Re Halcyon Hotels (antigua) Ltd (in Voluntary Liquidation)

• Jurisdiction: Antigua and Barbuda
• Court: High Court (Antigua)
• Judge: Bishop J.
• Judgment Date: 06 December 1976
• Neutral Citation: AG 1976 HC 6
• Docket Number: No. 80 of 1975
• Date: 06 December 1976

High Court

Bishop, J.

No. 80 of 1975

Re: Halcyon Hotels (antigua) Limited (in Voluntary Liquidation)

Bankruptcy - Voluntary winding-up — Creditors — Whether power existed to set aside statutory charge — Priority of debtors in voluntary winding up — Whether further proceedings by certain creditors ought to be stayed.

Bishop J.

1 This motion sought an Order (1) that any further civil proceedings commenced against the Halcyon Hotels (Antigua) Limited be stayed; (2) that all further proceedings in any action already commenced against the Halcyon Hotels (Antigua) Limited be stayed; (3) that the taking of any further steps to enforce any judgment obtained against the above named company including any application whereby Company's assets will be charged, be stayed; and (4) that any of the proceedings or steps afore mentioned commenced against the above named Company pending the hearing of this motion be declared null and void.

2 At the hearing learned counsel for the Liquidator abandoned (1) and (4) above, explained that (2) above was limited to all further proceedings in the actions by the three creditors mentioned in paragraph 8 of the affidavit in support of the motion, and he said that in effect (3) above was an expansion of (2) above.

3 On the 21 ^st March last year the company know as Halcyon Hotels (Antigua Limited passed an extraordinary resolution which was published in the Antigua Official Gazette on Friday 4 ^th 1975. Despite the statement in paragraph 2 the affidavit of the duly appointed Liquidator, William Douglas Rapier, the Antigua Official Gazette of 4 ^th April 1975 was not exhibited with the affidavit. The affidavit stated, inter alia,-

• “4. The Company is unable to pay its debts in full. The Company's total debts on the date of liquidation was $18,116,701.00 and the value of all its present assets is approximately $6,000,000.00

• 5. Ordinary creditors commencing or pursuing actions against the Company for the payment of debts owing to them by the Company could proceed to judgment and thereafter create a charge on the Company's assets by merely complying with the provision of the Judgments Act Cap. 40 and section 109 of the Title by Registration Act.

• 6. Any charge created as aforesaid, would, I am advised make such ordinary creditors secured creditors and the result would be that these creditors would be paid in full while the other ordinary creditors would not.

• 7. It would be unjust and inequitable in all the circumstances to permit any creditors to gain priority over other creditors of the same class by bringing proceedings on his claim instead of taking of taking his place with the other creditors in the winding up.”

4 It is stated on oath that Heyl and Patterson International Incorporated, Barclay Bank International Limited, and John J. Smith Provision Sales Corporation, each an ordinary creditor, obtained individual judgments against Halcyon Hotels (Antigua) Limited on the 17 ^th September 1974, 7 ^th April 1975 and 12 ^th May 1975 respectively. The first mentioned judgment was varied on the 10 ^th April 1975. Having obtained judgment, each creditor applied to the court for an Order for sale of the Company's assets.

5 In dealing with the motion, learned counsel for the Liquidator asked the court to make an Order containing the stipulations (2) and (3) contained in motion. He urged that basically the court has been invited to answer the question whether or not it is beneficial and equitable for an ordinary creditor to make himself preferred or secured at the expense of other ordinary creditors after the date of the winding up. Counsel referred to the provision of Section 121 of the Companies Act, Cap. 358. He pointed out that no similar statutory provisions exist to meet cases of voluntarily wound up companies and that the decisions showed that a voluntary winding up does not operate as a stay of proceedings. Then Mr. Brown dealt with the position where there is a voluntary winding up of a company, and he submitted:–

• (1) that to permit a creditor to enforce a judgment obtained after the resolution to wind up has been passed would be defeating the purpose of Section 158 (a) of the Companies Act, Cap. 358, by which the court must be guided.

• (2) on application to it, the court will stay proceedings where there has been a judgment and an attempt to enforce that judgment after the resolution to wind up, unless there are exceptional circumstances.

