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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any act or thing to be done to or in favour of the [official] liquidators, the expression
[oiBcial] lic^uidators shall be deemed to mean the liquidators conducting the winding-
up, subject to the supervision of the Court. Sect. 151 of 1862.

As to the word "official," see sect. 4 (3) of 1890. See also sect. 31 (2) of 1890,
as to the difference between a supervision and a compulsory order.

Sect. 152 of 1862. — Where [a supervision] order ... is afterwards superseded Effect of
by [a compulsory] order . . . the Court may in such last-mentioned order, compulsory
or in any subsequent order, appoint the voluntary liquidators or any of them,
either provisionally or permanently, and either with or without the addition of any
other persons, to be [official] liquidators.

E. 17 of April, 1892. — In all proceedings for the winding-up of a company under Application
the supervision of the Court . . to which these rules apply [that is in all com- ?op./ ^^ °
mencedsince the 31st Dec. 1890, except " retained cases"], the rules contained in the
General Order of the High Court of Chancery, dated the 11th Nov. 18G2, which
relate to such proceedings, shall, so far as appUcahle, be observed, subject to the
following modifications : — Expressions in the said order relating to the judge shall
be deemed to refer to the judge of the High Court within the meaning of these
riiles. Expressions in the said order relating to the chief clerk and the chambers
of the judge shall be deemed to refer to the registrar and his office. All orders
shall be drawn up and filed in the office of the registrar in the manner herein-
before provided with reference to orders made on the compulsory winding-up
of a company, and R. 11 of these Rules, relating to the filing of affidavits and other
documents in the registrar's office, shall apply to all such proceedings.

See the Rules of Nov. 1862, set out in Appendix B.

The words "so far as applicable " in the above Rule of 17th April, 1892, do not
mean that the elaborate course of procedure prescribed by the Rules of 1862, in the
case of a compulsory winding-up, is now to be adopted in liquidations under super-
vision, for this would be by a general rule to alter the whole system of conducting
a liquidation under supervision, which has hitherto been worked in conformity with
sect. 151 of the Act of 1862, whereby it is provided that the liquidators may,
' ' subject to any restrictions imposed by the Court, exercise all theii* powers without
the sanction or intervention of the Court in the same manner as if the company
were being wound up altogether voluntarily."

Accordingly, it is not necessary to have the debts and claims or list of con-
tributories certified by the registrar.

The following are the rules of 1862 generally appHcable: — R. 6, as to the
advertisement of the supervision order ; R. 45, as to convening meetings directed
by the judge ; R. 46, as to votes and proxies at such meetings ; R. 47, as
to the memoranda of the direction of the meeting and its chairman ; R. 53, as to
advertisements of the meetings ; R. 61, as to appointing representatives of a class ;
R. 62, as to appearance, book of creditors, &c., attending proceedings ; Rr. 63
and 64, as to service on contributories and creditors. (See Form 773.)

Although the law and px'actice relating to winding-up under supervision are Application
mainly governed by the Act and Rules of 1862, the Rules of 1890 and 1892 contain of Rules of
many provisions as to the practice with reference to petitions for supervision orders, , ggo



670



WINDING-UP UNDER SUPERVISION.



Wishes of
creditors, &c.



advertisement and service of petition, evidence on petition, compliance attendance,
and hearing, &c., with reference to which see Section I., Chaps. III. to VIII., which
contain the practice as to proceedings to obtain supervision orders down to and
including the hearing.

It must be borne in mind, however, in referring to the Act of 1890, that sect. 31 (2)
provides that "for the purposes of this Act a company shall itot be deemed to be
wound up by order of the Court if the order is to continue a winding-up under the
supervision of the Court."

Although by R. 180 of 1890 the General Order of 1862 ceases to apply in the
case of future compulsory winding-up pi'oceedings, such General Order, so far as
appJicahle, and with certain modifications, continues to apply to proceedings for
winding-up a company under supervision. See R. 17 of April, 1892, set out supra.

With reference to ascertaining the wishes of creditors and contributories under
sect. 149 of 1862, see sect. 91, and the cases cited supra, p. 79.

The following leading cases on the section may be mentioned : —

West Hartlepool Co., 10 Ch. 618, where a supervision order was made at the wish
of the majority of the creditors in lieu of a compulsory order.

Barned''s Banhbig Co., 14 W. R. 722, in which a compulsory order was made,
matters requiring investigation and the assets large.

Neiv Oriental Bank Corporation, (1892) 3 Ch. 563.

