C.H. (Property
Developments) Pty Ltd Unit 47, Northcliffe,
Duporth Avenue,
Queensland;
<
7. James Molineux B of 22
Wain Street, Buderim, Queensland; and
<
8. David Anthony Glasgow of Unit
47 �Northcli Duporth Avenue, Queenslandsland. Akeela Pty Ltd is owned by
G.C.H. (Property
Developments) Pty Ltd and Molineux Investments Pty Ltd. RT
is owned by Mr. and Mrs. Meiners. By clause 2 of the Agreement,
all the
parties including Molineux Investments Pty Ltd and RT were to effect the
following changes:-
(a) the issued capital of MIL
w be increased from $10,000 to $40,000;
(b) Akeela Pty Ltd was to take
up 18,000 ordinary shares o pay $18,000 upon the allo allotment of the
shares;
(c) the Meiners were to hold 17,
991 sharepan>
(d) the Philips were to hold
3,999 ordinary shares;
class="MsoNoMsoNormal" style="margin-left: 72.0pt; margin-top: 1; margin-bottom: 1">
(e) the cost of further
allotment of shares to the Meiners and the Philips was to b to be met by Akeela
Pty Ltd by way of loans
to them interest free until the first anniversary of
the Closing Date;
(f) The Directors in MIL were to
be:
David Anthony Glasgow
Wolfgang Meiners
Davinia Philip
James Molineux Bayley; and
Joann Marie Meiners;
(g) the Cha of the Board of
Directors of MIL to be David Anthony Glasgow;
(h) Akeela Pty Ltd was to take
p 50 shares in RT and the Meiners 48 shares;
>
class="MsoNoMsoNormal" style="margin-left: 72.0pt; margin-top: 1; margin-bottom: 1">
(i) the Directors of RT be David
Anthony Glasgow:
Wolfgang Meiners;
James Molineux Bayley; and
Joann Marie Meiners;
(j) the Chairman of the RT Board
of Directors be David Anthony Glasgow. These changes must be effected on the
closing
date under the Agreement being 1/9/89. By clause 3 of the Agreement,
Akeela Pty Ltd would immediately lend to RT on the closing
date the sum of
A$1,000,000 in consideration of the transfer to Akeela Pty Ltd.'s interest
in RT and MIL. RT would in
turn onlend portion of the monies at its
discretion to MIL for MIL operation in Solomon Islands. By resolution dated
8/9/89, Davinia Philip, Wolfgang Meiners and David Anthony Glasgow were
appointed Directors of MIL. By resolution dated 3/10/89,
the Board of
Directors of MIL approved the following:-
(a) Akeela Pty Ltd was to hold
18,000 ordinary shares in MIL;
p>
p class="MsoNoMsoNormal" style="margin-left: 108.0pt; margin-top: 1; margin-bottom: 1">
(b) Mr. and Mrs Meinersther
were to hold 17,991 ordinary shares in MIL;
(c) Davinia Philip was to hold
the balan the shares being 3,991 sha1 shares;
(d) the share capital subscribed
be paid into MIL account;
(e) Davinia Philip be the
Company Secretary;
(f) the Company Secretary be
aused to issue share certificates and to file the appropriateriate return
for share allotment;
(g) Mesavid Anthony and
James Molneux Bailey together with Joann Marie Meiners be appointed nted
Directors of MIL;
<
(h) Wolfgang Meiners be
appointed Managing Director of MIL;
lass="MsoNoMsoNormal" style="margin-left: 108.0pt; margin-top: 1; margin-bottom: 1">
(i) Wolfgang Meiners and J
Marie Meiners open and operate on behalf of MIL a bana bank account at the ANZ
Bank in Honiara.
By resolution dated 89, the
authorised capital of MIL was increased from $10,000 to $40,000 as agreed
d
under the Agreement.
By resolution dated 14/11/89, Melanesian Intertrade
Limited (MIL) became Reef Pacific Trading Limited (�the Company�).
The correction of the
Agreement dated 26/9/89 was later disputed by the Meiners in a letter date dated
26/10/89. The dispute
was over the wording of the loan clause in the correct
version of the Agreement. According to the Meiners, the loan clause
in the
Agreement they signed required Akeela Pty Ltd (Akeela) to advance
A$1,000,000 immediately to RT and therefore
the other versions saying
otherwise were wrong. They alleged that the alterations in the other
versions must have been
done fraudulently by someone, possibly by Mr. Sowry,
Mr. Bayley's Solicitor. Mr. Sowry explained that what appeared to be
alterations must have been a result of incorrect compilation in his office
there being several copies of the Agreement
at the relevant time. Mr. Sowry
further said that further transfer of funds to RT would be stopped until the
allegation
of fraud had been retracted by Messrs Lee, Turnsbull & Co. There
being an admission of error, Mr. Parr of Messrs Lee, Turnbull
& Co. said it
should be corrected and that further transfer of refunds to RT should be
immediately effected as contemplated
by the Agreement.
class="MsoNoMsoNormal" style="margin-top: 1; margin-bottom: 1">
Akeela had began to pay money
for the benefit of the company as early as t, 1989. By 14/5/90, Akeelakeela
had paid money
for the benefit of the Company up to the sum of A$1,000,000.
Payments of money were made by way of instalments either directly
to RT or
to suppliers for the benefit of the Company or directly to the Company.
class="MsoNoMsoNormal" style="margin-top: 1; margin-bottom: 1">
In early 1990, Mr. Bailey paid a
visit to Gizo. With him were David Glasgow and his proxy director Lyn
Conway. Apparently
Mr. Bayley was not at all impressed by the way the
Company's records and books were kept by Mrs. Meiners, the Company's
book-keeper. An attempt to sort this matter out did not succeed and Mr.
Bayley had to take some of the Company's records
on his return to Australia.
Further attempts by Mr. Bayley to find out more about the financial position
of the Company
and its trading prospects were also unsuccessful. The
situation was such that the parties no longer trusted each other and
Mr.
Bayley and the Meiners had their own version of events to tell. They were
miles apart. Mr. Bayley�s confidence in
the Meiners had deteriorated so much
that he no longer saw any prospect of success for the Company.
In a conversation between Mr.
Bayley and Mr. Meiners on 15/7/90, Mr. Bayley had indicated that he would
not pay any more
money for the benefit of the Company and that any further
funds for the Company would have to be raised in Solomon Islands.
By fax
dated 17/7/90, Mr. Meiners indicated to Mr. Bailey that Mr. Bayley's
intention not to fund the company any more
was a breach of the Agreement. He
pointed out to Mr. Bayley that under the Foreign Investment Board approval,
the company
was to be funded off-shore. He indicated to Mr. Bayley that in
the event that Mr. Bayley did stop funding the Company, the
Company would
have to consider its entitlements and its operation generally. By fax dated
20/7/90, Mr. Bayley informed
Mr. Meiners that Akeela would not further fund
the operation of the Company and RT would have to look for funds elsewhere.
The position taken by Mr. Bayley had prompted the Meiners to look elsewhere
for funds. Immediately, they contacted Graeme
Price of Sydney and asked him
to assist them with funds. They said, they needed about A$200,000. A deal
was struck with
Graeme Price and his wife Rosa Price. The deal was contained
in a Deed signed by the relevant parties on 24/1/91. It was a
loan facility
with conditions under which funds were transferred to the ANZ Bank, Honiara
for the benefit of the Company.
class="MsoNoMsoNormal" style="margin-top: 1; margin-bottom: 1">
In the meantime, Mr. Bayley
being concerned about his investment in the ny, sought advice from his his
solicitor, Mr.
Sowry, as to what to be done. Mr. Sowry advised Mr. Bayley to
consult Mark McCluskey, a solicitor working in Solomon Islands.
Mark
McCluskey gave advice to the effect that a Court Order was necessary to
steady the situation. That is to say, it
was necessary to get a receiver in
to preserve the status quo and to prevent the risk of asset stripping. Mark
McCluskey
recommended someone from Brisbane to act as receiver. Mr. Bayley's
intention at that time was to get the Company�s Directors
back to a Board
Meeting to discuss the Company�s situation and to make relevant decisions.
The whole exercise was to cost
Akeela about A$50,000. Mark Mcluskey on the instructionMr. Bayley
prepared tred the court
documents to be filed in the High Court of Solomon
Islands. The court documents were a Writ of Summons, and an ex parte
application for the appointment of a receiver supported by affidavits sworn
and signed by Messrs Bayley, and Douglas McCluskey.
It was Civil Case No. 58
of 1991 in the High Court of Solomon Islands. The ex parte application was
heard by Ward CJ.
on 25/3/91. One of the terms of the Order made by Ward,
C.J. on 23/3/91 was the appointment of Richard Anthony Barber as Official
Receiver and Special Manager of the Company. The Court Order was transmitted
to Douglas McCluskey and Bruce Elliot at
Gizo on 26/3/91. In the morning
about 6 am, Douglas McCluskey and Bruce Elliot accompanied by two Police
Officers took
possession of the Company�s premises at Gizo. Messrs Elliot
and Douglas McCluskey representing Mr. Barber, the Receiver caused
the
following to happen:-
(a) ompany accounts at the
ANZ Bank at the Gizo Branch were frozen;
(b) new accounts were opened in
the name of the Receiver;
(c) final reading of electricity
was taken;
(d) new post office box was
arranged;
(e) a new account with Telekom
was opened;
(f) an Administration Bank
Account with Messrs McCluskey and Elliot being signatories was opened;
(g) properties of the Company
were ascertained from the members of the Company staff;
(h) Mr. & Mrs. Meiners and other
senior staff members of the Company were dismissed;
(i) cash in the filing cabinet
in the Company premises were counted and banked;
(j) all Company records and
books were taken into possession;
(k) Victoria 2 fishing vessel
chartered by the Company was recalled to Gizo;
(l) The Victory 2 was allowed to
return to Australia with the product on board; and
(m) Mr. Graham Miller was
appointed to be on-site Manager of the Company and left with him $1,000
petty cash.
Douglas McCluskey was appointed
a
joint receiver with Mr. Barber by Order of the High Court of Solomon Islands
dated 12/4/91. On 7/6/91, Mr. Bayley and Mr. Meiners
met in Townsville. At
that meeting the following agreement was reached �
(. Meiners would register
45% of the shares in the Company in the name of Akeela;
(b) the receivership would be
terminated;
(c) 70% of the shareholding in
the Company, that is to say, 35% each from Akeela's shares and Mr. Meiners
shares respectively
would be for sale;
(d) Mr. Danny Philip was to be
appointed as Manager of the Company for a period of 6 months;
(e) Mr. Meiners was to continue
in employment subject to work assessment;
(f) Civil Case No. 58 of 1991
was to be adjourned for 6 weeks.
This agreement was reduced to
writing in a document signed by Mr. Bayley and Mr. Meiners dated 7/6/91. At
a Meeting on
16/6/91 a Deed of Indemnity was discussed and agreed to be
signed by Mr. Bayley and Mr. Meiners in order to remove the receivers.
By
order of the High Court of Solomon Islands dated 17/6/91, the receivers were
released and discharged on the date the
Deed of Indemnity was executed and
stamped. Also, at a Directors Meeting at 2:30 pm 17/6/91, Mr. Bayley was
appointed
Director and Chairman of the Board of Directors of the Company.
The transfer of 1000 shares to David Anthony Glasgow in trust
for Akeela Pty
Ltd, and 1000 shares to Mr. Meiners was also approved and that new share
certificates be issued accordingly.
On 21/6/91, Mr. Bayley and Mr. Meiners
with others flew to Brisbane and at the office of Price Waterhouse, Mr.
Meiners
signed the Deed of Indemnity. Mr. Bayley also signed the Deed of
Indemnity. The common seals of the Company and Akeela were
duly affixed to
the Deed of Indemnity. The Receivers filed their final report to the court
on 27/6/91 incorporating earlier
reports to the Court on 5/4/91 and 7/5/91
respectively. The receivership came to an end on 28/6/91.
The Statement of Claim
As I have said, the Statement of
Claim in this case is rather lengtt is winding, repetitive, cve, confusing
and rather
general in nature. However, Ms. O�Reilly, Counsel for the
Defendants, had usefully identified the relevant causes of action
and
expressed them in the proper legal terms for the sake of clarity. That is,
causes of action giving rise to the Company�s
claims for damages. They are:-
(a) fraspan>
(b) breach of statutory duty;
(c) trespass;
(d) nuisance;
(e) conversion; and
(f) negligence.
Mrs. Meiners� claims for damages
are the same with the addition of wrongful dismissal. The bottom-line
ne
in this case
is alleged fraud against the Receivers permeating into the
jurisdiction of the High Court appointing the Receivers, discharging
them
and then worst still indemnifying them against any loss that may arise from
their previous conduct during the receivership.
