Olsson v Solomon Time Ltd [2011] SBHC 161; HCSI-CC 417 of 2006 (7 December 2011)

IN THE HIGH COURT OF SOLOMON ISLANDS
(Chetwynd J)

Civil Claim No. 417 of 2006

BETWEEN

WILLIAM FREDERICK OLSSON
First Enforcement Creditor

And

GLORIA ELIZABETH OLSSON
Second Enforcement Creditor

And

SOLOMON TIME Ltd (In Liquidation)
Enforcement Debtor

And

PAMELA LORRAINE KIMBERLEY
Respondent

Mr Suri for the First and Second Enforcement Creditors
Mr Kingmele for the Respondent

Date of Hearing: 18th November 2011
Date of Judgment: 7th December 2011

Ruling on application for leave

1. This is an application for leave to continue to exercise or enforce the right to recover a judgment debt against Solomon Time Ltd. The Company is in liquidation and a liquidator has been appointed. The application also asks that two other companies be joined as Respondents to enforcement proceedings. The companies are Island Gold Ltd and Tuvanipupu Island Resort Ltd. The application(s) were filed on 20th October 2010. When they first came before the court over a year ago a liquidator had just been appointed. It seemed reasonable to allow the liquidator to deal with the liquidation and winding up and the application(s) were adjourned. The initial liquidator resigned and Mr Gideon Zoloveke accepted the appointment as Liquidator in March of this year. Unfortunately there are no funds to pay his fees and not much progress has been made in the liquidation.

2. In February 2011 a second application was filed by the First and Second Enforcement Creditors ("the Olssons"). They were then acting in person. The application mirrors the one filed in October 2010 in that it asks to join Island Gold Ltd and Tuvanipupu Island Resort Ltd as respondents in the enforcement proceedings. Although there are two applications before the court I intend to treat them as one. To complete the picture, the Olssons are now represented by Mr Suri.

3. The latest application is made pursuant to sections 21(1) and 22(1)(a) of the Companies (Insolvency and Receivership) Act 2009 ('the Act"). The Act came into force on the same day as the Companies Act 2009 which was 1st July 2010. The sections read:-

21. (1) The Court may, on the application of the liquidator or a creditor or shareholder, do any of the things set out in subclause (2) if, in the course of the liquidation of a company, it appears to the Court that a person who has taken part in the formation or promotion of the company, or a past or present director, manager, liquidator, receiver, or officer of the company, has—

(a) misapplied, or retained, or become liable or accountable for, money or property of the company; or

(b) been guilty of negligence, default, or breach of duty or trust in relation to the company.

(2) The Court may—

(a) inquire into the conduct of the promoter, director, manager, liquidator, receiver, or officer; and

(b) order that person—

(i) to repay or restore the money or property or any part of it with interest at a rate the Court thinks just; or

(ii) to contribute such sum to the assets of the company by way of compensation as the Court thinks just; or

(c) if the application is made by a creditor, order that person to pay or transfer the money or property or any part of it, with interest at a rate the Court thinks just, to the creditor.

(3) This clause has effect even though the conduct may constitute an offence.

22. (1) On the application of the liquidator, or a creditor or shareholder, the Court, if satisfied that it is just and equitable to do so, may order that—

(a) a company that is, or has been, related to the company in liquidation must pay to the liquidator the whole or part of any or all of the claims made in the liquidation;

(b) if 2 or more related companies are in liquidation, the liquidations in respect of each company must proceed together as if they were 1 company to the extent that the Court so orders and subject to such terms and conditions as the Court may impose.

(2) The Court may make any other order or give any directions to facilitate giving effect to an order under subclause (1) that it thinks fit.

The Act conveniently has guidelines. They read:-

23. (1) In deciding whether it is just and equitable to make an order under clause 22(1)(a), the Court must consider the following matters—

(a) the extent to which the related company took part in the management of the company in liquidation;

(b) the conduct of the related company towards the creditors of the company in liquidation;

(c) the extent to which the circumstances that gave rise to the liquidation of the company are attributable to the actions of the related company;

(d) any other matters as the Court thinks fit.

(2) In deciding whether it is just and equitable to make an order under clause 22(1)(b), the Court must consider the following matters—

(a) the extent to which any of the companies took part in the management of any of the other companies;

(b) the conduct of any of the companies towards the creditors of any of the other companies;

(c) the extent to which the circumstances that gave rise to the liquidation of any of the companies are attributable to the actions of any of the other companies;

(d) the extent to which the businesses of the companies have been combined;

(e) any other matters that the Court thinks fit.

(3) The fact that creditors of a company in liquidation relied on the fact that another company is, or was, related to it is not a ground for making an order under clause 22.

3. It should be made clear that neither Island Gold Ltd nor Tuvanipupu Island Resort Ltd is in liquidation.

4. The application is supported by written submissions and two sworn statements by Mrs Gloria Elizabeth Olsson ("Mrs Olsson"). There was objection to the two statements because Mrs Olsson was not an expert. I allowed the statements to be read because they were not submitted as expert testimony but on the basis Mrs Olsson was merely giving her views on the financial records produced via the Liquidator by the Enforcement Debtors professional accountants in New Zealand. The gist of the evidence and submissions is that the records show a number of financial transactions where "assets of Solomon Time Ltd" were transferred or paid into accounts for Island Gold Ltd and Tuvanipupu Island Resorts Ltd. Mrs Olsson also points to property transactions where funds were raised by loans secured by Solomon Time Ltd but properties purchased with those funds registered in the name of Mrs Pamela Lorraine Kimberley. Mrs Olsson also mentions what she sees as discrepancies in gold trading records amounting to over $19,000,000.00.

5. Mrs Kimberley is involved in the management of Tuvanipupu Island Resort Ltd and Island Gold Ltd, she has given evidence previously she was a director in both. She was a director in Solomon Time Ltd.

6. These present proceedings are the result of a judgment being entered against Solomon Time Ltd. The Writ of Summons was filed in October 2006 but judgment was not obtained until 2009. The matter went to the Court of Appeal and was dealt with in or about June 2010. The matters referred to in paragraph 4 above and the period during which the case has been litigated appear to be contemporaneous.

7. In all the circumstances and in accordance with the guidelines set out above, if the Olssons are able to establish all they claim they would likely succeed in obtaining the orders they seek. Of course neither Island Gold Ltd nor Tuvanipupu Island Resort Ltd has had the opportunity of being heard and so it is right they be joined as Respondents to the enforcement proceedings.

8. Leave is granted pursuant to section 4 of Schedule 5 of the Act for the Olssons to continue proceedings against Solomon Time Ltd. The applications under sections 21 and 22 of Schedule 7 of the Act and supporting documents are to be served on Island Gold Ltd and Tuvanipupu Island Resort Ltd. The Liquidator must also be served. The two companies must be given time to respond and the matter can then come back for further directions.

Order

1. The Enforcement Creditors are granted leave to continue enforcement proceedings against the Enforcement Debtor;

2. Island Gold Ltd and Tunvanipupu Island Resort Ltd be joined as Second and Third Respondents to the enforcement proceedings and the application pursuant to sections 21 and 22 of the Companies (Insolvency and Receivership) Act 2009 be served on both together with any sworn statements in support;

3. The Liquidator of Solomon Time Ltd is to be served with a copy of the application and supporting documents referred to in paragraph 2;

4. Any sworn statements in response are to be filed and served within 28 days of service of the documents referred to in paragraphs 2 and 3;

5. The matter is to be listed for further directions following the filing of any responses on a date to be fixed by the Registrar of the High Court in consultation with the parties;

6. Costs in the cause

Chetwynd J