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In Re: Durant Radford and Co. Ltd (C.C. No. 242/1934) [1937] EACA 209 (1 January 1937)
- Citation
- [1937] EACA 209
- Status
- Judgment
- Jurisdiction
- Uganda
- Court
- East African Court of Appeal
- Panel
- Webb, J
- Case number
- C.C. No. 242/1934
- Language
- English
More details
- Court
- East African Court of Appeal
- Panel
- Webb, J
- Case number
- C.C. No. 242/1934
- Language
- English
On this page
Professional case brief
Research organized from the available case record
01
Holding and result
The court held that, in the absence of compelling reasons to the contrary, a winding-up order should be made in Kenya ancillary to the principal liquidation in England. The interests of all creditors, wherever situated, must be considered, and the court should avoid conflicts between jurisdictions. The powers of the provisional liquidator in Kenya are restricted to taking possession, collecting, and protecting assets, preparing a list of creditors, and discharging current expenses, pending further order. The court recognized the need to safeguard local assets and creditors but did not accept the argument that local assets should be exclusively reserved for local creditors. The costs of the petition are to be taxed and paid out of the company's assets, and liberty to apply is granted to the liquidator and creditors.
Court disposition
Order for winding-up granted; powers of provisional liquidator restricted pending further order.
Orders
- Order for winding-up of Durant Radford & Co., Ltd. in Kenya, ancillary to English proceedings.
- Acting Official Receiver constituted provisional liquidator with powers limited to asset protection, creditor listing, and payment of current expenses.
- No distribution or parting with assets until further order of the court.
- Costs of the petition to be taxed and paid out of company assets.
- Liberty to apply granted to the Acting Official Receiver and any creditor.
02
Material facts
Parties
Durant Radford & Co., Ltd.
Applicant Counsel: MathewsUnnamed creditor
Respondent Counsel: Hogan03
Procedural history
Posture
Company Winding Up / Judgment
04
Questions and positions
Legal issues
- 01
Whether the Kenyan court should order the winding-up of a foreign company already under liquidation in its country of incorporation.
- 02
Whether local assets should be applied first to satisfy local creditors before remittance to the foreign liquidator.
- 03
Whether the provisional liquidator in England has authority to present the petition in Kenya.
Party arguments
- Applicant
- The applicant argued that the winding-up in Kenya should be ancillary to the English proceedings, relying on section 316 of the Companies Ordinance, 1933, and English case law. It was submitted that persons dealing with a foreign company do not rely solely on its local assets, and even if local assets and liabilities are considered separately, local creditors would not be paid in full. The applicant sought an order for winding-up with restricted powers for the liquidator.
- Respondent
- The respondent, a creditor, objected on the basis that the assets in Kenya would suffice to pay local creditors in full and should be applied to their benefit first. It was argued that the English winding-up order does not affect the rights of creditors outside its jurisdiction, citing New Zealand Loan Co. v. Morrison. The respondent also questioned whether the English provisional liquidator had authority to institute proceedings in Kenya.
05
Court’s reasoning
Legal principles
- 01
New Zealand Loan Co. v. Morrison (77 L. T. 603)
Winding-up proceedings in a foreign jurisdiction do not affect the rights of local creditors unless expressly provided.
- 02
In re Commercial Bank of South Australia (33 Ch. D. 174); In re Matheson (27 Ch. D. 225)
Ancillary winding-up orders may be made in jurisdictions where the company has assets, with the local court ensuring no conflict with the principal liquidation and protecting local creditors.
- 03
Companies Ordinance, 1933, section 316
The court may restrict the powers of a provisional liquidator to asset protection and creditor listing pending further order.
06
Ratio, limits and disposition
Ratio decidendi
The court held that, in the absence of compelling reasons to the contrary, a winding-up order should be made in Kenya ancillary to the principal liquidation in England. The interests of all creditors, wherever situated, must be considered, and the court should avoid conflicts between jurisdictions. The powers of the provisional liquidator in Kenya are restricted to taking possession, collecting, and protecting assets, preparing a list of creditors, and discharging current expenses, pending further order. The court recognized the need to safeguard local assets and creditors but did not accept the argument that local assets should be exclusively reserved for local creditors. The costs of the petition are to be taxed and paid out of the company's assets, and liberty to apply is granted to the liquidator and creditors.
Obiter and limits
- The court is not prepared to assume that the Official Receiver has acted without proper authority in presenting the petition.
- Prima facie, winding-up should benefit all creditors, not just those in the local jurisdiction.
- Courts should ensure no conflict arises between concurrent liquidation proceedings in different jurisdictions.
Court disposition
Order for winding-up granted; powers of provisional liquidator restricted pending further order.
- Order for winding-up of Durant Radford & Co., Ltd. in Kenya, ancillary to English proceedings.
- Acting Official Receiver constituted provisional liquidator with powers limited to asset protection, creditor listing, and payment of current expenses.
- No distribution or parting with assets until further order of the court.
- Costs of the petition to be taxed and paid out of company assets.
- Liberty to apply granted to the Acting Official Receiver and any creditor.
