Category: Insolvency

Ashe v Mumford: CA 2001

The court considered the relative interests arising in the trust of a house bought under the right to buy scheme.
Held: The court upheld the trial judge’s decision that the discount should not be apportioned between the parties, the series of transactions suggested was a sham.
However, there was no absolute rule that entitlement to statutory discount should be treated as a contribution to the purchase price.

Judges:

Jonathan Parker LJ

Citations:

[2001] 33 HLR 67

Jurisdiction:

England and Wales

Citing:

Appeal from – Ashe v Mumford and Others ChD 7-Mar-2000
The Regulation under question was procedural;, and a failure to comply with its requirements was not to be deemed fatal. The requirement for a trustee to identify the transactions to be set aside did not require every single part of the scheme to be . .

Cited by:

Cited – Richards v Wood CA 27-Feb-2014
The defendants had purchased their council house with financial asistance from their son, the claimant. He now asserted that a trust existed in the property in his favour.
Held: ‘unless there is a secure tenancy the statutory right to buy . .
Lists of cited by and citing cases may be incomplete.

Trusts, Insolvency

Updated: 15 May 2022; Ref: scu.541709

In re Wenborn and Co: 1905

Buckley J held: ‘When the voluntary liquidator, or the liquidator in a compulsory winding up, comes to the Court for leave to bring or defend an action by or against the company, and obtains this leave, the judge in effect pledges the assets of the company for the costs of the action which he authorizes the liquidator to bring or adopt or defend.’ and ‘When there is a winding-up of a company – whether the liquidation be compulsory or voluntary – all claims of creditors ought prima facie to be dealt with in the winding-up in accordance with the rules applicable to the distribution of the assets, and that costs ought also to be dealt with in like manner; but that if an action is pending to which the company is a party, then, if the company which is in liquidation acting by its liquidator determines to prosecute or defend the proceedings for the estate, the estate must be treated as the party litigant, and must in case of failure pay the costs in full. In other words, the other creditors, for whose benefit the action is defended, must in such case bear the costs.’

Judges:

Buckley J

Citations:

[1905] 1 Ch 413

Cited by:

Cited – In re Nortel Companies and Others SC 24-Jul-2013
The court was asked as to the interrelationship of the statutory schemes relating to the protection of employees’ pensions and to corporate insolvency.
Held: Liabilities which arose from financial support directions or contribution notices . .
Lists of cited by and citing cases may be incomplete.

Costs, Insolvency

Updated: 15 May 2022; Ref: scu.537947

In Re A Company No.2340: ChD 2001

Blackburne J said: ‘At the end of the day the question is whether or not there is a debt owed by [the Debtor] to [the Creditor] over and above andpound;750, sufficient therefore in amount to support a winding up petition, which is not bona fide disputed on substantial grounds. In my judgment, there clearly is. Even making allowance for the various points which [Counsel] has raised, on any view further substantial sums are owing. In my judgment therefore, it cannot be said that if [the Creditor] were now to present a petition to wind up [the Debtor] it would be an abuse of process. True it is that there is a dispute as to the precise amount of the sum to which [the Creditor] is entitled but, on the evidence I have seen, I am satisfied that there is no genuine dispute . . as to the existence of an indebtedness on the part of [the Debtor] to [the Creditor] amply sufficient in amount to support a winding up petition. I propose therefore to dismiss this application’.

Judges:

Blackburne J

Citations:

Unreported

Jurisdiction:

England and Wales

Cited by:

Cited – Angel Group Ltd v British Gas Trading Ltd ChD 8-Oct-2012
The court was asked how it should treat a winding up petition based upon a running account between the parties. . .
Lists of cited by and citing cases may be incomplete.

Insolvency

Updated: 15 May 2022; Ref: scu.518801

Re Union Accident Insurance Co Ltd: ChD 1972

A provisional liquidator cannot be appointed on a baseless petition. There are two conditions to be met. The first was that the petition must disclose a prima facie case, the second was that there were circumstances that require that a provisional liquidator ought to be appointed. The circumstances were not limited. The fact that the petition was not opposed was one of them. In this case, a prima facie case was established because it was shown that the company could not meet the level of solvency required of insurance companies by statute. The circumstances here required that a provisional liquidator ought to be appointed, and it was in the interest of the public in the fact that sums retained by brokers amounting to a large sum of andpound;300,000 be collected from them. A provisional liquidator was correctly appointed.
It is inappropriate to limit the exercise of the power to appoint a provisional liquidator by restricting it to fixed categories or classes of circumstances or fact, as commercial affairs are complex and circumstances will vary greatly.
Nevertheless, before a winding up order is made, a company’s Board of directors retained certain residuary powers which included the authority to instruct solicitors and counsels to oppose the petition, notwithstanding the appointment of provisional liquidators to the company.
Plowman J explained the twofold approach that he proposed to adopt: ‘There are two matters though, which seem to be relevant for me to consider. The first is whether the department has made out a good prima facie case for a winding-up on the hearing of the petition. Any views I express about the matter now are of course provisional only because I am not trying the petition at the present time. If the department has not made out a good prima facie case for a winding-up order then clearly I think it would not be right to appoint a provisional liquidator. On the other hand, if the department has made out a good prima facie case for a winding-up order then the second matter for my consideration arises, namely, whether in the circumstances of this case it is right that a provisional liquidator should have been appointed.’

Judges:

Plowman J

Citations:

[1972] 1 All ER 1105, [1972] 1 WLR 640

Jurisdiction:

England and Wales

Cited by:

Cited – Revenue and Customs v Rochdale Drinks Distributors Ltd CA 13-Oct-2011
The revenue appealed against refusal of its petition for the winding up of the company for non-payment of a VAT assessment. The company said that the assessment was disputed. The revenue said that the company had been run for the purpose of . .
Cited – Revenue and Customs v SED Essex Ltd ChD 14-Jun-2013
Liquidator confirmed despite VAT challege
The Revenue sought the winding up of the company for non-payment of substantial arrears of VAT. The revenue had declined to allow VAT input claims. The company said that the petition was wrong since the debt was genuinely disputed.
Held: The . .
Cited – HM Secretary of State for Business Enterprise and Regulatory Reform, Re Order To Wind Up UK Bankruptcy Ltd SCS 31-Mar-2009
Outer House – Court of Session – . .
Lists of cited by and citing cases may be incomplete.

Insolvency, Company

Updated: 15 May 2022; Ref: scu.510891

In re West Coast Gold Fields Ltd: 1905

The shareholder was bankrupt, but the company, in which he owned shares on which the capital remined unpaid, was solvent and in voluntary liquidation.
Held: The payment-up of the shares in full was a condition precedent to any participation in the distribution of surplus assets. Buckley J said: ‘The right view is that the person liable as contributory must discharge himself in that character before he can set up that, as a creditor, he is entitled to receive anything, and a fortiori, as it seems to me, before he can set up that, as a contributory, he is entitled to receive anything.’

Judges:

Buckley J

Citations:

[1905] 1 Ch 597

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, Company

Updated: 15 May 2022; Ref: scu.449850

Carreras Rothmans Ltd v Freeman Mathews Treasure Ltd: 1985

Peter Gibson J said: ‘where the effect of a contract is that an asset which is actually owned by a company at the commencement of its liquidation would be dealt with in a way other than in accordance with [the statutory pari passu rule] . . then to that extent the contract as a matter of public policy is avoided.’

Judges:

Peter Gibson J

Citations:

[1985] Ch 207, [1985] 1 All ER 155, [1984] 3 WLR 1016

Cited by:

Cited – Belmont Park Investments Pty Ltd v BNY Corporate Trustee Services Ltd and Another SC 27-Jul-2011
Complex financial instruments insured the indebtedness of Lehman Brothers. On that company’s insolvency a claim was made. It was said that provisions in the documents offended the rule against the anti-deprivation rule. The courts below had upheld . .
Lists of cited by and citing cases may be incomplete.

Insolvency, Contract

Updated: 15 May 2022; Ref: scu.442609

In re Sharp’s Settlement Trusts: 1972

Judges:

Pennycuick V-C

Citations:

[1973] Ch 331, (1972) 36 Conv 436

Jurisdiction:

England and Wales

Cited by:

Cited – Belmont Park Investments Pty Ltd v BNY Corporate Trustee Services Ltd and Another SC 27-Jul-2011
Complex financial instruments insured the indebtedness of Lehman Brothers. On that company’s insolvency a claim was made. It was said that provisions in the documents offended the rule against the anti-deprivation rule. The courts below had upheld . .
Lists of cited by and citing cases may be incomplete.

Trusts, Insolvency

Updated: 15 May 2022; Ref: scu.442618

Budge v AH Budge (Contractors) Ltd: CA 1997

When being asked to set aside a statutory demand, and exercising the statutory discretion, the real question is whether the applicant can show ‘a substantial reason comparable to the sort of reason one sees in paras (a), (b) and (c) of r 6.5(4), why the demand ought to be set aside.’
Peter Gibson LJ said: ‘The language of para (d) does not on its face lend any support for the construction of limiting the application of that paragraph to instances referred to by Jacob J. [the statutory demand being defective to the point of being unfair to the debtor or evidence that the debt would paid immediately]. Indeed, it is quite impossible, I would have thought, to foresee all the circumstances which may arise and which may justify the proper application of that sub-paragraph. But, consistently with the views expressed by Nicholls LJ, it is appropriate when considering whether to set aside a statutory demand under that paragraph to consider the consequence if one does set it aside . . there is no point in setting aside a statutory demand and requiring a creditor to litigate his claim that he is owed money by the debtor if it cannot be foreseen that there will be any ground on which the creditor will be denied his claim were the matter to be litigated. That would only be to increase costs to no purpose whatsoever . .
The real question, as it seems to me, in this case is whether Mr Budge can show a substantial reason comparable to the sort of reason one sees in paras (a) (b) and (c) of r 6.5(4), why the demand ought to be set aside . .
All that the court is concerned with is whether the creditor is able to pursue bankruptcy proceedings founded on the statutory demand. The creditor must establish a debt. It is for the debtor to establish why he cannot do so, at any rate by the route of a statutory demand. Miss Heilbron points out that it is a short-cut route to establishing an inability to pay a debt. The longer route would be to go for judgment in court proceedings, but that raises, fairly and squarely, whether there would be any defence to a claim raised by Contractors which would have any prospect whatever of succeeding were the matter to be litigated.’

Judges:

Peter Gibson, Balcombe, Hutchison LJJ

Citations:

[1997] BPIR 366

Statutes:

Insolvency Rules 1986 6.5(4)(d)

Jurisdiction:

England and Wales

Citing:

Cited – In re a Debtor (No 1 of 1987), ex parte the Royal Bank of Scotland CA 1989
A statutory demand as served showed an incorrectly calculated sum owed and was in the wrong form.
Held: The application to set the demand aside was refused. A statutory demand should not be set aside for a mere technicality.
Lord Justice . .

Cited by:

Cited – Chan v Appasamy 2008
The test for the exercise of the discretion to set aside a statutory demand is whether there are circumstances which would make it unjust for the statutory demand to give rise to insolvency consequences in the particular case. . .
Cited – Remblance v Octagon Assets Ltd CA 17-Jun-2009
A statutory demand was served against the guarantor of the lease after rent arrears arose. He applied for the demand to be set aside, and now appealed against its refusal. He said that the court would have set aside such a demand against the tenant, . .
Lists of cited by and citing cases may be incomplete.

insolvency

Updated: 15 May 2022; Ref: scu.377228

In Re Oriental Inland Steam Company ex parte Scinde Railway Company: CA 1874

The liquidator obtained an order requiring a creditor who had attached assets in India to return them to the company in liquidation.
Sir W M James LJ said: ‘The winding-up is necessarily confined to this country. It is not immaterial to observe, that there could now be no possibility, having regard to the decision of the Supreme Court of Calcutta, in Bank of Hindustan v. Premchand, which we must take to be quite right, of treating this case as if there were an auxiliary winding-up in India. If this is so with regard to a company domiciled in England, but having its business and assets in India, there would be no ground for the contention on the part of the Appellants that they would obtain an equitable and rateable distribution of the assets between the creditors. All the assets there would be liable to be torn to pieces by creditors there, notwithstanding the winding-up, and there would be an utter incapacity of the Courts there to proceed to effect an equitable distribution of them. The English Act of Parliament has enacted that in the case of a winding-up the assets of the company so wound up are to be collected and applied in discharge of its liabilities. That makes the property of the company clearly trust property. It is property affected by the Act of Parliament with an obligation to be dealt with by the proper officer in a particular way. Then it has ceased to be beneficially the property of the company; and, being so, it has ceased to be liable to be seized by the execution creditors of the company.
There may, no doubt, be some difficulty in the way of dealing with assets and creditors abroad. The Court abroad may sometimes not be disposed to assist this Court, or take the same view of the law as the Courts of this country have taken as to the proper mode of dealing with such companies, and also with such assets. If so, we must submit to these difficulties when they occur.
In this particular case there is no such difficulty. There were assets fixed by the Act of Parliament with a trust for equal distribution amongst the creditors. One creditor has, by means of an execution abroad, been able to obtain possession of part of those assets. The Vice-Chancellor was of opinion that this was the same as that of one cestui que trust getting possession of the trust property after the property had been affected with notice of the trust. If so, that cestui que trust must bring it in for distribution among the other cestuis que trust. So I, too, am of opinion, that these creditors cannot get any priority over their fellow-creditors by reason of their having got possession of the assets in this way. The assets must be distributed in England upon the footing of equality.’
Sir G Mellish LJ said: I quite agree that the 87th section of the Act of 1862, providing that no action shall be brought without the leave of the Court, and the 163rd section, enacting that no execution shall issue, apply only to the Courts in this country. Of course, Parliament never legislates respecting strictly foreign Courts. Nor is it usually considered to be legislating respecting Colonial Courts or Indian Courts, unless they are expressly mentioned. Still, that appears to me not to prevent the general application to this case of the principles which have been established in cases of bankruptcy.
No doubt winding-up differs from bankruptcy in this respect, that in bankruptcy the whole estate, both legal and beneficial, is taken out of the bankrupt, and is vested in his trustees or assignees, whereas in a winding-up the legal estate still remains in the company. But, in my opinion, the beneficial interest is clearly taken out of the company. What the statute says in the 95th section is, that from the time of the winding-up order all the powers of the directors of the company to carry on the trade or to deal with the assets of the company shall be wholly determined, and nobody shall have any power to deal with them except the official liquidator, and he is to deal with them for the purpose of collecting the assets and dividing them amongst the creditors. It appears to me that that does, in strictness, constitute a trust for the benefit of all the creditors, and, as far as this Court has jurisdiction, no one creditor can be allowed to have a larger share of the assets than any other creditor.
Then it is said that the assets are subject to the law of the place where they are. I quite agree that if the law of the place where they are had given a charge of that nature on the assets prior to the time when the petition for winding-up was presented, or possibly prior to the time when the winding-up order was made, and a judgment, for instance, had been put on the register, that might, by the law of Bombay, have constituted a charge on the property of the company, and then the trust for the benefit of the creditors would have been subject to that charge. But here there is no allegation that the judgment in Bombay, any more than a judgment here, simply qua judgment, operates as any charge at all. It is quite clear that it does not, and that until the execution and attachment have issued and been executed, there is no actual charge on the property. That charge is subsequent to the creation of the trust, and is made by the particular Appellants here with full notice of the trust.
The consequence necessarily follows, that in this Court these creditors cannot be allowed by such means to obtain priority; and that they must give up, for the benefit of the creditors, what they have so obtained.’

Judges:

Sir W M James LJ, Sir G Mellish LJ

Citations:

(1874) LR 9 Ch App 557

Jurisdiction:

England and Wales

Cited by:

Cited – Harms Offshore AHT Taurus Gmbh and Co KG v Bloom and Others CA 26-Jun-2009
The court had granted to the liquidators of a company a mandatory injunction requiring the appellant German companies to attempt to obtain the release of assets from attachment by the court in new York.
Held: The appeal was dismissed. The . .
Cited – In re Nortel Companies and Others SC 24-Jul-2013
The court was asked as to the interrelationship of the statutory schemes relating to the protection of employees’ pensions and to corporate insolvency.
Held: Liabilities which arose from financial support directions or contribution notices . .
Lists of cited by and citing cases may be incomplete.

