Charles Mac Naughten Sir Francis Beaufort Palmer.

Company precedents for use in relation to companies: subject to ..., Volume 2 online

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is ordered that H. and K., contributories, and D., M., S., and W., Order for
creditors, being six members of the committee of inspection, be dis- remuneration
charged, and that G., a contributory, and X. and Y., creditors, be ^d'^^anr-
continued as the committee of inspection under the sd order of 18th ing-some
Dec. 1891 (two to a quorum), and that the sd W. be at liberty to ™®™^"-
pay out of the assets of the bank the sum of 100 guineas to each of
the nine members of the committee of inspection, exclusive of their out
of pocket expenses, for their services up to the 19th May, 1892, the
date of the order confirming the scheme of reconstruction. English
Bank of River Plate (1891), E. 0258, Chitty, J., 19th July, 1892.
A. 1067.

Haying regard to R. 160 of 1890 (now R. 143 of 1903), p. 284, it would seem that
the order ought to hare specified the special aeryioee rendered, and it is now usual
to speoify them.



Othee Foems.



Request by committee to inyest cash balance. Form 249.

Request for sale of securitiee. Form 250.

Oertifioate of audit of liquidator's account. Form 210.



u2



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292



WINDING-TJP BY THE COURT. [ChAP. XXIII.



CHAPTER XXni.

REMUNERATION OP LIQUIDATOR.



Act of 1862.



Regulation
of 1868.



How Bemuneration Assessed*

Sect. 98 of 1862. — There shall be paid to the official liquidator such salary or
remuneration y bj way of percentage or otherwise, as the Court may direct ; and if
more liquidators than one are appointed, such remuneration shall be distributed
among them in such proportions as the Court directs.

This section has not been repealed by the Act of 1890.

The regulation set out below was issued in 1868 as a guide to the exercise of the
discretion of the Court under sect. 93 of 1862 ; but it was not a rule of Court, and,
as appears from the concluding paragraph, did not fetter the Courtis discretion.
See Cannan^s ease, 7 Eq. 102 ; and Mysore Betfs Co., 34 Ch. Div. 14. It was to
some extent acted on up to the end of 1890, when the Winding-up Act was passed,
and under R. 137 of 1903 {infra), it is apparently open to the Court to direct
that the liquidator shall be remunerated according to the mode prescribed by the
Regulation of 1868.

REGULATION
As TO THE Mode of RsinTNERATma Official LiauinATOBS adopted bt the Masteb
OF THE Rolls akd the YioB-CHAiroELLOBS, and sanctioited akd appboyed bt

THE LOBD ChANCELLOB.

Eyery application by an official liquidator for remuneration must be supported
by an affidavit showing the number of hours deyoted by him and his clerks
respectively to the business of the liquidation.

In fixing the amount of the remuneration the judge will, subject as hereinafter
mentioned, be g^ded by the following scale : —

LiaUIDATOBS.



Group A.














Pet ^f at
eight boon.


Class 1. Where the assets divisible among


the unsecured oredi*


r


£




tors shall not amount to
bere thev shall amoimt to








600
2,000


1


„ 2. Wl




£500 and not to


2


,, 3.


»





»>




2,000


)9


6,000


3


Group B.


















Class 4.


»>


»♦


»»




6,000


»»


10,000


4


„ 6.





»»


»>




10,000


f )


60,000


6


Group C.


















Class 6.


»♦





»>




60,000


»)


100,000


8


» 7.


>)


»f


if




100,000


>)


600,000


10


„ 8.


>>


»>


tf




600,000 and over




12








{


Clbbxs.












First class.




Second class.


Third class.




GboitpA.


2«.


. . • •


1».


6rf


U. per hour.






„ B.


3*.


• • • •


2«.


ed.


1*.


»»






„ C.


Ze. 6d.


...•


2e,


M


U.








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REMUNERATION OF LIQUIDATOR. 293

If in the speoial oironmstances of any liquidation it shall at any time, or from
time to time, appear to the judge that it is proper to place it on a higher or lower
daas, he will so plaoe it accordingly.

If it shall appear to the judg^e that in the speoial ciroomstances of any Uqnidation
it is proper to add to or deduct from the amount of remuneration provided by the
scale, he will make such addition or deduction accordingly.

If during the progress of a liquidation it shall appear to the judge expedient so to
do, he will sanction payments to the liquidator on account of his remuneration.

For this purpose the judge will estimate the amount of such remuneration as
well as droumstanoee will admit, and will pay to the. liquidator either the whole
of such estimated remuneration or such part thereof as to the judge shall seem
reasonable.

