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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the equity of redemption or surplus after clearing off the incumbrances. Hence an assets,
order to pay thereout may be abortive. Anglo- Austrian, i^-c. Union, (1895) 2 Ch.
891 ; Lloyd v. David Lloyd ^- Co., 6 C. D. 345.

The following are some of the cases decided under the old practice : —

[a) The petitioner's costs, where a winding-up order was made, were held to be a Petitioner's
first charge on the assets {Atidley Hall Cotton Co., 6 Eq. 245 ; 37 L. J. Ch. 904) ; costs.

and he was entitled to them free of set-off [General Exchange Bank, 4 Eq. 138 ; 37
L. J. Ch. 618) ; and accordingly it was not uncommon to pay them early in the
winding-up.

[b) As to costs directed to be paid by the company in liquidation, or by the official Costs of out-
liquidator, it was held that such costs were to be paid in full out of the assets, and side litigation,
not merely proved for. Home Lnvcstment Soc., 14 C. D. 167 ; Madrid Bank v. Belly,

7 Eq. 442 ; Ex parte Levick, 5 Eq. 69 ; Ex parte Smith, 3 Ch. 130; Fcrrao's case, 9
Ch. 355. See further, especially as to personal payment by the liquidator or official
receiver. Eotmsloiv Brewery Co., W. N. (1896) 45 ; W. Foicell and Sons, (1896) 1 Ch.
681 ; and supra, p. 215.

[c) As to the [official] liquidator's costs, i. e., the costs of the winding-up : — Liquidator's
It was held that as a general rule he was entitled to his costs of all jn-oceedings *^'^^''^"

properly taken. Silver Valley Mines Co., 21 Ch. Div. 381.

If the assets are deficient, the Court can give the costs incurred in winding-up
the company priority. Sect. 110 of 1862. In such case they will rank next after
the petitioner's costs, and before the official liquidator's remuneration. In re Mas-
sey, 9 Eq. 367. But they rank after costs ordered to be paid by the liquidator, or



566



WINDING-UP BY THE COURT. [ChAP. XL VIII.



Incum-
brancers.



Personal
liability of
liquidator.



Court's
discretion.



Application
of old rules
as to costs.



Building and

industrial

Bocietics.



out of the assets. Dominion of Canada Tlumhago Co., uhi supra. See further, supra,
p. 192.

Where there are incumbrances, such as mortgage debentures, and the mortgaged
property is realised in the winding-up, with the consent of the incumbrancers, the
liquidator's costs, charges, and expenses of the realisation are the first charge, the
incumbrances rank next, and the general costs of the winding-up are payable only-
out of the surplus, if any. Oriental Hotels Co., 12 Eq. 126 ; 40 L. J. Ch. 420 ; 24
L. T. 495 ; 19 W. R. 767; Regent's Canal Co., 3 Ch. Div. 411 ; Batten v. Wedgivood
Co., 28 Ch. Div. 317, 32-5. As to the priority of the incumbrancers when their
security is not realized in the winding-up, see Anglo-Austrian, i^-c. Union, supra.

{d) The solicitor of the liquidator has no claim for the costs of the winding-up
against the liquidator personally {Anglo-Moravian Co., 1 Ch. Div. 130; 45 L. J.
Ch. 115; 33 L. T. 650; 24 W. R. 122; Dominion of Canada Co., uli supra); nor
has he any lien on the file of proceedings for such costs. Ex parte FullbrooJc,
4 Ch. 627.

The following provisions of the Rules of the Supreme Court, and decisions
thereunder, must be borne in mind : —

K. S. C. 1883, 0. LXV. r. 1.— Subject to the provisions of the Acts and these
Rules, the costs of and incident to all proceedings in the Supreme Court, including
the administration of estates and trusts, shall be in the discretion of the Court or
judge.

Sect. 5, Jud. Act, 1890. — Subject to the Supreme Court of Judicature Acts, and
the rules of Court made thereunder, and to the express provisions of any statute,
whether passed before or after the commencement of this Act, the costs of and inci-
dent to all proceedings in the Supreme Court, including the administration of
estates and trusts, shall be in the discretion of the Court or judge, and the Court or
judge shall have full power to determine by whom and to what extent such costs
are to be paid.

This enactment in effect gets rid of the decision in lie Mills, 34 C. D. 24.

