Francis Beaufort Palmer.

Company precedents for use in relation to companies subject to the Companies acts, 1862 to 1890 ... (Volume 2) online

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E. S. C. 1883, O. XXXVIII. r. 3, requires that affidavits shall be confined to such
facts as the witness is able of his own knowledge to prove, except on interlocutory
motions [applications, Se N'etv Callao, 22 C. Div. 484], on which statements as to
his belief, with the grounds thereof, may be admitted. An affidavit of facts to the
best of the defendant's knowledge, information, and belief, without stating the
grounds, is worthless. Quartz Sill Co. v. Beall, 20 C. Div. 508 ; Bonnard v. Perry-
man, (1891) 2 Ch. 287. And an affidavit deposing positively to a fact not likely to
be vnthin the personal knowledge of the deponent {e.g., as to the age of another
person) is worthless, vmless it shows the deponent's means of knowledge. Bidder v.
Bridges, 26 C. Div. 1. Evidence on information and belief is not admissible on
applications which finally settle the rights of the parties. Gilbert v. Endean, 9
C. Div. 259.

But the above rules ai-e to some extent qualified by the rules in winding-up, e.g.,
R. 36 of 1890, making the affidavit in su^jport of a winding-up petition jgrima facie
evidence of facts stated merely by way of belief.



Form 13.

Order in
chambers.



Drawing
up orders.



\_Rcference to Record and Title, as in Form 1 or 2, and notes.~\
Upon the applicon of [A. B., the [off recr and] liqr of the above-
named coy], by summons dated, &c., and upon hearing the solor [or

counsel] for the applicant and for , and upon reading an order

dated the day of , the registrar's certificate, dated the

day of , an afft of N., filed the day of , and the exhibit



It is ordered that the applicant be at liberty to, &c.
, do within days, &c.]. And it is ordered



A therein mentd

[or tliat N., of ■

\jE.(/., that the applicant's costs of and incident to this applicon be costs

in the winding-up, or that the sd N. do pay to the applicant, the said

A. B., his costs of and incident to this applicon: such costs to be taxed].

E. 10 of April, 1892, is as follows : — Every order, whether made in Court or in Cham-
bers, in a windiug-up matter in the High Court to wliich these rules apply, shall be



COMMON FORMS AND GENERAL PROCEDURE. 31

drawn up by the registrar, unless in any proceeding or classes of proceedings the
judge of the High Court or regi.strar who makes the order shall direct that no order
need he drawn up. Where a direction is given that no order need be drawn up, the
note or memorandum of the order, signed or initialled by the judge of the High
Court or the registrar making the order, shall be sufficient evidence of the order
having been made.

This rule only applies in the High Court. Every such order must be sealed (see
R. 8 of Api-il, 1892) and stamped, whether made in Court or Chambers, with an
impressed "companies winding-up " stamp. II. for order in Court (except winding-
up order) ; 5s. in Chambers; 10s. impressed on order on originating summons in
voluntary windings-up.

The High Court of Justice. Form 14.

Companies (Winding-up). Application

Application for office copy. for office

No. of 18—.

Be . day of , 1892.

I request you to cause an office copy of , filed in this matter on

the day of , 1 8 — , to be made for me.

I appear for .

(Signature) .

(Address) . £ s. d.

Value of stamps deposited (being one-half of the

estimated cost of copy)

Further stamps upon issue of copy to complete

the charge

Number of folios. Total charge . .



copy.



R. 12 of April, 1892. — All office copies of petitions, affidavits, depositions, papers, Office copies,
and writings, or any parts thereof, required by any liquidator, contributory,
creditor, officer of a company, or other person entitled thereto, shall be provided by
the registrar, and shall, except as to figiu-es, be fairly written out at length, and be
sealed and delivered out without any unnecessary delay and in the order in which
they shall have been bespoken.

This rule only applies to cases before Vaughan Williams, J.

As to copies of documents on the file in " retained" cases, see E. 146 of 1890.

