Jersey Unreported Judgments

Companies - application for a winding up order.

[2013]JRC164

Royal Court

(Samedi)

20 August 2013

Before     :

W. J. Bailhache, Q.C., Deputy Bailiff, and Jurats Morgan and Milner.

 

IN THE MATTER OF THE REPRESENTATION OF HUELIN-RENOUF SHIPPING LIMITED

AND IN THE MATTER OF ARTICLE 155 OF THE COMPANIES (JERSEY) LAW 1991.

Advocate N. Williams for the Representor.

judgment

the deputy bailiff:

1.        This is an application by the Board of Huelin-Renouf Shipping Limited (the "Company") under Article 155 of the Companies (Jersey) Law 1991 (the "Law"), which is in these terms:-

"(1) A company, not being a company in respect of which a declaration has been made (and not recalled) under the Désastre Law, may be wound up by the court if the court is of the opinion that -

(a) it is just and equitable to do so; or

(b) it is expedient in the public interest to do so. 

(2) An application to the court under this Article on the ground mentioned in paragraph 1(a) may be made by the company or by a director or a member of the company or by the Minister or the Commission..."

2.        This is an application under paragraph (a), that is to say that it is "just and equitable" for the Court to make an order that the company be wound up.  It is made by the Board.  The Court is satisfied that Mr Jonathan Bale, who is the ultimate beneficial owner of this company is aware that this application is being made and we have been pointed to correspondence which shows that although he is out of the jurisdiction, in France, he is well aware of the current position and it seems to us that it would, absent any other explanation which he might give in the future, it would have been possible for him to have made his way to either a solid base for communication or indeed have returned to the Island.  So we are satisfied that his absence is no reason for us not to proceed to consider the Company's application today. 

3.        The Court has been referred to a number of cases on the use of its jurisdiction under Article 155 to make an order for a "just and equitable" winding up.  It has been described as a power that should be used flexibly.  In the case of Jean-v-Murfitt 1996/237 the then Bailiff added the words:-

"We conclude by observing that the words "just and equitable" in Article 155 of the 1991 Law should be given a flexible interpretation.  Justice and equity cannot be confined within the four corners of specific instances."

4.        In Re Leveraged Income Fund Limited 2002/209 the Court, then presided over by the present Bailiff, said:-

"The words "just and equitable" are general words.  As Palmer's Company Law Vol. 3, para 15.219 puts it:-

"It has sometimes been suggested that there is an exhaustive list of situations that may fall within the scope of the "just and equitable" clause, but it now seems that although such classification may be convenient for purposes of presentation, the words "just and equitable" require a more flexible interpretation.  In the words of Lord Wilberforce: "Illustrations may be used, but general words should remain general and not be reduced to the sum of particular instances.""

5.        In the case of In the matter of the Representation of Belgravia Financial Services Group Limited [2008] JRC 161, there were a number of particular advantages and disadvantages relating to that company which were canvassed in the application for an order under Article 155, but what is particularly apparent is the statement in the decision of the Court in that case that the Court should look at the alternative orders that might be made before making an order under Article 155.  After all it is part of our customary law that the Court may grant a declaration of désastre either applied for by the company or applied for by creditors, so that is a route that creditors can take for suing company assets realised and distributed amongst the creditors in an orderly way.  Furthermore, the statute, the Law, which does provide for the Article 155 application also provides for a creditors' winding up where the shareholders convene a meeting and the company passes the resolution at a general meeting and then there is a creditors' committee usually which operates conjunctively with the liquidator. 

6.        We have considered both of those alternatives to the application under Article 155 and we think that neither is appropriate.  In the case of the creditors' winding up there are a number of objections.  The first is that it is quite apparent that the shareholder is not going to assist by arranging for the Company to pass the relevant resolution in general meeting; but secondly, the timing constraints provided for in the Law do make it plain that there would not be the ability for the liquidators to take steps quickly in relation to the assets of this particular company.  Of course it is true that in most cases the liquidators would want to be able to take steps quickly but there are particular reasons here why it seems to us to be relevant to take speedy action.  The most important of those is that there are a number of goods in the custody of the Company which Advocate Williams tells us, on his instructions, may include perishables; but whether they do or they do not, an unseemly rush after goods whose ownership might be in dispute would be very inappropriate and therefore it is better that the liquidators have power to deal with that issue absolutely immediately.  Also it appears to us that the multijurisdictional angle that is involved in this case, with applications needed to be made both in Guernsey and in the United Kingdom, make it desirable that the liquidators should have a status to proceed as quickly as possible. 

