Very common is the “joint venture vehicle”, (the shelf company purchased hurriedly by the investors) lost in its purpose, when such joint venture fails to take off. Sometimes, companies are formed for other motive (best known to its founding fathers) but later losing directions and purpose. The common mistake which its directors and shareholders do is to fail to wind up the company. The company is just left in abeyance. You should wind it up.
http://corporategovernancebangsar.blogspot.com/
Tuesday, May 27, 2008
A Question of Costs
The million-dollar question that the client poses to the lawyer does not necessarily entertain a million-dollar reply. The question – the confidant client then will ask, “won’t the other side pay for your legal fees when they lose?” (a fact which all client deem)
Clients, quite rightly, are often confused as to party-to-party cost and solicitor-client costs (which is actually legal fees). There are other types of costs awarded but we shall not get into that here.
Party-to-party cost is costs awarded to a party, usually the winning party, payable by the losing party. Unless otherwise directed (which is usually immediate/forthwith), costs are payable at the end of the proceedings.
Solicitor-client the latter is costs/legal fees as between the solicitor and client.
Both costs, if not agreed, are awarded pursuant to the Rules of the High Court (legislation which is usually “under-nourished”) and applied vide taxation proceeding. If Fees are Agreed, then the lawyer can commence legal proceedings for recovery.
It is common (in most jurisdictions), that party-to-party cost is significantly lesser in comparison to solicitor-client costs.
The rational being that whereas the losing party ought to, in all circumstances, be penalised to pay cost, the losing party has got no place to play in the appointment of an “expensive barrister” in contrast to an “inexpensive” counsel. Therefore, if a party wishes to appoint a barrister on a high retainer, that shall be that client’s prerogative. Nevertheless, the Court shall only award what is proper (legislated) and the fees, commonly referred to “getting-up fees” reflecting various matters including seniority of the counsel in question and subject matter (not counsel’s) expertise.
The bottom line, the litigant seldom receives 100% compensation of costs.
There are various repercussions to this premise which shall be examined on another occasion.
Clients, quite rightly, are often confused as to party-to-party cost and solicitor-client costs (which is actually legal fees). There are other types of costs awarded but we shall not get into that here.
Party-to-party cost is costs awarded to a party, usually the winning party, payable by the losing party. Unless otherwise directed (which is usually immediate/forthwith), costs are payable at the end of the proceedings.
Solicitor-client the latter is costs/legal fees as between the solicitor and client.
Both costs, if not agreed, are awarded pursuant to the Rules of the High Court (legislation which is usually “under-nourished”) and applied vide taxation proceeding. If Fees are Agreed, then the lawyer can commence legal proceedings for recovery.
It is common (in most jurisdictions), that party-to-party cost is significantly lesser in comparison to solicitor-client costs.
The rational being that whereas the losing party ought to, in all circumstances, be penalised to pay cost, the losing party has got no place to play in the appointment of an “expensive barrister” in contrast to an “inexpensive” counsel. Therefore, if a party wishes to appoint a barrister on a high retainer, that shall be that client’s prerogative. Nevertheless, the Court shall only award what is proper (legislated) and the fees, commonly referred to “getting-up fees” reflecting various matters including seniority of the counsel in question and subject matter (not counsel’s) expertise.
The bottom line, the litigant seldom receives 100% compensation of costs.
There are various repercussions to this premise which shall be examined on another occasion.
Wednesday, May 21, 2008
My University - Nudity on Campus
Comments
Audi alteram partem meaning, literally, hear the other side (I am sure they saw the other side) . However the Injunction was not granted because “the plaintiff had suffered no injustice”. There must be a serious question to be tried….
CHANCERY DIVISION
Glynn vs. Keele University and another
[1971] 2 All ER 89, [1971] 1 WLR 187
Natural justice - No opportunity given to student to be heard. Injunction - Injunction to restrain breach of rules of natural justice. Refusal of injunction.
Held
The powers of the vice-chancellor under s 6(4) of the statutes to suspend a student were so fundamental to the position of a student in the university that they could not be regarded merely as a matter of internal discipline; accordingly the vice-chancellor was acting in a quasi-judicial capacity when he exercised them; so acting he had not complied with the rules of natural justice in that he did not give the plaintiff a chance of being heard before he reached his decision on the infliction of a penalty.
However, the plaintiff had suffered no injustice; it was not disputed that he had been involved in the incident of 19th June, the offence was one which merited a severe penalty and the penalty imposed by the vice-chancellor was an intrinsically proper one; the fact that the plaintiff had merely been deprived of a right to make a plea in mitigation was insufficient to justify setting aside the decision; accordingly an injunction would be refused
INTRODUCTION
Motion. By notice of motion the plaintiff, Simon Vincent Glynn, sought, inter alia, an injunction against the University of Keele and William Alexander Campbell Stewart, the vice-chancellor of the university, restraining them from excluding the plaintiff from residence on the campus of the university for the remainder of the academic year 1970-71 and from impeding in any save a lawful was any application which the plaintiff might make for residence. The facts are set out in the judgment.
JUDGMENT BY PENNYCUICK V-C
In this action the plaintiff is Mr Simon Vincent Glynn who is a last year undergraduate at the University of Keele. The first defendant is the University of Keele itself; the second defendant is Mr William Alexander Campbell Stewart, who is the vice-chancellor of that university. I have before me a notice of motion whereby the plaintiff seeks an injunction restraining the defendants from excluding the plaintiff from residence on the campus of the university for the remainder of the current accademic year.
The present action, including the motion, arises from an incident on 19th June 1970; on that day a number of undergraduates of the university were standing or sitting naked on the campus of the university, and that incident gave rise to a great deal of trouble, as one would expect. In the present action there was no formal admission by the plaintiff that he was one of the undergraduates concerned; there is, however, evidence of identification, and there is nowhere in his affidavits, or in the speeches of counsel for him, any real suggestion that he was not one of the naked undergraduates on that occasion. I must plainly proceed to deal with this motion on the footing that he was in fact involved in this incident; in other words no issue of identification is raised. The sequence of events is set out by the vice-chancellor [the second defendant] in para 3 of an affidavit sworn by him on this motion, in which he states:
'On my return to Keele on the evening of the 19th June 1970, I received information that certain students had appeared naked in the area of the Students' Union on that day, causing offence to many members and employees of the University, and residents on the campus. I thereupon proceeded with an investigation into the affair, and by the 29th and 30th June 1970 I had received clear and reliable evidence that the incident had indeed occurred and that the offenders included the Plaintiff and certain students due to graduate on the 1st July. Term ended on the 30th June and the Graduation Ceremony was on the 1st July. If a Disciplinary Panel had been convened it could not have met until after the end of term, by which time the graduation students would no longer have been within the disciplinary jurisdiction of the University. In any case if I had invited those against whom the evidence was available to visit me and make any representation it was clear to me that few if any would have been able to come. To expedite the decision and to enable that decision to treat all involved on an equality whether graduating students or not I decided to exercise my disciplinary jurisdiction and to give to the students involved an opportunity to appeal to the Council. The Council was due to hold a meeting on 7th July 1970 at which meeting they could appoint a committee to hear any appeals which might have been lodged. I deliberately limited my punishment to that which may be recommended and inflicted by the Disciplinary Panel under Regulation XXX. Accordingly I wrote the letter to the plaintiff dated 1st July 1970.'
I will refer in a few minutes to the statutes, ordinances and regulations which govern the university. The letter dated 1st July referred to by the vice-chancellor is in these terms:
'Dear Mr. Glynn, You have been identified as having appeared naked in the area of the Students' Union on the 19th, 1970. This incident has offended many members and employees of the University and residents on the campus. It has also offended many people outside the University both locally and nationally. You cannot have been ignorant of the likely consequences of your action. Following upon the general responsibility of the Vice-Chancellor to the Council under Section 6 (3) of the Statutes for the efficiency and good order or the University, I shall report to the Council at its meeting on the 7th July that you have been fined £10 and excluded from residence in any residential accommodation on the University campus from today's date and for the whole of the session of 1970/1. I shall also report that the fine must be paid by the 1st October 1970, or you will not be readmitted to the University at the beginning of next term. If you wish to address any grievance in connection with the above to the Council under Section 19 (24) of the Statutes, you shouls send it in writing to the Registrar to reach him not later than Tuesday, 7th July.'
