Charles Mac Naughten Sir Francis Beaufort Palmer.

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

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see Oenertd Share Trmt Co,, 20 Oh. Div. 260.



Upon the applicon of the off liqrs, Order that the applicants, upon Form 635.

W., of , paying to them the costs of and incident to this applicon, Li|,ertyto

such costs to be taxed in case the parties difEer, be at liberty to accept compromise
from W., by the instalments mentd in the sd afEt, the sum of ^^ ^^'•
57/. 16«. bd., in full discharge of a debt of 152/. \2s, lie/., due from
the sd W. to bank prior to its suspension, such debt beiog in respect,
&o. Liberty to off liqrs to apply as to costs of applicon if W. does not
pay. West of England, Sfc. Bank, Fry, J., 7th July, 1879. B. 1421.



Upon the applicon of T. and C, &c., Order that the applicant be at Form 686.

liberty to accept from J., of , a debtor to the above bank, 260/.

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



Another.



Upon the applicon of T. and 0., the off liqrs of bank, and upon Form 637.

hearing, &c.. Order that upon R., of , a debtor to the above- j^other.

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



Upon the applicon of 8., by summons, &c., and the sd 0., as such off Form 638.
liqr as afsd, by his solors admitting that the sum of 76,300/. is now due Compromise"
from the sd coy to the sd S. for principal on the indentures of mort- with mort-
gage and bill of sale in the summons and afft mentd, and the sum of 8^®®*
3,790/. for interest thereon up to this day, making together 80,090/.,
and the sd C, as such off liqr, admitting that the amount due to the
sd S. largely exceeds the value of the mortgaged ppty ; And the sd .
C, as such off liqr, claiming that sundry chattels now on or about the
works and land comprised in the sd mortgage are not subject to the sd
mortgage and bill of sale or either of them ; And the sd S., without



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648 WINDINO-UP BY THE COURT. [ChAP. XLVI.

admitting such claim, agreeing to pnrohase all the interest (if any) of
tlie sd coy, or the sd o£E liqr thof , in the sd chattels, for the sum of
200/., It is by consent ordered that the sd coy, as from the date hereof,
stand absolutely debarred and foreclosed of and from all right, title,
interest, and equity of redemption of and in the sd mortgaged ppty.
And order that the sd coy and the sd off liqr, upon payment by the sd
6. to the sd off liqr of the sum ^f 200/., and upon being required so to
do, release and convey the sd equity of redemption and all right, title,
and interest to and in the sd chattels to the sd S., or as he shall direct,
at his expense, and either party is to be at liberty to apply as he or
they may be advised. Britannia Iron Works, 8th Aug. 1877. A. 1551.



Form 639.

Liberty to

compromise

aotion.



Upon the applicon of off liqr of the coy, and upon hearing the solors

for the applicants, and upon reading the opinion of Hr. , dated,

&c., Order that the sd off liqr be at liberty to apply in the action of
A. V. B., B. 1880, for an order for the compromise of such action upon
the following terms : that is to say, the defts to consent to a perpetual
injunction in the terms ^et out in paragraph 1 of the prayer of the
statement of claim therein, and to pay their own costs ; liberty being
reserved to the defts therein for them to sell the machines, &c. Beverley
Iron Co., Hall, V.-C, 11th March, 1881. A. 511.

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



Form 640.

Liberty to

official

receiver to

compromiie

misfettfance

claims.



The applicon by summons of, &c. Order that the sd B. as such off
recr and Hqr as afsd be at liberty to enter into the compromise, the
terms of which are set forth in the schedule hereto, for the settlement
of the claims of the sd B. against the applicants, the sd X. and Y.
mentd in the sd summons, dated, &c. And order that the costs,
charges, and expenses of the winding-up be paid out of the sum of

/. mentd in the sd schedule, and that the balance be distributed

by the said off recr and liqr by way of dividend among the creditors of
the above-named coy. [^Applicants to pat/ taxed costs of this summons.^
And order that all further proceedings upon the sd summons of, &o.,
be stayed. New Travellers^ Chambers, 00195 of 1894. Wright, J.,
July 13, 1898.



