The Judicial Committee of the Privy Council Decisions

Archer & Anor v. Registrar General & Anor (The Bahamas) [2004] UKPC 31 (24 June 2004)

Privy Council Appeal No. 39 of 2003

(1) Oswald Archer and

(2) Rupert Watkins Appellants

v.

(1) The Registrar General and

(2) The Attorney General Respondents

FROM

THE COURT OF APPEAL OF THE

COMMONWEALTH OF THE BAHAMAS

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JUDGMENT OF THE LORDS OF THE JUDICIAL

COMMITTEE OF THE PRIVY COUNCIL,

Delivered the 24th June 2004

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Present at the hearing:-

Lord Bingham of Cornhill

Lord Hope of Craighead

Lord Scott of Foscote

Lord Walker of Gestingthorpe

Dame Sian Elias

[Delivered by Lord Walker of Gestingthorpe]

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1. This appeal raises an issue as to the functions and duties of the Registrar General under the legislation relating to the registration and regulation of companies in the Bahamas. It is a fairly short point (although slightly complicated because of changes in the company legislation and some uncertainty as to which legislation is relevant) and the answer to it is in their Lordships' opinion clear. However this limited point arises against a background of events which are complicated, obscure and controversial, spanning a period of 20 years.
2. The appellants (Mr Oswald Archer and Mr Rupert Watkins) have a strong sense of grievance about these matters, although Mr Archer (who appeared in person on behalf of both appellants) addressed the Board with great moderation and courtesy. Their Lordships thought it right to permit Mr Archer to address the Board on matters which are not, on analysis, relevant (except as background history) to this appeal (to which the Registrar General and the Attorney General of the Commonwealth of the Bahamas are the only respondents). In order to understand the context of the appeal it is necessary to make some reference to the controversial history, and to other litigation in which the appellants have been (and may hope to continue to be) engaged. But their Lordships wish to emphasise that they have heard only one side of the story of the appellants' grievances. Their Lordships cannot and do not make any finding of fact in relation to disputes between the appellants and others who are not parties to this appeal. Nor can their Lordships offer any advice to the appellants as to what course they might take in relation to other litigation, and they do not do so. The summary which follows must be read subject to these caveats.
3. Petroleum Products Ltd ("PPL") was incorporated in 1958. In 1984 the appellants (and two other individuals) purchased its issued share capital with a loan from Canadian Imperial Bank of Commerce ("CIBC") for $300,000. PPL gave security for this borrowing (Mr Archer asserted that this did not infringe the companies legislation then in force) and the facility letter provided for "hypothecation of all shares of [PPL] issued to" the four shareholders. The shareholders deposited their share certificates with CIBC. The certificates had an endorsed form of transfer, which the shareholders executed leaving the name of the transferee blank.
4. In 1986 CIBC informed PPL and its shareholders that they should refinance their borrowing. The new lender was to be Gulf Union Bank (Bahamas) Ltd ("the Bank"). There was a loan agreement dated 12 December 1986 between the Bank and PPL in which the appellants joined as guarantors. Then on 8 August 1988 there was a restructuring agreement between the Bank and PPL in which all four shareholders joined as guarantors. The documentation is complex and the appellants challenge certain features of it. For present purposes the most important point is that Clause 3 (and, for good measure, Clause 4) of the restructuring agreement provided for the guarantors "to assign to [the Bank] their certificates of shares in [PPL] by way of deposit". Such a deposit, with endorsed transfers in blank, would have created an equitable mortgage with an implied power of sale: Stubbs v Slater [1910] 1 Ch 632, 639.
5. The appellants assert that although they agreed to this deposit with the Bank, it never occurred. Their case (which gains some support from correspondence in the record, though the correspondence may be incomplete) is that on 13 February 1987 CIBC, having been paid off in full, sent the share certificates (still bearing the endorsed transfers executed in blank) to an attorney, Mr Rawle Maynard, who claimed to be instructed on behalf of PPL (and, presumably, its shareholders also). The appellants deny that Mr Maynard ever had any such instructions. They say that the documents were sent to Mr Maynard to be held to their order, but that this direction was disregarded.
6. PPL defaulted in its obligations to the Bank and in December 1988 Mr Maynard was appointed as receiver. (This may give some support to the appellants' claim that Mr Maynard was not acting for PPL in 1987.) It is in 1989 and 1990 that the course of events becomes most controversial. The appellants' case in other litigation is that Mr Maynard dishonestly caused PPL's principal assets (some leasehold land and its business assets) and PPL's shares to be sold to a company called Fabian Investments Ltd ("Fabian"), which was one of three newly-formed companies under Mr Maynard's direct or indirect control. Fabian and its nominees were registered as shareholders of PPL and then removed the four previous shareholders from their directorships. Mr Archer showed the Board some correspondence and other documents which may be thought to raise certain questions about these events (but their Lordships again emphasise that they have heard only one side of the story, and there may be a satisfactory explanation of some apparent inconsistencies in the documents). The appellants' case is that they knew nothing about these events until 1992.
7. PPL's annual statement of shareholders made up to 5 December 1990, and stamped as received by the Registrar General on 5 September 1991, showed Fabian as holder of 54,996 (out of 55,000) issued shares, the others being held by four individual nominees (including Mr Maurice Glinton, an attorney, as company secretary).
8. On 13 October 1994 the four former shareholders caused a writ to be issued with PPL as the first plaintiff and themselves as co-plaintiffs. There were initially ten and by amendment eleven defendants, including the Bank (the first defendant), Fabian (the fourth defendant), Mr Glinton (the ninth defendant) and Mr Maynard (the tenth defendant). A statement of claim was filed on 23 January 1995. It made several serious allegations against different defendants (including, in paragraph 24, bad faith and breach of trust against Mr Maynard as receiver) and claimed a variety of reliefs (including accounts and relief based on establishing a constructive trust). Soon afterwards Mr Glinton applied to have PPL struck out as a plaintiff. Remarkably, he seems to have appeared as counsel for PPL while himself being a defendant. Two other defendants made striking-out applications which are not directly material.
9. The striking-out applications were adjourned several times, partly because of doubts as to his professional position felt by the attorney originally instructed on behalf of all the plaintiffs. According to the appellants the judge commented that the former shareholders' first step should have been to issue a notice of motion for rectification of PPL's register of shareholders. There is no transcript of any such comments, but if anything like that was said it is easy to understand the appellants' feeling of frustration at the subsequent course of events.
10. On 25 February 1998 the appellants and the other two former shareholders applied by notice of motion for rectification of PPL's register. As respondents they joined PPL, Fabian and PPL's other registered shareholders. The application was made under section 57 of the Companies Act 1992 (as then amended) which is in the following terms:

