Trinidad Home Developers Ltd (in Voluntary Liquidation) v IMH Investments Ltd
| Jurisdiction | UK Non-devolved |
| Judge | Lord Hoffmann |
| Judgment Date | 08 December 2003 |
| Neutral Citation | [2003] UKPC 85 |
| Court | Privy Council |
| Docket Number | Appeal No. 49 of 2002 |
| Date | 08 December 2003 |
[2003] UKPC 85
Present at the hearing:-
Lord Hoffmann
Lord Hope of Craighead
Lord Scott of Foscote
Lord Walker of Gestingthorpe
Sir Kenneth Keith
Privy Council
[Delivered by Lord Hoffmann]
Trinidad Home Developers Ltd ("the company") has been in liquidation since 1988 but its affairs have not yet been wound up. It was, as its name suggests, a property development company. In 1978 the respondent, IMH Investments Ltd ("IMH"), granted the company a licence to use a process for building houses out of pre-fabricated concrete panels in which it held certain patents. The company agreed to pay a royalty of US$0.45 per square foot of concrete panel. The company duly paid the royalties until July 1985 and then stopped, leaving US$1,060, 954 outstanding.
On 23 June 1986 IMH issued a writ which (as amended) claimed payment of US$1,060,954, followed by a summons for summary judgment. The company filed affidavits in opposition and the matter came before Master Goopeesingh, who gave a reserved judgment on 13 January 1987. He held that there was no arguable defence and gave IMH leave to sign final judgment.
However, the amount payable, as expressed in the Master's judgment and the order as drawn up, was not in the same terms as the writ. The writ had asked simply for payment in United States currency. Judgments in this form have been possible since Miliangos v George Frank (Textiles) Ltd [1976] AC 443, a decision of the House of Lords which has been followed in Trinidad and Tobago. The fact that the judgment may express the obligation in US dollars does not necessarily mean that a defendant has to pay in that currency. It means that US dollars are the unit of account for measuring the sum which has to be paid. If the defendant pays in a different currency (e.g. dollars of Trinidad and Tobago) they must be the equivalent of the US dollar debt at the time of payment.
The Master, however, gave judgment for "an equivalent, in Trinidad and Tobago currency, to the sum of $1,060,954.45 United States currency". This could be read to mean that the unit of account was Trinidad and Tobago currency and the amount payable was the equivalent in that currency of US$1,060,954.45 at the rate of exchange prevailing at the date of the judgment. So the plaintiff would get less than $1,060,954.45 if the Trinidad and Tobago currency fell against the US dollar between the date of judgment and the date of actual payment. Whether this is what the Master meant is something to which their Lordships will have to return.
On 13 March 1987 IMH registered the judgment under the Remedies of Creditors Ordinance Chap. 6 No. 2, which has since been replaced by the Remedies of Creditors Act, Chap. 8:09 ("ROCA"). The relevant provisions remain the same and their Lordships will for convenience refer to the Act. Part II, entitled "Remedies of Creditors" starts with a group of sections under the sub-heading "Operation of Judgments". The first of these sections is 5:
"Every judgment … entered up against any person in the Court shall operate as a charge upon all lands … to which that person shall at the time of entering up the judgment … be seised, possessed or entitled for any estate or interest whatever … and shall be binding as against the person against whom the judgment … shall be entered up, and against all persons claiming under him after the judgment …"
Section 7 deals with registration:
"No judgment … of the Court shall affect any lands as to purchasers, mortgagees or creditors … unless and until a memorandum or minute containing the name and the usual or last known place of abode and the trade or profession of the person whose estate is intended to be affected thereby, and the title of the cause or matter in which the judgment … has been obtained … and the date of the judgment … and the amount of the debt, damages, costs or moneys thereby recovered or ordered to be paid, shall be left with the Registrar General, who shall forthwith enter the same particulars … in a book."
Section 8 deals with the remedies available to a judgment creditor by virtue of a registered judgment:
"Every judgment to be registered in the manner directed by this Act shall entitle the creditor, by virtue of the judgment … to the same remedies in equity against the lands charged by virtue of this Act, or any part thereof, as he would be entitled to in case the person against whom the judgment … has been so entered up had power to charge the same lands, and had by writing under his hand agreed to charge the same with the amount of the judgment debt … and interest thereon."