As to the charge per folio for copies, see R. 32 of April, 1892 {\d. per folio of
seventy-two words, payable by adhesive stamps on office copy). If, however, the
office copy is made by the parties and not in the office the charge is Id. a folio.

Gazetting and Advertising, in tabular form thus : — Form 15.



First table headed (1.) Winding-up Orders, with six columns headed respec- Notices for

tively : — (a) Name of company. — (b) Addi-ess of registered office. — (c) Court. — • London
(d) Number of matter. — (e) Date of order. — (f) Date of presentation of petition. "'^ **

Second table headed (2.) First 3feetings, with seven columns headed respec- -.o^ ^
tively : — (a) Name of company. — (b) Address of registered office. — (c) Court. —
(d) Number. — (e) Date of first meeting. — (f) Hour. — (g) Place.



32



WINDING-UP BY THE COURT. [ChAP. II.



Third table headed (3.) Notice of Bay appointed for Fiiblic Examination, with eight
columns headed respectively : — (a) Name of company. — (b) Address of registered
office. — (c) Court. — (d) Number of matter. — (e) Date fixed for examination. —

(f) Names of persons to be examined. — (g) Hour. — (h) Place.

Fourth table headed (4.) Notice of intended Dividend, with seven columns headed
respectively : — (a) Name of company. — (b) Address of registered of&ce. — (c) Court.
— (d) Number. — (e) Last day for receiving proofs. — (f) Name of liquidator. —

(g) Address.

Fifth table headed (5.) Notice of Dividend, with eight columns headed respec-
tively : — (a) Name of company. — (b) Address of registered office. — (c) Court. —
(d) Number. — (e) Amount per £. — (f) First or final or otherwise. — (g) When pay-
able. — (h) Where payable.

Sixth table headed (6.) Appointment of Liquidators, with seven columns headed
respectively : — (a) Name of company. — (b) Address of registered office. — (c) Court.
— (d) Number. — (e) Liquidator's name. — (f) Address.- — (g) Date of appointment.

Seventh table headed (7.) Notice of Releases of Liquidators, with seven columns
headed respectively : — (a) Name of company. — (b) Address of registered office. —
(c) Court. — (d) Number. — (e) Liquidator's name. — (f) Liquidator's Address. —
(g) Date of release.

The above form was substituted for the original form by B. T. O. 13th February,
1891.

R. 152 of 1890. — All notices subsequent to the making by the Court of a winding-
up order in pursuance of the Act, or these rules, requiring publication in the
London Gazette, shall be gazetted by the Board of Trade.

But supervision orders must still be gazetted by the petitioner. See R. 6 of
1862.
Ke-o-azettino-. R- 153 of 1890. — Where any winding-up order is amended, and also in any case
in which any matter which has been gazetted has been amended or altered, or in
which a matter has been wrongly or inaccurately gazetted, the Board of Trade
shall re-gazette such order or matter with the necessary amendments and altera-
tions in the prescribed form, at the expense of the company's assets, or otherwise
as the Board of Trade may direct.



Form 16.



Memorandum
of advertise-
ment or
gazetting.
Form 87 of
1890.



{Title.)



Name of Paper.



Date of Issue.



Date of Filing.



Nature of Order, &c.



(Signed)



A. B.



Filing B. 147 of 1890. — (1.) Whenever the London Gazette contains any advertisement

memorandum. j-qIq^^^^ Iq mjy -windiTig-up to which these rules apply, the liquidator shall file with
the proceedings a memorandum referring to and giving the date of the advertise-
ment.



COMMON FORMS AND GENERAL PROCEDURE. 83

(2.) In the case of an advertisement in a local paper, the ofBcial receiver Bhall
keep a copy of the paper, and a memorandum referring to and giving the dale of
the advertisement shall be placed on the file.

(3.) For this purpose one copy of each local paper in which any advertisement
relating to any winding-up proceeding in the Court is inserted, shall be left Avith
the official receiver by the person who inserts the advertisement.