Form 641. Upon the applicon of W. P. and L., the liqrs of the above-named

TT .^jj coy, and upon hearing the solors for the applicants, and upon reading

liberty to the London Oazette of the 15th June, 1875, containing a notice of

^™^J^iS resolution to wind up the sd coy voluntarily, and of the appointment



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C?OMPBOMISES. 649

of liqrs, and upon reading an afft of W. P. and L., filed 1st Aug.
1877, Order that the sd liqrs be at liberty to compromise the cross-
claims made in the proceedings for winding-up, by the sd coy on

the one hand against Messrs T. W. and Sons, of , and the sd

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

Although the above order was made in a volantary winding-np, it is, of ooorse,
equally usefol as a precedent in a oompnlsory winding-np.



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660



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



Remunera-
tion of
liquidator.



Court maj
regulate
priority of
cottts, so.



OHAPTEE XLVn.

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



Costs.

The Act of 1862 does not, in the case of a compulsory winding-up,
expressly provide (as in the case of a voluntary winding-up, sect. 144),
that the costs, charges, and expenses properly incurred in the winding-
up, including the remuneration of the liquidators, shall be payable out
of the assets of the company in priority to all other claims. It was no
doubt assumed that the Court would, as a matter of course, give due
priority to such costs and expenses. Webb v. Whiffeny L. E. 6 H. L.
717, 735. But the Act contains the following section : —

8eot. 110 of 1862. — ^The Court may, in the event of the assets being insufficient
to satisfy the liabilities, make an order as to the payment out of the estate of the
company of the costs, charges, and expenses incurred in winding-up any company
in such order of priority as the Court thinks just.



Inoumbered
assets.



Petitioner's
costs.



Costs of

outside

litigation.



The assets or estate of the company in the case of incumbered
property means the equity of redemption or surplus after clearing off
the incumbrcLuces. Hence an order to pay thereout may be abortive.
Anglo-Austrian, Sfc, Union, (1895) 2 Ch. 891 ; Lloyd T. David Lloyd Sf
Co., 6 0. D. 345.

Costs of defending actions against the company where the defence
is for the benefit of the debenture-holders will be ordered to be paid
in priority to their claims. Wrexham, Mold and ConnaJCs Quay R, Co.,
(1900) 1 Oh. 261.

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 first charge on the assets {Audley Hall Cotton Co,, 6 Eq.
245 ; 37 L. J. Ch. 904) ; 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 liquidator, it was held that such costs were to be paid



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CJOSTS. 661

in full out of the assets, and not merely proved for. Home Investment
Soc, 14 0. D. 167 ; Madrid Bank v. Pellt/, 7 Eq. 442 ; Ex parte Levtck,
6 Eq. 69 ; Ex parte Smith, 3 Ch. 130 ; Ferrao's case, 9 Ch. 355.

The rule applies where an action is brought against the company
with the Court's leave. Bailey and Leetham^s case, 8 Eq. 94. And
where an action commenced by the company before winding-up is
continued by the liquidator with the Court's leave, a successful defen-
dant is entitled to his costs in full as from the commencement of the
action. London Drapery Stores, (1898) 2 Ch. 684.

But where the action against the company is commenced before the
winding-up, the plaintiff is, as regards costs, put in the same position
as if he had prosecuted his suit to judgment before winding-up — ^that
is, he must add his costs to his debt and prove in the winding-up.
Thurso New Oas Co,, 42 C. D. 486 ; Snyder Dynamite Projectile Co,,
W.N. (1893) 37.

See further, especially as to personal payment by the liquidator or
official receiver, Hounslow Brewery Co,, W, N. (1896) 45; W, Powell
and Sons, (1896) 1 Ch. 681 ; and supra, p. 278.

