Francis Beaufort Palmer.

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COMMITTEE OF INSPECTION. 221



Powers and Duties of Committee.

The powers and duties of the committee of inspection seem to be as stated below
(but the list is probably not exhaustive) : —

1. To fix the remuneration of the liquidator, unless the Court otherwise orders.
(R. 154, cl. 1, of 1890.)

2. To apply to the Board of Trade, in a proper case, to " authorize the liquidator
to make his payments into and out of such other bank," than the Bank of England,
"as the committee may select" (see sect. 11, sub-s. 3, of 1890, and Chap. XXV. ;
and to provide for the countersigning' of the liquidator's cheques on such account.
(See R. 81 of 1890.)

3. To request tlie Board of Trade to invest in Government securities any amount
of the cash balance standing to the credit of the comjiany's account, which in their
opinion is in excess of what is required for the time being to answer demands in
respect of the company's estate. (Sect. 17, sub-s. 1, of 1890; R. 134 of 1890, and
end of Chap. XXV.)

4. To request the Board of Trade to sell securities to raise money which in their
opinion is required to answer such demands. (Sect. 17, sub-s. 2, of 1890, and
R. 134 of 1890.)

5. To sanction or refuse to sanction the liquidator's —

(a) Carrying on the business of the company. (See Chap. XXVI.)

(b) Bringing or defending any legal proceedings in the name and on behalf of

the company. (See Chap. XXXII.)

(c) Exercising any powers under sects. 159 or 160 of 1862 (entering into general

schemes of liquidation or compromises: Chap. XLVII.).

(d) Employing a solicitor or other agent to take any proceedings or do any busi-

ness which the liquidator is unable to take or do himself (the sanction
being obtained before the employment, except in urgent cases). (Sect. 12
of 1890, and Chap. XX.)

(e) Making any call (sect. 13 of 1890 ; and as to summoning meetings, &c. to

obtain the sanction of the committee, see R. 92 of 1890, and Chap.
XXXIX.).

6. To require the liquidator to submit the "Record Book" and "Cash Book,"
and any other requisite books and vouchers to them, at least once every three months,
and oftener, if they think fit. (R. 144, cl. 2, of 1890, and Chap. XXIV.)

7. To see that such "Record Book" properly records all minutes and proceed-
ings had and resolutions passed at any meeting of the committee (see R. 143 of
1890) ; and that the Cash Book contains proper entries in accordance with R. 144,
cl. 1, of 1890, and R. 142, and Chap. XXIV.

8. To audit, not less than once every three months, the " Cash Book," and certify
therein the day of audit. (R. 135 of 1890, Chap. XXIV.)

9. To require the liquidator, when he carries on the business, once at least in
every month to submit his trading account, verified by affidavit, to the committee, or
some member thereof appointed for the purpose, who is to examine and certify the
same. (R. 137, cl. 2, of 1890, Chap. XXIV.)

[N.B. — " The provisions of these Rules as to liquidators and their accounts shall
not apply to the official receiver when he is liquidator, but he shall account in such
manner as the Board of Trade may from time to time direct. (R. 168, cl. 3, of 1890.)]

10. To give any directions (which, however, may be overruled by general meetings
of creditors and contiibutories) to the liquidator with regard to the administration
of the property of the company, and the distribution thereof amongst its creditors.
(See sect. 23, sub-s. 1, of 1890.)

The committee of inspection exercise their powex's by resolution passed by " a



322



WINDING-Uf DY THE COURT. [ChAP. XXII.



majority of their members present at a meeting, but shall not act unless a majority
of the committee are present at the meeting." (See sect. 9 (3), supra.)

This means that— although there is no quorum, apparently for any purpose, unless
more than half of the total committeemen are present — if there is a quorum, any
niunber exceeding half of them may do any act which the committee is empowered
to do by the Act or Eiiles. There is no provision for the appointment of a chair-
man.

It is usual for the liquidator (whether official receiver or outside liquidator) to
attend the meetings and preside as chairman, but in his absence, there seems to be
no objection to the committee apx^ointing one of their number present at the meeting
to preside as chairman thereof. But the liquidator has no right to vote on the
resolution, and, qiuere, whether any other chairman has a casting vote.

If any difference of opinion exists the chairman will put the question to the vote,
and the decision of the majority will bind the meeting mid the committee (see supra) ;
but any directions given may be overridden by the creditors or contributories in
general meeting. (See sect. 23 (1) of 1890.)



Record Book and Minutes.

