Supreme Court
Action No. 87 of 1982
20th May, 1982
MOE, CJ.

Mr. Hubert Elrington for the Plaintiff
Mr. Horace Young, Q.C. for the Defendant

Company - Companies Ordinance, Cap. 206 - Voluntary liquidation - Compliance with sections 184, 185(2) and 213 of the Ordinance - Liquidator to file with Registrar account of his acts and dealings.

J U D G M E N T

The plaintiff is a shareholder in Real Estate Limited (hereinafter referred to as the Company) a company registered under the provisions of the Companies Ordinance CAP. 206 (hereinafter referred to as the Ordinance). The Company went into voluntary liquidation on the 9th April, 1975 and the defendant was appointed sole liquidator on the 23rd May, 1975.

2. By a Notice of Motion the plaintiff seeks to have the court order the defendant (i) to comply with the provisions of section 185(2) of the Ordinance; (ii) to comply with section 213 of the Ordinance; and (iii) to refrain from selling or disposing of any of the assets of the Company until the above orders have been complied with.

3. Section 185(2) provides "In the event of the winding up continuing for more than one year, the liquidator shall summon a general meeting of the company at the end of the first year from the commencement of the winding-up, and of each succeeding year, or as soon thereafter as my be convenient, and shall lay before the meeting an account of his acts and dealings and conduct of winding-up during the preceding year." Section 213(1) states "If where a company is being wound-up, the winding-up is not concluded within one year after its commencement, the liquidator shall, at such intervals as may be prescribed, until the winding-up is concluded, send to the Registrar a statement in the prescribed form and containing the prescribed particulars with respect to the proceedings in and position of the liquidation.", and in (3) "If a liquidator fails to comply with the requirements of this section he shall be liable to a fine not exceeding two hundred and fifty dollars for each day during which the default continues."

4. The plaintiff seeks the orders by virtue of section 184 of the Ordinance which provides (1) "Where a company is being wound-up voluntarily, the liquidator or any contributory or creditor may apply to the Court to determine any question arising in the winding-up, or to exercise, as respects the enforcing of calls, or any other matter, all or any of the powers which the Court might exercise if the company were being wound-up by the Court." "(2) The Court, if satisfied that the determination of the question or the required exercise of power will be just and beneficial, may accede wholly or partially to the application on such terms and conditions as the Court thinks fit, or may make such other order on the application as the Court thinks just."

5. The defendant submitted that the orders sought are not such as may be granted by virtue of section 184 because neither the matter raised under section 185(2) nor that raised under section 213 is a question which arises fro determination under section 184. Further that the orders are not properly sought by motion but ought to have been sought by way of mandamus since both orders concerned relate to the failure of the liquidator to perform a public duty. The plaintiff contends that she seeks to enforce a right of a private nature and that no public interest is involved in a breach of the sections concerned. Further that the section 184 is to be liberally construed, has been given the widest possible construction and is wide enough to enable the court to make the orders sought. The plaintiff referred to section 307(1) and (2) of the Companies Act 1948, U.K. which are in identical terms to provisions of section 184 of the Ordinance. These provisions are identical to provisions appearing as far back as 1862 in section 138 of the Companies Act, U.K. of that year. In construing the provision in Re Union Bank of Kingston-Upon-Hull (1880) 13 Ch. D. 808, Jessell M.R. refused to cut down its effect in any way and throughout its history the courts have held that the provisions can be brought into play on any question that fairly arises in the course of a winding-up.

6. I deal first with the application for an order that the liquidator comply with section 213 of the Ordinance. It is clear that section 213 imposes a duty on the liquidator and indeed lays down a penalty which may be imposed if he defaults. Section 213(3) stipulates "If a liquidator fails to comply with the requirements of this section, he shall be liable to a fine not exceeding two hundred and fifty dollars for each day during which the default continues."; and section 250 provides "All offences under this Ordinance made punishable by any fine, unless expressly provided otherwise, shall be prosecuted under the Summary Jurisdiction Ordinance on the complaint of the Registrar of Companies." The ordinance has therefore provided a summary remedy for an offence under section 213, and as a consequence the question arises whether the Court should proceed to enforce compliance with the section. A decision whether to order compliance with the section will necessarily involve a decision whether there has been failure to comply with the section and thus whether there is liability to pay the fine. It seems to me the latter decisions are by the ordinance matters for a court of summary jurisdiction. In Barraclough v. Brown [1897] A.C. 615 it was laid down that "where a statute provided for the recovery of sums in a Court of summary jurisdiction it is not proper to ask for a declaration in the High Court as to liability to pay those sums, for the recovery of which another remedy is given." In other words it cannot be the duty of the court to pronounce an order when in so doing the Court would be using a jurisdiction which the Legislature has said is to be exercised elsewhere.

