There is no right to appeal from an order of the court for the liquidation and winding up of a company - Court of Appeal
News    ·   07-10-2019
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AUTHOR: Marisa Vella; Francesca Galea Cavallazzi; Stefania de Gabriele

In its decision of the 27th September 2019 in the names Marina Milling & Grain Handling Co. Limited (MMGH Ltd.) vs Euro Imports Limited, the Court of Appeal decided for the first time, that an order by the First Hall, Civil Court, ordering a company to be liquidated and subsequently wound up in terms of Article 214(2) of the Companies Act, is not subject to appeal. In its judgment at first instance, decided on the 16th January 2014, the First Hall Civil Court, declared that the defendant company- Euro Imports Limited- was unable to pay its debts and thus, in accordance with the law, ordered the liquidation and consequent winding up of the same company.

In its considerations, the Court of Appeal endorsed the arguments of MMGH Ltd and noted that a decision made in respect of the process falling under Article 214 (2)(a)(iii), is one which is ordinative by nature and which resembles a decree and not a final judgment of the court. Moreover, the law giving power to the court to order such liquidation and winding up does not at any point mention of the ability of a party, against whom such order was made, to appeal. The Court of Appeal explained that were this the case, the law would clearly state the parties right to appeal from such orders, just like it does under Article 253 of the Companies Act, which envisages another form of decision granted by the Court. This reasoning by the Court of Appeal is very much in line with the latin maxim ubi lex voluit dixit, ubi noluit tacuit, meaning that “When the law wills, it speaks, when it does not will, it is silent.”  The Court of Appeal further drew an analogy with appeals filed from actions filed under Article 402 of the Companies Act. The Court of Appeal had previously established  in judgments such as Jonathan Shaw et noe vs David Alan Shaw et and Busuttil vs Busuttil & Sons Ltd. that decisions on disputes brought under Article 402 of the Companies Act are not capable of being appealed from, given that the law does not mention a right to appeal in such circumstances. Therefore, similar cases, such as the one in question, should also follow that reasoning.

Moreover, the Court of Appeal argued that the procedure under Article 214(2)(a)(ii) of the Companies Act is intended to initiate the process of granting an order for liquidation and winding up. This type of process is entirely different from the ordinary procedural process for contentious matters. The main difference being that, an order of the court for liquidation and subseqeunt winding up does not terminate the proceedings before that court. In its judgment the Court of Appeal substantiated this reasoning by making reference to Profs. Caruana Galizia’s Notes on Civil Procedure, whereby it is explained that in cases where a decision of the Court terminates a dispute, then that matter is considered final and a judgment is delivered. On the other hand, if a decision of the court only relates to a procedural aspect or a single episode occurring within the dispute, then that decision is considered a decree. This was established in the judgment Tabone V Borg Olivier (1925).

On the basis of the above, the Court of Appeal agreed with the the arguments of MMGH Ltd and namely that there was no validity in the appeal proceedings being brought by the Appellant Company. After never having addressed this issue, the Court of Appeal finally established its view on this question, that any order/instruction given by a court at first instance, in terms of Article 214(2)(a)(iii) of the Companies Act, instructing the liquidation and consequent winding up of a Company, cannot be appealed to. Such an order may only be contested through the use of other procedural remedies.

 

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