R, S. C. 1883, 0. LXV. r. 37. — The rules, orders, and practice of any Court whose
jurisdiction is transferred to the High Court of Justice or Court of Appeal, relating
to costs, and the allowance of the fees of solicitors and attorneys, and the taxation
of costs, existing prior to the commencement of the principal Act, shall, in so far as
they are not inconsistent with the principal Act and these rules, remain in force and
be applicable to costs of the same or analogous proceedings, and to the allowance
of the fees of solicitors of the Supreme Coiirt and the taxation of costs in the High
Court of Justice and Court of Appeal.

This rule means that all the old rules of the Court of Chancery, except so far as
they are altered by the new rules, are still binding upon the judges of the Chancery
Division (per Jessel, M. R., Pringle v. Gloag, 10 Ch. D. 678).

[As to the inherent jurisdiction of the Com-t with respect to costs, see Ee Bombay
Civil Fund Act, 1862, 40 Ch. Div. 288.]

As to costs in County Courts, in the winding-up of building and industrial
societies, see infra, p. 615.

As to ordering liquidator personally to pay costs, see supra, p. 215.



Order of
priority (sub-
ject to special
order).



Costs Payable out of the Assets of the Company.

R. 31 of 1890. — The assets of a company which is being wound up, remaining
after payment of the fees (1), and actual expenses incurred in realising or getting
in tlic ttHsets (2), shall, subject to any order of the Court (3), and, if the winding-up
is iu the Stannaries Court, subject to the provisions of tho Stannaries Act, 1887 (4),



COSTS. 567

be liable to the following payments, wliich shall be made in the following order of
priority, namely : —

First. The taxed costs of the petition, including the taxed costs of any person

appearing on the petition whose costs are allowed by the Court (o) ;
Next. The remuneration of the special manager, if any (6) ;

,, The costs and expenses of any person who makes, or concurs in making,

the company's statement of affairs (7) ;
,, The taxed charges of any shorthand writer appointed to take an examina-
tion : Provided that where the shorthand writer is appointed at the
instance of the official receiver the costs of the shorthand notes shall be
deemed to be an expense incurred by the official receiver in getting in
and realising the assets of the company (8) ;
,, The liquidator's necessarj- disbursements, other than actual expenses of

realisation heretofore provided for (9) ;
,, The costs of any person properly employed by the liqmdator with the

sanction of the committee of inspection (10) ;
,, The remuneration of the liquidator (11) ;

,, The actual out-of-pocket expenses necessarily incurred by the committee
of inspection, subject to the approval of the Board of Trade (12).
(1.) The above rule does not touch the rights of incumbrancers ; in the case of an Incum-
incumbered property, the company's asset is the equity of redemption. See Anr/lo- brancers.
Austrian, i^-e. Union, supra, p. 565. Nor does it affect the priority of costs ordered to
be paid by the liqiiidator out of the assets ; and such costs are prima facie payable
in full and immediately out of the net assets of the company, although the date of
the order does not of itself give priority. London Metallurgical Co., (1895) I Ch. 758.

(2.) "■Actual expenses of rvalising and getting in the Assets." — These words cover a Expenses of
considerable part of the general costs of the winding-up. Bronfield Co., 23 Ch. D. realization.
516. But there are some which are not, it would seem, covered, e.g., the costs of
ascertaining the debts and liabilities of the company. Such costs appear to fall
under (9) and (10). Costs of preservation are not costs of realization: LatltuniY.
Greentvich Ferry Co., W. N. (1895) 77.

As a liquidator cannot obtain possession of the assets without discharging what is Fees of offi-
due to the official receiver for fees, &c., and cannot very well realise without pos- cial receiver,
session, the payment of the official receiver's fees, &c., will jjrobably be held to be
expenses of realisation. And see order in Unionist Club, Limited, infra.

(3.) "Subject to any Order of the Com?-<."— Having regard to sect. 110 of 1862 Special order.
{supra) , the sounder construction seems to be that the words refer to that section,
and are without prejudice to the power of the Court thereunder. And see London
Jfefallurgical Co., (1895) 1 Ch. 758.

(4.) "Subject to the provisions of the Stannaries Act, 1887." — See sects. 4, 7, 9, Stannaries
10, 19, 34 ; which are not expressly repealed by the Stannaries Coiu-t (Abolition) -A-Ct.
Act, 1896.

(5.) Costs of Petition and persons appearing thereon. — Under the old practice the Petition.
taxed costs of the petitioner were paid in full in priority to the costs of the
winding-up. See supra, p. 565.

In case of deficiency the practice is for the official receiver to pay the costs of
petition and of persons appearing thereon ;;ro rata, unless a summons is taken out
within twenty-one days of his notice of intention so to divide them.

