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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to the rent or payment may prove for a proportionate part thereof up to the date of

the winding-up order as if the rent or payment grew due from day to day.
As to rent accruing due under a lease, see Tanthcr Lead Co., (1896) 1 Ch. 100.

104. On any debt or sum certain, payable at a cci-tain time or otherwise, whereon Interest,
interest is not reserved or agreed for, and which is overdue at the date of the
winding-up order, the creditor may prove for interest at a rate not exceeding four

per centum per annum to the date of the commencement of the winding-up from
the time when the debt or sum was payable, if the debt or sum is payable by
virtue of a written instrument at a certain time, and if payable otherwise, then
from the time when a demand in writing has been made giving notice that interest
will be claimed from the date of the demand until the time of payment.

105. A creditor may prove for a debt not payable when the winding-up order Proof subject
was made, as if it were payable immediately, subject to a rebate of interest at the ^° rebate,
rate of five per centum per annum computed from the date of the winding-up

to the time when the debt would have become payable according to the terms on
which it was contracted.

108. In any case in which it appears from the statement of affairs that there are Workmen's
numei-ous claims for wages by workmen and others employed by the company, it wages,
shall be sufficient if one proof for all such claims is made either by a foreman or by
some other person on behalf of all such creditors. Such proof shall have annexed
thereto, as forming part thereof, a schedule setting forth the names of the workmen
and others, and the amounts severally due to them. Any proof made in compliance
with this rule shall have the same effect as if separate proofs had been made by
each of the said workmen and others.

107. Where a creditor seeks to prove in respect of a bill of exchange, promissory Production
note, or other negotiable instrument or security on which the company is liable, security,
such bill of exchange, note, instrument, or security must, subject to any special

order of the Court made to the contrary, be produced to the official receiver, chair-
man of a meeting, or liquidator, as the case may be, and be marked by him before
the proof can be admitted either for voting or for any pui-pose.

108. A proof intended to be used at the first meeting of creditors or at an Proofs for
adjournment thereof shall be lodged with the official receiver not later than the "^^'^ meetings,
time mentioned for that purpose in the notice convening the meeting, or adjourned

meeting.

109. Where a liquidator is appointed all proofs of debts that have been received DeUvery by

by the official receiver shall be handed over to the liquidator. But the official o^cia-l re-

ceiver to
receiver shall first make a list of such proofs, and take a receipt thereon from the \\nx,\Act\c

liquidator for such proofs.

As to swearing proofs, see note to Form 157, and R. of Dec. 3, 1892, Appendix. Swearino-.

Admission axd Rejection of Proofs, and Appeal to the Court.
Rr. 110 to 118 of 1890 are as follows :—

110. The liquidator shall examine every proof and the grounds of the debt, and Examination
in writing admit or reject it, in whole or in part, or require further evidence in £; proois (see
support of it. If he rejects a proof he shall state in writing to the creditor the

grounds of the rejection.

111. If a creditor or contributory is dissatisfied with the decision of the liquidator Appeal by
in respect of a proof, the Court may, on the application of the creditor or contribu- creditor.



362



WINDING-Ur BY THE COURT. [ChAP. XXXVII.



tory, reverse or vary the decision ; but, subject to tbe power of the Coiirt to extend
the time, no application to reverse or vary the decision of the liquidator rejecting
a proof shall be entertained, unless notice of the application is given before the
expiration of twenty-one days from the date of the rejection.
Expunging. 112. If the liquidator thinks that a proof has been improperly admitted, the

Court may, on the application of the liquidator, after notice to the creditor who
made the proof, expunge the proof or reduce its amount.

113. The Court may also expunge or reduce a proof uijon the application of
a creditor or contributory if the liquidator declines to interfere in the matter.
ISe Stenson, 25 C. Div. 147.]

114. For the purpose of any of his duties in relation to proofs, the liquidator may
administer oaths and take affidavits.

115. The official receiver, before the appointment of a liquidator, shall have all
the powers of a liquidator with respect to the examination, admission, and rejection
of proofs, and any act or decision of his in relation thereto shall be subject to the
like appeal.

116. The official receiver, where no other liquidator is appointed, shall, before
payment of a dividend, file all proofs tendered in the winding-up, with a list
thereof, distinguishing in such list the proofs which were wholly or partly admitted,
and the proofs which were wholly or partly rejected.

117. Every liquidator other than the official receiver shall, on the first day of
every mouth, file with the proceedings a certified list of all proofs, if any, received
by him during the month next preceding, distinguishing in such lists the proofs
admitted, those rejected, and such as stand over for further consideration ; and, in
the case of proofs admitted or rejected, he shall place the proofs on the file of
proceedings.

