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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debentiu'es entitled to the benefit of an indenture mentd in the indorse-
ment hereon) ; defendants, the coy and the trustees of the deed.]

The plaintiff claims as a debenture holder of the defendant coy : —

1. To have an account taken of what is due from the defendant
coy to the plaintiff, and the other holders of debentures entitled to the
benefit of an indenture, dated, &c. and made, &c.

2. To have the trusts of the sd indenture carried into execution
under the order of the Ct.

3. To have a recr and manager of the ppty comprised in the sd
indenture appointed.

The defendants and are sued as trustees of the sd

indenture.



Form 455.

Statement of
claim in
debenture
holder's
action.



In the matter of A. B. and Coy, Limtd.

Between E. C. B. (on behalf &c., as in icrit). .Plaintiff,

and
A. B. and Coy, Limtd Defendants.



1 . The defendant coy (hnf tr called ' ' the coy
April, 18—, under the Cos Acts 1862 to —



') was incorporated in
— , for the purposes,
amongst other objects, of acquiring and working the business of, &c.

2. The mcmdum of association of the coy gave power to borrow or
raise or secure the payment of money by the issue of mortgage deben-
tures, or any other security charged upon all or any of the ppty and
rights of the coy.

3. In the month of Feb. 1888, the coy borrowed and raised for the
purposes of the coy a sum of 25,000/. by the issue of a series of
mortgage debentures for that amount.

4. The sd debentures were all in the same form for 100/. each, and
by cacli such debenture the coy agreed to pay to the registered holder
thereof the jipal thby eocurod on the let Feb. 1889, and in the moan-



DEBENTURES AND DEBENTURE STOCK. 415

■while to pay interest thereon at the rate of G p.c. p. a., by equal half-
yearly pa}Tneiits, and the coy thby charged with the payment of such
ppal and interest its undertaking and all its ppty, both present and
future, and such debenture was described as one of a series of deben-
tures for securing the ppal sum of 25,000/., and was stated to bo issued
upon and subject to the conditions indorsed thereon.

5. By the conditions indorsed on each of the sd debentures, it was,
among other things, provided that the sd debentures should rank j'jar/
passu in point of charge, and that the charge created by the debentures
should be a floating security.

6. By one of the sd conditions, so indorsed as aforesaid, it was also
provided that, if the coy should make default for six calendar months
in the pajTnent of any interest thereby secured, the registered holder
of such debenture might, at any time thereafter, before such interest
was pd, by notice in writing to the coy, call in the ppal moneys
thereby secured, and that such ppal moneys should immediately become
payable.

7. The plaintiff is, and has for upwards of months been, the

registered holder of fifteen of the sd debentures, all dated the

day of , for securing ppal sums amounting in the aggregate

to 1,500/.

8. The coy made default in payment of the half-year's interest due

to the plaintiff on his sd debentures on the of and on the

of , and the plaintiff, on the of , duly served at

the registered office of the coy a notice calling in the ppal money
secured on the sd fifteen debentures. The plaintiff subsequently de-
manded payment of such ppal money, but without success.

9. The whole of the sd ppal money, together with interest thereon
from the 1st Feb. 1884, is still unpaid and owing to the plaintiff.

10. The registered holders of debentures of the sd series are nume-
rous.

1 1 . The plaintiff sues on behalf of himself and all other the holders
of debentures of the above series.

The plaintiff claims —

1. A declaration that the sd debentures constitute a [fu'st] charge
upon the undertaking and ppty of the coy.

2. An account of what is due to the plaintiff and other holders of
the sd mortgage debentures for ppal, interest, and costs.

3. That the sd mortgage debentures may be enforced by foreclosure
or sale.

There are cases in "which it may be well to claim judgment or payment, as in
Mope V. Croijdon Tramicays, 3-4 Ch. D. 730.

As to declaring a charge, see Marwick v. lord Thiirloiv, (1895) 1 Ch. 770, and
notes to Form 459. It is unusual now to ask for a declaration oi first charge unless
there is some dispute as to priorities.



416 WINDING-UP BY THE COURT. [ChAP. XXXVIII.

4. A recr and manager of the ppty and business of the coy.

To such an action as this a defence is rai-ely put in. If the debentures are to be
disputed, the hne of defence must depend on the special facts. It may be that the
debentures were issued in excess of the borrowing powers, or that they were ob-
tained by fraud, or that they do not charge all the property, or there may be
subsequent incumbrancers who ought to be made defendants.

As to special words on record when a debenture holder is authorized to defend in
a representative capacity, see FairfeJd, ^c. Co. v. London, ^c. Steamship Co., W. N.
(1895) 64.