6 In support of the submission counsel cited the head-note and judgment of Kay J. (at pages 490 to 492) in the case IN RE. THURSO NEW GAS CO. (1889) 42 Ch. D. 486, and the head-note in Bowkett v. Fuller's United Electric Works Ltd. [1922] All. E.R. 281. He urged this court to say that “although there are no direct statutory provisions as in the case of a winding up by the court or under the court's supervision, one would be defeating the provision of section 158 (a) of Cap. 158 by permitting a creditor to jump the queue in the absence of exceptional circumstances.

7 It is undisputed that after obtaining judgment against the Halcyon Hotels (Antigua) Limited, each of aforementioned creditors then complied with section 109 of the Title by Registration Act, Cap. 293. It is also clear that the Liquidator filed this affidavit he stated that more than six months had elapsed since the creditor Heyl and Patterson International Incorporated had applied for an Order for sale under the Judgment Act, Cap. 40. Learned counsel for the Liquidation urged that under Section 6 of Cap 40, this creditor's application for an Order for sale must be deemed to have been abandoned and the lands mentioned in the application by this creditor for an extension of time had been successful.

8 As far as the two other creditors were concerned, Mr. Brown said this: “Having entered judgment after the date of the resolution to wind up the Company, both of these creditors made application under Section 109 of Cap. 293, on the 10 ^th April 1975 and the 14 ^th May 1975 respectively. Charges were created in their favour against the property of the Company. The Liquidator then came in and filed the two creditors, Barclays Bank and John J, Smith, would have been deemed to have been abandoned six month after the 10 ^th April 1975 and 14 ^th May 1975 respectively.” Learned counsel then asked the court to make orders (2) and (3) as sought.

9 Six months after 10 ^th April and 14 ^th May mean the 10 ^th October 1975 and 15 ^th November 1975 (in respect of Barclays Bank International Limited and John J. Smith Provision Sales Corporation respectively). The motion on behalf of the Liquidator, as I said earlier, was filed on 6 ^th November 1975, i.e. after the 10 ^th October 1975 but before the 14th November 1975.

10 Learned counsel for the creditors Barclays Bank International Limited submitted: (a) A that this court ought to make an order that Barclays Bank International Limited an John J. Smith Provisions Sales Corporation could have, and did it was proper and open to these creditors to charge the Company's assets under Section 109 of the Title by Registration Act, Cap.293 in relation to the Judgements Act Cap. 40, Sections 3 and 4..”

11 Miss Lake agreed with Mr. Browne that (i) no express power was given under the Companies Act, Cap 358 to stay proceedings where the company was being wound up voluntarily, and (ii) in order that proceedings against a company in a voluntary winding up be stayed there must be an application to the court for an order staying the proceedings. Counsel urged that in the absence of such an application a creditor is not debarred from taking such action as he thinks fit to protect his interest; and she cited the case RE MARGOT BYWATERS LTD. [1941] 3 All. E.R. 471, particularly the judgement of Simonds J. at pages 471 and 472 (letters H and D to E respectively).

12 Miss Lake contended that an application to stay the proceedings may be made after the judgment creditor has taken steps to protect his interest but that in the circumstances of the judgement case such an application cannot prejudice the interest of the judgment creditors.

13 Learned counsel contrasted the legal position then prevailing in England with that in existence here. She said that under the Judgement Act. 1838 in England leave of the Court was necessary to create the charge and also to make the charging order absolute; whereas in Antigua “no leave was necessary to create the charge but only to convert it in to money.” Counsel submitted that in Antigua once the application for sale has been made the statutory charge became established and there is no power in the court to set it aside. It was also counsel's view that in this case any order to stay should take effect from 14ht May 1976, the dat4e of an alleged agreement referred to at paragraph 8 of the affidavit of Sydney Williams E.G. Maynard. Additionally, Miss Lake urged that if the court deemed that Barclays Bank International Limited and John J. Smith had statutory charges as of the 14 ^th May 1976, in respect of these two creditors, statutory charges remained effective, and since they abandoned the charges because of an undertaking by Liquidator as set out in his letter dated 10 ^th May 1976 (fifth paragraph0, then if such undertaking were not honoured the creditors would be severely prejudiced.

14 Perhaps I may make two observation here. I do not agree with learned counsel that there is no power to set aside a statutory charge. I should think that it would depend upon the circumstances of the case and the inherent power of the court to see that justice prevailed. For example a statutory charge admitted to be erroneously “established” could not in my view be allowed t stand merely because application for sale...