Charles Mac Naughten Sir Francis Beaufort Palmer.

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

. (page 59 of 152)
Online LibraryCharles Mac Naughten Sir Francis Beaufort PalmerCompany precedents for use in relation to companies: subject to ..., Volume 2 → online text (page 59 of 152)
Font size
QR-code for this ebook

more than 20«. in the pound. Ex parte Cama, 9 Ch. 686. But if before proof
holder has received a dividend or part payment from any other party liable, he can
only prove against the company for the balance. Orietital Commercial Bank, 6 Eq.
682 ; Cooper v. Fepys, 1 Atk. 107.

As to lumping together claims on bills when the rights over against third persons
are different, see Be Morris, (1899) 1 Ch. 486.

As to proving in respect of notarial charges and commission, see English Bank of
Fiver Flate, Ex parte Bank of Brazil, (1893) 2 Ch. 438.

" When, upon the acceptance of a bill by a banker or other person, property has
been appropriated by the drawer for the benefit of the acceptor towards payment of
the bill, on the double bankruptcy or insolvency of the drawer and acceptor, the
holder of the bill has an equity to the benefit of the contract between them, and to
have the property specifically applied in payment of the bill." Tudor's L. C.
Merc. Law, 3rd ed. 392 ; and see Ex parte Waring, 19 Yes. 346, and other cases
there cited ; Williams on Bkcy., 7th ed. 184 el seq.

As to the rule in Ex parte Waring applying in the case of companies in liquida-
tion, see Eickie^s case, 4 Eq. 226 ; Earned!' s Banking Co,^ 10 Ch. 198, and Lindley
on Companies, 6th ed. 1012.

The rule does not apply to Scotland. Foyal Bank ^f Scotland y. Commercial Bank
of Scotland, 7 App. Cas. 382.

Bbbaoh of Tbtjst.

CUuma in respect of breach of trust can be proved in a winding-up, whether the
company is solvent— in which case they clearly fall within sect. 168 of 1862 — or is
insolvent, in which case they clearly fall within the words of sect. 37 of the Bank-
ruptcy Act, 1883. Emtna Silver Mining Co, v. Gh^ant, 17 CD, 122 ; Metropolitan
Bank, 16 C. D. 139 ; Milan Tramways Co.^ 26 C. D. 691. And see Wms. on Bkcy.,
p. 120.

Digitized by




When the company is a holder of shares in another company, tiie liahility to pay
calls on snch shares, made at the time of the proof, is prorahle as a debt, and the
liability to future calls is provable as a contingent debt. Mercantile Mutualy ^.
Ateoeiation, 25 C. D. 415 ; Hardi/ v. Fothergili, 13 App. Cas. 351 ; Eughet' ease,
13 Eq. 623.

Contingent and Future Debts.

Proof can be made in respect of contingent and f ature liabiUtieB of the most
varied character, and however difficult it may be to ascertain the value thereof, e.ff,^
where the company has undertaken to indemnify A. B. against certain contingent
liabilities, A. B. can prove in respect of the company's liability before paying any-
thing, and notwithstanding that it is uncertain whether he will be called on to pay
anything. Hardy y. Fothergili^ 13 App. Cas. 351 ; British Prov, v. Anglo- Aut, Co.,
10 L. T. 326 ; 4 N. R. 48 ; National Funds Co., 3 Ch. 791.

As to proof by landlords for future rent, &c., see Chap. XXXV. ; BamettY. King,
(1891) 1 Ch. 4.

So, also, a surety for the company may prove in respect of his title to be in-
demnified even before payment. Fx parte Delmar, 38 W. R. 752 ; and see SuretieSy
infra, p. 469.

As to proving for a debt payable at some future time, with interest in the mean-
time, see R. 101 of 1903 below, and Fx parte Ador, (1891) 2 Q. B. 574.

Where the debt or liability is in the opinion of the Court " incapable of being fairly
estimated," the Court has, under sect. 37 (6) of the Bankruptcy Act, 1883, power to
make an order to that effect, and thus exclude it from proof ; but the Court is not
much inclined to make such an order even in bankruptcy, and much less in winding-
up, for in the former case the bankrupt would still remain liable, but in the latter
case the company would be dissolved. Mardg v. Fothergili, 13 App. Cas. 351.