Form 456. In the matter of the Coy, Limtd.

j^Q^-jjgj, Between A. B., on behalf, &c., as in Form - - Plaintiff,

where trust and

^^^^- The Coy, Limtd, and C. D. and E. F. - Defendants.

1. The plaintiff is the registered holder of, and beneficially entitled
to, debentures under the common seal of the defendant coy for securing

the payment of the princijial sum of 1., and forming part of a

debenture loan borrowed by the sd coy in the year .

2. By each of the sd debentures it was declared that the sd coy \^here
set out the material j)rovisions~\.

3. Upon each of the sd debentures there were indorsed divers
conditions, and amongst others the following [he7-e set out such of the
conditions as may he material, including the reference to the trust cleed'\.

4. The following are the short particulars of the indenture referred
to in the debentures : —

5. By the sd indenture, &c. \_set out the trust deed so far as may he
necessai-y^ .

6. The sd indenture was duly executed by the parties, and the
defendants C. D. and E. F. still are the trustees of such indenture.

7. On the day of an extraordinary resolution of the sd coy

was passed to the effect that it had been proved to the satisfaction of
the coy that the coy could not, by reason of its liabilities, continue its
business, and that it was advisable to wind up the same, and accord-
ingly that the sd coy should be wound up voluntarily, and N. was
thereupon duly appointed liqr of the sd coy for the purposes of such
winding-up.

8. By an order in this action, made the day of , the sd

N. was appointed the recr and manager of the undertaking and ppty
of the sd coy.

9. Besides the debentures issued to the plaintiff as afsd, divers
other debentures, forming part of the same loan, have been issued by
the sd coy, and the holders of such debentures are numerous.

10. Tlio plaintiff sues on behalf of liimself and all others the holders
of the debentures issued by the sd coy.

The plaintiff claims : —

(1) A declaration that the plaintiff and the other holders of doben-



417



DEBENTURES AND DEBENTITRE STOCK.

tures of the sd coy are entitled to a first charge on all the
ppty to which the sd coy was entitled at the commencement of
the winding-up thof, for securing the principal and interest
in the debentures mentioned ;

(2) That the trusts of the sd indenture may be carried into execution

under the order and direction of the Ct ;

(3) That an account may bo taken of what is due to tho plaintiff and

the other holders of the sd debentures in respect thof ;

(4) That the charge contained in the sd debentures may be enforced

by sale or foreclosure ;

(5) That the sd may be continued as receiver and manager of

the profits and undertaking of the sd coy.

It may be that the trust deed in effect qualifies or suspends the plaintiff's right
to sue, or that a meeting- of debenture-holders has been held pursuant to the provi-
sions of the deed, and has deprived the plaintiff of his cause of action. The trustees
usually submit to act as the Court may du'ect. They may, however, submit that
no action is necessary, and that all that is reqviired could have been obtained by an
originating summons.

For another form, where there is a dispute as to priorities, see Part I., p. 855.



Upon motion this day made unto this Ct by counsel for the pit for Form 457.
judgment against the dfts in default of defence, and upon hearing Ordinary
counsel for the dfts, and upon reading the pits statement of claim ju'lgmentin

delivered the of , 189G, and the three several orders dated a^tion^beforn

resply, &c. It is ordered that the following inquiries and accounts be VaughanYrii-
made and taken, that is to say : — ^''^'"^' '

1. An inquiry what (if any) debentures have been issued by the
deft coy, and which of them are now outstanding and unpd, and who
are the holders of or the persons entitled to the benefit of the same
resply.

2. An inquiry what are the priorities of such debentures.

3. An account of what (if anything) is due to the holders of or the
persons entitled to the benefit of such debentures upon the security
thof.

4. An inquiry of what the ppty subject to such debentures consists.
But if and when it shall appear in the course of the proceedings

under this judgment that there is any series of debentures issued by
the deft coy having priority over the other debentures issued by them,
the inquiries and accounts hereinbefore directed are not without the
leave of the judge to be proceeded with except as regards the series
of debentures having such priority.

And this order is without prejudice to the order of the \_date^,
appointing a receiver, and to the order of [_date'], directing a sale, and
is also without prejudice to any question that may be raised as to the
validity of any of the debentiires issued by the dft coy.

p. E E



418 WINDING-UP BY THE COURT. [ClIAP. XXXVIII.

And the further consideration of this action is adjourned, and any of
the parties are to be at liberty to apply as they may be advised.
Peacock v. Olympia, Limtd., Eomer, J., for Vaughan Williams, J.,
14th Dec, 1896.