The plaintiff wrote a long letter to the registrar of the university for the attention of the council on 3rd July 1970. In that letter he stated that he wished to appeal against the decision of the vice-chancellor. That letter should be read in full:
'I wish to appeal against the decision of the Vice-Chancellor under Section 19 (24) of the statutes. I have received a letter from the Vice-Chancellor, in which he informs me that I "have" been identified as having appeared naked... I "have" been fined £10, and I "have" been excluded from campus residence for next year. All this has been done without any representation by myself or on my behalf, and hence I have not even had the opportunity to defend myself which is afforded to those accused of breaking the law of the land. Whilst the Vice-Chancellor may be acting within the letter of his statutory powers (which incidentally he assured the Parliamentary Commission he would never use), I do not feel that he has acted within the spirit of the Statutes, for I do not believe that any Government would ratify statutes that they believed would be used to entail [sic] the freedom of defence, or the freedom to plead mitigating circumstances, which are extended to subjects under the law of the land.
Furthermore, with all due respect, I do not believe that this, my representation in writing to the Council, (after the decision to punish has already been taken by the Vice-Chancellor), can in any way be truly described as a chance to defend myself, as I am not present to answer queries which may arise and any representation on my behalf at this late stage in the proceedings can only be retrospective in spirit. The section of the statute invoked by the Vice-Chancellor is section 6 (3), under which he is responsible to council for the efficiency and good order of the University. It cannot be denied that the threatened withdrawal of £20,000 from the University impinges upon its good order and efficiency. However, this withdrawal of money was not forseen by students and obviously was not forseen even by the Administration, for surely, if the Administration had forseen such awithdrawal of monies, they would have given a formal order, or made formal request to those who were sunbathing to put on their clothes. (WHICH IT SHOULD BE NOTED THEY AT NO TIME DID.)
Thus, the assertion by the Vice-Chancellor in his letter, that "you cannot have been ignorant of the likely consequences of your action", is clearly invalid and unfair for by what token can he assume that the students were aware of the "likely consequences" of their actions when it is obvious (from the lack of directive at the time from the administration to the students concerned) that not even the administration were aware of the possible outcome. The implications of the type of retrospective punishment being invoked in this situation are abhorent. To draw a parallel: if a member of this Council while driving home accidentally ran over and killed a pedestrian it could be argued retrospectively that that man had killed a pedestrian because he had driven home, and thus, to drive home constitutes a blameworthy offence. However, I believe that any rational human being will see that the driver should not be punished for he did not intend to kill the pedestrian and had no way of knowing the outcome of his action. As I have argued earlier, despite the assertion to the contrary by the Vice-Chancellor, the students involved in sunbathing at Keele had no way of knowing that it would lead to a withdrawal of £ 20,000 from the University. Nor do I believe that in this day and age when nude plays, nudist colonies and health farms flourish, and when we are - one would hope - less inhibited and less restricted by the proven psychologically harmful aftermath of Victorian prudishness, that any student could reasonably be expected to think that such a harmless action could have such repercussions.
In conclusion then, may I ask the members of Council to consider my appeal with the open minded rationalism of which I am convinced they are possessed. I would further like to point out that I have a lot more to say on this subject and in all fairness feel sure that the Council members will realise that had I been allowed to be present, I would have been able to clarify the situation far better than I can do in this letter, furthermore as I am not present and there is consequently no feed-back I am unable to answer any queries or objections that I am sure will be raised. In view of this may I beg to appear in person before the council if there is any question of my appeal being rejected.
Yours faithfully, Simon V. Glynn.
P.S. I am a finalist next year and in view of the travelling involved, the structure of my timetable and the fact that I should have to rely upon Public Transport, I feel that exclusion from campus residence would have an extremely detrimental effect upon my examination performance.'
Having heard no more, according to his affidavit, the plaintiff went abroad at the end of July. On 10th August a letter was written to the plaintiff giving him notice that the date of his appeal had been fixed for 2nd September. The plaintiff himself did not, according to his own evidence, receive that letter until he came home from abroad considerably after 2nd September. His mother acknowledged the letter and stated her own views. In the event, on the date fixed for hearing the appeal, the plaintiff was not present or represented, and accordingly the decision of the vice-chancellor stood.
The plaintiff has given evidence to the effect that he has been seriously inconvenienced by his exclusion from residence on the campus. I need not, I think, go through the particulars of the matter. It will be sufficient to say that although separate accommodation in the village of Keele was offered to him, he did not find that accommodation acceptable, or perhaps practicable, for one reason or another, and in the event he found lodgings some ten miles away. That involves a daily journey to and from the campus, and unfortunately in November he had an accident which involved his car in being a total write-off, so that the inconvenience is considerably augmented. I should mention that the plaintiff in fact paid the £10 fine in order to get back to his studies. In those circumstances the writ in this action was issued, and notice of motion dated 2nd December was given.
Audi alteram partem meaning, literally, hear the other side (I am sure they saw the other side) . However the Injunction was not granted because “the plaintiff had suffered no injustice”. There must be a serious question to be tried….
CHANCERY DIVISION
Glynn vs. Keele University and another
[1971] 2 All ER 89, [1971] 1 WLR 187
Natural justice - No opportunity given to student to be heard. Injunction - Injunction to restrain breach of rules of natural justice. Refusal of injunction.
Held
The powers of the vice-chancellor under s 6(4) of the statutes to suspend a student were so fundamental to the position of a student in the university that they could not be regarded merely as a matter of internal discipline; accordingly the vice-chancellor was acting in a quasi-judicial capacity when he exercised them; so acting he had not complied with the rules of natural justice in that he did not give the plaintiff a chance of being heard before he reached his decision on the infliction of a penalty.
However, the plaintiff had suffered no injustice; it was not disputed that he had been involved in the incident of 19th June, the offence was one which merited a severe penalty and the penalty imposed by the vice-chancellor was an intrinsically proper one; the fact that the plaintiff had merely been deprived of a right to make a plea in mitigation was insufficient to justify setting aside the decision; accordingly an injunction would be refused
INTRODUCTION
Motion. By notice of motion the plaintiff, Simon Vincent Glynn, sought, inter alia, an injunction against the University of Keele and William Alexander Campbell Stewart, the vice-chancellor of the university, restraining them from excluding the plaintiff from residence on the campus of the university for the remainder of the academic year 1970-71 and from impeding in any save a lawful was any application which the plaintiff might make for residence. The facts are set out in the judgment.
JUDGMENT BY PENNYCUICK V-C
In this action the plaintiff is Mr Simon Vincent Glynn who is a last year undergraduate at the University of Keele. The first defendant is the University of Keele itself; the second defendant is Mr William Alexander Campbell Stewart, who is the vice-chancellor of that university. I have before me a notice of motion whereby the plaintiff seeks an injunction restraining the defendants from excluding the plaintiff from residence on the campus of the university for the remainder of the current accademic year.