(This regulation is giyen in L. R., 3 Gh. bdv.)

The words ** assets divisible " in the scale mean assets free to be divided among
the creditors and shareholders, not assets actually divided. Myiort Berfs^ ^e, Co,,
34 Ch. Diy. 14.

Under the practice prior to 1890, a provisional liquidator was remunerated in the
same w^y as other liquidators, imless the order appointing him otherwise provided,
e,ff,, ho was sometimes appointed ** without salary,*' or at " £ per week."

As to the remuneration of the official receiver, as prorisional liquidator, see i^fra. Remunera-
As to the practice with reference to other provisionid liquidators, see Chap. X. ^^^ ?^ .

E. 137 of 1903.— (1) Hie remuneration of a liquidator, unless the Court shall liquidator,
otherwise order, shall be fixed by the committee of inspection, and shall be in the Ne^^ pro-
nature of a commission or percentage, of which one part shall be payable on the ^^^^ *® j?
amount realized after deducting the sums (if any) paid to secured creditors (other
than debenture holders) out of the proceeds of their securities, and the other part
on the amount distributed in dividend. [R. 154 (1) of 1890 amended. Compare
sect. 72 (1) of Bkcy. Act, 1883, on which it has been held that '^the amount
realized'* means the amount realized by the trustee. In re Christie, (1900)
1 Q. B. 6.]

(2) If the Board of Trade is of opinion that the remuneration as fixed by the
committee of inspection is unnecessarily large, the Board of Trade may apply to
the Court, and thereupon the Court shall fix the amount of the remuneration of the
liquidator [New].

(3) If there is no committee of inspection, the remuneration of the liquidator
shall, unless the Court shall otherwise order, be fixed by the scale of fees and
percentages for the time being payable on realizations and distributions by the
official receiver as liquidator. [R. 164 (2) of 1890 amended.]

B. 188 of 1908. — ^Except as provided by the Acts or rules, a liquidator shall
not, under any circumstances whateyer, make any arrangement for, or accept from
any solicitor, auctioneer, or any other person connected with the company of which
he is liquidator, or who is employed in or in connection with the winding-up of the
o(»npany, any gift, remuneration, or pecuniary or other consideration or benefit
whateyer beyond the remimeration to which under the Acts and rules he is entitled
as liquidator, nor shall he make any arrangement for gfiving up, or g^ve up any
part of such remuneration to any such solicitor, auctioneer, or other person. [R. 155
of 1890 (amended). From Bkcy. R. 306. As to purchasing property of the
company without leave, or makiog purchases from persons whose connection with
the liquidator might result in profit to himself, see Rr. 139 and 140 of 1903.]

leet. 11 (4) of 1890. — If any such liquidator at any time retains for more than Improper
ten days a sum exceeding fifty pounds, or such other amount as the Board of Trade retention of
in any particular case authorize him to retain, then, tmless he explains the retcn- ™^°^^'



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294,



WINDING-UP BY THE COUKT. [ChAP. XXIII.



Remunera-
tion of official
receiver and
liquidator.



Stationery
expenses.



tion to the satiiifaction of the Board of Trade, he shall (inter alia) be HaUe to dis-
allowance of all or such part of his remuneration as to the Board shall seem just.
[Compare Bkcy. Act, 1883, s. 74 (6).]

Looking to the terms of R. 137 of 1903, suprot the Court cannot, except by a prior
order, prevent the committee of inspection from fixing the liquidator's remunera-
tion, but under R. 137 (2) there is an appeal by the Board of Trade to the Court
where the remuueration appears too large, in. which case the Court can fix the
remuneration itself under the rule and sect. 93 of 1862 ; but the Court can order
remuneration on a footing other than a commission or percentage on the
amount realized and distributed (probably, that is to say, a oommission or
percentage on the lines of that given to the official receiver by the Order
as to Fees of 17th December, 1891 (Appendix B.)) ; but the words of R. 137,
together with sect. 93 of 1862, supra, seem sufficient to enable the Court to allow
the remuneration on some other footing, in which case the above reg^ation of 1868
may still be a guide to the Court. The same observations apply to a case where
there is no committee of inspection. See R. 137 (3) of 1903, supra.

The committee of inspection does not always represent the interests of both cre-
ditors and contributories, and it is obvious that in many oases the remuneration
fixed by the committee should be reviewed by the Court.

The provisions of R. 137 apparently only apply in the case of a liquidator other
than the official receiver.