See note to Form 459.

Form 458. Upon motion for judgment in default of thedfts delivering a defence

Ordinary this day made unto this Ct by counsel for the jilt, and upon hearing

judgireut counsel for the dfts, S. and T., and upon reading the pits statement of

■where trust , . ... ' r. i , t • i n i

deed claim with the certmcate oi the pits solors indorsed on such statement,

that the dfts have not delivered a statement of defence and an afft of

of service of notice of this motion on the dfts, the A. B. C, &c.

Coy, Limtd., and the sd dfts, S. and T., by their counsel submitting

to this judgment. This Ct doth declare that the trusts of the indenture

dated the of mentd in the statement of claim ought to be

performed and carried into execution, and doth order and adjudge the

same accordingly. And it is ordered that the following accounts and

inquiries be taken and made, that is to say : —

1. An inquiry what debentures (if any) issued by the dft coy entitled
to the benefit of the sd indenture are now outstanding and unpd, and
what persons are the holders or entitled to the benefit of the same
resply.

2. An inquiry of what the ppty comprised in the sd indenture or
otherwise charged by the sd debentures consists.

3. An account of the trust estate and effects comprised in the sd
indenture come to the hands of the dfts, S. and T., or either of them,
or any other person or persons, by the order or for the use of the
sd dfts.

4. An account of what is due for principal and interest to the pit
and other holders of, or to the persons entitled to the benefit of the sd
debentures, under or upon the security of such debentures.

But this order is without prejudice to any question that may be
raised as to the validity of the debentures issued by the dft coy. And
the further consideration of this action is adjourned, and any of the
parties are to be at liberty to apply in chambers with regard to the sale
of any portion of the ppty charged by the sd debentures, and generally
as they may bo advised. Offord v. A. B. C. Hotel, ^-c. Co., Limtd.,
Homer, J., for Vaughan. AVilliams, J., 11th Jan., 1897.

See note to Form 459.

Form 459. Upon motion for judgment this day made unto this Ct by counsel
.Tud"- ■ t ' ^^^' ^^^ plaintiff, and upon hearing counsel for the plaintiff and for the
dcchiring' defendants, and upon reading the writ of summons issued, and the

^'tll ""^ "^''*' three orders dated resply, &c., this Ct doth declare that the plaintiffs and
debenture- the other holders of the mortgage debentures, forming part of the issue



DEBENTURES AND DEBENTURE STOCK. 419

of 30,000/. first mortgage debentures of the defendant coy, are entitled holders to
to a Jirst charge on all the real and personal ppty whatsoever and -v^'ithlu-^^^'
■wheresoever, both present and future (including the uncalled capital], quiries.
of the defendant coy for the time being, for securing the repay-
ment of the ppal moneys and interest in the sd mortgage debentures
mentd.

And it is ordered that the following accounts and inquiries be taken
and made, that is to say — 1. An account of what is due for ppal and
interest to the sd plaintiffs and the other holders of the sd mortgage
debentures on the security thof. 2. An inquiry what ppty or assets of
the defendant coy are comprised in the sd. mortgage debentures and
the charge or security thereby created. [3. An inquiiy in what way
the ppty comprised in and charged by the sd debentures can best be
realised or otherwise dealt with for the benefit of the plaintiffs and
the sd other debenture holders.]

And it is ordered that the recr and manager appointed by the sd
order, dated the 2nd day of April, 1891, be continued.

And it is ordered that the further consideration of this action be ad-
journed. And any of the parties are to be at liberty to apply in
Chambers as to the sale of any of the ppty comprised in the sd deben-
tures, and generally as they shall be advised. Cochshott v. Dare
Gallery, Ld., North, J., 9th May, 1891. A. 656.

The settled practice of the judges of the Chancery Division is to make a Declaration
declaration of charge at the hearing in a debenture action as above, unless some o^ charge,
question is raised, see Manvick v. Lord Thnrloiv, (1895) 1 Ch. 776; but Vaughan
Williams, J., does not upon motion for judgment heard as a short cause adopt this Short cause,
practice, unless the company by its liquidator appears and consents. The learned Consent of
judge merely orders the usual accounts and inquiries, and the order contains words liquidator.
to the effect that it is "without prejudice to any questions that may be raised as to Savin"- rights,
the validity of the debentures," see Forms 457, 458.

There is no need to continue the receiver and manager unless he was only ap- Continuino-
pointed until the hearing. Underwood v. Underivood, 37 W. R. 428. receiver and

In the case of a manager appointed for a limited time, the proper form is to iii8,nager.
extend the time duriug which the receiver is to act as manager. Davies v. Vale of
Evesham Preserves, W. N. (1895) 105.