(c) As to the [official] liquidator's costs, i,e,, the costs of the Liquidator's
winding-up : — *^'®*

It was held that as a general rule he was entitled to his costs of all
proceedings 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 Massey, 9 Eq. 367. But they rank
after costs ordered to be paid by the liquidator, or out of the assets.
Dominion of Canada Plumbago Co,, uhi supra. See further, supra,
p. 274.

Where there are incumbrances, such as mortgage debentures, and inoum-
the mortgaged property is realized in the winding-up, with the consent of brancera.
the incumbrancers, the liquidator's costs, charges, and expenses of the
realization 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. E. 767; Regent's Canal Co,, 3 Ch. Div. 411 ; Batten v.
Wedgwood Co,, 28 Ch, Div. 317, 325. As to the priority of the in-
cumbrancers when their security is not realized in the winding-up, see
Anglo- Austrian, Sfc, Union, supra,

(d) There is no such office as ** solicitor to the liquidator." London pergonal
Metallurgical Co,, (1897) 2 Ch. 262. The solicitor employed by him— liability of
and as to the sanction to employ him, see the same case— has no claim hqmdator.
for the costs of the winding-up against the liquidator personally {Anglo-
Moravian Co,, 1 Ch. Div. 130; 45 L. J. Ch. 115; 3 3 L. T. 650; 24



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652



Court's
discretion.



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

W. K. 122 ; Dominion of Can<uki Co., uhi supra) ; nor lias he any lien
on the file of prooeedings for such costs. Ex parte Ptdlbrook, 4 Ch. 627.
The followiDg provisions of the Bules of the Supreme Court, and
decisionB thereunder, must he borne in mind : —

E. 8. 0. 1888, 0. LZV. r. 1.— Subject to the proYisioiis of the Acts and these
rules, the costs of and incident to all proceedings in the Supreme Court, iti«^nHing
the administration of estates and trusts, shall be in the discretion of the Court or
judge.

Seet. 6, Jnd. Aot, 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
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, and the Court or
judge shall haye 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 Be MUU^ 84 0. D.
24. And see Wrexham, Mold and ConnaVe Quay R. Co., (1900) 1 Gh.
261.



Ap.

01 old rules

as to costs.



Building and

industrial

societies.

Appeal.



E. 8. C. 1888, 0. LZV. r. 87. — ^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 attomeTS, and the
taxation of costs, existing prior to the oommenoement of the principal Aot, shall,
in so far as they are not inconsistent with the principal Aot and these rulesf
remain in force and be applicable to costs of the same or analogous proceedingB,
and to the allowance of the fees of solicitors of the Supreme Court 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 Ohanceiy,
except so far as they are altered by the new rules, are still binding
upon the judges of the Chancery Diyision (per Jessel, M. H., PringU
V. Gloag, 10 Ch. D. 678).

[As to the inherent jurisdiction of the Court with respect to coets,
see Re Bombay Civil Fund Act, 1862, 40 Ch. Div. 288 ; Wrexham,
Mold and Connah*8 Quay Co., supra."}

As to costs in County Courts, in the winding-up of building and
industrial societies, see infra, p. 715.

As to ordering liquidator personally to pay costs, see supra, p. 278.

As to the liquidator's right to appeal as to costs, see Silver Valley
Mines, 21 C. D. 381 ; Raynes Park Oolf Club, (1899) 1 a B. 961.

Where, however, costs are in the discretion of the judge, the Court
of Appeal will assume that he has exercised his discretion as to them
and will not entertain an appeal, unless it is satisfied that he has not
done so, but has applied some rule which he supposed to exclude it ;
and an appeal from an order for payment of ''costs, charges and



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COSTS. 663

expenses" will not lie as to ** costs" only, if the order is right as to
" charges and expenses." Bew v. Bew^ (1899) 2 Oh. 467.

Costs Payable otjt of the Assets of the Company.

