RE S. ZHONG SHAN INTERNATIONAL INVESTMENTS CO LTD

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J U D G M E N T

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Penlington, J. A.:

1. On 29th September, 1989 an order was made by Mayo, J. for the winding up of the Appellant company on the grounds that it was unable to pay its debts. The petitioner was Mr Percy Kok Seng Chan at the same time Mayo. J. refused a stay of execution pending the hearing of an appeal against that order. The Appellant company now renews that application for a stay.

2. Mr. Loughran, who appears for the Appellant company here, argues that there are goods grounds of appeal on the basis that the learned judge below has not exercised his discretion upon proper principles but that the appeal cannot be heard before March, 1990. If the winding-up goes ahead then it would mean that the appeal, if successful, would be overtaken by the steps that the liquidator will have already taken.

3. The position as regards the stay of a winding-up order pending appeal is set out in the dicta of Plowman J. in Re A and BC Chewing Gum Ltd [1975] 1 A.E.R. 1017 at 1029. This dicta has now been approved in subsequent cases. He said,

"As I understand it, the position is this. First of all, as a matter of jurisdiction it is quite clear that I have jurisdiction to grant a stay, because the Companies Act 1948 says so. It says I can grant a stay on proof to my satisfaction that the proceedings ought to be stayed. But then there is the question of practice, and as a matter of practice a stay is never granted. The only exception that I think is known to the Department of Trade is where I myself once went wrong in the Westbourne Gallaries case, and not having been alerted to the position, and not knowing it before, I granted a stay, with precisely what consequences nobody has ever told me. But there are very good reasons for the practice of never ordering a stay, and they are these: as soon as a winding-up order has been made the Official Receiver has to ascertain first of all the assets at the date of the order; secondly, the assets at the date of the presentation of the petition, having regard to the possible repercussions of s 227 of the 1948 Act; and thirdly, the liabilities of the company at the date of the order, so that he can find out who the preferential creditors are, and also the unsecured creditors."

4. Mr. Loughran has cited to me some authorities which are set out in Pennington's Company Law, 5th Edition, at p. 873. There the learned author says:

"A winding up may be stayed in this way at the request of the contributories if all the creditors of a company have been paid in full, or if adequate provision has been made for the few creditors who nave not been paid and whose claims are not admitted by the company, or if all the creditors have agreed to an arrangement with the company for the satisfaction of the claims. But a stay of the winding up proceedings will not be ordered unless the liquidator's remuneration and expenses have been paid or provided for, nor unless the application for a stay is either supported by an overwhelming majority of the contributories, or is reinforced by a scheme of arrangement which has been approved by the court and is consequently binding on all the contributories. See Re Calgary and Edmonton Land Co Ltd [1975] 1 A.E.R. 1046."

Even if this passage widens somewhat Plowman J's dicta, none of these conditions are present here. I am also satisfied that no harm will be done, even if the appeal succeeds, by the liquidator immediately beginning to carry out his duties. Accordingly this application must be refused.

5. As regards the question of costs I am informed that if an order is made that the costs be paid by the company from its assets they will in fact not be paid as it has no such assets. Mr. McInnes suggested that there should be an order that the costs be paid by the director who has brought the proceedings. I am satisfied that such an order should here be made, and accordingly I direct that the costs of this application be paid by Mr. Luis Chang Soh.