For judgments where there are A. and B. debentures, see Part I., Forms 543, j^ ^-^^ -q
544, 545, 546, and Aiisted v. La)ul Co. of Australasia, (1893) A. 267. Vaughan debentures.
Williams, J., 2 1st March, 1894.

It is not at all uncommon to insert " An inquiry in what way the property com- Inquiry as to
prised or charged by the said debentures can best be realized for the benefit of the best mode of
plaintiffs and the other debenture holders." Dawson y. Owen, Malins, V.-C, 11th '^^^^^^S-
Nov., 1876. A. 1778 ; Hay v. Swedish, ^-c. Bail. Co., Stirling, J., 1st Feb., 1890 ;
Kohley. Dee Oil Co., North, J., 3rd Feb., 1891. Sometimes there is "An inquiry
what steps ought to be taken for getting in such parts (if any) of the said property
as may be outstanding." Dawson v. Owen, uhi supra.

As to certificate in answer to inquiry 2, where plaintiff holder of not fully paid
shares, see Madelei/ y. Jioss, (1897) 1 Ch. 505.

E E 2



420



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



Form 459a.

Judgment
■where deben-
ture stock
issued.



Declare that trusts of sd indenture of 15tli Aug., 1888, ought to be
performed, &c., and order that the following inquiries be made : —

1 . An inquiry what debenture stock issued by the df t coy is now
outstanding and unpd, and what persons are the holders of the same,
and of some and what parts thof resply.

2. An inquiry into any and what principal moneys and interest
secured by or due under the sd debenture stock or any pt thof are
now due and payable, and to whom the same resply are due.

3. An inquiry of what the ppty and assets comprised in the sd
indenture, and otherwise charged by the sd five debts of 10,000/. each
in the sd indenture mentd consists, and in what way the same can best
be realised for the benefit of the pit and other holders of the debenture
stock. Adjourn for consideration. Liberty to apply. Nolle v. Dee
Oil Co., North, J., 3rd Feb., 1891.

See also Form 552, in. Part I.



Form 460. Upon the applicon, &c. order that the U. Coy, Limtd, be added as
pits in this action, and that the writ of summons in this action, and
that the copy filed at the Central Office, and all subsequent proceedings
be amended accordingly. House and Land, ^'c. v. Brading Harbour Co.,
Yaughan Williams, J., 30 Jan., 1896.



Order adding
plaintiffs.



Form 460a. Upon the applicon of the pit, order that the aj)plicant be at liberty



Liberty to
sue S. as re-
presenting
class.



to sue the above-named S. on behalf of himself and the other holders
of second mortgage debentures of the deft coy, for the purj)ose of
obtaining the judgment of this Ct upon the questions referred to in
the indorsement of the writ in this action.

"WTiere there is a class having adverse interests to the plaintiffs an order as above
should be obtained, see Frazer v. Cooper, Hall ij- Co., 21 C. D. 718.



Form'461.

Order to add
applicant as a
defendant,
and to repre-
sent dis-
sentient
debenture
holders ; and
to hold meet-
ings of de-
bfiiturc
holders to
consider
•luestions as
to ai)pr)int-
ment of
receiver and
Koniling
iriissiou to
America.



Upon the applicon of J., of, &c., and holder of twenty first mortgage
debentures of 50/. each of the defendant coy, and upon hearing counsel
for the applicant and for the plaintiff in the first-mentd action, and the
solors for the defendant coy, and the plaintiff in the second action in
person, and upon reading, &c.. It is ordered that the writ in each of the

sd actions be on or before amended, by adding the applicant J. as

a party defendant to the sd consolidated actions; And the judge doth
appoint the sd J. to represent all other holders of first mortgage deben-
tures of the defendant coy who arc opposed to the view of the plaintiffs,
and ob j oct to the appointment of a receiver and manager ; And it is ordered
that the rest of the sd applicon which asks that all further proceedings
under the order of the 5tli June, 1891, for the appointment of a receiver
and manager might be stayed until after a period of four months, do
stand over until the 27th day of July, 1891 ; And it is ordered that, in
the meantime, a meeting of the first mortgage debenture-holders of



DEBENTURES AND DEBENTURE STOCK. 421

the coy be summoned by the plaintiff IT., by advertisements (at least
seven days beforehand), once in the following papers, namely, once in
The Times, one other daily London newspaper, one York newspaper,
one Liverpool newspaper, one Bristol newspaper, and The Glasgow
Herald. And it is ordered that the j^laintiff H., or, in his absence,
the plaintiff M., do act as chairman of such meeting, and do report the
result thof to the judge, and such meeting is to be summoned to con-
sider — (I) whether Mr. X.'s mission to the property of the defendant
coy in America should proceed or not ; (2) whether the appointment of
a receiver and manager, pursuant to the order of 3rd June, 1891, should
be proceeded with forthwith. Howard v. Iron, Sfc. Co. of Minnesota ;
Mitchell \. Same, Kekewich, J., at Chambers, 6th July, 1891. A. 985,

See supra, p. 407, as to adding defendant.