As stated in Section I., Chap. VIII., where a company is solvent the wishes of
contributories, and where it is insolvent the wishes of creditors, are specially regarded
by the Court. Besides matters arising after a winding-up order, the question
whether a winding-up order shall be made, and whether the order shall be compul-
sory or for supervision, is "a matter relating to the winding-up" within the
meaning of sect. 91 of 1862, set out supra, p. 78.

Until recently few supervision orders have been made under the new practice,
the leaning of the Court in cases where the company was in difficulties having been
towards a compulsory order, even where the parties interested wished for a supervision
order, ^ee New Oriental Bank Corporation, (1892) 3 Ch. 563. But a more favourable
view of this method of liquidation is now taken, especially since the House of Lords'
decision in J^x parte Barnes, (1896) A. C. 146.



Form 767. Forms of Supervision Orders.

Order for Upon the peton, &c., This Ct doth order that the voluntary winding-up of the

winding-up, sd coy be continued, but subject to the supervision of this Ct ; and any of the pro-
subject to ceedings under the sd voluntary winding-up may be adopted as the judge shall
■p I (I f think fit. And the creditors, contributories, and liqrs of the sd coy, and all other
Iggo, persons interested are to be at liberty to apply to [the judge at chambers] as there
may be occasion.

This form is never used now by Vaughan Williams, J.



Form 768.

Supervision
order (full
form) accord-
ing to present
practice.



Upon tho poton of A. B., of, &c., a creditor [and contributory] of the

abovo-naniod coy, on the th , 189 — , preferred unto this Ct,

and upon hearing counsel for the petr, and for tho above-mentd coy,
]jy J., tlio voluntary liqr thof, and for X. Y., a contributory of the
above-incntd coy, appearing and .supporting tho sd peton, and ujDon
reading the sd peton, an allt of Z., tiled, &:c. (verifying the sd peton),
the Londoji (iazcUe, dated, &c., and tho Times ne^\■spaper, dated,



SUPERVISION ORDERS. 671

&c., each, containing an advertisement of the sd peton, the London
Gazette, dated, &c., containing a notice of the passing of the [extra-
ordinary] resolution for the voluntary winding-up of the sd coy,
and of the appointment of the sd J., as the voluntary liqr thof, the
alft of, &c., this Ct doth order that the voluntary winding-up of the

sd ■ Coy, Limtd, be continued, but subject to the supervision of this

Ct, and any of the proceedings under the sd voluntary winding-up may
be adopted as the Ct shall think fit. And it is ordered that the sd J.,
as such liqr in the voluntary wiudiug-up of the sd coy, do, on the

of next and on the same day in each succeeding month,

file with the Eegr Cos (Winding-up) a report in writing as to the posi-
tion of and the progress made with the winding-up of the sd coy, and
with the realization of the assets thof, and as to any other matters
connected with the winding-up as the Ct may from time to time direct.
And it is ordered that no bills of costs, charges, or expenses, or special
remuneration of any solor employed by the liqr of the sd coy, or any
remuneration, charges, or expenses of such liqr, or of any manager,
accountant, auctioneer, broker, or other person be pd out of the assets
of the sd coy, unless such costs, charges, expenses, or remuneration
shall have been taxed or allowed by the Eegr (Cos "Winding-up). And
it is ordered that all such costs, charges, expenses and remuneration
be taxed and ascertained accordingly. And the creditors, contribu-
tories, and liqr of the sd coy, and all other persons interested are to be
at liberty to apply as there may be occasion ; And it is ordered that
the costs of the petr and of the sd coy, and of the sd , the volun-
tary liqr thof, and of the several creditors and contributories supporting
a supervision order, of the sd peton [and named in the first and second
schedules hereto] be taxed and pd out of the assets of the sd coy [and
that on such taxation one set of costs is to be allowed the sd creditors
supporting a supervision order, and one set of costs is to be allowed
to the sd contributories supporting such an order].

The above is the form now adopted in the registrar's office.

A condition as to taxation something like the above form was first imposed by
Vaughan Williams, J., in Civil Service Brewery Co., (1893) W. N. 5 ; 37 S. J. 194 ;
and the original form was somewhat extended in Waterproof Maieriah Co., W. N.
(1893) 18 ; 37 S. J. 231. And see Xew Morgaii Gold Minini/ Co., 0093 of 1893 ;
Vaughan Williams, J., I7tli May, 1893 ; Theatrical Trust, 00177 of 1893 ; Vaughan
Williams, J., 8th July, 1893. The clause as to filing a report was added later. See
Fritchard, Offor 6( Co., W. N. (1893) 153 ; North Eastern Bultfontein Co., 00246 of
1893. Vaughan Williams, J., 26th Oct., 1893. As to the priority of the liquidator's
costs incurred prior to the supervision order, see New York Exchange Co., (1893) 1 Ch.
371. The separate costs of the company and the liquidator will not generally be
allowed. The order often contains the following directions : — " And the time within

which the order is to be advertised in the London Gazette is extended until the

day of ."