These events rolled into one
is the sour apple in this case.
The Company and Mrs. Meiners
therefore allege that Ward, C.J. of the High Court of on Islands had no
pow power to vary
the order made on 25/3/91 by the subsequent Order dated
12/4/91 as the Original Order of 25/3/91 had been made fraudulently.
Alternatively, they say, the Order had been made without jurisdiction anyway
and is not valid. Both the Company and Mrs.
Meiners also put in claims for
"deprivation" whilst Mrs. Meiners on her part put in a claim for
"distress and hardship." Ms. O�Reilly argued that "deprivation"
was not a cause of action known at law. I think she is right and I dismiss
that as a claim to be considered by this Court.
Ms. O'Reilly also argued
that "distress and hardship" were not causes of action but heads of
damage in the law of tort. I think she is again right in that "distress
and hardship" must necessarily be the result of some cause of action.
Without there being a cause of action, "distress and hardship" cannot
follow. That is, there must be a horse before the cart. Mrs. Meiners may
have mixed things up and have meant that
she suffered "distress and
hardship" as a result of any or all of the causes of action set out in
the Statement of Claim. Her position is not clear on this and
the Defendants
are entitled to meet her case as pleaded in the Statement of Claim and are
not expected to work out what
the case is and meet it on that basis. The
rules of pleading are clear on this. Even if I am wrong in that the
Defendants
do have a case answer on this point, there is in this case no
evidence adduced by Mrs Meiners to prove "distress and hardship". I
therefore dismiss her claim for "distress and hardship" as heads of
damage.
Case for the Plaintiffs
Puttinde Mrs. Meiners�
claim for wrongful dismissal, the case for the Company and Mrs. Mein Meiners is
based upon several
grounds. These grounds will emerge as I take them one by
one and consider each in turn. The first ground is lack of jurisdiction
or
legal power of the Court. This is particularised to mean:-
(a) the purd Writ of
Summons filed in the High Court of Solomon omon Islands in Civil Case No. 58 of
1991 was not issued
out of the High Court of Solomon Islands;
lass="MsoNoMsoNormal" style="text-indent: .55pt; margin-left: 35.45pt; margin-top: 1; margin-bottom: 1">
(b) thse of action set out
in the Statement of Claim in Civn Civil Case No. 58 of 1991 (i.e. specific
performance) was
a matter which did not fall within the jurisdiction of the
High Court of Solomon Islands;
(c) the High Court of Solomon
Islands did not have the power to appoint Official Receiver and Special
Manager without
satisfying the requirements of the Companies Act (Cap.175);
ass="MsoNoMsoNormal" style="margin-left: 36.0pt; margin-top: 1; margin-bottom: 1">
Mr. Suri for the Company and
Mrs. Meiners argued in rt of (a) that the Writ of Summons filed on
25/3/91 in91 in Civil
Case No. 58 of 1991 did not bear the seal of the Court in
contravention of Order 5, rule 3 of the High Court Rules nor was
it
witnessed by the then Chief Justice in contravention of Order 2, rule 5 of
the High Court Rules. This being the case,
the Writ was a nullity as being
defective and irregular on its face and so the Court lacked jurisdiction to
entertain
the action contained in that Writ of Summons. My response to (a)
is that in terms of Order 69 of the High Court Rules, the
result of
non-compliance with the High Court Rules is not automatic nullity but rather
the proceeding may be set aside
by the court if the application to set aside
is brought to the Court within a reasonable time. There is no evidence
before
the court to show that the Company and Mrs. Meiners had applied to
the Court to set aside the proceedings of 25/3/91 in Civil
Case No. 58 of
1991. Doing so now after almost 8 years lapse of time cannot be said to be
doing so within a reasonable
time. In respect of (b), Mr. Suri argued that
Clauses XI and XII of the Agreement dated 26/9/89 did not permit the action
contained in the Writ of Summons filed on 25/3/91 in Civil Case No. 58 of
1991 to be entertained by the High Court of
Solomon Islands. Mr. Suri placed
emphasis upon clause XII which says that the Agreement at all times be
construed and
interpreted in accordance with and shall be governed by the
law of the State of Queensland. It however does not stop there.
It further
says that where any claim made under the Agreement involves legal
proceedings, the parties thereto have irrevocably
submitted to the
non-exclusive jurisdiction of the Courts of the State of Queensland.
Obviously, the law of contract
of the State of Queensland and the rules of
construction thereof in the State of
Queensland would
apply to the Agreement. However, the term "non-exclusive"
jurisdiction, in my view, does not restrict the parties to the Courts of the
State of Queensland in respect of claims
made under the Agreement. My
response to (b) is that a Writ of Summons can be issued out of the High
Court of Solomon
Islands under Order 5, rule 5 (c) of the High Court Rules
where an action is for specific performance or where the performance
of a
contract is to be effected in Solomon Islands or where the defendant resides
in Solomon Islands. As matter of fact,
the action in Civil Case No. 58 of
1991 was for specific performance of an obligation agreed to be performed in
Honiara
by the Company and Mrs. Meiners whose registered office and
residential address is in Honiara. In respect of (c), Mr. Suri
argued that
whilst the appointment of Richard Anthony Barber as Official Receiver and
Special Manager was made pursuant
to sections 221 and 222 of the Companies
Act (Cap. 175), there was no evidence to suggest that such appointment was
required on 25/3/91. That is to say, the term "Official
Receiver" means the
Registrar of Companies under section 221 of the Companies Act or some other
person appointed by the Minister. It is an undisputed fact that Richard
Anthony Barber was not appointed
by the Minister on 25/3/91 because the
Company had not been wound up. In respect of (d), Mr. Suri argued that the
terms
of paragraph 2 of the Court Order of 25/3/91 cannot be justified even
if that Order had been made pursuant to Order 53, of
the High Court Rules
because paragraph 2 above of the Court Order conferred upon Richard Anthony
Barber (Mr. Barber)
statutory powers under the Companies Act (Cap. 175)
exercisable by the receiver only in a winding up situation of a Company
incorporated under the Companies Act (Cap. 175) whereas the scope of an
appointment under Order 53, rule 6 of the High Court Rules was narrower in
that it
is confined to the preservation of property pending trial of the
main dispute between the parties there being no evidence as
of 25/3/91 that
the shares in the Company needed to be preserved urgently to prevent the
risk of being lost.
In response to Mr. Suri's
argument in (c), I would say this. First of all, there is the principle that
the Order of a
superior Court remains valid until it is set aside or
reversed. Everything done under such Order before reversal is protected.
In
Cameron v Cole [1944] HCA 5; (1943) 68 CLR 571, LATHAM, C.J. of the High Court of
Australia at page 590, said,
�there are two
well-established rules. First, a court which, after ater a real trial, has given
a valid decision determinative
of right, liability or status has no
jurisdiction to recall it whatever mistakes may have been made in facts or
law ...
Second, if in the course of a purported trial a fundamental
irregularity has occurred which prevents it from being a trial
at all, the
decision of the court is either void or voidable. It is well settled by the
highest authority that the decision
of a superior court, even if in excess
of jurisdiction, is at worst voidable, and is valid unless and until it is
set
aside�.
Again, in MacIntosh v Lobel &
Another [1935] 53 CLR 441,Y, P. of the NSW Supreme Come Court at page
459 said,
"it is a well-known principle
of ommon law that a judgement ment reversed is the same as no judgement ...
Equally,
acts done according to the exigency of a judicial order, afterwards
reversed, are protected. At least in respect of the orders
of a superior
court, proceedings which are based upon a judgement, later reversed, and
which are brought to completion
before its reversal are not thereby avoided
..."
(Also see The Commissioner
for Railways (NSW) v Cavanough [1935] HCA 45; (1935) 53 CLR 220 at 225 Solomon
Islands the the case in which this principle of the validity of final orders or
judgments of this Court
was discussed at some length by Palmer, J. is
Willie Roni and David Thuguvoda v Ross Mining Limited & Others (Civil
Case No. 60/97 (unreported)) The first Order dated 25/3/91 being the Order
of the High Court of Solomon Islands
being a superior court of unlimited
jurisdiction was a valid order of the Court until it is set aside. Secondly,
the
first Order of the Court was subsequently rectified by the second Order
dated 12/4/91. I will say more on this later in this
judgment. In response
to Mr. Suri's argument in (d), I would say that it is well covered by the
principles of law applicable
to (c) above. That is to say that whatever
might have been the case, the Court Order of 25/3/91 was valid until it is
set aside. Mr. Suri's argument also assumes that Order 53, rule 6 of the
High Court Rules are not meant to be applied to the
Companies Act (Cap. 175)
for the reasons that the Companies Act (Cap. 175) is a self contained Code
for Corporations incorporated under the Companies Act. To do so he said,
would be erroneous in law as in this case. At least, that is how I
understand Mr. Suri's line of argument
on this point. Again, that might have
been the case in this case, but unless and until that Court Order was set
aside,
that Order would remain valid for all purposes. Mr. Suri also argued
that since the first Court Order dated 25/3/91 was invalid
ab initio,
its rectification by second Court Order dated 12/4/91 would not remove its
nullity. The fact is that the first Court
Order dated 25/3/91 was varied by
a subsequent second Court Order dated 12/4/91 to the following extent:-
a) that thds, "Official
Receivers" and "Special cial Manager" in paragraphs 1, 3 and 4 in the first Order
be deleted and be replaced wherever they occur in paragraphs 1, 3 and 4
above with the word "Receiver";
b)that paragraph 2 in the first
Order be deletd be replaced with a new paew paragraph 2 which gives
additional powers
(a) and (b) set out in that paragraph. Paragraph 2 of the
second Order then treats these variations as taking effect nunc pro
tunc
from 25/3/91 being the date of the first Order.
In making these variations, the
Court must have obviously recognised and accepted the fact that the first
Order was in
parts irregular to the extent of the variations in the second
Order. In Emanuele v Australian Security Commission (1996-1997) 188
CLR 115, TOOHEY, J. at page 131, quoted the Dictionary meaning of nunc pro
tunc as:�Now instead of then; meaning that a judgment is entered, or
document enrolled, so as to have the same legal force and effect
as if it
had been entered or enrolled on an earlier day.� At page 132, His Honour
continued, ��The first record of an order nunc pro tunc seems to be of
one made by Lord Clarendon in Ex parte Robert Devenish and Henry
Devenish v Richard Bern ford, per pet, a private case.�� That First
order is understood to have been dated 4th December, 1691. His
Honour continued;��Thereafter the use of an order nunc pro tunc is well
recorded in judicial decisions� In Donne v Lewis� Lord Eldon said:
�The Court will enter a decree nunc pro tunc, if satisfied from its own
official documents, that it
is doing now what it would have done then��
After the judicature Acts, the English Rules of the Supreme Court specified
the method of entry of judgment or nunc pro tunc�� In the Emanuele
case above, a nunc pro tunc order was made to rectify a failure to obtain
leave which was a requirement under section
459P(2) of the Corporations
(South Australia) Act 1990. In other words, procedural errors can be
rectified by the use
of nunc pro tunc orders as and when necessary. This was
the case when the court made the second order to correct the relevant
parts
of the first order. The procedural error was that the appointment of Mr.
Barber should have been made under Order
53 of the High Court Rules in the
first place. That error did not touch the jurisdiction of the Court and
therefore the
second order had nothing to do with the jurisdiction of the
Court. The jurisdiction of the Court can only be attacked by way
of
proceedings to set aside the first order. This has not been done by the
Company and Mrs. Meiners since the date of
the first order. It is not enough
to allege that the first order is void. The fact is that the first order
stills stand
on the record as amended by the second order although now spent
since the discharge of the Receivers on 28/6/91. The argument
based on lack
of jurisdiction therefore fails.
Fraud
Allied to the lack of
isdiction argument is the argument that the first order was obtained by
fraud. An alln allegation
of fraud against any person is a serious matter. The
courts do not take it lightly. It must therefore be specifically pleaded
in
the Statement of Claim. A general allegation of fraud without specifics is
insufficient. The rules of practice in
pleading fraud can be found in the
judgement of the Supreme Court of New South Wales in Minister
Administering the Crown Land (Consolidation) Act and Western Lands Act &
Another v Tweed Byron Aboriginal
Land Council [1990] 71 LGRA 201 and the
judgement of the Federal Court of Australia in White Industries (QLD) Pty
Ltd v Flower & Hart ( a firm) [1998] FCA 806; (1988) 156 ALR 169. In this case fraud was
alleged against Mr. Bayley in paragraphs 10 and 16(e) of the Statement of
Claim. Fraud was also
alleged against Messrs Barber and Douglas McCluskey in
paragraphs 10, 16(f) and 17(a) of the Statement of Claim. The Defendants
did
not challenge the pleading of fraud in the Statement of Claim during the
course of trial but Ms. O�Reilly made a
number of submissions on it at the
close of the Defendants� case.
