IN THE COURT OF APPEAL OF SOLOMON ISLANDS
Criminal Jurisdiction

Civ. App. No. 3 of 1994
O.S. No. 261 of 1993

BETWEEN:

JOANN MEINERS
Appellant

AND:

WILLIAM DOUGLAS McCLUSKEY
First Respondent

GRAHAM MILLER
Second Respondent

WILLIAMS, J.A: This is an appeal from an order of Palmer J, made 27th August 1994 by which he granted an order for certiorari, removed into the High Court a charge against William Douglas McCluskey, one of the respondents, and then quashed that charge . From that decision the appellant, who was the person who brought the charge, has appealed to this court alleging that the learned judge erred in law in making that decision and that he further erred in the construction he placed on various statutes of the Solomon Islands.

Section 179 of the Companies Act makes it an offence for a person, being an "undischarged bankrupt", to be "concerned in the management of any company except with the leave of the Court by which he was adjudged bankrupt."

The appellant placed before a magistrate some evidence that at the material time one G.D. Miller, the second respondent, was an undischarged bankrupt. The affidavit of the appellant before the magistrate merely made such an assertion and did not establish by which court he had been so adjudged. That material also prima facie established that the High Court had appointed a receiver of that company Reef Pacific Trading Limited and that Miller was employed by the receiver of that company to play some role on their behalf in the course of that receivership.

It can be assumed for present purposes, but this is a matter which is otherwise in dispute between the parties, that the material before the magistrate sufficiently established that Miller was at the material time "concerned in the management" of Reef Pacific Trading Limited.

The appellant also relied before the magistrate on s.334(1) of the Companies Act which makes it an offence for an "undischarged bankrupt" to act as the receiver as manager of a company on behalf of debenture holders. It is now conceded that the appellant cannot rely on that provision because she was not a debenture holder and anything that Miller did was not done as a receiver appointed by debenture holders.

The concession does not make the appellant's case any easier because in fact the charge against the respondent formulated by the magistrate pursuant to s.76(4) of the Criminal Procedure Code is in these terms:

WILLIAMS DOUGLAS McCLUSKEY, Senior Partner of Price Waterhouse, No. 1 Eagle Street, Brisbane, Commonwealth of Australia is charged with the offence on the complaint of Joann Marie Meiners, Company Director of Vura 3, Honiara, and is charged with the following offence:

STATEMENT OF CHARGE

Did aid and abet, counsel and procure an undischarged bankrupt to take part in the Management and to act as a Receiver of the property of a Company, to wit, Reef Pacific Trading Limited of Gizo in the Western Province, Solomon Islands, contrary to the Companies Act (Cap. 66) Section 179 and contrary to the Penal Code (cap. 5) Section 21.(b, c and d).

PARTICULARS OF OFFENCE

WILLIAM DOUGLAS McCLUSKEY did between the 25th March 1991 and the 17th June 1991 at Gizo in the Solomon Islands, procure Grahame Dennis Miller knowing him to be a person declared bankrupt in the Commonwealth of Australian, to act as Receiver and Manager of the property of Reef Pacific Trading Limited, a company duly incorporated according to the Laws of the Solomon Islands.

Given the concessions of the appellant of acting as receiver should be read as no more than an allegation that as an employee or agent of the Court appointed receiver he was concerned in the management of the company.

Certainly before Palmer J, and again in this Court all the argument was based on the fact that Miller been adjudged Bankrupt on his own petition by the Federal Court of Australia sitting in the Northern Territory.

Given the provisions of s.76 of the Criminal Procedure Code and the authorities as to the interpretation of such a provision the magistrate had to be satisfied the complaint disclosed a belief in a reasonable and probable cause that an offence against s.179 had been committed. The question agitated before Palmer J. and again in this court was whether a person was an "undischarged bankrupt" for purposes of that section if the bankruptcy was the result of proceedings taken outside of the Solomon Islands.

The answer to that question is primarily dependant upon the proper construction of s.179.

As noted above the offence is defined in sub-section (1) and therein the exception is made "except with the leave of the court by which he was adjudged bankrupt." Sub-section (2) then stipulates that leave shall not be so given unless notice of the application is served on the "registrar of companies" - which can only mean the registrar of companies for the Solomon Islands - and he is required to appear and oppose the granting of leave if he is of opinion that it is contrayr to the public extent that leave be granted.

Sub-section (3) provide an expanded definition of "Company" for purpose of this section. It includes a company incorporated outside the Solomon Islands but which has an established place of business here.

If the appellants principal submission is correct and the reference in s. 179(1) is to an undischarged bankrupt wherever that adjudication was made then subsection (2) would have surprising consequences. That sub-section would purport to regulate procedure in a foreign court and to require the Solomon Islands registrar of companies to appear in any court around the world dealing with a relevant application. The parliament of the Solomon Islands has no power to regulate the procedure of a foreign court and the interpretation should be preferred which is within legislative competence of the parliament.

That is to say this offence is only established where the person was adjudged bankrupt in the Solomon Islands and it was the High Court which was called upon to grant leave. Though there is no Solomon Islands statute dealing with bankruptcy the High Court does exercise jurisdiction in bankruptcy by applying the U.K. Bankruptcy Act 1914. That was expressly stated by Palmer J. in his judgment and it would appear to have been the accepted practice.

A perusal of relevant texts indicates that an adjudication in bankruptcy primarily has effect only in the jurisdiction in which the order was made. It does not create a status which is recognised in other countries by operation of the principles of conflict of laws. Its extra-territorial and operation appears limited to questions relating to property of the bankrupt situated abroad and extinguishment of debts.

It is only if the legislation of a particular country specially attaches consequences to a foreign bankruptcy that the law of the former country recognizes consequences flowing from the status of being a bankrupt in a foreign country. But here the legislature has not so provided in s.179(1). It is interesting to observe that there is an expanded definition of "company" but no expanded definition of "bankrupt."

By contrast recent Australian company's legislation has included unexpanded definition of "bankrupt" and then provided for the application for leave to be made to Australian courts.

It follows that the judgment of Palmer J. was correct and the appeal should be dismissed.

It should also be noted that a separate complaint in substantially the same terms was made against Miller. The only difference was that he was charged as a principal offender. The material before the Magistrate in his case specially alleged he had been adjudicated bankrupt in the Federal Court of Australia. The magistrate formulated a charged against him accordingly.

Miller did not formally seek to have that charge quashed by way of certiorari but was present in court during the hearing before Palmer J. It was obvious to the learned judge that the charge against Miller was also bad and would have to be quashed if formal application was made. Miller who appeared in person orally asked that similar orders be made in his case as the Court considered appropriate in that of McCluskey. That appear from the notes made by Palmer J.

In consequence Palmer J. also removed the charge against Miller into the High Court and quashed it. There is an appeal against that order, but there is no specific complaint about the procedure followed by Palmer J.

The approach adopted by Palmer J. was realistic in the circumstances, and the appeal against the order in so far as it applies to the respondent Miller should also be dismissed.

Appeal dismissed with costs.

WILLIAMS, J.A.
COURT OF APPEAL OF SOLOMON ISLANDS