Oliver LJ acceded to a submission that the rule better be called the rule against double dividends, for its object was to absolve the liquidator from paying out two dividends on what was essentially the same debt. Because overlapping liabilities resulted from separate and independent contracts with the debtor, the basis of the liability by itself was not determinative of whether the rule applied. Oliver LJ said: ‘The test is in my judgment a much broader one which transcends a close jurisprudential analysis of the persons by and to whom the duties are owed. It is simply whether the two competing claims are, in substance, claims for payment of the same debt twice over . . for the moment I accept [the] broad general proposition that the rule against double proofs in respect of two liabilities of an insolvent debtor is going to apply wherever the existence of one liability is dependant upon and referable only to the liability to the other and where to allow both liabilities to rank independently for dividend would produce injustice to the other unsecured creditors.’
Slade LJ said that the payment of more than one dividend in respect of what was in substance the same debt would give the relevant proving creditors a share of the available assets larger than the share properly attributable to the debt in question.
Judges:
Oliver LJ, Slade LJ
Citations:
[1984] AC 626, [1984] 1 All ER 628, [1984] BCLC 1, [1984] 2 WLR 49
Jurisdiction:
England and Wales
Cited by:
Cited – In re Kaupthing Singer and Friedlander Ltd SC 19-Oct-2011
The bank had been put into administrative receivership, and the court was now asked as to how distributions were to be made, and in particular as to the application of the equitable rule in Cherry v Boultbee in the rule against double proof as it . .
Lists of cited by and citing cases may be incomplete.
Insolvency, Equity
Updated: 11 May 2022; Ref: scu.449847