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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Court, and with the sanction of an extraordinary resolution of the company where
the company is being wound up altogether voluntarily, compromise all calls and
liabilities to calls, debts, and liabilities capable of resulting in debts, and all claims,
whether present or future, certain or contingent, ascertained or sounding only in
damages, subsisting or supposed to subsist between the company and any contribu-
tory or alleged contributory, or other debtor or person apprehending liability to the
company, and all questions in any way relating to or affecting the assets of the
company or the winding-up of the company, upon the receipt of such sums, pay-
able at such times, and generally upon such terms as may be agreed upon, with
power for the liquidators to take any security for the discharge of such debts or
liabilities, and to give complete discharges in respect of all or any such calls, debts,
or liabilities.

Sect. 12 (1) of 1890. — The liquidator of a company which is being wound up by
the Court may, with the sanction either of the Court or of the committee of inspec-
tion .... exercise any of the powers conferred by sect. 159 or sect. 160 of the
Companies Act, 1862.

If there be no committee of inspection, "the sanction" may, subject to the
directions of the Board of Trade, be exercised by the official receiver. See sect. 9 (9)
of 1800, andR. 169 of 1890.

Sect. 12 (3) of 1890. — The exercise by the liquidator of the powers referred to in
this section shall be subject to the control of the Court, and any creditor or con-
tributory may apply to the Court with respect to any exercise or proposed exercise
of any of those powers.

And see sect. 23 of 1890, as to the control of the creditors and contributories in
general meeting.

It was held, under the old practice, that the Court had no jurisdiction to compel
a liquidator to compromise [Pearson'' s case, 7 Ch. 309) ; but qucerc whether, having
regard to sects. 12 and 23 of 1890, a liquidator may not now be compelled to
coiniiromisc in ii proper case. In sanctioning a comiH'omiso the Court is exercising
a judicial discretion, and accordingly evidence of the propriety of the compromise
must bo forthcoming. I'^x parte Tolly, 1 ])r. & Sm. 273. It has, however, been
held that the judge may act on tho knowledge he has already obtained in the



COMPROMISES. , 557

wiuding'-np. Oriental Bank Corp. (No. 2), 56 L. T. 8G8. The sanction of the
registrar is sufficient (R. 3 of 1892), though, of course, any of the parties can
require the matter to be heard by the judge. Ex parte Garstin, 10 W. R. 457.

A contributory who is unable to pay the calls made on him generally endeavours Practice as to
to effect a compromise. In such a case he is very commonly required to make an contribu-
affidavit as to his means, and if it seems desirable he can be cross-examined thereon. ''°"<^s.
If the liquidator is satisfied, he will enter into a provisional agreement with the
contributory embodying the terms of compromise, and will then ajij^ly for the
sanction of the Court by ex parte summons.

1. I am tlie holder of 100 shares in the above-named coy, and I am Form. 641.
unable to pay the two last calls of 5Z. per share, lately made upon me .^, .

in respect of the sd shares. contributory

2. The paper writing now shown to me, and marked with the """ith a view to

A • f> 11 1 I' n 1 1 re- compromise,

letter A, contains a luil and true account of all the ppty and effects,

real and personal, which I possessed, or in which I had any share or
interest in possession, reversion, or expectancy at the time of the stop-
page of the sd coy on the of , and also of all such parts of

my sd ppty as have since been sold or contracted to be sold, and the
price at which such sales or contracts have been made, and as nearly
as I can ascertain the full and true value of all such parts thof as still
remain to be sold.

3. I have no ppty whatsoever, real or personal, of any description,
nor am I entitled either in posson or revon to any share or interest
in any ppty whatsoever which is not included in the sd statement.

4. I have not made away with, incumbered, or charged, settled, or
in any manner parted with any part of my ppty or effects, real or per-
sonal, since the failure of the sd coy on the 16th of Oct. 1876, save as
ajopears by the sd account.