Fraud and its Proof./p>
Thous case on fraud is
Derry v Peev Peek
(1889) 14 App. Cas. 337. LORD BRAMWELL at 350 and LORD HERSCHELL at 374 each
set out the elements of fraud. That is,
a person commits fraud if that
person makes a statement to be acted on by others which is false and is
known by that
person who makes it to be false or is made by that person
recklessly or without care paying no attention to its truthfulness.
This
definition of fraud can now be found in this jurisdiction in Robert
Victor Emery and John Sullivan v Taisol Investment Corporation (SI)
Limited, Toshio Hashimoto and David Hayward (Civil Case No. 301 and 119
of 1993 (unreported), Island Construction Management Limited v Air
Transport Limited (Civil Case No. 144/96 (unreported), and Mbaeroko
Timbers Company Limited v Island Construction Management Limited and
National Bank of Solomon Islands Limited (Civil Case Nos. 100 and 231 of
1997) (unreported) (Also see The Law of Torts, John C. Fleming 1992
Eighth Edition at 633-634).
Also, LORD HERSCHELL at 372 and
374 said proof of fraud ssential for it to succeed. In other words,
there muse must be
evidence of a false representation being made knowingly or
without belief in its truth or recklessly without being certain
whether it
is true or false. The Law Lords did not however say what standard of proof
was required in proving fraud.
It has been however said that the civil
standard of proof applies to fraud cases. In Hornal v Neuberger Products
Ltd. [1956] 3 A.E.R 971 at page 973, DENNING L.J said,
"Nevertheless, the judge
having set the problem to himself, he answered it, I think, correctly. He
reviewed all the
cases and held rightly that the standard of proof depends
on the nature of the issue. The more serious the allegation the higher
the
degree of probability that is required; but it need not, in a civil case,
reach the very high standard required by
the criminal law".
The same view was held by HODSON
L.J. at page 976 andIS, L.J. at page 978. The High Court of Australia
hel held the same
view. In Rejfek v McElroy [1965] HCA 46; (1965) 112 CLR 517 at page
521, the Court said,
"The "clarity" of the proof
required, where so se a matter as fraud is to beto be found, is an
acknowledgment
that the degree of satisfaction for which the civil standard
of proof calls may vary according to the gravity of the fact to
be proved
ass="MsoNoMsoNormal" style="margin-left: 36.0pt; margin-top: 1; margin-bottom: 1">
But the standard of proof to
be applied in a case and the relationship between the the degree of persuasion
of the mind
according to the balance of probabilities and the gravity or
otherwise of the fact whose existence the mind is to be persuaded
are not to
be confused. The difference between the criminal standard of proof and the
civil standard of proof is no mere
matter of words: it is a matter of
critical substance. No matter how grave the fact which is to be found in a
civil case,
the mind has only to be reasonably satisfied and has not with
respect to any matter in issue in such a proceeding to attain
that degree of
certainty which is indispensable to the support of a conviction upon a
criminal charge ...."
No evidence that an ex parte
application was in fact heard by Ward, C. J. on 25/3/91
class="MsoNoMsoNormal" style="margin-top: 1; margin-bottom: 1">
The first allegation of fraud
affecting the jurisdiction of the court is that there was no hearing at all
of an ex parte
application before Ward, C.J. on 25/3/91 because there is no
evidence to show anything to the contrary that a hearing did in
fact take
place. Mr. Suri argued that both Mr. Meiners (PW2) and Mr. Teutao (PW9) had
said in evidence that they had
each searched the relevant Court File (Civil
Case No. 58/91) and discovered no record of the hearing that purported to
have taken place on 25/3/91. That is to say that the Court Order there were
no handwritten notes by Ward, C.J. in that File
to prove that the Chief
Justice did in fact hear the ex parte application on 25/3/91. There is also
the fact that Exhibit
77 which was faxed by Mark McCluskey from Honiara to
Messrs Elliot and Douglas McCluskey at Gizo on 25/3/91 was purported to
be
the Order of Ward, C.J. of the High Court of Solomon Islands. Exhibit 77 was
subsequently served upon Mrs. Meiners
on 26/3/91 by the Receivers. The
significance of the fact that Exhibit 77 bore the signature of Ward, C.J. in
capital
letters had not been noted by the Meiners until subsequently pointed
out by someone, probably by Mr. Teutao who was the solicitor
for the Company
and Mrs. Meiners in April, 1991. Even the subsequent discovery of the
existence of Exhibit 380 being
the first Order dated 25/3/91 and signed by
Ward, C. J. in his own and normal signature did not dispel that suspicion of
fraud in the absence of handwritten notes by Ward, C.J. being accepted as
the normal incidence of a Court hearing in Solomon
Islands. This suspicion
obviously bore the marks of credibility in the light of the manner and speed
in which Exhibit
77 was faxed to Messrs Elliot and Douglas McCluskey
together with the remark "Operation Gizo Underway", suggesting
a
military-like operation against the Company. This suspicion remained until
Mr. Sullivan, (DW 15) produced in Court
Exhibit 531 being the handwritten
notes by Ward, C.J. dated 25/3/91. Although, Mrs. Meiners had criticised the
late production
of Exhibit 531, the fact is that it has put an end to the
mystery over the existence or otherwise of the handwritten notes
by Ward,
C.J. taken of the hearing on 25/3/91 resulting in the appointment of Mr.
Barber as the Receiver for the Company.
There is now no doubt that Exhibit
380 is the true copy of the Court Order dated and signed by Ward, C.J. on
25/3/91.
The signature on it was well recognised by Mr. Teutao (PW9) as
being that of Ward, C.J. I of my own knowledge as a former Attorney
General
also know that the signature at the bottom of the right-hand side of the
second page of Exhibit 380 is that of
Ward, C.J. of course being familiar
with His Lordship's signature since 1986 when His Lordship took office as
the Chief
Justice of this country. This of course means that Exhibit 77 was
not an Order signed by Ward, C.J and should not have been
served upon Mrs.
Meiners on 26/3/91. It would have been proper for Mark McCluskey to send to
Gizo a true copy of Exhibit
380 if the intention was to serve a copy of the
Order upon the company and its Directors. However, I do not think the
Receivers were to bear any blame for this. They took Exhibit 77 at face
value and served it upon Mrs. Meiners at Gizo. They
would not have known
whether or not the signature on it was that of Ward, C.J. of the High Court
of Solomon Islands.
There is clearly no case to answer. The argument
advanced by Mr Suri therefore fails. I do not however blame the Company and
Mrs. Meiners for sticking to their guns until Exhibit 531 was produced by Mr
Sullivan (DW 15) on the 25 day of this trial.
This being the case, Mr. Suri
should not have pressed this point in his final submission.
The copy of the Agreement
hed to James Molineux Bayley's Affidavit fraudulently alteraltered?
The second allegation of fraud
is contained in parh 17(a) of the Statement of Claim. This allegation
is is made against
Mr. Bayley. The particulars of this allegation of fraud were
not pleaded in the Statement of Claim. They were however later
identified
during the course of trial through cross-examination by Ms O'Reilly.
Firstly, the date 26th September on page
1 of the Agreement in handwritten
form had been inserted by someone and so was fraudulent because it was put
in after
Mrs Meiners had signed the Agreement. Secondly, on page 18, a
handwritten addendum and two signatures did not appear in the
left margin of
that page and is therefore fraudulent because it was removed by someone.
These particulars are as follows:
-
a) Insertion of the handwritten date �26th September�
In response to
cross-examination, by Ms. O�Reilly, Mrs. Meiners admitted that it w necessary that the Agre Agreement be dated
provided that the parties agreed to
the date. The fact is that the Agreement was not dated when Meiners signed
it. She
said she recalled signing it on 23/9/89 on a weekend either on
Saturday or Sunday. When asked further by Ms. O'Reilly in cross-examination
whether the handwriting of the date was fraudulent, she said it was because
the Agreement was not dated the day she signed
it. Mrs. Meiners was in fact
suggesting that there was a motive in someone's mind in inserting the date
in the Agreement
in the absence of all the parties who signed it. She was
assuming that there must have been fraudulent intention by someone
but could
not say who did it and why.
b) ppearance of the
handwritten addendum and two signatures on page 18 of the Agreement.ment.
Mrs. Meiners in her evidence
aid this anomaly must have been caused by someone with a fraudulent
intention. Mr. Mer. Meiners
also supported this in his evidence. The first person
who identified these anomalies was Mr. Parr, the solicitor for the Meiners.
He did so on 26/10/89 at the Office of Messrs Ernst & Young, Chattered
Accountants, when Mr. Parr was shown the Agreement.
Mr. Parr alerted
immediately Mr. Sowry, Mr. Bayley's Solicitor, of these anomalies by fax
dated 26/10/89. Mr. Sowry responded
the same day by fax. Mr. Parr also
responded immediately requesting correction of the document and the payment
of $1
million to the account of RT under the original Agreement. Mr. Parr
also returned to Mr. Sowry the Agreement with the anomalies
in it. Mr Sowry
responded by fax on 30/10/89 and said that he and his client had examined
the document as returned by
Mr. Parr and saw nothing wrong. That is to say,
that document was the same document that Mrs Meiners had signed in the
presence of Mr. Parr. On 10/11/89, Mr. Parr requested by fax a stamped copy
of the document. Mr. Pare received stamped copies
of the Agreement from Mr.
Sowry on 21/11/89. The stamped copy of the Agreement also differed from the
Agreement signed
by Mrs.Meiners in three ways:-
(i) At page 21, clause 5 are
se words, "Akeela will will lodge such sums as shall be required from time to
time not
exceeding the sum of ONE MILLION DOLLARS ($1,000,000) in the
account of RT ......"; whereas the Agreement signed by Mrs.
Meiners required
that, "Akeela will lodge the sum of ONE MILLION DOLLARS ($1,000;000) in the
account of RT ....";
<
(ii) the amendment inserted by
Mr. Parr on page 18 of the agreement signed by Mrs. Meiners was missing;
On 17/10/89, Mr. Parr was shown
a copy of the Agreement by Mr. Meiners handed to Mr. Meiners by Mr. Seda, an
Accountant
in Solomon Islands. That Agreement had previously been sent to
Mr. Seda by Mr. Sowry under the cover of a letter dated 11/10/89.
Mr Parr
confirmed in his Affidavit (Exhibit 366) that that Agreement was the same as
the document signed by Mrs Meiners
in his presence. Mr. Parr further deposed
that the copy of the Agreement exhibited to Mr. Bayley's affidavit of
23/3/91
was not the same as the Agreement signed by Mrs Meiners in his
presence in so far as the amendment on page 18 is missing but
clause 5 at
page 21 was correct.
Paragraph 5 of Mr. Parr's faxed
letter6/10/89 to Mr. Sowry for the first time suggested fraud agad against
Mr. Sowry,
Mr. Bayley's solicitor. Mr. Sowry rejected the allegation of
fraud outrightly in his faxed letter to Mr. Parr that same day.
Mr. Sowry
explained in that letter that he was out of Australia when the Agreement was
signed. He also explained that
the anomalies might have been due to
compilation error as there were numerous copies of the Agreement. He also
said that
further funds would be stopped until the allegation of fraud was
retracted without conditions. By letter dated 27/10/89, addressed
to Messrs
Glasgow and Sowry (Exhibit 24) Mrs. Meiners accepted Mr. Sowry's explanation
of compilation error and apologized
for the misunderstanding that had arisen
between them. By letter dated 30/10/89, addressed to Mr. Parr, Mr. Sowry
repeated
that further transfer of funds would not be made until the
allegation of fraud was retracted without conditions. In answer
to
cross-examination by Ms. O'Rielly, Mrs. Meiners said that it was Mr. Parr
who suggested that the alterations of the
Agreement would appear to be
fraudulent. Again, in answer to cross-examination by Ms. O'Rielly, Mrs.
Meiners said there
was nothing fraudulent about Mr. Bayley proffering to the
Court the stamped version of the Agreement with the correct funding
clause.
However, she said that Mr. Bayley did know about the second stamped original
with a different clause. She further
said that in a conversation with Mr.
Bayley he said that he had changed the Agreement because he did not like it.