The present action, including the motion, arises from an incident on 19th June 1970; on that day a number of undergraduates of the university were standing or sitting naked on the campus of the university, and that incident gave rise to a great deal of trouble, as one would expect. In the present action there was no formal admission by the plaintiff that he was one of the undergraduates concerned; there is, however, evidence of identification, and there is nowhere in his affidavits, or in the speeches of counsel for him, any real suggestion that he was not one of the naked undergraduates on that occasion. I must plainly proceed to deal with this motion on the footing that he was in fact involved in this incident; in other words no issue of identification is raised. The sequence of events is set out by the vice-chancellor [the second defendant] in para 3 of an affidavit sworn by him on this motion, in which he states:
'On my return to Keele on the evening of the 19th June 1970, I received information that certain students had appeared naked in the area of the Students' Union on that day, causing offence to many members and employees of the University, and residents on the campus. I thereupon proceeded with an investigation into the affair, and by the 29th and 30th June 1970 I had received clear and reliable evidence that the incident had indeed occurred and that the offenders included the Plaintiff and certain students due to graduate on the 1st July. Term ended on the 30th June and the Graduation Ceremony was on the 1st July. If a Disciplinary Panel had been convened it could not have met until after the end of term, by which time the graduation students would no longer have been within the disciplinary jurisdiction of the University. In any case if I had invited those against whom the evidence was available to visit me and make any representation it was clear to me that few if any would have been able to come. To expedite the decision and to enable that decision to treat all involved on an equality whether graduating students or not I decided to exercise my disciplinary jurisdiction and to give to the students involved an opportunity to appeal to the Council. The Council was due to hold a meeting on 7th July 1970 at which meeting they could appoint a committee to hear any appeals which might have been lodged. I deliberately limited my punishment to that which may be recommended and inflicted by the Disciplinary Panel under Regulation XXX. Accordingly I wrote the letter to the plaintiff dated 1st July 1970.'
I will refer in a few minutes to the statutes, ordinances and regulations which govern the university. The letter dated 1st July referred to by the vice-chancellor is in these terms:
'Dear Mr. Glynn, You have been identified as having appeared naked in the area of the Students' Union on the 19th, 1970. This incident has offended many members and employees of the University and residents on the campus. It has also offended many people outside the University both locally and nationally. You cannot have been ignorant of the likely consequences of your action. Following upon the general responsibility of the Vice-Chancellor to the Council under Section 6 (3) of the Statutes for the efficiency and good order or the University, I shall report to the Council at its meeting on the 7th July that you have been fined £10 and excluded from residence in any residential accommodation on the University campus from today's date and for the whole of the session of 1970/1. I shall also report that the fine must be paid by the 1st October 1970, or you will not be readmitted to the University at the beginning of next term. If you wish to address any grievance in connection with the above to the Council under Section 19 (24) of the Statutes, you shouls send it in writing to the Registrar to reach him not later than Tuesday, 7th July.'
The plaintiff wrote a long letter to the registrar of the university for the attention of the council on 3rd July 1970. In that letter he stated that he wished to appeal against the decision of the vice-chancellor. That letter should be read in full:
'I wish to appeal against the decision of the Vice-Chancellor under Section 19 (24) of the statutes. I have received a letter from the Vice-Chancellor, in which he informs me that I "have" been identified as having appeared naked... I "have" been fined £10, and I "have" been excluded from campus residence for next year. All this has been done without any representation by myself or on my behalf, and hence I have not even had the opportunity to defend myself which is afforded to those accused of breaking the law of the land. Whilst the Vice-Chancellor may be acting within the letter of his statutory powers (which incidentally he assured the Parliamentary Commission he would never use), I do not feel that he has acted within the spirit of the Statutes, for I do not believe that any Government would ratify statutes that they believed would be used to entail [sic] the freedom of defence, or the freedom to plead mitigating circumstances, which are extended to subjects under the law of the land.
Furthermore, with all due respect, I do not believe that this, my representation in writing to the Council, (after the decision to punish has already been taken by the Vice-Chancellor), can in any way be truly described as a chance to defend myself, as I am not present to answer queries which may arise and any representation on my behalf at this late stage in the proceedings can only be retrospective in spirit. The section of the statute invoked by the Vice-Chancellor is section 6 (3), under which he is responsible to council for the efficiency and good order of the University. It cannot be denied that the threatened withdrawal of £20,000 from the University impinges upon its good order and efficiency. However, this withdrawal of money was not forseen by students and obviously was not forseen even by the Administration, for surely, if the Administration had forseen such awithdrawal of monies, they would have given a formal order, or made formal request to those who were sunbathing to put on their clothes. (WHICH IT SHOULD BE NOTED THEY AT NO TIME DID.)
Thus, the assertion by the Vice-Chancellor in his letter, that "you cannot have been ignorant of the likely consequences of your action", is clearly invalid and unfair for by what token can he assume that the students were aware of the "likely consequences" of their actions when it is obvious (from the lack of directive at the time from the administration to the students concerned) that not even the administration were aware of the possible outcome. The implications of the type of retrospective punishment being invoked in this situation are abhorent. To draw a parallel: if a member of this Council while driving home accidentally ran over and killed a pedestrian it could be argued retrospectively that that man had killed a pedestrian because he had driven home, and thus, to drive home constitutes a blameworthy offence. However, I believe that any rational human being will see that the driver should not be punished for he did not intend to kill the pedestrian and had no way of knowing the outcome of his action. As I have argued earlier, despite the assertion to the contrary by the Vice-Chancellor, the students involved in sunbathing at Keele had no way of knowing that it would lead to a withdrawal of £ 20,000 from the University. Nor do I believe that in this day and age when nude plays, nudist colonies and health farms flourish, and when we are - one would hope - less inhibited and less restricted by the proven psychologically harmful aftermath of Victorian prudishness, that any student could reasonably be expected to think that such a harmless action could have such repercussions.
In conclusion then, may I ask the members of Council to consider my appeal with the open minded rationalism of which I am convinced they are possessed. I would further like to point out that I have a lot more to say on this subject and in all fairness feel sure that the Council members will realise that had I been allowed to be present, I would have been able to clarify the situation far better than I can do in this letter, furthermore as I am not present and there is consequently no feed-back I am unable to answer any queries or objections that I am sure will be raised. In view of this may I beg to appear in person before the council if there is any question of my appeal being rejected.
Yours faithfully, Simon V. Glynn.
P.S. I am a finalist next year and in view of the travelling involved, the structure of my timetable and the fact that I should have to rely upon Public Transport, I feel that exclusion from campus residence would have an extremely detrimental effect upon my examination performance.'
Having heard no more, according to his affidavit, the plaintiff went abroad at the end of July. On 10th August a letter was written to the plaintiff giving him notice that the date of his appeal had been fixed for 2nd September. The plaintiff himself did not, according to his own evidence, receive that letter until he came home from abroad considerably after 2nd September. His mother acknowledged the letter and stated her own views. In the event, on the date fixed for hearing the appeal, the plaintiff was not present or represented, and accordingly the decision of the vice-chancellor stood.
The plaintiff has given evidence to the effect that he has been seriously inconvenienced by his exclusion from residence on the campus. I need not, I think, go through the particulars of the matter. It will be sufficient to say that although separate accommodation in the village of Keele was offered to him, he did not find that accommodation acceptable, or perhaps practicable, for one reason or another, and in the event he found lodgings some ten miles away. That involves a daily journey to and from the campus, and unfortunately in November he had an accident which involved his car in being a total write-off, so that the inconvenience is considerably augmented. I should mention that the plaintiff in fact paid the £10 fine in order to get back to his studies. In those circumstances the writ in this action was issued, and notice of motion dated 2nd December was given.
Tuesday, May 20, 2008
The Malaysian Chapter - Some thoughts on s218(1) of the Companies Act, 1965
1) Section 218(1) of the Companies Act (Malaysian Companies Act 1965) sets out the circumstances in which a company may be wound up by the Court, of which s218(1)(e) being one of the “common” grounds i.e. inability of the company to pay its debts.
2) Upon service and the non-payment of a s218 notice, the presumption under s218(2)(a) will be invoked that the company is deemed unable to pay its debts.
Judgment
3) It is also trite law that the Petitioner does not need to be armed with a Judgment to invoke the presumption under s218. Nevertheless and unfortunately, many judges and the official receivers department seek this (a judgment) as a “prerequisite”. .
