Re Televest Ltd

JurisdictionBermuda
Judgment Date06 June 1994
Docket NumberCML Jurisdiction 1993 No. 554,Civil Jurisdiction 1994 No. 199
Date06 June 1994
CourtSupreme Court (Bermuda)

In the Supreme Court of Bermuda

Ground, J

CML Jurisdiction 1993 No. 554

Re Televest Ltd.

In re Koscot Interplanetary (UK) Ltd.UNK [1972] 3 All ER 829

In re Travel and Holiday Clubs Ltd.WLR [1967] 1 WLR 711

In re Armvent LtdWLR [1975] 1 WLR 1679

Companies Act 1981, s. 110

Preliminary ruling — Provisional liquidation — Admissibility of evidence — Admissibility of reports of provisional liquidators — Whether statutory inspectors should be produced for cross-examination on their report as a condition of its admissibility — Hearsay

RULING

I had prepared a ruling on that issue [that is, whether statutory Inspectors should be produced for cross-examination on their report as a condition of its admissibility]. I am going to give it in a truncated form for this reason: It impacts generally upon the question of hearsay in these proceedings. Yesterday I made a short ruling on the question of the Scott Hunter letter, and the embodiment of that in the report of the Joint Provisional Liquidators. In giving that short ruling I said words to the effect that it was up to Mr. Hall to show some reason why I should insist on the witness being called. In looking into the question of Inspectors' reports I find that the question of their reports and the question of hearsay are quite closely interlinked, and I am going to use this opportunity to revisit and give more full reasons for the ruling I gave in respect of the Scott Hunter letter.

There is in fact quite a settled line of cases on all of this which I have looked at. I have done it without the benefit of argument from counsel, but as the principles seem quite clear, I am going to risk it in any event.

The primary principle is that there is no general rule that hearsay is admissible on a petition for the winding-up of a company, and that derives from In re Koscot Interplanetary (U.K.) Ltd.[1972] 3 All ER 829. There are two exception to this: The affidavit verifying the petition and the report of statutory Inspectors. The affidavit verifying the petition is excepted by reason of the wording of the rule which refers to them, which says that they ‘shall be sufficient prima facie evidence of the statements in the petition:’ see Winding-Up Rules, rule No. 21.

Inspectors' reports, or at least the facts contained in them, are let in by a line of cases. These are based on U.K. law, and in relying on them I do note that there are significant distinctions between the statutory scheme here, and that in the United Kingdom, most notably that here the minister cannot present a petition either based on the Inspectors' report, or at all. Nevertheless, having considered the differences, I still think that there are sufficient similarities for that common law line of cases, in general, to apply.

In any event in Bermuda we have s. 110 (9) of the Companies Act 1981, which permits Inspectors' reports to stand as evidence of their opinion. Their ‘opinion,’ I note, not necessarily of the facts contained in the report, though they may be let in by the common law. In the event I do not have to go in to that and consider it.

There are some principles in those cases that I find helpful when considering the reports of Provisional Liquidators. The principles have developed over the years since 1962, and I will summarise them very briefly. They are that if the Inspectors' report is unchallenged the Court can rely on it with out more. That derives from In re “Travel and Holiday Clubs Ltd[1967] 1 WLR 711, per Pennycuick J. A challenge in order to defeat that basic rule has to be more than just a refusal to accept the report; has to be more than counsel saying that they take issue with the whole thing. It means that somebody with knowledge of the facts has to come along and swear an affidavit in opposition to the report, and has to condescend upon particulars. I derive that from the case of In re Armvent Ltd. [1975] 1 WLR 1679 per Templeman J (as he then was). I cannot help but note that, at least in these matters, Lord Templeman (as he now is) tends to set the tone of the House of Lords in considering commercial matters, particularly company matters. In that case Lord Templeman went on to say that, in his view, even if there is a challenge in the sense of affidavit evidence being filed, the report is still prima facie evidence which the judge can take into account and weigh in the balance. That was followed by Dillon J in In re Piran[1981].

In any event, the cases say, and I do not now make much of this, but I point out that Mr. Justice Pennycuick in In re Travel & Holiday Clubs (supra) said that it was inappropriate for statutory Inspectors to come along and be cross-examined, and for that reason their report could go in as hearsay. But for that reason he also developed the principles relating to evidential challenge. I do note that in all those cases the Inspectors had carried out wide and far ranging investigations, sometimes over a year, and it is said here that that is not the case.