R. 143 of 1890 provides that " the official receiver, until a liquidator is appointed,
and thereafter the liquidator shall keep " a Record Book " in which lie shall record "
{inter alia) all minutes, all proceedings had and resolutions passed at any meeting of
the committee of inspection ;" and it is obvious, therefore, that only he, and not the
committee, can make entries in this book, though R. 144 (2) requires him to submit
the book to the committee when required, and not less than once every three
months. But, although not required by the Act or Rules to do so, the committee
should keep a minute book recording all their proceedings, and the minutes of each
meeting should be signed as correct by the members present thereat.



The first entry in the record book or the minute book should be a copy of the
order of the Court appointing the liquidator and the committee, if any ; this order will
show what members of the committee are creditors and what contributories. The
following will show the mode of entering the minutes : —



Form 193.

Minutes of
meeting of
committee of
inspection.



Meeting of tlie committee of inspection, held at on the

— day of . Present, A., B., C. and D., members of the com-



mittee, and E., the liqr.

In the chair, E.

The notice convening the meeting was read.

The liqr stated that he was in treaty for the sale of the coy's busi-
ness as a going concern, and that, in his ojiiuion, it was desirable to
keep the business going for the present, and that he had examined the
books and was satisfied that it could be kejit going without loss, and
he applied for liberty to carry it on for one month.

Eesolved, tliat tlio liqr be authorized to carry on the business for
one month from this date.

The liqr stated that part of the assets of the coy consisted of three
bills of exchange drawn by the coy on N., and accepted by him, pay-



COMMITTEE OF INSPECTION. 2'3'3

able on the day of , and that tlieso bills had been dishonoured,

and he applied for liberty to bring an action to enforce jiayment, and
for that purpose to employ M., solor ; and it was

Eesolved that the liqr be authorized to bring an action against N.
for enforcing payment of his acceptance above-named, and to employ
Mr. M., solor, for the purposes of such action.

The liqr produced a prov agmt for compromise, dated the day

of • , and made between the liqr and Q., a contributory of the coy,

and stated &c., and it was

Eesolved that tbe sd prov agmt be sanctioned.

A letter from , addressed to the liqr, and dated the day of

, respecting &c., was read, and it was resolved tbat the liqr be

authorized &c.

(Signed) , Chairman.

The minutes should be duly entered and signed before the meeting separates.

Remuneration.

No general order under sect. 27 (3) of 1890 has been made by the Lord Chancellor,
vdth the concurrence of the Treasury, providing for the remuneration of members
of the committee of inspection, but in the case of a large and troublesome liquidation,
where much time of the committeeman is taken up even "in the discharge of the
duties attached to his office," a special order has been made, the application being
supported by the Board of Trade.

Sect. 12 (4) of 1890 empowers the liquidator in a compulsory winding-up, with
the sanction either of the Court or the committee of inspection, to employ a solicitor
or agent to do any business which the liquidator is unable to do himself ; and
among the costs payable out of the assets of the company, under Rule 31 of 1890,
are ' ' the costs of any person properly employed by the liquidator with the sanction
of the committee of inspection."

But, having regard to E,. 160 {supra), the sanction of the Court seems to be neces-
sary to payment even for these services, if performed by a member of the committee.
See Ex parte Gallard, tibi stipra, as to the solicitor or his clerk being on the com-
mittee.

Proceedings.

{Title.) Form 193a.

Take notice that a meeting of the committee of inspection in the Notice of

above matter \or of tbe above coy : see Form 54 of 1890] will be held meeting of

-, ^ ,T-.,,-r I- J-, committee of

at 33, Carey Street, Lincoln s inn, London [or as the case may be], on inspection.

the ■ day of , 189 — , at o'clock in the noon, when

your attendance is requested.

Dated this day of , 189 — .

[^Signed'] A. B., [off recr and] liqr [or member of the committee of
inspection, and state address^.

The above is the form used when the official receiver is liquidator, with the
necessary modifications, if the meeting is called by an outside liquidator, or by a
committeeman. See sect. 9 (2) of 1890, supra.



224



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



Form 194.

Kesignation
by committee-
man.



(Title.)

To Mr. A. B., the [off recr and] liqr of the above-named coy.
Take notice that I, the undersigned, a member of the committee of
inspection in the winding-up of the above-named coy, resign my office
as a member of the sd committee. A duplicate of this notice is sent
herewith, and I shall be obliged if you will endorse thereon an acknow-
ledgment of the receipt thof by you and return the same to me at
the above address.

(Signed) X.
See sect. 9 (4), supra.



Form 195.

Leave of
absence to
committee-
man.



{mie.)