Insolvency, International

Updated: 15 May 2022; Ref: scu.375968

Mitchell v Carter: ChD 1997

Section 183 of the 1986 Act, which precludes a creditor who levies execution or attaches a debt after commencement of a winding up, from retaining the benefit of his execution or attachment, does not apply to executions or attachments in foreign jurisdictions.

Judges:

Blackburne J

Citations:

[1997] 1 BCLC 673

Statutes:

Insolvency Act 1986 183

Jurisdiction:

England and Wales

Cited by:

Cited – Harms Offshore AHT Taurus Gmbh and Co KG v Bloom and Others CA 26-Jun-2009
The court had granted to the liquidators of a company a mandatory injunction requiring the appellant German companies to attempt to obtain the release of assets from attachment by the court in new York.
Held: The appeal was dismissed. The . .
Lists of cited by and citing cases may be incomplete.

Insolvency

Updated: 15 May 2022; Ref: scu.375969

Theophile v Solicitor-General: HL 1950

The House was asked as to the legitimacy of making bankrupt, on the basis of debts unpaid in respect of his English trading, a foreigner who had left the jurisdiction.
Held: A business continues until sums due are collected and all debts paid.
Lord Porter said: ‘(T)rading does not cease when, as the expression is, ‘the shutters are put up,’ but continues until the sums due are collected and all debts paid.’ The person concerned could not take exception to such an order ‘though it may be he will escape from compliance with its terms because he is out of the jurisdiction and cannot be reached by English process.’

Judges:

Lord Porter

Citations:

[1950] AC 186

Jurisdiction:

England and Wales

Cited by:

Cited – Masri v Consolidated Contractors International Co Sal and Others HL 30-Jul-2009
The claimant sought to enforce a judgment debt against a foreign resident company, and for this purpose to examine or have examined a director who lived abroad. The defendant said that the rules gave no such power and they did, the power was outside . .
Lists of cited by and citing cases may be incomplete.

Insolvency

Updated: 15 May 2022; Ref: scu.372594

In re Edennote Ltd (No 2): ChD 1997

Sanction was sought against a liquidator. Lightman J said: ‘The question is the commercial best interests of the company, reflected prima facie, by the commercial judgment of the liquidator, a judgment in my view which, in the circumstances and in the light of the evidence in this case, ought to be given full weight.’

Judges:

Ligtman J

Citations:

[1997] 2 BCLC 89

Jurisdiction:

England and Wales

Citing:

See Also – In Re Edennote Ltd; Tottenham Hotspur plc v Ryman CA 21-May-1996
The company was in liquidation. Terence Venables, who had owned the shares, had taken an assignment of a cause of action against the football club. The court had set aside that assignment, and removed the liquidator. Venables now appealed saying . .

Cited by:

Cited – Whitehouse v Wilson (Liquidator of Vol-Mec Ltd) and Another CA 7-Dec-2006
. .
Cited – Greenhaven Motors Limited (In Liquidation) and Another v BG Funding Limited and Another CA 31-Jul-1998
. .
Lists of cited by and citing cases may be incomplete.

Insolvency

Updated: 15 May 2022; Ref: scu.346609

Hawkes And Another, Assignees Of Stephen Dunn v Samuel Dunn: 1831

The agent of a bankrupt who has made himself responsible for the price of goods, may stop them in transitu. But if, after they have reached a certain place, he give them in a new destination in furtherance of the bankrupt’s business, and in the course of the bankrupt’s trade, when they arrive at the place of such destination, they vest in the bankrupt, and pass to his assignees. A defendant received from A some bacon, really the property of a bankrupt, and the messenger under the commission asked him if he had not got some bacon of the bankrupt; to which he replied that he had some belonging to A ; upon which the messenger desired him to take care of it, and not part with it, as more would he heard of it. Afterwards the defendant allowed the bacon to be returned by A to the person from whom A had received it : – Held, that this was evidence of a conversion.

Citations:

[1831] EngR 100, (1831) 1 Cr and J 519, (1831) 148 ER 1529 (B)

Links:

Commonlii

Insolvency, Torts – Other

Updated: 15 May 2022; Ref: scu.319978

Slack v Tolson: 4 Aug 1826

A, having previously borrowed andpound;1000 of B, executes to him a bond for that sum, and B, two days afterwards, executes a deed, whereby he covenants that the bond shall not be enforced: some years afterwards, B having become bankrupt, his assignees bring an action on the bond, and file a bill to have the deed of covenant declared fraudulent. Held, that the Court will not interfere against the legal operation of the deed; there being nothing to shew that B was insolvent when he executed it; and there being evidence, that A. had also at that time pecuniary claims on E, and that the execution of the bond was accompanied by an agreement, that payment of it should not be enforced.

Citations:

[1826] EngR 1119, (1826) 1 Russ 553, (1826) 38 ER 213

Links:

Commonlii

Jurisdiction:

England and Wales

Contract, Insolvency

Updated: 15 May 2022; Ref: scu.325883

Simeon Warburg v William Owen Tucker: 12 Jun 1855

Defendant, being indebted to plaintiff, assigned to him, as security, an insurance ori defendant’s life, and an insurance on the life of defendant’s wife, and covenanted (1) to pay the premiums, (2) that, if he did not pay them, plaintiff might pay them and defendant would repay plaintiff. PlainItiff sued defendant on tbis covenant, assigning, as breaches of covenant, (1) that defendant had not paid the premiums, and (2) that defendant had not paid to plaintiff’ premiums paid by plaintiff in defendant’s default. Defendant, to the whole declaration, pleaded his bankruptcy and certificate, averring that they had occurred after the execution of the deed, but not that they had occurred after the breaches had taken place. Held, on demurrer to the plea: that the plea gave no answer to the declaration, neither of the plaintifYs claims being a debt payable upon Contingency, within sect. 177 of The Bankrupt Law Corisolidation Act, 1849 (12 and 13 Vict. e. lOS), nor a liability to pay money upon a contingency, within sect. 178.

Citations:

[1855] EngR 595, (1855) 5 El and Bl 384, (1855) 119 ER 524

Links:

Commonlii

Jurisdiction:

England and Wales

Insolvency

Updated: 15 May 2022; Ref: scu.292517

Sir Robert Edward Wilmot, Baronet v Joseph Rose: 25 Apr 1854

Sect. 11 of the Act ‘To regulate the sale of farming stock taken in execution,’ 56 G. 3, e. 50, enacts that no assignee of any bankrupt or insolvent debtors’ estate, or under any bill of sale, nor any purchaser of the goods, chattels, stock or crop of any peraon employed in husbandry, on lands let to farm, shall use or dispose of any produce of such land in any other manner, and for any other purpose, than sucb bankrupt, insolvent, or other person employed in husbandry, ought to have used or disposed of the same if there had been no bankruptcy, assignment or sale made.-Held : that this prohibitioti as to purchasers is not confined to purchasers under an execution.

Citations:

[1854] EngR 424, (1854) 3 El and Bl 563, (1854) 118 ER 1253

Links:

Commonlii

Jurisdiction:

England and Wales

Agriculture, Insolvency

Updated: 15 May 2022; Ref: scu.293281

Smith v Secretary of State for Trade and Industry: EAT 15 Oct 1999

The claimant had been sole director of a company which went into liquidation. He sought a redundancy payment from the respondent under the 1996 Act. It was refused. The tribunal had applied Buchan. It had refused to hear an argument that the tribunal chairman was also employed by the respondent and could not therefore be independent.
Held: Although the Human Rights Act was not yet in force, when looking at a case which would be reheard after it has come into effect, it is right to allow for the Act. Article 6 of the Convention allows a fair trial, yet in this case, the bankrupt’s representative, and the tribunal hearing his case were both indirectly employees of the respondent. As a bankrupt, the claimant’s affairs were managed by the Official Reciver, again an employee of the respondent. The appellant should have been given chance to argue the point before the tribunal. In any event that fact that the claimant was a controlling shareholder did not of itself disqualify him from being an employee and entitled to a redindancy payment. His appeal was allowed.

Judges:

Morison J

Citations:

Times 15-Oct-1999, Gazette 10-Nov-1999

Statutes:

Human Rights Act 1998, European Convention on Human Rights and Fundamental Freedoms 6.1, Employment Rights Act 1996 166

Jurisdiction:

England and Wales

Citing:

Cited – Buchan and Ivey v Secretary of State for Employment EAT 20-Jun-1996
. .
See Also – Smith v Secretary of State for Trade and Industry EAT 13-Oct-1997
. .
Cited – Secretary of State for Trade and Industry v Bottrill CA 12-Feb-1999
There is no rule of law, to suggest that a sole director and owner of majority of shareholding, could not be an employee of that company, and be entitled to a redundancy payment on the liquidation of the company. ‘If the tribunal considers that the . .
Lists of cited by and citing cases may be incomplete.

Human Rights, Insolvency, Employment

Updated: 15 May 2022; Ref: scu.89343

Powdrill and Another v Watson and Another: HL 23 Mar 1995

A receiver of a companies assets, who employed former staff of the company, beyond an initial period of 14 days, becomes personally responsible for their employment contracts, and consequently becomes liable for making redundancy payments. The 1870 Act could be used to determine arrears of salary attributable to the period prior to the administrators’ appointment.
Lord Browne-Wilkinson said: ‘This ‘rescue culture’ which seeks to preserve viable businesses was and is fundamental to much of the Act of 1986. Its significance in the present case is that, given the importance attached to receivers and administrators being able to continue to run a business, it is unlikely that Parliament would have intended to produce a regime as to employees’ rights which renders any attempt at such rescue either extremely hazardous or impossible.’

Judges:

Lord Browne-Wilkinson

Citations:

Independent 23-Mar-1995, Gazette 03-May-1995, Times 23-Mar-1995, [1995] 2 AC 394

Statutes:

Insolvency Act 1986 19 44, Apportionment Act 1870 2

Jurisdiction:

England and Wales

Citing:

Appeal from – Powdrill and Another v Watson and Another CA 1-Mar-1994
The administrators of a company are deemed to have accepted the employees who had been kept on after 14 days. A letter from them denying that they would accept them as employees, was insufficient to prevent adoption of the contracts. . .

Cited by:

Appealed to – Powdrill and Another v Watson and Another CA 1-Mar-1994
The administrators of a company are deemed to have accepted the employees who had been kept on after 14 days. A letter from them denying that they would accept them as employees, was insufficient to prevent adoption of the contracts. . .
Cited – Fassihim, Liddiardrams, International Ltd, Isograph Ltd v Item Software (UK) Ltd CA 30-Sep-2004
The first defendant (F) had been employed by a company involved in a distribution agreement. He had sought to set up a competing arrangement whilst a director of the claimant, and diverted a contract to his new company.
Held: A company . .
Cited – Krasner v McMath; in Re Huddersfield Fine Worsteds Limited CA 12-Aug-2005
The administrators had adopted the contracts of certain employees, who now claimed that the protective awards should have priority to the expenses of the administration.
Held: The payments did fall within paragraph 99(5) and do not have . .
Cited – Freakley and others v Centre Reinsurance International Company and others HL 11-Oct-2006
When it became clear that the company would be financially overwhelmed by asbestos related claims, a voluntary scheme of arrangement was proposed under s425. The House was now asked whether the right to re-imbursement of the company’s lawyers after . .
Lists of cited by and citing cases may be incomplete.

Employment, Insolvency

Updated: 15 May 2022; Ref: scu.84826

Morris and Others v Agrichemicals Ltd and Others: CA 20 Dec 1995

No mandatory set off on liquidation without the requirement for mutuality. The Court accepted a proposition that a chargeback arrangement was inefficiency, no implication followed as to the recourse against the Depositor of a collateral security.

Citations:

Times 08-Jan-1996

Statutes:

Insolvency Rules 1986 4.90

Jurisdiction:

England and Wales

Cited by:

Cited – Tam Wing Chuen v Bank of Credit and Commerce Hong Kong Ltd PC 1996
The Board considered a banking transaction and the application of a chargeback by the bank, under which a loan was made only after a deposit by a third party against which it was secured, and particularly in the context of the insolvency of the bank . .
Lists of cited by and citing cases may be incomplete.

Insolvency

Updated: 15 May 2022; Ref: scu.83841

Jacobs v Official Receiver; In re Jacobs (a bankrupt): ChD 3 Apr 1998

The bankrupt was due to have his automatic discharge, but the Official Receiver applied on the day before for the discharge for an interim suspension of the discharge to allow consideration of his alleged lack of co-operation. The bankrupt said the court had no power to make such an order. The Official receiver had served his report, and there had been full compliance with Insolvency Rule 6.215, that the bankrupt was present and able to argue against the making of the bank interim order at the hearing.
Held: The court had to be satisfied that the grounds would, if unchallenged, have enabled the court to make an order under Section 279 (3). Since the court would be able to make a final order on an inter partes hearing, it also had a power to act on an interim basis. Once the bankrupt was discharged, the bankruptcy could not be revived. The appeal failed.
A court considering an application under section 279(3) may make an interim order suspending a bankrupts automatic discharge pending a full hearing of the Official Receiver’s application for such suspension.

Judges:

Michael Burton QC

Citations:

Times 16-Jun-1998, [1999] 1 WLR 619

Statutes:

Insolvency Act 1986 279(3)

Jurisdiction:

England and Wales

Citing:

Cited – Clydesdale Bank plc v Davidson and Others (Scotland) Clydesdale Bank plc v Davidson and Others HL 16-Oct-1997
(Scotland) Joint pro indiviso proprietors of land were not able at law to create a binding lease in favour of one of their number, so as to defeat the proper claims of a third party. A person cannot enter into a contract with himself.
Held: . .
Cited – Hardy v Focus Insurance Co (In Liquidation) ChD 19-Jul-1996
The Court has no power to direct the Official Receiver as to suspension of bankruptcy. . .
Cited – Whittaker’s Trustee v Whittaker ScSf 1993
. .
Cited – American Cyanamid Co v Ethicon Ltd HL 5-Feb-1975
Interim Injunctions in Patents Cases
The plaintiffs brought proceedings for infringement of their patent. The proceedings were defended. The plaintiffs obtained an interim injunction to prevent the defendants infringing their patent, but they now appealed its discharge by the Court of . .

Cited by:

Cited – Bagnall QC v the Official Receiver ChD 18-Jun-2003
The bankrupt was to receive his automatic discharge. The receiver had applied ex parte to suspend the automatic discharge. The bankrupt appealed.
Held: The court had power to make such an order. The court had seen strong prima facie evidence . .
Lists of cited by and citing cases may be incomplete.

Insolvency

Updated: 15 May 2022; Ref: scu.82465

Clements and Another v Udall: ChD 7 Jul 2000

Where in an insolvency an office holder was not carrying out his prescribed functions, it was open to the court itself to appoint others to such tasks as were required. The power existed both under the court’s inherent jurisdiction, and under the Act. An application should be on notice save in emergency, but the court could make temporary appointments pending the on notice hearing.

Citations:

Times 07-Jul-2000, Gazette 27-Jul-2000

Insolvency

Updated: 15 May 2022; Ref: scu.79213

A 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 investigating the conduct of the directors, and to pay Grant Thornton’s fees up to an initial limit of pounds 5,000. A Grant Thornton member was appointed. The plaintiffs claimed damages for breach of contract, and for negligence.
Held: Ordinarily, outside creditors cannot sue a liquidator in negligence. Claims have succeeded for either a direct contract with the liquidator or as a result of the negligence and the creditors have suffered some special damage over and above other creditors.
The submission that the plaintiffs should have sued the liquidators personally, on the footing that only they, and not the firm, possessed the powers which the plaintiffs alleged had been negligently exercised was misconceived.
Jacobs J said: ‘It is true that it is employees of the firm who were the liquidators, but they only took their position as such by virtue of the contract between the plaintiff[s] and Grant Thornton. Grant Thornton, in accepting the consideration of pounds 5,000, were contracting to put their man in as liquidator. Of course once in as liquidator he would owe his duties to the company. But there is nothing inconsistent between the pleaded contract and the employee having duties to the company. The pleaded contract is, in short, that the employee/liquidator undertakes to do a proper job as liquidator. That is what Grant Thornton contracted would happen.’
On the alternate claim in negligence, it was submitted that outside special circumstances, a liquidator owes no general duty of care to creditors. Jacob J said: ‘As a generality, that may well be true, but in two cases the courts have recognised that a liquidator is under a direct duty to creditors, or owes a direct duty to creditors.’
‘Given there is a duty on these liquidators to get the money in, there was a duty to investigate what money could be got in. The pleading says they failed in that duty; in particular, they failed to keep the plaintiffs informed of the state of their investigations, and did so for such a long time that any possibility of a claim became statute-barred. [Counsel for Grant Thornton] says, again, that the plaintiffs have got the wrong party. If there was a duty in tort it was a duty on the individual liquidators, and they should be the defendants. No doubt they could be, but it seems to me that once those defendants were put in as Grant Thornton men, Grant Thornton owed a duty coterminous and dependent upon the duties of the individual liquidators to these plaintiffs.’
As to a duty under section 212, there was no reason why that statutory remedy should exclude common law remedies in contract or tort: ‘Those who undertake the task of being liquidators should reasonably expect to have to do their job properly, and should reasonably expect that if they do not do so they are answerable to those ultimately for whom they are acting, namely the creditors.’