As I said, I consider some of those principles of assistance when considering the reports of Provisional Liquidators. I accept that such reports are not statutory creatures, at least not in this jurisdiction, but the Provisional Liquidators are officers of the Court and they do have first hand access to the underlying materials in the hands of the company.

In respect of the Scott Hunter letter, it was contained in Exhibit 17 to the report of the Joint Provisional Liquidators, which itself was put into evidence by a covering affidavit of one its makers, Mr. Charles Kempe. As far as I understand, I can be corrected if I am wrong on this, there is no affidavit challenge to the letter or to the assertion based on it, and that assertion is not just in the letter itself, but it is embodied in the body of the report.

Normally hearsay evidence requires a notice under the provisions of the Rules of the Supreme Court, Order 38 rule 21. This rule does not apply in the case of statements contained in affidavits (see rule 21 (4)), although that exception itself does not apply in the case of statements contained in the exhibits to affidavits. I derive that from In re Koscot, a (supra) decision of Mr. Justice Megarry (as he then was).

However the Court has a residual discretion to admit hearsay under Order 38 rule 29(1), and that has a statutory foundation. That discretion, of course, must be exercised judicially. I think, by analogy with Inspectors' reports, that the reports of Provisional Liquidators, who are officers of the Court, should be accorded a certain respect, unless challenged in the sense referred to by Templeman J in In re Armvent. It is not enough for counsel to do this in the pleading sense of saying ‘I put you to strict proof of that.’ He has to adduce some evidence to justify the parties and the Court embarking on the enormous expense of public money and company funds which strict proof would entail. If the report is challenged in that way, then I consider that the challenged aspect should be proved properly and strictly.'

In saying all this, I do not purport to lay it down as a rule, but simply as a factor which can be taken into account in exercising the discretion under r. 29(1) in this sort of case, and which I am going to take into account, indeed have taken into account, in exercising my discretion in this case in respect of the evidence pertaining to Scott Hunter.

I have already noted that there was no affidavit challenge to the statement in the report and the accompanying letter. Even if exhibits to affidavits are not within the strict affidavit exception to the rule requiring notice of intention to give hearsay in evidence, the fact that the affidavit has been sworn, filed and served well in advance, has in fact given ample notice of the intention to rely upon that evidence, and has therefore afforded an opportunity for it to be addressed, and if necessary (if possible) challenged on affidavit.

In those circumstances I am going to take those factors into account, and exercise my discretion in this instance to allow the evidence, notwithstanding that no notice was served. I in fact did that yesterday, but as I explained at the outset, I have expanded my ruling by these short reasons.

Richard Ground

26.4.94

In the Supreme Court of Bermuda

Meerabux, J

Civil Jurisdiction 1994 No. 199

Hotel Employer of Bermuda
Plaintiff

and

The Bermuda Industrial Union
First Defendant

and

Ottiwell Simions
Second Defendant

Mr. G. Bell, Q.C.for the Plaintiff

Mr. A. Hodgson for the Defendants

Mercury Communications Ltd v Scott-GarnerWLR [1983] 3 WLR 914

Bonsor v Musicians UnionUNK [1955] 3 All ER 518

Engineers' and Managers' Association v Advisory, Conciliation and Arbitration Service (No.1)UNK [1979] 3 All ER 223

Taff Vale Railway Co. v Amalgamated Society of Railway ServantsELR [1901] AC 426

Olivier v ButtigiegUNK [1969] 2 All ER 459

Collymore v Attorney GeneralUNK [1969] 2 All ER 1207

Gouriet v Union of Post Office WorkersUNK [1977] 3 All ER 70

Khawaja v Home SecretaryUNK [1983] 1 All ER 765

Labour Relations Act 1975, s. 40

Bermuda Constitution Order s. 1

Restraining injunction — Labour dispute — Role of the Court — Locus standi — Whether trade union was a person — Definition of “person”— Definition of “labour dispute”— Unlawful strike — Award of Essential Industries Dispute Settlement Board — Constitution — Right to strike

REASONS FOR RULING
ORIGINATING SUMMONS

By an Ex Parte Originating Summons dated 27 May 1994 the Plaintiff sought against the Defendants, inter alia—

  • (a) that the First Defendant, the Bermuda Industrial Union, by itself, its officers, its shop stewards, its servants or agents, and the Second Defendant by himself, his servants or agents, be enjoined and restrained by injunction from engaging in any unlawful strike or strikes, or unlawful irregular industrial action short of a strike against the services...

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