We, the undersigned, being members of the committee of inspection
in the winding-up of the above-named coy, who, together with X.,
represent the creditors [^or contributories, as the case may ie] of the
sd coy, hereby give leave to the sd X. to absent himself from all
meetings of the sd committee, or any such meeting, to be held at any
time before the day of , 189 — .

See sect. 9 (5), supra. If a member is absent for five meetings, he vacates office
unless he has leave under this section.



Form 196.

Notice of
meeting- of
creditors or
contributories
to remove
committee-
man.



{Title.)

Notice is hby given that a meeting of the creditors [or contributories]

of the above-named coy will be held at on the day of ,

189 — , at o'clock in the noon, for the purpose of considering,

and if deemed expedient, passing the following resolution, that is to

say: " That X., a member of the committee of inspection of the

Coy, Limtd, representing creditors [or contributories] thereof be, and
he is hby, removed from office."

Dated, &c. A. B., [off recr and] liqr [state address'].

Until the member is removed there is " no vacancy in the office of a member."
It is only on such a vacancy occurring that the liquidator can " forthwith summon
a meeting" under sect. 9 (7) "for the purpose of filling the vacancy." The
removal and filling up of the vacancy caunot tliereforc be effected at one meeting,
and accordingly after the resolution for removal has been passed, a further meeting
to fill up the vacancy must bo convened. See next form.



Form 197.

Notice of
meeting of
creditors or



{Title.)

Notice is hby given that a meeting of the creditors [or contributories]
of the above-named coy will bo hold at on the day of ,



committfj: of inspection. 22o

189 — , at of the clock in the noon, foi- the purpose of filling contributories

the vacancy in the office of a member of the committee of inspection in vacancy'on
the winding-up of the sd coy caused by the resignation [or death, or committee,
removal from office] of X., a creditor [or contributory] thof, or by
X., a creditor [_or contributory] thof, having become bankrupt [or
compounded, or arranged with his creditors, or having been absent
from five consecutive meetings of the sd committee without the leave
required by the Cos (Winding-up) Act, 1890].

Dated, &.c. A. B., [off recr and] liqr of the above-named coy \_state
address~\.

See scot. 9 (7) of 1890, supra. What is to be summoned is a mcctiDg "of creditors
or contributories as the case may require," not of the creditors or contributories on
the committee of inspection.



That Z., of , &c., a creditor [or contributory] of the Coy, Form 198.

Limtd, be, and he is hby, appointed a member of the committee of Resolution of

inspection of the sd coy in the place or stead of X., a creditor, who creditors or
T , T no contributories

has vacated office. fillino- up

In case of the death, removal, or resia-nation of a liquidaior, another may be ^ can y

' ' '^ » „ . ,, committee,

appointed "in the same manner as directed in the case of a first appointment.

R. 65 of 1890. But where the meetings resolved that no application to the Court

should be made to appoint a person other than the ofiBcial receiver, another official

receiver was appointed without resummoning the meetings. There is no provision

similar to R. 65 in the case of a vacancy on the committee of inspection, and having

regard to sect. 9 (7) of 1890, supra, ■p. 219, it seems that the creditors or contributories

may themselves fill up vacancies without any order of the Court.

{Title.) Form 199.

I, A. B., of &c., the liqr in the above matter, hby apply to the off Liquidator's
recr, acting as the committee of inspection in this winding-up, for his application
sanction and directions in the following matters, viz. : \_set out the of official

matters in which directions are required^. receiver

2 J (acting as

Dated this day of ,189 — , committee).

A. B., Liqr.

The above applicon will be heard by the off recr on the day of

, 189—, at o'clock.

As to the ofiicial receiver acting as committee of inspection, see sect. 9 (9) of 1890
and H. 109 of 1890, supra.

Qnccre, whether an outside liquidator may not at any time summon the ofiicial
receiver (as committee) to his aid under sect. 9 (2), supra.

{Title.) "Eovm 199a.

I, , the off recr and liqr in the above matter, hby apply to the Apphcation

Board of Trade, acting as committee of inspection, for \_here state the ^^^q^.'^q ^^'



226



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



Board of _ directions or jjermission required. If the statement oj" facts hy tcliich the
as committee application is supported is lengthy., it may he appended. If the off liqr is
of inspection, of opinion that the directions or po'mission of the Court are desirable he
should state his reasons for thinking so~\.

\_Date and signature'],

, Off Eecr and Liqr.

See sect. 9 (9) of Act of 1890, and R. 169 of 1890, sujira, p. 219.



Form 200. {Title.)