5. The paper writing now produced and shown to me, marked B,
contains a true and just account of all sums of money received and pd
by me since the 16th of Oct. 1876, down to the 6th of July instant.

0. My income is derived from a salary of 160^. p. a., which I receive
from my employers, Messrs. D. & C, and such income has not for the
last two years exceeded the sum of 160^. p. a.

The official receivers, however, have a form of questions to be answered by a Questions to
contributory who wishes to compromise. This form ia given below (Form 642), and be answered,
the answers are verified by affidavit (see Form 642a).

{Title.) Form 642.

Mr. X. Y., holder of shares ; liability 1. 7^ 7- 7

' ' -^ Questions to

Questions to be answered by Shareholders desirous of compromising ^^ answered

amount due in respect of Calls : holders wish-

1. "What property do you possess ; and what is its nature and value "'» *? ^°"i"
to the best of your knowledge and belief ?

(Specify the particidars, if necessary, in the separate signed list or schedule



558 WINDING-UP BY THE COURT. [ChAP. XLVII.

marked A. ; and accompany the statement with valuations, certified rentals, and
other evidence of value, by competent ijarties.)

2. Have j^ou, since the , either as security for your debts or

otherwise, sold, given, transferred or conveyed away in trust or other-
wise, or placed under the charge or in the custody of any person or
j)ersons, or in any way put away, set aside, or concealed any property,
money, stock, shares, securities, or effects of any kind ? If so, state
the particulars and value, and present position of such property so

alienated. Or have you, since , renounced, or discharged, or given

up any right of any kind which you then had ? If so, state the parti-
culars thof.

3. What is your regular or average annual income ; and from what
sources is it derived ?

(Specify the particulars, if necessary, in the separate signed list or schedule
marked B.)

4. What dehts or obligations are owing by you besides the calls for
which you are liable as a shareholder of the ?

(Specify the particulars, if necessary, in the separate signed list or schedule
marked C.)

5. Have you any expectation of funds or property of any kind
coming to you by succession or otherwise ? If so, state its nature and
probable value.

6. Is your life insured? If so, give particulars.

7. Are you interested in any settlement made on marriage or other-
wise ?

8. State any circumstances connected with yourself, or those depen-
dent on you, which you may wish to be considered along with your
ajiplicon.

9. What sum or other consideration do you offer for a discharge in
full of all claims by the off recr and liqr against you as a shareholder

of the Limtd ; and in what manner do you propose it shall be

secured or pd ?

Each schedule must be signed by the shareholder. The answers are numbered,
and must be signed and dated by the shareholder, who must verify them by the
affidavit in Form 642a.



Form 642a. !> , "jf > make oath, &c., that the several matters and things

T^T r~l contained in the answers written on the preceding page (and in the

shuroliolder schedules A., B., and C.) [//" schedules not required strike out these

verifying rcords], and whicli are signed by mo as relative hereto, are full, true,

answers. -I' . . ■ ^ ■! s

and correct answers to the foregoing printed questions to the best of

my knowledge, information and belief. Sworn, &c. A. B.,

A Commissioner for Oaths.



COMPROMISES. 559

Let all parties concerned attend, &c., on, &c., on the hearing of an Form 643.
applicon on the part of A. B., the [off recr and] liqr of the above- tj^^^nj.jjjy ^
named coy [and recr in the ahove-mentd action] that the conditional Kauetion
agreement of compromise, dated, &c., and made between the applicant ^o^^p "omise ""^
of the one part, and N., one of the contributories of the coy, of the
other part, may be sanctioned. And that it may be referred to the
Taxing Master to tax the costs of the applicant of and incidental to
the preparation and execution of the sd agreement of, &c., and the
evidence in support thof and of this applicon, as between solor and
client. [And that the compromise entered into by the applicant with
S., a contributory of the sd coy, for the compromise of his debt of 135/.,
by payment of the sum of 30/., may be approved.]