(1.) A memorandum under this rule shall he prima facie evidence that the adver-
tisement to which it refers was duly inserted in the issue of the Gazette or news-
paper mentioned in it.



P.



34 WINDING-UP BY THE COURT. [ChAP. III.



CHAPTER III.

WINDING-UP PETITIONS.



As to wliat companies may be wound up by the Court, see
Chapter I.

Grounds for Winding up.

(a) Registered Companies.

Grounds for Sect. 79 of 1862. — A company under this Act may be wound up by the Court as

winding up. hereinafter defined, under the following circumstances : (that is to say),

( 1 . ) Whenever the company has passed a special resolution requiring the company

to be wound up by the Court :
(2.) Whenever the company does not commence its business within a year from

its incorporation, or suspends its business for the space of a whole year :
(3.) Whenever the members are reduced in number to less than seven :
(4.) Whenever the company is unable to pay its debts :
(5.) Whenever the Court is of opinion that it is just and equitable that the

company should be wound up.
There are also two other grounds for making a compulsory winding-iip order.
(6.) " If the Coui-t is of opinion that the rights of [the petitioning] creditor will

be prejudiced by [an existing] voluntary winding-up." Sect. 145 of

1862 :
(7.) On the petition of the oflficial receiver, "if the Court is satisfied that the

voluntary winding-up, or winding-up subject to supervision, cannot be

continued with due regard to the interests of the creditors or contributories.' '

Sect. 14 of 1890.

" The Court''

As to the meaning of this now, see Chap. I., p. 13, and sect. 32 (2) of 1890.

' ' For the purposes of this Act a company shaU not be deemed to be woiind up by
order of the Court if the order is to continue a winding-up under the supervision of
the Court." Sect. 31 (2) of 1890.

(1) Resolution Jor Compulso7-y Liquidation.
Resolutions and orders under this part of the section are very rare.

(2) No7i-commencement or Suspensiofi oj" Business.

The date of incorporation mentioned in the certificate of incorporation is the date
at which the company is incorporated. Sect. 192 of 18G2.



WINDING-UP PETITIONS. 35

As to non-commencoraent ■within a year, sgo Tumacacori Minbig Co., 17 Eq. 531 ;
Neiv Gas Generator Co., 4 C. D. 874 ; Capital Fire Inmrance Association, 21 C. D.
209. The fact that a year has not elapsed is no defence if the case comes within
Clause 5. German Date Coffee Co., 20 C. D. 1G9 ; Thomas Edward Brinsmead ^- Sons,
(1897) 1 Ch. 45 ; on app. W. N. (1897) 16.

As to suspension for a year, see Norwegian Titanic Iron Co., 35 Beav. 223 ; Tomlin
Patent Horseshoe Co., 55 L. T. 314 ; Middlesbronr/h Assembly Rooms Co., 14 C. D.
104.

As to amalgamation not being suspension, see National Financial Corporation, 14
W. JR. 907.

Petitions under sub-sect. (2) are rare, and the Court is but little disposed to grant
an order at the instance of a minority of the members. Suburban Hotel Co., 2 Ch.
737; Capital Fire Insurance Association, supra; St. Petersburg Gas Co., W. N. (1874)
196 ; Metropolitan Warehouse Co., 36 L. J. Ch. 827.

(3) Less than Seven Members.
Petitions under this head are also rare, but the clause might perhaps be utilized
by surrendering shares where differences as to the management of a private com-
pany arise. Although the clause uses the words " are reduced," it is apprehended
that it should be held to apply to a case in which there have never been seven
members, e.g., where some of the signatures to the memorandum of association
were fictitious, and the number of members has not been subsequently made up to
seven. In such a case the certificate of incorporation is conclusive. See Feel's case,
2 Ch. 674 ; Oakes v. Turquand, L. R. 2 H. L. 354, which have been acted on ever
since. The dicta to the conti-ary in National Feboiture and Assets Corporation, (1891)
2 Ch. 505, cannot be supported. According to those dicta the word "conclusive"
means '^ primd facie;'' but this is to disregard the words of the Act. Where the
legislature means primd facie it uses the words, as in sects. 31 and 37 of the Act.
See also Nassau Fhos2)hate Co., 2 C. D. 610, and what Vaughan Williams, J., said
in He laxon ^- Co. (2), (1892) 3 Ch. 555.