Source and reliance status
East African Court of Appeal
This page organises the available record for research. Confirm quotations, current status, and subsequent treatment against the official source before relying on the case.
Judgment reading view
Judgment text
The complete available source text.
East African Court of Appeal
Judgment
ORIGINAL CIVIL
Before WEBB, J.
In re DURANT RADFORD & Co., Ltd.
C. C. No. 242/1934
- Company-Winding-up-Company incorporated in England-Order for winding-up by High Court in England—Assets and Liabilities both in England and in Kenya. - Held (18-12-34).—That an order for the winding-up of the Company should be made, such winding-up to be ancillary to the winding-up in England, and the powers of the liquidator being restricted (pending furher order) to (1) taking possession of, collecting and protecting the assets of the Company: (2) preparing a list of creditors: (3) discharging rents, salaries and other current expenses.
(In re Commercial Bank of South Australia (33 Ch. D. 174), and in re Matheson (27 Ch. D. 225) followed.)
Petition by the Company.
The Company was incorporated in England in September, 1906, it established a place of business in Kenya in 1919 and carried on business there, principally in coffee, down to October, 1934. The particulars required by section 277 of the Companies Ordinance, 1921, were duly filed with the Registrar of Companies. On the 23rd October, 1934, the Company presented a winding-up petition in the High Court of Justice in England and on the 5th November an Order was made that the Company be wound up and the Official Receiver be constituted provisional liquidator. The Company had ceased to carry on business both in England and in Kenya. The assets in Kenya consisted chiefly of sums due for advances on coffee to planters, which, owing to bad seasons were unrealisable im-<br>mediately, though, if realized they might suffice to pay in full all the creditors in Kenya.
Mathews, for the Company, referred to Companies Ordinance, 1933, section 316, In re Commercial Bank of South Australia (33) Ch. D. 174). Persons dealing with a foreign Company do not give credit in reliance on its local assets. Even if the assets and liabilities in Kenya are regarded as an entity the local creditors will not be paid in full.
Hogan, for a creditor objecting. On such information as we have the assets in the Colony will suffice to pay the local creditors in full: the local assets should be applied in the first instance to paying the local creditors who, if no winding-up order is made, could attach them. The winding-up order made in England does not affect the rights of persons who are not within the jurisdiction of the Court making the order: New Zealand Loan Co., v. Morrison (77 L. T. 603). It does not appear whether the provisional liquidator appointed in England has the leave of the Court to institute these proceedings.
JUDGMENT.—This is a petition by the Company for winding-up by the Court. The Company is incorporated in England and on the 5th November, 1934, an order that it be wound up was made by the
High Court of Justice in England and the Official Receiver was constituted provisional liquidator of the Company. But that order does not affect the rights of creditors of the Company who are resident in Kenya: New Zealand Loan Co. v. Morrison (77 L. T. 603): one of whom opposes the petition on the ground that such assets as the Company possesses in Kenya should be for the benefit of its creditors here, and the surplus (if any) transferred to the liquidator. It is further objected that proof has not been given that the provisional liquidator has been authorized by the Court to present this petition. This is so, but I am not prepared to assume that the Official Receiver has given instructions for the presentation of this petition without having obtained the necessary authority.
Whether or not it is the case that persons who give credit to a foreign Company carrying on business in the Colony have regard to its apparent assets in Kenya, or whether they do not rather have regard to the particulars which the Company is bound to furnish to the Registrar, I should have thought that prima facie a winding-up should be carried on for the benefit of all the creditors of the Company wherever situated, and that, where a winding-up order has been made in the country in which the Company is incorporated, some very special reason would have to be shown to justify a Court in another country in which it has carried on business, but has now ceased to do so, to refuse to make a similar order when such order is asked for. I am glad to find that this seems to be the view that has been taken by the Courts in England. In In re the Commercial Bank of South Australia, (33 Ch. D.
174) North J. in making an order for the winding up of an Australian Company, in regard to which a winding-up order had already been made in Australia, said "But I will say this that I think the winding up here will be ancillary to a winding up in Australia, and, if I have the control of the proceedings here, I will take care that there shall be no conflict between the two Courts and I shall have regard to the interests of all the creditors and all the contributories.". To the same effect was the decision in In re Matheson (27 Ch. D. 225), a New Zealand Company having a branch in London, in which Kay J. said, "I consider that I am justified in taking steps to secure the English assets until I see that proceedings are taken in the New Zealand liquidation to make the English assets available for the English creditors pari passu with the creditors in New Zealand.
There will be an order for the winding up of the Company, the Acting Official Receiver is constituted provisional liquidator of the affairs of the Company: and this Court doth hereby limit and restrict the powers of the said Acting Official Receiver as such provisional liquidator to the following acts, that is to say, (1) to take possession of, collect and protect the assets of the said Company but not to distribute or part with the same until further order: (2) to prepare the list of the creditors of the said Company: (3) to discharge rents, salaries and other current expenses: And it is ordered that the costs of the said Company of the petition be taxed and paid out of the assets of the said Company: And the Acting Official Receiver and any creditor of the said Company are to be at liberty to apply as they may be advised.
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