The following form is an example of an affidavit of a liquidator (pursuant to
K. 49 of 1862, now annulled so far as regards compulsory windings-up) in support.
Where the agreements were numerous, the liquidator and the contributory made a
joint affidavit to save expense.



1. H., of , has been settled on the list of contributories of the Form 644.



above-named coy in respect of shares therein, and by an order Affida\'it of

in these matters, dated, &:c., a call of 20/. per share has been made on liquidator as

. IP- 7 to proposed

him in respect thoi, amounting to 200/. compromise.

2. The sd H. has applied to me to accept a compromise of 50/., to
be pd as follows, &c., and five guineas towards the costs of the
agreement for the sd compromise, in full discharge of his liability in
respect of the sd call of 20/. per share, and all liability as a contri-
butory of the sd coy.

3. I have investigated the affairs of the sd H., who has made an

afft as to his means, filed the day of , and have caused him

to be cross-examined on such afft before the examiner of this Ct, and
as the result of such investigation and cross-examination it appears
that the sd H. cannot pay the sd call, and I believe that if I cause him
to be made a bankrupt I shall not obtain from his estate as much as
I shall by the sd compromise. I believe that it will be beneficial to
the sd coy that the sd compromise shall be accepted.



In the matter, &c. Form 645.

Memdum of agreement, entered into this day of , 189 — , Agreement

between E. P. H., of, &c., the off liqr of the above-named coy, of the ^]^^ ^°^'

p . nil tributory for

one part, and b. B., oi, &c., one of the contributories of the sd coy compromise.
of the other part.

"Whereas the sd S. B. has been settled on the list of contributories of

the sd coy as a contributory in respect of shares in the sd coy ;

and whereas, by an order made by Mr. Justice , dated the day



560 WINDING-UP BY THE COUliT. [ChAP. XL VII.

of , 189 — , a call of 1, per sliare was made on all the contri-

butories of tlie sd coy, and there is now due from the sd »S. B. to the

sd coy the sum of 1, in respect of the sd call. And whereas the sd

S. B. has proposed to pay to the sd off liqr the sum of 1, by way

of compromise, and in satisfaction and discharge of the sd sum of

/., and of all liability whatsoever as a contributory of the sd coy.

And whereas the sd off liqr, having investigated the affairs of the sd
S. B., and believing that such compromise will be beneficial to the sd
coy, hath, in exercise of the power for that purpose given to him by
the above statute, agreed to accept the same, subject to the sanction
of the sd judge and to the conditions and agreements hnftr contained.
Now it is hby agreed by and between the sd parties hereto :

1st. That the sd off liqr shall, before the day of next,

apply to the sd judge at Chambers to sanction this agreement of com-
promise.

2nd. That upon this agreement being sanctioned by the sd judge,

the sd S. B. shall, within days next after such sanction, pay to

the sd off liqr the sd sum of 1., and when thereto required, shall

do and execute all such acts and deeds as may be necessary for trans-
ferring, or surrendering and releasing, to the sd off liqr on behalf of
the sd coy, or in such manner as the sd judge may direct, the sd
shares held by the sd S. B. in the sd coy, and all claim and demand
whatsoever which the sd S. B. has, or may have, against the sd coy
in respect of the sd shares, or the distribution of the assets of the sd
coy, or otherwise howsoever.

3rd. That the sd sum of 1., and the transfer or surrender and

release of the sd shares and interest of the sd S. B. as afsd, shall be
accepted by the sd off liqr as, and be deemed and taken to give to the
sd S. B., a full and complete discharge from all calls and liabilities,
claims and demands whatsoever, which the sd coy, or the off liqr thof,
now has or may hereafter have, or be entitled to, against the sd S. B.
in respect of his being or having been the holder of the sd shares, or
otherwise as a contributory of the sd coy.