118. The official receiver, or, as the case may be, the hquidator, shall, within
tliree days after receiving notice from a creditor of his intention to appeal against a
decision rejecting a proof, file such proof, with a memorandum thereon of his
disallowance thereof.

[R. 119 of 1890 was annulled by R. 34 of Ap. 1892, and the following provision
was substituted for it.]

E. 29 of Ap. 1892. — Subject to the powers of the Court to extend the time, the
official receiver as liquidator, not later than fourteen days from the latest date
specified in the notice of his intention to declare a dividend as the time within
which such proofs must be lodged, shall in writing either admit or reject wholly
or in part every proof lodged with him, or require further evidence in support of it.

The claunaut may be cross-examined on his affidavit, or an order to examine hun
under sect. 115 of the Act of 1862 may be obtained. See Chap. XLIII.

B. 120 of 1890. — Subject to the power of the Court to extend the time, the liqui-
dator, other than the official receiver, within twenty-eight days after receiving a
proof, which has not previously been dealt with, shall in writing either admit or
reject it wholly or in part, or require further evidence in support of it. Provided
that where the liquidator has given notice of his intention to declare a dividend, he
shall within fourteen days after the date mentioned in the notice as the latest date
up to which proofs must be lodged examine and in writing admit or reject every
proof which has not been already dealt with, and give notice of his decision reject-
ing a pi-iKif wliully or in part to the creditors afi'ccted thereby.
CoHtfl of B. 121 of 1890. — Th(^ official receiver shall in no case be personally liable for costs

appeal. in relation to an appeal from his decision rejecting any proof wholly or in part.



Oaths.

Powers of

official

receiver.



Official re-
ceiver to file
proofs.



Liquidator to
file fists and
proofs.



Procedure
on appeal.



Time for offi-
cial receiver
to admit or
reject.



Time for
liquidator
to do so.



CKEDITUKS. 363



Dividends.

E. 122 of 1890.— (1.) Not more than two months before declaring' a dividend, the Notice of
liquidator shall give notice of his intention to do so to the Board of Trade in order l^^**^_?'!S^ ^^^'
that the same may be gazetted, and at the same time to such of the creditors men- ^^^ . j^^^^
tioned in the statement of affairs as have not proved their debts. Such notice shall dividend,
specify the latest date up to which proofs must be lodged, vrhich shall be not less Form 442).
than fourteen days from the date of such notice.

(2.) Where any creditor, after the date mentioned in the notice of intention to Appeal,
declare a dividend as the latest date up to which proofs may be lodged, appeals
against the decision of the liquidator rejecting a proof, notice of appeal shall, sub-
ject to the power of the Court to extend the time in special cases, be given within
seven days from the date of the notice of the decision against which the appeal is
made, and the liquidator may in such case make provision for the dividend upon
such proof, and the probable costs of such appeal in the event of the proof being
admitted. Where no notice of appeal has been given within the time specified in
this Rule, the liquidator shall exclude aU proofs which have been rejected from
participation in the dividend.

(3.) Immediately after the expiration of the time fixed by this Rule for appealing Declaration of
against the decision of the liquidator he shall proceed to declare a dividend, and dividend,
shall give notice to the Board of Trade (in order that the same may be gazetted), Gazettmg
and shall also send a notice of dividend to each creditor whose proof has been
admitted.

(4.) If it becomes necessary, in the opinion of the liquidator and the committee of Postpone -
inspection, to postpone the declaration of the dividend beyond the limit of two ment.
months, the liquidator shall give a fresh notice of his intention to declare a dividend
to the Board of Trade in order that the same may be gazetted ; but it shall not be
necessary for the liquidator to give a fresh notice to such of the creditors men-
tioned in the statement of afPairs as have not proved their debts. In all other
respects the same procedure shall follow the fresh notice as would have followed the
original notice.

Proof by Secured Creditors.

2nd Sched. to Bankruptcy Act, 1883 (Rr. 9—16), is as follows : —

9. If a secured creditor realizes his security, he may prove for the balance due to Realization,
him after deducting the net amount realized.

10. If a secured creditor surrenders his security to the official receiver or trustee, Sxirrender.
for the general benefit of the creditors, he may prove for his whole debt.

11. If a secured creditor does not either realize or surrender his security, he shall. Assessed
before ranking for dividend, state in his proof the particulars of his security, the value,
date when it was given, and the value at which he assesses it, and shall be entitled

to receive a dividend only in respect of the balance due to him after deducting the
value so assessed.