"(1) If the name of any person is, without sufficient cause, entered in or omitted from the register of members of any company incorporated under this Act, or if default is made or unnecessary delay takes place in entering on the register the fact that a person has ceased to be a member of the company, the person, the member aggrieved, any other member of the company or the company itself, may by way of motion apply to the court for an order that the register be rectified and the court may in either case grant or refuse the application with or without costs, to be paid by the applicant.

(2) Where the court is satisfied as to the justice of an application pursuant to this section, it may make an order for the rectification of the register, and may direct the company to pay all costs of such motion, application or petition and any damages the party aggrieved may have sustained.

(3) The court may in proceedings under this section decide on any question relating to the title of any person who is a party to such proceedings to have his name entered in or omitted from the register, whether such question arises between two or more members or alleged members, or between any members or alleged members and the company, and generally the court may in any such proceedings decide any question that it may be necessary or expedient to decide for the rectification of the register.

(4) Without prejudice to anything contained in subsection (3), the court may direct an issue to be tried in which any question of law may arise or be raised.

(5) Where an order for rectification of the register is made, the court may order that a copy be forwarded to the Registrar."

11. On 12 March 1998 the section 57 application was adjourned. Before it was heard Ganpatsingh J gave judgment on 7 April 1999 in the interlocutory applications in the writ action. He allowed all three applications. In particular, he struck out PPL as a plaintiff on the ground that it was "trite corporate law" that he was bound by what he called "the corporate record and the certificate of the Registrar General". Here he seems to have treated the Registrar General's stamp on the annual statement as a certificate of the correctness of the information contained in it. The judge did not make any mention of the pending application for rectification of the register. The appellants and their colleagues appealed against the order of Ganpatsingh J. On 3 February 2000 the Court of Appeal adjourned the appeal pending a hearing of the section 57 application. The appeal remains adjourned.
12. The section 57 application was heard on 10 March 2000 by Lyons J. He dismissed the application as an inappropriate procedure, quoting Pennington's Company Law (7th edition, p421) in relation to the comparable British provision, section 359 of the Companies Act 1985:

"... if the facts are complex and in dispute, or if there is pending litigation about the same question between one of the parties to the application and a third person, the court will always refuse to give a decision on a summary application, and will leave the applicant to seek rectification in an action commenced by writ."

(For the current practice in England, see Re Hoicrest Ltd [2000] 1 WLR 414.) Lyons J went on to refer to the pending writ action, and to some "sage advice" which had been given to the plaintiffs in that action. He may not have been told (or if he was told, he may not have accepted) that part of the advice had been to make a summary application for rectification of the register. Mr Archer alone gave notice of appeal against the order of Lyons J, but the notice was treated as irregular. All four applicants then gave notice of appeal out of time. On 8 November 2000 the Court of Appeal refused an application for leave to appeal out of time.

13. That is the background history to the appellants' third round of litigation. On 9 January 2002 the appellants made an application for leave to apply for an order of certiorari to rectify PPL's register. The respondents were the Registrar General and the Attorney General. Neither the ex parte summons nor Mr Archer's affidavit in support made clear what decision (or refusal to act) on the part of the Registrar General was impugned. But Mr Archer's affidavit exhibited a letter dated 28 November 2000 written by the appellants' attorneys to the Registrar General. After summarising the appellants' complaints the letter asked that PPL's records should show the four former shareholders "as the shareholders, officers and directors for the years 1990 to present". Mr Archer has since the oral hearing produced some further correspondence but it takes the matter no further in the identification of a letter containing a decision amenable to judicial review. On 7 May 2002, Moore J gave a lengthy reserved judgment dismissing the application as inappropriate. On 7 November 2002 the Court of Appeal (Churaman, Ganpatsingh and Osadebay JJA) dismissed the appeal in a short oral judgment of the Court given by Osadebay JA.
14. In the course of his judgment he said,

"The register of shareholders of the company is neither compiled nor kept by the Registrar of Companies, that is, the Registrar General, who is a public officer in charge of the public registry, and whose responsibility under the Companies Act includes the registration of companies. The Registrar General is not empowered by law to decide whose name should be entered on the register of shareholders of any company."