(4) Inability to pay Debts.

In most cases the order is made with reference to this clause.

Sect. 80 of 1862 provides that — A company under this Act shall be deemed to be
unable to pay its debts,

(1.) Whenever a creditor, by assignment or otherwise, to whom the company is
indebted, at law or in equity, in a sum exceeding fifty pounds then due,
has served on the company, by leaving the same at their registered office,
a demand under his hand requiring the company to pay the sum so due,
and the company has for the space of three weeks succeeding the service of
such demand neglected to pay such sum, or to secure or comjDOund for the
same to the reasonable satisfaction of the creditor :

(2.) Whenever, in England and Ireland, execution or other process issued on a
judgment, decree, or order obtained in any Court in favour of any creditor,
at law or La equity, in any proceeding instituted by such creditor against
the company, is returned unsatisfied in whole or in part :

(3.) Whenever, in Scotland, the induciae of a charge for payment on an extract
decree, or an extract registered bond, or an extract registered protest have
expired without payment being made :

(4.) Whenever it is proved to the satisfaction of the Coiirt that the company is
unable to pay its debts.

Although a creditor for 50^. or less cannot avail himself of the machinery pointed
out by clause 1, he may, nevertheless, petition if he can satisfy the Court of \he

d2



3^ - WINDING-UP BY THE COUKT. [ChAP. III.

company's inability to pay. Per Bacon, V.-C, in ScoveW s Hamhle Fisheries Co.,
16th Feb., 1884, where petitioner's debt was 2QI. undisputed. At the hearing the
company offered to pay the amount, but without costs. Bacon, V.-C, ordered them
to pay the costs. And Kay, J., made an order to wind up The Temperance and
General Advance Co., upon the petition of an undisputed creditor for 8?. 5«. 9>d.,
4 May, 1884. Re Wear Engine Works, 10 Ch. 188, which shows tliat the petition
must on the face of it show a case for winding up, must be borne in mind.

The High Court is reluctant to lend itself as a collector of small debts by means
of its winding-up jurisdiction, and in future winding-up orders wUl not usually be
made where the debt is small, and where the order is made it wHl be without
costs. Eerier t Standring # Co., W. N. (1895) 99.

As to leaving the demand where there is no registered office, see British and
Foreign Gas Co., 13 W. E. 649.

The twenty-one days must have expired before the presentation of the petition.
Re Catholic PuMishing Co., 2 D. J. & S. 121.

A debt bond fide disputed is not a good ground for a winding-up petition. Gold
mil Mines, 23 0. Div. 211.

Under the first thi'ee sub-sections of this section proof of the facts therein
respectively mentioned is sufficient evidence that the company is unable to pay its
debts. Imperial Hgdropathic Co., 49 L. T. 160.

But where a case cannot be made under one of those sub -sections, there may,
nevertheless, be a case under the fourth sub -section, for under that sub -section
the company's inability to pay its debts may be established by any evidence satis-
factory to the Court. The following are some cases where the Court has been
satisfied : —

Company's acceptances for goods bought, dishonoured. In re Globe Co., 20 Eq.
337. In this case no demand had been made under sub -sect. (1), but the Court held
that no such demand was necessary when the order was claimed under sub -sect. (4).
And where a judgment creditor was told by the company's solicitors that there
were no assets on which he could levy, it was held that this was evidence that the
company was unable to pay its debts. Flagstaff, iS;c. Co. of Utah, 20 Eq. 268 ;
Yates Collieries, W. N. (1883) 171.

The fact that there is due to the petitioner a liquidated sum, that the debt is not
disputed, and that the petitioner has demanded payment without success, affords
Bivoug prima facie e^A.ence of the company's inabUity to pay its debts, and is the
evidence most commonly relied on.

