Re Aro Company Ltd
| Jurisdiction | England & Wales |
| Date | 1979 |
| Court | Chancery Division |
Company - Winding up - Execution - Arrest of vessel - Issue of writ in rem by creditor - Writ not served and ship not arrested - Caveat entered in Admiralty Register - Subsequent liquidation of company - Application by creditor for leave to proceed with action in rem - Whether secured creditor - Whether leave should be granted to proceed with action -
On January 16, 1978, an unregistered Liberian shipping company was ordered to be wound up compulsorily on a petition presented by a P & I club in respect of an admitted indebtedness of US $134,912.37 owed for calls. The company's principal place of business was at Piraeus, it had no place of business in the United Kingdom and its only asset was the vessel Aro, which had, since 1975, been laid up in the Blackwater River for lack of employment. The vessel's only likely value was US $300,000 for scrap. Besides the petitioning creditor's debt, other debts were claimed to be owing, namely one of US $147,598.40 to S Ltd. for fuel supplied, one of £106,000 to another company for disbursements, manufactures and expenses, and an unliquidated claim by the plaintiffs to damages in respect of damage to a cargo of oil carried by the vessel in September 1974, estimated at US $60,000. In addition there was a small claim by the Admiralty Marshal for expenses arising out of the arrest of the vessel by S Ltd. on May 7, 1977, under a writ issued in the Admiralty Court on March 3, 1977. On May 4, 1977, the petitioning creditor had commenced proceedings in the Commercial Court, and had obtained an injunction restraining the company from removing the vessel from the jurisdiction. On July 29, 1977, the plaintiffs issued a writ in the Admiralty Court in respect of their claim to damages, but such writ was not served nor was the vessel arrested by the plaintiffs, who merely entered a caveat in the Admiralty Register on the same day as the issue of their writ, with the result that if S Ltd. lifted its arrest, the vessel could still not be moved by the company without notice to the plaintiffs.
On the plaintiffs' summons dated February 7, 1978, for leave, pursuant to section 231 of the Companies Act 1948, to continue their action against the vessel and the company, now pending in the Admiralty Court of the Queen's Bench Division notwithstanding the making of the winding-up order on January 16, 1978: —
Held, dismissing the summons, that a plaintiff who issued a writ in rem did not invoke the jurisdiction of the Admiralty Court and perfect the security of his claim until he served the writ and arrested the ship; that, since the plaintiffs had not taken the necessary steps to perfect their security, they were not secured creditors and, therefore, the court would not enable them to achieve priority over other unsecured creditors by granting leave, under section 231 of the Companies Act 1948, to proceed with their action in the Admiralty Court (post, pp. 168C–169A).
The following cases are referred to in the judgment:
Anglo-Baltic and Mediterranean Bank v. Barber & Co. [
Banco, The [
Berny, The [
Cella, The (
Constellation, The [
Croshaw v. Lyndhurst Ship Co. [
Heinrich Bjorn, The (
Herbert Berry Associates Ltd., In re [
London and Devon Biscuit Co., In re (
Monica S., The [
Oak Pits Colliery Co., In re (
Pacific, The (
Pieve Superiore, The (
Roundwood Colliery Co., In re [
Thurso New Cas Co., In re (
Vron Colliery Co., In re (
Wanzer Ltd., In re [
Zafiro, The [
The following additional cases were cited in argument:
Australian Direct Steam Navigation Co., In re (
Bowkett v. Fullers United Electric Works Ltd. [
Commercial Bank Corporation of India and the East, In re (Smith, Fleming & Co.'s Case; Gledstanes & Co.'s Case) (
James W. Elwell, The [
Lloyd (David) & Co., In re (
Poole Firebrick and Blue Clay Co., In re (
Sabloniere Hotel Co., In re (
Webb v. Whiffin (
Westbury v. Twigg & Co. [
SUMMONS
By a summons dated February 7, 1978, the plaintiffs, Texaco Export Inc., applied to the Companies Court for leave to continue an action against the ship Aro and against the company Aro Co. Ltd., which was then pending in the Admiralty Court of the Queen's Bench Division notwithstanding the order to wind up the company made in the Companies Court dated January 16, 1978. By a cross summons dated April 3, 1978, the company's liquidator, G. T. E. Parsons, sought determination of the questions (1) whether the action in rem against the Aro and in personam against the company pending in the Queen's Bench Division (Admiralty Court) was an action or proceeding against the company for the purpose of section 231 of the Companies Act 1948. (2) Whether the plaintiffs became entitled by reason of the issue of the writ in the action and/or the entry of a caveat therein pursuant to
The facts are stated in the judgment.
Nigel Teare for the plaintiffs.
David Grace and David Richards for the liquidator.
June 14. OLIVER J. read the following judgment. The matter which calls for decision in this case arises out of cross summonses issued in the liquidation of an unregistered company which was, on January 16, 1978, ordered to be compulsorily wound up. The company is a Liberian shipping company which was incorporated on March 8, 1968. Its principal place of business was in Piraeus and it had no place of business in the United Kingdom. Its only asset is the vessel Aro. That is a motor tanker of about 10,000 light displacement tons and it has, since 1975, been laid up in the Blackwater River for lack of employment. It is not an asset of great value. I have been told that the only likely purchaser is a purchaser for scrap and that the vessel is unlikely to raise more than about US $300,000.
The company was wound up upon the petition of Oceanus Mutual Underwriting Association of Bermuda, a P & I Club (to which I will refer as “the club”) to whom there was an admitted indebtedness in respect of calls for a sum of US $134,912.37. In addition, there are three other principal claims. First, there is a debt owed to Shell Co. (Hellas) Ltd. (“Shell”) amounting to US $147,598.40 for fuel supplied. Secondly, there is a debt of £106,000 claimed as due to a company called Petrolaro S.A. in respect of disbursements, management fees and expenses. Thirdly, there is the claim of the present applicants, Texaco Export Inc. (“Texaco”), for damages to a cargo of oil carried by the vessel in September 1974. That is an unliquidated claim but is estimated to amount to about US $60,000. In addition there is a small claim by the Admiralty Marshal for expenses arising out of the arrest of the vessel in the circumstances to which I shall now have to allude.
Prior to the winding-up order a number of actions were commenced against the company. On March 3, 1977, Shell issued a writ in rem in the Admiralty Court in respect of their debt, and on May 7, 1977, that writ was served on the vessel and she was arrested. On May 4, 1977, the club commenced an action against the company in the Commercial Court in respect of its debt and in that action it obtained an injunction restraining the company from removing the vessel from the jurisdiction. The club has made no claim in rem against the vessel. Texaco too had a claim in respect of which a writ in rem was an appropriate remedy under the provisions of section 1 (1) (g) and (h) of the
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