Table B., annexed to the order of 17th December, 1891, states what fees are
payable to the official receiver — " L Where the official receiver acts as provisional
liquidator only. II. Where the official receiver is continued as liquidator of the
company (including his services as provisional liquidator). III. Where the official
receiver is continued as liquidator of the company for the purpose of carrying out a
reconstruction or other scheme by which the affairs of the company are wound up
otherwise than by the realization and distribution of the assets.** Table B. also
provides for payment to the official receiver of — IV. Travelling and other ex-
penses ; and V. Threepence in the pound on *' every payment under sect. Id (of
1890) of money out of the Companies* Liquidation Account.**

But an outside liquidator, when remunerated by a commission or percentage,
seems to be not entitled to be paid all the remuneration payable to the official
receiver under the order of 17th December, 1891. Whether there is a committee of
inspection or not, his remuneration is to be by a percentage only for (1) realization
and (2) distributions. He seems, therefore, to be not entitled to the capitation fee
of W. per ten members, &o., payable to the official receiver when continued as liqui-
dator. This is considered as a fee for stationery ; and it is understood that the
Board of Trade does not allow an outside liquidator any stationery expenses.



Ranks after
costs.



Peiokity of Ebmtjneration.

The priority of a liquidator's remuneration is now regulated by R. 170 of 1903
(set out in Chap. XLYII.), from which it appears that many charges are payable
in priority to it. See London Metallurgical Co., (1896) 1 Ch 768,

A liquidator should bear in mind that he is not entitled to receive anything out
of the assets of the company by way of remuneration until all the oosts and
expenses having priority under R. 170 of 1903 (including the bill of oosts of the
solicitor employed by the liquidator) have been paid in full. And see Re Massey, 9
Eq. 367 ; Drcnfield Co., 23 C. Div. 511 ; Dominion of Canada Co., 27 C. Dir. 38 ;
Battett V. Wedgtcood Coal Co., 31 CD. 346. But this does not prevent payments
being made to him on account of remuneration where the aaseto will clearly or
probably be sufficient to cover the above costs and expenses.



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REMUNERATION OF LIQUIDATOR. 295

Moreover, where the assets are encumbered, e.g,^ by mortgages or debentures, Incum-
the remuneration of the liquidator ranks after the rights of the inoumbrancers. brances.
OrimtiU HoteU Co., 12 Bq. 126 ; Regent's Cattallron Works Co., 3 0. Div. 411. Com-
pare theee cases with Davy v. Friee, W. N, (1883) 226 ; 28 S. J. 153 ; Ormerod,
fi^kJr«<m^Cio., W.N. (1890)217. And see Chap. XL VII. Accordingly, where there
are debentures outstanding, the liquidator should get a debenture holder to bring
an action to enforce the debentures. In such case the liquidator is generally
appointed receiver, and thus secures priority. But the remuneration of the
liquidator ranks before the claims of unsecured creditors.

As to joint liquidators being entitled, where it is not otherwise agreed, to equal
shares in the remuneration, see Langham HoteU Co., 20 L. T. N. S. 163. But in a
recent case {Tawd Vale Colliery Co., June, 1903) the Court of Appeal intimated that
the Court could apportion the remuneration according to the work done by each
liquidator.

Payment of, aot) Accounts as to, Ebmuneeation.

The authority for the liquidator's remuneration, whether by resolution of the
committee or order of the Court, must be entered in the record book before such
book is sent to the Board of Trade, with the accounts, for the purpose of being
audited. See R. 149 of 1903, p. 271, and Form 213.

Apparently, although the remuneration, when by way of commission or per-
centage, is earned from time to time as assets are realized or amounts distributed
(see R. 137 of 1903, supra), the liquidator must not pay himself the remuneration
as it from time to time becomes due. He must pay ** the money received by him,"
which means ''all moneys received .... without deduction " into the Companies'
Liquidation Account (unless he has a special banking account) . See sect. 1 1 (2) of
1890, and Reg. 1 of Board of Trade Regulations of January, 1893 (Appendix).
And see Chap. XXIV.

When any remuneration has become due, the liquidator should fill up the proper
form, to be obtaiaed on application to the Board of Trade, presumably C. No. 6
(post, Form 245). This form when filled up must be sent direct to the Board of
Trade, Bankruptcy Department. Payment is made by cheque, but the payment
does not preclude disallowance of the amount should it be found to be irregular on
audit of the liquidator's accounts. Probably no sum will be paid on account of
remuneration until after some audit of accounts showing that something has been
at any rate realized, and that enough money is left to provide for the payments
which have priority over the remuneration.

The amount received for remuneration must be entered in the cash book iJBieg. 9
of Jan. 1893), and on the credit side of the summary of accounts under R. 166 of
1903 (see Form 217).