12. — (a) Where a secui-ity is so valued, the trustee may at any time redeem it on Redemption
payment to the creditor of the assessed value. of security.

(b) If the trustee is dissatisfied with the value at which a security is assessed, he
may require that the property comprised in any security so valued be offered for
sale, at such times and on such terms and conditions as may be agreed on between
the creditor and the trustee, or as, in default of such agreement, the Court may
direct. If the sale be by public auction, the creditor, or the trustee on behalf of Sale,
the estate, may bid or purchase.



364

Election.



Amending
valuation.



Surplus divi-
dend.



Subsequent
realization.



Exclusion.



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

(c) Provided that the creditor may at any time by notice in writing require the
trustee to elect whether he will or wUl not exercise his power of redeeming the
security or reqiiiring it to be realized ; and if the trustee does not, within six months
after receiving the notice, signify in writing to the creditor his election to exercise
the power, he shall not be entitled to exercise it, and the equity of redemption, or
any other interest in the property comprised in the security which is vested in the
trustee, shall vest in the creditor, and the amount of his debt shall be reduced by the
amount at which the security has been valued.

13. Where a creditor has so valued his security he may at any time amend the
valuation and proof on showing to the satisfaction of the trustee or the Court that
the valuation and proof were made bond fide on a mistaken estimate, or that the
security has diminished or increased in value since its previous valuation ; but every
such amendment shall be made at the cost of the creditor, and upon such terms as
the Court shall order, unless the trustee shall allow the amendment without appli-
cation to the Court.

14. Where a valuation has been amended in accordance with the foregoing rule,
the creditor shall forthwith repay any surplus dividend which he may have received
in excess of that to which he would have been entitled on the amended valuation,
or as the case may be, shall be entitled to be paid out of any money for the time
being available for dividend, any dividend, or share of dividend, which he may have
failed to receive by reason of the inaccuracy of the original valuation, before that
money is made applicable to the payment of any future dividend, but he shall not
be entitled to distiu-b the distribution of any dividend declared before the date of
the amendment.

15. If a creditor, after having valiied his security, subsequently realizes it, or if
it is realized under the provisions of rule 12, the net amount realized shall be substi-
tuted for the amount of any valuation previously made by the creditor, and shall be
treated in all respects as an amended valuation made by the creditor.

16. If a secured creditor does not comply with the foregoing rules he shall be
excluded from all share in any dividend.



Proofs by Shareholders.



Sect. 38 (7) of 1862. — No sum due to any member of a company, in his character
of a member, by way of dividends, profits, or otherwise, shall be deemed to be a
debt of the company, payable to such member in a case of competition between him-
self and any other creditor not being a member of the company ; but any such sum
may be taken into account, for the purposes of the final adjustment of the rights of
the contributories amongst themselves.

But a member may prove, in competition with non-members, for a debt due to
him as a stranger. GrisselPs Case, 1 Cli. 528 ; Ilnmber Ironworks Co., 8 Eq. 122.



Exclusion of Creditors not proving in time.

Court may Sect. 107 of 1862. — The Court may fix a certain day or certain days on or within

fix time. ■which creditors of the company are to prove their debts or claims, or to be excluded

from the benefit of any distribution made before such debts are proved.
Liquidator's Sect. 13 of 1890. — General Rules may be made for req^iiring or enabling all or

power. any of the powers and duties conferred and imposed on the Coui't by [the above

section] to be exercised or performed by the licjuidator as an officer of the Court
and subject to the control of the Court. [And see R. 122 of 1890, supra. But
fjuecrc whether this rule was made under sect. I'l. It seems necessary to apply under
sect. 107 of 1802 for the Court to fix the time.]



CREDITORS.

Alphabetical Table as to Proof of Debts.

Admission.
As to liquidator's power to admit, see R. 110 of 1890. As to official receiver's
power, see R. 115 of 1890.

Affidavit.

Proof of debt to be made by affidavit. R. 97 of 1890. As to contents, see R. 99
of 1890, supra, p. 360, and Form 157. Affidavit includes affirmations and declara-
tions. See Interpretation Act, 1889, s. 3.

Liquidator's power to administer oaths, see R. 114 of 1890 ; and official receiver's
power, see R. 115 of 1890 and R. of Dec. 3, 1892, Appendix.

Amendment.

