Re Real Estate Ltd

• Jurisdiction: Belize
• Court: Supreme Court (Belize)
• Judge: Moe, C.J.
• Judgment Date: 11 September 1980
• Docket Number: Action No. 95 of 1980
• Date: 11 September 1980

Supreme Court

Moe, C.J.

Action No. 95 of 1980

Re Real Estate Limited

Mr. Glenn Godfrey for the applicants

Mr. Horace Young, Q.C. for the respondent

Company Law - Liquidator — Delay in proceeding with liquidation — Whether unreasonable.

Moe, C.J.

1 In this matter the applicants three shareholders in Real Estate Limited (hereinafter called the Company) seek an order that the respondent (hereinafter referred to as the Liquidator) be removed from his office as liquidator of the company. They complain firstly:- that the liquidator was appointed as such on 9 ^th April 1975, yet has not proceeded with the liquidation of the company, but rather has continued the normal business of the company; Secondly, that the delay in liquidation is unreasonable; Thirdly, that the delay has adversely affected the company and its shareholders; Fourthly, that the liquidator has unreasonably refused to allow shareholders of the company to view the books of account; Fifthly, that the liquidator has acted to benefit certain shareholders of the company at the expense of other shareholders. In fact the liquidator has executed and recorded agreements for the sale of four of the company's properties with two shareholders of the company at prices below the amounts at which they were valued.

2 The affidavits filed in the matter disclose that the company is the beneficial owner of certain properties subject to its continued observance of the term and conditions of an agreement for sale which it entered into on the 4 ^th August 1953. Under the agreement the company agreed to by from Robert Sydney Turton now deceased the said properties for a purchase price of $ …………. ? took immediate possession of them and has ever since managed them ………… the income, arrears of rent and profits therefrom.

3 The company went into voluntary liquidation on the 9 ^th April 1975 and the liquidator was appointed as such on the 23 ^rd May 1973. At the time that the company went into liquidation it owed the estate of R.S. Turton deceased $240,000.00 being the balance of the purchase price due under the above-mentioned agreement for sale. As an effort to discharge this indebtedness, it was agreed on 26 ^th May 1975 that six of the shareholders, including the applicants would lend to the company sums totalling $220,000.00. This did not materialised, the applicants not adhering to the proposed arrangement. Since then there have been various efforts made to raise the sum required to liquidate the debt but the problem continued without resolve.

4 Since his appointment the liquidator has continued the normal business of the company. In a report to the shareholders and dated 25 ^th August 1975, that is, one year and three months after appointment, he explained the continuation of business. He stated “In this particular case, because of the obvious benefits to the winding-up process, the business of the company has been carried on, more or less in the same manner as before liquidation proceedings got under way.”

5 On the 25 ^th day of April 1979 the liquidator entered into an agreement with Sydney Joseph Turton by virtue of which all the estate and interest of the company in tow of its properties which it holds under the agreement for sale mentioned above were sold to Mr. Turton. On the 26 ^th April 1979 the liquidator entered into an agreement with Mansel Colville Turton Sr. by virtue of which all the estate and interest of the company in one of its properties were sold to Mr. Turton. About July 1977 the two properties sold to Sydney Turton were valued at a sum of $42,000.00 in respect of one and $154,000.00 in respect of the other; a total sum of $196,000.00. That sold to Mansel Turton Sr. was valued at $100,000.00. The liquidator has agreed to sell the properties to Sydney Turton for $150,000.00 and to Mansel Turton for $90,000.00.

6 Since May 1975 when the liquidator was appointed there has been deterioration in the properties. Indeed the properties were already deteriorating before the company went into liquidation and two of them were closed by the liquidator due to the dangerous conditions it had reached even before the company went into liquidation. Since his appointment, there have been expressions of dissatisfaction with the liquidator. On the 23 ^rd February 1979 the six shareholders sent him a letter requesting that he either liquidate the company within six weeks or resign from his position as liquidator. Failing this they would take proceedings to have him removed.

7 Since his appointment there has been a contretemps between one of the applicants, namely, Lorna Turton and the liquidator concerning the viewing of the company's accounts. On 2 ^nd December 1977 in reply to a query by Mr. Dean Lindo an attorney-at-law on behalf of the shareholder of the company, the liquidator indicated he had no objections to the shareholders seeing the accounts of the company. By letter dated 14 ^th December 1977, five of the shareholders of the company requested from the liquidator access by or on behalf of Lorna Turton to be allowed to examine the account books, records and documents of the company. By Action No. 32 of 1979 the applicant Lorna Turton placed the question of inspection of the company's books before the Supreme Court and the matter is still sub judice.

8 Now the guiding principle in determining whether a liquidator shall be removed is that if the court thinks it is for the real interests of the persons interested in the winding up of a company that a liquidator should be removed it has power to remove him and appoint another in his place as being for cause shown. In Re Rubber & Produce Investment Trust [1915] 1 Ch. 382 Astbury J. out it this way: “If a court is satisfied on the evidence that it is desirable in the interests of all those interested in the assets that a particular person shall not manage the assets the court has power to remove him without there being shown any personal misconduct or unfairness.” With that in mind I now turn to consider the various complaints made against the liquidator to see whether cause has been shown.

9 The first and second complaint may be dealt with together. By section 177(d) CAP. 206 in a voluntary winding-up the liquidator may, without the sanction of the court, exercise all powers given to liquidate in a winding-up by the court. These powers include the power to carry on the business of the company so far as may be necessary for the beneficial winding-up thereof (section 145(1)(b). However, this power must be exercised with caution and where a liquidator is in doubt as to the availability of carrying on the business, it is desirable that he get the sanction of the court to do so. Simonds, J. in Re Great Eastern Electric Company [1941] 1 Ch. At pg. 246 pointed out that it is sufficient if he bona fide and reasonably form the opinion that the carrying on of the business is necessary for the beneficial winding up of the company.

10 The need for caution and advice is illustrated by the duty which a liquidator has to creditors and his liability for negligence if he does not properly perform his statutory duties. This is particularly relevant in this matter where at the time of the...