672



WINDING-UP UNDER SUPERVISION.



Form 769.

Taxation
•wlien official
receiver is
provisioual
liquidator.

Form 770.

Order for ap-
pointment of
liquidators.



And it is ordered that the costs, charges, and expenses of the o£F
recr as prov liqr be reserved to be dealt with in the winding-up.
T. Daniel, 1st Sept. 1892.

Upon the peton [^creditors' : supervisioii order~\. And order that a
proper person or persons be appointed liqr or liqrs of the sd coy,
without prejudice to any applicon by those appointed by the general
meeting for their appointment as such liqrs. Ballyctimmisk Coj^per
Mining Co., M. E., 15th Dec. 1873. A. 3104.

Unless otliermse provided by the supervision order, the voluntary liquidators
remain in office, but sometimes the Court removes them and appoints others, or
appoints additional liquidators. This is done under sect. 141 of 1862, and under
sects. 93 and 150. It seems, however, that a voluntary liquidator can only be
removed for " due cause." Oxford Building Society, 49 L. T. 495. Accordingly,
■where it is desired to remove him at the hearing of the petition, the petition should
state the facts which render his removal expedient, and should pray for such removal.



Form 771.

liiquidator to
give security.



Upon, &c. \_supervisio7i orde7'~\. And order that E., the liqr of the sd
coy appointed under the sd voluntary winding-up, be continued as
such liqr on his giving security to be approved by the judge. Great
Western, Sfc. Laundry Co., M. E., 20th July, 1878. A. 1471.

The Court formerly seldom reqnii'ed security from a liquidator where the company
had not required it. See European Bank, 19 W. E. 268 ; Aberavo?i Tin Plate Co., 57
L. J. Ch. 761. But under sect. 151 of 1862 the Court can require security, and it
is now the usual practice to require it. Hatnjjshire Zand Co., (1894) 2 Ch. 632.



Form 772.

Supervision
order, volun-
tary liqui-
dators
retirin":.



Upon the peton, &c. [supervision order, see the forms ahove.^ And
"A. and B., the voluntary liqrs of the sd coy, consenting to retire," It

is ordered that C, of , chartered accountant, be appointed liqr of

the above-named association ; And it is ordered that the sd liqr do on
or before the 25th day of March, 1892, give security to be approved
by the judge [and order for taxing and payment of costs] ; And it is
ordered that the time for advertising this order be extended to the
11th March, 1892. Private Investors' Assoc, 4th March, 1892.

See Hampshire Land Co., supra.



Form 772a Upon the applicon by summons dated, &c. of , creditors of the

above-named coy, and upon hearing, &c., and upon reading, &c.. And

ordeTre- *^^® ^'^ ^' ^^^ ^^ ^^® liqrs of the above-named coy, by his counsel,

placing one offering to retire, Order that it be referred to the Eegistrar (Cos Wind-

d te ° "'i^'" ing-up) to appoint a proper person as a liqr of the above-named coy

in the place and stead of the sd X., to act jointly with the sd G., And



SECURITY KESTKICTIONS. 673

order that the costs of all parties of the sd applicon, and the question
as to the remuneration of the sd X., as one of the liqrs of the sd coy,
be reserved, with liberty to the sd X. [to apply]. Thriitchley Brothers
(0082 of 1895), Eomer, J., 1.5th June, 1896.

Sec another order in General Credit Co. (4th Oct. 1895, Giffard, Reg-.), directing
the new liquidator to give security, and the remaining old and the now liquidator to
file monthly reports, as usually directed in a supervision order.

For appointment of additional liquidator, see Economic Fire Office (0082 of 1894),
Hood, Reg., 25th Oct. 1S95.

How Security given.

Where security is required, it should, unless otherwise directed, be given in Old practice
accordance with the old practice, which was as follows : — A summons was taken still prevails,
out by the liquidator " to settle the security to be given by him pursuant to the
order" dated, &c. The chief clerk (now the registrar) determined the amount
and nature of the security to be given, and evidence as to the assets was required,
the liquidator making an aflBdavit that he had examined the books and pajiers of
the company, and that to the best of his knowledge, information, and belief the
assets consisted exclusively of the particulars in the schedule. See " Company
Precedents," .5th ed., 757. The security was by recognizance, as in Form 10 of
1862, in which case an affidavit of each surety was required, to the effect that he

was worth ' ' the sum of £ of lawful money of Great Britain over and above

■what is sufficient for the payment of all my just debts and liabilities."

