Richardson
| Jurisdiction | Antigua and Barbuda |
| Judge | Harris, J. |
| Judgment Date | 31 May 2010 |
| Neutral Citation | AG 2010 HC 39 |
| Court | High Court (Antigua) |
| Date | 31 May 2010 |
| Docket Number | ANUHCV No. 271 of 2008 |
High Court
Harris, J.
ANUHCV No. 271 of 2008
Mr. Clement Bird for the Intervener/First Caribbean International Bank (Barbados Ltd) (FCIB)
Dr. D. Dorsett for the claimant/applicant/judgment creditor/petitioner
Mr. Trevor Kendall for the defendant/respondent/judgment debtor
Company law - Winding up — Claimant filed a petition for winding up of the defendant company on the basis it was unable to pay its debtors — Secured creditor applied for permission to enforce its security — Whether secured creditor's interest subject to liquidation process — Finding that the charge created by secured creditor ranks in priority to claimant's charge under the Judgment Act — Secured creditor's application successful.
The claimant (also referred to as: petitioner; judgment creditor and Daphne Richardson) obtained a Judgment against the defendant Company (Also referred to as the judgment debtor and Hope Investment Construction & Engineering Ltd.) on the 29th July 2009 and is seeking to enforce that judgment (A Judgment summons was issued and heard where the impecunious status of the defendant Company was disclosed).
The claimant, on the 17th December 2009 filed a Petition for winding up of the defendant Company pursuant to S.337(c) of the Companies Act 1995 on the grounds that the Company was unable to pay its debts (The Judgment Debt).
The defendant Company is indebted to the First Caribbean International Bank (“FCIB”) AND the Bank holds a registered charge on the subject property (Registered under the Registered Land Act, Cap 374).
The defendant Company has ceased trading as a going concern.
The effect and indeed the apparent intent of the petitioner and the Petition were to bring the subject property into “hotchpots” as it were.
The secured creditor, The First Caribbean International Bank (Barbados Ltd) (“FCIB”) seemed to have gotten wind of the unfolding process and has now sought to intervene in the matter in order to protect its interest in the security (Sands-louison et al Civil Appeal #4 of2007, Grenada, per barrow J.A. at para 17) over the interests of the petitioner in a winding-up of the defendant/judgment debtor Company. The defendant Company is the registered owner of the subject property and is also the judgment debtor (Hope Investment Construction & Engineering Ltd) of the petitioner/ Judgment creditor, Daphne Richardson (The subject property is registered under the Registered land Act(“RLA”)). The FCIB has filed an application pursuant to S.382 of the Companies Act 1995 and the inherent jurisdiction of the Court, seeking permission to enforce its security under a legal charge registered on the 16th February 2005, over the subject Freehold property.
On the application of counsel for the defendant, leave was granted on the 26th of February 2010 to the parties, to file written submissions in the matter and the hearing was adjourned to a later date. The FCIB and the claimant/petitioner filed their written submissions. The defendant/judgment debtor Company did not file any submissions in this matter. Both applications were heard together.
Relying substantially on the authority of ( Cleaver et al v. Delta American Reinsurance CO. (2001) 58 WIR 123 P.C. per Lord Scott of Foscote; See also Hill v. Royal Bank of Canada ANUHCV2006/0138; see further, pp 5 of the FCIB written submissions filed 9th March 2010) the intervener, First Caribbean International Bank (“FCIB”), contends that;
-
(i) A secured creditor pre-dating the liquidation is entitled to realize his security and apply the proceeds to his use. He is not required to bring into general account, the proceeds of his security (See the Cleaver case, ante, para. 26 thereof).
-
(ii) Neither the Insolvent Company nor the Liquidator has title to the Security (Ibid, para 27);
-
(iii) The asset constituting the security never formed part of the Liquidation estate (Ibid, para 28);
-
(iv) It is only of the secured creditor elect to give up his security and prove for the full amount that the secured asset becomes part of the liquidation estate (Ibid para 29);
-
(v) The Mortgagors interest is Limited to an equity of redemption (Ibid para 32).
Further, Counsel for First Caribbean International Bank (FCIB) contends that where a liquidation ensues, the secured creditors rights under the security are not prejudiced and the liquidator cannot restrain the secured Creditors sale, save by either;
-
a. Paying the amount due or
-
b. Paying the amount Claimed in Court (Halsbury's laws Vol. 7(2) 4th edit. Para 1600).
Counsel for the (FClB) submits further, that a Mortgagee is entitled to enforce his security notwithstanding the liquidation of the Mortgagor and that leave will normally be granted a secured Creditor seeking to enforce his security.
I accept as the applicable Law in relation to liquidation, that which is submitted by Counsel for the FCIB above.
The First Caribbean International Bank (FClB) contends that it has a priority over the security (the subject property) and entitled to pursue its right of sale of the Security, It contends that the petitioner ought not to be allowed in the winding up process to affect the Security interests of the (FClB) or its right of sale (equity of redemption) as a Mortgagee.
Prior to the date of the adjourned hearing of the Intervener/FClB's application, the petitioner/ Judgment creditor, Daphne Richardson, filed an application seeking an order of the Court that the registered property of the judgment debtor Company be sold so as to satisfy the Judgment of the Court which was entered in favor of the petitioner, Daphne Richardson on the 7th July 2009. Daphne Richardson's application was to sell the property as provided under the Judgments Act, Cap 227; an Act which if complied with, rendered the said Judgment a Charge on all of the property of the judgment debtor Company. At the adjourned hearing of the FCIB's application, Counsel for the petitioner (Daphne Richardson) accepted, (Impliededly if not expressly) that in a winding-up the subject property did not fall into “hotchpots” and thus, in a winding up, would be subject to the priority of the registered charge (In the absence of a Charge registered with the Company Registry, the FCIB contention for its priority interest is not entirely clear. However, in the end, the petitioner, appears to have conceded that point-regardless of whether the charge is registered at the company registry or land registry — and is now pursuing her options under the Judgment Act. See also The Law of Corporate Receivers and Receiver-Managers by Anthony Burgess, pp 26–30).
The effect of the petitioners compliance with the said S.3 of the Judgment Act is to render the Judgment effective as a Charge upon all lands of the judgment debtor and more specifically, to operate as a Charge on the (FClB) Security interest- the subject property- to the extent of the defendant/judgment debtors interest in the property.
Counsel for the petitioner/judgment creditor submits that this Judgment Act creates a special class of Charge that supersedes the prior registered Charge of the FCIB. Counsel contends...
To continue reading
Request your trial