(5) Just and Equitable.

In most cases the order is made with reference to (4) and (5) . Inability to pay
debts is defined by sect. 80, supra, and the cases under it.

In (5) the words '■^just and equitable" do not vest an absolute discretion in the
Court. They refer to cases ejusdem generis with the four preceding cases. Langham
Skating Rink Co., 5 C. D. 069 ; Suburban Hotel Co., 2 Ch. 737 ; Wear Fngine Works
Co., 10 Ch. 188 ; Rica Gold Co., 11 C. Div. 36.

It is to bo regretted that the ejusdem generis j)rinciple was pushed so far in some
of the earlier authorities, and, whatever reported cases may say, there is a strong
inclination now to relax the rule. Australian Joint Stock Co., W. N. (1897) 48 ;
Suiling Ship Kentmere Co., W. N. (1897) 58.

Tlie following are some of the cases which have been deemed ejusdem generis : —

(a) Insolvency. Eurojjcan Life Assurance Society , 9 Eq. 122; London and Manchester
Industrial, 1 C. D. 406 ; British Alliance Corporation, 9 C. D. 635. And see Wicket
latent Syndicate, 35 S. J. 743 ; Lyric Club, 36 S. J. 801.

(b) Substratum of company gone, c. g., wlicro the primary and substantial object



WINDING-UP PETITIONS. 37

is to work a patent -wliioli has proved invalid, or to work a mine wliicli cannot be
obtained. German Bate Coffee Co., 20 C. Div. 109 ; Haven Gold Co., 20 C. Div. 151 ;
Crown Bank, 44 C. D. 634 ; Bristol Joint Stock Bank, ib. 703 ; Red Rock Gold3fining
Co., 61 L. T. 785. But the case must be clearly made out, or the Court will decline
to interfere. See Lan(jham Skating Rink, 5 C. D. 669 ; Kijlstroom Co., 60 L. T. 478,
and other cases specified above ; also Electric Arms Co., 35 S. J. 818 ; Thomas Edward
Brinsmead and Sons, infra.

(c) That the company is a bubble : London and County Coal Co., 3 Eq. 355 ; but
there is no good definition of a bubble company.

(d) That the company cannot carry on business, and that assets may be recovered
from fraudulent promoters. Diamond Fad Co., 13 C. Div. 400. Or even that sup-
posed fraud in promotion demands investigation. General Rhosphate Corporation,
W. N. (1893) 142. But mere misconduct of directors is not enough. Anglo-Greek
Steam Co., 2 Eq. 1. And fraud on outsiders in carrying on the business will not in
general suffice. Medical Battery Co., (1894) 1 Ch. 444. And since the decision of
the House of Lords in Ex parte Barnes, (1896) A. C. 146, the Court has not relied
much on the ground that an investigation as to fraud in promotion is required.
But where it is once shown that the substratum has gone, the facts that the company
has been established for fraudulent purposes, even as regards outsiders, and that
winding-up is the best means to make promoters disgorge, are cogent reasons for
making a compulsory order. Thomas Edward Brinsmead and Sons, (1897) 1 Ch. 45 ;
on app. (1897) 1 Ch. 406.

Where the ground of " just and equitable " is made out, it is no defence that the
company has not been in existence for a year. German Date Coffee Co., supra;
Thomas Edward Brinsmead and Sons, supra.

(b) Unregistered Companies.