Judges:

Jacobs J

Citations:

Times 05-Aug-1999, Gazette 11-Aug-1999, [1998] 2 BCLC 227

Statutes:

Insolvency Act 1986 212

Jurisdiction:

England and Wales

Citing:

Cited – 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. . .
Cited – James Smith and Sons (Norwood) Ltd v Goodman CA 1936
Two leases had been granted by the plaintiff to a company. Subsequently the company determined the leases but it had previously assigned the leases to a third party. The company went into liquidation and the liquidator distributed its assets. He . .
Cited – Firbank’s Executors v Humphryes CA 1886
The plaintiff was induced to enter into a transaction by the someone pretending to be the principal. The defence was that he was the principal’s innocent agent.
Held: Lord Esher MR discussed the warranty of authority: ‘The rule to be deduced . .
Cited – West London Commercial Bank v Kitson 1883
. .
Cited – Starkey v The Bank of England HL 1903
Frederick and Edgar Oliver jointly owned Consols and bank stock. Frederick instructed Starkey a stockbroker to sell them. Frederick signed the necessary powers of attorney in his own name and forged Edgar’s signature. Starkey presented the powers of . .
Cited – Penn v Bristol and West Building Society and Others CA 24-Apr-1997
The solicitor innocently accepted instructions to sell a property, but was misled as to the identity of the wife – one of the joint owners. Unknown to him, however, Mr Penn had forged his wife’s signature on the contract documents. He was sued by . .
Lists of cited by and citing cases may be incomplete.

Professional Negligence, Insolvency

Updated: 15 May 2022; Ref: scu.77565

A Debtor v Focus Insurance Co Ltd (In Liquidation): ChD 12 Jul 1993

An expedited bankruptcy petition could be filed, despite the existence of an outstanding application to set aside the statutory demand on which it was based. Section 270 overrides section 267(2(d).

Judges:

Mummery J

Citations:

Times 12-Jul-1993

Statutes:

Insolvency Act 1986 270, Insolvency Rules 1986 (1986 No 1925)

Insolvency

Updated: 15 May 2022; Ref: scu.77574

In re British Gold Fields of West Africa: 1899

An order for costs could be proved where the action was in respect of a provable debt or liability. In such a case they were regarded as an addition to the sum recovered.

Citations:

[1899] 2 Ch 7

Cited by:

Cited – Haine v Secretary of State for Business Enterprise and Regulatory Reform and Another; Day v Haine CA 11-Jun-2008
Former employees had obtained a protective award against the company for failing to consult on the impending redundancies and submitted proofs of debt to the liquidator who sought guidance from the court. The judge had held that since the Act . .
Cited – In re Nortel Companies and Others SC 24-Jul-2013
The court was asked as to the interrelationship of the statutory schemes relating to the protection of employees’ pensions and to corporate insolvency.
Held: Liabilities which arose from financial support directions or contribution notices . .
Lists of cited by and citing cases may be incomplete.

Insolvency, Costs

Updated: 15 May 2022; Ref: scu.268852

Re Warren: ChD 1932

The Divisional Court in Bankruptcy applied the rule that a judicial act takes effect at the very start of the day on which it occurs to give deemed precedence to a receiving order, a judicial act, over a payment made earlier in the day. The overreaching statutory trusts for sale imposed by the Law of Property Act, 1925, do not normally alter the beneficial rights inter se of the concurrent owners.

Judges:

Maugham J

Citations:

[1938] Cl 725, [1932] 1 Ch 42

Jurisdiction:

England and Wales

Cited by:

Cited – Hammersmith and Fulham London Borough Council v Monk HL 5-Dec-1991
One tenant of two joint tenants of a house left and was granted a new tenancy on condition that the existing one of the house, still occupied by her former partner, was determined. She gave a notice to quit as requested, the council claimed . .
Lists of cited by and citing cases may be incomplete.

Litigation Practice, Insolvency

Updated: 15 May 2022; Ref: scu.267520

Guinan III v Caldwell Associates: 2004

Citations:

[2004] BPIR 531, [2004] EWHC 3348 (Ch)

Jurisdiction:

England and Wales

Cited by:

Cited – Bryce Ashworth v Newnote Ltd CA 27-Jul-2007
The appellant challenged a refusal to set aside a statutory demand, in respect of his director’s loan account with the respondent company, saying the court should have accepted other accounts to set off against that debt.
Held: A statutory . .
Lists of cited by and citing cases may be incomplete.

Insolvency

Updated: 14 May 2022; Ref: scu.258441

In re Daisytek-ISA Ltd and others: 2004

The court was asked where the centre of main interests of French and German subsidiaries of ISA International plc was situated for the purposes of article 3.1 of the Regulation.
Held: After referring to recital (13) to the Regulation, to the commentary at paragraph 75 of the Virgos-Schmit Report and to the registrar’s decision in Skjevesland: ‘In my view the most important ‘third parties’ referred to in recital 13 are the potential creditors. In the case of a trading company the most important groups of potential creditors are likely to be its financiers and its trade suppliers. The evidence in this case is that the financing of the business of the German companies by a factoring agreement was organised for them by International in Bradford and that 70% of goods supplied to the German companies are supplied under contracts made by International in Bradford. It appears that a large majority of potential creditors by value (which I regard as the relevant criterion) know that Bradford is where many important functions of the German companies are carried out.’

Judges:

Judge McGonigal

Citations:

[2004] BPIR 30

Jurisdiction:

England and Wales

Citing:

Cited – Skjevesland v Geveran Trading Company Limited ChD 2002
The registrar had decided that the debtor’s centre of main interests was situated in Switzerland.
Held: Article 3 of Regulation (EC) 1346/2000 did not displace the bankruptcy jurisdiction which (as the registrar found) the High Court would . .

Cited by:

Cited – Shierson v Vlieland-Boddy CA 27-Jul-2005
The debtor claimed that he could not be served with an insolvency petition, being resident in Spain.
Held: The court was to look to where was the centre of his main interests to determine whether to open insolvency proceedings. On that basis, . .
Lists of cited by and citing cases may be incomplete.

Insolvency

Updated: 14 May 2022; Ref: scu.249853

In re Mark One (Oxford Street) plc: 1999

Jacob J referred to the inherent jurisdiction of the court with particular reference to Ex parte James.

Judges:

Jacob J

Citations:

[1999] 1 WLR 1445, [1999] 1 All ER 608

Statutes:

Insolvency Act 1986 14(3)

Cited by:

Not followed – In re Luna Metal Products Ltd (in Administration) CA 14-Dec-2006
The administrators held cash. They proposed a distribution giving creditors who would on a winding up be preferential, full preference. They appealed refusal by the court to sanction the proposal.
Held: The court had no power to make such an . .
Lists of cited by and citing cases may be incomplete.

Insolvency

Updated: 14 May 2022; Ref: scu.247768

In re Melton, Milk v Towers: CA 1918

In 1901 Richard Melton and another guaranteed to a Bank his son Arthur’s debts up to andpound;500. Richard died survived by his widow, Arthur and three daughters, giving his real estate to his widow for her life, with remainder to his four children in equal shares. Arthur mortgaged his share of the estate to the bank to secure his account, but was later adjudicated bankrupt, owing andpound;1,057. The bank valued its security at andpound;158 and proved in Arthur’s bankruptcy for the rest, receiving andpound;494. The bank made demand under the guarantee. Richard’s executors raised funds by mortgaging the testator’s real estate and paid andpound;313 to the bank (andpound;250 + andpound;63 by way of interest). The bank, as mortgagee of Arthur’s share of the estate, assigned that share to Arthur’s wife, Frances. The testator’s widow died in 1916. The real estate was sold and the executors had some andpound;1,598 available for distribution amongst the three daughters and Frances (as assignee of Arthur’s share). The question arose whether the andpound;313, paid by the estate under the guarantee, had to be brought into account as against Arthur’s share. The effect, on the figures, would be that Frances would receive andpound;164.75 (1/4 of {andpound;1,598 + andpound;313} – andpound;313) rather than andpound;399.50 (1/4 of andpound;1,598). At first instance, Justice Astbury held that the andpound;313 paid under the guarantee must be brought into account and retained as against Arthur’s share, rejecting the submission that the executors were (in effect) seeking to prove in Arthur’s bankruptcy – which, he accepted, they would be precluded from doing by the rule against double proof. The question whether the executors could have proved in respect of their right of indemnity as sureties was not the determining factor. The true principle was that the testator’s estate having satisfied its debt (under the guarantee) neither the principal creditors (the bank) nor the trustee in bankruptcy could demand payment of more than the unpaid amount of the bankrupt-trustee-beneficiary’s share.
Held: The appeal failed. The issue was: ‘The appellant [Mrs Frances Melton] claims that she is entitled to receive one fourth of this sum [andpound;1597 18s 10d], say about andpound;400, without any deduction in respect of the andpound;313. Against her it is said that the estate consists not only of the sum of andpound;1600, but also of the andpound;313 which the estate has paid on behalf of the son, and in respect of which the son Arthur was indebted to his father under the agreement that the debtor must indemnify the surety for the obligations of the surety. Therefore, treating the andpound;1600 and andpound;313 as making roughly andpound;1900, the trustees say to Mrs [Melton], ‘You are entitled only to one fourth of about andpound;1900, of which you have in hand andpound;313′.’ He answered: ‘The fund treated as being available for division must first be increased by the amount which Arthur owes, and then his assign is entitled to one fourth of that entire amount subject to this, that she must give credit for the andpound;313 that he has already notionally received.’ He examined the rule against double proof: ‘It is not disputed that under an ordinary creditors’ deed – and it would be the same in bankruptcy for this purpose – the creditor could, having regard to the form of the guarantee, prove for the whole amount of the debt; and the bank have in this case carried in a proof against the bankrupt’s estate for the balance of their debt after valuing their security. They could do that notwithstanding that the surety on account of his liability might have made a payment to the bank. In carrying in their proof the bank were not bound to give credit for that, but might prove for the whole amount just as if no payment had been made by the surety. I think, further, it cannot now be disputed that the position would be the same although the payment made by the surety to the creditor had not been made out of his own money but out of the proceeds of a counter-security given to him by the debtor to indemnify him against his liability as surety. That is the effect of the decision in Midland Banking Co v Chambers . . . Upon the construction of a guarantee similar to the one in the present case In re Sass [[1896] 2 QB 12] was to the same effect. It is quite true, as Mr Potts urged [on behalf of the appellant], that there can be no double proof against the estate; and the rule against double proof has regard to the substance of the transaction and not to the form. It may well be that technically there are two claims against the debtor in respect of the transaction and two separate liabilities of the debtor arising out of the transaction. One of these is the debtor’s liability to the bank for the money he owed. The other, which is a separate liability arising out of the contract of guarantee, is the debtor’s liability to indemnify the sureties in respect of their liability to the principal creditor. Technically they are two separate liabilities, but in substance they are the same; and in respect of that liability there could not be double proof against the estate. The creditor could not prove for the amount of the debt and the surety bring in a proof for part of the same amount as regards his liability for that part of that amount. I think that it is clear from what Mellish LJ said in In re Oriental Commercial Bank . . . That applies to a case of principal and surety. There could not be a double proof in respect of that obligation.’ and ‘Apart from the debtor having become bankrupt, I think it cannot be questioned that the debt arising under an obligation to indemnify a surety can be deducted from a legacy or share of residue given to the debtor’

Judges:

Lord Justice Swinfen Eady, Warrington, Scrutton LJJ

Citations:

[1918] 1 Ch 37

Jurisdiction:

England and Wales

Citing:

Cited – Cherry v Boultbee HL 22-Nov-1839
B died having made a will leaving a fund to pay income to A who owed her money but had been made bankrupt before the death. The debt to B remained unpaid.
Held: The liability to pay the debt and the right to receive the legacy had never tested . .
Cited – Midland Banking Co v Chambers 1869
. .
Cited – In re Oriental Commercial Bank 1871
The court considered the rule against double proof. Mellish LJ said: ‘This rule against double proof applies in the Court of Chancery as well as in the Court of Bankruptcy, and therefore would apply equally where companies are being wound up.’
Applied – Cherry v Boultbee CA 6-Apr-1838
TB was indebted to CB, his sister, in the sum of andpound;1878. He became bankrupt, and shortly after his bankruptcy C B made her will, giving legacies of andpound;500 and andpound;2,000 to her executors, in trust to pay the interest thereof (as to . .

Cited by:

Applied – In re SSSL Realisations (2002) Ltd and Another; Squires and others v AIG Europe (UK) Ltd and Another CA 18-Jan-2006
A creditor claiming an equity in a debt but who himself owed money to the debtor, could not pursue his claim without first contributing the sum due. A person could not take an aliquot share out of a fund without first contributing what he owed to . .
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 . .
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

Updated: 14 May 2022; Ref: scu.238733

In re Condon, Ex parte James: 1874

The Trustee in bankruptcy has relevant duties as the Trustee as an officer of the Court. Such a Trustee would not engage in conduct which could be seen to involve an unfair use of that position, and ‘where it would be unfair’ for a trustee in bankruptcy ‘to take full advantage of his legal rights as such, the court will order him not to do so’. The court will permit a mistake of law rule to be invoked to prevent repayment of sums paid under an error of law to or by a trustee in bankruptcy as an officer of the court.

Citations:

(1874) LR 9 Ch App 609, [1874-80] All ER 388

Jurisdiction:

England and Wales

Cited by:

Cited – Kleinwort Benson Ltd v Lincoln City Council etc HL 29-Jul-1998
Right of Recovery of Money Paid under Mistake
Kleinwort Benson had made payments to a local authority under swap agreements which were thought to be legally enforceable when made. Subsequently, a decision of the House of Lords, (Hazell v. Hammersmith and Fulham) established that such swap . .
Cited – In re Nortel Companies and Others SC 24-Jul-2013
The court was asked as to the interrelationship of the statutory schemes relating to the protection of employees’ pensions and to corporate insolvency.
Held: Liabilities which arose from financial support directions or contribution notices . .
Cited – In re Multi Guarantee Ltd CA 1987
Nourse LJ said of the Condon Case: ‘The principle of cases such as those is that the court will direct a trustee in bankruptcy not to insist on his full legal rights if it would be unacceptable for him to do so. The principle is subject to . .
Lists of cited by and citing cases may be incomplete.

Equity, Insolvency

Updated: 14 May 2022; Ref: scu.236545

Turner v Royal Bank of Scotland: CA 2000

The court was asked whether a debtor could pursue at the hearing of the bankruptcy petition a challenge to the petition debt on grounds which had already failed on an earlier application to set aside the statutory demand.

Judges:

Chadwick LJ

Citations:

[2000] BPIR 683

Jurisdiction:

England and Wales

Citing:

See Also – Turner v Royal Bank of Scotland Plc CA 23-Jan-2001
The claimant sought damages for an alleged negligent mis-statement by his bankers when giving a reference. He sought leave to appeal.
Held: Leave was refused. The claimant had not established either that the bank had broken its duty of care to . .

Cited by:

See Also – Turner v Royal Bank of Scotland Plc CA 23-Jan-2001
The claimant sought damages for an alleged negligent mis-statement by his bankers when giving a reference. He sought leave to appeal.
Held: Leave was refused. The claimant had not established either that the bank had broken its duty of care to . .
Cited – Coulter v Chief Constable of Dorset Police CA 13-Jul-2005
An appeal was made against an order refusing to set aside a second statutory demand. The demand was to enforce payment of an order for costs made in proceedings between the parties. The first statutory demand had been upheld, and the judge found . .
Cited – Atherton v Ogunlende and Another CA 20-Nov-2001
It would be a waste of court time and the parties’ money to allow a debtor, who had already failed on his application to set aside a statutory demand, to advance the same arguments by way of challenge to the petition debt on the hearing of the . .
Cited – West Bromwich Building Society v Crammer CA 2002
Referring to Turner: ‘Those observations were plainly obiter in that case; but will be given, no doubt, the weight which they deserve. But they do not have the effect of depriving a court exercising its functions under s 271 of the duty to decide . .
Lists of cited by and citing cases may be incomplete.

