Defiance Mills Ltd v Attorney-General [1997] KICA 26; Civil Appeal 05 of 1996 (25 March 1997)

IN THE COURT OF APPEAL OF KIRIBATI
CIVIL JURISDICTION

CIVIL APPEAL NO. 5 OF 1996

BETWEEN

DEFIANCE MILLS LTD
Appellant

V

AND

THE ATTORNEY GENERAL
IN RESPECT OF LIQUIDATOR
OF KIRIBATI COOPERATIVE
WHOLESALE SOCIETY
Respondent

Date of Hearing: 18 March 1997
Delivery of judgment: 25 March 1997

Mr B Berina for the Appellant
Mr D Sim for the Respondent

JUDGMENT OF THE COURT
(Gibbs V.P., Connolly and Ryan JJ.A)

Kiribati Co-operative Wholesale Society is a co-operative society registered as such under the Co-operatives Societies Ordinance. It was in financial difficulties and on 10 July 1995 the Registrar of Co-operatives Societies, having previously made an order for the cancellation of its registration appointed a liquidator pursuant to S.44 of the Ordinance. The Winding L113 IS to have commenced on 2 6.7.9

Defiance Mills Ltd on 16.12.94 entered Judgment against the Society for $ 118,606.49 and on 4.1.95 obtained a writ of fi-fa under which certain of its property was seized and sold. There remain substantial land on which are erected 30 odd tenanted houses, some vehicles and some office equipment of all of which the Sheriff proposed to take possession with a view to sale under the writ of execution. Accordingly, the Attorney General on 12.1.96 issued a writ against Defiance claiming a stay of execution, asserting that, the Liquidator having been appointed to carry out, inter alia, the sale of assets, realisation of accounts, and the distribution of assets to the creditors it would be inexpedient in the circumstances to allow the execution of the judgment to proceed.

The functions proposed to be carried out by the liquidator are amongst those within the powers of a liquidator under S.45 of the Ordinance and on 19.7.96 Lussick CJ under 0.45 r.9 of the High Court Rules stayed execution of Defiance's judgment, amongst others, until further order.

Defiance appeals against that order contending that its writ of execution, obtained on 4.1.95 has priority over the powers of the liquidator who was not appointed until 10.7.95.

The resolution of this problem is complicated by the fact that a cooperative society does not appear to be a company for any purpose of the Companies Act so that provisions such as s.268 of the Companies Act 1929 (UK) which brought into company law S.40 and 41 of the Bankruptcy Act 1914 and established the rule that a creditor of a company shall not be entitled to retain the benefit of an execution against the liquidator unless he has completed the execution by seizure and sale before the commencement of the winding up, have no direct application. Moreover the effect of a judgment as an equitable charge, recognised by the judgments Act 1838 and restricted by the Law of Property Act 1925 S.195 was abolished by the Administrative of Justice Act 1956. see Sykes, the Law of Securities (4^th Ed) pp.21-3. by virtue of s.7 of the Laws of Kiribati Act 1989 this should be regarded as the position in Kiribati.

We therefore approach the problem as being wholly governed by the provisions of the Co-operative Societies Ordinance. S.45 of that Act gives extensive powers to the liquidator with a view to the beneficial winding up of the society, powers which, by virtue of S.46 are to be exercised subject to the control and revision of the Registrar. Such Orders are to be enforced by the courts: S. 47 (2). However save as thereinbefore expressly provided, no civil court is to have any jurisdiction in respect of any matter concerned with the dissolution of a registered society under the Act: S.48. S. 49 provides for the order of application of the funds of a society, whose registration has been cancelled. They are to be applied first to the costs of liquidation, then to the discharge of the liabilities of the society, then to the payment of the share capital ....

There is no basis, in our opinion for excluding a judgment creditor whose judgment has not been fully executed from the statutory order provided by S.49. The order of Lussick CJ was not one which conflicted with S.48 as being "concerned with the dissolution". Rather it was concerned to ensure that the dissolution proceeded according to law. The order was therefore appropriate and the appeal should be dismissed with costs.

Vice President
Judge of Appeal
Judge of Appeal