Re Pacific Hill Pictures, Inc.
| Jurisdiction | Bahamas |
| Judge | Marques, J. |
| Judgment Date | 27 April 1995 |
| Court | Supreme Court (Bahamas) |
| Docket Number | No. 30 of 1995 |
| Date | 27 April 1995 |
Supreme Court
Marques, J.
No. 30 of 1995
Mr. John Delaney with Mr. Kirk Seymour for the petitioner, Mr. Paul Saltzman.
Mr. Frederick R. Smith with Ms. R. Adams & Ms. S. Smith for Mr. & Mrs. Hobbs.
Mr. Michael Barnett for Mr. La Bella.
Company law - Winding up — Whether petitioner has locus standi to bring winding up petition — Finding by court that petitioner brought motion even though there would be no surplus in which he could participate if the company was wound up and that he had ulterior motives — Petition ordered struck out.
These are my reasons for a judgment given by me in this matter on 27 th April, 1995.
On 7 th April, 1995 a petition presented on January 10, 1995 (the petition) by Mr. Paul Saltzman (the petitioner) for the winding up of Pacific Hill Pictures Inc. (the Company) came on for hearing. This petition is opposed by the Company and three persons Mr. Richard and Mrs. Patricia Hobbs and Mr. Vincenzo La Bella (hereinafter referred to as the Hobbs and La Bella respectively).
The company was incorporated with a registered office in Freeport, Grand Bahama under the former name of Pink Crystal Films Ltd on July 25, 1984 pursuant to the International Business Companies Act, 1989. The papers for incorporation were filed in the office of the Registrar for Companies in Freeport, Grand Bahama.
The petitioner and the Hobbs are the major shareholders. It was agreed among all parties that the hearing on April 7, would not be used for the trial of the substantive petition, as that would have necessitated the attendance of several overseas witnesses.
Instead the hearing would be used for the disposition of those issues raised by two interlocutory proceedings, to wit, a summons filed on March 17, 1995 on behalf of the Company (the summons) and a notice of motion filed on April 5, 1995 by the petitioner (the first motion).
The purpose of the summons, which is supported by the Hobbs and La Bella is to have the petition set aside on several grounds. At the hearing on April 7, arguments were limited to the grounds that –
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(1) the petitioner or his attorneys filed the petition in the office of the Registrar located in Nassau contrary to section 14 of the Supreme Court Act as amended by para. (b) of section 5 of the Supreme Court (Amendment) Act, 1994 (Act 7 of 1994) (the Freeport provisions);
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(2) the petition be struck out or the hearing thereof be stayed under the inherent jurisdiction of the court on the ground that the petitioner has no locus stand) in that he has no tangible interest in the winding up of the company and/or the petition was presented with no legitimate purpose and is an abuse of the process of the court.
Counsel for the Company and the Hobbs in urging the court to strike out the petition on the basis of its filing being in breach of the Freeport provisions referred to the following facts to show that the Company has a closer connection with Freeport than Nassau, to wit –
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(a) the papers for the incorporation of the Company were filed in the Freeport office;
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(b) the registered office of the Company is in Freeport;
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(c) the only principal shareholders locally resident are the Hobbs who reside in Freeport.
The petitioner says however the Company is an international business company doing business internationally, with bank accounts located in Canada and that there is only one Company registry which is principally located in Nassau with a branch in Freeport and that most meetings of the Company have occurred in Canada.
As between Nassau and Freeport, I am of the opinion on the facts before me that indeed the Company has a closer connection with Freeport and had the petition and all ensuing proceedings therewith been filed in Freeport, I would say that such filing was in keeping with the Freeport provisions. I am not however prepared to say that the filing of the petition in Nassau renders it liable to be struck out because that filing is not in keeping with subsections (2) and (3) of section 14 of the Supreme Court Act as amended. I do not disagree with counsel for the Company and the Hobbs when he says in effect that the objectives of the Freeport provisions are to “designate the Supreme Court sitting in Freeport as the forum to entertain disputes which have a substantial connection with the northern region. Parliament intended to provide easier access to the Supreme Court for litigants and practitioners based in the northern region and to reduce the inconvenience and expense of having disputes with a northern region nexus determined in Nassau”. Counsel recognizes that the mere use of the word “shall” in statutory provisions does not conclusively mean that the provision is mandatory in nature (see Liverpool Borough Bank v. Turner (1860) English Reports Volume XLV p. 715 at 718). It is the very Supreme Court in being for the purposes of Article 93 of the Constitution that is sitting both in the Islands of New Providence and Grand Bahama. Certainly Parliament could never have purported by a side-wind to establish a Supreme Court for Grand Bahama in addition to that in being on July 10,1973.
