Re Bermuda Workers Co-Operative Society

• Jurisdiction: Bermuda
• Judgment Date: 28 April 1998
• Docket Number: Civil Jurisdiction 1997 No. 438
• Date: 28 April 1998
• Court: Supreme Court (Bermuda)

In the Supreme Court of Bermuda

Ground, J

Civil Jurisdiction 1997 No. 438

Mr. Delroy Duncan for the Society;

Mr. A. Martin for certain creditors; and

the Solicitor General for the Registrar of Companies.

Keys v Boulter (no.2)UNK [1972] 2 All ER 303

Re Lead Company's Workmen's Fund SocietyELR [1904] 2 Ch.196

Re St. James's Club (1852) 2 DeGM&G 383

Companies Act 1981 s. 3

Bankruptcy Act 1989

RSC 1985 Ord. 30; O. 32 r. 6; O. 36 r. 6(1); O. 45 r. 7(4), r. 5(1); O. 51 r.3

Supreme Court Act 1905 s.19(c)

Companies (Winding-Up) rules 1982, Form 13

Application of the Registrar of Companies to set aside order to wind up — Unincorporated body with no surplus funds — Appointment of receiver — Definition of ‘Official Receiver’

RULING

Background

This matter comes before me on the application of Mr. Kymn Astwood, who is inter alia the Registrar of Companies, to set aside an order of this court made on the 19th of January 1998.

The Order of 19th January 1998 provided that the Bermuda Workers Co-operative Society (‘the Society’) should be wound up pursuant to section 15 of the Supreme Court Act and the inherent jurisdiction, and that ‘the Official Receiver of Bermuda’ be appointed Receiver and Manager over the assets and business of the Society with powers to get in the assets. It was made upon the Petition of the President of Society, and pursuant to a resolution of the membership passed at a meeting of the Society.

The background in brief is that the Society was an unincorporated body, formed for the purposes of owning and operating a consumer co-operative for the economic benefit of its members (see Article II of the Society's Constitution). It is not clear when it was established, but according to the Petition, its constitution was framed in August 1978, and the supermarket which it operated opened for business in 1980. The most recent list of the membership contains approximately 1200 members. As at the date of the Petition the Society had debts of approximately $1.4M, many of which appear to be trading debts, although the list of accounts payable includes $105,931.47 to the Tax Commissioner; $40,387.20 for social insurance; $58,311.41 to the BIU gas station; $330,000 for loans from the BIU; and $94,597 for rent to the BIU. Otherwise many of the creditors are for small amounts, although at the time of the Petition three of the larger ones had issued writs totalling approximately $350,000, and they appeared before me (nobody objecting) by Mr. Martin.

The assets of the Society appear to be minimal. $18,000 was apparently raised from sale of stock. Otherwise I know of none, and it apparent that there is going to be a very substantial shortfall.

Against that background the Society itself applied to the Court on Petition to wind it up, and for the appointment of the Official Receiver as receiver.

There are obvious difficulties with such an application. Because the Society is unincorporated it falls, by definition, outside the statutory scheme for winding up by the Court contained in the Companies Act 1981. Because it is not an individual, the Bankruptcy Act has no application to it. There is no other statutory scheme for the resolution of its affairs. However, the Society relied upon the case of Keys -v- Boulter (No. 2)[1972] 2 All ER 303, as demonstrating that the Court has jurisdiction to wind-up an unincorporated association. I will return to the ambit of that case later.

The application sought the appointment of a receiver. Certainly, the Supreme Court has power to appoint receivers under section 19(c) of the Supreme Court Act 1905. However, it is apparent from the submissions before me that the Society, and indeed the larger creditors, envisaged something more than the usual receivership, and were hoping by the combination of a winding-up order and the appointment of a receiver, to achieve a scheme for the liquidation of the affairs of the Society which would be analogous to a winding-up under the provisions of the Companies Act.

Whatever their intent, the Order of 19th January 1998 does not purport to effect that, because it does not incorporate the statutory provisions by reference or otherwise, and the powers conferred upon the receiver by the Order itself were not themselves extraordinary, being largely limited to getting in and preserving the assets.

The Position of the Official Receiver

Prior to the making of the Order of 19th January no-one asked the Official Receiver if he was willing to act as receiver in this matter. He was not served with notice of the proceedings which lead to the making of the Order, and the...