Even where a special bank account has been authorized under sect. 11 (3) of
1890, aU moneys received must be paid into the appointed bank. Reg. 4 of Jan.
1893. Payment in this case is made by cheque signed by the liquidator, and
countersigned in pursuance of R. 148 of 1903. See Chap. XXV.

Entries must be made in the cash book in accordance with Reg. 9 of Jan. 1893,
and the amount must be entered in the summary. See stipra.

{TUle.) Form 208.



Let all persons concerned, &c., on the applicon of [the Board of Summons for
Trade or A. B., of, &c., the liqr of the above-named coy, or as may be] ^^^^^^



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296 WINDING-UP BY THE COUET. [ChAP, XXIII.

to be fixed that the Ct may direct what amount of remimeration, by way of
by e CJourt. commisfiion or percentage or otherwise, shall be pd to [the sd] A. B.,
as the liquidator of the sd coy or such liqr as afisd [m cane of two or
more liqr 8 a further direction must be asked for, vtz., and in what pro-
portions such remuneration shall be distributed amongst them].

See B. 137 of 1903, supra.

The application seems to be properly made by sammons. See B. 5 of 1903.

As a general role, however, the remuneration is in the first instance fixed by the
committee of inspection, if there is one. For resolution of committee fixing lemn-
neration, see Form 200.

When an application is made to the Court it must be supported by an affidavit
showing why the application is made to the Court, instead of the remuneration
being fixed by the committee (if any) or if there is no conmiittee ; or why the scale
referred to in B. 137 (3) should not apply.

The affidavit should also state particulars as to the nature and supposed value of
the assets, the estimated amount of liabilities, and any special oiroumstanoea which
are material. Many of these particulars may be obtained from the statement of
affairs. See Form 146.



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297



CHAPTER XXIV.

ACCOUNTS OF LIQUIDATOR ; AND PKOCEDURE UNDER SECT. 15 OF 1890.

Obdeb L. r. 23 of the R. S. G. 1883, provides that *' the accounts of a liquidator
shall be passed and verified in the same manner as is bj this order directed as to
receivers' accounts." But, at any rate in compulsory winding-up, it may be
assumed that this rule is superseded by the rules [infra) made under the Companies
(Winding-up) Act, 1890.

Accounting to Committee of Inspection.

fleet. 81 of 1890. — Every liquidator of a company which is being wound up by Books to be
order of the Court shall keep, in manner prescribed, proper books in which he shall kept,
from time to time cause to be made entries and minutes of proceedings at meetings,
and of such other matters as may be prescribed, and any creditor or oontribntory of
the company may, subject to the control of the Court, personally or by his agent
inspect any such books. [From Bkcy. Act, 1883, s. 80.]

B. 149 of 1908. — The official receiver, until a liquidator is appointed by the Court, Kecord book,
and thereafter the liquidator, shall keep a book to be called the *' record book," in
which he shall record all minutes, all proceedings had and resolutions passed at any
meeting of creditore or oontributoriee, or of the committee of inspection, and all
such matters as may be necessary to give a correct view of his administration of the
company's affairs, but he shall not be bound to insert in the ''record book" any
document of a confidential nature (such as the opinion of counsel on any matter
affecting the interest of the creditors or oontributories), nor need he exhibit such
document to any person other than a member of the committee of inspection,
or the o£Boial receiver, or the Board of Trade. [B. 143 of 1890 (varied), taken from
Bkcy. R. 285.]

B. 100 of 1908. — (1.) The official receiver, until a liquidator is appointed by the Cash book.
Court, and thereafter the liquidator, shall keep a book to be called the *' cash book "
(which shall be in such form as the Board of Trade may from time to time direct),
in which he shall (subject to the provisions of the rules as to trading accounts) enter
from day to day the receipts and payments made by him. [Formerly B. 144 (1) of
1890, taken from Bkcy. B. 286.]

(2.) The liquidator shall submit the record book and cash book, together with any Submitting
other requisite books and vouchers, to the committee of inspection ^ any) when l>oolO) &o. to
required, and not less than once every three months. [Formerly B. 144 (2) oif 1890, ^™°"*^'®®'
taken £rom Bkcy. B. 287.]

Br. 168 to 159 of 1903 are as follows :—

152. The committee of inspection shall not less than once every three months Audit of
audit the liquidator's cash book and certify therein under their hands the day on ^^^^ ^^ ^7
which the said book was audited. [Formerly B. 135 of 1890, taken from Bkcy. ^™°^**««-
B. 288.]