The Court of Appeal affirmed that “It is not provided under the Act that a petitioner must be armed with a judgment debt prior to the filing of a petition to wind up a company” (Syarikat Mohd Noor Yusof Sdn Bhd v Polibina Engineering Enterprise Sdn Bhd (in liquidation) – COA [2006] 1 MLJ 446)
“Under s218(2)(a) of the Act, once a notice to pay a debt has been served on a company, the company has to meet the presumptive challenge of the section by disputing the existence of the debt which can be done by either showing that the debt is non-existent or that the petitioner is not its creditor.” (Tan Ah Teck (t/a Plumcon Plumbing & Construction Co) v Coffral (Malaysia) Sdn Bhd – HC [1992] 1 MLJ 553)
The Debt - A liberal interpretation
4) Being a statutory right, the Federal Court decided that Courts ought to adopt a liberal interpretation in considering of the provisions of s218(2)(a) of the Companies Act and even a demand not specifying an exact sum was deemed sufficient. Commercial reality demands of this liberal interpretation otherwise leaving this section an absurdity. The leading case of Re Fabo Pty applied. The Courts are looking into the commercial insolvency of the company rather than technical objections of the demand.
“The court should adopt a liberal interpretation when considering the provisions of s218(2)(a)of the Act. The adoption of a literal interpretation would be difficult as it would compel the court not to make a winding up order notwithstanding the existence of clear evidence that an undisputed sum exceeding RM500 has remained unpaid after a demand made without any reasonable explanation for the failure to pay. Further, commercial reality demands that liberal interpretation be adopted.
A notice of demand under s218 need not specify the exact sum due as at the date of demand. So long the sum due exceeded RM500 and remained unpaid after the demand made without any reasonable explanation to the satisfaction of the court, there is therefore neglect to pay such sum within the meaning of the section” (Malaysia Air Charter Co Sdn Bhd v Petronas Dagangan Sdn Bhd – FC [2000] 4 MLJ 657)
A statutory right/ Commercial Insolvency
5) In any event, the right to present a Petition is a statutory one and cannot be taken away unless the company/Plaintiff can seriously challenge and prove that the debt is substantially and bona fide disputed. Furthermore, the party must prove that they are able to pay the debt and are not commercially insolvent.
6) Following the Privy Council, Sri Hartamas Development Sdn Bhd v MBF Finance Bhd – SC [1992] 1 MLJ 313 decided that, “In dealing with ‘commercial insolvency’, that is, of a company being unable to meet current demands upon it, we would respectfully follow the Privy Council in the Malayan Plant case and cite the following observations from Buckley on the Companies Act (13th Ed) at p 460:In such a case it is useless to say that if its assets are realized there will be ample to pay twenty shillings in the pound: this is not the test. A company may be at the same time insolvent, and wealthy. It may have wealth locked up in investments not presently realizable; but although this be so, yet if it have not assets available to meet its current liabilities it is commercially insolvent and may be wound up”
Conclusion
Alas, as aforemetioned, many courts seek a judgment as a “prerequisite” before the Winding-Up..
2) Upon service and the non-payment of a s218 notice, the presumption under s218(2)(a) will be invoked that the company is deemed unable to pay its debts.
Judgment
3) It is also trite law that the Petitioner does not need to be armed with a Judgment to invoke the presumption under s218. Nevertheless and unfortunately, many judges and the official receivers department seek this (a judgment) as a “prerequisite”. .
The Court of Appeal affirmed that “It is not provided under the Act that a petitioner must be armed with a judgment debt prior to the filing of a petition to wind up a company” (Syarikat Mohd Noor Yusof Sdn Bhd v Polibina Engineering Enterprise Sdn Bhd (in liquidation) – COA [2006] 1 MLJ 446)
“Under s218(2)(a) of the Act, once a notice to pay a debt has been served on a company, the company has to meet the presumptive challenge of the section by disputing the existence of the debt which can be done by either showing that the debt is non-existent or that the petitioner is not its creditor.” (Tan Ah Teck (t/a Plumcon Plumbing & Construction Co) v Coffral (Malaysia) Sdn Bhd – HC [1992] 1 MLJ 553)
The Debt - A liberal interpretation
4) Being a statutory right, the Federal Court decided that Courts ought to adopt a liberal interpretation in considering of the provisions of s218(2)(a) of the Companies Act and even a demand not specifying an exact sum was deemed sufficient. Commercial reality demands of this liberal interpretation otherwise leaving this section an absurdity. The leading case of Re Fabo Pty applied. The Courts are looking into the commercial insolvency of the company rather than technical objections of the demand.
“The court should adopt a liberal interpretation when considering the provisions of s218(2)(a)of the Act. The adoption of a literal interpretation would be difficult as it would compel the court not to make a winding up order notwithstanding the existence of clear evidence that an undisputed sum exceeding RM500 has remained unpaid after a demand made without any reasonable explanation for the failure to pay. Further, commercial reality demands that liberal interpretation be adopted.
A notice of demand under s218 need not specify the exact sum due as at the date of demand. So long the sum due exceeded RM500 and remained unpaid after the demand made without any reasonable explanation to the satisfaction of the court, there is therefore neglect to pay such sum within the meaning of the section” (Malaysia Air Charter Co Sdn Bhd v Petronas Dagangan Sdn Bhd – FC [2000] 4 MLJ 657)
A statutory right/ Commercial Insolvency
5) In any event, the right to present a Petition is a statutory one and cannot be taken away unless the company/Plaintiff can seriously challenge and prove that the debt is substantially and bona fide disputed. Furthermore, the party must prove that they are able to pay the debt and are not commercially insolvent.
6) Following the Privy Council, Sri Hartamas Development Sdn Bhd v MBF Finance Bhd – SC [1992] 1 MLJ 313 decided that, “In dealing with ‘commercial insolvency’, that is, of a company being unable to meet current demands upon it, we would respectfully follow the Privy Council in the Malayan Plant case and cite the following observations from Buckley on the Companies Act (13th Ed) at p 460:In such a case it is useless to say that if its assets are realized there will be ample to pay twenty shillings in the pound: this is not the test. A company may be at the same time insolvent, and wealthy. It may have wealth locked up in investments not presently realizable; but although this be so, yet if it have not assets available to meet its current liabilities it is commercially insolvent and may be wound up”
Conclusion
Alas, as aforemetioned, many courts seek a judgment as a “prerequisite” before the Winding-Up..
Wednesday, May 14, 2008
Removal of Liquidators, Quickson & the Deloitte’s case
Section 108(2) of the Insolvency Act 1986
Section 108(2) provides that the "court may, on cause shown, remove a liquidator and appoint another."
Quickson (South & West) Ltd v Katz [2004]
In recent times there has been case law when the Court has required some “show cause” reflecting characteror unfitness. This has been correctly "re-aligned" when the Court has said that there is no need for such special circumstances - Ehterton J in Quickson
Etherton J in Quickson,
…………… therefore, that it is quite clear from the entire line of authority stretching back to 1867 that, in appropriate circumstances, there may be good cause to remove a liquidator, notwithstanding the failure of the applicant to prove misfeasance as such, and even though no reasonable criticism can be made of his conduct.
In my judgment, that summary of the application of the legal principles to the present case is too narrow and too rigid, and does not properly reflect the broad discretion of the court under IA s.108(2). It appears to be an analysis which has transformed the observation of Neuberger J in AMP Enterprises that the court expects any liquidator to be efficient and vigorous and unbiased in his conduct of the liquidation (at para [23]) into a pre-condition of removal under s.108(2) that, in order to succeed, the applicant must show that the liquidator has failed to act in an efficient, vigorous and unbiased manner, and will continue to fail to do so in the future.