But in many cases the bond of a guarantee company was accepted instead of the
recognizance of ordinary sureties.

On applying to such a comi^any for a form of proposal, the usual form of bond
by way of security can also be obtained. The chief clerk (now the registrar) signed
his allowance of the security in the margin thereof, and gave a certificate that the
liquidator had given security pursuant to the General Orders and Rules of Court.

For orders reducing security, see Thermo Co., M. R., 19th July, 1878, B. 1548 ;
Duplex Electric, Bacon, V.-C, 13th June, 1884, A. 902 ; Wes(er?i of Canada, ^-c. Co.,
M. R., 24 July, 1878, B. 1559; Britannia Iron Works, M. R., 7 March, 1878, A. 480.

Where a liquidator was discharged, whether upon a dissolution order being made
or otherwise, an order was made vacating any recognizance or bond entered into or
given by him or his sureties.

Restrictions.

Sect. 151 of 18G2 enables the Court to restrict the powers of the liquidators, but,
except as in Form 768, restrictions are rare. See, however, Jie Watson ^- Co., (1891)
2 Ch. 55, in which Chitty, J., appointed a committee to act with the liquidator,
and restricted his powers accordingly, and Re London Qi<aijs, 3 Ch. 394, in which
the powers of the liquidator were closely restricted.

Subject to any restrictions so imposed, the liquidators may exercise all their
powers just as if the company were being wound up altogether voluntarily. See
sect. 151 and Wrighfs case, 5 Ch. 437.

If it becomes desirable to apply to the Court in regard to any matter, the liqui-
dator can make application accordingly, but he may find that he can complete the
winding-up without any application except for taxation, as required by Form 769,
or by sect. 155 of 1862.

P. XX



674



WINDING-UP UNDER SUPERVISION.



Whence it

DATES.

Date of
resolution.



Special
resolution.



Compulsory
order.



Status of
members.



Commencement of Winding-up.

A supervision order merely continues the voluntary winding-up, and accordingly
the -winding-up in such cases commences " at the time of the passing of the reso-
lutions authorizing such winding-up," as provided by sect. 130 of 1862, even where
the petition upon which the order is made was presented before the resolution was
passed {Weston'' s case, 4 Ch. 20; Emperor Life Assur. Soc., 31 C. D. 78), notwith-
standing a provisional liquidator has been appointed. West Cumberland Iron and Steel
Co., 40 C. D. 361.

In the case of a special resolution (sect. 51 of 1862) the resolution is passed within
the meaning of the above section at the confirmatory meeting.

The fact that no liquidators are appointed does not affect the validity of the reso-
lution. Thomas v. Lionite Co., 17 0. Div. 250.

Where a compulsory order is made after a voluntary winding-up has commenced,
the winding-up commences as from the presentation of the petition on which the
order is made. Be Taurine Co., 25 C. Div. 118.

WTiere a petition for a compulsory order is presented, and a resolution for a volun-
tary liquidation, and subsequently passed, and a supervision order is made in
ignorance of material intervening transactions, the Court of Appeal may extend the
time to appeal, and make a compulsory order. Manchester Economic, 24 C. D. 488.

In the case of a supervision order, all dispositions of the property, effects, and
things in action of the company, and every transfer of shares, or alteration in the
status of the members of the company made between the commencement of the
winding-up and the order for winding-up, shall, unless the Court otherwise orders,
be void. Sect. 153 of 1862, and National Bank of Wales, (1897) 1 Ch. 298. In
practice, however, tliis provision has been disregarded, and it has not been customary
to apply for any general confirmation order. Eut Vaughan Williams, J., has made
an order adopting the proceedings prior to the supervision order.

Sect. 14 of 1890 enables the Court, on the petition of the official receiver, if satis-
fied that a winding-up under supervision cannot be continued with due regard to
the interests of the creditors or contributories, to make an order that the company
be wound up by the Covirt.



Form 773.

Advertise-
ment of super-
vision order.



Advertisement of Order.

No. 0031 of 1892.

In the High. Ct of Justice. Coy's ("Winding up.) Mr, Justice
Vauglian Williams. In the matter of the Coy's Acts, 1862 to 1890,
and In the matter of the N. Coy, Lmtd. By an order made by Mr.

