There was both an English and a foreign insolvency, the debtors having traded as wine merchants in England and in Portugal. They presented a petition for their adjudication in bankruptcy in England in December 1877. Insolvency proceedings were taken in Portugal after the English petition had already been presented. The Portuguese court took possession of the insolvents’ assets in Portugal, realised them and paid a dividend to the Portuguese creditors. These creditors then proved in the English bankruptcy.
Held: They were not allowed any dividend in the English bankruptcy until they had accounted for the dividend they had received in Portugal.
Cairns LC: ‘ . . the Appellants are perfectly entitled to prove under the English bankruptcy; but if they elect do so they must, as was said in the case of Selkrig v. Davis, bring into the common fund what they have received abroad.’
Lord Selborne noted that the ‘Portuguese assets were, by the Law of England, . . . subject to and bound by the English liquidation, except so far as the local law of Portugal might have intercepted any portion of them while within its jurisdiction’ and continued ‘Every creditor coming in to prove under, and to take the benefit of, the English liquidation, must do so on the terms of the English law of bankruptcy; he cannot be permitted to approbate and reprobate, to claim the benefit of that law, and at the same time insist on retaining, as against it, any preferential right inconsistent with the equality of distribution intended by that law, which he may have obtained either by the use of legal process in a foreign country, or otherwise. As against the Appellants . . . it is unimportant that the presentation of the petition in December 1877 was not per se a cessio bonorum; because . . the Act makes the title of the trustee relate back to the time when the petition was presented, which was before the time when the title of the Portuguese Court to administer the Portuguese assets is said to have accrued. The Appellants cannot come in and prove and take dividends out of the English assets, with the full benefit of the relation back of the title of the trustee to the date of the petition, and at the same time set up against that title a later act of a Portuguese Court, for the purpose of enabling themselves to refuse credit for property belonging to the estate, received by them in Portugal after the date of the petition, through the action of that Court. I must not, however, be supposed to think that it would really have made any difference if the action of the Portuguese Court had been earlier, nothing having been received by the Appellants till long after the title of the English trustee had accrued.’
Judges:
Cairns LC, Lord Selborne
Citations:
(1880) 5 App Cas 161
Jurisdiction:
England and Wales
Cited by:
Cited – Cleaver, Bodden v Delta American Reinsurance Company PC 1-Feb-2001
(Cayman Islands) In the course of trading the company had given security to carry on its insurance business. On its insolvency, the administrators required the creditor to bring into hotchpot credit received in a foreign jurisdiction. It was said . .
Lists of cited by and citing cases may be incomplete.
Equity, Insolvency
Updated: 18 November 2022; Ref: scu.180691