A creditor may, it would seem, obtain leave to amend his proof, but without
prejudice to dividends already declared. Me BarnecVs Banking Co., 18 W. R. 944 ;
Ex parte Cama, 9 Ch. 686. And as to amendment by a secured creditor, see Re
Arden, 14 Q. B. D. 121; Ex parte Bagshaw, 13 C. D. 305; Henry Lister ^ Co.,
(1892) 2 Ch. 419. In the case last mentioned, a seciired creditor had inadvertently
proved without valuing his security, and had voted at the first meeting of creditors,
but he was allowed to amend his proof. See also Re Schojield, 12 C. D. 337.

As to amending valuation and proof, see Ex parte National, ^c. Bank, Re Newton,
(1896) 2 Q. B. 403.

Appeal.
As to appeal by creditor or contributory from decision of liquidator in respect of
a proof, see R. Ill of 1890 ; and from decision of official receiver, see R. 115 of
1890. And see Chap. XLIX.

Assignment.
When A. is a creditor of or has a provable claim against the company, and has
assigned it to B., and B. seeks to prove in respect thereof, he must prove the
assignment. An equitable assignee can prove {Ex parte Colborne and Strawbridge,
11 Eq. 478); and an assign under sect. 25 (6) of the Jud. Act, 1873. Milan
Tramways, 25 C. D. 587; JFalker v. Bradford Old Bank, 12 Q. B. D. 511.

Bank Notes
Can be proved for. East of England Banking Co., 4 Ch. 14 ; Herefordshire Banking
Co., 4 Eq. 250. Wliere sect. 6 of the Companies Act, 1879, applies, the liability
of a limited company in respect of notes is unlimited ; but the better opinion
is that this section only applies to banks registered under Part VII. of the Act of
1862.

Bills of Exch.ajs'ge.

See R. 107 of 1890 as to production.

The holder of a biU of exchange upon which the company is liable, whether as
acceptor, indorser, or drawer, can prove in the winding-up, whether the company is
solvent or insolvent, and whether his bill is current or overdue. See sect. 158 of
1862, and sect. 37 of the Bankruptcy Act, 1883; Alsager v. Currie, 12 M. & "W.
751. And the fact that other parties are liable on the bill does not make the
holder a secured creditor, or compel him to value, though he is bound to state the
bills in his proof. Ex parte Schojield, 12 C. D. 337. He may get what he can out



365



366 WINDING-UP BY THE COURT. [ChAP. XXXVII.

of the other parties and the company concurrently, provided that he does not obtain
more than 20s. in the pound. Ux parte Cama, 9 Ch. 686. But if before proof
holder has received a dividend or part payment from any other party liable, he can
only prove against the company for the balance. Oriental Commercial Bank, 6 Eq.
582 ; Cooper v. Fepys, 1 Atk. 107.

As to proving in respect of notarial charges and commission, see Enf/lish Bank of
Hirer Plate, Kv parte Bank of Brazil, (1893) 2 Ch. 438.

" When, upon the acceptance of a biU by a banker or other person, property has
been appropriated by the di-awer for the benefit of the acceptor towards payment of
the bill, on the double bankruptcy or insolvency of the drawer and acceptor, the
holder of the bill has an equity to the benefit of the contract between them, and to
have the property specifically applied in payment of the bUl." Tudor's L. C.
Merc. Law, 3rd ed. 392 ; and see £x parte Waring, 19 Ves. 345, and other cases
there cited.

As to the rule in Ex parte Waring applying in the case of companies in liquida-
tion, see Rickie's Case, 4 Eq. 226 ; BarnecVs Banking Co., 10 Ch. 198, and LLudley
on Companies, 5th ed. 727.

The rule does not apply to Scotland. Jiogal Bank of Scotland v. Commercial Bank
of Scotland, 7 Ap. Cas. 382.

Breach op Trust.
Claims in respect of breach of trust can be proved in a winding-up, whether the
company is solvent — in which case they clearly fall within sect. 158 of 1862 — or is
insolvent, in which case they clearly fall within the words of sect. 37 of the Bank-
ruptcy Act, 1883. Emma Silver Mining Co. v. Grant, 17 C. D. 122 ; Metropolitan
Bank, 15 C. D. 139; Milan Tramtvays Co., 25 C. Div. 591.

Calls.
When the company is a holder of shares in another company, the hability to pay
calls on such shares, made at the time of the proof, is provable as a debt, and the
liability to future calls is provable as a contingent debt. Mercantile Mutual, &;c.
Association, 25 0. D. 415 ; Hardy v. Fothergill, 13 Ap. Cas. 351 ; Hughes' ease, 13
Eq. 623.

Contingent and Future Debts.