He then referred to sections 57 and 58 of the Companies Act 1992 (as amended). Section 57 has been set out already. Section 58 requires a company to make an annual return to the Registrar General with a statement of all persons who are members of the company, with their names and addresses, and the number of shares held by each of them, and the list is to be kept by the Registrar General.

15. Osadebay JA also said later in his judgment:

"The appellants in their application for leave to bring proceeding for judicial review, have not identified any decision alleged to have been made by the Registrar General with regard to the shares in question, or with regard to the register of shareholders of the company, which they intend to challenge in the intended judicial proceeding. Such decision cannot be manufactured by mere correspondence alone between the applicants and the Registrar General: R v Secretary of State for Employment, Ex parte Equal Opportunities Commission [1993] 1 WLR 872."

Their Lordships do not find it necessary to express a view as to whether there was a decision of the Registrar General in respect of which the appellants made a sufficiently prompt application for leave to move for judicial review. They are prepared to assume that that point might not have been fatal to the appellants' application. But the application was in any event misconceived as it was based on a fundamental misunderstanding of the functions and duties of the Registrar General.

16. The Registrar General has numerous statutory functions and duties. In relation to companies, the Registrar General has certain statutory duties which could if necessary be enforced by judicial review (in the form of the particular statutory procedure set out in section 291 of the Companies Act 1992, mentioned below). For instance, the Registrar General has a statutory duty to issue a formal certificate of incorporation (which is conclusive evidence that the statutory requirements for incorporation have been complied with) and that duty could be enforced by an application to the court if the Registrar General were for any reason to fail to perform his duty. But it is not the function of the Registrar General to certify, conclusively or otherwise, who are the members of a company. It is his function to receive annual statements made by companies under section 58 of the Companies Act 1992, and to make them available for public inspection. But the accuracy of the information depends on the officers of the company who submit the statement. Any dispute as to its correctness is to be resolved by the court, either on a summary application under section 57 or (in a complex case raising factual disputes) in other proceedings.
17. The scheme of the Registrar General's functions appears from Part VIII of the Companies Act 1992 (as amended as at April 2002) which was placed before the Board by Mr Archer. That Act has been amended on several occasions, and the section numbers have to some extent changed, but none of the amendments appears to alter the scheme of Part VIII, or the scope of the Registrar General's functions. Their Lordships will refer to the Act as amended down to April 2002, when the appellants' judicial review application was pending, while noting that there is some doubt as to the date of the decision (or refusal to act) impugned in the application.
18. The Registrar General has a general statutory responsibility for maintaining the registers required by the Act (section 276(2)(b)). But the register of shareholders of any particular company is maintained, not by the Registrar General, but by the officers of the company (section 56), and it is for the company to prepare and authenticate the annual statement required by section 58 (section 284). The Registrar General has a statutory duty to issue a certificate of good standing on request (section 284A, introduced in 1994) but that certificate does not relate to the membership of the company (as opposed to whether the requisite documents have been filed). The company's obligation to provide correct information in its returns is backed by criminal sanctions (sections 299 and 300).
19. Section 291 (appeal from Registrar's decisions) provides as follows:

"(1) A person aggrieved by a decision of the Registrar –

(a) to refuse to file in the form submitted to him any articles or any other document that is required to be filed under this Act;

(b) to register, change, reserve or revoke a name of a company;

(c) to grant any exemption that is authorised to grant under this Act; or

(d) to refuse to do anything that he is required to do in order to give effect to this Act,

may apply to the court for relief, and the court may, subject to subsection (2), grant such relief as it considers appropriate having regard to all the circumstances.

(2) The court may refuse relief under this section if it is of the opinion that the application is frivolous and vexatious."

None of these provisions covers the present case. This express enactment merely emphasises that the appellants were seeking judicial review on a matter which was outside the Registrar General's functions, and could be dealt with only by a court in proceedings to which those directly affected (in particular, Fabian and PPL) were parties.

20. The appellants' original grounds of appeal included a submission that the decision of the Court of Appeal was flawed by apparent bias because two members of the Court had (as judges of first instance) heard applications in other litigation involving the appellants. Mr Archer sensibly did not rely on this point in his oral submissions, and their Lordships need say no more about it.
21. The appellants may possibly be able to continue their campaign on other fronts, although they face formidable difficulties, not least because of the passage of time. Their Lordships cannot comment further on that possibility. For the reasons set out above their Lordships will humbly advise Her Majesty that this appeal should be dismissed (with costs, if the respondents seek costs).