A claim which is contingcDt at the commencement of the winding-up, and is
afterwards conclusively ascertained, may be approved at the amount so ascertained.
Macfarlane's Claim, 17 C. D. 337. And so where a creditor proves in respect of a
contingent liability at a specified amount, and before the liquidator has admitted or
rejected the claim the contingency happens, the liquidator may reduce the proof
accordingly. Re Dodds, 25 Q. 6. D. 529.

As to a surety's right of proof in respect of his contingent liability, see Fx parte
Fead, (1897) 1 Q. B. 122 ; Wolmershausen v. Gullick, (1893) 1 Ch. 614.

A contingent claim may be barred by a scheme under the Joint Stock Companies
Arrangement Act, 1870 : Craig's Claim, (1895) 1 Ch. 267.


A commission on future profits or business is not provable when the company is
not imder any obligation to continue. Fx parte Maelure, 5 Ch. 737. And see
Rhodes V. FortoQod, 1 App. Cas. 256. Queere whether Ogdens, Limtd, v. Nelson, (1903)
2 K. B. 287, is consistent with that case.

As to commission on bills, see Fnglish Rank of River Flate, (1893) 2 Ch. 438.


Claims under, or for the breach of, contracts are clearly provable, and constitute
the great mass of claims proved. But, in order to prove, the claimant must show
that the contract was made with him or some person through whom he, as assignee
or cestui que trust, derives title. Hence, where a company contracts with A. to pay
B. a sum of money, B. cannot prove ag^ainst the company unless he can show an
asdgfnment or that A. was his trustee. Fmpress Fngineering Co., 16 CD. 125 ;

Digitized by

Google j


Rotterdam Ahtm Co., 25 C. Div. 103 ; BritUh Prov., ie. Soe., 10 L. T. 326 ; :Eume
V. Record Reign Jubilee Syndieate, 80 L. T. 404.

Claims are sometimes made in respect of provisions in the articles of association
for the payment of sums by way of salary, commission, or promotion money. As a
general rule outsiders cannot claim the benefit of such proyisions. And tiiis right
of members to claim the benefit of such provirion is qualified. However, there
are cases in which the Court may imply a contract to sell on the terms set forth in
the articles. And see tn^a, ** Salarttm.**

Costs op Peoof akd Proof for Costs.

A creditor proving must bear the cost of proving, unless the Court otherwise
directs. See R. 97 of 1903, supra (like Sched. II. r. 6, and B. A. 1883) ; but see
Rriiiah Gold Fields of West Africa, (1899) 2 Ch. 7.

Where a claimant fails to establish his claim, he may be ordered to pay costs.
Re Knight, 67 L. T. 238.

And where the liquidator disputes the debt, he may be ordered to pay the costs.
MayU ease, W. N. (1871) 18 ; National Wholemeal, ^c. Co., (1892) 2 Ch. 467.

The liquidator may be ordered to pay the costs personally, although he has acted
under the direction of the committee of inspection. Ex parte Brown, 17 Q. B. Div.
488 ; jr. Fowell and Sons, (1896) 1 Ch. 681.

The decisions on sect. 37 of the Bankruptcy Act, 1883, have established the
following rules: — ^'If an action is brought against a person, who afterwards
becomes bankrupt, for the recovery of a sum of money, and the action is successful,
the costs are regarded as an addition to the sum recovered and to be provable if
that is provable, but not otherwise. If, therefore, what is recovered is unliquidated
damages * arising otherwise than by reason of a contract, promise, or breach of
trust,' that sum is not recoverable unless judgment, or at least a verdict for it, has
been obtained before adjudication, or now the receiving order ; and if the sum
recovered is not provable, neither are the costs of recovering it. Re Newtnan, 3
C. D. 494 ; Re Black, 67 L. T. 419. On the other hand, if what is recoverable is
provable, so are the costs of recovering it. See Emma Silver Mining Co. v. Grant,

17 C. D. 122 If an unsuccessful action is brought by a man who becomes

bankrupt, then, if he is ordered to pay the costs, or if a verdict is given against
him before he becomes bankrupt, they are provable. Ex parte Feaeock, 8 Ch. 682.
On the other hand, if no verdict is given against him, and no order is made for
payment of costs until after he becomes bankrupt, they are not provable. In such
a case there is no provable debt to which the costs are incident, and there is no
liability to pay them by reason of any obligation incurred by the bankrupt before
bankruptcy ; nor are they a contingent liability to which he can be said to be sub-
ject at the date of his bankruptcy. This was the case of Vint v. Eudspith, 30
C. D. 24."