I think
the fact is that apart from the date "26th September" being hand
written after Mrs. Meiners had signed the Agreement
and the missing
amendment on page 18, the funding clause was correct. This is confirmed by
Mr. Parr's affidavit (Exhibit
366). I do not think the subsequent insertion
of the handwritten date "26th September" and the missing amendment
on page
18 of the Agreement proffered to the Court by Mr. Bayley are material
alterations so as to change the Agreement
in any material way even if they
were for some reason fraudulent. I find as a fact that the insertion of the
date "26th
September" and the missing amendment on page 18 are not material
alterations and are not fraudulent. I do not believe
Mrs. Meiners evidence
on these matters. As regards the insertion of the date "26th September", she
was assuming
that if the Agreement was not dated the same day she signed it
and dated later by someone else she did not know, it must have
been
fraudulent. She assumed that it must have been done by Mr. Bayley and those
who assisted him. The same is the case
as regards the missing amendment on
page 18 of the Agreement. Mrs. Meiners was relying too much on Mr. Parr's
remarks
about fraud being committed by someone. Mr. Sowry had outrightly
rejected the allegation of fraud by Mr. Parr in his correspondence
with Mr.
Parr (Exhibits 20, 23 and 25). Mr. Sowry had also in those letters explained
the reason for the mix up of pages
and that explanation had been accepted by
Mrs. Meiners (Exhibit 24). Mr. Bayley also denied tampering with the
Agreement
nor instructed his solicitor to do so. There was no secret about
the occurrence of the mix-up of pages through a compilation
error. There is
therefore no evidence of fraud apart from the fact that fraud had not been
adequately pleaded by the
Company and Mrs. Meiners. The particulars of the
alleged fraud regarding the alterations of the Agreement became apparent
only as a result of careful and penetrating cross-examination by Ms.
O'Reilly otherwise the allegation of fraud in the
Statement of Claim would
have stood only as a general allegation of fraud.
It therefore goes without saying
that the Agreement dated 26th September, 1989 was a vAgreement despite
it it being
dated subsequently by someone most probably by Mr. Sowry, Mr.
Bayley's solicitor. (See Colonial Bank of Australian v Moodie (1880)
V.L.R 354 at 356 and Brianwell v Stafford (1988) V.L.R. 281 at
287-8).
lass="MsoNoMsoNormal" style="margin-top: 1; margin-bottom: 1">
5.
Fraud in Mr. Bayley's Affidavit of
23/3/91?
a) Paragraph 3 of the Affidavit
ass="MsoNoMsoNormal" style="margin-left: 36.0pt; margin-top: 1; margin-bottom: 1">
In cross-examination by Ms.
O'Reilly, Mrs. Meiners said that the figure A$1.409 million was false.
However, she admitted
that between September, 1989 and June 1990, Akeela Pty
Limited had paid funds to RT. She said that the funds paid by Akeela
Pty Ltd
stood at A$970,000 or A$980,000 as at 23/3/91.
In Mrs. Meiners did not
dispute that Akeela Pty Ltd had paid funds to RT or directly toly to the Company
or for its benefit.
The gist of her allegation was that Akeela Pty Ltd had
breached the Agreement by not paying immediately to RT A$1 million as
agreed
under the Agreement and therefore why should Akeela Pty Ltd be entitled to
45% of the shares in the Company? Whilst
on the other hand, Mr. Bayley was
saying that Akeela Pty Ltd had paid in the aggregate A$1 million by 14/5/90
and by
19/3/91 had paid a further A$351,510.85. He said other funds could
have been paid also by Akeela including the cost of the
receivership. Mr.
Bayley said that the figure A$1.409 million quoted in paragraph 3 of his
affidavit above was a reflection
of the amounts spent so far by Akeela in
respect of the investment at Gizo in Solomon Islands. This was his genuine
belief
at that time. However, Mrs. Meiners maintained that the figure
A$1.409 million was false. She did not however say why this
figure A$1.409
million was false. However, I understand her evidence to be that the figure
A$1.409 quoted in paragraph
3 above was an exaggeration to induce the Court
to appoint a Receiver. In fact she believed, Akeela had paid much less in a
piece meal way so as to be in breach of the Agreement. Mr. Meiners' evidence
in response to Ms. O'Reilly's cross-examination
is also similar in effect. I
find that Mr. Bayley committed no fraud in paragraph 3 above. There is no
evidence of it
before me. Clause 3 of the Agreement made it quite clear that
in consideration of the transfer of the interests in RT and MIL
(the
Company), Akeela would lend to RT immediately by an advance on the closing
date the sum of ONE MILLION AUSTRALIAN
DOLLARS (A$1,000,000). Akeela was to
onlend portion of such monies to MIL (the Company) as determined by RT at
its own
discretion. My understanding of this clause of the Agreement was
that the transfer of the interests of Akeela in RT and MIL
(the Company) was
to be done straightaway, if not, simultaneously and then Akeela in
consideration of that would immediately
advance A$1 million to RT with
effect from 1/9/89. How the funds were to be disbursed to the Company, at
what times and
how much and in what way were matters to be decided by RT.
The source from which Akeela was to advance A$1 million to RT was
not part
of the Agreement and therefore is not an issue in this case. Akeela's
commitment was A$1 million and Akeela
fulfilled it by 14/5/91. This is the
fact that is being denied by the Company and Mrs. Meiners. The payment of
A$1 million
to RT was what should be done immediately upon the transfer of
Akeela's interests in RT and the Company. Mrs. Meiners' view
was that it
should be the other way around. That is, Akeela was entitled to its shares
on the completion of its commitment
under the Agreement by paying up A$1
million to RT. This is supported in evidence by Mr. Meiners. The fact
however is
that parts of that A$1 million had been given directly to the
Company because urgent requests for funding had been received
directly from
the Meiners. As I have said, by 14/5/90, the amount of funding in the
aggregate was A$1 million. Also,
as I have said, by the date of Mr. Bayley's
affidavit, the total sum was A$1,351,510.85 excluding the cost of the
receivership.
The figure A$1.409 million included the cost of the
receivership as at 25/3/91. By that time, 45% interests in the Company
still
had not been transferred to Akeela. The fact that Akeela had stopped funding
as at 14/5/90 had added to the belief
held by the Meiners that Akeela was
not entitled to 45% of the shares in the Company. Mr. Bayley on the other
hand, firmly
believed that Akeela was entitled to 45% of the shares in the
Company because he had paid over A$1 million at the time Akeela filed Civil
Case No.
58 of 1991. The root of the dispute in this case are the
personalities involved. Mr. Bayley is an experienced businessman who
knows
the mechanics of running a successful operation to make a profit. The
Meiners' business track record on the other
hand, is obscure to say the
least. However, the Meiners did believe that the financial difficulty of the
Company was
due to inadequate funding from Akeela. The Meiners said Akeela
was "drip-feeding" the Company meaning that funding
by Akeela was piece-meal
and eventually stopped altogether thus being in breach of its commitment
under the Agreement.
Mr. Bayley on behalf of Akeela denied this and said
that by 14/5/90, Akeela had paid A$1 million. He produced evidence to prove
this fact. The Meiners disputed this and said some of the funds paid by
Akeela were not from Akeela funds and should
not be counted as part of the
A$1 million commitment of Akeela. They maintained that Mr. Bayley was still
in breach of
the Agreement. I find as a fact that Mr. Bayley committed no
fraud in paragraph 3 of his affidavit. There is no evidence before
me to
support the allegation.
b) Paragrapf the Affidavit
The effective date of the
Agreement dated 26th September, 1989 was 1/9/89. In response to
Ms. O'Reilly's cross-examination, Mrs. Meiners said that 45% of the shares
were allotted to David Anthony Glasgow as trustee for Akeela. However, the
shares had not been formally assigned because Akeela
had failed to perform
its part under the Agreement. However, Mr. Meiners in response to Ms.
O'Reilly's cross-examination
said that David Anthony Glasgow never had any
shares in the Company because no shares had been allotted. Mr. Meiners also
said that Mr. Bayley could only have shares in the Company if he paid for
them. The Meiners were really saying here that
Mr. Bayley was not entitled
to any shares at all in the Company because of his failure to perform his
part under the
Agreement. It was tit for tat. This attitude by the Meiners
manifested itself quite clearly in the record of the Registrar
of Companies
(Exhibit 390). Mr. Goh (DW 1) in his evidence said that the Company's
records were not in order. This was
confirmed by Mr. Seda's (PW5) answers to
cross-examination by Mr. Kelly. That is to say, the Company's statutory
report
was defective, the Company Minute was irregular, incorrect reference
to shareholders being appointed or resigning, increase
of capital being
authorised by Directors and not shareholders without special resolution etc,
no share register, no share
certificates and no annual return. The fact is
that no shares were transferred to Akeela as agreed under the Agreement. The
fact is that shares were transferred to Akeela only at the Directors Meeting
held on 17/6/91. Mr. Bayley was also appointed
a Director of the Company at
this Meeting. This fact supports the position that at the date of the
receivership, no shares
were held by Akeela in the Company. I find as a fact
that Mr. Bayley committed no fraud in paragraph 4 above. There is no
evidence of it before me.
c) Paragraph 5 of the Affidavit
class="MsoNormal" style="mle="margin-top: 1; margin-bottom: 1">
p class="MsoNoMsoNormal" style="margin-left: 36.0pt; margin-top: 1; margin-bottom: 1">
In response to cross-examination
by Ms O'Reilly, Mrs Meiners confirmed that there here were no meetings of
Directors or shareholders between 20/7/90 and 25/3/91, the date the Receiver
was appointed. This was contrary to the
intention of Mr. Glasgow in his
letter to the Meiners dated 2/10/89 (Exhibit 376). In that letter, he said
that there
should be a Meeting of Directors to discuss a number of things
that were of concern to him and Mr. Bayley. He enclosed in that
letter to
the Meiners a formal notice of a Meeting for 24/10/89. Having received no
response, Mr. Glasgow reminded them
by fax dated 17/10/89. (Exhibit 377). By
letter dated 5/12/89 (Exhibit 375) Mr. Parr, the Meiners' solicitor,
informed
them that in the opinion of Mr. Cullinane, Q.C. they must cease to
accept any more funding from Mr. Bayley if they wished to
rescind the
Agreement. Any further dealing with Mr. Bayley would be regarded as
acceptance of the Agreement as varied
by Messrs Bayley and Glasgow. Mr. Parr
again reminded the Meiners of the risk they faced by continuing to accept
funds
from Messrs Bayley and Glasgow by letter dated 23/1/90 (Exhibit 378).
By this time RT and the Company had received A$675,943.49
from Mr. Bayley,
well over half a million dollars. By 23/3/91, the amount received by RT and
the Company was well over
A$1 million. It is no surprise that Mr. Bayley was
concerned and thereby expressing his concern in paragraph 5 above. I find
as
a fact that Mr. Bayley committed no fraud in paragraph 5 above. There is no
evidence of it before me.
d) Parh 6 of the Affidavit
In answer to cross-examination
by Ms O'Reilly, Mrs. Meiners said that the Company did provide proper
accounting to Mr.
Bayley. She said Mr. Bayley had taken possession of the
Company documents or at least some of them.. Mr. Bayley on the other
hand
said in evidence that to run a business of the size of the Company's
business, an end of month set of books was
necessary. There must be monthly
bank reconciliations. Petty cash must be balanced. He said there was no
format for monthly
financial reporting. All these things were not being
done. This was the basis for Mr. Bayley's concern in paragraph 6 above.
Also, the Company's statutory record were not in order as already stated in
paragraphs 4 and 5 above. I find as a fact
that Mr. Bayley committed no
fraud in paragraph 6 above. There is no evidence of it before me.
e) Paragraph 7 of the Affidavit
In response tss-examination
by Ms. O'Rielly, Mrs. Meiners admitteditted that the relationship between the
parties to the
Agreement had broken down beyond repair but was due to Mr.
Bayley's continuous interference with the affairs of the Company.
Asked by
Ms. O'Reilly that Mr. Bayley was simply expressing an opinion in paragraph
7, Mrs. Meiners said that opinion
was misleading. She said Mr. Bayley had
forgotten the fact that the Meiners' interest in the Company was also
equally
at stake. I find as a fact that Mr. Bayley committed no fraud in
paragraph 7 above. There is no evidence of it before me.
f) Paragraph 8 of the Affidavit
In response to cross-examination
by Ms. O'Reilly, Meiners said that proper bper books and accounts were kept
and what
Mr. Bayley said in paragraph 8 was misleading and a nonsense. As
already said, Mr. Bayley was concerned with the day to day
books and
accounts of the Company and he was not satisfied with the way Mrs. Meiners
kept the accounts of the Company
meaning the nuts and bolts of the daily
management of the book-keeping in the Company. She also denied that the
Company's
statutory records were defective. She however admitted that she
was not at the Meeting on 17/6/91 at which the Company's records
were
rectified. I find as a fact that Mr. Bayley committed no fraud. There is no
evidence of it before me.
p class="MsoNoMsoNormal" style="text-indent: 36.0pt; margin-top: 1; margin-bottom: 1">
g) Paragraph 9 of the Afit
In response to cross-examination
by Ms O'Reilly, Mr. Meiners said that this paragraph was confusing but
accepted that
Mr. Glasgow had been a Director but later resigned. I find
that Mr. Bayley committed no fraud.
