IN THE COURT APPEAL OF TONGA
NUKU'ALOFA REGISTRY

APPEAL NO. 3/2000

BETWEEN:

MAXAM GOLD BANK LIMITED
Appellant

AND:

LAIDLAW HOLDINGS LIMITED
Respondent

BEFORE THE HON. CHIEF JUSTICE WARD

Counsel: Mr Niu for appellant/applicant
Mr Garrett for respondent

Date of Ruling: 3 May 2000.

RULING

On 1 May I ordered the appellant company Maxam Gold Bank Ltd to rectify its share register by entering the transfers of 100 shares from Fuiva Kavaliku to Hemaloto 'Alatini and from 'Alatini to Laidlaw Holdings Ltd. In order to determine that matter, I had found it necessary to consider whether the number of shares was 100 and whether Kavaliku was entitled to transfer them.

That is the extent of my ruling but the consequences may be far reaching in terms of control of the appellant company.

Maxam appeals my ruling and seeks a stay of execution of the order pending appeal on the grounds, inter alia, that the respondent has no expertise or experience in the business of the company and would bring the operations of the company to a stop.

The appellant is willing to undertake to operate its affairs and report to the court to safeguard the present assets of the company. Therefore, it seeks a stay to preserve the status quo until the matter has been resolved.

I have no ides of the expertise or otherwise of the respondent company but counsel for the respondent tells the court that it also would be willing to give an undertaking effectively to freeze the company's business pending the appeal.

That is countered by the appellant because, Mr Niu advises the court, the essence of Maxam's operations is the maintenance of its clients' confidentiality. Give the respondents access to the company records and that will be lost. Should the appeal succeed, the damage will be irrevocable.

As it turns out, the assets of the appellant within the jurisdiction are few. Counsel explained to the court that, since the application to registered the share transfer, the assets of the appellant company have been disposed of and the money spent leaving only a few minor items of office equipment. Neither he nor the company secretary was able to tell the court whether the documents that would reveal the matters of confidence in the company's affairs are still in the country or have been removed by Mr Pedras.

I accept the strength of the argument that, if the respondent operates the company for the two or three months it will be awaiting the resolution of its appeal, the company could be irrevocably altered. However, I do not consider that the offer of the appellant to preserve things during that period carry much weight. The court and the respondent would be bound to assess the effective operation of such a stay on the information supplied by the appellant alone.

On the other hand, if by registering the share transfer, the respondent has access to the company records, each party will have equal knowledge of the company business and be able, thereby, to check on the other.

I refuse the application for a stay but I do so because I consider that, together with the undertakings I am about to enumerate, is the only effective way on ensuring the status quo is maintained. It also leaves unresolved, the question of the validity of the position of the two contesting parties' claims to be the officers of the company. I cannot make such a determination and have not been asked to do so. Equally it leaves unresolved the question of whether the present applicant has the authority to lay this appeal.

I order that Laidlaw Holdings, through its company secretary, shall give a written undertaking that it will not conduct any business or transaction of the appellant company until further order of this court. I would ask that Mr Donald Laidlaw supplies me with a similar undertaking. I require a similar undertaking from the Respondent's appointee as company secretary

I order similarly that Maxam through its claimed secretary shall supply a similar undertaking and Mr Christopher Pedras shall supply a similar undertaking.

I further order that the two claimants to the position of company secretary of Maxam shall both be present at all times that the records and documents of the company are being examined. No other purported officers of Maxam or Laidlaw Holdings or Private Client services are to examine, handle or otherwise deal with the assets, property or records of Maxam unless it is to supply them at the request of the respondent's appointee as company secretary to those two persons.

Finally I make it clear that, as I have refused the application for a stay, my order for rectification must stand and be complied with forthwith.

I leave it to counsel to agree the terms of the undertaking and, until they are filed with the court, no person is to handle or otherwise deal with the assets, property or records of Maxam.

NUKU'ALOFA: 3 May 2000.

CHIEF JUSTICE