The above observations were made by Lindley, M. R., delivering the judgment
of himself and Rigby and Collins, L.JJ., in British Gold Fields of West Africa,
(1899) 2 Ch. 7. In that case a shareholder in a limited company having applied,
before its winding-up, for rectification of the register under sect. 36 of 1862, and
repayment of the sum paid for his shares, obtained, after the winding- up, an order
for rectification and repayment, and was admitted by the official receiver and liqui-
dator to prove for the sum ordered to be repaid, but not for the costs of the

But the Court of Appeal held that such an application was not a claim for unli-
quidated damag^. The Master of the Rolls said : — '* It is a claim for two things,

Digitized by



namely, first, for the removal of an impediment which prevents tiie demand for a
return of the money from being sncoessf ul ; and, secondly, it is a demand for the
repayment of a liquidated sum, and not for unliquidated damages. The register
having been rectified, the sums paid by the applicant are dearly provable debts,
and the costs of rectifying the register are costs of obtaining an order, without which
these debts cannot be recovered or admitted to proof. The costs are, therefore,
properly added to the debts provable."

Where a solicitor daims in respect of a bill of costs, the bill, at any rate when
the time for taxation was not passed before the commencement of the winding-up,
will be referred to the taxing master. Ex parte QuilteTf 4 De G. & S. 183 ; JFx
parte Evam, 11 Eq. 151. And, notwithstanding those cases, it would seem that,
even where the time for taxation has passed at the commencement of the wind-
ing-up, the Court will, before admitting such a claim, obtain the assistance of
the taxing master, for a bill is not conclusive even where the time for taxation is
passed. Ex parte Ditton, 13 C. Div. 320 ; Ee Park, 69 L. T. 925 ; and see Terrell
▼. Huttm^ 4 H. L. G. 1091. When in any such case the assistance of the taxing
master was required, the usual course was for the chief derk to request the taxing
master to tax the bill, and the claim meantime stood over. But now the registrar
will make the request. And see Chap. XLVII.

Ceown Debts.

The Crown, not being expressly mentioned in the Act of 1862, is entitled to be
paid out of the assets in priority to all other creditors. Senley ^ Cb., 9 C. Biv.
469 ; In re Bonhamy 10 C. Div. 595. And sect. 10 of the Judicature Act, 1875,
has not afiPected this right. Oriental Bank Corporation, 28 C. D. 643. And see
Ex parte Boetnuuter^General, 10 C. D. 596 ; West London, #c. Bank, 38 C. D. 364 ;
jittomey- General v. Leonard, ib, 622; Exchange Bank v. Reg., 11 App. Gas. 157.
But the Crown's priority is to some extent modified as to assessed taxes, land tax,
and property and income tax, by the Preferential Payments in Bankruptcy Act,
1888 (61 & 52 Vict. c. 62): see notes to Form 451b. But these taxes and the other
•daims mentioned in the Act are given priority over a debenture ** floating charge "
\fj the Preferential Payments in Bankruptcy Act, 1897. As to debts due to bodies
receiving grants from Government not being preferential, see Fox y. Newfoundland
Government, (1898) A. C. 667.

Qiuere, whether Crown debts have priority oyer fees due to the Board of Trade as
a Qovemment Department.


"Dtmmg&B for breach of contract, whether liquidated or unliquidated, may be
-proyedflor. Unliquidated damages, arising otherwise than by reason of a contract,
,promise, «ir laeach of trust, are not provable. Sect. 37 of the Bankruptcy Act, 1883,
tupra, p. 4t6. And as to the costs incurred in recovering them, see eupra, <* CoeiB."

As to coottracts providing for the payment of liquidated damages, see /» tv New-
man, 4 C. Diy. 724 ; Waller y. Smith, 21 C. Diy. 243.