(h) Paragraph 10 of the
Affidavit
sponse to cross-examination
by Ms. O'Reilly, Mr. Meiners said that the third line in e in paragraph 10 was
misleading
but was false to say that Mr. Glasgow as a Director never
resigned. He also said that it was false to say that no Directors
Meeting
could have been held because such meetings could have been held if
requested. I find as a fact that Mr. Bayley
committed no fraud.
i) Paragraph 11 of the Affidavit
class="MsoNoMsoNormal" style="margin-left: 36.0pt; margin-top: 1; margin-bottom: 1">
In response to cross-examin
by Ms. O'Reilly, Mrs. Meiners said that Mr. Bayley'yley's share in the Company
were not denied
as they had been allotted though not properly lodged in the
Companies Registry. She said it was misleading to say that Mr.
Bayley was
denied his shares. Further, she said that it was misleading to conclude that
the Company business was being
run in an improper, irregular and uneconomic
fashion by the Meiners and Davinia Philip. Furthermore, she said that it was
also misleading to say that the Company was indebted to creditors to the
tune of $550,000 as some claims were not debts
to the Company (Exhibit 418).
Also, in response to cross-examination by Ms. O'Reilly, Mr. Meiners also
said Akeela's
interest was never denied. Also, he said it was both incorrect
and false to say that the Company's business was being ran in
an improper,
irregular and uneconomic fashion by the Meiners. The estimate he said of the
figure $550,000 was false.
He said to say there was little prospect of that
sum being paid unless further funding was injected into the Company was also
false. Again, the figure $550,000 was an expression of Mr. Bayley's belief
at that time without the benefit of the Company
accounts. In fact the
Receiver's Summary of claimed creditors against the Company (Exhibit 418)
stood at $903,708.94
even if due allowance was given for some disputed
debts. I find as a fact that Mr. Bayley committed no fraud in paragraph 11
above. There is no evidence of it before me.
j) Paragraphs 12 and 13 of the
Affidavit
In response to cross-examination
by Ms. O'Reilly, Mr. Meiners said that paragraphs 12 and 13 were false. He
said whatever
belief or opinion was held by Mr. Bayley was wrong. I find as
a fact that Mr. Bayley committed no fraud in paragraphs 12, 13
and 14 above.
There is no evidence of it before me.
<
k) Paragraph 15 of ffidavit
In response to cross-examination
by Ms. O'Reilly, Mrs. Meiners said that the first part of this paragraph was
not true
as far as she was concerned. I find as a fact that Mr. Bayley
committed no fraud in paragraph 15 above. There is no evidence
of it before
me.
Mr. Suri added in arguthe
following grounds as further evidence of fraud foud for the purpose of nullifying
the Order
of Ward, C.J. dated 25/3/91:-
a) the non-disclosure or
concealment of a material fact that the Writ of Summons was not issued out
of the High Court
of Solomon Islands;
b) the non-dsure or
concealment of a material fact that the AgreeAgreement has an ouster-clause
excluding the High Court
of jurisdiction in Civil Case No. 58 of 1991;
c) non-disclosure or concealment
of a mat fact that the Second DefenDefendant was not entitled to practise as
a Receiver
in Solomon Islands;
d) the Affidavits sworn by
Messrs Bayley, Barber and Douglas McCluskey were insufficient.
In my view,e grounds would
have been relevant if the Company and Mrs. Meiners had applied to seto set aside
the First
Order. They are now not relevant as I have already found that Mr.
Bayley committed no fraud. These grounds were also not pleaded
in the
Statement of Claim. They are now of no consequence in this case.
Fraud in Affidavits sworn by
Messrs Barber ouglas McCluskey?
Mr. Barber swore an affidavit on
19/3/91 wherein he deposed that he was a chartered Accountant in the State
of Queensland and that
he consented to being appointed an Official Receiver of and in respect of
the Company. Mr. Douglas McCluskey
also swore an affidavit on 23/3/91
wherein he deposed that he and Mr. Barber were members of Price Waterhouse
and supported
Mr. Barber to be appointed an Official Receiver of the
Company. These affidavits were brief in their contents (Exhibit 73)
but the
Company and Mrs. Meiners saw it fit to feature them prominently in the
Statement of Claim. Reference is made
to them in paragraphs 8, 9, 10, 13,
16, 17 and 19 in the Statement of Claim. Reference is also made to Mr.
Barber's affidavit
of 5th April, 1991 (Exhibit 133).
However, connected to a previous
sequence ofts, the Company and Mrs. Meiners thought they could prove
ove
fraud against
Messrs Barber, Douglas McCluskey and Mr. Bayley. The sequence
of events are as follows. The Company and Mrs. Meiners allege
that Messrs
Mark McCluskey and Douglas McCluskey who are cousins and Bayley met in
Brisbane between November 1989 and
19th March, 1991 and discussed
ways to appoint an Official Receiver and Special Manager of the Company.
Then Mark McCluskey
and Douglas McCluskey flew to Honiara in March 1991 with
the intention of making arrangement with Mr. Bayley to appoint Mr.
Barber
the Official Receiver of the Company. Having consulted Mr. Bayley and Mark
McCluskey, Mr. Barber swore an affidavit
of consent on 19/3/91 to be
appointed the Official Receiver of the Company. On 20/3/91, Mr. Elliot an
employee of Price
Waterhouse flew to Honiara to meet up with Messrs Douglas
McCluskey, Mark McCluskey and Mr. Bayley at the Honiara Hotel. On
23/3/91,
Douglas McCluskey swore an affidavit in support of Mr. Barber's appointment
as Official Receiver. On 25/3/91,
Akeela obtained a Court Order appointing
Mr. Barber the Official Receiver of the Company. On 26/3/91, Douglas
McCluskey
and Mr. Elliot took possession of the Company's premises at Gizo
as representatives of Mr. Barber, the Official Receiver. The
implication of
course was that these men had conspired to commit fraud against the Company
by inducing Ward, C.J. to
appoint Mr. Barber an Official Receiver being
their own nominee and a partner in Price Waterhouse.
Mr. Bayley's Extion (DW2)
In his evidence to the Court,
Mr. Bayley said that by 14/5/91, he through Akeela Pty Ltd had paid A$1
million as was his
commitment under the Agreement. As a matter of fact, he
said that Akeela had spent an additional A$351,510.85 by 23/3/91, the
date
he swore his affidavit in Civil Case No. 58 of 1991. He said a number of
things were worrying him as the financier
of the Company. First, the Meiners
had refused to Akeela's 45% stake in the Company. That is to say, 45%
interest in
the Company had not been transferred to Akeela as agreed under
the Agreement. He said his understanding of the Agreement was
that Akeela's
45% interest in the Company would be transferred by the Meiners upon the
signing of the Agreement. Second,
he discovered that the books and records
of the Company were not being kept properly by Mrs Meiners. His efforts to
correct
this failed and had to take some of the records with him to
Australia. Third, the Meiners had refused to co-operate with his
efforts to
arrange Board Meetings in order to discuss the affairs of the Company and to
make the necessary decisions.
Fourth, he discovered that the Company's
trading prospects were far below what the Meiners represented to him. Fifth,
it was becoming obvious that communication had broken down between him and
the Meiners. It was at this stage that Mr. Bayley
began to seek advice as to
what he should do to protect Akeela's Pty Ltd's interest in the Company. He
spoke to his solicitor
Mr. Sowry who referred him to Mark McCluskey, a
solicitor in Solomon Islands. In March, 1991, he attended a meeting in
Brisbane. At that meeting were Messrs Mark McCluskey, Douglas McCluskey and
Glasgow. Mark McCluskey advised Mr. Bayley at
that Meeting that it was
necessary to appoint a receiver so that the parties could come to the
negotiating table. Mr.
Bayley's intention was to get a Board Meeting going
so that the issues between them could be resolved. Mr. Bayley said he had
not known Douglas McCluskey before but Mark McCluskey had told him that both
men were cousins. Mr. Bayley also said that
Mark McCluskey had recommended
someone from Brisbane to act as the Receiver. Mr. Bayley said he left the
choice to Mark
McCluskey. It was at this stage that Mr. Bayley gave
instructions to Mark McCluskey to apply to the High Court of Solomon Islands
for the appointment of a Receiver in Civil Case No. 58 of 1991.
Mr. Elliot's Explanation (DW6)
: 1">
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In his evidence to the Court,
Mr. Elliod that he was an employee of Price Waterhouse when Mr. Barb Barber
instructed him
to take possession of the Company's premises at Gizo. He left
for Honiara on 20/3/91 to join up with Douglas McCluskey who
was already in
Honiara. Mr. Elliot said he had brought with him the consent document
(Exhibit 73) of Mr. Barber which
was attached to Douglas McCluskey's
affidavit filed in the Civil Case No. 58 of 1991. He said he had attended a
Meeting
on 22/3/91 at Honiara. At that Meeting were Messrs Bayley, Mark
McCluskey and Douglas McCluskey. He said he and Douglas McCluskey
took no
part in the preparation of the Court documents or the application made to
the Court on 25/3/91. However, he said
that he and Douglas McCluskey had
flown to Gizo on 24/3/91 in anticipation of an Order being made by the High
Court on
25/3/91. At about 2 pm on 25/3/91, he and Douglas McCluskey were
told by Mark McCluskey that the Chief Justice had made the
Order appointing
Mr. Barber the Official Receiver and Special Manager of the Company. A faxed
copy of the Court Order
followed. The next day 26/3/91 he and Douglas
McCluskey took possession of the Company's premises at Gizo. Mr. Elliot said
that what he and Douglas McCluskey did was normal practice in receivership
situations. He said there was nothing wrong
about the way he performed his
duties as the agent of Mr. Barber, the Receiver. He also said that Mr.
Barber was appointed
as Receiver in his personal capacity and not as one of
the Partners in the Firm of Price Waterhouse. He said that being so,
Mr.
Barber would be personally liable for any negligence committed by him or his
agent.
The Truth
I find as a that Messrs
Barber and Douglas McCluskey committed no fraud. The fact that Mr. BarbeBarber
came on the scene
in the first place was not his fault. He was recommended
by Mark McCluskey. The fact that Mark McCluskey and Douglas McCluskey
are
cousins is of no consequence. The fact that Douglas McCluskey became a Joint
Receiver together with Mr. Barber by
the second Order of the High Court
dated 12/4/91 and that Akeela might have retained Price Waterhouse for some
other
work previously is also of no consequence. Messrs Barber and Douglas
McCluskey were simply professional accountants who provided
services
requested for a fee. The fee quoted in this case was A$50,000 although it
went up at the end of the receivership.
The logistics applied in getting to
Honiara and then to Gizo from Brisbane in pursuance of Mr. Bayley's wish to
get a
receiver in to maintain the status quo of the Company is not
conspiracy to commit fraud against the Company or anyone. It was
normal
practice in receivership situations already said by Mr. Elliot and further
confirmed in evidence by Mr. Burns
(DW 16). The fact that Messrs Barber and
Douglas McCluskey are Partners in the same Firm, Price Waterhouse is a fact
of life. The Company and Mrs. Meiners failed to produce evidence to prove
fraud on the balance of probability. The allegation
against Messrs Barber
and Douglas McCluskey therefore fails.
