Rainbow v Moorgate Properties Ltd
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE ORMROD |
| Judgment Date | 17 January 1975 |
| Judgment citation (vLex) | [1975] EWCA Civ J0117-1 |
| Docket Number | 1973 R. No. 1089 |
| Court | Court of Appeal (Civil Division) |
| Date | 17 January 1975 |
[1975] EWCA Civ J0117-1
In The Supreme Court of Judicature
Court of Appeal
On Apeeal From District Register, Bournemouth.
Lord Justice Bucklky and
Lord Justice Ormrod
MR D. NICHOLLS, Q.C., and MR HAMILTON (instructed by Messrs D.J. Freeman & Co.) appeared on behalf of the Appellants.
MR D. RAINBOW appeared on his own behalf and that of his wife.
LORD JUSTICE BUCKLEY: This is an appeal from two orders of the District Registrar at Bournemouth by which he made absolute two charging orders nisi which had been granted to the plaintiffs on the 11th November, 1974.
The defendant company, Moorgate Properties Limited, is a subsidiary - indeed I think: it is a sub-sub-subsidiary - of another company which is itself a member of a group of companies, subsidiaries of Willstar Securities Limited, all forming part of a complex of companies which are commonly known as the Stern Group of companies engaged in property development- As a consequence of the prevailing economic situation the group as a whole has become involved in acute financial difficulties and, as a result of that, Willstar Securities Limited went into creditors' voluntary liquidation on the 7th June, 1974. The estimated liabilities of the group are very large but, of course, the liabilities of the individual companies in the group vary and, as is always likely to be the case when one gets a group of companies of this kind, there are numerous inter-company debts and liabilities, guarantees, and so forth. I can well believe that the financial position of the group as a whole is an extremely complicated affair.
A meeting of unsecured creditors of the companies in the group was convened on the 19th July, 1974, which was attended by a large number of creditors, certainly upwards of 500 - although I think elsewhere in evidence a figure of 700 was mentioned, but let me say upwards of 500 unsecured creditors of companies in this group. That had been convened by means of a circular letter which was sent out urging the desirability for a moratorium to enable the assets of these companies - which mainlyconsist of land and buildings to be realised in an orderly way so that as large a sum as possible could be realised for the benefit of the creditors of the group. The evidence discloses that the holdings of the companies in this group are of such a magnitude that if they were all to be released on to the market in an unregulated way and at much about the same time it would completely upset the property market and result in the amounts realised being considerably less than what it is hoped will be realised if the assets can be sold in accordance with some controlled programme.
At that meeting on the 19th July those creditors who were present unanimously voted in favour of a scheme which contemplated a moratorium for a period of six months, and contemplated that the subsidiary companies would not any of them be liquidated in the meanwhile, but that where should be a moratorium on the enforcement of all debts by creditors against any of the companies to enable sufficient time to pass for a scheme of arrangement to be prepared which it was proposed to submit to the court for approval under section 206 of the Companies Act, 1948. In such a case the court directs meetings of the creditors and, having regard to the voting which takes place at those meetings, does or does not confirm the scheme. If it is confirmed the scheme becomes binding on all creditors. Such a scheme is in fait in course of preparation, but although the six months' moratorium is about to reach its terminal date, Mr. Nicholls tells us that the complications of the scheme are such that although the draft has been in existence for a considerable time and, no doubt, subject to discussion and amendments and alterations and improvements from time to time, the date hasnot arrived at which it can be said that the application to the court is imminent. However, that process is in course.