4th. That in case this agreement shall not be sanctioned by the sd
judge it shall cease and determine, and the sd off liqr and the sd S. B,
shall be remitted to their origintil rights with respect to each other, as
if this agreement had not been entered into.

5th. That in case this agreement shall be sanctioned by the sd
judge, and the sd S. B. shall not in all respects perform the same on
his part, the off liqr shall bo at liberty, with the sanction of the sd
judge, and without notice to the sd S. B., to enforce the performance
thof, or, with the like sanction, to give notice to the sd S. B. that he
abandons tliis agreement, whereupon tlio same shall cease and deter-
jiiiuc!, and tho sd off' liqr shall bo entitled to proceed against the sd
tS. B. to enforce payment oi the ad bum of /., or so much thof as



COMPROMISES. 561

shall then remain due and unpaid, as if this agreement had not been
entered into.
As witness, &c.

E. P. n. ) ^^ ^

Witness to the signatures of the sd
E. P. H. and S. B.,

C. D., of .

The above is Form 50 of 1862, now annulled as to compulsory winding-up pro-
ceedings. But under the new practice it is equally applicable.



The above form of agreement (Form 50 of 1862) was generally followed as
closely as possible under the old practice, but sometimes the contributory agreed
to pay a sum by instalments, and the following clause has been sometimes inserted.

6th. Provided always, that nothing herein contained shall prejudice Form 646.

or affect the rights of the sd coy, or of the sd off liqr, or of the ~

° . . . Clause as to

creditors of the coy, against any contributories of the sd coy, whether sureties.

as present or past members thof or otherwise, and that the liability of

such members to contribute to the assets of the coy shall remain the

same as if this agreement of compromise had not been made, except

only to the extent of the sd sum of /. so to be pd as afsd.

Having regard to what was said in Helbert v. Banner, L. K. 5 H. L. 39, it seems
doubtful whether the above clause is requisite.



Upon the aj)plicon of [off recr and] liqr, Order that the conditional Form 647.
agreement dated, «&c., and made, &c., for the compromising of the Confirmation
claim of the sd H. against the sd coy on the terms of the sd agree- of agreement
ment, be confirmed and carried into effect {Ince Hall Co., Chitty, J.,



promise.



30th July, 1885, A. 1219), or, for the compromise of the debt of
1,000?. due from the sd X., as a contributory of the above-named coy,
be confirmed and carried into effect. And it is ordered that it be
referred to the Taxing Master, &c. \_as in summons, Form 643]. Anglo-
Austrian, 8fc. Co., (1891) A. 0120. Eeg., 12th July, 1892.



Upon the applicon, &c., Order that the off liqr of the sd bank be at Form 648.
liberty to accept from the applicant the sum of 100?., together with Order sanc-
10?. 10s. for costs, in the whole 110?. 10s., in discharge of the appli- tioning com-
cant's liability as a contributory of the sd bank and otherwise, and in P^'^^i^'^-
discharge of all claims of the sd bank against him. London and
Suburban Bank, Limtd, Hall, V.-C, 9th May, 1878. B. 894.

In some cases, in order to avoid the expense of an agreement, the liquidator
applies for liberty to compromise, as above.

P.



662



WINDING-UP BY THE COUET. [ChAP. XLVII.



Form 649.

Another.



Upon tlie applicon of W., the liqr of coy, and upon hearing the
solor for the sd liqr, and upon reading an afft of M., filed, &c., Order
that the sd liqr be at liberty to compromise with the sd M. in respect
of his liability for calls due to the sd coy by accepting the sum of 201.,
together with the costs of this applicon, such costs not to exceed the
sum of 51. 5s., in full satisfaction and discharge thof. Welsh Steam
Coal, 19 Sep. 1876. B. 1609.



Form 650.

Liberty to

compromise

claim for

damages

agaiust

company.