Non-compliance with the laws o Solomon Islands
This allegation is contained in
paragraph 7 of the Statement of Claim. There is no dispute that Messrs
Barber and Douglas
McCluskey had received no approval from the Commissioner
of Labour under the Labour Act (Cap. 93) nor from the Investment Board under
the Investment Act (Cap. 142). Section 37(3) of the Labour Act requires any
immigrant or non-indigenous worker to apply for a work permit through his or
her prospective employer in
addition to complying with section 8 of the
Immigration Act (Cap. 60). Section 8 of the Immigration Act requires the
Principal Immigration Officer to issue a permit to enter and reside in
Solomon Islands subject to conditions
(a) (b) and (c) therein. Condition (a)
is that no such permit to enter and reside in Solomon Islands may be issued
unless
that person applying to enter and reside in Solomon Islands has got a
work permit under section 37 of the Labour Act. So that a pre-requisite for
the issue of a permit to enter and reside in Solomon Islands is the
obtaining of a work
permit from the Commissioner of Labour. Section 37(7)
exempts persons who enter Solomon Islands under section 7(1)(e) of the
Immigration Act as employees of the Government or the Government of any
country or territory of the Commonwealth entering Solomon Islands in
the
course of their duty. Obviously, Messrs Barber and Douglas McCluskey did not
fall into the exempted category of persons
under section 7(1)(e) above of
the Immigration Act. However, the fact is that they both entered Solomon
Islands as visitors only. They came under the provisions of section 9
of the
Immigration Act. Section 2 of the Immigration Act defines a "visitor" as
meaning "a person arriving in Solomon Islands for an intended stay of any
period
not exceeding three months". In this case, the fact is that Douglas
McCluskey entered Solomon Islands on 17/3/91 and left
Solomon Islands on
29/3/91. He was in Solomon Islands for 9 days although he had come to
Solomon Islands on a previous
occasion both periods together being less than
three months. Mr. Elliot, on the other hand, entered Solomon Islands on
20/3/91 and left also on 29/3/91 having been in the country for 12 days. The
legal fact is that the proviso to subsection
2 of section 9 of the
Immigration Act does allow visitors to engage in any business, profession or
employment (except research) in the course of duties arising from
his or her
normal employment outside of Solomon Islands. The fact in this case is that
both Messrs Douglas McCluskey
and Elliot were visitors performing their
duties arising from being an employee and partner of Price Waterhouse in
Brisbane.
Section 9(2)(b) of the Immigration Act (no work without the
approval of the Commissioner of Labour) does not therefore apply
to Messrs
Douglas McCluskey and Elliot whilst they were in Solomon Islands for the
purpose of the receivership of the
Company. Furthermore, there is no
evidence in this case to show that Messrs Douglas McCluskey and Elliot had
come to
Solomon Islands to invest money in this country. The allegation that
Douglas McCluskey and Mr. Barber failed to register with
the Institute of
Solomon Islands Accountant was withdrawn by Mrs. Meiners during the course
of the trial for the reason
that she was not able to sustain that
allegation. The allegation of non-compliance with the laws of this country
therefore
fails.
Breach of Statututies
>
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The allegation that Messrs
Barber and Douglas McCluskey had not complied with sections 221 and 222 of
the Companies Act (Cap. 175) are contained in paragraphs 16(h)and 17(b) of
the Statement of Claim. This is not disputed by the Defendants. That
was an
error made by Ward, C.J., on 25/3/91 but was subsequently corrected by His
Lordship on 9/4/91 by making a nunc
pro tunc Order dated 12/4/91. The fact
that the First Order was corrected by the Second Order under Order 53 of the
High
Court Rules made the need for a security (Form 22) to be filed under
the Companies (Winding up) Rules, 1963 irrelevant. The
allegation that
Messrs Barber and Douglas McCluskey had contravened sections 179 and 334 of
the Companies Act is contained in paragraphs 16(I), 17(f) and 19(d) of the
Statement of Claim. Palmer, J. in William Douglas McCluskey v The
Attorney General & Others (Civil Case No. 243/93) (unreported), ruled
that "undischarged bankrupt" in section 334 of the Companies Act meant "undischarged
bankrupt" declared so by the High Court of Solomon Islands. That ruling was
affirmed on
appeal by the Solomon Islands Court of Appeal (Civil Appeal No.
3 of 1994) (unreported). In this case, Mr. Miller was a bankrupt
declared in
Australia by an Australian Court. Section 334 of the Companies Act does not
therefore apply to Mr. Miller. Further, Mr. Miller was not the receiver. He
was appointed only as a care-taker
Manager under the supervision of the
joint Receivers with very limited powers to do things at Gizo. The
allegation that
Messrs Barber and Douglas McCluskey had contravened sections
339, 340 and 341 of the Companies Act is contained in paragraph 17(g) of the
Statement of Claim. Firstly, these sections only apply to receivers
appointed
by the Court on behalf of holders of debentures. In my view, this
is not the case here. Secondly, the penalties for non-compliance
are penal
and minor in nature. It does not seem to be the intention of Parliament,
that non-compliance would be a cause
of action for damages. Thirdly, in this
case, there is no evidence of damage suffered by the Company as a result of
non-compliance.
The allegation of breach of statutory duties had been
misconceived and therefore fails. I find that the Receivers had been
validly
appointed by Ward, C.J. by the First Order as amended by the Second Order.
Trespass
The allegation of trespass
against the Defendants is contained in paragraph 22A of the Statement of
Claim. It refers to
trespass being committed by the Defendants between
26/3/91 and 28/3/91 against the real property of the Company and the goods
and chattels belonging to the Company and Mrs. Meiners. This allegation
assumed at the time it was made that the First
and Second Orders of Ward,
C.J. were both invalid and that there was no lawful basis for the Defendants
to enter upon
the Company's premises at Gizo and to deal with other
properties belonging to the Company and Mrs. Meiners during the course
of
the Receivership. There is no doubt in this case that Messrs Douglas
McCluskey and Elliot took possession of the Company's
premises at Gizo on
26/2/91 and other properties belonging to the Company and Mrs. Meiners on
the authority of a Court
Order and therefore they committed no trespass
against the Company and Mrs Meiners. I think the problem here was that the
Court Order (Exhibit 77) was not the filed copy of original First Order and
that it bore a disputed signature of Ward,
C.J. in capital letters.
Furthermore, searches conducted by Mr. Teutao (PW9) and Mr. Meiners (PW2) of
the Court records
(i.e. Civil Case No. 58 of 1991 File) did not reveal the
existence of Ward, C.J.'s handwritten notes of the hearing on 25/3/91.
This
fact seemed to have confirmed the suspicion that no court hearing did in
fact take place on 25/3/91 and therefore
the Court Order served on Mrs.
Meiners by the Receivers on 26/3/91 was a bogus one. This is not now the
position as evidenced
by Exhibit 531 being a photocopy of the handwritten
notes by Ward, C.J. taken at the hearing on 25/3/91, produced by Mr.
Sullivan (DW 15) in evidence. It would seem that the Company and the Meiners
were not aware of the fact that there were
indeed handwritten notes in
existence a photocopy of which was tendered in Court by Ms. O'Reilly. The
basis for the claim
in trespass is therefore gone and no longer exists. The
Defendants have set up an absolute defence against this claim in trespass.
I
therefore feel that I need to go into the law of trespass in this case. The
Company and Mrs. Meiners have not pointed
to any elements of the law of
trespass that was lacking other than the validity of the First Order
combined with the
Second Order based upon alleged lack of jurisdiction of
the High Court. The claim in trespass therefore fails.
Nuisance
An alternative allen of
nuisance is contained in paragraph 22B of the Statement of Claim. The law of
f
nuisance is
well discussed in Chapter 19 of Street on Torts by
Margaret Brazier, Ninth Edition, 1993. At pages 345-6 the author says,
"The essence of the tort of
private nuisance is unreasonable inte interference with the use or enjoyment of
land ...
What constitutes unreasonable
interference forms the of the question in nuisancisance. When actual
physical damage to
property ensues from the defendant's conduct, that
interference in the plaintiff's use of his property is self-evident and
justifying the incursion may be difficult. Where no such tangible damage
occurs, the plaintiff's interest in his property
may still have been
invaded; if noise from an adjoining dwelling continues until 3 am,
preventing sleep, the plaintiff's
freedom to use his property as he sees fit
(i.e. to sleep at night) is diminished. And indeed the value of his property
may be affected by the existence of the persistently noisy neighbour.
What in broad terms do we
mean by nue? The kind of conduct ofte often constituting nuisance can be
readily illustrated.
It embraces interferences in use and enjoyment of land
by water, fire, smoke, fumes, gas, noise, heat, electricity, vibrations,
disease and any other similar incursion into another's property. But the
term 'nuisance' is used in a number of different
senses by judges sometimes
producing confusion in the development and exposition of the tort. First
'nuisance' may simply
describe what is going-on on the defendant�s property.
The burning of rubble, the collection of a foul smelling heap of refuse
may
be styled 'a nuisance'. Second, 'nuisance' may be the term given to the
effect on the plaintiff's land. The fire
spreading across the boundary, the
stench wafting across the garden will be seen as 'nuisance'. Thirdly,
nuisance is
used to connote legal liability. The court may find that the
interference caused by the spreading fire or the persistent stench
constitutes a legal nuisance in respect of which the defendant is liable in
tort and may be ordered both to compensate
the plaintiff and to refrain from
repeating the nuisance. Great care must be taken to understand exactly what
is meant
by nuisance in any particular context.
It can be seen then that not
y interference in the plaintiff's interest in enjoyment of t of his land
constitutes a legal
nuisance. Much will depend on the character of the
defendant's conduct. Was his conduct or use of his own property unreasonable
in the light of its adverse impact on the plaintiff's interests? In the
majority of cases of private nuisance, some 'fault'
on the part of the
defendant must be demonstrated. That 'fault' may well result from
carelessness, for example, I light
a bonfire inches from my neighbour's
fence on a hot summer's day. I then go out for the afternoon and the fire
spreads
engulfing the fence and my neighbour's shrubs. But nuisance can
result as much from intentional as negligent conduct. If I
persist in
practising the saxophone in the early hours of the morning, knowing the
walls between my home and my neighbour's
are thin, I commit a nuisance. And
indeed taking all reasonable care to avoid nuisance may be insufficient to
avoid liability.
A factory which does all that is feasible to limit the
noise of lorries coming and going through the night may nonetheless
find
itself liable in nuisance for the disruption to the peace of the
neighbourhood. "
uthor points out at page
349 that the normal remedy often sought by the Plaintiff is f is an injunction
which is a matter
of discretion by the Court and not damages. But unlike in
trespass, damage must be proved in order to succeed in nuisance.
Unfortunately in this case, there is no evidence of nuisance. It therefore
follows that there is no evidence of damage.
I find that the Defendants
committed no nuisance against the Company and Mrs. Meiners.
Conversion
Also, e alternative, is the
allegation of conversion of goods and chattels belonging to theo the Company and
Mrs. Meiners
contained in paragraph 22C of the Statement of Claim. Again,
the law of conversion is well discussed in Chapter 4 of Street on Torts
by Margaret Bazier, Ninth Edition, 1993. At page 39, the author defines
"conversion" as "an intentional
dealing with goods which is seriously
inconsistent with the possession or right to immediate possession of another
person".
At pages 39-40, the author says,
"The tort protects the
plaf's interest in the dominion and control of his goods; it d it does not
protect his interest
in its physical condition. It follows, therefore, that
the tort is much concerned with problems of title to personal property.
Indeed, many cases on conversion are in essence disputes on title which
often involve complex rules of commercial law.
Consequently, this subject is
one of the most difficult in the law of torts.
The plaintiff muse
either possession or the right to immediate possessssession. English law in this
respect favours possession
at the expense of ownership. For example if a
landlord has rented out furnished accommodation for a fixed term and a third
party commits an act of conversion in respect of some of the furniture, the
landlord has no right to sue in conversion,
although the tenant may."
In this case, the Company and
Mrs. Meiners failed to set out the particulars of the good chattels
converted ated and the
exact acts of conversion. Everything done by the Receivers
were authorised by the terms of the First Order and the Second Order
combined as in the case of the claim in trespass above. Any right in
possession or immediate possession was clearly vitiated
by the effect of the
First and Second Orders of the Court combined. The claim for conversion of
goods and chattels therefore
fails.
Negligence
<
In approaching the allegation of
nence, I would narrow it down to professional negligence to e to see whether
or not this
case is one of professional negligence on the part of the
Receivers or their agents. There is of course a different standard
of test
in the ordinary case as opposed to the case which involves special skill.
The different standards of test was
clearly set out by
MCNAIR. J. in
Bolam v
Friern
Hospital Management Committee
[1957] 2 A.E.R. 118. At page 121,
His Lordship said,
p class="MsoNoMsoNormal" style="margin-top: 1; margin-bottom: 1">
Is this a case of professional
negligen would think not in the strict sense. As Receivers appointeointed by
the Court,
they were officers of the Court and accountable to the Court.
They were not retained by the Company and Mrs. Meiners to provide
them
services for a fee as professional practising accountants. There is no
relationship between the Receiver and the
Company and Mrs. Meiners. The
Receivers were simply carrying out duties conferred upon them by the Court.
This does not
however mean that they are not open to liabilities that may
arise out of their conduct as Receivers. At page 240, R. WALTON
IN Kerr
on Receivers, Fifteenth Edition, 1978, points out that,
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"As a receiver is a principal
he appears to rsonally liable, but with aith a right of indemnity against
the assets,
to the persons, not parties, in respect of torts committed by
him, or by persons in his employment in the ordinary course of
their duties,
though if the act complained of is done under the express directions of the
court, it seems that the person
aggrieved should not sue the receiver; but
should apply in the action; this is the more convenient course in cases of
alleged trespass. If the act complained of is not specifically authorised,
but is merely committed in the course of the receiver's
duties, e.g. where
his servant negligently injures a third person, the injured person may sue
the receiver, and it seems,
without leave of the court, though it can never
be improper to apply for such leave. In all such cases the receiver should
apply for leave to defend at the cost of the estate."