Insolvency

Updated: 13 May 2022; Ref: scu.230915

Brillouet v Hachette Magazines Ltd: 1996

A party should not be allowed to put an argument again which had been lost at an earlier stage merely because he felt he had found a better way of putting the argument.

Judges:

Vinelott J

Citations:

[1996] BPIR 518

Cited by:

Cited – Atherton v Ogunlende and Another CA 20-Nov-2001
It would be a waste of court time and the parties’ money to allow a debtor, who had already failed on his application to set aside a statutory demand, to advance the same arguments by way of challenge to the petition debt on the hearing of the . .
Cited – Coulter v Chief Constable of Dorset Police CA 13-Jul-2005
An appeal was made against an order refusing to set aside a second statutory demand. The demand was to enforce payment of an order for costs made in proceedings between the parties. The first statutory demand had been upheld, and the judge found . .
Lists of cited by and citing cases may be incomplete.

Insolvency, Litigation Practice

Updated: 13 May 2022; Ref: scu.230916

In re X Y, Ex parte Haes: 1902

Bankruptcy proceedings are not ‘in any sense criminal’.

Judges:

Vaughan-Williams LJ

Citations:

[1902] 1 KB 98

Jurisdiction:

England and Wales

Cited by:

Cited – Stubbs v Gonzales The Attorney General PC 25-May-2005
(Bahamas) The applicant, an MP, had been bankrupted. The debt was paid, but he appealed refusal to have the order quashed, saying that the fact of bankruptcy threatened his position as MP.
Held: The court of appeal had declined jusridiction. . .
Lists of cited by and citing cases may be incomplete.

Insolvency

Updated: 13 May 2022; Ref: scu.228786

Re Osborn: 1931

An Isle of Man trustee in bankruptcy was seeking the assistance of the English court in relation to the bankrupt’s immovable property in England.
Held: Section 122 was to be given a cautious interpretation.

Judges:

Farwell J

Citations:

[1931-2] B and CR 189

Statutes:

Bankruptcy Act 1914 122

Cited by:

Cited – Al Sabah and Al Sabah v Grupo Torras SA Culmer as trustee of the property of Sheikh Fahad Mohammed Al Sabah, bankrupt PC 11-Jan-2005
PC (Cayman Islands) The claimant complained of an order of the Court of Appeal of the Cayman Islands, requiring him to comply with a letter of request from the Grand Court of the Bahamas.
Held: In earlier . .
Lists of cited by and citing cases may be incomplete.

Insolvency

Updated: 13 May 2022; Ref: scu.222845

Re Bridgend Goldsmiths Limited and Others: ChD 1995

The High court may not exercise its jurisdiction under section 263 of the 1986 Act within a voluntary arrangement within the county court.

Judges:

Blackurne J

Citations:

[1995] BCC 226, [1995] 2 BCLD 208

Statutes:

Insolvency Act 1986 263(5)

Cited by:

Followed – In re Sankey Furniture Ltd, ex parte Harding; Re Calorifique Limited, ex parte Betts ChD 1995
Separate applications were made by liquidators of companies in variously voluntary or compulsory liquidation and otherwise. . .
Cited – In Re Sutton (Removal of Liquidator) ChD 17-Oct-1997
The insolvency practitioner held many appointments. His partnership in a large firm of accountants ended suddenly. He did not have the resources to handle the cases, and nor could acceptable arrangements be made for him to have access to the related . .
Cited – In Re A and C Supplies Limited ChD 17-Oct-1997
Applications were made for the removal of a liquidator from several appointments in corporate nd individual insolvencies. He had been a partner in a firm and that had ceased in a way which left it impossible to work with his former partners to . .
Lists of cited by and citing cases may be incomplete.

Insolvency

Updated: 13 May 2022; Ref: scu.221558

Re Adams (AB) Builders Limited: 1991

An insolvency practitioner who had lost his power to act applied to the court to be removed from his positions as liquidator in several creditors voluntary liquidations.

Citations:

[1991] BCLC 359

Cited by:

Cited – In Re Sutton (Removal of Liquidator) ChD 17-Oct-1997
The insolvency practitioner held many appointments. His partnership in a large firm of accountants ended suddenly. He did not have the resources to handle the cases, and nor could acceptable arrangements be made for him to have access to the related . .
Lists of cited by and citing cases may be incomplete.

Insolvency

Updated: 13 May 2022; Ref: scu.221560

Marchant v Morton Down and Co: 1901

An assignment of a debt by a liquidator need not be by deed, any signed writing will be enough.

Citations:

[1901] 2 Ch 829

Cited by:

Cited – Firstdale Ltd v Quinton ComC 5-Aug-2004
In the course of a long dispute, the defendant’s solicitors had indicated that they would accept service of proceedings. Just before the limitation period expired, the papers were served directly in the client. The defendants solicitors said that . .
Lists of cited by and citing cases may be incomplete.

Insolvency

Updated: 13 May 2022; Ref: scu.219110

Shepheard v Lamey: ChD 2001

An application was made for the removal of a liquidator: ‘After all, all that one has to find is some good cause why a person should not continue as a liquidator. You do not have to prove everything in sight; you do not have to prove, for example, misfeasance as such: you do not have to show more than there may well be a case of misfeasance or, indeed, incompetence.’

Judges:

Jacob J

Citations:

[2001] BPIR 939

Jurisdiction:

England and Wales

Cited by:

Cited – Quickson (South and West) Limited v Stephen Mark Katz, John Stephen Kelmanson (As Joint Liquidators of Buildlead Limited) ChD 25-Aug-2004
Various applications were made in the insolvency, including for removal of the liquidators and declarations that certain payments were a fraudulent preference on the creditors.
Held: No prejudice had been shown by any procedural irregularity. . .
Lists of cited by and citing cases may be incomplete.

Insolvency

Updated: 13 May 2022; Ref: scu.216397

Marseilles Extension Rly and Land Co: 1867

The court considered the circumstances when a liquidator could be removed. The words ‘due cause’ did not require anything amounting to misconduct or personal unfitness. It was sufficient if it could be shown that it was on the whole desirable that a liquidator should be removed. It was a serious and valid objection to the liquidator’s efficiency that a considerable number of the creditors were opposed to his continuance in office: ‘I am of opinion that under the 141st section of the Act I have a discretionary power to remove the liquidators appointed by the company. The question is, what is meant by the words ‘On due cause shewn’? On one side it is contended that ‘due cause’ must be something amounting to misconduct or personal unfitness; on the other side it is contended, and I think that the contention is borne out by the case of Ex parte Pullbrook, that the Court may take all the circumstances into consideration and if it finds that it is, upon the whole, desirable that a liquidator should be removed, it may remove him.’

Judges:

Malins V-C

Citations:

(1867) LR 4 Eq 692

Statutes:

Companies Act 1862 141

Cited by:

Cited – In re Keypak Homecare Ltd ChD 1987
The court considered an application under section 108 to remove the liquidator, and reviewed the case law on the topic: ‘The section authorises the court to remove the liquidator ‘on cause shown’. That is not the same as saying ‘if the court shall . .
Cited – Quickson (South and West) Limited v Stephen Mark Katz, John Stephen Kelmanson (As Joint Liquidators of Buildlead Limited) ChD 25-Aug-2004
Various applications were made in the insolvency, including for removal of the liquidators and declarations that certain payments were a fraudulent preference on the creditors.
Held: No prejudice had been shown by any procedural irregularity. . .
Lists of cited by and citing cases may be incomplete.

Insolvency

Updated: 13 May 2022; Ref: scu.215938

Halliard Property Co Ltd v Jack Segal Ltd: 1978

The court considered a proviso for re-entry that: ‘forfeiture on the bankruptcy of the lessee is considered as a case of breach of condition.’
Held: It was clearly a condition rather than a mere covenant of the original protected tenancy that the tenant should not become a bankrupt and this condition had been broken by the tenant. The court declined an application to amend to rely upon a fresh ground of forfeiture (namely bankruptcy) when no notice under section 146 Law of Property Act 1925 had been served before the commencement of the proceedings.

Judges:

Goulding J

Citations:

[1978] 1 WLR 377, [1978] 1 All ER 1219

Jurisdiction:

England and Wales

Cited by:

Cited – Cadogan Estates Limited v McMahon HL 26-Oct-2000
When a tenancy was terminated and was followed by a statutory tenancy, a term in the contractual tenancy that the tenancy should be forfeit on the tenant’s bankruptcy was continued in and inherited by the statutory tenancy. Though perhaps in . .
Cited – Midtown Ltd v City of London Real Property Company Ltd ChD 20-Jan-2005
Tenants occupied land next to land which was to be developed after compulsory acquisition. The tenants and the landlords asserted a right of light over the land, and sought an injunction to prevent the development. The developer denied that any . .
Lists of cited by and citing cases may be incomplete.

Landlord and Tenant, Insolvency

Updated: 13 May 2022; Ref: scu.196913

In re Anglo American Insurance Ltd: 2001

Judges:

Neuberger J

Citations:

[2001] BCLC 755

Jurisdiction:

England and Wales

Cited by:

Cited – In re Telewest Communications Plc ChD 26-Apr-2004
A scheme of arrangement had been proposed. The creditor complained that in providing for payment in a currency other than that agreed, it had been prejudiced.
Held: The provision in the scheme did purport to alter the claimant’s rights. . .
Lists of cited by and citing cases may be incomplete.

Company, Insolvency

Updated: 13 May 2022; Ref: scu.197909

In re D H Curtis (Builders) Ltd: ChD 1978

Debts were, on the one side, the liability of the company to the Inland Revenue and the Department of Health and Social Security for PAYE and National Insurance contribution respectively and, on the other, the liability of HM Customs and Excise to the company for excess input VAT. All the debts were due and payable at the insolvency date.
Held: The court rejected an argument that the mutuality required by the statute meant that the claims sought to be set off ‘must be such as result in pecuniary liabilities arising out of contract’. He said that the type of acts or events giving rise to the liabilities were immaterial provided that those liabilities were ‘commensurable’, that is to say, capable of being expressed in money.

Judges:

Brightman J

Citations:

[1978] Ch 162

Jurisdiction:

England and Wales

Cited by:

Cited – Secretary of State for Trade and Industry v Frid HL 13-May-2004
The company went into insolvent liquidation. The secretary of state was to make payments to employees and there were other state preferential creditors. At the same time a refund of VAT was due from the Commissioners of customs and Excise.
Lists of cited by and citing cases may be incomplete.

Insolvency

Updated: 13 May 2022; Ref: scu.196881

In re Camden Brewery: 1911

Citations:

[1911] 106 LT 598

Cited by:

Applied – In Re Portbase Clothing Ltd; Mould v Taylor 1993
The company had given two debentures, one fixed and one floating. Their priority was fixed by a deed of priority. On insolvency the liquidator sought direction as to the application of the assets.
Held: The deed made the bank’s floating charge . .
Lists of cited by and citing cases may be incomplete.

Insolvency

Updated: 13 May 2022; Ref: scu.195882

In re Glyncorrwg Colliery Co Ltd: 1926

In a receivership the costs of the receivership (including the cost of realising the property comprised in the charge) had priority to the claims of the charge holder. The preferential payments must be paid before the debenture holders ‘but not before the costs of liquidation’.

Citations:

[1926] Ch 951

Cited by:

Cited – Buchler and another (as joint liquidators of Leyland DAF Limited) v Talbot and another (as joint administrative receivers of Leyland DAF Limited) and Stichting Ofasec and others HL 4-Mar-2004
The liquidator sought to recover his expenses from assets charged under a floating charge in priority to the chargee.
Held: Barleycorn was decided in error. The liquidators costs incurred in an insolvent winding up were not to be charged . .
Lists of cited by and citing cases may be incomplete.

Company, Insolvency

Updated: 13 May 2022; Ref: scu.194250

Re Abbey Leisure: CA 1990

A minority shareholder had brought a petition to wind up the company, saying the project for which it had been created was complete. An offer was made to purchase his shares. He rejected the offer to purchase his shareholding at an accountant’s valuation. He appealed a striking out of his petition on the grounds that his rejection was unreasonable.
Held: Appeal allowed. The accountant’s offer would include some discount for the fact that the shares were in a minority shareholding, and he would achieve a better figure by the machinery available in a winding up.

Citations:

[1990] BCLC 342 CA, [1990] BCC 60

Statutes:

Insolvency Act 1986 125(2)

Jurisdiction:

England and Wales

Cited by:

Cited – CVC/Opportunity Equity Partners Limited and Opportunity Invest II Limited v Luis Roberto Demarco Almeida PC 21-Mar-2002
(Cayman Islands) The respondent was a minority shareholder. An offer was made to buy out his interest. He petitioned for the winding up of the company on the just and equitable ground. The claimants obtained an injunction to prevent him doing so, . .
Lists of cited by and citing cases may be incomplete.

Company, Insolvency

Updated: 13 May 2022; Ref: scu.192621

William Gaskell Ltd v Highley: 1994

Judges:

Morritt J

Citations:

[1994] 1 BCLC 197

Citing:

Applied – Siebe Gorman and Co Ltd v Barclays Bank Ltd ChD 1979
It was possible to create a fixed charge over present and future book debts and on its true construction, the debenture granted to Barclays Bank Ltd in this case had done so. If the chargor of book debts, having collected the book debts, ‘[had] had . .
Followed – In Re Keenan Bros Ltd 1986
(Supreme Court of the Republic of Ireland) A debenture conferred a fixed charge on book debts. It specifically provided that withdrawals from the account to which the proceeds of the book debts had to be credited might only be made with the prior . .

Cited by:

Doubted – National Westminster Bank Plc v Spectrum Plus Ltd and others ChD 15-Jan-2004
The company granted a debenture to the claimant purporting to secure its book debts. The company went into liquidation. The liquidator challenged the bank’s charge.
Held: Siebe was wrongly decided. The charge was ineffective over the book . .
Cited – National Westminster Bank plc v Spectrum Plus Limited and others HL 30-Jun-2005
Former HL decision in Siebe Gorman overruled
The company had become insolvent. The bank had a debenture and claimed that its charge over the book debts had become a fixed charge. The preferential creditors said that the charge was a floating charge and that they took priority.
Held: The . .
Lists of cited by and citing cases may be incomplete.

Insolvency

Updated: 13 May 2022; Ref: scu.191963

Re Sperrin Textiles Ltd: 1992

Citations:

[1992] NI 323

Citing:

Applied – Siebe Gorman and Co Ltd v Barclays Bank Ltd ChD 1979
It was possible to create a fixed charge over present and future book debts and on its true construction, the debenture granted to Barclays Bank Ltd in this case had done so. If the chargor of book debts, having collected the book debts, ‘[had] had . .

Cited by:

Coubted – National Westminster Bank Plc v Spectrum Plus Ltd and others ChD 15-Jan-2004
The company granted a debenture to the claimant purporting to secure its book debts. The company went into liquidation. The liquidator challenged the bank’s charge.
Held: Siebe was wrongly decided. The charge was ineffective over the book . .
Lists of cited by and citing cases may be incomplete.

Insolvency

Updated: 13 May 2022; Ref: scu.191961

In re Majory, a debtor: CA 1955

The debtor challenged the bankruptcy petition and receiving order saying that the creditor had attempted in connection with the proceedings to extort andpound;8 15s from the debtor in excess of the sums lawfully due under a court judgment. He said that this was ‘extortion’ in bankruptcy law, ie the oppressive use or threat of proceedings in order to obtain some collateral advantage, such that the court would not permit the creditor to make use of the process which he had abused.
Held: The court considered, obiter, the issue of a strike out of an action as an abuse of process.
Lord Evershed MR said: ‘The so-called ‘rule’ in bankruptcy is, in truth, no more than an application of a more general rule that court proceedings may not be used or threatened for the purpose of obtaining for the person so using or threatening them some collateral advantage to himself, and not for the purpose for which such proceedings are properly designed and exist, and a party so using or threatening proceedings will be liable to be held guilty of abusing the process of the court and therefore disqualifed from invoking the powers of the court by proceedings he has abused.’

