, the Court should not lightly remove from the Respondent, any other creditors and the contributories, the right to have the company placed in receivership where all their interests are to be looked after. The Court has, in a winding up order, made a decision that the Company is unable to pay its debts. By inference thus, the right of any other creditors and contributories are in issue. The winding up order has the practical effect of putting the company in "safe hands" and out of the hand of the Directors who have run it into the position of being insolvent (at least in the Court's view). Clearly thus, all of the above-mentioned parties' interests (including the public interest - see TOBERUA ISLAND CASE) need to be considered as well as the interests of the Applicant for stay.

Against this, any aggrieved party which can show exceptional circumstances can be the beneficiary of a stay order. Although the list of exceptional circumstances is, I suppose, incapable of precise definition, generally speaking such matters as: destruction of the subject matter; the likelihood of a successful appeal being rendered nugatory; the likely inability to recover any judgment monies paid and so forth, are considered by the Courts to be exceptional circumstances.

To obtain support for these exceptional circumstances, one turns to the evidence properly put before the Court.

On review of the evidence in this matter, I can find no evidence of any exceptional circumstances. In fact the whole issue seems to have been side-tracked by a dispute as to whether or not there are any other creditors and as to the asset value of the Applicant company.

None of this could be said to be evidence of exceptional circumstances. Just because a Company may have certain assets (I note little mention is made of liabilities in the evidence before me) is not an exceptional circumstance. Whether or not the Department of Inland Revenue is a creditor or the circumstances of the National Bank (Asset Management) of Fiji's claim is also hardly an exceptional circumstance.

I hold the view that where the courts have prescribed certain principles to govern the exercise of its discretion, such principles must be met. It would totally defeat the consistent course of justice if one were to ignore the principles for no valid reason.

I am unable to see any reason why I should depart from being restricted and guided in the exercise of my discretion in this case. It is in the interest of justice that I must be bound by the requirement that the Applicant show exceptional circumstances before this Court is moved to grant a stay.

As I have said the Applicant has not shown those circumstances. No evidence is offered on the point at all.

The application must fail.

The application for stay is dismissed. I award the Respondent/Petitioner its costs for this application which I summarily assess at $200.00 (TWO HUNDRED DOLLARS).

JOHN D. LYONS
JUDGE

HBF0023.96L