In re NBF Asset Management Bank [2012] FJHC 1128; HBE87.2011 (25 May 2012)

IN THE HIGH COURT OF FIJI
AT SUVA
COMPANIES JURISDICTION

Winding Up Action No. 87 of 2011

In the matter of NBF ASSET MANAGEMENT BANK, a body corporate incorporated pursuant to section 24 of the National Bank of Fiji Restructuring Act 1996

AND

In the matter of the NATIONAL BANK OF FIJI RESTRUCTURING ACT

AND

In the matter of the BANKING ACT

AND

In the matter of the COMPANIES ACT

BEFORE : Master Deepthi Amaratunga
COUNSEL : Mr. Muir M. for the Petitioner.
Mr. Hikuroa H. for Kawakawdawa (Fiji) Ltd, and Mr. Peter Knight for Taveuni Estate Ltd, all opposing the winding up.

Date of Hearing : 22nd March, 2012
Date of Ruling : 25th May, 2012

DECISION

1. INTRODUCTION
   

1. The Petitioner has filed the petition for the winding up of the NBF Asset Management Bank (hereinafter referred to as AMB). AMB is created by NBF Restructuring Act 1996 and is deemed licensed financial institute in terms of Section 30(1) (a) of NBF Restructuring Act 1996, created specially for the purposes stated in the said NBF Restructuring Act. Section 30(1) (b) of the said Act states that the licence is deemed for the performance of the functions set out in Section 25(1) of the NBF Restructuring Act 1996. The Petition indicates that the winding up is made in pursuant to Section 30(2) (d) and Section 55 (2) of the Banking Act. The two provisions are mutually exclusive and cannot be dependent on each other, as Section 55(2) of Banking Act provides for an executive order for winding up, without the intervention of court to wind up any licensed financial institution. The provisions contained in Section 30(2) (d) of Banking Act is a general provision that can be resorted by any licensed financial institution for winding up by petitioning to court. The difference in the two provisions are clear as one is an executive order to 'wind up' and the other is a judicial pronouncement. In the case of the Petitioner, since AMB is a creation by NBF Restructuring Act 1996, the Petitioner has to fulfill prerequisites contained in Section 30 (4) (a) and (b) of the NBF Restructuring Act 1996 as it is a specially deemed licensed for the restructure of the defunct NBF which expressly stated that application of Section 30 of the Banking Act is only subject to the provisions contained in Section 30 (4) (a) and (b). The same Act that established the AMB also contained the provisions for 'dissolution' which is contained in Section 32. The word 'dissolution' cannot be equated to the word 'winding up' though the effect may be the same, as the legislature has used different words. When a special Act provides a provision that has to be applied overriding the general provision, but in this instance while certain provisions in the Banking Act being expressly excluded the provisions regarding winding up has been expressly included subject to certain conditions that are expressly stated in Section 30 (4) (a) and (b) of the NBF Restructuring Act. The said express inclusion of Section 30 of the Banking Act, in the NBF Restructuring Act 1996 would make 'dissolution' as an option to 'winding up' in terms of either Section 30(2) of the Banking Act. Winding Up in terms of executive order under Section 55(2) should be done in the manner specified in the said executive order and there is no requirement to petition to court, unless expressly stated in the said order, which is unlikely as it is superfluous. In the circumstances the maxim 'gneralis clausula non porrigituradea quae anteaspecialiter sunt comprehensa' does not apply to the winding up in terms of the provisions contained in Section 30(2) of the Banking Act, and the 'dissolution' under Section 32 of the NBF Restructuring Act 1996 and 'winding up' in terms of the Section 30 (4) read with Banking Act Section 30 (2) are two parallel legislative provisions that can achieve the same result, but notably the latter is 'winding up' and the earlier is a 'dissolution' of AMB. The petition has not correctly indicated the provision under which they are seeking the intervention of the court and has combined mutually exclusive provisions Section 30(2) of Banking Act and Section 55 (2) of the Banking Act, which has confused and prejudiced, to any party who is concerned with the affairs of AMB, including the parties interested and or affected by the intended winding up. Apart from this the petitioner has not submitted evidence of fulfillment of prerequisites, for winding up in terms of Section 30 (2) of Banking Act read with Section 30(4) (a) and (b) of NBF Restructuring Act 1996. On both grounds this petition is dismissed.
   