E. 170 of 1908. — (1) The assets of a company in a winding-up bj the Court, Order of
remaining after payment of the fees [1], and actual expenses incurred in realizing priority (sub-
or getting in the assets [2], shall, subject to any order of the Court [3], and, as i^ *? special
regards a winding-up to which the provisions of the Stannaries Act, 1887, applyi
subject to that Act (4), be liable to the following pa3rments, which shall be made in
the following order of priority, namely : —
Fint, The taxed costs of the petition, including the taxed costs of any person

appearing on the petition whose costs are allowed by the Court (5) ;
Next, The remuneration of the special manager, if any (6) ;
„ The costs and expcDses 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 examination :
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 realizing
the assets of the company (8) ;
,, The liquidator's necessary disbursements, other than actual expenses of

realization heretofore provided for (9) ;
„ The costs of any person properly employed by the liquidator 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).

(2) ^o payments in respect of bills or charges of solicitors, managers, accountants. Costs,
auctioneers, brokers, or other persons, other than payments for costs and expenses
incurred and sanctioned under Bule 67, and payments of bills which have been
taxed and allowed under orders made for the taxation thereof, shall be allowed out

of the assets of a company without proof that the same have been considered and
allowed by the registrar. The taxing officer shall satisfy himself before passing
such bills or charges that the employment of the solicitor or other person in
respect of the matters mentioned in the bills or charges has been duly sanctioned.
[R. 28 of April, 1892, varied.]

(3) Nothing contained in this rule shall apply to or affect costs which in the course
of legal proceedings by or against a company which is being wound up by the Court
are ordered by the Court in which the proceedings are pending or a judge thereof to
be paid by the company or the liquidator, or the rights of a person to whom such
costs are payable.

(I.) The above rule does not touch the rights of incumbrancers ; in Inoum-
the case of an incumbered property, the company's «tsset is the equity hrancers.
of redemption. See Anglo- Austriariy Sfc, UntoUy stiprUy p. 651. And as
to (3), which is new, see London Metallurgiccd Co,^ (1895) 1 Ch. 758.

(2.) ^^ Actual expenses of realizing and getting in the Aesets^^ — ^These Expenses of
words cover a considerable part of the general costs of the winding-up. roahzation,
Dronfield Co.^ 23 Ch. D. 516. But there are some costs which are not,
it would seem, thereby covered, c.y., 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 : Lathamy.



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654



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



Fees of
official
peceiTer.



Special order.



Stannaries
Act.

Petition.



Special
manager.



Statement of
affairs.



Shorthand
writer.

Disburse-
ments.



Greenwich Ferry Co.^ W. N. (1895) 77. In bankraptcj, it has been
held that the words mean costs of a sale, and do not include the
trustees' solicitor's bill of costs. Re Bright, (1903) 1 K. B. 736.

As a liquidator cannot obtain possession of the assets without
discharging what is due to the official receiver for fees, &c., and
cannot very well realize without possession, the payment of the
official receiver's fees, &c.| will probably be held to be expenses of
realization. And see order in Unionisi Cluhj Limited, infra,

(8.) ** Subject to any Order of the Court,^* — Having regard to sect 1 10
of 1862 (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 Metallurgical Co,, (1895) 1 Ch.
758.

(4.) Stannaries Act, 1887.— See sects. 4, 7, 9, 10, 19, 34; which are
not expressly repealed by the Stannaries Court (Abolition) Act, 1896.

(5.) Costs of Petition and persons appearing thereon, — ^Under the old
practice the taxed costs of the petitioner were paid in full in priority to
the costs of the winding-up. See supra^ p. 650.

As a rule the costs of a rehearing or appeal are included. Be Bright,
(1903) 1 K. B. 735.

In case of deficiency the practice is for the official receiver to pay
the costs of petition and of persons appearing thereon pro ratd, unle^
a summons is taken out within twenty-one days of his notice of inten-
tion 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 ''liqui-
dator'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).

(6.) Remuneration of Special Manager, — This is fixed by the Court
(sect. 5 (3) of 1890) on the report of the official receiver. £. 48 (1) of
1903. His costs of givin g security are to be borne by himself personally.
B. 60 (5) of 1903. But the expenses incurred by him seem to be
expenses of realization.