7.        So for those reason we are satisfied that the creditors' winding up is not appropriate, if we did not take such a step today the Company would be left in deadlock with a lack of shareholder participation with the Board and therefore that option is not available. 

8.        As to the declaration of désastre, we have heard from Mrs Allo for the Viscount that there is no view from that Department that a désastre would be more appropriate.  Advocate Williams submits that the Viscount would be in no better position than a liquidator under Article 155 and indeed it would probably just add to costs because not only would there be the Viscount's costs of administering the désastre but there would also be the costs of experts who would be doing a similar job to the liquidators and who would be assisting the Viscount.  We accept that in the circumstances of this particular case that is a fair criticism to make. 

9.        So in the circumstances we think that it is "just and equitable" to order a winding up.  We think it is necessary to have a winding up because the company is clearly insolvent on the figures which have been put before us at the moment, both on a balance sheet basis and on a cash flow basis, and in those circumstances the order is made for a "just and equitable" winding up. 

10.      We have been asked to confer a number of powers on the liquidators.  First of all we appoint Messrs Roberts, Toynton and Rhodes of Grant Thornton to be the joint liquidators.  It seems to us to be desirable to take advantage, if I can put it that way, of the work which has been done by that firm already in the context of this particular liquidation, and those gentlemen are therefore appointed as joint liquidators. 

11.      As to the powers they should have, these are conferred in accordance with paragraphs (a)-(l) inclusive of paragraph 3 of the Prayer of the Representation and there is liberty to apply if those powers should turn out to be insufficient.  The Court has power to supplement them, whether with powers within Chapter 4 of Part 21 of the Law or more widely.  So that order is made. 

12.      The Court orders that notice of this judgment today should be given to all creditors and without prejudice to what is paragraph 10 of the draft order, any creditor shall have liberty to apply to the Court with a view to seeking to set aside the Court's order so that the process could revert to a creditors' winding up or an application for a désastre. 

13.      We order that Article 166 of the Law, relating to the application for an order of désastre shall apply to the winding up of the Company.  All the powers and obligations granted or imposed on the joint liquidators by Acts of the Court, or the Law, or otherwise, may be exercised by them on a joint and several basis, such that they act together, or one may act without the other (and by doing so will bind the other) in the exercise of the powers and obligations. 

14.      We order that under Article 159(4) of the Law, from the date of commencement of the winding up no action shall be taken or proceeded with except by leave of the Court and subject to such terms as the as the Court may impose, shall apply to the Company. 

15.      We order that subject to further order the costs of the liquidation shall come out of the liquidation of the Company. 

16.      We order that the costs and expenses that have been incurred (to the extent outstanding as at the time of today) and the costs and expenses which will be incurred in respect of restructuring advice given to the Company as well as to Huelin-Renouf Shipping Guernsey and Eagleway are treated as expenses of the liquidation of the Company.  We make that order notwithstanding that Huelin-Renouf Shipping Guernsey and Eagleway are technically separate entities because there is the complication of the three companies operating, in many ways, together as is set out in the paperwork before us and this also meets the multijurisdictional problems which have been raised in the paperwork before us. 

17.      We order on completion of the winding up the joint liquidators shall apply to the Court for orders in relation to the dissolution of the Company. 

18.      For the avoidance of doubt we also order that as from now the powers of the directors shall cease except insofar as the liquidators sanction their continuance. 

19.      There is liberty to any interested party to apply. 

Authorities

Companies (Jersey) Law 1991.

Jean-v-Murfitt 1996/237.

Re Leveraged Income Fund Limited 2002/209.

In the matter of the Representation of Belgravia Financial Services Group Limited [2008] JRC 161