In the circumstances with the aforesaid objectives, I consider the use of “shall” in the aforementioned subsections to be, as Sawyer, J. said in Intervascular Inc & Others v. Goicoechea & Others “facultative, it confers a faculty or power”. Being permissive in nature, any breach in my opinion would be an irregularity to be addressed by an order of transfer or costs or both or otherwise as the court considers then appropriate having regard to the peculiar facts of the case.
It is recognised that under present circumstances obtaining there is difficulty in attaining a speedy hearing of some matters such as the instant case in the Freeport forum. Based on the tenor of the arguments presented by the opposers to the petition a speedy hearing is desirable. Any non-compliance as I may find that has occurred with the Freeport provisions would appear therefore to have been for the benefit of the Company. For present purposes I do not consider it necessary to address subsection (2) of section 39 of the Supreme Court Act, as amended.
The other ground urged by the summons and supported by the Hobbs and La Bella is the lack of locus standi on the part of the petitioner due to the absence of any showing of a tangible interest resulting to him in the event the Company is wound up.
Counsel for the petitioner agreed with opposing counsel that in keeping with the principle enunciated in such cases as Re Rica Gold Washing Co. Ltd (1879) 11 Ch.D 36 and Re Expanded Plugs Ltd [1966] 1 All E.R. 877 the petitioner, being a contributory, needs to have locus stand) to launch the petition by averring he had or would have a tangible interest, in that, in the event of a winding up there will be a surplus of assets for distribution.
To meet the argument of the opposers to the petition as regards his failure to show any tangible interest resulting to him, the Petitioner by his first motion seeks leave to amend his petition inter alia to aver that in the event of a winding-up there is the possibility of there being a surplus and to further show reasons why the petitioner is justified in seeking the winding-up of the Company.
To determine whether or not there can or will be a surplus regard must be had to the assets and liabilities of the Company. All parties agree that the major, if not the sole asset of the Company, is a sub-licence agreement dated 28 th July, 1994 (the sub-licence) granted by Corticle Del Belvedere Inc (CDB) that itself holds a licence from the Biblioteca Apostolica Vaticana (BAV). By that sub-licence the Company obtained from CDB exclusive worldwide film and video rights to exploit the Vatican Library. The fee for the sub-licence was US$3 million which was a part of the US$3.5 million invested by the Hobbs in the Company. In the event of a winding-up the Hobbs has a first claim to US$3.5 million out of any surplus.
As regards the issue of tangible interest, the petitioner by his first motion proposes inter alia amendments to the following respectively numbered paragraphs of the petition which would then read –
“5. The company is not known by the petitioner to be insolvent.
14. Exploitation of the Sub-Licence is of extreme lucrative promise. Indeed, it is estimated that the Vatican Library Project could generate profits in excess of US$50 Million. Your petitioner submits that the Sub-Licence could fetch on a sale (prior to exploitation) a purchase price of some US$4 Million.
15. Further, your petitioner submits that, subject to the discretion of CDB and BAV, pursuant to paragraph l(c) of the Sub-Licence CDB may reasonably permit an assignment to a third party from the company.”
In support of his first motion the petitioner filed on 7 th April, 1995 an affidavit sworn by himself on April 5, 1995 but no where in that affidavit does he verify the contents of the above proposed paragraphs of the amended petition. Similarly in support he further filed an affidavit sworn by him on 7 th April, 1995 to which was exhibited a letter addressed to him by a Mr. Richard Borchiver purporting to be a representative of Paragon Entertainment Corporation expressing on behalf of the latter an interest in acquiring the sub-licence if it does become available for purchase at a possible price of US$4 million. There was also filed by the Petitioner an affidavit of Mr. Paul Quigley (the Quigley affidavit) wherein that deponent opined that the sale of products under the sub-licence will be an enormously lucrative business and that the licence far exceeds the value of its purchase price of US$3.5 million.
At the hearing on the 7 th April, 1995, the opposers to the petition maintained their assertion that on the evidence before the...
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