Neuberger J himself emphasised (at para [21]) that it is inappropriate to lay down what facts will and what facts will not constitute sufficient grounds for removal under s.108(2). In that case, he made helpful and practical comments that it should not be seen to be easy to remove a liquidator merely because it can be shown that in one or more respects his conduct has fallen short of the ideal, and it is necessary to bear in mind the expense and disruption of a substitute appointment. Similarly, as I have already said, Nourse LJ in Edennote (at p.398) observed that the creditors’ lack of confidence in the liquidator must be reasonable, and the court will pay due regard to the impact of removal on the liquidator’s professional standing and reputation. Factors such as those might, taking into account all the circumstances, warrant a refusal to remove a liquidator even where there are reasonable criticisms that can be made of the liquidator’s conduct of the liquidation.
On the other hand, it is quite clear from the entire line of authority stretching back to 1867 that, in appropriate circumstances, there may be good cause to remove a liquidator, notwithstanding the failure of the applicant to prove misfeasance as such, and even though no reasonable criticism can be made of his conduct: see Millett J in Re Keypak Homecare at p.416, approved by the Court of Appeal in Re Edennote at p.398.
In my judgment, the touchstone for an appraisal of whether good cause has been shown for the removal of a liquidator is the principle stated by Bowen LJ in Re Adam Eyton (at p.306) :
"The due cause is to be measured by reference to the real, substantial, honest interests of the liquidation, and to the purpose for which the liquidator is appointed."
See Also
Deloitte’s case Privy Council Appeal No. 44 of 1998
1. The statutory jurisdiction to remove a liquidator.
The companies legislation which was under consideration by the Court of Appeal was the Companies Law (1995) Revision. The legislation has since been consolidated and revised as the Companies Law (1998) Revision. The parties are agreed that there are no material differences between the two, though the section numbers have been altered as a result of the addition of a new section 4 in the 1998 Revision. Their Lordships will refer to the provisions of the 1995 Revision. The legislation is based upon the English Companies Act 1862.
Section 106(1) provides:-
“(1) Any official liquidator may resign or be removed by the Court on due cause shown; and any vacancy in the office of an official liquidator appointed by the Court shall be filled by the Court.”
It is common ground that this section applies not only to a compulsory liquidation but also (by virtue of section 153) to a liquidation which is continuing subject to the supervision of the court. The corresponding section which applies to a voluntary winding up is section 143. This provides:-
“143. If, from any cause whatever, there is no liquidator acting in the case of a voluntary winding up, the Court may, on the application of a contributory appoint a liquidator or liquidators; and the Court may, on due cause shown, remove any liquidator and appoint another liquidator to act in the matter of a voluntary winding up.”
Their Lordships make two observations on these sections. In the first place, each of the sections has two limbs, one enabling the court to appoint a liquidator to fill a vacancy, and the other enabling it to remove a liquidator for cause. In the second place, save in the case of the appointment of a liquidator in a voluntary winding up where the application must be made by a contributory, there is no express restriction on the category of person who may make the application. Where an insolvent company is being voluntarily wound up, it appears that a creditor who wishes to apply for the appointment of a liquidator must either petition for a compulsory winding up or apply for the liquidation to continue under the supervision of the court.
In the course of argument reference was made to the cases on the corresponding statutory provisions in England. For convenience, therefore, their Lordships set out the terms of the relevant English section which corresponds to section 106 of the 1995 Revision. This is section 108 of the Insolvency Act 1986, which provides:-
“(1) If from any cause whatever there is no liquidator acting, the court may appoint a liquidator.
(2) The court may, on cause shown, remove a liquidator and appoint another.”
It will be seen that the two sections are in largely similar terms. Each contains the same two limbs; neither prescribes the person or persons who may make the application.
The appellants submit that as a matter of ordinary construction section 106 confers on the court a power to remove a liquidator for cause without any limitation on the category of person who may make the application. They draw a contrast with other sections of the Companies Law which do contain such a limitation. Section 95, for example, restricts the right to apply to the court for the winding up of a company to creditors and contributories. Sections 102 (application for a stay of proceedings), 140 (determination of questions in a winding up), and 143 (set out above) all contain express restrictions on the person or persons who may make the application. By contrast section 106 contains no requirement that the applicant should be a creditor or contributory, or that he should have a direct financial interest in the conduct of the liquidation. There is certainly no express requirement and, it is said, none should be implied, since it is impossible to foresee all the circumstances which may justify the removal of a liquidator.
The appellants concede that not everyone is a proper person to make the application. They submit that any person who has an interest in making the application or who may be affected by its outcome is a proper person to make it. They say that they are such persons since they are critically affected by decisions which the liquidators will make in the conduct of the proceedings which the Company has brought against them. The real question is whether they can establish due cause for the removal of the respondents as liquidators. This, it is submitted, is a separate question which can only be determined after a full investigation of the grounds upon which the removal of the liquidator is sought. Unless obviously ill founded, they submit, an allegation of impropriety could not be summarily dismissed without investigation; and an alleged conflict of interest is in like case. It is not to be supposed that the court would lightly permit its own officers to place themselves in a position where their interest conflicts with their duty.
The appellants have cited numerous authorities on the circumstances in which the English Court will exercise its power to remove a liquidator for cause. Their Lordships do not find them helpful to the appellants. They show that impropriety is not necessary; that it is sufficient to satisfy the court that the removal of the liquidator will be for the general advantage of the persons interested in the liquidation; that in the absence of impropriety the court will have regard to the wishes of the majority of those interested; but that where impropriety is shown the court may override their wishes. They do, however, show that the court has consistently regarded the creditors (in the case of an insolvent liquidation) and the contributories (in the case of a solvent liquidation) as the proper persons to make the application, being the only persons interested in the liquidation. Their Lordships have not been shown any case in which the court has removed a liquidator who is able and willing to act on the application of anyone who is not a creditor or contributory as the case may be.
The appellants place much reliance on recent cases in England under section 108(1) of the Insolvency Act 1986. They have been concerned with the situation which arises when an office-holder with numerous appointments is incapable of continuing in office. Where he has automatically vacated office on having his authorisation withdrawn, the court has appointed another office-holder in his place on the application of the former office-holder himself, his former partners, the Secretary of State, and the Insolvency Practitioners Association. The court has also acceded to an unopposed application by the former partners of an office-holder who has resigned from his firm and is unable to continue in consequence to remove him and appoint another partner in his place. In all these cases the applicant has had a professional or official responsibility to bring to the attention of the court the existence of a large number of vacancies which needed to be filled. The only question of substance was whether it was necessary to incur the expense and delay of calling meetings of the creditors in every case in order to fill them. The court was prepared to remove the office-holder and thus create the vacancies it was asked to fill only where the office-holder accepted that he was incapable of acting. In such a case it recognised the reality of the situation, which was that the office was to all intents and purposes already vacant. But it refused the application and left the decision to the creditors where the office-holder, though unwilling to continue in office, was capable of doing so: see In re Sankey Furniture Ltd. [1995] 2 B.C.L.C. 594 and In re A. & C. Supplies Ltd. [1998] 1 B.C.L.C. 603.
In their Lordships’ opinion two different kinds of case must be distinguished when considering the question of a party’s standing to make an application to the court. The first occurs when the court is asked to exercise a power conferred on it by statute. In such a case the court must examine the statute to see whether it identifies the category of person who may make the application. This goes to the jurisdiction of the court, for the court has no jurisdiction to exercise a statutory power except on the application of a person qualified by the statute to make it. The second is more general. Where the court is asked to exercise a statutory power or its inherent jurisdiction, it will act only on the application of a party with a sufficient interest to make it. This is not a matter of jurisdiction. It is a matter of judicial restraint. Orders made by the court are coercive. Every order of the court affects the freedom of action of the party against whom it is made and sometimes (as in the present case) of other parties as well. It is, therefore, incumbent on the court to consider not only whether it has jurisdiction to make the order but whether the applicant is a proper person to invoke the jurisdiction.