Proof can be made in respect of contingent and future liabilities of the most
varied character, and however difficult it maybe to ascertain the value thereof, e.g.,
where the company has imdertaken to indemnify A. B. against certain contingent
liabilities, A. B. can prove in respect of the company's liability before paying any-
thing, and notwithstanding that it is uncertain whether he wiU be called on to pay
anything. Hardy v. Fothergill, 13 Ap. Cas. 351 ; British Frov. v. Anglo-Aus. Co.,
10 L. T. 326 ; 4 N. P. 48 ; National Funds Co., 3 Ch. 791.

As to proof by landlords for future rent, &c., see Chap. XXXV.

So, also, a surety for the company may prove in respect of his title to be in-
demnified even before payment. Ex parte Delmar, 38 W. R. 752 ; and see Sureties,
infra, p. 377.

As to proving for a debt payable at some future time, with interest in the mean-
time, sec R. 105 of 1890 below, and Ex parte Ador, (1891) 2 Q. B. 574.

Where the debt or liability is in the opinion of the Court "incapable of being fairly
estimated," the Court has, under sect. 37 (6) above, power to make an order to
that effect, and thus exclude it from proof ; but the Court is not much inclined to
make such an order even in bankruptcy, and much less in winding-up, for in the



CREDITORS. 367

former case the bankrupt would still remain liable, but in the latter case the com-
pany would be dissolved. Hardy v. Fotlierc/iU, 13 Ap. Cas. 351.

A claim which is contingent at the commencement of the winding - up, and is
afterwards conclusively ascertained, may be proved at the amount so ascertained.
MacfarJane' s Claim, 17 C. D. 337. And so where a creditor proves in respect of a
contingent liability at a specified amount, and before the liquidator has admitted or
rejected the claim the contingency happens, the liquidator may reduce the proof
accordingly. In re Dodds, 25 Q. B. D. 529.

A contingent claim may be barred by a scheme under the Joint Stock Companies
Arrangement Act, 1870 : Craig's Claim, (1895) 1 Oh. 267.

Commission.

A commission on future profits or business is not provable when the company is
not under any obligation to continue. Kv jmrle Maclure, 5 Ch. 737. And see
Mhodes v. Foricood, 1 A pp. Cas. 256.

As to commission on bills, see English Bank of River Flate, (1893) 2 Ch. 438.

Contracts.

Claims under, or for the breach of, contracts, are clearly provable, and constitute
the great mass of claims proved. But, in order to prove, the claimant must show
that the contract was made with him or some person through whom he, as assignee
or ccshd que trust, derives title. Hence, where a company contracts with A. to pay
B. a sum of money, B. cannot prove against the company xmless he can show an
assignment or that A. was his trustee. Empress Engineey-ing Co., 16 C. D. 125 ;
Rotterdam Alum Co., 25 C. Div. 103 ; British Prov. ^c. Soc., 10 L. T. 326.

Claims are sometimes made in respect of provisions in the articles of association
for the payment of sums by way of salary, commission, or promotion money. As a
general rule outsiders cannot claim the benefit of such provisions. And this right
of members to claim the benefit of such provision is qualified. However, there
are cases in which the Coui-t may imply a contract to sell on the terms set forth in
the articles.

Costs.

A creditor proving must bear the cost of proving unless the Com-t otherwise
directs. See R. 101 of 1890, supra.

Where a claimant fails to establish his claim, he may be ordered to pay costs.
Re Knight, 57 L. T. 238.

And where the liquidator disputes the debt, he may be ordered to pay the costs.
Mai/s case, W. N. (1871) 18 ; National Wholemeal, ^-c. Co., (1892) 2 Ch. 457.

The liquidator may be ordered to pay the costs personally, although he has acted
under the direction of the committee of inspection. Ex parte Brown, 17 Q. B. Div.
488 ; W. Powell and Sons, (189G) 1 Ch. 681.

Where a solicitor claims in respect of a bill of costs, the bill, at any rate when
the time for taxation was not passed before the commencement of the winding-up,
will be referred to the taxing master. Ex parte Quilter, 4 De G. & S. 183 ; Ex parte
Evans, 11 Eq. 151 ; 4 L. J. Ch. 197. And, notwithstanding those cases, it would
seem that, even where the time for taxation has passed at the commencement of
the winding-up, the Court will, before admitting such a claim, obtain the assist-
ance of the taxing master, for a bill is not conclusive even where the time for taxa-



Online LibraryFrancis Beaufort PalmerCompany precedents for use in relation to companies subject to the Companies acts, 1862 to 1890 ... (Volume 2) → online text (page 50 of 134)