Upon the applicon of F., the liqr of the above-named coy, by
summons dated, &c., and upon hearing the solor for the aj)plicant, and
upon reading, &c., Order that the sd F. be at liberty to compromise,

by the payment to S. of a sum of 1., a claim for damages against

the above-named coy by reason of the tenants of a small piece of land

at , which he the sd S. derived from the above coy, having refused

to give up possession to him of such property, and the coy being
unable to give him such possession notwithstanding their covenant to
do so. And that the sd F. be at liberty, if necessary, to raise the sd

sum of 1, by mortgage of the ppty of the coy or otherwise. New

British Iron Co., 0031 of 1892. Eeg., 1st July, 1892.



Form 651. Upon the applicon of the off liqr, &c., Order that the sd ofE liqr be
at liberty to compromise the action commenced by the above-named
coy (with the sanction of the Ct) against M. upon the terms embodied



Liberty to
liquidator to



action against ^^ ^^^ exhibit B to the afft of the sd off liqr, being the proposed
company. minutes of judgment in the sd action signed by the solors for the

respive defts. Mendip Hematite Co., Malins, V.-C, 14th Jan. 1878.

B. 570.

For order in winding-up giving liquidator liberty to compromise action of com-
pany against Grant and others, as regards two of the defendants, upon payment of
1,000/. a-piece, see Lisbon Steam Tramways, Malins, V.-C, 13th June, 1878.
B. 1221.

For order on motion giving liquidator liberty to compromise landlord's claim,
2,000/. to bo paid by company, and certain leaseholds and chattels to be given up to
company, see Victoria ^- Fcnton Co., Bacon, V.-C, 24th Jan. 1878. B. 429.

For order giving liquidator hbcrty to release equity of redemption in patents, see
Metal Tube Co., Hall, V.-C, 17th March, 1878. B. 478. As to the jurisdiction,
eeo General Share Trust Co., 20 Ch. Div. 260.



Form 652. Upon the applicon of the off liqrs, Order that the applicants, upon

W., of , paying to them the costs of and incident to this aiij)licon,

such costs to bo taxed in case the parties differ, bo at liberty to accept
from W., by the instalments montd in the sd afft, the sum of
511. 165. 5(/., in full discharge of a debt of 152/. 12*. lie?., due fi'om



Liberty to
coniproiiiiso
with debtor,



COMPROMISES. 563

the sd W. to bank prior to its suspension, such debt being in respect,
&c. Liberty to off liqrs to apply as to costs of applicon if W. does
not pay. West of Encjland, 8fc. Bank, Fry, J., 7th July, 1879. B. 1421.

Upon the applicon of T. and C, (fcc. Order that the applicant bo at Form 653.

liberty to accept from J., of , a debtor to the above bank, 260^. T j7~

in full discharge and satisfaction of the debt of 538/., due from the sd
J. to the sd bank, and costs of applicon. West of England Bank,
Malins, Y.-C, 29th May, 1880. B. 1071.

Upon the applicon of T. and C, the off liqrs of bank, and upon Form 654.

hearing, &c.. Order that upon E., of , a debtor to the above- 7 77

named bank, paying to the applicants their costs of and incident to
this applicon, such costs to be taxed in case the parties differ, the
applicants be at liberty to accept from the sd E.. 100/. in full discharge
and satisfaction of 400/., due from the sd E. to the bank. West of
England Bank, Malins, V.-C, 29th May, 1880. B. 1039.