Where the court is asked to exercise a statutory power, therefore, the applicant must show that he is a person qualified to make the application. But this does not conclude the question. He must also show that he is a proper person to make the application. This does not mean, as the appellants submit, that he “has an interest in making the application or may be affected by its outcome”. It means that he has a legitimate interest in the relief sought. Thus even though the statute does not limit the category of person who may make the application, the court will not remove a liquidator of an insolvent company on the application of a contributory who is not also a creditor: see In re Corbenstoke Ltd. (No.2) (1989) 5 B.C.C. 767. This case was criticised by the appellants: their Lordships consider that it was correctly decided.
The standing of an applicant cannot therefore be considered separately and without regard to the nature of the relief for which the application is made. Section 106(1) does not limit the category of persons who may make the application. The appellants, therefore, do not lack a statutory qualification to invoke the section. But the question remains whether they have a legitimate interest in the relief which they seek. They are not asking the court to appoint a liquidator to fill a vacancy. They are asking the court to remove incumbent liquidators for cause. The English cases relied upon by the appellants show that an interest which is sufficient to support an application of the former kind may not be sufficient to support an application of the latter kind.
The Company is insolvent. The liquidation is continuing under the supervision of the court. The only persons who could have any legitimate interest of their own in having the respondents removed from office as liquidators are the persons entitled to participate in the ultimate distribution of the Company’s assets, that is to say the creditors. The respondents are willing and able to continue to act, and the creditors have taken no step to remove them. The appellants are not merely strangers to the liquidation; their interests are adverse to the liquidation and the interests of the creditors. In their Lordships’ opinion, they have no legitimate interest in the identity of the liquidators, and are not proper persons to invoke the statutory jurisdiction of the court to remove the incumbent office-holders.
The appellants’ case is not advanced by alleging that the respondents have a conflict of interest. This is not the same as impropriety or want of probity. Their Lordships observe that the expression “conflict of interest” is an abbreviation for “conflict of interest and duty”. The rule is that a fiduciary may not without the informed consent of his principal place himself in a position where his interest may conflict with his duty to the principal. The danger is that his interest may affect him in the discharge of his duty to the prejudice of his principal. The only persons with a legitimate interest in complaining of a breach of the rule are the persons to whom the duty is owed; and they may waive the breach. The appellants do not allege that the respondents have an interest which conflicts with any duty owed to them. They do not plead any such duty. They allege that the respondents have an interest which conflicts with their duty to the Company and its creditors. If such a conflict exists, it is for the creditors alone to decide what if anything to do about it.
2. The inherent jurisdiction of the Court over its own officers.
As liquidators of the Company the respondents are officers of the court. The court’s inherent jurisdiction to control the conduct of its own officers is beyond dispute. But it does not follow that the appellants are proper persons to invoke that jurisdiction. They say that the respondents are behaving unconscionably by reason of their conflict of interest. But they cannot say that the respondents are acting unconscionably to them.
The appellants complain of the manner in which the respondents have conducted the proceedings against them in Cause 104. Thus they make the application as defendants to existing proceedings. They do not allege that those proceedings disclose no cause of action or are an abuse of the process of the court. If such were the case, the appellants would have an obvious remedy. They complain that the respondents have not made Coopers & Lybrand UK defendants to Cause 104. But the appellants have the remedy in their own hands. If they want to make Coopers & Lybrand UK parties to the action, they can bring them in themselves as third parties. They complain that the respondents, being the persons in control of the proceedings on behalf of the Company, have interests which conflict with those of the Company and may accordingly not properly discharge their duties to the Company. It is strange to hear defendants complain that the proceedings against them may not be pursued with sufficient vigour. If the Company were not in liquidation, the appellants could not be heard to complain of such conduct on the part of its directors. It would be a matter within the exclusive competence of the shareholders. Their Lordships do not accept that the fact that the Company is in insolvent liquidation and that the liquidators’ duties are owed to the creditors rather than the shareholders gives the appellants a standing to complain which they would not otherwise have had.
Their Lordships consider that the answer they have returned to the first question effectively disposes of this question also. They will humbly advise Her Majesty that the appeal and the petition for special leave should both be dismissed. The appellants must pay the respondents’ costs of both the appeal and the petition before their Lordships’ Board.
Section 108(2) provides that the "court may, on cause shown, remove a liquidator and appoint another."
Quickson (South & West) Ltd v Katz [2004]
In recent times there has been case law when the Court has required some “show cause” reflecting characteror unfitness. This has been correctly "re-aligned" when the Court has said that there is no need for such special circumstances - Ehterton J in Quickson
Etherton J in Quickson,
…………… therefore, that it is quite clear from the entire line of authority stretching back to 1867 that, in appropriate circumstances, there may be good cause to remove a liquidator, notwithstanding the failure of the applicant to prove misfeasance as such, and even though no reasonable criticism can be made of his conduct.
In my judgment, that summary of the application of the legal principles to the present case is too narrow and too rigid, and does not properly reflect the broad discretion of the court under IA s.108(2). It appears to be an analysis which has transformed the observation of Neuberger J in AMP Enterprises that the court expects any liquidator to be efficient and vigorous and unbiased in his conduct of the liquidation (at para [23]) into a pre-condition of removal under s.108(2) that, in order to succeed, the applicant must show that the liquidator has failed to act in an efficient, vigorous and unbiased manner, and will continue to fail to do so in the future.
Neuberger J himself emphasised (at para [21]) that it is inappropriate to lay down what facts will and what facts will not constitute sufficient grounds for removal under s.108(2). In that case, he made helpful and practical comments that it should not be seen to be easy to remove a liquidator merely because it can be shown that in one or more respects his conduct has fallen short of the ideal, and it is necessary to bear in mind the expense and disruption of a substitute appointment. Similarly, as I have already said, Nourse LJ in Edennote (at p.398) observed that the creditors’ lack of confidence in the liquidator must be reasonable, and the court will pay due regard to the impact of removal on the liquidator’s professional standing and reputation. Factors such as those might, taking into account all the circumstances, warrant a refusal to remove a liquidator even where there are reasonable criticisms that can be made of the liquidator’s conduct of the liquidation.
On the other hand, it is quite clear from the entire line of authority stretching back to 1867 that, in appropriate circumstances, there may be good cause to remove a liquidator, notwithstanding the failure of the applicant to prove misfeasance as such, and even though no reasonable criticism can be made of his conduct: see Millett J in Re Keypak Homecare at p.416, approved by the Court of Appeal in Re Edennote at p.398.
In my judgment, the touchstone for an appraisal of whether good cause has been shown for the removal of a liquidator is the principle stated by Bowen LJ in Re Adam Eyton (at p.306) :
"The due cause is to be measured by reference to the real, substantial, honest interests of the liquidation, and to the purpose for which the liquidator is appointed."
See Also
Deloitte’s case Privy Council Appeal No. 44 of 1998
1. The statutory jurisdiction to remove a liquidator.
The companies legislation which was under consideration by the Court of Appeal was the Companies Law (1995) Revision. The legislation has since been consolidated and revised as the Companies Law (1998) Revision. The parties are agreed that there are no material differences between the two, though the section numbers have been altered as a result of the addition of a new section 4 in the 1998 Revision. Their Lordships will refer to the provisions of the 1995 Revision. The legislation is based upon the English Companies Act 1862.
Section 106(1) provides:-
“(1) Any official liquidator may resign or be removed by the Court on due cause shown; and any vacancy in the office of an official liquidator appointed by the Court shall be filled by the Court.”
It is common ground that this section applies not only to a compulsory liquidation but also (by virtue of section 153) to a liquidation which is continuing subject to the supervision of the court. The corresponding section which applies to a voluntary winding up is section 143. This provides:-
“143. If, from any cause whatever, there is no liquidator acting in the case of a voluntary winding up, the Court may, on the application of a contributory appoint a liquidator or liquidators; and the Court may, on due cause shown, remove any liquidator and appoint another liquidator to act in the matter of a voluntary winding up.”