2. LAW AND ANALYSIS
   

2. National Bank of Fiji Restructuring Act of 1996 in its preamble (long title) stated that it is an Act to provide for
   
   1. the restructuring of the National Bank of Fiji, and in particular, to provide for the continuation of the Bank as the Bank offering personal banking services
      
   2. The establishment of an NBF Asset Management Bank whose function is to dispose of over an appropriate period of time, all assets and liabilities transferred to it under this act.
      
   100. The transfer into the NBF Asset Management Bank of all assets and liabilities of the National Bank of Fiji other than those appropriate for a personal bank.
        
   4. An assessment in 1998 of the commercial viability of the National Bank of Fiji and, if then appropriate, the registration under the Companies Act of a company owned by the state, and the transfer of the bank's undertaking to the company.
      
   5. The reporting and other accountability requirements of the national bank of Fiji, the NBF Asset management Bank and the company
      
   6. The continuation of the state's guarantee to all deposits with the nation Bank of
      Fiji, the provision of an equivalent guarantee in respect of deposits with the NBF Asset Management Bank, and the Performance of the State's Obligations under the latter guarantee. (emphasis is added )
      
3. The long title which indicates the purposes of the legislation state that the function of the AMB is to dispose all assets and liabilities transferred to it under the Act. It is pertinent to note that the establishment of AMB is for a special purpose and that is to 'Restructure' the defunct National Bank of Fiji and this includes the dealing with all the assets and liabilities that were transferred to it.
   
4. One of the primary functions of the AMB is to dispose all assets and liabilities that transferred to it and no time period it set out for the said task. The requirement of the disposing all the assets and liabilities is not an easy task and the legislature has granted 'appropriate period of time' to fulfill it, because it considered the complexity of the issues involved in the process of disposal of all assets and liabilities. The disposal of all the assets and liabilities is important as it echoed in the provisions in the Act including the purposes and long title of the NBF Restructuring Act, and special powers were granted under the Restructuring Act 1996 for the said purpose, that are contained in Schedule 3 of the same Act. The provisions contained in Section 30(1) (a) and (b) is explicit on this and states as follows.
   

'(a) AMB is deemed to have been granted and issued with, on the restructuring day, a licence under the Banking Act, 1995; and

(b) The licence is deemed, on the restructuring day, to specify the performance of the functions referred to in section 25(1) as the business of AMB.' (emphasis is added)

5. The said provision contained in the NBF Restructuring Act, 1996 is a clear indication that establishment of AMB and, the licence granted to it is for a specific purpose and disposal of all and assets and liabilities is paramount before the 'dissolution' under the Section 32 of the NBF Restructuring Act, 1996 or 'winding up' under the Banking Act.
   
6. At the oral hearing I requested the counsel to submit any example or similar creation to AMB, but they were unable to do so. Though not entirely similar the function of disposal of assets and liabilities are similar to Special Purpose Vehicle (SPV) in Securitization, in Banking and Corporate Finance, though the purpose is entirely different. Special Purpose Vehicle is a company created for a special purpose to deal with the task of Securitization having character of a company, that can be wound up.
   
7. The purpose of establishment of AMB is obvious and the disposal of all the assets and liabilities was expected and special powers were conferred for this purpose and contained in Schedule 3 of the NBF Restructuring Act of 1996.
   
8. In terms of Section 23(1) of the NBF Restructuring Act of 1996 the National Bank of Fiji was dissolved and the undertaking of the National Bank of Fiji was vested with NBF Asset Management Bank (AMB).
   