Justice Vaughan AVilliams in the above matters, dated the day of

, 1 895, on the peton of S., of , a creditor of the above-named coy,

praying that an order might be made for the continuance of the volun-
tary winding-up of the sd coy, but subject to the supervision of the
Ct, it was ordered that the voluntary winding-up of the sd N. Coy,
Lmtd. be continued, but subject to the supervision of the Ct, and any
of the proceedings under the said voluntary winding-vip might be
adopted as the Ct should think fit. And it was ordered that A., the

liqr in the voluntary winding-up of the sd coy, should on the

day of , and on each succeeding, &c. [as in supervision order,

Form 7G8], and it was ordered that no bills, &c. [as in supervision order,



APPLICATIOX.S TO COURT. ^^'^

Form 768]. And it was ordered that the costs of tlio petrs and of
the coy, and of the creditors supporting the peton be taxed by the
proper taxing master and pd out of the assets of the coy, and that on
such taxation only one set of costs was to be allowed to the creditors
supporting the peton. And the creditors, contributories and liqr of the
sd CO}' and all other persons interested were to be at liberty to apply
to the Ct as there might be occasion. And the time, &c. [as in siiper-

vision order, Form 768] . Dated the day of , 1 895. F. & W.

\_a(hlress], solors for the sd potons.

Advertising is the point at wliieli the practice as to supervision in proceedings
branches ofE from the practice as to compulsory winding-up. In the latter case the
Board of Trade advertises the order. In the former this diity is thrown upon the
petitioner. See R. 6 of 1862, which also provides for service of the petition.

See also R. 53 of 1862 as to advertising, and dispensing with advertisements.

If the advertisement is signed by a solicitor, it will be accepted withoiit attestation
of such signature, or the production of the order. In other cases the advertisement
must be signed by an official of the Court, and sealed. See Appendix D.

Upon motion, &c., for C, the petr named in the order made on the Form 774.
6th May, 1876, for the winding-up of the above-named coy [under the Order
supervision of the Ct], and upon reading the sd order, This Ct doth extending
order that the time limited for the advertisement of the sd order, advertisino-
dated 6th Maj', 1876, in the London Gazette, pursuant to the general supervision
order of this Ct, be extended to the 19th May, 1876. Percy, Sfc. Co.,
Bacon, V.-C, l7th May, 1876. B. 889.

Sometimes by accident or otherwise the advertisement is not inserted within the
twelve days. In such ease an order as above can be obtained on ex parte motion or
summons. The order need not be drawn up. Ord. LII. r. 14. An affidavit
explaining the omission is occasionally required. But according to present practice
the registrar withoiit any application to the Court by consent inserts, if requisite in
the draft order, a paragraph extending the time. See Form 768.

Applications to the Court.

The supervision order gives liberty to the creditors, contributories, and liquidators How made,
of the company, and to all other persons interested to apply ; and application can
be made by ordinary summons (Form 10), as in the case of a compulsory winding-up.
The fact that creditors can apply is one of the chief distinctions between a vdnding-
up purely voluntary, and one under supervision. In the fonner, creditors have no
such power.

A considerable number of orders made in cases where the winding-up was under
supervision will be found among the forms relating to compulsory winding-up
given in Section I.

Applications are veiy commonly made (a) by liquidators to restrain proceedings ; By whom,
to enforce the payment of calls and other moneys due from contributories ; for
liberty to sell or concur in sales ; as to compromises ; for examination of directors
and others under sect. 115 of 1862; to recover money from directors and others
under sect. 10 of 1890 ; (b) by contributories to rectify the list of contributories ; for

XX 2



676



WINDING-UP UNDER S[JPEKVLSION.



Kulesof 1862.



Service and
general pro-
cedure.



inspection ; and for other pui'poses ; (c) by creditors, as regards disputed debts and
claims; for declarations of rights; and for liberty to bring actions and take pro-
ceedings.

As to the power of the Court on its own motion to direct a private examination,
see Land Securities Co., W. N. (1894) 91, and Section I., Chap. XLIII.

As to the rules of 1862 applying to applications in proceedings under the super-
vision of the High Court, see R. 17 of April, 1892, and sitpra, p. 669.

As to applying to the Court for leave to prosecute directors, see sect. 167 of 18G2
(which in terms applies to supervision cases), and Section I. Chap. XLVI.

As to service on contributories and others, see Rr. 63, 64 of 1862.

As to the general practice, see R. 74 of 1862, Appendix B. See also R. 178 of
1890, and R. 17 of April, 1892, as to the preservation of the existing procedure,
and R. 177 of 1890 as to irregularity and formal defects.



Online LibraryFrancis Beaufort PalmerCompany precedents for use in relation to companies subject to the Companies acts, 1862 to 1890 ... (Volume 2) → online text (page 88 of 134)