That A. B., of &c., chartered accountant, the liqr of the above-
- Coy, Limtd, shall be remunerated for the service of him-



Eesolution
fixing re-
muneration of named
liquidator.



self and his clerks in the winding-up of the sd coy in accordance with
the scale of percentage payable for realizations and distributions by
the off recr as liqr set out in Table B., Part II., annexed to the order
of the Lord Chancellor as to fees of the 17th Dec, 1891 \if expedient
add, subject to the following modifications, e.g., (a) 10 per cent, shall
be substituted for 5 per cent. ; (b) 8 per cent, shall be substituted for
4 per cent., &c., or as the case may require].

The remuneration viusl now be in the nature of a commission or percentage. See
R. 154 of 1890. Qucere, whether the Court can direct the remuneration to be
assessed on any other principle than percentage. As to the power of the Board of
Trade in bankruptcy to alter the amount allowed, see In re Galland, 61 L. J. Q. B.
425.



Form 201.

Sanction of
committee to
liquidator
carrying on
business.



That the liqr be authorized to carry on the business of the coy until

the day of , 189 — \jrestrict poxoer if necessary, e.g., but so

far only as may be necessary to complete contracts already made by
the sd coy, or by the off recr as prov liqr thof, and to undertake con-
tracts to an extent not exceeding what may be necessary to sell the
land, buildings, and business of the sd coy as a going concern, but so

that the price for such further contracts shall not exceed 1., and so

that any such further contracts shall not take more than months

to complete].

See sect. 12 (1) of 1890.

Other forms of sanction (by the Coiirt) to carrj^ng on the business will be found
in Chap. XXVI.



Form 202. That for the purpose of carrying on the business of the coy it is for
the advantage of the creditors [or contributories] thof that the liqr

should have a speoial bankiug account with the Bank, and

that this coiumittec do make au applicou to the Board of Trade to



Resolution in
favour of
Hpf;cinl bank
account.



I



1.4



COMMITTEE OF LXSI'ECTION. 227

autliorize tlio llqr to maico liis payments into and out of the sd bank,
and [if dffemed necessari/l that every cheque on such account shall be
counters! g'ued not only by a member of this committee, but by Y., of
&c., the solr acting for the sd liqr [or the special manager appointed
in the above matter, or as the case may require'].

See sect. 11 (3) of 1890, and Rr. 81 and 82 of 1890.



That L. M., of &c., a member of the committee of inspection of the Form. 203.

Coy, Limtd, be and he is hby appointed the member of the sd Appointment



committee who shall from time to time until further resolution of the *^^ comraittee-

committee examine and certify the trading account of the liqr of the auditor of

sd coy pursuant to the Cos (Winding-up) Eules, 1890. tridin^*"'''^

See Rr. 135—138 of 1890, and Chap. XXIV. account.

For certificate of audit, see Form 211 (Form 80 of 1890).



Tliat this committee do sanction the employment by the liqr of Mr. Form 204.
C. D., of &c., solr, to take proceedings in respect of the following Sanction of
matter, viz. [here state the particular matter, as in Form 191a]. ikJuidLtoJ *°

See sect. 12 (4) of 1890. A copy of this resolution must be produced to the employing
taxing officer before the costs are taxed. R. 29 of 1890. See Ex parte Gallard,
(189C) 1 Q. B. 68* as to solicitor or his clerk being on the committee.



That the liqr be authorized to take the proceedings following. Form 205.

namely [state the proceedings to be taken or acts to he done~\. And to Sanction of

employ C. D., of &c., as the sob for the purposes of the sd proceedings. J''™?^'^"^^® *°

See sect. 12 (1) and (4) of 1890, and Chaps. XX. and XXXII. ■^i-i°&\'?& "i"

^ ' ^ ' defending

proceedings.

That the sanction, d'c, to an agreement for compromise, dated, &c., Form 206.



and made between, &c., and which sd agreement is identified by the Sanction of

followins: memdum of sanction endorsed thereon as follows : — committee to
° fl T • T • 1 comijromise

" Sanctioned by the committee of inspection of the withm-named coy ^^ arrange-

this day of , 189 — , A. B., 0. D., members of the committee ment.

of inspection."

And see other forms of sanction to compromises and aiTangements in
Chap. XLVII.