9. The functions of the AMB are laid down in Section 25 (1) of the NBF Restructuring Act of 1996 and they are
   

"(a) To manage its assets and liabilities with the objective of disposing of or satisfying all of them as soon as practicable, while minimizing any loss of value to it; and

(b) For the purpose of performing the function specified in paragraph (a) of this subsection, to provide banking services principally to persons who are or were customers of the National Bank of Fiji." (emphasis added)

10. The purpose of disposal of all the assets and liabilities, more specifically reiterated in the Section 25 (1) of NBF Restructuring Act 1996, and no time period is set out for that purpose. So there is no time constraint on the AMB for the fulfillment of the disposal of all assets and liabilities, but it has to fulfill its duties and this cannot be 'outsourced' to another body as AMB was specially created with sufficient expertise and powers for that purpose. The creation and character of AMB is for a special purpose and special powers are entrusted for that purpose and this cannot be delegated for another general liquidator, without fulfillment of the primary object of disposal of all assets and liabilities that transferred to AMB, by virtue of the NBF Restructuring Act, 1996.
    
11. The AMB is also given power in terms of Section 25(2) set out in Schedule 3 of the NBF Restructuring Act of 1996 in order to carry out its functions subject to the restrictions enumerated in Section 25(3) and 25(4). Said, Section 25(3) and 23(4) are not relevant to the issue before me, hence I do not wish to deal with them.
    
12. The functions and the special powers granted to AMB are distinct and clearly distinguishable from the general powers that are conferred to a liquidator. This can be understood by simply reading through the powers contained in the Schedule 3 of the NBF Restructuring Act 1996. This is required as a special legislation, namely NBF Restructuring Act 1996, was enacted for the purposes restricting of the defunct National Bank of Fiji and for the purposes set out in the long title of the NBF Restructuring Act of 1996. It should be noted at this juncture that the legislature has specifically enacted a special legislation to deal with the issues relating to the Restructuring of the defunct National Bank of Fiji, obviously having in mind the inadequacy of legal provision and or the expertise and mechanism to deal as a winding up by the official receiver.
    
13. This is evident from the provisions contained in Section 30(4) which expressly excluded, subject to the conditions mentioned in said provision, the Section 30 of the Banking Act of 1995, which deals with the winding up of a licensed financial institution by the court. In respect of AMB unless certain conditions which are mentioned as prerequisites met, it cannot resort to Section 30 of the Banking Act, though AMB is a licensed financial institution for the purposes of Banking Act. The AMB is deemed as a licensed financial institute for specific purpose and the licence is deemed granted for a specific business of functions referred to in the Section 25(1) of the NBF Restructuring Act, 1996. So, it is not treated on par other financial institutions as regards to the winding up in terms of Section 30 of the Banking Act. Though the winding up in terms of the Section 30 of the Banking Act is possible, it cannot deviate from the primary purpose for which it was established. So, fulfillment of duties set out in Section 25(1), for which it had been deemed to have granted licence in terms of Section 30(1)(a) and (b) of the NBF Restructuring Act is vital and without fully carrying out the said functions it cannot resort to winding up and expect the official receiver who is not empowered with special powers similar to AMB to continue and or finalize the task it was entrusted with, in terms of Section 25(1) of the NBF Restructuring Act,1996.
    
14. The section 30(4) of the NBF Restructuring Act of 1996 states as follows
    

'(4) The Reserve Bank shall not exercise any of the powers specified in any of section 21, 22(3) and 30 to the Banking Act, 1995 in respect of AMB in any particular case unless

1. it had regard to the functions of AMB specified in section 25(1); and
   
2. it has received the written approval of the Minister to do so in that case or in cases of that kind.' (emphasis is added)
   

15. The prerequisites of any action to wind up AMB in terms of Section 30 of the Banking Act, is clearly set out in Section 30(4) of the NBF Restructuring Act. The jurisdiction of a court to deal in terms of Section 30 (2) of Banking Act arises only when the said prerequisites are satisfied by the petitioner, and the court is satisfied with that requirement.
    