It is interesting to note that
in this passage is the principle that liabili third persons does not
t
include the parties
to the dispute. In this case, the disputing parties are
the Meiners and Mr. Bayley. It is therefore doubtful in my view whether
or
not the Meiners could sue the Receivers directly for negligence as third
persons. It is also not clear whether or
not the Company could sue the
Receivers directly for negligence. In a receivership situation the Company
is totally paralysed
of its powers etc as regards the matters under
receivership. However, even in the case of a suit by a third party, the
standard of test for professional negligence above would still, in view,
apply in this case. That is to say, the Receivers
conduct must be measured
according to the standard of the ordinary skilled receiver exercising and
professing to have
the skill of a Court appointed receiver. The affidavit of
Douglas McCluskey dated on 23/3/91 in support of the appointment
of Mr.
Barber as the Receiver did confirm that Mr. Barber was a Chartered
Accountant, a registered Company liquidator
and receiver. Messrs Elliot,
Douglas McCluskey, and Didlick were equally qualified to perform the duties
of a receiver
appointed by the Court.
The allegation of nence was
presented throughout the Statement of Claim. In dealing with the particulars lars
of negligence,
it is important to bear in mind the terms of the first Order
and second Order combined. The powers and duties of the Receivers
emanated
from those two Orders of the Court. Paragraph 2 of the first Order gave the
Receiver and his agents all the
powers, rights and obligations of an
Official Receiver or liquidator of a Company without limitation to operate
any or
all businesses of the Company. Paragraph 1(b) of the second Order
amended paragraph 2 of the first Order by deleting it and
replacing it with
a new paragraph 2 giving the Receivers the normal powers and obligations
incidental to a Receiver and
adding specific powers to carry on and manage
every business of the Company including the powers, rights and obligations
mutatis mutandis of the Official Receiver liquidator and Special Manager of
a Company under the Companies Act (Cap. 175). Paragraph 17(b) of the
Statement of Claim seems to suggest that it was inappropriate in this case
for Mr.
Bayley to ask the Court to appoint a Receiver under Order 53 of the
High Court Rules or under the provisions of the Companies Act. The proper
thing would have been to ask the Court for a winding up order under the
provisions of the Companies Act. This was not the advice given to Mr. Bayley
by his solicitor, Mark McCluskey, although the winding up option was always
there. Mr. Bayley's intention was not to kill the Company but to find ways
of getting the Meiners to Board Meetings in
order to discuss matters and
make decisions for the benefit of the Company and its shareholders. Was Mr.
Bayley wrong
in law in doing what he did? I do not think so. I say this on
the authority of two cases decided in 1873. In Featherstone v Cooke
[1873] L.R. 16 Equity 298, the Court intervened and appointed a Receiver to
protect the property of the Company. The
problem was that there was so much
disagreement amongst the Directors of the Company that Directors Meetings
had not
been held. At pages 301-302 SIR R. MALINS V.C. said,
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"With regard to pr
partnerships, nothing is of more frequent occurrencerence than the quarrels of
partners. If parties
quarrel, oust each other from the management, or so
conduct themselves that the partnership cannot go with advantage, it is
every day's practice for the Court to interfere by injunction, and appoint a
receiver if necessary. With regard to public
companies, I apprehend the same
principle is applicable. If a state of things exists in which the governing
body are
so divided that they cannot act together, and there is the same
kind of feeling between the members as there is frequently
in the case of
private partnerships, it is clearly within the rule of this Court to
interfere, and it will do so. I have
referred already to the case of the
Trade Auxiliary Company, where there being quarrels between the
directors, in which one set being in possession of the office shut the doors
against the others, and those who were excluded employed Irish labourers to
ram the door down, and when they got in tried to
exclude the others. I
interfered, I believe, with great advantage, by appointing a receiver and
manager, excluding them
all from any voice in the matter until a meeting had
been held and appointed a governing body, and when that was done I
discharged the receiver, and left the management of the property, as it is
at this moment I believe, in the hands of directors
selected by the body of
shareholders."
lass="MsoNoMsoNormal" style="margin-top: 1; margin-bottom: 1">
The other was Three Auxiliary
Company v Vickers [1873] L.R. 16 Equity 303 where there was also
disagreement between the Directors and the Court appointed a Receiver for a
time. At page 305, SIR R MALINS V.C. said,
"This case, above all others,
strongly illustrates the danger nger of departing from principles which ought to
be
well settled. Those principles are, I apprehend, what I laid down in
Featherstone -v- Cooke, that the Court will not interfere with the
internal affairs of joint stock companies unless they are in a condition in
which there is no properly constituted government body, or there are such
dissensions in the governing body that it is impossible
to carry on the
business with advantage to the parties interested. In such a case the Court
will interfere, but only
for a limited time, and to as small an extent as
possible."
R. WALTON page 55 of Kerr on
Rece, Fifteenth Edition, 1978 says,
"The appointment of a
receiver over the undertaking ssets of a company incorpororporated under the
Companies Act
1948, or the Acts which it replaces, is usually made upon the
application of mortgagees or debenture holders. The appointment
may, in
cases of jeopardy, be made at the instance of contributories or the company:
thus a receiver and manager was
appointed for a limited time where disputes
between directors had led to a dereliction in the management; similarly
where
there was no governing body a receiver was appointed pending a general
meeting. The appointment will not be made where winding
up is a more
appropriate remedy"
It is against the above background that I now deal with each of the
particulars of negligence set out in the Statement
of Claim.
a) Was it a duty of the
Receivers to have investigateela's claims or the basis for their
appointment?
This is clearly the implication
of paragraphs 17(a) and (c) and 22 (iii) of the Statement of Claim.
Thi This is a wild
and unfounded claim. The Company and Mrs. Meiners failed to
prove this claim on the balance of probability. They produced no
evidence
nor cited any law on this. Mr. Bayley's claims in his affidavit of 23/3/91
were for the benefit of the court
drawn up by his solicitor, Mark McCluskey.
At that time, the relationship between Mr. Bayley and Mark McCluskey was
that
of lawyer/client relationship. Mr. Barber at that time was independent
of Mr. Bayley and Akeela. He was simply agreeing to
be a Receiver if the
Court should see fit to appoint him. The same is true of Douglas McCluskey
when he was appointed
a Joint Receiver by the Second Order of the Court. The
Receivers were not the legal advisers to Mr. Bayley and Akeela so that
they
would be expected to be mindful of putting to the Court fraudulent claims.
It is not disputed that the Receivers
are both accountants by profession. If
there had been any doubts about the professional integrity of the Receivers
(which
is not), there can be no argument about Mr. Elliot's ability and
professional integrity when he and Douglas McCluskey took
possession of the
Company's premises at Gizo on 26/3/91. Although Mr. Barber was the Receiver
in the first place later
joined by Douglas McCluskey, he was never in
Solomon Islands. The receivership was physically conducted by Messrs Elliot
succeeded by Mr. Didlick and Douglas McCluskey. There is no evidence to
suggest that they were not fit and proper persons
to do the job on behalf of
Messrs Barber, and Douglas McCluskey, the Receivers. It was not the duty of
the Receivers
to bend over backwards and investigate the basis of their
appointment as Receivers. That would have been the function of the
Court in
weighing the evidence before it. The terms of the First and Second Orders
combined were the guiding stars for
the Receivers. The evidence of Mr.
Robert Burns (DW16), the expert in receivership matters supports that view.
Mr. Elliot
(DW6) does not disagree.
b) Did the Receivers neglect the
Matthew and Island Enterprises litigations?
This allegation isained in
paragraphs 18(b), (c), (d) and (f) and 22(vii) of the Statement of Claim.
m.
The case of
Peter Alexander Matthew v Reef Pacific Trading Limited
(Civil Case No. 65 91) was commenced by a Writ of Summons dated 2/4/91. The
claim was for the amount of A$57,356.92 for
breach of contract of
employment. There being no appearance by the Company, a judgement in default
of appearance was
entered against the Company for the sum claimed. The
judgment debt being unpaid, a Writ of Fieri Facias was issued on 1st
May, 1991. Douglas McCluskey as one of the Receivers became aware of the
litigation through Ms Corrin, the solicitor
for the Plaintiff. By way of
further correspondence, Douglas McCluskey was able to get some more
information from Ms
Corrin but was not aware of the judgement in default of
appearance until 24/4/91. Immediately, Mr. Kama was instructed to file
an
application asking the Court to set aside the judgement in default of
appearance. This Mr. Kama did on 1st May, 1991 and succeeded. In
setting aside the judgment, the Court ordered that the Company file its
defence with 21 days,
that is, by 3/6/91. Due to lack of insufficient
instructions from Mr. Meiners, Mr. Kama was unable to file the defence
within time. Mr. Kama again filed an application by Summons on 4/6/91
seeking extension of time to enable the Company to
file its defence.
However, before the hearing of the Summons was due, a judgement in default
of defence was again entered
against the Company. In the meantime Mr. Kama
was able to obtain sufficient instructions from the Meiners. Mrs. Meiners
gave instructions that the Company would admit liability for A$12,737.21.
Mr.Kama again filed an application by an amended
Summons on 19/6/91 to set
aside the judgement in default of defence and further extension of time. At
the hearing of
the summons on 20/6/91, the Court again set aside the
judgement in default of defence and ordered that the Company file its
defence within 3 days. The Court also ordered that the admitted sum of
A$12,737.21 be paid within 14 days in default
of which the defence would be
struck out. Mr. Kama filed the Company's defence on 21/6/91. The Company did
not pay the
admitted sum of A$12,737.21 by 4/7/91 and the defence was duly
struck out. The Company did not have the money to pay. There
is therefore no
shard of evidence to suggest that the Receivers were negligent in conducting
this litigation. The evidence
given by Messrs Kama (DW3), Didlick (DW9),
Sullivan (DW15) and Burns DW16 clearly points to the fact that the Receivers
did their best and the right thing to defend the action against the Company.
The fact that the Company had no funds to meet
its admitted liability was no
fault of the Receivers. There is therefore no case to answer in this
allegation.
In the case of d
Enterprises Limited v Reef Pacific Trading Limited (Civil Case No.
119/9019/90), the Writ of Summons was filed on 4/6/90. The claim was for
$52,305.52 being money for the
supply of goods and services plus costs.,
Again, a judgement in default of appearance was entered against the Company
on 4/7/90. A Writ of Fieri Facias was also issued on 6/8/90 to enforce that
judgement. The judgement was later set aside on
17/9/90. The Court ordered
the Company file its defence within 10 days. The defence was filed on
27/9/90. On 20/3/91,
the Plaintiff filed interrogatories to be answered by
the Company within 21 days. The Plaintiff then applied by Summons dated
9/5/91 to strike out the Company's defence for failing to answer the
Plaintiff's interrogatories. Mr. Kama again appeared
for the Receivers at
the hearing of this Summons. The application was refused but the Court
ordered that answers be provided
by the Company within 14 days or else the
Company's defence would be struck out. The Receivers were not able to
provide
the answers to the interrogatories and would have to rely on the
Meiners to do this. Mr. Kama then consulted Mr. Teutao who
was the Company's
previous solicitor if he would release the relevant file for the purpose of
providing answers to the
interrogatories. Mr. Teutao promised to draw up the
answers but he never did and so Mr. Kama was forced to file another
application for extension of time by Summons on 24/5/91 returnable on
27/6/91. Mr. Meiners agreed to draw up the answers
and would fax them to Mr.
Kama. This he did on 20/6/91. The application was heard on 27/6/91 but the
Court reserved its
decision until 2/7/91 when it ruled that the Company's
defence was automatically struck out if answers to the Plaintiff's
interrogatories were not answered within 14 days. Mr. Kama's application for
further extension of time was therefore refused.
The Court's ruling was then
communicated to Mr. Meiners by Mr. Kama in a letter dated 3/7/91 (Exhibit
338). The next
day 28/6/91; the Receivers were discharged. It is clear from
the evidence of Messrs Kama (DW3), Didlick (DW9) and Sullivan
(DW15) that
the Receivers did their best to defend the action against the Company. They
were not negligent in any way.
The reason that caused the striking out of
the Company's defence was Mr. Meiners delay in providing the answers to the
Plaintiff's interrogatories to enable Mr. Kama, the solicitor for the
Receivers to file the answers in time. This fact was
made very clearly in
evidence by Messrs Kama (DW3) and Teutao (PW9). The real reason for the
curtailment of that claim
was an error committed by the trial judge as
pointed out by the Court of Appeal in Reef Pacific Trading Limited v
island Enterprises Limited (Civil Appeal No. 1 of 1992). There is again
no case to answer in this.
c) Was the restraining order
rigid and should the Rthe Receivers be held responsible for its
terms?