Judges:

Lord Evershed MR

Citations:

[1955] Ch 600

Jurisdiction:

England and Wales

Cited by:

Approved – Speed Seal Ltd v Paddington CA 1985
The court was asked whether the defendant should be permitted to add to his pleadings a counterclaim asserting that the action was brought in bad faith for the ulterior motive of damaging the defendants’ business, and not for the protection of any . .
Cited – Pitman Training Ltd and Another v Nominet UK and Another ChD 22-May-1997
The defendant had received a request to register the domain name ‘pitman.co.uk’ from the claimants, who held the trade mark. The domain was not activated, and was de-registered by the defendants and then re-registered by another company. Action was . .
Cited – Land Securities Plc and Others v Fladgate Fielder (A Firm) CA 18-Dec-2009
The claimants wanted planning permission to redevelop land. The defendant firm of solicitors, their tenants, had challenged the planning permission. The claimants alleged that that opposition was a tortious abuse because its true purpose was to . .
Cited – Hays Plc v Hartley QBD 17-May-2010
Mr Hartley operated a news agency, and provided to the publisher of the Sunday Mirror, MGN Ltd, allegations of racism that had been levelled at the claimant company by former employees. The allegations were reported in an article headed ”KKK . .
Lists of cited by and citing cases may be incomplete.

Litigation Practice, Insolvency

Updated: 13 May 2022; Ref: scu.190158

In re Downer Enterprises Ltd: ChD 1974

The company was the assignee of a lease. The rent appears to have been payable in advance on the usual quarter days. The company went into liquidation in November 1971. At some time before April 1972 the liquidator instructed agents to market the lease and it was assigned to a purchaser in January 1973. Rent had been accruing due since the liquidation.
Held: Sir John Pennycuick V-C said: ‘Given those facts, it seems to me that from the date when he gave instructions to find a purchaser – that is some date in the early spring of 1972 – the liquidator must be treated as having remained in possession of this property with a view to the realisation of the property to the best available advantage, or, in other words, he must be treated as having kept the property in order to sell it or do the best he could with it. It is immaterial, I think, in considering the purpose for which the liquidator retained the property that, having regard to the amount of the rent and the amount which he expected to realise upon a sale of the property, it might have been more advantageous to him and to his trust estate to have realised it at an earlier date.
Given those facts, it seems to me that, applying well established principles, I must hold that Prudential, if it had not been put in funds by Granada, or Schick through Granada, would have been entitled to be paid, as an expense of the liquidation, rent for approximately one year. That would cover the four quarter days at the end of March, June, September and December 1972.’

Judges:

Sir John Pennycuick V-C

Citations:

[1974] 1 WLR 1460

Jurisdiction:

England and Wales

Cited by:

Cited – Kahn and Another v Commissioners of Inland Revenue; In re Toshoku Finance plc HL 20-Feb-2002
A company went into liquidation, being owed substantial sums by another company in the same group, but itself insolvent. A settlement did not include accrued interest, but was claimed to be taxed as if it had, and on an accruals basis. If so, was . .
Cited – Wright and Another (Liquidators of SHB Realisations Ltd) v The Prudential Assurance Company Ltd ChD 6-Mar-2018
IVA is a special form of contract
Liquidators asked the court whether sums sought by the insolvent company’s landlords were payable and or provable. Under an IVA, the copany had been paying reduced rents, but the arrangement document provided that the full rents would be restored on . .
Lists of cited by and citing cases may be incomplete.

Insolvency, Landlord and Tenant

Updated: 12 May 2022; Ref: scu.190100

In re ABC Coupler and Engineering Co Ltd (No 3): ChD 1970

The liquidator when appointed closed down the business which had been conducted on the premises, had the company’s plant and machinery valued and thought about what he should do.
Held: The rent did not become a liquidation expense until some time after the winding up order, notwithstanding that the company remained in occupation. He was due to pay rent from the time he decided to put the lease on the market. He was from that point retaining the premises for the benefit of the winding up and was liable to pay the rent in full.

Judges:

Plowman J

Citations:

[1970] 1 WLR 702

Jurisdiction:

England and Wales

Cited by:

Cited – Kahn and Another v Commissioners of Inland Revenue; In re Toshoku Finance plc HL 20-Feb-2002
A company went into liquidation, being owed substantial sums by another company in the same group, but itself insolvent. A settlement did not include accrued interest, but was claimed to be taxed as if it had, and on an accruals basis. If so, was . .
Cited – In re Nortel Companies and Others SC 24-Jul-2013
The court was asked as to the interrelationship of the statutory schemes relating to the protection of employees’ pensions and to corporate insolvency.
Held: Liabilities which arose from financial support directions or contribution notices . .
Cited – Wright and Another (Liquidators of SHB Realisations Ltd) v The Prudential Assurance Company Ltd ChD 6-Mar-2018
IVA is a special form of contract
Liquidators asked the court whether sums sought by the insolvent company’s landlords were payable and or provable. Under an IVA, the copany had been paying reduced rents, but the arrangement document provided that the full rents would be restored on . .
Lists of cited by and citing cases may be incomplete.

Insolvency, Landlord and Tenant

Updated: 12 May 2022; Ref: scu.190098

Sharpe Re, Ex parte Trustee of the Bankrupt v Sharpe: ChD 30 Jul 1979

A couple lived in a maisonette with their aunt. The property had been purchased in the name of the husband but the aunt had contributed a partial sum towards the purchase price, while the rest of the amount was raised by way of a mortgage. The couple subsequently went bankrupt and the aunt claimed to be entitled to a proprietary interest in the maisonette by means of a resulting trust presumed from her contribution to the purchase price.
Held: The money had in fact been advanced by way of a loan with the intention that it be repaid. She was, therefore, not entitled to any share of the equitable interest of the property. Monies advanced by way of loan are not, on this basis alone to be treated as contributions to the purchase price of property so that the lender acquires a beneficial interest in that property as a result.
A constructive trust will be treated as coming into existence at the time of the conduct which gives rise to the trust.
Browne-Wilkinson J said: ‘I will first consider whether she has established an equitable interest in the property and its proceeds of sale by virtue of having provided the bulk of the purchase money, that is to say, has she an interest under a resulting trust? I have no doubt that she has not established any such interest. It is clear that the parties never worked out in any detail what was the legal relationship between them, but no one has suggested that Mrs. Johnson advanced the money to the debtor otherwise than by way of gift or loan. In his public examination, the debtor suggested that the monies were a gift, but I find as a fact that the monies were advanced by way of loan.’

Judges:

Browne-Wilkinson J

Citations:

[1980] 1 WLR 219, (1980) 39 P and CR 459, [1980] 1 All ER 190

Jurisdiction:

England and Wales

Cited by:

Cited – Tackaberry and Another v Hollis and others ChD 13-Nov-2007
A house had been purchased in 1982 by one member of a large family. Other family members now disputed whether the land was held in trust for them. A constructive trust was asserted.
Held: The claimants had failed to establish that a . .
Lists of cited by and citing cases may be incomplete.

Insolvency, Land, Trusts

Updated: 12 May 2022; Ref: scu.190151

Re HH Realisations Ltd: ChD 1975

The liquidator of a company ceased to be liable to pay the rent under the company’s lease in full from the time it gave notice to the landlord that it was seeking authority to disclaim the lease, even though it remained in occupation for nearly two months longer.

Judges:

Templeman J

Citations:

(1975) 31 P and CR 249

Jurisdiction:

England and Wales

Cited by:

Cited – Kahn and Another v Commissioners of Inland Revenue; In re Toshoku Finance plc HL 20-Feb-2002
A company went into liquidation, being owed substantial sums by another company in the same group, but itself insolvent. A settlement did not include accrued interest, but was claimed to be taxed as if it had, and on an accruals basis. If so, was . .
Cited – Wright and Another (Liquidators of SHB Realisations Ltd) v The Prudential Assurance Company Ltd ChD 6-Mar-2018
IVA is a special form of contract
Liquidators asked the court whether sums sought by the insolvent company’s landlords were payable and or provable. Under an IVA, the copany had been paying reduced rents, but the arrangement document provided that the full rents would be restored on . .
Lists of cited by and citing cases may be incomplete.

Landlord and Tenant, Insolvency

Updated: 12 May 2022; Ref: scu.190099

Knowles 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 have liability as a trustee dealing with his cestui que trust. Without proof of misfeasance or wilful misconduct no action will lie against him for a delay in distributing the assets of the company. Romer J said: ‘In my view a voluntary liquidator is more rightly described as the agent of the company – an agent who has no doubt cast upon him by statute or otherwise special duties . . If this be the true position of a liquidator, and I think at any rate agency more nearly defines his true position than trusteeship, it is clear that he could not as agent be sued by a third party for negligence apart from misfeasance or personal misconduct.’

Judges:

Romer J

Citations:

[1891] 1 Ch 717, [1891] 60 LJ Ch 284, [1891] 64 LT 135, [1891] WR 523, [1891] 7 TLR 306

Jurisdiction:

England and Wales

Cited by:

Cited – Oldham 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 . .
Distinguished – 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. . .
Lists of cited by and citing cases may be incomplete.

Insolvency, Professional Negligence, Company

Updated: 12 May 2022; Ref: scu.190145

In re National Arms and Ammunition Co: CA 1885

‘If the company retains the possession of property which would be rateable in the hands of anyone else, it is only reasonable that it should be rateable in the hands of the company . . the true test is whether there has been a beneficial occupation within the ordinary meaning of those words in cases as to rating.’

Judges:

Bowen and Fry LJJ

Citations:

(1885) 28 Ch D 474

Jurisdiction:

England and Wales

Citing:

Disapproved – In re Watson, Kipling and Co ChD 1883
An assessment for rates had been made after the liquidation of the company upon property occupied by the company. The court rejected the submission of counsel for the rating authority that: ‘where a liability is incurred during the winding-up, that . .

Cited by:

Cited – Kahn and Another v Commissioners of Inland Revenue; In re Toshoku Finance plc HL 20-Feb-2002
A company went into liquidation, being owed substantial sums by another company in the same group, but itself insolvent. A settlement did not include accrued interest, but was claimed to be taxed as if it had, and on an accruals basis. If so, was . .
Applied – In re Blazer Fire Lighter Ltd 1895
The liquidator had closed the business and done nothing on the premises except to instal a caretaker to protect them from vandalism. That was sufficient to continue the company in rateable occupation. So the rates were an expense of the liquidation. . .
Cited – In re Nortel Companies and Others SC 24-Jul-2013
The court was asked as to the interrelationship of the statutory schemes relating to the protection of employees’ pensions and to corporate insolvency.
Held: Liabilities which arose from financial support directions or contribution notices . .
Lists of cited by and citing cases may be incomplete.

Insolvency, Rating

Updated: 12 May 2022; Ref: scu.190101

In re Blazer Fire Lighter Ltd: 1895

The liquidator had closed the business and done nothing on the premises except to instal a caretaker to protect them from vandalism. That was sufficient to continue the company in rateable occupation. So the rates were an expense of the liquidation.

Judges:

Vaughan-Williams J

Citations:

[1895] 1 Ch 402

Jurisdiction:

England and Wales

Citing:

Applied – In re National Arms and Ammunition Co CA 1885
‘If the company retains the possession of property which would be rateable in the hands of anyone else, it is only reasonable that it should be rateable in the hands of the company . . the true test is whether there has been a beneficial occupation . .

Cited by:

Cited – Kahn and Another v Commissioners of Inland Revenue; In re Toshoku Finance plc HL 20-Feb-2002
A company went into liquidation, being owed substantial sums by another company in the same group, but itself insolvent. A settlement did not include accrued interest, but was claimed to be taxed as if it had, and on an accruals basis. If so, was . .
Cited – In re Nortel Companies and Others SC 24-Jul-2013
The court was asked as to the interrelationship of the statutory schemes relating to the protection of employees’ pensions and to corporate insolvency.
Held: Liabilities which arose from financial support directions or contribution notices . .
Lists of cited by and citing cases may be incomplete.

Insolvency, Rating

Updated: 12 May 2022; Ref: scu.190102

James Smith and Sons (Norwood) Ltd v Goodman: CA 1936

Two leases had been granted by the plaintiff to a company. Subsequently the company determined the leases but it had previously assigned the leases to a third party. The company went into liquidation and the liquidator distributed its assets. He failed to provide for future rent due to the plaintiffs under the leases. No notice of the voluntary liquidation was given to creditors. The company was subsequently dissolved. The plaintiffs were unaware of the liquidation or of the subsequent dissolution.
Held: The liquidator was liable in damages to creditors for breach of statutory duty. The liability under those two leases were liabilities which ought to have been admitted to proof by the liquidator. (Affirmed on appeal) Lord Harworth MR said: ‘The cases that we have looked at are sufficient to show that if a creditor has been injured by the failure of the liquidator to take the steps that he ought to have taken, and has suffered damage, he can ‘succeed on an action on the case’ . . in establishing a liability against a liquidator.’

Judges:

Bennett J, Lord Harworth MR

Citations:

[1936] Ch 216

Jurisdiction:

England and Wales

Cited by:

Cited – Oldham 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 . .
Cited – A 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, Negligence

Updated: 12 May 2022; Ref: scu.190148

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:

Distinguished – Knowles 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:

Cited – Oldham 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 . .
Cited – A 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

In re Mesco Properties Ltd: CA 1980

Tax legislation provided that the company was chargeable to corporation tax on a capital gain arising in the winding up.
Held: The appeal failed. It was a tax which the liquidator was bound to discharge by payment, and the payment was a ‘necessary disbursement’ for the purposes of the winding-up rules.

Judges:

Buckley LJ, Bridge LJ, Templeman LJ

Citations:

[1980] 1 WLR 96

Jurisdiction:

England and Wales

Citing:

Appeal from – In re Mesco Properties Ltd ChD 1979
The court considered whether corporation tax had to be paid as an expense of the liquidation in priority to other claims. In that case it had arisen not on profits but on chargeable gains, on sales of the company’s properties after the commencement . .

Cited by:

Cited – Kahn and Another v Commissioners of Inland Revenue; In re Toshoku Finance plc HL 20-Feb-2002
A company went into liquidation, being owed substantial sums by another company in the same group, but itself insolvent. A settlement did not include accrued interest, but was claimed to be taxed as if it had, and on an accruals basis. If so, was . .
Cited – In re Nortel Companies and Others SC 24-Jul-2013
The court was asked as to the interrelationship of the statutory schemes relating to the protection of employees’ pensions and to corporate insolvency.
Held: Liabilities which arose from financial support directions or contribution notices . .
Lists of cited by and citing cases may be incomplete.

Corporation Tax, Insolvency

Updated: 12 May 2022; Ref: scu.190090

In re M C Bacon Ltd: ChD 1990

A liquidator claimed that the costs of an unsuccessful attempt to set a floating charge aside should be paid out of the assets subject to the charge in priority to the claims of the charge holder.
Held: The rule was a complete statement of the possible expenses to be paid out under the rules: ‘The expenses of the winding up and the order on which they are payable out of the assets are listed in rule 4.218(c).’ S238 requires a comparison of incoming value, assessed in money or money’s-worth with outgoing value assessed in money or money’s-worth from the point of view of the insolvent estate.’ and ‘To come within that paragraph [238(4)] the transaction must be (i) entered into by the company; (ii) for a consideration; (iii) the value of which is measured in money or money’s worth; (iv) is significantly less than the value; (v) also measured in money or money’s worth; (vi) of the consideration provided by the company. It requires a comparison to be made between the value obtained by the company for the transaction and the value of [the] consideration provided by the company. Both values must be measurable in money or money’s worth and both must be considered from the company’s point of view.’ The grant of security cannot constitute a transaction at an undervalue.
Millett J: ‘The mere creation of a security over a company’s assets does not deplete them and does not come within the paragraph. By charging its assets the company appropriates them to meet the liabilities due to the secured creditor and adversely affects the rights of other creditors in the event of insolvency. But it does not deplete its assets or diminish their value. It retains the right to redeem and the right to sell or remortgage the charged assets. All it loses is the ability to apply the proceeds otherwise than in satisfaction of the secured debt. That is not something capable of valuation in monetary terms and is not customarily disposed of for value. In the present case the company did not suffer that loss by reason of the grant of the debenture. Once the bank had demanded a debenture the company could not have sold or charged its assets without applying the proceeds in reduction of the overdraft; had it attempted to do so, the bank would at once have called in the overdraft. By granting the debenture the company parted with nothing of value, and the value of the consideration which it received in return was incapable of being measured in money or money’s worth.’