Now I come to the facts of this particular case. She plaintiffs are resident in a building which belongs to the defendant company called Dorchester Mansions, and they had occasion, in 1973 thereabouts, to bring two actions against the defendant company to restrain nuisances, in one instance by noise and in the other instance I think by obstruction of access to the building, arising out of building operations being conducted by the defendant company upon the building, and they were successful in those actions. They obtained relief with which we are not now concerned and also in each action they obtained an order for costs. Those costs were in due course taxed in September, 1974. In the earlier action - which was the one relating to nuisance by noise the costs taxed out at £254.65 and in the later action they taxed out at £,933.90, making a total sum of approximately £1,188.00, which I think includes the costs of taxation. At a later stage they heard rumours of a sale by the defendant company of Dorchester Mansions, and in order to secure themselves with regard to their debt for costs, which had not been paid, they in the first place wrote demanding payment in a letter of the 1st November, 1974, a letter in which their solicitors said that their information that there was probably a moratorium in operation but that their clients were no party to such moratorium. By that letter they demanded payment of the costs and that was followed by an application made exporte in accordance with the rules of the court on the 11th November, 1974, for charging orders in respect of the two sums of costs, and charging orders nisi were granted on that day. The further consideration of those matters was onthe 4th December. Between those two dates this court decided, on the 29th November, 1974, a case called D. Wilson (Birmingham) limited v. Metropolitan Property Developments Limited and Toe Proprietors of Hays Wharf Limited, to which I shall have to refer in a moment, which was a case of a rather similar nature in respect of another company in the Stern Group.
When the matter came before the District Registrar on the 4th December the application was opposed - that is to say, the application to make the orders absolute was opposed - by the defendant company and that opposition was supported by an affidavit of a gentleman who is a partner in the firm of W.H. Cork Gully & Co. Mr. Cork, the senior partner in that firm, was the gentleman who was concerned in dealing with the affairs of the Group as a whole and the arrangement which was being developed or devised pending the six months' moratorium. In that affidavit the deponent sets out the state of affairs which I have been describing and in paragraph 10 he refers to the up-to-date financial position of the defendant company, and he describes it in this way: "Firstly, it is quite" - that is the defendant company is quite - "unable to pay its debts as they fall due. Secondly, whether - if the assets are realised in an orderly fashion and to best advantage - they will eventually suffice to pay all the creditors in full is something which at present it is quite impossible to know. There is, to say the least, a very serious doubt as to whether this will be possible. Liabilities ore continuing to increase, with high interest rates, etc; and at this stage the amount of any sum which will or may be due under the complex system of cross guarantees which companies in the Group (including the defendant) entered into to finance borrowings fromoutside sources is a matter which nobody can ascertain", and then be goes on to say there is no chance of anybody mounting a rescue operation.
Mr. Rainbow, the first plaintiff - who has appeared in person on behalf of himself and his wife, the second plaintiff and has, if I may say so, presented his argument most sensibly and clearly and helpfully - has said that down to the date of the 4th December, 1974, he had no knowledge whatever of the connection between the defendant company and the group of companies and that he had no knowledge of the state of affairs set out in the affidavit and had no reason to suppose that the defendant company was in financial difficulties. He points out that the defendant come any is not in liquidation and that therefore, to a layman at least, it would appear that the defendant company must be a solvent company. He also draws attention to some of the material in evidence in support of the defendant company's case which shows that on a first view of the figures there is a possibility of there being a surplus, or an ultimate surplus, or the shareholders in the event of a winding up of the company's affairs. However, I do not myself think that we can, on those grounds, disbelieve the evidence of Mr. Weiss, the deponent to the affidavit which I have mentioned, and I think we must proceed upon the footing that the financial position of the defendant company is such as is stated in paragraph 10 of his affidavit, to which I have referred.
The District Registrar was urged not to make the charging orders absolute because of the insolvent character of the defendant company's situation, but he was not persuaded by thatargument. He said that for the plaintiffs "to have the...
To continue reading
Request your trial
-
Roberts Petroleum Ltd v Bernard Kenny Ltd
...transcript No. 110 of 1961; Wilson (D) Birmingham Ltd. v. Metropolitan Properties Ltd., (1975) 2 All England Reports, 814; Rainbow v. Moorgate Properties Ltd., (1975) 1 Weekly Law Reports, 788; Glass (Cardiff) Ltd. v. Jardean Properties Ltd. & Anor., (1976) 120 Solicitors' Journal, 167, B......
- Bank Bumiputra (M) Bhd v Cheong Yoke Choy (Malaysian Central Depository Sdn Bhd, proposed intervener)
- Lian Seng Properties Sdn Bhd and Another; Pembinaan KSY Sdn Bhd
-
Burston Finance Ltd v Godfrey
...Order 49 relating to garnishee orders. The relevance of the latter is that this Court (Lords Justices Buckley and Ormrod) in Rainbow v. Moorgate Properties Ltd. (1975) 1 Weekly Law Reports 788, has held that the same considerations apply to the question whether the discretion should or shou......