1999/131 - Midland Ship Repairs [1999] UR 131 (22 July 1999)

JUDGMENT THE COMMISSIONER: This is an application by Midland Ship Repairs, Ltd., of 14 William Street, Paisley, Scotland, asking the Court to make a declaration under Article 6 of the Bankruptcy (Désastre) (Jersey) Law, 1990 that the property of Global Offshore Services, Ltd of Beresford House, Bellozanne Road, St. Helier, Jersey, is en désastre . It appears that the debtor is, in fact, the alter ego of Global Marine Services and that some repairs were carried out to a ship by the plaintiff company. There is some dispute as to whether the debtor company was the owner of the vessel or merely the agent of another company with a similar name, Global Marine Shipping No. 10 Ltd. That is not a matter that need detain us very long. In examining whether or not to grant an application of this nature, there is no doubt that the Court has a discretion which it must exercise and in exercising that discretion it is entitled to take into account the question of a counterclaim. The authority for that statement is In Re a Company (No. 006273 of 1992) (1993) BCLC 131. However, before we start to look at the question of our discretion, and after taking into account the matters I have just mentioned, there are one or two facts in this case which need to be addressed. As deposed to by Mr. Gerald Hughes, who describes himself as a company director of Midland Ship Repairs Ltd, the claim was originally for £206,792.92. That was reduced, as a result of matters which are not germane to today’s decision, to £109,000, and this is mentioned in an unsworn affidavit of Mr. Hayden-Taylor who is - according to that affidavit - a director of the company itself. Be that as it may, even if the amount has been reduced to that figure, as we were informed this morning, there was no affidavit evidence to support it. However, we assume that counsel would not make such a statement unless he is properly instructed that a counterclaim could lie to the extent of £354,000. It is not for us to go into the merits of whether there is a strong counterclaim or not. We are bound by and must follow the ruling and judgment of the Court of Appeal in the case of In re Baltic Partners, Ltd., and in re Sparbanken Sverige AB (18 th April, 1996) Jersey Unreported CofA. On p.10 of that judgment, Southwell, JA, who was giving the judgment said this: At common law the preconditions for such a déclaration were that (1) the creditor had a valid liquidated claim against the debtor; (2) the debtor to the best of the creditor’s knowledge and belief was insolvent, but had realisable assets, and (3) the creditor verified these matters by affidavit (see page 3 of my judgment in the Minories case). Article 3 of the 1990 Law provides (inter alia) that an application for a déclaration may be made by a creditor of the debtor with a claim against the debtor of not less than such liquidated sum as shall be prescribed. The creditor’s claim will usually have been established by a judgment of a competent court, often a summary judgment. A judgment is not a precondition. But if the creditor does not have a judgment in his favour, there must nevertheless be a liquidated sum undoubtedly due and payable by the debtor. The indebtedness must be certain, and not the subject of genuine dispute and arguable defence, set off or counterclaim. The indebtedness must be such as could form the basis of an immediate summary judgment." At the bottom of that page in commenting on the judgment of the Privy Council in Dyson & Anor -v- Godfray (1884) 9 AC 726 the learned Court of Appeal Judge refers to a phrase used by the Privy Council that the debts must be "incontestées ou du moins incontestables". It seems to us apparent that had the company relying on an admitted debt of £109,000 brought an action in the Royal Court claiming that sum either by way of summons or an Order of Justice it would have been met immediately by a counterclaim which may or may not have come to the amount mentioned by Mr. Hayden-Taylor for the company today, i.e. £354,000. That would seem on the face of it to dispose of the application. I would like to say this, however, and it may be of some cold comfort to Mr. Speck: first, applying the pre-conditions to this case, we have already said that there is a liquidated claim which is valid but subject to a counterclaim. Secondly, the debtor is, to the best of the creditor’s knowledge, insolvent. I think that is quite clear from the papers and is not arguable at the moment although Mr. Hayden-Taylor said that if the counterclaim succeeded and everything was examined and if the plaintiff was not a claimant there might be a compromise but we have seen no document showing that the company is other than insolvent, in fact quite the contrary. Thirdly, the creditor verified these matters and the only other point which has to be settled is that the amount is more than the £1,000, as prescribed by our law. Having said that, we think it unlikely that an order would be made immediately by the Royal Court for £109,000 if that was the claim brought. We are driven to the conclusion that the present case examined in the light of In re Baltic Partners, Ltd would not justify our declaring the defendant company en désastre and accordingly we decline to do so. The costs will be paid by the applicant on a standard basis. Authorities Tolley’s Insolvency Law: L.5227-9. In Re a Company (No. 006273 of 1992) (1993) BCLC 131. Hofer -v- Strawson (1999) TLR 297. Re a Company (No. 0012209 of 1991) (1992) BCLC 865. In re Baltic Partners, Ltd., & in re Sparbanken Sverige AB (18 th April, 1996) Jersey Unreported CofA. Dyson & Anor -v- Godfray (1884) 9 AC 726. BAILII: Copyright Policy | Disclaimers | Privacy Policy | Feedback | Donate to BAILII