Judges:

Millett J

Citations:

[1991] Ch 127, [1990] BCLC 324

Statutes:

Insolvency Act 1986 238

Jurisdiction:

England and Wales

Citing:

At trial – Re: A Company (No. 005009 of 1987), ex parte Copp ChD 1988
MC Bacon Ltd had borrowed money from a bank. The loan was unsecured. The company got into financial difficulty. The bank commissioned a report on the company’s financial affairs; and insisted on the grant of a debenture to secure the company’s . .

Cited by:

Cited – Kahn and Another v Commissioners of Inland Revenue; In re Toshoku Finance plc HL 20-Feb-2002
A company went into liquidation, being owed substantial sums by another company in the same group, but itself insolvent. A settlement did not include accrued interest, but was claimed to be taxed as if it had, and on an accruals basis. If so, was . .
Cited – Buchler and another (as joint liquidators of Leyland DAF Limited) v Talbot and another (as joint administrative receivers of Leyland DAF Limited) and Stichting Ofasec and others HL 4-Mar-2004
The liquidator sought to recover his expenses from assets charged under a floating charge in priority to the chargee.
Held: Barleycorn was decided in error. The liquidators costs incurred in an insolvent winding up were not to be charged . .
Cited – Re Thoars (Dec’d); Reid v Ramlort Ltd ChD 2003
The company claimed the benefit of an insurance policy. They had paid certain premiums and the trustee had made a declaration that it was held on trust for the company. The insured died in Scotland, intestate and insolvent.
Held: The . .
Cited – Ramlort Ltd v Michael James Meston Reid CA 8-Jul-2004
The company sought to claim under a life policy. The deceased had died in Scotland insolvent. The trustee of the policy had declared that he held it on trust for the claimant, but the defendant, the judicial factor of the estate, said the . .
Cited – Ultraframe (UK) Ltd v Fielding and others ChD 27-Jul-2005
The parties had engaged in a bitter 95 day trial in which allegations of forgery, theft, false accounting, blackmail and arson. A company owning patents and other rights had become insolvent, and the real concern was the destination and ownership of . .
Cited – Feakins and Another v Department for Environment Food and Rural Affairs (Civ 1513) CA 9-Dec-2005
The department complained that the defendants had entered into a transaction with their farm at an undervalue so as to defeat its claim for recovery of sums due. The transaction used the grant of a tenancy by the first chargee.
Held: The . .
Cited – Hill (As Trustee In Bankruptcy of Nurkowski) v Spread Trustee Company Ltd and Another CA 12-May-2006
The defendants sought relief for transactions entered into at an undervalue. The bankrupt had entered into charges and an assignment of a loan account in their favour before his bankruptcy, and the trustee had obtained an order for them to be set . .
Cited – Haines v Hill and Another CA 5-Dec-2007
On the divorce, the husband was ordered to transfer his share in the house to the wife. On his bankruptcy shortly after, the order was confirmed. After the wife sold the property at a profit, the trustee in bankruptcy applied to set the transfer . .
Lists of cited by and citing cases may be incomplete.

Insolvency

Updated: 12 May 2022; Ref: scu.190092

In re Atlantic Computer Systems Plc: CA 1992

The chargor was a company which arranged with the chargee, a funding bank, that it should purchase equipment and let it on hire purchase to the chargor with permission to sub-lease to end users. The chargor charged to the chargee by way of security all the benefit of the terms of each of the specific sub-leases involved and, in particular, the rentals due under them. The chargor later went into administration and the issue arose as to whether the charges were fixed or floating charges. The court was also asked whether rental due under hire purchaser agreements should be treated as an expense of administration.
Held: To be treated as liquidation expenses under the rules, an expense had to meet the ‘liquidation expenses’ principle of fairness. If a liability was incurred as a result of a step taken for the benefit of the insolvent estate, it was fair that the burden should be borne by the persons for whose benefit the estate was being administered. A creditor could ordinarily be given leave to execute against the company’s assets for a ‘new debt incurred by the liquidator for the purposes of the liquidation’ ‘it is just and equitable that the burden of the debt should be borne by those for whose benefit the insolvent estate is being administered.’ It was a corollary of this principle that a debt was incurred for the purposes of the liquidation ought to be paid in full as an expense of the liquidation. ‘The latter principle is not confined to new debts incurred by the liquidator. It applies also to continuing obligations under existing contracts such as leases which the liquidator chooses to continue for the benefit of the winding up.’ As to the question of whether a fixed charge had been created: ‘in practice sums payable by the end users under these sub-leases were paid to the company and utilised by it in the ordinary course of business. In so far as this is relevant, it may well be that this was what the parties intended should happen. The company was to be at liberty to receive and use the instalments until AIB chose to intervene. We are unpersuaded that this results in these charges, on existing and defined property, becoming floating charges. A mortgage of land does not become a floating charge by reason of the mortgagor being permitted to remain in possession and enjoy the fruits of the property charged for the time being.’

Judges:

Nicholls LJ

Citations:

[1992] Ch 505

Jurisdiction:

England and Wales

Citing:

Cited – In re Lundy Granite Co; Ex parte Heavan CA 1871
The landlord of Lundy Island, which was let to a third party, distrained upon goods of the company which had been left upon the tenant’s property. The distraint was for rent which had fallen due more than a year after the winding up order. The . .

Cited by:

Cited – Kahn and Another v Commissioners of Inland Revenue; In re Toshoku Finance plc HL 20-Feb-2002
A company went into liquidation, being owed substantial sums by another company in the same group, but itself insolvent. A settlement did not include accrued interest, but was claimed to be taxed as if it had, and on an accruals basis. If so, was . .
Applied – In Re Kentish Homes Ltd ChD 31-Mar-1993
The question was whether a post-liquidation liability to community charge on empty flats was an expense of the liquidation.
Held: The company was the chargeable person in respect of the flats for the relevant periods, but the liability was . .
Applied – Re Atlantic Medical Ltd 1992
A charge was granted over hire-purchase agreements, sub-leases and rentals of leased equipment. The charge extended to such agreements as the chargor might enter into in the future.
Held: Applying Atlantic computers, the charge was a fixed . .
Cited – National Westminster Bank Plc v Spectrum Plus Ltd; In re Spectrum Plus CA 26-May-2004
The court was asked whether a charge given over book debts in a debenture was floating or fixed.
Held: Since the charge asserted some control over receipt of the payments, it was a fixed charge. Upon payment into the account, title to the . .
Cited – Freakley and others v Centre Reinsurance International Company and others HL 11-Oct-2006
When it became clear that the company would be financially overwhelmed by asbestos related claims, a voluntary scheme of arrangement was proposed under s425. The House was now asked whether the right to re-imbursement of the company’s lawyers after . .
Lists of cited by and citing cases may be incomplete.

Insolvency

Updated: 12 May 2022; Ref: scu.190091

Hardy v Fothergill: 1888

Rent falling due after a winding up of the tenant was a future debt for which the landlord could have proved in the tenant’s liquidation.

Citations:

(1888) 13 App Cas 351

Jurisdiction:

England and Wales

Cited by:

Cited – Kahn and Another v Commissioners of Inland Revenue; In re Toshoku Finance plc HL 20-Feb-2002
A company went into liquidation, being owed substantial sums by another company in the same group, but itself insolvent. A settlement did not include accrued interest, but was claimed to be taxed as if it had, and on an accruals basis. If so, was . .
Cited – In Re Park Air Services Plc; Christopher Moran Holdings Ltd v Bairstow and Another HL 4-Feb-1999
The tenant company went into liquidation, the receiver disclaimed the lease, and the landlord claimed compensation under the Act. The question concerned how the compensation was to be calculated.
Held: Where a solvent tenant under an onerous . .
Lists of cited by and citing cases may be incomplete.

Insolvency, Landlord and Tenant

Updated: 12 May 2022; Ref: scu.190096

Coulter v Chief Constable of Dorset Police: ChD 12 Dec 2003

The claimant had failed in an action for damages against the respondent, and had failed to pay the costs award. The respondent issued a statutory demand. He claimed that it was invalid because the chief constable had changed in the interim, and there had been no assignment of the benefit of the order.
Held: The office of chief constable was not a corporation, but an office. Some assignment was required. There was no statutory assignment, but there had been an equitable one. An equitable assignment need take no particular form: ‘All that is needed is a sufficient expression of an intention to assign’. Equity would treat as done that which ought to have been done.

Citations:

Times 24-Dec-2003, [2003] EWHC 3391, [2004] 1 WLR 1425

Statutes:

Insolvency Rules 1986 (1986 No 1925) 6.1

Jurisdiction:

England and Wales

Citing:

Cited – Attorney-General for New South Wales v Perpetual Trustee Co Ltd PC 14-Mar-1955
(Australia) The Crown could not recover damages for the loss of the services of a police constable as the result of injuries caused by the negligence of a third person. A chief constable was an office held under the Crown, and the usual relationship . .

Cited by:

Appeal from – Coulter v Chief Constable of Dorset Police CA 8-Oct-2004
The appellant had failed in his action against the police and been ordered to pay the costs. A statutory demand was issued in the name of the respondent, but as the new chief constable had no deed of assignment, he was only equitable assignee.
See Also – Coulter v Chief Constable of Dorset Police CA 13-Jul-2005
An appeal was made against an order refusing to set aside a second statutory demand. The demand was to enforce payment of an order for costs made in proceedings between the parties. The first statutory demand had been upheld, and the judge found . .
Lists of cited by and citing cases may be incomplete.

Police, Insolvency, Equity

Updated: 12 May 2022; Ref: scu.189946

In re EWA, A Debtor: CA 1901

The general rule is that where an obligation is joint and several, the release of one of two joint debtors has the effect of releasing the other, but: ‘It is clear that, although a document in terms purports to release one of two joint debtors, yet it may contain in terms a reservation of rights against the other joint debtor. Where you find those two provisions you construe the document, not as a release, but merely as an undertaking not to sue a particular individual, and the result is that the right to proceed against the co-debtor is reserved and can be put in force against him. Whenever you can find from the terms of the document an agreement for the reservation of rights against the co-debtor, then, I agree, the document cannot be construed as an accord and satisfaction of the joint debt, and, therefore, as a release of the co-debtor.’

Judges:

Collins LJ

Citations:

[1901] 2 KB 642

Jurisdiction:

England and Wales

Cited by:

Cited – Matthews v Pournasrollahzadeh and Another CA 9-Mar-1998
The tenant fell into arrears, and discussed a surrender with the landlord. It had been intended that the landlord would waive any arrears, but he then claimed that there had been an implied surrender by law, and that the arrears remained.
Lists of cited by and citing cases may be incomplete.

Insolvency

Updated: 12 May 2022; Ref: scu.187716

re K G Hoare: ChD 1997

A creditor who wishes to vote in respect of his debt must state to the best of his ability the total amount that is owing to him by the debtor.

Judges:

E.G.Nugee QC

Citations:

1997 BBIR 683

Jurisdiction:

England and Wales

Cited by:

Cited – Roberts v Pinnacle Entertainment Limited ChD 21-Oct-2003
This was an appeal against a revocation of an approval of an individual voluntray arrangement. The notice to creditors inviting them to attend the meeting had been in an outdated form.
Held: The creditir had given suficient evidence of his . .
Lists of cited by and citing cases may be incomplete.

Insolvency

Updated: 12 May 2022; Ref: scu.187054

Ex parte Smith: 1800

Two partners, Strickland and Richardson, held property as joint tenants at law. Richardson committed an act of bankruptcy by absenting himself, and a commission was issued against him. The commissioners then declared Richardson bankrupt and executed a provisional assignment. Meanwhile Strickland, the solvent partner, had died. Richardson’s brother-in-law issued a second commission and Richardson was found a bankrupt under that commission. The petitioners under the first commission then petitioned that the second commission be superseded, ie. stayed. The Attorney General, seeking to uphold the second commission, argued that there having been no assignment before Strickland’s death the survivorship had taken place. He submitted that: ‘The date of the commission has no effect: but the relation to the act of bankruptcy is this: it avoids all acts to the prejudice of creditors; but has not the effect of preventing the bankrupt from acquiring property by survivorship.’ Counsel for the petitioners, arguing for a stay of the second commission, did not refer to the doctrine of relation back, submitting that the partnership was severed in Strickland’s lifetime by the issue of the commission: ‘The commission severs the partnership. When the commission issues, the property is out of the bankrupt and in the commissioners; and the assignees take from the commissioners.’
Held: Rejecting the argument of the petitioners, but it is not clear whether he accepted that of the Attorney General. ‘The issuing of the commission does nothing, unless he is found a bankrupt. The adjudication that he is a bankrupt is what severs the partnership. The first act is that declaring him a bankrupt, then all the property is out of him; and they make the assignment…I am satisfied that the first commission will do well enough. Let the first commission stand.’

Judges:

Lord Loughborough LC

Citations:

(1800) 5 Ves Jun 296

Cited by:

Disapproved – Re Dennis (A Bankrupt) CA 22-May-1995
A joint tenancy was severed (under the former law) on the event of an act of bankruptcy, and not only by the later actual adjudication of bankruptcy. The vesting of the debtor’s property in the trustee which occurred on adjudication was automatic; . .
Lists of cited by and citing cases may be incomplete.

Insolvency

Updated: 12 May 2022; Ref: scu.186747

Knight v Lawrence: 1991

If a mortgaged property is let, the receiver is duty bound to inspect the lease and, if the lease contains an upwards only rent review, to trigger that rent review in due time.

Citations:

[1991] BCC 411

Citing:

Appealed to – Knight v Lawrence 1993
As part of his duty of care, a receiver may be required to take positive steps to maintain the value of the property. . .

Cited by:

Appeal from – Knight v Lawrence 1993
As part of his duty of care, a receiver may be required to take positive steps to maintain the value of the property. . .
Cited – Silven Properties Limited, Chart Enterprises Incorporated v Royal Bank of Scotland Plc, Vooght, Harris CA 21-Oct-2003
The claimants sought damages from mortgagees who had sold their charged properties as receivers. They said they had failed to sell at a proper value. They asked whether the express appointment in the mortgage of receivers as agents of the mortgagor . .
Lists of cited by and citing cases may be incomplete.

Insolvency

Updated: 12 May 2022; Ref: scu.187039

Stein v Pope: CA 1902

A lessee assigned the lease by an assignment which constituted an act of bankruptcy. He was subsequently adjudicated bankrupt and his trustee disclaimed the lease. During the interval between the assignment of the lease and the date of the adjudication two quarters’ rent had fallen due, the lessors had sued the assignee and had recovered judgment for the first quarter’s rent, and had commenced proceedings for the second quarter’s rent. The action did not come on for trial until after the adjudication. Was the assignee of the lease liable for the rents notwithstanding the relation back of the trustee’s title?
Held: He was. The bankruptcy provisions, including the relation back of the trustee’s title, were not provisions for the benefit of the bankrupt. As a general rule bankruptcy did not affect the rights and liabilities of persons not parties to the bankruptcy, except so far as might be necessary in the interests of the trustee and creditors and the administration of the bankrupt’s estate in bankruptcy. It was not necessary in those interests to hold that the bankruptcy had freed the assignee from his liability to the lessor. The court reserved its opinion on what would have been the outcome if bankruptcy had supervened before any action had been take by the lessor against the assignee.

Judges:

Romer LJ, Sir Richard Henn Collins MR

Citations:

[1902] 1 KB 595 CA

Jurisdiction:

England and Wales

Citing:

Approved – Titterton v Cooper CA 1882
The bankrupt was a lessee. His trustee did not disclaim the lease, and the question was whether he was personally liable for the rent which had fallen due between the date of his appointment and the date on which he elected not to disclaim.

Cited by:

Cited – Re Dennis (A Bankrupt) CA 22-May-1995
A joint tenancy was severed (under the former law) on the event of an act of bankruptcy, and not only by the later actual adjudication of bankruptcy. The vesting of the debtor’s property in the trustee which occurred on adjudication was automatic; . .
Lists of cited by and citing cases may be incomplete.

Insolvency, Landlord and Tenant

Updated: 12 May 2022; Ref: scu.186760

Re Offshore Ventilation: 1989

The position of agency of receivers is a real one, even though it has some peculiar incidents.