Their Lordships make two observations on these sections. In the first place, each of the sections has two limbs, one enabling the court to appoint a liquidator to fill a vacancy, and the other enabling it to remove a liquidator for cause. In the second place, save in the case of the appointment of a liquidator in a voluntary winding up where the application must be made by a contributory, there is no express restriction on the category of person who may make the application. Where an insolvent company is being voluntarily wound up, it appears that a creditor who wishes to apply for the appointment of a liquidator must either petition for a compulsory winding up or apply for the liquidation to continue under the supervision of the court.
In the course of argument reference was made to the cases on the corresponding statutory provisions in England. For convenience, therefore, their Lordships set out the terms of the relevant English section which corresponds to section 106 of the 1995 Revision. This is section 108 of the Insolvency Act 1986, which provides:-
“(1) If from any cause whatever there is no liquidator acting, the court may appoint a liquidator.
(2) The court may, on cause shown, remove a liquidator and appoint another.”
It will be seen that the two sections are in largely similar terms. Each contains the same two limbs; neither prescribes the person or persons who may make the application.
The appellants submit that as a matter of ordinary construction section 106 confers on the court a power to remove a liquidator for cause without any limitation on the category of person who may make the application. They draw a contrast with other sections of the Companies Law which do contain such a limitation. Section 95, for example, restricts the right to apply to the court for the winding up of a company to creditors and contributories. Sections 102 (application for a stay of proceedings), 140 (determination of questions in a winding up), and 143 (set out above) all contain express restrictions on the person or persons who may make the application. By contrast section 106 contains no requirement that the applicant should be a creditor or contributory, or that he should have a direct financial interest in the conduct of the liquidation. There is certainly no express requirement and, it is said, none should be implied, since it is impossible to foresee all the circumstances which may justify the removal of a liquidator.
The appellants concede that not everyone is a proper person to make the application. They submit that any person who has an interest in making the application or who may be affected by its outcome is a proper person to make it. They say that they are such persons since they are critically affected by decisions which the liquidators will make in the conduct of the proceedings which the Company has brought against them. The real question is whether they can establish due cause for the removal of the respondents as liquidators. This, it is submitted, is a separate question which can only be determined after a full investigation of the grounds upon which the removal of the liquidator is sought. Unless obviously ill founded, they submit, an allegation of impropriety could not be summarily dismissed without investigation; and an alleged conflict of interest is in like case. It is not to be supposed that the court would lightly permit its own officers to place themselves in a position where their interest conflicts with their duty.
The appellants have cited numerous authorities on the circumstances in which the English Court will exercise its power to remove a liquidator for cause. Their Lordships do not find them helpful to the appellants. They show that impropriety is not necessary; that it is sufficient to satisfy the court that the removal of the liquidator will be for the general advantage of the persons interested in the liquidation; that in the absence of impropriety the court will have regard to the wishes of the majority of those interested; but that where impropriety is shown the court may override their wishes. They do, however, show that the court has consistently regarded the creditors (in the case of an insolvent liquidation) and the contributories (in the case of a solvent liquidation) as the proper persons to make the application, being the only persons interested in the liquidation. Their Lordships have not been shown any case in which the court has removed a liquidator who is able and willing to act on the application of anyone who is not a creditor or contributory as the case may be.
The appellants place much reliance on recent cases in England under section 108(1) of the Insolvency Act 1986. They have been concerned with the situation which arises when an office-holder with numerous appointments is incapable of continuing in office. Where he has automatically vacated office on having his authorisation withdrawn, the court has appointed another office-holder in his place on the application of the former office-holder himself, his former partners, the Secretary of State, and the Insolvency Practitioners Association. The court has also acceded to an unopposed application by the former partners of an office-holder who has resigned from his firm and is unable to continue in consequence to remove him and appoint another partner in his place. In all these cases the applicant has had a professional or official responsibility to bring to the attention of the court the existence of a large number of vacancies which needed to be filled. The only question of substance was whether it was necessary to incur the expense and delay of calling meetings of the creditors in every case in order to fill them. The court was prepared to remove the office-holder and thus create the vacancies it was asked to fill only where the office-holder accepted that he was incapable of acting. In such a case it recognised the reality of the situation, which was that the office was to all intents and purposes already vacant. But it refused the application and left the decision to the creditors where the office-holder, though unwilling to continue in office, was capable of doing so: see In re Sankey Furniture Ltd. [1995] 2 B.C.L.C. 594 and In re A. & C. Supplies Ltd. [1998] 1 B.C.L.C. 603.
In their Lordships’ opinion two different kinds of case must be distinguished when considering the question of a party’s standing to make an application to the court. The first occurs when the court is asked to exercise a power conferred on it by statute. In such a case the court must examine the statute to see whether it identifies the category of person who may make the application. This goes to the jurisdiction of the court, for the court has no jurisdiction to exercise a statutory power except on the application of a person qualified by the statute to make it. The second is more general. Where the court is asked to exercise a statutory power or its inherent jurisdiction, it will act only on the application of a party with a sufficient interest to make it. This is not a matter of jurisdiction. It is a matter of judicial restraint. Orders made by the court are coercive. Every order of the court affects the freedom of action of the party against whom it is made and sometimes (as in the present case) of other parties as well. It is, therefore, incumbent on the court to consider not only whether it has jurisdiction to make the order but whether the applicant is a proper person to invoke the jurisdiction.
Where the court is asked to exercise a statutory power, therefore, the applicant must show that he is a person qualified to make the application. But this does not conclude the question. He must also show that he is a proper person to make the application. This does not mean, as the appellants submit, that he “has an interest in making the application or may be affected by its outcome”. It means that he has a legitimate interest in the relief sought. Thus even though the statute does not limit the category of person who may make the application, the court will not remove a liquidator of an insolvent company on the application of a contributory who is not also a creditor: see In re Corbenstoke Ltd. (No.2) (1989) 5 B.C.C. 767. This case was criticised by the appellants: their Lordships consider that it was correctly decided.
The standing of an applicant cannot therefore be considered separately and without regard to the nature of the relief for which the application is made. Section 106(1) does not limit the category of persons who may make the application. The appellants, therefore, do not lack a statutory qualification to invoke the section. But the question remains whether they have a legitimate interest in the relief which they seek. They are not asking the court to appoint a liquidator to fill a vacancy. They are asking the court to remove incumbent liquidators for cause. The English cases relied upon by the appellants show that an interest which is sufficient to support an application of the former kind may not be sufficient to support an application of the latter kind.
The Company is insolvent. The liquidation is continuing under the supervision of the court. The only persons who could have any legitimate interest of their own in having the respondents removed from office as liquidators are the persons entitled to participate in the ultimate distribution of the Company’s assets, that is to say the creditors. The respondents are willing and able to continue to act, and the creditors have taken no step to remove them. The appellants are not merely strangers to the liquidation; their interests are adverse to the liquidation and the interests of the creditors. In their Lordships’ opinion, they have no legitimate interest in the identity of the liquidators, and are not proper persons to invoke the statutory jurisdiction of the court to remove the incumbent office-holders.
The appellants’ case is not advanced by alleging that the respondents have a conflict of interest. This is not the same as impropriety or want of probity. Their Lordships observe that the expression “conflict of interest” is an abbreviation for “conflict of interest and duty”. The rule is that a fiduciary may not without the informed consent of his principal place himself in a position where his interest may conflict with his duty to the principal. The danger is that his interest may affect him in the discharge of his duty to the prejudice of his principal. The only persons with a legitimate interest in complaining of a breach of the rule are the persons to whom the duty is owed; and they may waive the breach. The appellants do not allege that the respondents have an interest which conflicts with any duty owed to them. They do not plead any such duty. They allege that the respondents have an interest which conflicts with their duty to the Company and its creditors. If such a conflict exists, it is for the creditors alone to decide what if anything to do about it.