Upon the applicon of W., the liqr of the above-named bank, &c., It Form 207.

is ordered that H. and K., contributories, and D., M., S., and W., Order for

creditors, being six members of the committee of inspection, be dis- remuneration
° of committee

Q 2



228



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



and discharg-
ing some
members.



charged, and that Q., a contributory, and X. and Y., creditors, be
continued as the committee of inspection under the sd order of 1 8th
Dec. 1891 (two to be a quorum), and that the sd W. be at liberty to
pay out of the assets of the bank the sum of 100 guineas to each of
the nine members of the committee of inspection, exclusive of their out
of pocket expenses, for their services up to the 19th May, 1892, the
date of the order confirming the scheme of reconstruction. English
Ba7ik of River Plate, (1891) E. 0258, Chitty, J., 19th July, 1892.
A. 1067.

Having regard to R. 160 of 1890, p. 220, it would seem that the order ought to
have specified the special services rendered ; and it is now usual to specify them.



229



CHAPTER XXIII.

REMUNERATION OF LIQUIDATOR.



How Remuneration Assessed.

Sect. 93 of 1862. — There shall be paid to the official liquidator such salary or Act of I8G2.
remuneration, by way of percentage or otherwise, as the Court may direct ; and if
more liquidators than one are appointed, such remuneration shall be distributed
among them in such proportions as the Court directs.

This section has not been repealed by the Act of 1890.

The regulation set out below was issued in 1868 as a guide to the exercise of the Regulation of
discretion of the Coui't under sect. 93 of 18C2 ; but it was not a rule of Court, and, 1868.
as appears from the concluding paragraph, did not fetter the Court's discretion.
See Cannan's case, 7 Eq. 102 ; and Mysore Reefs Co., 3i Ch. Div. 14. It was gene-
rally acted on up to the end of 1890, when the "Winding-up Act was passed, and
under R. 15i of 1890 {uifra), it is still open to the Court to direct that the liquidator
shall be remunerated according to the mode prescribed by the Regulation of 1868 ;
and see infra.

REGULATION

As TO THE Mode of Remttneeating Official Liquidatoes adopted by the Master
OF THE Rolls and the Vice-Chancelloes, and sanctioned and appeoved by

THE LOED ChANCELLOE.

Every application by an official liquidator for remuneration must be supported
by an affidavit showing the number of hours devoted by him and his clerks re-
spectively to the business of the liquidation.

In fixing the amount of the remuneration, the judge will, subject as hereinafter
mentioned, be guided by the following scale : —

Liquidatoes.
Group A. Per day of

eight huurs.
Class 1 . Where the assets divisible among the unsecured credi- £ £

tors shall not amount to 500 1

„ 2. "Where they shall amount to £500 and not to 2,000 2

,, 3. ,, ,, ,, 2,000 ,, 5,000 3
Group B.

Class 4. ,, ,, ,, 5,000 „ 10,000 4

„ 5. ,, ,, ,, 10,000 „ 50,000 6
Group C.

Class 6. ,, ,, ,, 50,000 ,, 100,000 8

„ 7. „ ,, „ 100,000 ,, 500,000 10

,, 8. ,, ,, ,, 500,000 and over 12

Cleeks.

First class. Second class. Tliird class.

Geoup A. 2s. .... \s. &d. .... Is. per hour.

,, B. 3s 2s. 6c? Is. ,,

„ C. 3s. 6^ 2s. Qd Is. „



230



WINDING- UP BY THE COURT. [ChAP. XXII L



Eemuneration
of provisional
liquidator.

"New pro\-ision
as to remune-
ration.



Improper
retention
of money.



If in the special circumstances of any liquidation it shall at any time, or from
time to time, appear to the judge that it is proper to place it on a higher or lower
class, he will so place it accordingly.

If it shall appear to the judge that in the special circumstances of any liquidation
it is projDer to add to or deduct from the amount of remuneration provided by the
scale, he will make such addition or deduction accordingly.

If during the progress of a liquidation it shall appear to the judge expedient so to
do, he will sanction jjayments to the liquidator on account of his remuneration.

For this purpose the judge will estimate the amount of such remuneration as
well as circumstances will admit, and will pay to the liquidator either the whole
of such estimated remuneration or such part thereof as to the judge shall seem
reasonable.

(This regulation is given in L. R., 3 Ch. Ixiv.)

The words "assets divisible" in the scale mean assets free to be divided among the
creditors and shareholders, not assets actually divided. Mi/sore Reefs, ^c. Co., 34
Ch. Div. 14.

Under the old practice, a provisional liquidator was remunerated in the same way
as other liquidators, unless the order appointing him otherwise provided, e. g., he
was sometimes appointed "without salary," or at " £ per week."

As to the remuneration of the official receiver, as provisional liquidator, see infra.
The practice with reference to other provisional liquidators is still unsettled. But
see Chap. X.

R. 154 of 1890. — (1) The remuneration of a liquidator shall, unless the Court



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