Jamaica Export Credit Insurance Corporation v Alcron Development Ltd et Al

• Jurisdiction: Jamaica
• Court: Court of Appeal (Jamaica)
• Judge: Wright, J.A.,Morgan, J.A.,Bingham, J.A.
• Judgment Date: 04 December 1991
• Neutral Citation: JM 1991 CA 145
• Docket Number: No. 99 of 1989
• Date: 04 December 1991

Court of Appeal

Wright, J.A.; Morgan, J.A.; Bingham, J.A. (Ag.)

No. 99 of 1989

Jamaica Export Credit Insurance Corporation

and

Alcron Development Limited et al

Appearances:

R.N.A. Henriques, Q.C, Allan Wood and Ransford Braham instructed by Livingston Alexander Levy for claimant/appellant

Crafton Miller, Nancy Anderson and Susan Richardson for plaintiff/respondent

K.C. Burke for bailiff

Practice and procedure - Interpleader — Appeal — Execution of writ of sale and seizure by the bailiff — some of items seized belonged to the appellant under a bill of sale — Order made directing that proceeds of the sale of these goods be applied towards the bailiff's fees and expenses and satisfaction of the judgment debtor's indebtedness — Whether trial judge's order should be set aside — No dispute as to the appellant's right to the goods covered by the bill of sale — Appeal allowed.

Practice and procedure - Execution — Unsecured goods — Two days after seizure bailiff served with notice of petition for winding up of judgment debtor by the appellant — Order made directing that proceeds of the sale of seized goods to be applied to the credit of the suit — Plaintiff an unsecured creditor — Whether plaintiff entitled to claim the benefit of the execution — Whether execution was completed before the winding up proceedings began — Companies Act s. 229, 300 — Appeal allowed.

Company Law - Winding up — Execution of judgment in favour of unsecured judgment creditor two days prior to winding up proceeding — Whether creditor entitled to the benefit of the execution as against other unsecured creditors — Companies Act s. 299, 300.

Wright, J.A.

1 This is an appeal against the undermentioned order made by Patterson J. on November 18 ^th 1989:

“It is hereby ordered that the whole of the goods listed in the Schedules of the Bill of Sale exhibited to the said affidavit of Roy Williams be sold by the bailiff and that the proceeds of sale be applied in the following manner:–

Firstly, for the payment of all fees charges and expenses incurred by the bailiff in taking possession keeping and selling the goods covered by the Bill of Sale. The bailiff is authorised to deduct the amounts mentioned above in accordance with the prescribed scale of fees.

Secondly, the net proceeds of sale shall be paid into the Treasury to the credit of this suit,

• (a) To be applied in satisfaction of the defendant's indebtedness to the holder of the bill of sale, Jamaica Export Credit Insurance Corporation Limited, the claimant and

• (b) The surplus, if any, to be applied in satisfaction of the defendant's indebtedness to the plaintiff herein, Alcron Development Limited

AND IT IS FURTHER ORDERED that in respect of the goods and chattels not covered by the Bill of Sale to wit the 3 motor vehicles which were seized and have been sold by the bailiff, the proceeds of sale being in the hands of the bailiff that the claimant do not have any claim thereto, the bailiff should proceed as section 609 of the Judicature (Civil Procedure Code) Law directs, namely “All moneys payable under a judgment levied by execution, or otherwise under the process of the court shall be paid into the treasury to the credit of the suit, unless the court otherwise directs,” and the court doth order that the bailiff's fee, chargers and expenses incurred in relation to the said 3 motor cars levied shall be deducted from the proceeds of sale of those goods and thereafter, the net proceeds of sale shall be paid into the treasury to the credit of the suit, to be applied in satisfaction of the plaintiff's judgment.

AND IT IS FURTHER ORDERED that the claimant do pay to Howard Saint Clair Bennett, bailiff (the applicant) his costs of and occasioned by these proceedings and also that the claimant to pay to the plaintiff herein it costs of an occasioned by these proceedings to be taxed if not agreed.

Certificate for Counsel for Howard Saint Clair Bennett, bailiff (the applicant)and for the plaintiff.

And, on Application of Counsel for the claimant, special leave granted to the claimant to accordance with Section 557 of the Judicature Procedure Code) Law.”

The seven Grounds of Appeal on the basis of which the appeal was presented are as follows:

• “1. That the learned trial judge erred as a matter of law when he held that the motor vehicles and other goods not forming part of the Bill of Sale can be sold and the proceeds thereof paid to the plaintiff/respondent as an execution creditor as such an order is contrary to the provisions of the Companies Act.