Citations:

[1989] 5 BCC 160

Cited by:

Cited – Silven Properties Limited, Chart Enterprises Incorporated v Royal Bank of Scotland Plc, Vooght, Harris CA 21-Oct-2003
The claimants sought damages from mortgagees who had sold their charged properties as receivers. They said they had failed to sell at a proper value. They asked whether the express appointment in the mortgage of receivers as agents of the mortgagor . .
Lists of cited by and citing cases may be incomplete.

Agency, Insolvency

Updated: 12 May 2022; Ref: scu.187040

Re Hart, ex parte Green: 1912

The original disposal by a debtor was prior to the act of bankruptcy, though the later transfer by the disponee to the defendant was after it.
Held: In such a case, the trustee could not succeed against a transferee for value without notice.

Judges:

Warrington LJ

Citations:

[1912] 3 KB 6

Cited by:

Distinguished – Re Gunsbourg CA 1920
The debtor transferred his assets to a company formed by him. He later committed an act of bankruptcy on which he was adjudicated bankrupt. The company had sold some of the assets to a bona fide purchaser without notice of the act of bankruptcy. The . .
Cited – Al Sabah and Al Sabah v Grupo Torras SA Culmer as trustee of the property of Sheikh Fahad Mohammed Al Sabah, bankrupt PC 11-Jan-2005
PC (Cayman Islands) The claimant complained of an order of the Court of Appeal of the Cayman Islands, requiring him to comply with a letter of request from the Grand Court of the Bahamas.
Held: In earlier . .
Lists of cited by and citing cases may be incomplete.

Insolvency

Updated: 12 May 2022; Ref: scu.186765

Re Gershon and Levy: 1915

An order was made by consent in a partnership action to tax the costs of the parties and the receiver was ordered to pay the costs when taxed out to the solicitors for the parties out of the partnership assets. When the order was made all parties knew that a bankruptcy petition was pending against each of the partners. They were later adjudicated bankrupt on that petition. The solicitors claimed to be secured creditors.
Held: The order created an equitable charge on the partnership assets in favour of the claimants. But for the doctrine of relation back, the solicitors were secured creditors and entitled to priority over other creditors because all necessary parties were before the court when the order was made, but as a result of the relation back of the trustee’s title to the partnership assets, the partners were not the proper parties and could not consent to the order.

Judges:

Horridge J

Citations:

[1915] 2 KB 527

Cited by:

Cited – Re Dennis (A Bankrupt) CA 22-May-1995
A joint tenancy was severed (under the former law) on the event of an act of bankruptcy, and not only by the later actual adjudication of bankruptcy. The vesting of the debtor’s property in the trustee which occurred on adjudication was automatic; . .
Lists of cited by and citing cases may be incomplete.

Insolvency

Updated: 12 May 2022; Ref: scu.186763

Borland’s Trustee v Steel Brothers and Co Ltd: 1901

Mr Borland was a shareholder. The company’s articles contained pre-emption rights, such that on a shareholder’s bankruptcy, he had, on receiving a transfer notice from the directors, to transfer his shares to a manager or assistant at a fair value calculated in accordance with the articles. His trustee said that the transfer articles were void because, among other reasons, they amounted to a fraud upon the bankruptcy laws, and could not prevail when bankruptcy had supervened, since the trustee was forced to part with the shares at less than their true value, and the asset was not fully available for creditors.
Held: Farwell J said: ‘a simple stipulation that upon a man’s becoming bankrupt that which was his property up to the date of the bankruptcy should go over to some one else and be taken away from his creditors, is void as being a violation of the policy of the bankrupt law’. It was a commercial arrangement, and the provisions were were a fair agreement for the business of the company. They were binding equally on all shareholders. There was no suggestion of fraudulent preference, and nothing obnoxious to the bankruptcy law in a clause which provided that if a man became bankrupt he should sell his shares. The price was a fixed sum for all persons alike, and no difference in price arose in the case of bankruptcy. The purpose was that there should be in the company, if it were so desired, none but managers and workers in Burma. There was nothing repugnant in the way in which the value of the shares was to be ascertained. It would have been different if there were any provision in the articles compelling persons to sell their shares in the event of bankruptcy at something less than the price that they would have otherwise obtained, since such a provision would be repugnant to the bankruptcy law
He described the nature of a company share: ‘It is the interest of a person in the company, that interest being composed of rights and obligations which are defined by the Companies Act and by the memorandum and articles of association of the company.’ and one with limited liability in a company: ‘A share is the interest of the shareholder in the company measured by a sum of money, for the purpose of liability in the first place, and of interest in the second, but also consisting of a series of mutual covenants entered into by all the shareholders inter se in accordance with section 16 of the Companies Act 1862. The contract contained in the articles of association is one of the original incidents of the share. A share is . . an interest measured by a sum of money and made up of various rights contained in the contract, including the right to a sum of money of a more or less amount.’

Judges:

Farwell J

Citations:

[1901] 1 Ch 279

Cited by:

Approved – Inland Revenue Commissioners v Crossman HL 1937
For a valuation for estate taxes, the value is what a purchaser in the open market would have paid to enjoy whatever rights attached to the property at the relevant date.
Lord Russell of Killowen said that a share is the interest of a . .
Cited – Her Majesty’s Commissioners of Inland Revenue v Laird Group plc HL 16-Oct-2003
Was the payment of a dividend in respect of shares ‘a transaction in securities’ or ‘a transaction relating to securities’ within the meaning of section 703.
Held: ‘As a matter of ordinary language, the creation, issue, sale, purchase, . .
Cited – Belmont Park Investments Pty Ltd v BNY Corporate Trustee Services Ltd and Another SC 27-Jul-2011
Complex financial instruments insured the indebtedness of Lehman Brothers. On that company’s insolvency a claim was made. It was said that provisions in the documents offended the rule against the anti-deprivation rule. The courts below had upheld . .
Lists of cited by and citing cases may be incomplete.

Company, Insolvency

Updated: 12 May 2022; Ref: scu.186959

In re John Tweddle and Company Ltd: CA 1910

The court discussed the official receiver’s enquiries and report leading up to the public examination of former directors. Farwell LJ said: ‘Now those are functions of a judicial character which are cast upon him, not in the liquidation of the company for the benefit of the assets, but primarily at any rate for the protection of the public. One has to bear in mind that in 1890 there had been various company failures, and it was thought that more drastic legislation was required against directors and promoters and people standing in that position, and I have no doubt that this section was passed for that purpose. It is said, and with some truth, perhaps, that it is a little hard on the company if the view that we take is correct that the costs of all this should come out of the company’s assets; but a company only exists by favour of and on the conditions imposed by the legislature, and it is not immaterial to observe that as long ago as 1862, under the 167th section of the Act of 1862, if directors were prosecuted (as mentioned in that section) the expense of the prosecution came out of the assets of the company’.

Judges:

Farwell LJ

Citations:

[1910] 2 KB 697

Jurisdiction:

England and Wales

Cited by:

Cited – Official Receiver v Wadge Rapps and Hunt (a firm) and another and two other actions HL 31-Jul-2003
(Orse In re Pantmaenog Timber Co Ltd)
The Receiver sought to use information obtained under section 236 (documents recovered from the directors’ solicitors) in disqualification proceedings.
Held: The appeal succeeded. The Act had . .
Lists of cited by and citing cases may be incomplete.

Insolvency, Company

Updated: 12 May 2022; Ref: scu.186359

Bishopsgate Investment Limited v Maxwell: CA 1999

A person required to answer questions under the section may not refuse to answer on the ground of self-incrimination. (Dillon LJ) ‘It is plain to my mind – and not least from the Cork Report – that part of the mischief in the old law before the Insolvency Act 1985 was the apparent inability of the law to deal adequately with dishonesty or malpractice on the part of bankrupts or company directors . . That was a matter of public concern, and there is a public interest in putting it right. As steps to that end, Parliament has, by [the Insolvency Act 1986], greatly extended the investigative powers available to office-holders, with the assistance of the court, and has expressly placed the officers of the company and others listed in section 235(3), under a duty to assist the office-holder’. As to the Bishopsgate and Riley cases: ‘The essence of both decisions is that if Parliament, in the public interest, sets up by statute special investigatory procedures to find out if the affairs of a company have been conducted fraudulently, with the possibility of special remedies in the light of an inspector’s report, or to find out if there have been infringements of certain sections of the Banking Act 1987 which have been enacted for the protection of members of the public who make deposits, Parliament cannot have intended that anyone questioned under those procedures should be entitled to rely on the privilege against self-incrimination, since that would stultify the procedures and prevent them achieving their obvious purpose.’

Judges:

Dillon LJ

Citations:

[1999] Ch 1

Statutes:

Insolvency Act 1986 236

Jurisdiction:

England and Wales

Citing:

Cited – Bank of England v Riley 1992
Exercise of the right of privilege against self-incrimination. . .
Cited – In Re London United Investments Plc CA 1992
The privilege against self-incrimination was impliedly excluded by the terms of a statute which conferred power on company inspectors appointed by the Secretary of State to require documents and answers to questions from any person whom they . .

Cited by:

Cited – Official Receiver v Wadge Rapps and Hunt (a firm) and another and two other actions HL 31-Jul-2003
(Orse In re Pantmaenog Timber Co Ltd)
The Receiver sought to use information obtained under section 236 (documents recovered from the directors’ solicitors) in disqualification proceedings.
Held: The appeal succeeded. The Act had . .
Cited – Regina v Hertfordshire County Council, ex parte Green Environmental Industries Ltd and Another HL 17-Feb-2000
A notice was given to the holder of a waste disposal licence to require certain information to be provided on pain of prosecution. The provision of such information could also then be evidence against the provider of the commission of a criminal . .
Lists of cited by and citing cases may be incomplete.

Insolvency

Updated: 12 May 2022; Ref: scu.186360

Re a Company (No 003729 of 1982 ): ChD 1984

A creditor had claimed that the company owed it some andpound;12,000 for work done by the creditor for the company. The company refused to pay that sum but offered to pay some andpound;2,000. Two years later the creditor served a statutory demand for the original sum claimed and, when there was no payment, presented a winding-up petition. The company then paid the sum which it had previously offered to pay. An issue in the proceedings was whether the company had neglected to pay the sum demanded and it was argued by the creditor that the company had neglected to pay a sum exceeding andpound;200, the then statutory minimum, when it did not pay the sum it had previously offered and subsequently paid.
Held: The creditor was not in a position to make a genuine demand for a specified sum. A winding-up order may not be made on a debt which is disputed in good faith by the company.

Judges:

Mervyn Davies J

Citations:

[1984] 1 WLR 1090, [1984] 3 All ER 78

Jurisdiction:

England and Wales

Cited by:

Doubted – Platts v Trustees Savings Bank Plc CA 13-Feb-1998
A counterclaim for negligent sale was a valid claim allowing potential against repossessing bank but would not make bank’s claim unliquidated. The Judge could properly hold that there was a liquidated and unsecured debt the subject of the statutory . .
Lists of cited by and citing cases may be incomplete.

Insolvency, Company

Updated: 12 May 2022; Ref: scu.184800

TSB Bank plc v Platts (No 2 ): 1997

Judges:

His Honour Judge Weeks Q.C

Citations:

[1997] BPIR 302

Jurisdiction:

England and Wales

Cited by:

Appeal from – Platts v Trustees Savings Bank Plc CA 13-Feb-1998
A counterclaim for negligent sale was a valid claim allowing potential against repossessing bank but would not make bank’s claim unliquidated. The Judge could properly hold that there was a liquidated and unsecured debt the subject of the statutory . .
Lists of cited by and citing cases may be incomplete.

Insolvency

Updated: 12 May 2022; Ref: scu.184791

Galbraith v Grimshaw and Baxter: CA 1910

A garnishee order nisi does not operate as a transfer of the property in the debt, but it is an equitable charge on it, and the garnishee cannot pay the debt to any one but the garnishor without incurring the risk of having to pay it over again to the creditor.

Judges:

Farwell LJ

Citations:

[1910] 1 KB 339

Jurisdiction:

England and Wales

Cited by:

Cited – Societe Eram Shipping Company Limited and others v Hong Kong and Shanghai Banking Corp Ltd, Compagnie Internationale de Navigation HL 12-Jun-2003
The appeal concerned a final third party debt order (formerly a garnishee order). A judgment in France was registered here for enforcement. That jurisdiction was now challenged.
Held: A third party debt order is a proprietary remedy operating . .
Appeal From – Galbraith v Grimshaw and Baxter HL 2-Jan-1910
Where a Scottish sequestration occurred shortly after an English garnishee order nisi, the judgment creditor prevailed over the trustee in bankruptcy, although the result would have been different if both the attachment and the bankruptcy had . .
Cited – Rubin and Another v Eurofinance Sa and Others SC 24-Oct-2012
The Court was asked ‘whether, and if so, in what circumstances, an order or judgment of a foreign court . . in proceedings to adjust or set aside prior transactions, eg preferences or transactions at an undervalue, will be recognised and enforced in . .
Lists of cited by and citing cases may be incomplete.

Litigation Practice, Insolvency

Updated: 12 May 2022; Ref: scu.183521

Re Button: 1905

A secured petitioner’s estimate of the value of his property was challenged.
Held: The petitioner’s estimate was made ‘at his own risk’, in that, if at undervalue, he would still be bound by it in the bankruptcy; but that, provided the estimate was ‘real and not a sham’, it was not the function of the court ‘to go into the question what is the true value after the declaration of the estimated value.’

Judges:

Vaughan Williams LJ

Citations:

[1905] 1 KB 602

Statutes:

Bankruptcy Act 1883

Cited by:

Cited – Owo-Samson v Barclays Bank Plc, Boyden CA 21-May-2003
The appellant challenged a formal statutory demand which had led to his bankruptcy. The demand had included the anticipated cost of realising the charged property, and also had been inflated to allow for extra costs of dealing the appellant who was . .
Lists of cited by and citing cases may be incomplete.

Insolvency

Updated: 12 May 2022; Ref: scu.182734

Sea Voyager Maritime Inc and Others v Bielecki trading as Hughes Hooker and Co: ChD 23 Oct 1998

The creditor alleged a right to recover against the estate citing an unfair prejudice from the IVA.
Held: He had been unfairly prejudiced. The IVA precluded him, like all the other unsecured creditors, from suing the debtor for the full amount of his claim
Where a claim in a debtor’s estate was in respect of a claim which remained unliquidated, and an insolvency arrangement could very substantially prejudice that claim, the creditor was entitled to relief against the proposed arrangement; however, the prejudice to the applicant must be prejudice as a creditor of the debtor and not in some other capacity.

Judges:

Richard McCombe QC

Citations:

Times 23-Oct-1998, [1999] BCC 924, [1999] 1 All ER 4 628

Statutes:

Insolvency Act 1986 262, Third Party (Rights Against Insurers Act) 1930

Jurisdiction:

England and Wales

Cited by:

Cited – Wright and Another (Liquidators of SHB Realisations Ltd) v The Prudential Assurance Company Ltd ChD 6-Mar-2018
IVA is a special form of contract
Liquidators asked the court whether sums sought by the insolvent company’s landlords were payable and or provable. Under an IVA, the copany had been paying reduced rents, but the arrangement document provided that the full rents would be restored on . .
Lists of cited by and citing cases may be incomplete.

Insolvency

Updated: 11 May 2022; Ref: scu.89073

Secretary of State for Trade and Industry and Another v Arum Marketing Ltd and Another: CA 31 Aug 2000

A company was wound up on public interest grounds. The costs were ordered to be paid out of the company’s assets. The Secretary appealed, and on appeal the costs were ordered to be paid by the company’s sole director and shareholder personally. The company was a swindle, and there was no reason why anyone other than the proprietor should lose out if it was not necessary.

Citations:

Gazette 31-Aug-2000

Jurisdiction:

England and Wales

Company, Costs, Insolvency

Updated: 11 May 2022; Ref: scu.89110

Heritable Reversionary Co v Millar (M’Kay’s Trustee): HL 9 Aug 1892

Held (rev. the judgment of the First Division) that a sequestration does not vest in a trustee in bankruptcy heritage to which the bankrupt holds an unqualified feudal title in his own name, if it can be shown that he only holds it in trust for another.