This allegation is contained in
paragraph 18 of tatement of Claim. There is no merit in this
allegatiegation. It is simply
a nonsense. Paragraph 4 of the First Order being
the restraining part of the Order simply said that the Meiners and Davinia
Philip must not interfere with the work of the Receivers. This did not mean
to exclude assistance from them when requested
or being consulted by the
Receivers. The assistance given by them to the Receivers in the conduct of
the litigation in
the Matthew case and Island Enterprises Case
above had not been impressive to say the least. I think this allegation must
have been premised upon the risk of
being held in contempt of Court. This
was indeed the explanation proffered by Mrs. Meiners in response to
cross-examination
by Ms. O�Reilly. An example of an act of interference with
the work of a court appointed receiver was explained by SWINFEN
EADY J. in
Dixion v Dixion [1903] UKLawRpCh 131; [1904] 1 Ch. 161 at page 163 wherein His Lordship
said,
"In my opinion, any
deliberate act calculated to destroy property under the management of the
Court by means of a
receiver and manager is an interference with that
receiver and manager, although it may not induce the breaking of any
contract. The object of the court is to prevent any undue interference with
the administration of justice, and when any one,
whether a partner in a
business, a party to the litigation, or a stranger, interferes with an
officer of the Court, it
is essential for the Court to protect that officer.
In my judgment, tampering with employees and inducing them to leave a
business that is being carried on under the direction of the court with the
view of taking employment at a business that
is being started in opposition
is an interference against which the receiver and manager is entitled to
protection."
/p>
The allegation therefore is if
no consequence.
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class="MsoNoMsoNormal" style="margin-top: 1; margin-bottom: 1">
d) Seizure mpany Books and
Records
This allegation is contained in
paragraphs 16(c) and (k) and 18 of the Statement ofm. It is couched in
t the most ambiguous
terms. Taking the Company�s statutory records first.
There is no evidence that the Company�s statutory records were removed
by
the Receivers. The Company's accountant Mr. Seda (PW5) said that he was not
certain whether the Company did in fact
maintain proper statutory records.
This fact was confirmed by Mr. Goh (DW1) that he discovered that the
Company's statutory
records were in a mess and had to correct them.
ass="MsoNoMsoNormal" style="margin-top: 1; margin-bottom: 1">
The only statutoruments
that came into the hands of the Receivers were copies of the certificate of
of
incorporation,
(Form 2) and return of allotment of shares (Form 4) (Exhibits
496 and 497). The rest of the books and records in Exhibit 497
are ordinary
Company books and records that also came into the hands of the Receivers by
reason of the receivership.
In fact, Mr. Elliot (DW6) denied seeing any
Company's statutory books and records at Gizo when he and Douglas McCluskey
packed the Company's books and records into a suitcase at Gizo. These
records were taken to Australia. The taking of the
Company's books and
records by the Receivers was a normal incident of any receivership
situation. This was the unchallenged
view of Mr. Burns� (DW16) evidence on
oath. I do not see that there was anything negligent about what the
Receivers did
this case. There is still the other aspect of this allegation
referred to in paragraph 16(k) of the Statement of Claim. That
is that the
Company and Mrs. Meiners assumed that the Receivers had removed the
Company's statutory records from the
jurisdiction between the date of the
receivership and 29/3/91. As far as the Company's statutory records are
concerned,
this assumption is incorrect. There is already evidence that this
is not the case. The other Company�s books and records were
indeed removed
by the Receivers to Australia by the Mr. Elliot. However, by virtue of the
Second Order, a list of the
documents were to be provided to the parties and
that such documents were to be made available in Honiara for inspection by
the parties. The dates for inspection of the documents were 13th
to 18th May, 1991. The Meiners failed to inspect them and
eventually Mrs. Meiners had to do it in Australia. Mr. Sullivan (DW15) in
evidence confirmed that there were no statutory documents in Barber's
possession which should have remained in Solomon
Islands under the
provisions of the Companies Act. The other documents in the possession of
Mr. Bayley removed by him
in 1990 on a previous visit to Gizo were simply
uncollated invoices kept in a box. They were not Company's books or records
etc. The point being made by the Company and Mrs. Meiners was that paragraph
6 of the Second Order allowing the documents
to be removed out of
jurisdiction was nonsense because the documents had left Solomon Islands as
early as 29/3/91. That
is to say, the Second Order in so far it concerned
the documents of the Company was a cover-up because, the documents were
never in Solomon Islands after 29/3/91. However, the fact was that due to a
Public Service strike, the document could
not be brought back to Solomon
Islands for inspection. Instead, Mrs. Meiners went to Townsville to inspect
them. After
the receivership was over, the Company books and records were
delivered into the possession of Mr. Bayley, a director who brought
them,
back to Solomon Islands in 30 boxes. The allegation is really of no
consequence.
e) Victory 2 and its product
This allegation is contained in
paragraph 17(g) of the Stateof Claim. The fact was that that Mr. Torpelund
had a lien
over the product in the freezer on board the Victoria 2. This of
course was disputed by the Meiners. However, Mrs. Warren (DW11)
in her
evidence confirmed that the lobster tails on board the Victory 2 were sold
in Australia for A$5,270.00. She said
she retained 25% of it as commission
and the balance went to Mr. Torpelund with the remaining balance going
towards the
cost of repairs to the navigation equipment on board the
Victoria 2 etc. She said at the time of the receivership the Company
owed
Pynchrome A$19,606.43 outstanding charter fees plus other costs. She said
that Mr. Torpelund also never received
his commission of 27% under the
Charter Agreement. She said Pynchrome received only A$5720.00 from the sale
of the lobster
tails. Mr. Elliot (DW6) also said in evidence that the other
reason why the Receivers allowed the product on board the Victoria
2 to be
taken to Australia and sold was that they did not have a better commercial
option. That is to say, they had no
freezers for storage at Gizo. He said
they however accounted for the disposal of that product in Australia. The
other
reason of course was to maintain a good relationship with Mr.
Torpelund for future purposes. The other allegation is that the
action taken
by the Receivers deprived the Company of its obligation to fulfil its
contract of supply of product in the
freezer on board the Victoria 2. The
fact is that the Receivers acted within their powers as officers of the
Court. R.
WALTON at page 165 of Kerr on Receivers , Fifteenth
Edition, 1978 says, "The effect of the appointment of a to paralyse the
powers of the company to deal with its property. The legal persona
of the
company, however, still subsists, and its powers in relation to the property
comprised in the appointment are
delegated to the receiver by his
appointment as manager with whatever limitations may be imposed by the
order: the powers
of the receiver in that event are discussed in Chapter 9.
The receiver is not, prima facie, an agent of either the company
or the
encumbrancers, but an officer of the Court exercising the company's power as
such, and as a principal." This position was further confirmed by Mr.
Burns (DW16) in evidence. The Receivers therefore were not duty bound to
honour
the contract the Company entered into with Reef Pacific (Sydney) Pty
Ltd. There is again no evidence of negligence against
the Receivers. (Also
see Moss Steamship Company Limited v Winney [1911] UKLawRpAC 38; [1912] AC 254 at 126,
263, 271-72 on the position of a receiver as regards contracts).
f) Carrying on Business
This allegation is contained in
paragraph 22(l) of the Statement of Claim. In anto cross-examination by
y
Mr. Suri,
Mr. Elliot (DW6) said the Receivers could not continue fishing
because they had no funds. Earlier on in evidence, Mr. Elliot
had said that
according to information from the Company's staff, the Company had not
traded for several weeks prior to
the date of the receivership. Mr. Elliot
himself saw the Gizo premises as not being consistent with the Company being
in operation. Mrs. Meiners herself admitted in evidence that in November,
1990, the Gizo plant was closed due to lack of funds.
She said by July 1990,
Mr. Bayley and Akeela had refused to fund the Company. She said in October,
1990, the Meiners
sought funds from Mr. Price of Sydney. This was also
confirmed in evidence by Mr. Meiners. Again, Mr. Meiners confirmed that
he
went to Sydney in November, 1990 after he had closed the factory. Mr. Price
also confirmed in evidence that Mr. Meiners
pleaded with him and his wife
Rosa Price to lend money to the Company and they complied. Mr. Meiners said
a loan for
A160,000 was arranged for the benefit of the Company. There was
obviously the case that any product in the Gizo freezers and
the crayfish on
board the Victoria 2 as at 25/3/91 probably belonged to Mr. Price. This
scenario was supported by the
Company's ANZ Bank Statements and diary notes
(Exhibits 373 and 440). Mr. Burns said in evidence that the decision to
carry on business as a going concern was a matter for the Receiver to decide
depending upon the circumstances of each case.
The fact was that there was
no money to enable the Receivers to carry on the operation. In answer to
cross-examination
by Mr. Suri as to why the Company would not go on fishing,
Mr. Elliot said that apart from there being no funds, Mr. Torpelund
was
nervous about the fact that the Company was in receivership and would not
have been excited about that option. In
answer to cross-examination by Mr.
Suri, Mr. Elliot maintained that same view. I do not therefore think that
there can
be any suggestion that the Receivers had been negligent in any way
in not carrying on the business as a going concern. They
demonstrated good
and valid reasons for not doing so.
g) Dismissal of Staff
<
This allegation is contained in
paragraph 18 and 22 (iv) of the Stnt of Claim. Mr. Burns in h in his
evidence said that
it was normal in receivership situation for the Receiver
to dismiss staff. In his evidence, Mr. Elliot said that he and Douglas
McCluskey agreed, dismiss the Directors and shareholders of the Company
because there was dispute between them and until
that was sorted out, the
Meiners and other executive of the staff should not remain as employees of
the Company. He again
said this was normal practice in receivership
situations. In answer to cross-examination by Mr. Suri, Mr. Elliot
maintained
that same view. That evidence was not challenged by the Company
and Mrs. Meiners. It stands. There is therefore no evidence
of negligence.
h) The position of Pric Waterhouse
The allegation in paragraphs
3,4,5 and 22 (xii) in the Statement of Claim assumes that the Receivers were
the agents of
Price Waterhouse. This is not the case. Messrs Barber and
Douglas McCluskey were appointed Receivers in their personal capacities.
In
his evidence, Mr. Elliot said, "well, the standard practice of all
practitioners who are registered liquidators who take appointments in
administrations,
court, or under the bench or whatever, they are partners of
a private practice. So whilst they take the appointment in their
name as
Richard Barber did, he is a partner of Price Waterhouse of which I am an
employee under the instruction of Barber
as the partner and my immediate
boss. I mean, he - its by virtue of his registration, etc, that he is the
appointed.
It's not Price Waterhouse as a firm, but it is the partner who is
then engaged as the individual who is engaged as a partner
of a practice,
and that�s the standard practice of all insolvency practitioners the world
over". He said the earnings would be the earnings of the individual in
his capacity as the Receiver on behalf of the firm which would
go into the
firm's account. Mr. Burns also said in evidence that a court-appointed
receivership was a personal appointment
and not a partnership appointment
supervised and controlled by the partnership. However, he said that the fees
earned
would be banked into the firm�s account but remuneration and costs of
the appointee would be part of the firm's cost. This
evidence stands
unchallenged. It is therefore a misconception for the Company and Mrs.
Meiners to allege negligence against
Price Waterhouse. The allegation
therefore fails.
i) Failure to close the
Receiver's Bank Account
lass="MsoNormal" style="mar="margin-top: 1; margin-bottom: 1">
class="MsoNoMsoNormal" style="margin-top: 1; margin-bottom: 1">
This allegationontained in
paragraph 22 (xi) of the Statement of Claim. There is no dispute that thet there
was a failure
to close the Receiver�s bank account. However, Mr. Burns said
that was not negligent although it should have been done. Also,
he said that
the money in the bank account would have been due to Mr. Bayley and Akeela
and not the Company. The Company
therefore suffered no loss as a result of
that failure. Again, this evidence stands unchallenged. The allegation
therefore
fails
j) Failure to produce a
bona-fide final account to the Court, the Registrar of Companies or
to the Company
The last report (Exhibit 332)
from the Receivers was filed on 27/6/91 one day before the Receivers were
discharged rged the
next day 28/6/91. It was obvious that this was their last
report before they were discharged. This was clearly stated in paragraph
11
of that report. The same view was expressed by Mr. Burns in his evidence. He
said that it was not unusual for the
final account to have a balance
outstanding (T.2927). I think allegation is of no consequence. It therefore
fails.
Mrs Meiners� Claspan>