• 2. The learned trial judge erred as a matter of law when he made an order contrary to the statutory provisions namely, the Companies Act which provided that after a petition for winding-up has been presented to the court and before execution is completed by sale of the goods no sale can take place and the proceeds delivered to the execution creditor as the interest in such goods have to be shared pari passu with all unsecured creditors.

• 3. The learned trial judge erred as a matter of law when he failed to appreciate that the claimant/appellant was also an unsecured creditor having presented a petition to wind up the defendant/respondent, Antillean Food Processors Limited before execution was completed, that the execution creditor would not be entity have the whole of the proceeds of sale to the detriment of the unsecured creditors as provided by the provisions of the Companies Act.

• 4. That the learned trial judge erred as a matter of law whew he held that the chattels, the subject matter of the Bill of Sale should be sold and costs deducted for the bailiff and the proceeds thereafter paid over to the claimant/appellant.

• 5. The learned trail judge erred as a matter of law as he failed to appreciate that the provisions of the Companies Act applied to both secured and unsecured creditors and after a petition for winding-up was executed and before execution completed no order could be made which in effect adversely affected secured and unsecured creditors.

• 6. The learned trial judge erred as a matter of law when he failed to appreciate that the claimant/appellant is a secured creditor protected by a bill of sale and could not be made liable for the cost of the execution creditor liable for the cost of the execution creditor in respect of the bailiff and consequently further erred when he made an order that the goods of the secured creditor, the appellant should be sole to pay such costs and the proceeds thereafter paid to the secured creditor.

• 7. The learned trial judge erred as a matter of law when he failed to appreciate that it was only the claimant/appellant as the secured creditor, who could elect whether or not to realise the security by selling same and the judge erred when he made an order that the chattels protected by the Bill of Sale should be sold.”

2 The facts of one case reveal an intricate network or relationships. The defendant/respondent (Antillean) and the plaintiff/respondent (Alcron) are related companies. Antillean is a debtor of Jamincorp International Merchant Bank Ltd. (Jamincorp) which was wound up by order of the Supreme Court made on September 9 ^th 1988 pursuant to a pursuant to a petition which was filed on October 7 ^th 1986: the majority of the shares in Alcron is owned by Jamincorp while Alcron owns the building occupied by Antillcan at a monthly rental of US $846,000.00. It was not surprising that the rental fell in arrears resulting in the issue of a writ on 28 ^th July, 1986 claiming Us$1,994,130.44. Appearance was entered but no defence having been filed and delivered Alcron on October 21 ^st 1986 entered judgment for the sum claimed plus $293.70 for costs. Subsequently, on November 5 ^th 1986 a writ of seizure and sale was issued and it appears that it was executed on November 28 ^th 1986. On that very day the claimant's attorney-at-law letter informed the bailiff of the claimant's interest under a Bill of Sale in certain of the goods taken in execution viz, the furniture in the chairman's office and the factor machinery equipment and fittings. That Bill of Sale was executed on December 1 ^st 1983 and was duly registered in accordance with section 93(1) of the Companies Act. The goods not covered by the Bill of Sale included three months cars, finished goods, furnishings and fixtures. Alcron would not admit the entitlement of the claimant to the goods under the Bill of Sale so the bailiff could not release them but it is to be noted that they were not removed from the premises.

3 On December 12 ^th 1986, just two weeks after the execution of the writ of seizure and sale the claimant presented a petition under the Companies Act for the winding up of Antillean on the ground that, that company was insolvent and unable to pay its debts. The debt owned to the petitioner was stated to be US$9,499,382.31 plus interest and there were several other creditors.

4 The petition came before the court on February 9 ^th 1987, when at the request of Antillean, it was adjourned to March 26 ^th, then to April 25 ^th and finally to May 25 ^th 1987. Those adjournments were influenced by the proceedings for the winding-up of Jamincorp. No further action has been taken regarding the petition for the winding up of Antillean. Accordingly no liquidator was ever appointed. However, it is relevant to note that much earlier, to wit on June 3rd 1985 pursuant to the Bill of Sale the claimant (JECIC) had put Antillean into receivership and appointed a receiver who was still in place when the petition for winding-up was filed. In due course the bailiff advertised some of the goods for sale by public auction and on March 28 ^th 1987 he sold the three cars. Two days later on March 30 ^th, the claimant's attorney-at-law wrote to the bailiff as follows:

“March 30, 1987

The Bailiff

Resident Magistrate's Court

St. Andrew

Kingston 10

Attention: Mr. Bennett

Dear Sir:

Re: Suit No. C.L. A 143 of 1986

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