MAN KOU TAN AND ANOTHER v. TIMEWIN DEVELOPMENT LTD

HEADNOTE

A debenture under seal conferred power on the receivers appointed under it to carry any sale into effect by assigning the company's property in the name of the company, with ancillary powers to do all things incidental and conducive thereto. It contained the usual provision constituting them agents of the company, but no provision appointing them as attorneys for the company to execute deeds on its behalf.

HELD : Notwithstanding the absence of any provision appointing the receivers as attorneys for the company, the receivers had power to seal, with their own seals, a conveyance in the name of the company.

1987, No. M.P. 1786

IN THE SUPREME COURT OF

HONG KONG

HIGH COURT MISCELLANEOUS PROCEEDINGS

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JUDGMENT

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1. This is an application by joint receivers under Section 298A of the Companies Ordinance, Chapter 32, which provides as follows:

"A receiver or manager of the property of the company appointed under the powers contained in any instrument, or a holder of debentures of the company, may apply to the Court for directions in relation to any particular matter arising in connection with the performance of the functions of such receiver or manager, and on any such application, the court may give such directions, or may make such order declaring the rights of persons before the court or otherwise, as the court thinks just."

2. This application gives rise to a number of points, procedural and substantive. I shall deal first with the procedural points.

3. First, the title of the proceedings is of the usual inordinate length. It would have been quite sufficient to refer (1) to the company and (2) to section 298A of the Ordinance. Everything else is unnecessary.

4. Secondly, it would have been sufficient to describe the applicants (it is not appropriate to describe the receivers in this sort of proceeding as "plaintiffs") by their names alone, without a description in the title of the capacity in which they act.

5. Thirdly, the correct respondent (not "defendant") should have been the company itself, that is to say, C.C. Tse (Estates) Limited. ("the company"). Timewin Development Limited ('Timewin"), who is named as "defendant", is merely a person proposing to enter into a contract with the receivers. This is not sufficient to give Timewin any interest in the subject matter of the proceedings (in the legal, as distinct from the commercial, sense). The position would have been different if the receivers had entered into a contract with Timewin and were now seeking the assistance of the Court in relation to that contract. As it is, the interest of Timewin is a hypothetical, or future, interest; which is not enough.

6. The first and second procedural points mentioned above do not give rise to any particular difficulty; but the third point does. It is clear from the evidence that the company will not take any active part in the proceedings and in these circumstances I will grant the application made at my suggestion by the receivers today to strike out Timewin as a party and substitute the company in its place; and I will dispense with service of the proceedings on the company. The proceedings are therefore now properly constituted.

7. The facts are as follows.

8. On 25th November 1981, the Nanyang Commercial Bank Ltd. ("the bank") granted banking facilities to the company in consideration of which the company (among other things) charged by way of floating charge all its undertaking property and assets to the bank. The debenture supporting this has now been produced in evidence; originally, only a copy was exhibited, from which it was impossible to tell whether the debenture had been sealed. The debenture conferred on the bank a power to appoint receivers and managers of the company's property. By condition 3(c) the receivers were given power to sell the property "and to carry any such sale into effect by assigning in the name and on behalf of the mortgagor or otherwise". By condition 3(f) the receivers were given further power "to do all such other acts and things as may be considered to be incidental or conducive to any of the matters or powers aforesaid or which [they] lawfully may or can do as agent for the mortgagor". By condition 4 it was provided that a receiver appointed under the debenture should be deemed to be the agent of the company.

9. The company defaulted, and on 10th May 1983 the bank appointed the applicants to be the receivers and managers of the property of the company, which includes two properties at Tai Po, New Territories, Hong Kong in Demarcation District No. 32, lots No. 6A/2 and No. 670. The receivers have in principle agreed to sell these properties to Timewin at the price of HK$40,000 with vacant possession.

10. The applicants are concerned that they should be able to convey the property to Timewin. They have been unatle to find the common seal of the company, but it is unlikely that they would have power to use it even if they did.

11. In my judgment, the Court has power to declare, and ought to declare, that the receivers may convey in the name of the company and affix their own seals on behalf of the company. The testimonium should read:

"IN WITNESS whereof the receivers on their own behalf and also in the name and on behalf of the company have hereunto set their hands and seals."

 

12. The case is unusual: for the debenture does not confer on the receivers, nor for that matter on the bank, a power of attorney under which the necessary conveyance could be executed. And there is no authority covering the point, although much useful learning in the area is to be found in Sowman v. David Samuel Trust Ltd. [1978] 1 WLR 22 (and see also Kerr on Receivers, 16th Edition (1983), at PP. 311, 332 and 333.) So I approach the matter from first principles. As it seems to me, a power of sale carries with it, as a necessary incident, a power to complete the sale by a conveyance. This is a view I have already expressed in a different connection, in relation to Powers of attorney: see Wong Shui Yun v. Lau Wai Pui, 1987 MP 1830 (30th September 1987, unreported). Kerr (see above), at p.333, appears to support this view. The conveyance must be in the name of the company, for it is in the company that the property is vested, not in the receivers. But any agency necessarily implies power to do what is necessary to give effect to the agency; and the debenture in the present case, which is under seal, confers on the receivers express power to do all such other acts and things as may be considered to be incidental or conducive to any of the matters and powers conferred on the receivers by the debenture. Not only that, the debenture confers an express power on the receivers on a sale to carry any such sale into effect by assigning in the name and on behalf of the company. In my judgment, it would be wholly inconsistent with the general principles of the law of agency, and wholly inconsistent with the express provisions of the debenture, to hold that the sale by the receivers must be frustrated unless they can affix the seal of the company to any conveyance that has to be made as a result of such a sale.

13. Accordingly, I will declare that the receivers have power to convey property belonging to the company in the name of the company and to affix their own seals on behalf of the company to a conveyance so doing.