Re Burke Successors Ltd
| Jurisdiction | Jamaica |
| Judge | Bingham, J. |
| Judgment Date | 23 June 1989 |
| Court | Supreme Court (Jamaica) |
| Docket Number | E–291 of 1988 |
| Date | 23 June 1989 |
Supreme Court
Bingham, J.
E–291 of 1988
R. Codlin for the petitioner.
B. McCaulay, Q.C., and R. Francis for the Company.
Company law - Winding up — Whether company unable to pay its debts — Company in a precarious position financially — Winding up order granted.
Costs — Security for costs — Companies Act makes compliance by way of security cost necessary prior to hearing of winding up petition — Company waived rights to raise question by submitting to the jurisdiction of the Court — Failure to observe provision relating to security for costs does not make a subsequent hearing void — Winding up order granted.
On 29th May, 1989, after a hearing lasting some three days. I made an order that the Company Burke successors) Limited be wound up with certain consequential orders which flowed from this order. At the time of arriving at my decision I promised to put my reasons into writing and this I now do.
The Company in question was incorporated as a Private company on 23rd March, 1983 in accordance with the usual requirements of the Companies Act of Jamaica with registered offices at 80 Half Way Tree Road, in Saint Andrew. The nominal share capital of the company at the time of incorporation was stated to be $1,000 divided into 1000 shares having a par value of $1.00 each.
The petitioner, Carlton Beckford at paragraph 5 of the said petition presented in these proceedings for winding up the company, stated that “Olive Tibbets-Ramchand of 4 Duke Street, Kingston and James Gangasingh of the same address were the subscribers to the Memorandum of Association and that Delbert Perrier the Managing Director of the company and himself were the contributories (shareholders).”
Paragraph 3 of the Affidavit sworn to by Delbert Perrier and filed in opposition to the Petition for winding up states, that, “the petitioner, Carlton Beckford is not a contributory to the said company.” He further deponed that the two aforementioned persons previously referred to as being the subscribers to the Memorandum of Association, were also the sole contributors. This if true would be of crucial importance in considering the catalogue of events which have now lead up to the order which the petitioner sought and which has now been made.
Subsequent to the incorporation of the company, the petitioner, Carlton Beckford and Delbert Perrier, who if the former is to be believed were the two persons having a proprietary interest in the company, and if the latter's assertion is preferred no interest or benefit therein and even in the absence of any share qualification being given the exalted position of Managing Director. Both these gentlemen went to the National Commercial Bank Limited, a very well known financial institution, and procured two loans on behalf of the company, no doubt by way of capital injection into the operations of the company. These loans were secured by a personal guarantees executed by these two gentlemen.
The first loan of Three Million Dollars ($3,000,000) was secured on 20th June, 1984. This sum was obtained from the National Commercial Bank Trust Company.
The second loan was subsequently obtained from the Manor Park Branch of the same bank for $700,000.
The assets of the company, according to a document lodged with the record in these proceedings comprised two buildings situated at 80 Half Way Tree bad which consists of:–
“1. Front Building
Ground floor Gas Station — 2000 square feet.
Upper Floors (3) office space.
Total — 10,300 square feet.
Back Building
Ground and First Floors — Sixteen (16) shops including 2 double and one triple.
Second Floor — 8,000 square feet office space.
Each building has its own Strata Title and can be sold as a separate unit.”
From this narrative of events it may be reasonably inferred, and. this is bourne out by an examination of the articles of association, that this company was incorporated to construct these two buildings with, as its main purpose the operating of:
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a. a gas station.
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b. the letting of shops and offices — all with the object of generating sufficient income to cover its operational expenses, to service the existing debt to the bank and in keeping with prudent business practices t realise a reasonable profit for the investors, as whoever these persons were, they were certainly, not operating “a Sunday school” or some charitable organisation, but were in this venture to make money as is the object of all such commercial undertakings of a similar nature.
The performance of the company since its inception is a matter which on examination of the affidavits of the petitioner on the one hand, and Delbert Perrier, on the ether are at variance.
The petitioner has sought to petition for winding up the company on two grounds namely:
- That he is a contributory (shareholder). 2. That he is a co-guarantor of loans secured on behalf of the company.
In so far as the petitioner sought to bring these proceedings in his capacity as a contributory, on the basis of the ground upon which the order is sought namely that the company is unable to pay its debts, it was argued by learned counsel for the company that the petitioner was precluded from presenting a petition in such a capacity on this ground; as being a shareholder he could not properly petition to wind up the company, but if he was dissatisfied with the manner in which the company's affairs were being conducted then the proper course was to summon a meeting of the shareholders and seek such redress at that meeting.
On the basis, however, that the petitioner is also a guarantor of the company's indebtedness to the bank end although he has stated in his petition to be a contributory and as such precluded from presenting a petition on one of the grounds stated in the petition, he qualifies to file same on the secondary ground on the basis that he is a guanrantor of the company's indebtedness and as such a contingent or prospective creditor within the terms of section 205(1) of the Companies Act, and therefore although the term “creditor” is not defined in the Act it has been judicially decided that it includes “any contingent or prospective creditor,” which would include inter alia a guarantor of a debt owing by a company which debt has not yet been paid. In this regard a contingent creditor means “A Person Towards Whom Under En Existing Obligation The Company May Or Will Become Subject To A Present Liability On The Happening Of Some...
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