Sect. 199 of 1862. — Subject as hereinafter mentioned, any partnership, association,
or company, except railway companies incorporated by Act of Parliament, consisting
of more than seven members, and not registered under this Act, and hereinafter
included under the term unregistered company, may be woimd up under this Act.
******
(3.) The circimistances under which an unregistered company may be wound up
are as follow ; (that is to say,)
[a.) Whenever the company is dissolved, or has ceased to carry on business,
or is carrying on business only for the purpose of winding up its
afPairs ;
[b.) Whenever the company is unable to pay its debts ;

{c.) Whenever the Court is of opinion that it is just and equitable that the

company should be wound up :

(4.) An unregistered company shall, for the purposes of this Act, be deemed to bo

imable to pay its debts,

{a.) Whenever a creditor to whom the company is indebted at law or in

equity, by assignment or otherwise, in a sum exceeding fifty pounds

then due, has served on the company, by leaving the same at the

principal place of business of the company, or by delivering to the

secretary or some director or principal officer of the company, or by

otherwise serving the same in such manner as the Court may approve

or direct, a demand under his hand requiring the company to pay the

sum so due, and the company has for the space of three weeks

succeeding the service of such demand neglected to pay such sum, or

to secure or compound for the same to the satisfaction of the creditor :



WINDING-UP BY THE COURT. [ChAP. Ill,

{b.) Whenever any action, suit, or other proceeding has been instituted
against any member of the company for any debt or demand due, or
claimed to be due from the company, or from him in his character of
member of the company, and notice in writing of the institution of
such action, suit, or other legal proceeding having been served upon
the company by leaving the same at the principal place of business of
the company, or by delivering it to the secretary, or some director,
manager, or principal officer of the company, or by otherwise serving
the same in such manner as the Coiirt may approve or direct, the
company has not within ten days after service of such notice, paid,
secured, or compounded for such debt or demand, or procured such
action, suit, or other legal proceeding to be stayed, or indemnified the
defendant to his reasonable satisfaction against such action, suit or
other legal proceeding, and against all costs, damages, and expenses
to be incurred by him by reason of the same :

(c.) Whenever, in England or Ireland, execution or other process issued on a
judgment, decree, or order obtained in any Court in favour of any
creditor in any proceeding at law or in equity instituted by such
creditor against the company or any member thereof as such, or
against any person authorized to be sued as nominal defendant on
behalf of the company, is returned unsatisfied :

{d.) Whenever, in the case of an unregistered company engaged in working mines
within and subject to the jurisdiction of the Stannaries, a customary decree
or order absolute for the sale of the machinery, materials, and effects of
such mine has been made in a creditor's suit in the Court of the vice-
warden. See Stannaries Court Abolition Act, 1896 :

(e.) Whenever, in Scotland, the inducije of a charge for payment on an
extract decree, or an extract registered bond, or an extract registered
protest, have expired without payment being made :

(/.) Whenever it is otherwise proved to the satisfaction of the Court that
the company is unable to pay its debts.



Who may Petition.

Application Sect. 82 of 1862. — Any application to the Coiu-t for the winding up of a company

for winding- under this Act shall be by petition ; it may be presented by the company, or by any

P , , one or more creditor or creditors, contributory or contributories of the company, or

petition. ^J ^^^ °'' ^^J ^^ *^^° above parties, together or separately ; and every order which

may be made on any such petition shall operate in favour of all the creditors and all

the contributories of the company in the same manner as if it had been made upon

the joint petition of a creditor and a contributory.
Life assurance Sec sect. 14 of 1890, as to a petition by the official receiver ; and sect. 21 of the
companies. Life Assurance Companies Act, 1870, as to a petition by a ciu-rent policy holder.
Abuse of Proceedings on a petition presented with an illegitimate object— <f.^., to put

process. pressure on the company — will be stayed as an abuse of process. Re A Company,

(1891) 2 Ch. 349.

As to the Company^ s Petition.

Where the company gets into great difficulties, the directors, acting on the com-
pany's behalf, occasionally presout a petition for winding-up, but such petitions
are comparatively rare. Usually, where a wiuding-ux) seems expedient, the direc-



WINDING-UP TETITIONS. 39

tors take steps to obtain a voluntary winding-up, to be followed, if expedient, by a



Online LibraryFrancis Beaufort PalmerCompany precedents for use in relation to companies subject to the Companies acts, 1862 to 1890 ... (Volume 2) → online text (page 12 of 134)