Pulsford v Devenish: ChD 1903

The liquidator in a voluntary liquidation negligently failed to inform the company’s creditors of the liquidation, and distributed the company’s assets to its contributories without regard to the creditors’ claims. The company was later dissolved.
Held: The creditors had a claim against the liquidator. The availability of the statutory remedy of a creditor under section 10 and the statutory right of a creditor to apply in a voluntary liquidation under section 138 ceased to exist when the company was dissolved. ‘But the duty to pay the debts is an absolute statutory duty, without limit in point of time and with no provision for the release of the voluntary liquidator.
It is not necessary to resort to trusteeship or equitable doctrines: the case is one of a duty imposed by a statute on an individual for the benefit of a class of persons, namely, creditors and the only peculiarity of the case is that the remedy created by the statute is not co-extensive in point of time with the duty, for the Act permits the destruction of the remedy before the duty has been performed.
Now the principles applicable to such a duty as I have mentioned are well settled and rest on the well-founded assumption that the Legislature does not intend its enactment to be brutum fulmen: if, therefore, a statute creates such a duty but no remedy, an action at common law (in former days action on the case) will lie for breach of such duty.’ and ‘It was urged in argument that the liquidator is merely the agent of the company; but assuming this to be so, I can see nothing inconsistent in the imposition on such agent of a duty to the company’s creditors.’

Judges:

Farwell J

Citations:

[1903] 2 Ch 625

Statutes:

Companies Act 1890 10 138

Jurisdiction:

England and Wales

Citing:

DistinguishedKnowles v Scott 1891
A company’s voluntary liquidator is the company’s agent and no action lies against for delay him save in the case of misfeasance or wilful misconduct. He is not a trustee for the creditors or contributories of a company in liquidation. Nor does he . .

Cited by:

CitedOldham and others v Georgina Kyrris and Another CA 4-Nov-2003
The claimant sought to bring a claim against the administrators of a partnership alleging a duty of care to creditors.
Held: Such an administrator owed no greater duty to creditors than would a director. That duty was no different whether the . .
CitedA and J Fabrications (Batley) Ltd v Grant Thornton and Others ChD 1998
The plaintiffs, the majority creditors of a company in liquidation, alleged that they had agreed with Grant Thornton, the defendants, to support the appointment of one of the firm’s partners or employees as liquidator of the company, with a view to . .
Lists of cited by and citing cases may be incomplete.

Insolvency, Professional Negligence, Company

Updated: 12 May 2022; Ref: scu.190147