7. I am therefore loathe to make an order which in effect would establish the existence or non-existence of a liability to pay a penalty which could be enforced only in a court of summary jurisdiction. I am fortified in this approach after consideration of the question whether the order sought would be an exercise of a power which the court can exercise in a winding-up by the court. Section 153 of the Ordinance, which governs control over liquidation in a winding-up by the court also specifies a particular person i.e. Official Receiver, as having jurisdiction to do certain things if the liquidator does not fulfil his obligations. In the result I hold that I should refuse the application for an order as contained in paragraph (2) of the notice of motion.

8. Now section 185(2) of the ordinance imposes two obligations: - (1) to summon a general meeting of the company at a certain time; and (2) at such a meeting to do certain things. There appears to be no penalty laid down for non-fulfilment of these obligations. However section 139 of the ordinance provides that "the Court may, as to all matters relating to a winding-up, have regard to the wishes of the creditors or contributories as proved to it by any sufficient evidence." The effect of that section read in conjunction with section 184 is to give the court power at any time to direct meetings of creditors or contributories to be held for the purpose of ascertaining their wishes. Consequently I hold that the application for an order that the liquidator comply with section 185(2) is a proper request of the Court to exercise its jurisdiction.

9. By virtue of the combined effect of sections 216, 217 and 256 of the ordinance, the Companies (Winding-up) Rules 1909 U.K. apply here. Rule 5 thereof sets out the matters to be heard in Court and those to be heard in Chambers. Then Rule 8(1) provides "Every application in court other than a petition shall be made by motion, notice of which shall be served etc. --- The Plaintiff here has applied by motion and I hold that the application for an order under paragraph 1 is properly before me.

10. I turn now to determine whether the order should be made. The affidavits show that the meetings required to be called under section 185(2) have not been called. There was certainly no meeting called at the end of the company year ending 31st May, 1981. I have already pointed out above that the court can at any time direct that a general meeting of the company be called. The question now is whether it is just and beneficial to summon a meeting.

11. I am taking into account, as shown in the affidavits, that: - (1) the liquidator discontinued calling regular meetings of the shareholders of the Company because the plaintiff conducted herself in a manner which made some of the shareholders decline to attend any further meetings; (2) that on the 8th February, 1981 a meeting of shareholders was called but was disrupted by the plaintiff. It concluded after the plaintiff had left; (3) other shareholders have indicated they will not attend meetings at which the plaintiff will be present; (4) that the plaintiff holds a power-of-attorney for two of her sisters also contributories of the company.

The defendant has submitted that for the court to order the summons of a meeting at which only the plaintiff will attend is to make an inefficacious order. There is ample authority for saying that ordinarily a meeting must consist of more than one person. See East v. Bennett Brothers Ltd. [1911] 1 Ch. 163. Ordinarily a meeting of shareholders or contributories must consist of more than one shareholder or contributory. Therefore where only the plaintiff responds to a summoning of a meeting, there will not be a coming together of more than one person even although she has a power of attorney from other shareholders. There will consequently be not meeting. It thus seems pointless to direct the liquidator to summon a meeting. Counsel for the plaintiff sought indirectly to give undertaking to other shareholders that they may attend by impressing upon the court that every attempt will be made to sort matters out at the meeting if called. It is the manner in which the plaintiff seeks to sort matters out that gives cause of concern. Counsel recognizes this and has even suggested a method by which the series of matters of which the plaintiff seeks clarification may be clarified at the meeting. However in all the circumstances I am not satisfied that it is beneficial to make the order sought.

12. I however think that some order should be made and section 184(2) empowers me to make such order on the application as I think just. Bearing in mind what appear to be concerns of the plaintiff as emerge from the multiplicity of paragraphs of her affidavits, that on 5th October, 1981 the liquidator submitted a statement and account for the company year ending on 31st May 1981 and that another company year shall end within a few days time, I think it just in the circumstances to order: - (1) that the liquidator, the defendant, on or before the 31st July, 1982 file with the Registrar an account of his acts and dealings and of the conduct of the winding-up of Real Estate Limited for the year ending 31st May 1982; (2) the defendant send a copy of the said account to the plaintiff; (3) that the plaintiff be at liberty within 14 days of receipt of the copy of the said account to deliver in writing to the liquidator a list of the questions she needs answered and the liquidator within 14 days of the receipt of the list to supply the answers; (4) the plaintiff and the liquidator to be at liberty to apply generally as there may be occasion.

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