IMH registered its judgment in the form in which it had been sought in the writ, that is to say, simply as US$1,060,954 rather than the form in which the Master's order had been drawn up. Having registered the judgment, IMH did nothing more to enforce it.
The Master granted leave to appeal to the Court of Appeal and a stay of the order pending an appeal. IMH cross-appealed against the form of the order, asking that it should be expressed in US dollars in accordance with the prayer in the writ. But the appeal took a long time to come on. Meanwhile, on 1 June 1988, the company resolved to go into voluntary liquidation. The directors made a declaration of solvency but by 1992 it was apparent that the company would not have sufficient assets to pay its debts.
The appeal and cross-appeal were eventually heard and judgment given on 12 February 1993: Trinidad Home Developers Ltd v IMH Investment Ltd (No 2) (1993) 46 WIR 365. The company's appeal was dismissed and IMH's cross-appeal was allowed. So the form of order was corrected to reflect the claim for payment in US dollars which IMH had originally made.
Having secured its judgment, IMH applied to the liquidator for payment. The liquidator said that after payment of secured and preferential creditors, he was left with assets worth less than $3million (Trinidad and Tobago currency). The claims of unpaid creditors (including IMH) exceed $34 million.
IMH claimed to be entitled, by virtue of sections 5 and 7 of ROCA, to an equitable charge (which their Lordships will call a judgment charge) over the company's lands which gave it preference over unsecured creditors. The liquidator rejected this claim on various grounds of which two remain in issue. The liquidator says:
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(1) The judgment was not properly registered. It specified the debt as a sum in US dollars when the order (at the time of registration) was for payment in currency of Trinidad and Tobago.
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(2) The judgment charge has become unenforceable by virtue of the provisions of section 254 of the Companies Ordinance, Chap. 31, No. 1.
On 1 June 1994 the liquidator issued a summons asking for directions on these questions. The summons was argued before Bharath J on various dates in February-April 1995 and judgment given on 11 February 1998. He answered the first question in favour of IMH and the second in favour of the company. Both sides appealed. On 28 November 2001 the Court of Appeal dismissed the company's appeal on the registration point but allowed IMH's appeal on the section 254 point. The result was that IMH's claim to a judgment charge was upheld. The company appeals to the Privy Council on both points.
The Court of Appeal disposed summarily of the first point. Nelson JA, who gave a judgment with which the other two members of the court agreed, said that it was plain that the Master's order was intended to create an obligation using US dollars as the unit of account. In their Lordships' opinion the language used by the Master was rather less than plain, but when they take into account the background to the order, they arrive at the same conclusion as the Court of Appeal. The contractual obligation was expressed in US currency and the writ sought payment in US currency. No one appears to have suggested that, if IMH was entitled to judgment, it should be in anything other than US currency. The Master said nothing to indicate that he was not giving judgment according to the prayer in the writ. Their Lordships therefore think that the registration was in accordance with the true meaning of the Master's order.
The second point is rather more difficult. Their Lordships set out the relevant parts of section 254:
"(1) Where a creditor has issued execution against the goods or lands of a company or has attached any debt due to the company, and the company is subsequently wound up, he shall not be entitled to retain the benefit of the execution or the attachment against the liquidator in the winding up of the company unless he has completed the execution or attachment before the commencement of the winding up …
(2) For the purposes of this section, an execution against goods shall be taken to be completed by seizure and sale, and an attachment of a debt shall be deemed to be completed by receipt of the debt, and an execution against land shall be deemed to be completed from the date of the order for sale or by seizure as the case may be, and in the case of an equitable interest, by the appointment of a receiver."
IMH's submission, which persuaded the Court of Appeal, is that section 254 has no application to the grounds upon which it claims priority over other creditors. It is not seeking to retain the benefit of an execution. It has never attempted to execute against the company's property. It has not "issued execution" within the meaning of section 254(1) because it has not invoked the assistance of the court to enforce its judgment. The judgment charge was created automatically by statute at the moment it entered judgment. The only action it has taken since then has been to leave a copy of the...
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