(7.) Costs and Expenses of Statetnent of Affairs. — ^These are to be
paid by the official receiver out of the assets. B. 170 of 1903.
And they must be sanctioned by him before being incurred. B. 57 of
1903. And see B. 170, supra,

(8.) Charges of Shorthand Writer, — ^As to these charges, and when
he may be appointed, see B. 74 of 1903.

(9.) Liquidator's necessary Disbursements, — These do not include his
costs of giving security (R. 60 (5) of 1903) ; or his costs of obtaining
the Court's sanction to purchase under B. 140. B. 142.

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



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COSTS. 665

(10.) Costs of persons employed with sanction of Committee of InspeC' Persons
fion, — The general costs of winding-up (irrespective of costs of realiza- «™ploy«l.
tion, taxed costs of petition, remuneration of special manager, costs of
statement of affairs, and charges of shorthand writer, as to which see
supra) seem to come under the head either of (a) liquidator's necessary
disbursements, or (b) the above head.

(11.) Remuneration of Liquidator. — As to how the remuneration is Liquidator's
fixed, see Er. 137, 138 of 1903. As to depriving Hquidators of enumeration,
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. In re Massey^ 9 Eq. 367 ; In re Trueman, 14 Eq. 278.

Where a company has gone into voluntary liquidation and appointed
a liquidator, and afterwards, on a creditor's petition for a compulsory
order, a supervision order is made directing the petitioner's and
liquidator's costs to be taxed and paid out of the assets, the liquidator's
remuneration for the period from the commencement of the winding-up
to the supervision order is postponed to the taxed costs of the petitioner
and of the liquidator's solicitor, and also to any further costs for work
properly done by the solicitor by the authority of the liquidator sub-
sequentiy to the order. Sanitary Burial Association (0. A.), (1900) 2
Ch. 289.

As to the order in which a provisional liquidator's costs are paid, Provisional
see the order in Unionist Cluh, infra, Form 643. liquidator.

(12.) Expenses of Committee of Inspection, — ^This does not seem to Committee of
include payments to members of committee for services rendered, pay- "^*P®^<^°'
in6nt of which may be sanctioned by the Court. B. 142 of 1903. In
the absence of special direction by the Court, these seem to be expenses
of realization.

Taxation of Costs.

Br. 160—166 and 166 of 1908 are as follows :—

160. Every solioitor, manager, aooountant, anotioneer, broker or other person Taxation of
employed by an official receiyer or liquidator in a winding-np by the Court shall, oosts.

on request by the official receiver or liquidator (to be made a sufficient time before
the declaration of a diyidend), deliver his bill of oosts or charges to the official
receiver or liquidator for taxation ; and if he fails to do so within seven days from
the time stated in the request, or such extended time as the Court may allow, the
liquidator shall declare and distribute the dividend without regard to such person's
claim, and, subject to any order of the Court, the claim shall be forfeited. The
request by the official receiver or liquidator shall be in the Form No. 89. [See
infra, p. 666.]

161. Where a bill of oosts or charges in any winding-up is to be taxed, the taxing Notice of
master shall give notice of an appointment to tax the same, in a winding-up by the appointment
Court, to the official receiver, and in every winding-up to the liquidator, and to the ^**
person to or by whom the bill or charges is to be paid (as the case may be).

162. The bill or charges, if incurred in a winding-up by the Court prior to the Lodging bill
appointment of a liquidator, shall be lodged with the official reoeiTer, and if inoorred for taxation.



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656



WINDING-UP BY THE COURT. [ChAP. XLVIL



Copy bill.



DntieB of

official

receiver.



Sabsequent
application
for costs.



Certificate
of taxation.



Certificate
of official
receiver or
liquidator.

Authority for
employment.



after the appointment of a liquidator, 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



Online LibraryCharles Mac Naughten Sir Francis Beaufort PalmerCompany precedents for use in relation to companies: subject to ..., Volume 2 → online text (page 83 of 152)