When a debenture holder is sued in a representative character, the order shoidd
authorize him to defend in that capacity, and the record should bear the words
"authorized by order, dated, &c., to defend on behalf of himself and all other
the debenture holders." Fairfield, SjC. Co. v. London, ^c. Steamship Co., W. N.
(189.5) 64.

For order in chambers for inquiries, see Part I., p. 877.

Upon applicon of dft coy in each of the above actions, by summons Form 462.
dated, &c., and upon hearing, &c., and upon reading the writ of sum- Consolidation
mens in each of the sd two actions, order that the above-mentd actions order,
be consolidated and proceed as one action, and that the conduct of the
consolidated action be committed to the pit, W. Newmaii on behalf, Sfc.
V. The Variety Automatic, Sfc. Co., W. on hehalf, ^'c. v. Same Co.,
Yaughan Williams, J., 2nd March, 1896.

As a general rule two debenture actions for enforcing the same series will be
consolidated. As to form to consolidate, see R. S. C, Ord. XLIX., r. 8; Seton,
705, QxASolden v. Silhstone Co., 45 L. T. 531.

Upon the applicon of the pit, and upon hearing the solors for the Form 463.
applicants and for the dfts M. and II., and upon reading the judgment gen-ice of
in this action dated the 29th day of July, 1891, and an afft of, &c., It is notice of
ordered that service of notice of the sd judgment dated the 29th day of debenture °°
July, 1891, upon all the holders of "A" debentures, issued by the dfts holders
The Tivoli, Limtd, and referred to in the sd judgment, be dispensed ^![?[th^^^
with. Barrett'' s Breicery, Sfc. Co. v. The Tivoli, Limtd, Chitty, J., at
Chambers, 17th June, 1892. A. 883.

R. S. C, Ord. XVI., r. 40, provides for service of notice of a judgment or order.

R. S. C. 1883, 0. LV. r. 35. — "Where, upon the hearing of the summons to proceed,
it appears to the judge that by reason of absence, or for any other sufficient cause,
the service of notice of the judgment or order upon any party cannot be made or
ought to be dispensed with, the judge may, if he shall think fit, wholly dispense
with such service, or may at his discretion order any substituted service or notice by
advertisement or otherwise in lieu of such service.



422



WINDINCx-UP BY THE COURT. [ChAP. XXXVIII.



E. S. C. 1883, 0. LV. r. 35a (Nov. 1, 1893).— Where service of notice of a
judgment or order for accounts and inquiries is dispensed with, the judge in
person may, if he thinks fit, order that tlie persons as to whom service is dispensed
with shall be bound as if served, and they shall bo bound accordinnrly, except
where the judgment or order has been obtained by fraud or non-disclosure of
material facts.

The following practice direction la in force, and ig observed in cases before
Vaughan Williams, J. : —

Debentuee Holdees' Actions.
Dircctiuns to Chief Clerls as to Service of Notice of Judynient.

In ordinary cases the judgment in debenture holders' actions should not be
served on the debenture holders, but they should have notice given to them by
circular or letter, or by advertisement, if the case so requires, full discretion being
reserved to serve the judgment formally if thought advisable.

FoED NoETH, May 9, 1896.

N.B. — This matter has been considered by air the judges of the Chancery Divi-
sion, and to insure uniformity of practice similar directions will be given by each
judge. r. N.



Form 464.

Notice of
judement or
order.



The following is the form of notice used by the registrar : —

[_Title of action infull.~\

Take notice tliat a judgment [order] dated tlie day of ,

189 — , lias "been pronounced [made] in this action (which has been
instituted for the purpose of ascertaining who are the holders of
debentures {or as may he) of the dft coy, to realise the ppty charged
thereby, and to divide the proceeds amongst the persons entitled
thereto), and by such judgment [order] the inquiries and accounts {or
as may be) necessary for the afsd purpose are directed.

The material parts of the judgment [order] are set forth in the
schedule hereto.

A list of the debenture holders {or as may be) with the particulars
of the debentures held or believed to be held by them resply has been



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