Bank Negara Indonesia 1946 v. Interasian Traders Finance Ltd

CACV000127/1980

Stay of winding up order pending appeal.

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Coram: Huggins and Cons, JJ. A. and Bewley, J.

Date of Judgment: 31 July 1980

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JUDGMENT

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Cons, J.A.:

1. The judge in the court below made an order to wind up the Company With which we are concerned. He did so on the ground of statutory insolvency. The petitioning creditor had, pursuant to section 178(a) of the Companies Ordinance, Cap. 32, formally demanded payment of monies said to be due to the creditor and the monies had not been paid.

2. The Company had opposed the petition on two grounds. Firstly it said that it had been involved in the transactions on which the creditor's claim was based purely as a broker and thus incurred no personal liability. The second ground related to a document given by the Company in which it expressly acknowledged its indebtedness to the creditor. The Company said that there had been a collateral agreement that the creditor would not look to the Company itself for repayment provided that the Company would sign the document. In other words the Company was relying upon promissory estoppel.

3. The judge dealt fully with both defences and came to the conclusion that there was nothing substantial in either of them. He therefore granted the petition. Immediately he did so an application was made to stay the winding-up pending appeal and, after hearing argument, the judge acceded to that application. It is against the order for the stay that today's appeal is brought.

4. Counsel for the petitioning creditor raises two grounds. The first is that there is no jurisdiction to grant a stay to the Company. The second is that even if there be jurisdiction, in the circumstances it ought not to have been exercised.

5. Counsel did not press the first ground with any vigour. He pointed out that jurisdiction was not conferred by section 209 of the Companies Ordinance, but then conceded that there might perhaps be jurisdiction by reason of Order 59 rule 13 of the Rules of the Supreme Court, or under the inherent jurisdiction of the court to control its own procedure.

6. For my own part, I am inclined to think that the jurisdiction point is fatal to the Company. Section 209 is quite clear:

"(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."

Application may be made by certain named persons. The Company itself is not included. That is the end of the matter.

7. Mr. Lee, who appears for the Company, relies on rule 210 of the Companies (Winding-up) Rules:-

"In all proceedings in or before the court, or any Registrar or officer thereof, or over which the court has jurisdiction under the Ordinance and rules, where no other provision is made by the Ordinance or rules, the practice, procedure and regulations shall, unless the court otherwise in any special case directs, be in accordance with the rules and practice of the court."

Mr. Lee's argument is that because section 209 does not provide for a stay pending appeal, the court is bound to fall back upon the Rules of the Supreme Court and in particular Order 59 rule 13. He draws four distinctions between he relief offered by section 209 and that offered by Order 59 rule 13. I agree with him that those distinctions exist, but I cannot see how they relate to the question which we have to decide, namely, has the Ordinance made provision for the stay of a winding-up order. As I see it, provision is made by section 209 and it covers all stays. It is not open to a party to come and say "We have a particular kind of stay in mind which is not specifically mentioned in section 209 and therefore we are able to rely on Order 59". I see no reason to think that when the Legislature passed section 209 it chanced to overlook stays pending appeal. On the contrary, the actions that follow the making of a winding-up order incline me to the view that the omission was deliberate.

8. However I will assume, for the sake of this appeal, that the judge below did have jurisdiction. Even so I would not uphold the order. Mr. Lee has pointed out what he calls the special circumstances of this particular application. With respect to him, they seem more like the grounds of appeal. There may be something in them, but I prefer to express no opinion at the moment. In general litigation the likelihood of success and the danger that success may in the interim have been rendered nugatory are matters of considerable concern. But the jurisdiction we are concerned with at the moment is different. It is to some extent a supervisory jurisdiction and must take into account the interest of others apart from the two immediately involved. The machinery of winding-ups gives ample reason for the English practice, which is never to grant a stay pending appeal: In re A & B.C. Chewing Gum Ltd. [1975] 1 W.L.R. 579 at 592. A company is not without some protection. I understand that advertisement of the order may be restricted. And a company may bring an appeal within a very short space of time. There is a practice direction in England that such appeals, although they are from a final order, shall be entered in the list of interlocutory appeals: Re Reliance Properties Ltd. [1951] 2 All E.R. 327. I think we should adopt the same practice here once separate lists are in fact established. In the meantime urgent matters can be dealt with urgently and I can for the moment think of no reason why we could not have been asked to deal with the substantive appeal as well this morning. That would have disposed one way or other of the Company's problem.

9. Where an appeal against a winding-up order is subsequently allowed, but the liquidation has proceeded so far that the Company cannot be put back into its original position, then some injustice may result from the refusal of a stay. This must be set against the difficulties that a stay would cause to the liquidator in all other cases and also be viewed in the context of the many and varied advantages that limited liability otherwise confers.

10. For these reasons I would allow the appeal and set aside the order for the stay.

Huggins, J.A.:

11. I also would allow this appeal and for the reasons which Cons, J.A. has given. The learned judge did not give any reasons for granting a stay and in my view the practice of the English courts is clear, as appears from In re A & B.C. Chewing Gum Ltd. 1975 1 W.L.R. 579, and we ought to follow that practice.

Bewley, J.:

12. Without expressing any view on the question of jurisdiction, I agree that the appeal should be allowed. Although the reason for the winding-up was different in the case of In re A & B.C. Chewing Gum Ltd., the principle enunciated by Plowman, J. in that case should, in my judgment, be applied. The judge was, therefore, wrong to grant a stay pending appeal.

31st July 1980.

Representation:

A.R. Dicks & W. Stone (Johnson, Stokes & Master) for Appt.

M. Lee, Q.C. & H. Poon (Vincent Lo & Co.) for Respondent.

Barry-Walsh for Official Receiver.