16. The petitioner should satisfy to the court that it had regard to the functions that were entrusted in terms of the Section 25(1) of the NBF Restructuring Act and it had received the written approval of the Minister. As I have mentioned in this decision one of the main functions of AMB as set out in Section 25(1) as well as in the long title is the disposal of all the assets and liabilities that were transferred to AMB by virtue of the NBF Restructuring Act. This primary function cannot be delegated to another body, namely to the official receiver as the main function of AMB is to dispose all the assets and liabilities that got transferred to it by virtue of the NBF Restructuring Act 1996 for which it had been deemed granted licence as a financial institute for the purposes of Banking Act. So, any applicability of the Banking Act, is presumably subject to the functions that are entrusted in Section 25(1) of the NBF Restructuring Act, and without fulfilling the said function it cannot resort to provisions in the Banking Act, for the winding up.
    
17. In the petition that was submitted contains neither the written approval of the minister nor any evidence or facts that the petitioner had regarded its functions to determine the petition seeking to wind up AMB. The reasoning to decide the winding up is important as that would indicate whether AMB had regarded its functions that were conferred in the section 25(1) of the NBF Restructuring Act. In the petition the objects of the AMB are set out in the paragraph 3, but has conveniently dropped the functions stated in Section 25 of the NBF Restructuring Act which clearly stated the disposal of all assets and liabilities. What the Petitioner is seeking is clearly to hand over its function to the official receiver without completion of the disposal of all assets and liabilities.
    
18. In the circumstances I have to dismiss the petition as it has not fulfilled the prerequisites to petition to the court seeking winding up as required under the Section 30(4) (a) and (b) of the NBF Restructuring Act. The evidence of such fact is important as this would allow any interested party to appear and support and or oppose the winding up of AMB. In such circumstances application of the due process is necessary and the court has to exercise its judicial discretion in either allowing or disallowing winding up of AMB.
    
19. Though I have already decide to dismiss the petition seeking winding up as it has failed to fulfill the prerequisites of the petition, I shall also deal with the provisions contained in the Section 55(2) of the Banking Act.
    
20. The provisions contained in Section 55(2) of Banking Act are mutually exclusive and a standalone provision and it is an executive order for winding up that needs no reference to the court.
    
21. The Section 55 (2) of the Banking Act states as follows
    

'(2) The Minister, on the advice of the Reserve Bank may order that the licensed financial institution to which the recommendation relates shall be wound up in such manner as may be specified in the order and, in any such cases, the licensed financial institution shall be wound up in the manner specified.'

22. The executive order to wind up a licensed bank need not come before a court to petition the court. If the executive order to wind up has been made in pursuant to Section 55(2) by the minister on advice of the Reserve Bank there is no need to petition the court seeking winding up. If the executive order specified the manner only that should be followed.
    
23. The Petitioner has also mentioned that it is submitting its petition in pursuant to Section 55(2) of the Banking Act. This is not the correct position. If an executive order was made in pursuant to Section 55(2) there is no need to petition to the court unless that executive order specifically indicated the manner of winding up, which would be superfluous, as there are other provisions dealing with intervention of the court for winding up. This is an alternate provision to 'dissolution' in terms of Section 32 of the NBF Restructuring Act. The reference to Section 55(2) has no application to this petition on the evidence before me.
    
24. It was contended that the winding up in terms of the Banking Act is not possible as there is provision contained in Section 32 of the NBF Restructuring Act, 1996 and that AMB was not created under the Companies Act, hence winding up is not possible.
    
25. Neither party referred or discussed the maxim of 'gneralis clausula non porrigituradea quae anteaspecialiter sunt comprehensa'.
    
26. The winding up in terms of Section 55(2) of Banking Act, through an executive order or through the court by way of a petition in terms of Section 30 of the Banking Act are general provisions that are applicable to any licensed financial institute. Prima facie, such provision will not be applicable in terms of the maxim 'gneralis clausula non porrigituradea quae anteaspecialiter sunt comprehensa' since there is express provision for 'dissolution' of AMB in the Act that created it namely, NBF Restructuring Act 1996 and states as follows.
    