Upon the applicon of S., by summons, &c., and the sd C, as such off Form 655.
liqr as afsd, by his solors admitting that the sum of 76,300/. is now due Com-ru-omise
from the sd coy to the sd S. for principal on the indentures of mort- with mort-
gage and bill of sale in the summons and afft mentd, and the sum of o^o^^-
3,790/. for interest thereon up to this day, making together 80,090/.,
and the sd C, as such off liqr, admitting that the amount due to the
sd S. largely exceeds the value of the mortgaged ppty ; And the sd
C, as such off liqr, claiming that sundry chattels now on or about the
•works and land comprised in the sd mortgage are not subject to the sd
mortgage and bill of sale or either of them; And the sd S., without
admitting such claim, agreeing to purchase all the interest (if any) of
the sd coy, or the sd off liqr thof, in the sd chattels, for the sum of
200/., It is by consent ordered that the sd coy, as from the date hereof,
stand absolutely debarred and foreclosed of and from all right, title,
interest, and equity of redemption of and in the sd mortgaged ppty.
And order that the sd coy and the sd off liqr, upon payment by the sd
S. to the sd off' liqr of the sum of 200/., and upon being required so to
do, release and convey the sd equity of redemption and all right, title,
and interest to and in the sd chattels to the sd S., or as he shall direct,
at his expense, and either i)arty is to be at liberty to apply as he or
they may be advised. Britannia Iron Works, 8th Aug. 1877. A. 1551.

Upon the applicon of off Hqr of the coy, and upon hearing the solors Form 656.



for the applicants, and upon reading the opinion of Mr. , dated. Liberty to

&c.. Order that the sd off liqr be at liberty to apply in the action of compromise

o o 2



564



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



A. V. B., B. 1880, for an order for the compromise of sucli action upon
the following terms ; that is to say, the (lefts to consent to a perpetual
injunction in the terms set out in paragraph 1 of the prayer of the
statement of claim therein, and to pay their own costs ; liberty being
reserved to the defts therein for them to sell the machines, &c. Beverley
Iron Co., Hall, V.-C, 11th March, 1881. A. 511.

As to compromise under the Joint Stock Companies Arrangement Act, 1870, see
infra, Section IV.



Form 657.

Order giving
liberty to
compromise
cross-claims.



Upon the applicon of W. P. and L., the liqrs of the above-named
coy, and upon hearing the solors for the applicants, and upon
reading the London Gazette of the 15th June, 1875, containing a notice
of resolution to wind up the sd coy voluntarily, and of the appointment
of liqrs, and upon reading an afft of W. P. and L., filed 1st Aug. 1877,
Order that the sd liqrs be at liberty to compromise the cross-claims
made in the proceedings for winding-up, by the sd coy on the one hand

against Messrs. T. W. and Sons, of • , and the sd Messrs. T. W. and

Sons against the sd coy on the other hand, upon the terms of the sd
coy and the sd Messrs. T. W. and Sons mutually foregoing and re-
leasing the sd claims against one another. Humphreys and Pearson,
Malins, V.-C, 6th Aug. 1877. A. 1532.



Although the above order was made in a voluntary winding
equally useful as a precedent in a compulsory winding-up.



-up, it is, of course,



565



CHAPTER XLVIII.

COSTS IN WINDING-UP ; TAXATION, ETC. ; FEES,



Costs.

The Act of 1862 does not, in the case of a compulsory winding-up, expressly pro- Remunera-
vide (as in the case of a voluntary winding-up, sect. 144), that the costs, charges tion of
and expenses properly incurred in the winding-up, includmg the remuneration of liquidator,
the liquidators, shall be payable out of the assets of the company in priority to all
other claims. It was no doubt assumed that the Court would, as a matter of course,
give due priority to such costs and expenses. JFebb v. Whiffen, L. E,. 5 H. L.
717, 735. But the Act contains the following section : —

Sect. 110 of 1862. — The Court may, in the event of the assets being insufficient to Court may
satisfy the liabilities, make an order as to the payment out of the estate of the com- regulate
pany, of the costs, charges and expenses incurred in winding-up any company in Priority oi
such order of priority as the Court thinks just. '

The assets or estate of the company in the case of incumbered property means Incumbered



Online LibraryFrancis Beaufort PalmerCompany precedents for use in relation to companies subject to the Companies acts, 1862 to 1890 ... (Volume 2) → online text (page 74 of 134)