As to interest and other sums by statute payable as liquidated damages, see
London and Universal Bank y. Earl of Clanearty, (1892) 1 Q. B. 689 ; Lawrence y.
Willcoeke, (1892) 1 Q. B. 696.

Dissolved Company.

As to what becomes of property which would go to a company whioh has proved
Imt has been dissolved, see Re Higginson y. Dean, (1899) 1 Q. B. 325.

Digitized by



DoTTBUB Proof.

. Hiere oasnot be two proofs in reBpeot of one and the same debt. OrienUU Cbfn-
tnereial Bank, 7 Ch. 99.


The liquidator can apply to expunge any proof. R. 109 of 1903.

And a creditor or contributory can likewise apply. R. 110 of 1903.

And in some cases the debtor, lie Calvert, W. N. (1899) 34 ; 80 L. T. 268.

It becomes necessary to expunge a proof or reduce its amount generally when,
** after a creditor has been admitted to prove, circumstances are disclosed which, if
known at the time of proof, would have excluded him from the right to prove,
either altogether or to the extent to which proof was allowed. Again, circum-
stances may arise after proof materially to change the state of the debt'* ; ^.^., fraud,
or the fact that the debt is statute-barred. See Robson on Bankruptcy, 5th ed.,
404 et geq. Lapse of time is no objection to an application to expunge a proof
wrongly admitted. Ex parte Sarper, 21 CD. 537.

In bankruptcy, service of notice of motion to expunge out the jturisdiction is
aHowed. Re Calvert, W. N. (1899) 63 ; 80 L. T. 499.


As to official receiver filing aU proofs before payment of any dividend, see R. 113
of 1903.

As to filing proof after receiving notice of appeal from creditor, see R. 116 of
1903. And see Chap. XLYIII.

As to liquidator filing proofs, see R. 114 of 1903.

First Meetings.

As to proof and voting at, see Chap. XYII. and Sohed. L to Act of 1890, there
set out.

Foreign Law.

A debt under a contract made in a country by the laws of which it is not enforce-
able may be provable in England. Ex parte Melboura, 6 Ch. 64.

Frattdulent Prbferbncb. See Chap. XLIV.

Future Debts.
See <* GoNTnroENT asb Futubb Debts." Future rent, see Chap. XXXV.


Proof may be made on a contract by the company to i n d em nif y. British Prov,
V. Anglo-Australian Co,, 4 W. R. 48 ; 10 L. T. 326 ; National Financial Co., 3 Oh.
791 ; Sardy v. FothergiU, 13 App. Caa. 351. And see infra, "Suebtibs."

As to interest, see Hughes' Claim, 13 Eq. 623 ; MeKewanU ease, 6 0. D. 456.


Digitized by





Where a compaaj is insolyent, a creditor oaanot proye for iniereet aoomiDg or to
aoorue after the oommencement of the winding-np. Warrant Finance C%., 4 Ch.
643 ; Be Collie, 17 0. Div. 334 ; Hughet^ Claim, 13 Eq. 623 ; Quartermaine^a ease,
(1892) 1 Ch. 639. Ab to proof for a lamp sam or iBBtalments indading interest,
see £x parte Butt, 22 C. D. 450. The creditor maj, howerer, enter a claim for the
amount, and if the company should ultimatelj prove to he solvent, he will he paid.

In the case of a solvent company, the creditor whose deht carries interest ia
entitled to he paid both principal and interest.

R. 100 of 1903, formerly 104 of 1890, which is taken from B. A. 1888, Sched. II.
r. 20, specifies certain cases in which interest may be proved for, but it is merelj
affirmative, and does not preclude proof for interest in other oases where interest
is due.

It in effect re-enacts the provisions of sect. 28 of 3 & 4 Will. 4, c. 42, with an
important alteration, viz., that whereas the rule fixes the rate at 4 per cent., and
thus liquidates it, under the Act the claim for interest is for unliquidated damages.

An to what is a sufficient demand in writing under the Act and the rule, see
Ehymney Rail. Co. v. Rhymney Iron Co., 25 Q. B. Div. 146, in whiah it was held
that a writ in an action was not an effective demand in writing ; although it has
been held that a summons in a winding-up is sufficient. Ex parte Alison, 15 Eq.
397 ; Raet of England Bank, 4 Ch. 14. As to what is a time certain, see X. C. f 2>.
RaiL Co, V. 8, E. Rail. Co., (1892) 1 Ch. 120 ; (1893) A. C. 429.