2. The inherent jurisdiction of the Court over its own officers.
As liquidators of the Company the respondents are officers of the court. The court’s inherent jurisdiction to control the conduct of its own officers is beyond dispute. But it does not follow that the appellants are proper persons to invoke that jurisdiction. They say that the respondents are behaving unconscionably by reason of their conflict of interest. But they cannot say that the respondents are acting unconscionably to them.
The appellants complain of the manner in which the respondents have conducted the proceedings against them in Cause 104. Thus they make the application as defendants to existing proceedings. They do not allege that those proceedings disclose no cause of action or are an abuse of the process of the court. If such were the case, the appellants would have an obvious remedy. They complain that the respondents have not made Coopers & Lybrand UK defendants to Cause 104. But the appellants have the remedy in their own hands. If they want to make Coopers & Lybrand UK parties to the action, they can bring them in themselves as third parties. They complain that the respondents, being the persons in control of the proceedings on behalf of the Company, have interests which conflict with those of the Company and may accordingly not properly discharge their duties to the Company. It is strange to hear defendants complain that the proceedings against them may not be pursued with sufficient vigour. If the Company were not in liquidation, the appellants could not be heard to complain of such conduct on the part of its directors. It would be a matter within the exclusive competence of the shareholders. Their Lordships do not accept that the fact that the Company is in insolvent liquidation and that the liquidators’ duties are owed to the creditors rather than the shareholders gives the appellants a standing to complain which they would not otherwise have had.
Their Lordships consider that the answer they have returned to the first question effectively disposes of this question also. They will humbly advise Her Majesty that the appeal and the petition for special leave should both be dismissed. The appellants must pay the respondents’ costs of both the appeal and the petition before their Lordships’ Board.
Telephone Ethics
Creating a good impression on the telephone
How is it possible to create a good impression when a member of a staff is speaking to an inquirer on the telephone and cannot be seen? There are a few basic rules to remember when using the telephone at work.
Taking a call
· Greet the caller with “good morning” or” good afternoon”, and give the name of the firm;
· Ask, how may I help you?
· Sound bright and friendly. Try smiling on the telephone – it helps!
· Keep paper and pen next to the telephone and make clear notes. To assure the caller that all details have been recorded accurately, read them back. Always make sure that the message gets to the person it is intended for.
· Don’t keep a caller hanging on for a long time while your look fro information. Apologise and inform the caller that the inquiry is being dealt with as promptly as possible.
· At the end o the call, check the enquirer is satisfied that the call has been adequately dealt with.
· Say “…good-bye”, thank the enquirer for calling and let the enquirer put down the receiver first. This not only shows good manners but also gives the enquirer the final chance to ask a question.
Making a call
The same techniques apply when making a call. It helps if you are clear about what you want. Making notes of complicated information helps, especially if you are about to an answering machine.
Taking messages
Callers often wish to speak to another member of staff who is not available at the time.
This means that whoever answers he telephone has to take a message. Telephone message should:
· Include the callers name, title and telephone number
· Include the name f the person who is to receive the message and the date and the time of the call
· Be clear and to the point
· Include the name of the person who took the message
Answerphones
Don’t forget that answerphones and their message are also a first point of contact and therefore create impressions. Care should be taken when recording your message and when you record/log the calls.
Telephone Protocols
· Some of you may already be aware of the telephone protocol for lawyers and office staff and these are being put into practice; others may not be aware or may be aware but are not practicing it fully or properly. Whichever category you fall into, you are well reminded of the importance of telephone protocol. Despite technological advances like facsimiles and e-mail, the telephone continues to be one of the most important, if not the most important, of communication tools. If used properly, it can be a great ally in getting a job doe. On the flip side, if used incorrectly, all your effort in establishing a relationship with the other party may be erased.
How is it possible to create a good impression when a member of a staff is speaking to an inquirer on the telephone and cannot be seen? There are a few basic rules to remember when using the telephone at work.
Taking a call
· Greet the caller with “good morning” or” good afternoon”, and give the name of the firm;
· Ask, how may I help you?
· Sound bright and friendly. Try smiling on the telephone – it helps!
· Keep paper and pen next to the telephone and make clear notes. To assure the caller that all details have been recorded accurately, read them back. Always make sure that the message gets to the person it is intended for.
· Don’t keep a caller hanging on for a long time while your look fro information. Apologise and inform the caller that the inquiry is being dealt with as promptly as possible.
· At the end o the call, check the enquirer is satisfied that the call has been adequately dealt with.
· Say “…good-bye”, thank the enquirer for calling and let the enquirer put down the receiver first. This not only shows good manners but also gives the enquirer the final chance to ask a question.
Making a call
The same techniques apply when making a call. It helps if you are clear about what you want. Making notes of complicated information helps, especially if you are about to an answering machine.
Taking messages
Callers often wish to speak to another member of staff who is not available at the time.
This means that whoever answers he telephone has to take a message. Telephone message should:
· Include the callers name, title and telephone number
· Include the name f the person who is to receive the message and the date and the time of the call
· Be clear and to the point
· Include the name of the person who took the message
Answerphones
Don’t forget that answerphones and their message are also a first point of contact and therefore create impressions. Care should be taken when recording your message and when you record/log the calls.
Telephone Protocols
· Some of you may already be aware of the telephone protocol for lawyers and office staff and these are being put into practice; others may not be aware or may be aware but are not practicing it fully or properly. Whichever category you fall into, you are well reminded of the importance of telephone protocol. Despite technological advances like facsimiles and e-mail, the telephone continues to be one of the most important, if not the most important, of communication tools. If used properly, it can be a great ally in getting a job doe. On the flip side, if used incorrectly, all your effort in establishing a relationship with the other party may be erased.
Service of document on a Ltd company "Sdn Bhd"
Service of document on a Sdn Bhd is by leaving a copy of the said document at the registered address of the Company
Normally, the registered address will be the Company Secretary’s office, lawyer’s office eg. Chua Secretarial Services, Ah Chong Public Accountants, Muthu & Co. etc. It doesn’t matter what is the name of the company at the registered address. But the document must be left at the premises/office of the registered address (2nd Floor means 2nd Floor).
The document will almost always be acknowledged receipt at the registered address.
In the event, the receptionist at the registered office does not want to acknowledge receipt, then the document should be just left at the premises/office (not at the post box etc).
After the document is served, the person who serves the document will have to affirm an Statutory Declaration stating that he served the document at the registered address.
It is important that the document is actually served at the registered address otherwise the entire proceeding can be jeopardized. Therefore it is better to have an acknowledgment from the “accountant/secretary, lawyers etc” at the registered address
Since service of the document is by leaving a copy at the registered address, service can always be done on a Sdn Bhd. (with or without acknowledgement)
Normally, the registered address will be the Company Secretary’s office, lawyer’s office eg. Chua Secretarial Services, Ah Chong Public Accountants, Muthu & Co. etc. It doesn’t matter what is the name of the company at the registered address. But the document must be left at the premises/office of the registered address (2nd Floor means 2nd Floor).
The document will almost always be acknowledged receipt at the registered address.
In the event, the receptionist at the registered office does not want to acknowledge receipt, then the document should be just left at the premises/office (not at the post box etc).
After the document is served, the person who serves the document will have to affirm an Statutory Declaration stating that he served the document at the registered address.
It is important that the document is actually served at the registered address otherwise the entire proceeding can be jeopardized. Therefore it is better to have an acknowledgment from the “accountant/secretary, lawyers etc” at the registered address
Since service of the document is by leaving a copy at the registered address, service can always be done on a Sdn Bhd. (with or without acknowledgement)
Subscribe to:
Posts (Atom)