The above rule does not mention the general costs of the winding-up ; and, if
not costs of realization, they will be included either in "liquidator's necessary
disbursements" (see infra (9)), or in " costs of any person properly employed by
the liquidator with the sanction of the committee of inspection" (see infra (10)).
See further as to this, infra (9) and (10).



568



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



Special
manager.



Statement
of ajEfairs.



Shorthand
writer.

Disburse-
ments.



Persons
employed.



Liquidator's
remuneration.



Provisional
liquidator.

Committee of
inspection.



(6.) Eemunemtion of Special Manager. — This is fixed by the Court (sect. 5 (3) of
1890) on the report of the official receiver. R. 42 (1) of 1890. His costs of giving
security are to be borne by himself personally. R. 67 (5) of 1890. But the ex-
penses incurred by him seem to be expenses of realization.

(7.) Costs and Expenses of Statement of Affairs. — These are to be paid by the
official receiver out of the assets. Sect. 7 (4) of 1890. And they must be sanctioned
by him before being incurred. R. 62 of 1890.

(8.) Charges of Shorthand Writer. — As to these charges, and when he may be
appointed, see R. 16 of 1890.

(9.) Liquidator'' s necessary Disbursements. — These do not include his costs of giving
security (R. 67 (5) of 18901 ; or his costs of obtaining the Coui-t's sanction to pur-
chase under R. 157. R. 159.

It is, however, presumed that they include the general costs of the winding-up
not otherwise provided for.

(10.) Costs of persons employed with sanction of Committee of Inspection. — The general
costs of winding-up (irrespective of costs of realization, taxed costs of petition,
remuneration of special manager, costs of statement of aflfairs, and charges of short-
hand writer, as to which see supra) seem to come under the head either of («) liqui-
dator's necessary disbursements, or [b) the above head.

(11.) Remuneration of Liquidator. — As to how the remuneration is fixed, see
Rr. 154, 155 of 1890. As to depriving liquidators of remuneration for solicitation,
see Sch. I. (18) to Act of 1890.

Even under the old practice an official liquidator received no remuneration out of
the assets until after the costs of the winding-up (including those of solicitor and
provisional liquidator) had been paid in full. Li re Massey, 9 Eq. 367 ; In re True-
man, 14 Eq. 278.

As to the order in which a provisional liquidator's costs are paid, see the order in
Unionist Club, infra, Form 659.

(12.) Expenses of Committee of Inspection. — This does not seem to include payments
to members of committee for services rendered, payment of which may be sanctioned
by the Court. R. 160 of 1890. In the absence of special direction by the Court,
these seem to be expenses of realization.



Notice of
appointment
to tax.

Lodging bill
for taxation.



Taxation of Costs.

Er. 22—30 of 1890, are as follows :—

22. The provisions of the following rules numbered 23 to 30 shall apply to the
taxation and allowance of costs payable by or to the official receiver or liquidator or
which are to be paid out of the assets of the company.

23. Every person whose bill or charges is or are to be taxed shall in all cases give
not less than four days' notice of the appointment to tax the same to the official
receiver and to the liquidator (if any).

24. The bill or charges, if incurred prior to the appointment of a liquidator, shall
be lodged with the official receiver, and if incurred after the appointment of a liqui-
dator, shall be lodged with the liquidator three clear days before the application for
the appointment to tax the same is made. The official receiver or the liquidator, as
the case may be, shall forthwith, on receiving notice of taxation, lodge such bill or
charges with the proper taxing officer.

[Tlie practice now, although it may not be strictly in accordance with Rr. 23 and
24, is as follows :— As soon as an order directing taxation of costs is completed, and
one of the parties has lodged his bill for taxation, notice is sent from the registrar's
office to all the other parties of the date for lodging their bills. In cases in which



COSTS. 569

the bills have to be lodged with the official receiver or liquidator, the notice is
according' to Form 667 ; in other cases it is according to Fonn G68. Subsequently,
notice of the appointment to tax is sent from the registrar's office. See Form 669.]

25. Every person whose bill or charges is or are to be taxed shall, on appUcation Copy bill,
either of the official receiver or the liquidator, furnish a copy of his bill of charges

so to be taxed, on payment at the rate of id. per folio, which payment shall be
charged on the assets of the company. The official receiver shall call the attention j)ufjgg ^f qW.
of the liquidator to any items which, in his opinion, ought to be disallowed or cial receiver,
reduced, and may attend or be represented on the taxation.

26. "Where any party to, or person affected by, any proceeding desires to make Subsequent
an application for an order that he be allowed his costs, or any part of them, application
incident to such proceeding, and such application is not made at the time of the '*^'-' costs.
proceeding —

(1.) Such party or person shall serve notice of his intended application on the
official receiver, and, if a liquidator has been appointed, on the liquidator.