As to the rate of interest under the Act, see the case last mentioned ; but R. 100
of 1903 now fixes it. But the right as to dividend, as distingfuished from the
amount of proof (Ex parte Jonet, 9 Mor. 253), is restricted by B. A. 1890, s. 23,
which provides that '* where a debt has been proved upon a debtor's estate, under
the principal Act, and such debt includes interest, or any pecuniary consideration
in lieu of interest, such interest or consideration shall, for the purposes of dividend,
be calculated at a rate not exceeding five per centum per annum, without prejudice
to the right of a creditor to receive out of the estate any higher rate of interest to
which he may be entitled after all the debts proved in the estate have been jMud in
full.*' See Wms. on Bkcy., p. 380. But as to paying interest before proving, see
Re Fox and Jaeobt, (1894) 1 Q. B. 438.

It was long since settled that at common law interest was not payable on ordi-
nary debts unless by agreement, or by mercantile usage. Miggim v. Sargent, 2 B.
& C. 348 ; Pag9 v. Newman, 9 B. & C. 378 ; Foster v. Weston, 6 Bing. 709. This
was changed to some extent by 3 & 4 Will. 4, c. 42 ; and other statutes occasionally
provide for payment of interest. Moreover, interest was and is commonly allowed
on equitable debts or demands. JPrimd facie, therefore, a deht or daim does not
carry interest. It is for the claimant to show that he is entitled to prove for inte-
rest by reason of (a) a contract express or implied, or (b) by mercantile usage, or
(c) by statute, or (d) on equitable principles. As regards express contract, tbe rate
of interest, and the time from which the interest runs, depend on the term of the
contract. An implied contract may arise from a course of dealing between the
company and the claimant, e.g., if on similar transactions the claimant has been
allowed interest by the company. The fact that an account charging interest has
remained unquestioned does not imply an agreement to pay interest. Re Edwards,
65 L. T. 453. And where the contract provides for pa3rment of interest up to a
certain date, there is no implied contract for subsequent interest at the same rate.
Cook V. Fowler, L. R. 7 H. L. 27. And see, as to interest payable by statute,
3 & 4 WiU. 4, o. 42, above referred to, and 1 ft 2 Vict. c. 110, s. 17, under which

Digitized by


CBEDirOBS. 458

jadgment debts carry interest at 4 per cent, per annum. See B. 8. G. Ord. XLI.
r. 16; Ord. LVn. r. 19.

Section 23 of 1890 is not retroepeottve. jB# Athhmneyy Es parte Wilton^ (1898)
2 Q. B. 547.

As a contract is merged in a jadg^ent^ the jadgment creditor mnst take the
interest on the jadgment at the statatory rate, and cannot pHmd facie claim the
higher rate, if any, reserved by the contract. See European Gmtral Sail. Co.,
4 0. D. 33. But this rule may be controlled by the contract. Fopple ▼. Sylveatet^
22 G. D. 98 ; JSx parte Fewingt, 25 C. D. 338 ; Ex parte Hughet, 4 Gh. 34, n. ;
Economic Life Ass, Soe. y. Vsbome, (1902) A. 0. 147.

As to the cases in which interest is payable in respect of equitable debts or
demands, see X. C. ^ 2>. Bail. Co. ▼. 8. E. Bail. Co., (1893) A. G. 429 ; and FhUlips
Y. Bomfray, (1892) 1 Gh. 466. See further as to interest, Ghitty on Gontracts,
12th ed. p. 659 ; Wms. on Bkoy. 380.

As to interest varying with profits, see Be Ifildesheim, (1893) 2 Q. B. 357 ; and as
to a fixed sum payable out of the profits, see Ex parte Jones, (1896) 2 Q. B. 484.
And see Wms. on Bkoy., p. 120, and Ex parte Bing, (1899) 1 Q. B. 810.

As to distraining for interest under power in mortgage, see JSigginshaw Mitts and
Spinning Co., (1896) 2 Gh. 544.

As to what is " punctual '* payment of interest, see Leeds, ^. Theatre y. Broad'
bent, (1898) 1 Gh. 343.