158. — (1.) Every liquidator in a winding-up by the Court shall, at the expiration Board of
of six months from the date of the winding-up order, and at the expiration of every Trade audit
succeeding six months thereafter until his release, transmit to the Board of Trade a «^i<50unts,
copy of the cash book for such period in duplicate, together with the necessary
voaohers and copies of the oertifioates of audit by the oommittee of inspection. He



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298



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



Aooount
when assets
realized.

Verification.

Trading
aooonnt.



Verifying
same.



Filing copy
aooounts.



Summary.



Cost of
printing, &c.

Afadavit of
no receipts.



Proceedings
on resigna-
tion, &c.



Expenses
of sales.



shall also forward with the first aooonnts a summary of the company's statement of
affairs, [in such form as the Board of Trade may direct,] showing thereon in red ink
the amounts realised, and explaining the cause of the non-realisation of such assets
as may be unrealised. The liquidator shall also at the end of every six months
forward to the Board of Trade, with his accounts, a report upon the position of the
liquidation of the company, in such form as the Board of Trade may direct. [See
Form 215.]

(2.) When the assets of the company have been fully realised and distributed, the
liquidator shall forthwith send in his accounts to the Board of Trade, although the
six months may not have expired.

(3.) The accounts sent in by the liquidator shall be certified and verified by him
by affidavit. [R. 136 of 1890 (varied), taken from Bkcy. R. 289.]

154.— (1.) Where the liquidator carries on the business of the company, he shall
keep a distinct aooount of the trading, and shall incorporate in the cash book the
total weekly amount of the receipts and payments on such trading aooount.

(2.) The trading account shall from time to time, and not less than once in eveiy
month, be verified by affidavit, and the liquidator shall thereupon submit such
account to thd committee of inspection (if any), or such member thereof as may be
appointed by the committee for that purpose, who shall examine and certify the
same. [Formerly R. 137 of 1890, taken from Bkcy. R. 308.]

155. When the liquidator's account has been audited, the Board of Trade shall
certify the fact upon the account, and thereupon the duplicate copy, bearing a like
certificate, shall be filed with the registrar. [Formerly R. 138 of 1890. Comp.
Bkcy. R. 290.]

156.— (1.) The liquidator shall transmit to the Board of Trade with his acoounts
a summary of such acoounts in such form as the Board of Trade from time to time
direct, and, on the approval of such summary by the Board of Trade, shall forth-
with obtain, prepare, and transmit to the Board of Trade so many printed copies
thereof, duly stamped for transmission by post, and addressed to the creditors and
contributories, as may be required for transmitting such summary to each creditor
and contributory.

(2.) The cost of printing and posting such copies shall be a charge upon the
assets of the company. [Formerly R. 139 of 1890.]

157. Where a liquidator has not since the date of his appointment or since the
last audit of his accounts, as the case may be, received or paid any sum of money
on account of the assets of the company, he shall, at the time when he is required
to transmit his accounts to the Board of Trade, forward to the Board an affidavit of
no receipts or payments. [Formerly R. 140 of 1890, taken from Bkcy. R. 291, under
which the trustee must provide the stamp on the affidavit. Re Jiawlands^ 4 Mor. 70.]

158. — (I.) Upon a liquidator resigning, or being released or removed from his
office, he shall deliver over to the official receiver, or, as the oase may be, to the new
liquidator, all books kept by him, and all other books, documents, papers, and
accounts in his possession relating to the office of liquidator. The release of a
liquidator shall not take effect unless and until he has delivered over to the official
receiver, or, as the case may be, to the new liquidator, all the books, papers, docu-
ments, and accounts which he is by this rule required to deliver on his release.
[R. 141 of 1890 (varied), taken from Bkcy. R. 292. A Board of Trade notice to
comply with the rule may be enforced by the Court. Be Eineks, 8 Mor. 295.]

169. Where property forming part of a company's assets is told by the liquidator
through an auctioneer or other agent, the gross proceeds of the sale shall be paid
over by such auctioneer or agent, and the charges and expenses connected with the
sale shall afterwards be paid to such auctioneer or agent, on the production of the
necessary certificate of the taxing officer. Every liquidator, by whom such



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ACCX)UNT8 OF LIQUIDATOR, 299

MictioneMr or agent is employed, shall, unless the Court otherwise orderS; be
aooonntable for the proceeds of every saoh sale. [Formerly B. 142 of 1890, taken
from Bkoy. B. 296.]



Online LibraryCharles Mac Naughten Sir Francis Beaufort PalmerCompany precedents for use in relation to companies: subject to ..., Volume 2 → online text (page 41 of 152)