(2.) The official receiver and liquidator may appear on such application and
object thereto.

(3.) No costs of or incident to such application shall be allowed to the applicant
unless the Court is satisfied that the application could not have been made at the
time of the proceeding.

27. Upon the taxation of any bill of costs, charges, or expenses being completed, Certificate
the taxing officer shall issue to the person presenting such bill for taxation his of taxation,
certificate of taxation. The bill of costs, charges, and expenses shall be filed.

28. Every taxing officer shall keep a register of aU. bills taxed by him in windings- Roo-ister of
up under these rules, and shall, within fourteen days after the 3 1st day of October bills and
in each year, make a retiu'n to the Board of Trade of all bills taxed by him during returns,
the twelve months preceding such 31st day of October.

29. Before the bill or charges of any solicitor, manager, accountant, auctioneer, Certificate of
broker, or other person employed by an official receiver or liquidator is or are taxed official re-

a certificate in writing, signed by the official receiver or liquidator, as the case may ^.^^^ ?^ '^^

be, shall be produced to the taxing officer setting forth whether any, and if so

what, special terms of remuneration have been agreed to, and in the case of the bill , ^ ,

. . . , , . . . employment,

of costs of a solicitor, a copy of the resolution or other authority sanctioning the

employment.

[This sanction must be obtained before employment. See s. 12 (4) of 1890. If
not so previously obtained, there is considerable difficulty in obtaining payment.
When the official receiver is liquidator, without a committee of inspection, the
authority of the Board of Trade must be produced. See £.v parte Dimcan, 40 "W. R.
159.]

30.— (1.) Where any bill of costs, charges, fees, or disbursements of any solicitor, Review of
manager, accountant, auctioneer, broker, or other person has been taxed by a taxation not in
registrar of a Court other than the High Coiu't, the Board of Trade may require ^^S'^ Court,
the taxation to be reviewed by a taxing master of the Chancery Division of the
High Court.

(2.) In any case in which the Board of Trade require such a review of taxation
as is above mentioned they shall give notice to the person whose bill has been taxed,
and shall apply to the taxing master of the Chancery Division of the High Court
to appoint a time for the review of such taxation, and thereupon such taxing
master shall appoint a time for the review of, and shall review, such taxation and
certify the result thereof. The Board of Trade shall give to the person whose bill
of costs is to be reviewed notice of the time appointed for the review.

(3.) Where any such review of taxation as is above mentioned is reqiiired to be
made by a taxing master of the Chancery Division of the High Court, the registrar



570



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



Registrar's
allocatirr.



Misfeasance
proceedings.



whose taxation is to be reviewed shall forward to the said taxing master the bill
which is required to be reviewed.

(4.) The Board of Trade may appear upon the review of the taxation ; and if,
upon the review of the taxation, the bill is allowed at a lower sum than the sum
allowed on the original taxation, the amount disallowed shall (if the bill has been
paid) be repaid to the oiScial receiver, or the liquidator, or other person entitled
thereto. The certificate of the taxing master shall in every case of a review by
him under this rule be a sufficient authority to entitle the person to whom the
amount disallowed ought to be repaid to demand such amount from the person
liable to repay the same.

(5.) There shall be allowed to the person whose bill is reviewed such costs of and
incidental to his appearance on the review as the taxing master of the High Court
shall think proper, and such costs shall be paid to such person out of the assets of
the company : Provided that the costs of the attendance of a principal shall not be
allowed if in the opinion of the taxing master he could have been sufficiently repre-
sented by his London agent.

[An appeal lies from the decision of the taxing master of the High Court. See
Ex parte Jaynes, 40 W. E. 624.]

R. 28 of April, 1892. — No payments in respect of bills or charges of solicitors,
managers, accountants, auctioneers, brokers, or other persons shall be allowed out
of the assets of the company in a winding-up matter to which these rules apjjly
without proof that the same have been considered and allowed by the registrar.

[This rule is treated as applicable to all bills which have not been ordered to be
taxed.

A formal certificate or allocatur is now issued by the registrar, and the bill and
original certificate are filed. No stamp is charged for this certificate.]

As to costs of misfeasance summonses, see Anglo- Austrian, ^-c. Union, (1894) 2 Ch.
622 ; ibid., (1895) 2 Ch. 891 ; R. S. C. 1883, Appendix N. 72a, 82a, and 130 (An. Pr.
1897, vol. 2, pp. 180, 184, 193) ; and stipra, Chap. XLV. See also W. Towell and
Sons, (1896) 1 Ch. 681 ; followed by Stirling, J., in Chambers, in Western Counties,
^c. Co., May 4th, 1896. And see (1897) 1 Ch. 632.