Proof may be made on a judgment, but the judgment is not oondusiye in
winding-up, and it may be shown that it was obtained by collusion ; and the
G^urt can examine into the consideration. Be Lennox, 16 Q. B. Div. 315 ; Ex parte
Bevett, 13 Q. B. D. 720 ; Ex parte Anderson, 14 Q. B. D. 606 ; Ex parte Banner,
17 G. Div. 480, where judgment obtained by fraudulent compromise ; Ex parte
Beaton, 8 Mor. 97, as to a gambling debt. And see Wms. on Bkoy., p. 123.


The Statutes of Limitation cease to run as from the winding-up order, so that a
creditor whose claim is not then barred will not be barred by subsequent delay.
General Boiling Stock Co., 7 Gh. 646. But a debt barred before the winding-up is
not admissible to proof. MitcheWs Claim, 6 Gh. 822.

And sect. 107 of 1862 must be borne in mind. Moreover, if a creditor stands
by for years and allows the assets to be distributed and the company dissolved, he
may lose his right.

The acknowledgment of a debt in the statement of affairs does not take the case
out of the statute. Ex parte Topping, 34 L. J. Bk. 44.

As to how far the statute applies in the case of a continuing guarantee, see Parr's
Banking Co. v. Tates, (1898) 2 Q. B. 460.

Payment by a receiver carrying on business, and appointed under a mortgage
security, may take the case out of the statute. Be Hale, LiUey v. Foad, (1899)
2 Gh. 107.

List of Proofs.

Official receiver to file. B. 113 of 1903.

Liquidator to file. B. 114 of 1903. Sea *< Feldto," supra.

Digitized by



Creditor cannot vote at first meeting nntil lodgment. B. 104 of 1908.

Mutual Cebdit Clause.
See as to this, " Sbt-ofp," infra,

Negotl^ble Instbumsnts.
As to prodaotion, see B. 103 of 1903. And see tupra, << Bills of ExoHAirax."

Pbbiodical Payments.
As to proof for, see B. 99 of 1903. And see Chap. XXXY.



If before proof no fire has ooourred, the policj-holder can onlj proye for a
contingent liability, but if a fire has occurred before the commencement of the
winding-up, or even after the commencement of the winding-up, and before proof,
he wiU proTe for the damage sustained, MaefarlaneU case, 17 C. D. 837.


The Life Assuranoe Oompanief Aot, 1872 (35 k 36 Vict. o. 41), provides as
follows : —

Sect. 6. — ^Where a life assurance company is being wound up by the Court, or
subject to the supervision of the Court, or voluntarily, the value of every life
annuity and life policy requiring to be valued in such winding-up shall be estimated
in manner provided by the first schedule to this Act; but this section shaU not apply
to any company the winding-up of which has commenced before the passing of this
Act, unless the Court having cognizance of the winding-up so order, which order
that Court is hereby empowered to make, if it think it expedient so to do, on. the
application of any person interested in the winding-up of such company.

Seot. 6. — The rules in the first and second schedules to this Act shall be of the
same force as if they were rules made in pursuance of the one hundred and seventieth,
one hundred and seventy -first and one hundred and seventy- third sections of the
Companies Act, 1862, as the case may be, and may be altered in manner provided
by the said sections, and rules may be made under the said sections for the purpose
of carrying into effect the provisions of this Act with respect to the winding-up of

Seot. 7. — ^Where a company, either before or after the passing of this Act, has
transferred its business to or been amalgamated with another company, no policy
holder in the first-mentioned company who shall pay to the other company the
premiums accruing due in respect of his policy shall by reason of any such payment
made after the passing of this Act, or by reason of any other act done after the
passing of this Act, be deemed to have abandoned any claim which he would have
had against the first- mentioned company on due payment of premiums to such
company, or to have accepted in lieu thereof the liability of the other company.

Digitized by



unlees suoh abandonmenfc and aoceptanoe hare been ngnified bj some writing
signed, bj him or by his agent lawfully authorized.

8eet. 8. — ^This Act shall be oonstrned as one with the Life Assurance Companies

Online LibraryCharles Mac Naughten Sir Francis Beaufort PalmerCompany precedents for use in relation to companies: subject to ..., Volume 2 → online text (page 59 of 152)