Dissolution of AMB

32.-(1) AMB may be dissolved at any time by regulations made by the Minister.

(2) The undertaking of AMB at the time of its dissolution under subsection (1) shall from that time vest by virtue of this Act in the State.

27. This is similar to the provision contained in Section 55 (2) of the Banking Act where the executive is empowered to wind up AMB without the intervention of the court. The only difference is in terms of Section 55(2) of Banking Act the word used is 'winding up' as against 'dissolution' in the above mentioned provision. The maxim gneralis clausula non porrigituradea quae anteaspecialiter sunt comprehensa' and or its application has not been fully argued in this case before me, since the NBF Restructuring Act 1996 expressly excluded the certain provisions contained in the Banking Act and since Section 55(2) being not expressly excluded from the application to AMB, it may be considered that the above mentioned maxim will not apply to the issues as it stands before me.
    
28. The winding up of licensed financial institute is possible in terms of the Section 30(2) of the Banking Act. This is possible irrespective of whether the licensed financial institute is a limited liability company or a statutory body. In Subarmani v Native Land Trust Board, Civil Appeal No. ABU0095 of 2005S (25th June 2007), The Fiji Court of Appeal stated as follows in the said Judgment on p. 6 thereof in paragraph [10]:
    

"There are various decisions in England in which it has been held that under provisions of those and later Acts comparable to ss.358 and 359 of the Fiji Companies Act companies incorporated by statute are capable of being wound up."

29. The contention that winding up should be refused, on the basis that AMB is a statutory body is rejected applying the principles of that case. The application of gneralis clausula non porrigituradea quae anteaspecialiter sunt comprehensa would be applicable under normal circumstances for the general provision of winding up in terms of Section 30(2) of the Banking Act, but NBF Restructuring Act 1996, which expressly excluded certain provisions in the Banking Act, expressly included the provisions contain in Section 30 of the Banking Act subject to the conditions specified in Section 30(4) (a) and (b) of the NBF Restructuring Act. The applicability of the provisions contained in Section 30 of the Banking Act is subject to the condition precedent laid down in the Section 30(4) of the NBF Restructuring Act which I have discussed earlier in this case and by express inclusion the applicability of maxim gneralis clausula non porrigituradea quae anteaspecialiter sunt comprehensa' is prevented.
    

100. CONCLUSION
     

30. The Petitioner has petitioned to the court seeking winding up of AMB (NBF Asset Management Bank). In the petition it has indicated Section 30(2) (d) of the Banking Act and Section 55(2) of the Banking Act. Section 55(2) has no application to this matter as it relates to an executive decision to wind up a licensed financial institution. There is no evidence of such an executive order being made. If such an order is made 'winding up' needs to be done as specified in that order. This cannot be combined with the provision to wind up contained in Section 30 of the Banking Act, for which there are prerequisites before application of general provisions contained in the Section 30 of the Banking Act. The prerequisites are contained in Section 30(4) of the NBF Restructuring Act, 1996. The Petition should be rejected in limine because of that error of combining provisions that are mutually exclusive, as any interested party may have been misled by quoting the wrong provision of the law, which deals with an executive decision that this court cannot exercise its powers in a winding up action. Even if one disregard that error, the petitioner has not presented evidence of fulfillment of the prerequisites to petition for a winding up. There is no evidence of fulfillment of prerequisites contained in Section 30(4) (a) and (b) before the court. The inclusion of word 'all' as regards to disposal of assets and liabilities, which echoes from the start to the end of the NBF Restructuring Act cannot be ignored and that vital function cannot 'outsourced' or 'delegated' as it is the primary function of AMB. It is statutorily created and deemed granted licence for this purpose. There is no time period to dispose all the assets and liabilities that were transferred to AMB, but its obligation to dispose all assets and liabilities is required in Law.
    

4. FINAL ORDERS
   

31. The winding up petition is dismissed.
32. No cost.
    

Dated at Suva this 25th day of May, 2012.

Master Deepthi Amaratunga
High Court, Suva