Order to tax

costs of
official re-
ceiver and
liquidator.



Form 658. Upon the applicon of the off reer and liqr of the ahove-named coy,
by summons dated the 7th July, 1892, and upon hearing the solor for
the applicant, and upon reading the order to wind up the above-
named coy dated 6th March, 1891, it is ordered that it be referred to
the taxing master to tax the costs, charges, and expenses of the appli-
cant, the off recr and liqr of the above-named coy, as between solor
and client from the time of his appointment up to and including this
order, but in taxing such costs the taxing master is to have regard to
any sums of money arising on account of or in respect of the costs of
compromises with any contributories or otherwise. AUcJmi, Linnell ^
Co., No. 10 of 1891. Eogistrar. 21st June, 1892.



In orders made by the registrar himself, .such as the order above, the words "it
be referred to the taxing master " are inappropriate, as it is practically the registrar
referring the costs to himself as taxing master, and the practice now is to direct the
costs tf) bo " taxed," without saying by whom.

Whetlier the official receiver or someone else is liquidator ho will not, having
regard to R. 28 of April, 1892 (see above), make any payment until it has been



COSTS. 571

allowed. The practice, as approved by tlio judge, is for the liquidator's solicitor to
deliver his bill of costs to his client, who then submits it to the registrar under
R. 28, for taxation, and no order is necessary.



UlDon ttG appHcon of S., the off recr and liqr of tho above-named Form 659.
coy, by summons dated, &c., and upon tlie applicon of W., by ~^^^
summons dated, &c., and upon bearing, &c., and reading, &c., It is declaring
ordered that the claim of the sd W. be allowed at the sum of 50^. P^aJJ^^^'^'^o^fg
together with costs, and including in such costs the costs of these &c. under
applicons to be taxed, and it is ordered that it be referred to the ^" 'Ij ^^|
proper taxing master to tax the costs of the sd H. as prov liqr from directing
the time of his appointment, and of this order, and the costs of the sd ta^^^tion.
S., the off recr, as prov liqr and liqr (if any). And it is ordered that
the sd H. be allowed the sum of 50/. in full for his remuneration as
such prov liqr. And it is ordered that the sd off recr and lic[r do pay
out of the money now standing to the credit of the liqr, in the follow-
ing order of priority, as far as the same will extend : — To "VV. the sum
of 50/. and his taxed costs. The sum of 200/. 8s, hd. certified to be
due to the sd H., as prov liqr, for realising and protecting the assets of
the sd club. The taxed costs of the sd H., as such prov liqr. The
off recr's fees, and his expenses and disbursements, including the sura
of 12/. Is. incurred for the valuation of the coy's ppty and effects. The
costs of the off recr, as prov liqr and liqr, when taxed. The costs of
the petitioning creditors and the coy appearing on the petition and
certified by the taxing master. The sum of 12/. 12s. allowed by the
off recr for the preparation of the statement of the coy's affairs. The
sum of 50/. the remuneration of the sd H. as assessed. Unionist Club,
Limtd, U. 0126, 1891. Chitty, J., 14th March, 1891.

And see London Metallurgical Co., (1895) 1 Ch. 758.

Upon the applicon of the off liqr of the above-named coy, and upon Form 660.



hearing the solor for the applicant, and upon reading two several Order to tax
orders dated resply, &c., the chief clerk's certificate dated the 20th, costs of
and filed the, &c., It is ordered that it be referred to the taxing master anj' appoint-
to tax the costs, charges, and expenses of the applicant, as such off ing creditor's
liqr, as between solr and client from the time of his appointment up to^'aTt^nd'' ^^^
to and including this order. And it is ordered that Messrs. B. and B., taxation.
of, &c., solors, be appointed creditors' representatives in the above
matters for the purpose of attending the taxation of the sd costs of
the off liqr in the above matters. And it is ordered that the costs,
charges, and expenses of the sd Messrs. B. and B. of and incident to
such taxation and of this applicon be taxed. Ai-my and Navy Pro-
vision Market, Limtd, Pearson, J., 4th June, 1885.



572



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



Form 661.

Another.



Creditors'
representa-
tive.



Uj)on the applicon of the exors of L., deceased, &c., Order that
Mr. H. v., of, &c., solor, be appointed creditors' representative in
the above matters for the purpose of attending the taxation of the
costs both of the prov and off liqr in the above matters, other than the



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