Judges:

Lords Herschell, Watson, Macnaghten, and Field

Citations:

[1892] UKHL 13, 30 SLR 13

Links:

Bailii

Jurisdiction:

Scotland

Insolvency

Updated: 11 May 2022; Ref: scu.634560

Bottomley v Brougham: 1908

The official receiver is acting in a judicial capacity in making his report and his further report and in conducting the examination under that further report. A judge is privileged from inquiry as to whether he is malicious. Channell J considered whether the OR in carrying out investigative functions came within the doctrine of absolute privilege. He held: ‘I think, in the first place, that the official receiver has a statutory duty to inquire in a judicial way into certain matters by the Act of 1890, and that in performing that duty he is acting in a judicial capacity. It is quite true that the report is made ex parte, but that makes no difference. A judge in hearing an ex parte application is still acting as a judge, and the absolute privilege applies quite as much as when he is hearing a case in which both parties appear. The fact that this was a preliminary inquiry equally does not prevent it being a judicial enquiry. An inquiry before a magistrate on a charge of murder, for instance, which he has certainly no power to deal with, and as to which he is only inquiring in a preliminary way whether there is a case for committing the accused person for trial, is clearly a judicial proceeding although it is preliminary to trial. It is strongly contended on the part of the plaintiff that there is mischief and danger in allowing absolute privilege in this case, because it is an ex parte statement, and the person against whom the charge is made has no opportunity of meeting it; it appears to me, however, that the answer to that is the very fact that it is preliminary, and that it does lead to further inquiry upon which that person does have that opportunity of explaining and giving his view of the matter, and that, it being obviously known by anybody who sees or reads the report of the official receiver that, qua report, it will lead to future proceedings in which the report may be entirely displaced, that really prevents any serious mischief arising from applying this doctrine to such a proceeding as this. I think, therefore, that this report may be considered to be absolutely privileged on the footing of its being the judgment of a judicial officer upon a matter entrusted to him for inquiry’.
However Channell J went on to give an alternative ground for holding that the OR attracted absolute privilege which proceeded on the arguably opposite premise that the function which the OR was exercising was more analogous to that of a prosecutor than a judge: ‘But, even if that is not sound, there is the further ground that the report of the official receiver may be treated, not so much as the judgment in a judicial proceeding, but as the initial stage of proceedings in the winding-up Court, which clearly is a Court. It is the information upon which the proceedings take place and it is made by the official receiver under a statutory duty. It seems to me to come within the authority of the case of Lilley v Roney 61 L.J. (Q.B.) 727, and to be a much stronger case, because in that case complaint by a person who considered himself aggrieved by the conduct of a solicitor – a complaint which was the initiation of proceedings before the Law Society – was held to be privileged as being the commencement of proceedings of a legal character. I quite agree that there the privilege was rather the privilege of a litigant than the privilege of the judge; it was the privilege of a man who was starting proceedings. It is perhaps not quite accurate to say the official receiver is in any sense a litigant, but when he comes before the winding-up Court upon the examination no doubt he is, in one sense, a party to the proceedings; he is, as it were, appearing for the prosecution. It is much the same as when the Attorney-General appears upon an information filed by the Attorney-General; he is then a party to the proceedings possibly, not a litigant, and I should say certainly not acting as a judge, but I do not see that that much affects the matter here. In presenting this report the official receiver is informing the Court of alleged matters for inquiry, and so initiating a judicial enquiry; and it seems to me to be entirely analogous to what was held to be absolute privilege in Lilley v Roney, and to be a stronger case. It was done in the course of the performance of a duty imposed upon him in his position of officer of the Court. It is much like the report of an official referee, or someone of that sort, to whom matters are referred to report to the Court. I suppose no one would doubt that those reports were privileged.’

Judges:

Channell J

Citations:

[1908] 1 KB 584

Cited by:

Cited – More v Weaver CA 11-Jul-1928
The appellant brought the latest of several actions, this time alleging defamation in letters from the respondent to her own solicitors making certain statements about the appellant. Those letters had become public in the course of the earlier . .
Lists of cited by and citing cases may be incomplete.

Legal Professions, Insolvency, Defamation

Updated: 11 May 2022; Ref: scu.552688

In re Trent and Humber Shipbuilding Co; Bailey and Leetham’s Case: 1869

The court was asked whether costs awarded against a company were costs in the winding up.
Held: Where a creditor has obtained leave of the court to bring proceedings against a company in liquidation, any costs to which the creditor would become entitled as a result of the successful prosecution of the proceedings would be payable out of the company’s assets in full.
The rationale for the estate costs rule lies in the fact that: ‘a company in winding up ought to be dealt with as a matter of course like any other litigant, and if an action be brought or resisted for the benefit of the estate, and that action be brought fruitlessly, or defended fruitlessly, then the estate, that is to say, the other creditors, ought, like everybody else, to be fixed with the costs to which they have improperly and unnecessarily put their opponent.’

Citations:

(1869) LR 8 Eq 94

Cited by:

Cited – In re Nortel Companies and Others SC 24-Jul-2013
The court was asked as to the interrelationship of the statutory schemes relating to the protection of employees’ pensions and to corporate insolvency.
Held: Liabilities which arose from financial support directions or contribution notices . .
Lists of cited by and citing cases may be incomplete.

Insolvency, Company

Updated: 11 May 2022; Ref: scu.537946

In Re European Life Assurance Society: 1869

Sir William James V-C dismissed a petition for the winding up of a company which had issued large numbers of life policies and annuity contracts, and appeared to be in financial difficulties. He rejected the basis of the ‘just and equitable’ ground in section 79(5) of the 1862 Act, saying: ‘And in my view of the law of the case it would be just and equitable to wind up a company like this assurance company if it were made out to my satisfaction that it is, not in any technical sense but, plainly and commercially insolvent – that is to say, that its assets are such, and its existing liabilities are such, as to make it reasonably certain – as to make the court feel satisfied – that the existing and probable assets would be insufficient to meet the existing liabilities. I take it that the court has nothing whatever to do with any question of future liabilities, that it has nothing whatever to do with the question of the probability whether any business which the company may carry on tomorrow or hereafter will be profitable or unprofitable. That is a matter for those who may choose to be the customers of the company and for the shareholder to consider.’

Judges:

Sir William James V-C

Citations:

(1869) LR 9 Eq 122

Statutes:

Companies Act 1862 79(5)

Jurisdiction:

England and Wales

Cited by:

Cited – Byblos Bank SAL v Al-Khudhairy CA 1987
The parties disputed the validity of the appointment of a receiver. The ostensible ground for appointment of the receiver was not made out, but the bank relied on a new ground, section 223(d) of the 1948 Act. Nicholls LJ observed: ‘Construing this . .
Cited – BNY Corporate Trustee Services Ltd and Others v Neuberger SC 9-May-2013
Potential Insolvency effect under guarantee
The various parties had entered into complex and substantial financial arrangements incorporating guarantees. The guarantees were conditional upon the guaranteed party being solvent. The parties disputed whether a party which would otherwise be . .
Lists of cited by and citing cases may be incomplete.

Insolvency, Company

Updated: 11 May 2022; Ref: scu.535115

In re a Company (Bond Jewellers): ChD 21 Dec 1983

A tenant company had a propensity for postponing payment of its debts until threatened with litigation. Nourse J felt unable to make an order under section 223(d), and considered, but ultimately did not make an order, on the ‘just and equitable’ ground in section 222(f). The phrase ‘as they fall due’, although not part of the statutory text, was understood to be implicit in section 223(d). Nourse J observation as to section 223(d): ‘Counsel says that if I take into account the contingent and prospective liabilities of the company, it is clearly insolvent in balance sheet terms. So indeed it is if I treat the loans made by the associated companies as loans which are currently repayable. However, what I am required to do is to ‘take into account’ the contingent and prospective liabilities. That cannot mean that I must simply add them up and strike a balance against assets. In regard to prospective liabilities I must principally consider whether, and if so when, they are likely to become present liabilities.’

Judges:

Nourse J

Citations:

[1986] BCLC 261

Statutes:

Companies Act 1948 223(d) 222(f0

Jurisdiction:

England and Wales

Cited by:

Cited – Byblos Bank SAL v Al-Khudhairy CA 1987
The parties disputed the validity of the appointment of a receiver. The ostensible ground for appointment of the receiver was not made out, but the bank relied on a new ground, section 223(d) of the 1948 Act. Nicholls LJ observed: ‘Construing this . .
Cited – BNY Corporate Trustee Services Ltd and Others v Neuberger SC 9-May-2013
Potential Insolvency effect under guarantee
The various parties had entered into complex and substantial financial arrangements incorporating guarantees. The guarantees were conditional upon the guaranteed party being solvent. The parties disputed whether a party which would otherwise be . .
Lists of cited by and citing cases may be incomplete.

Company, Insolvency

Updated: 11 May 2022; Ref: scu.535117

Re Miller: CA 1901

A prospective partner in the firm paid andpound;2,000 to a broker on terms that he should have the option of demanding its repayment if he did not become a partner by a date. The firm was hammered before that date and having given notice to determine the agreement, he then petitioned for bankruptcy in that sum.
Held: The alleged debt of andpound;2,000 was not a liquidated sum and could not therefore found a petition because the hammering of the firm was not an event which entitled notice of determination to be served under the agreement. The only remedy for the firm’s inability to perform the contract was one in damages which was not a debt in a liquidated sum.

Citations:

(1901) 1 QB 51

Cited by:

Cited – McGuinness v Norwich and Peterborough Building Society CA 9-Nov-2011
The appellant had guaranteed his brother’s loan from the respondent, and the guarantee having been called in and unpaid, he had been made bankrupt. He now appealed saying that the guarantee debt, even though of a fixed amount could not form the . .
Lists of cited by and citing cases may be incomplete.

Insolvency

Updated: 11 May 2022; Ref: scu.450461

Barclays Bank Ltd v TOSG Trust Fund Ltd: CA 1984

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

In re Detmold, Detmold v Detmold: 1889

A provision stated that the property in a marriage settlement (originating from the husband) should pass to the wife for life in the event of an alienation by, or the bankruptcy of, the husband.
Held: It was valid against the husband’s trustee in bankruptcy, on the ground that it had been triggered, prior to the commencement of the bankruptcy, by the alienation effected as the result of the appointment of a receiver of the property in the settlement.

Citations:

(1889) 40 Ch D 585

Cited by:

Cited – Belmont Park Investments Pty Ltd v BNY Corporate Trustee Services Ltd and Another SC 27-Jul-2011
Complex financial instruments insured the indebtedness of Lehman Brothers. On that company’s insolvency a claim was made. It was said that provisions in the documents offended the rule against the anti-deprivation rule. The courts below had upheld . .
Lists of cited by and citing cases may be incomplete.

Insolvency, Contract

Updated: 11 May 2022; Ref: scu.442615

In Re Cabletel Installations Ltd: 1 Jul 2004

The court criticised the remuneration claimed by the insolvency office-holder were work had been carried out at too senior a level, and the calculation was an uncritical application of the time spent, and where there were more and lengthier meetings and excessive reviews than the administration warranted. Chief Registrar Baister set out the approach he would adopt to fixing the applicant administrators’ remuneration: ‘I shall examine the main work streams and some of their subcategories and consider the time spent and whether it was justified; I shall have regard, insofar as I can, to the level at which work has been done; I shall consider the benefit of the work done and, to any extent appropriate, whether it was necessary. I shall then look at the larger picture and consider the case in terms of value. In doing so I shall have regard to the factors set out in the rules and to other factors peculiar to this case. I shall bear in mind that time spent is a measure not of the value of the service rendered but of the cost of rendering it. I do not propose, therefore, to allow myself to be influenced to any real extent by the final figures which the administrators claim, since, it seems to me that, prima facie, they reflect the cost of time rather than the value of the service provided. I shall resolve any doubts I have against the administrators.’

Judges:

Chief Registrar Baister

Citations:

[2005] BPIR 28

Citing:

Cited – In Re Independent Insurance Co Ltd (No 2) 2003
Ferris J was required to consider the insolvency office-holders’ remuneration, assisted by a solicitor with wide insolvency experience, whose report sets out the general principles then accepted by the insolvency profession as the yardstick for . .
Cited – Mirror Group Newspapers Plc v Maxwell and Others (No 2) ChD 15-Jul-1997
The Court reminded insolvency practitioners of fiduciary duties to creditors when refusing application for further payment on account of costs. Ferris J considered the principles applicable to fixing the remuneration of receivers of the estate of . .

Cited by:

Cited – Brook v Reed CA 25-Mar-2011
The court was asked ‘What relation should the costs and remuneration bear to the circumstances, and in particular the size, of the bankruptcy?’ The bankrupt had considered that the costs first awarded to the trustee in bankruptcy and the trustee’s . .
Lists of cited by and citing cases may be incomplete.

Insolvency, Costs

Updated: 11 May 2022; Ref: scu.430875

In Re Carton Ltd: 1923

The court considered the remuneration of a liquidator in a voluntary liquidation.
Held: The court refused to authorise remuneration at an unusually generous percentage rate, which had been approved by the committee of inspection, on the grounds that the amount of work undertaken did not justify a rate higher than the rate usually applied. PO Lawrence J also said this of a time-basis: ‘The Court as a general rule only fixes remuneration on a time-basis if there is no other method which would operate to give the liquidator fair remuneration. Experience has shown that the time occupied by a liquidator and his clerks affords a most unreliable test by which to measure the remuneration. Even the best accountant may spend hours over unproductive work, let alone his more or less efficient staff of clerks . . The Court has long since come to the conclusion that the proper method to adopt whenever it is practicable is to assess the remuneration according to the results attained,’

Judges:

PO Lawrence J

Citations:

(1923) 39 TLR 194

Cited by:

Cited – Brook v Reed CA 25-Mar-2011
The court was asked ‘What relation should the costs and remuneration bear to the circumstances, and in particular the size, of the bankruptcy?’ The bankrupt had considered that the costs first awarded to the trustee in bankruptcy and the trustee’s . .
Lists of cited by and citing cases may be incomplete.

Insolvency, Costs

Updated: 11 May 2022; Ref: scu.430874

In Re Rhodesia Goldfields Ltd: ChD 1910

Partridge, a director of the company who held some of its debenture stock, was facing a serious misfeasance claim which had not yet been resolved. Set-off was therefore not available.
Held: Payment of what was due to Partridge and his assignees was therefore deferred until the claim against him was resolved.
Swinfen Eady J said: ‘it would be a strange travesty of equity to hold that in distributing the fund Partridge was entitled to be paid at once all that was due to him out of the company’s money, and subsequently to find, after it had been established that he owed money to the fund, that the amount could not be recovered from him.’
He went on to discuss the rule in Cerry v Boultbee, saying: ‘The rule is of general application that where an estate is being administered by the Court, or where a fund is being distributed, a party cannot take anything out of the fund until he has made good what he owes to the fund . . a person entitled to participate in and bound to contribute to the same fund cannot receive the benefit without discharging the obligation.’

Judges:

Swinfen Eady J

Citations:

[1910] 1 Ch 239

Jurisdiction:

England and Wales

Citing:

Applied – Cherry v Boultbee HL 22-Nov-1839
B died having made a will leaving a fund to pay income to A who owed her money but had been made bankrupt before the death. The debt to B remained unpaid.
Held: The liability to pay the debt and the right to receive the legacy had never tested . .

Cited by:

Cited – Brazzill and Others v Willoughby and Others CA 27-May-2010
The regulated bank Kaupthing Singer and Friedlander Ltd (KSF) was in financial difficulties. The Bank of England required KSF to credit to a trust account all future deposits. KSF later went into insolvency. Some deposits had been credited to the . .
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.

Trusts, Insolvency

Updated: 11 May 2022; Ref: scu.416575

Re A Debtor (No.488 IO of 1996), JP v A Debtor: ChD 1999

The debtor had been ordered to pay his wife a sum by way of ancillary relief in matrimonial proceedings. He then proposed an IVA, which was approved at a creditors meeting. W had notice but did not attend. She along with all other creditors was to receive a part payment in full and final settlement. She applied to revoke the approval.
Held: She succeeded. She wife had a right not enjoyed by other creditors namely the freedom to assert her claim following the husband’s bankruptcy notwithstanding the husband’s discharge which right would be overreached if she was compelled to accept a dividend under the IVA in full and final settlement of her entitlement. She had been unfairly prejudiced to the extent that her special position had not been recognised.

Judges:

Sir John Vinelott

Citations:

[1999] 2 BCLC 571

Statutes:

Insolvency Act 1986 262

Jurisdiction:

England and Wales

Cited by:

Applied – Child Maintenance and Enforcement Commission v Beesley and Another ChD 11-Mar-2010
The agency challenged the inclusion in an individual voluntary arrangement of the father’s arrears of child support. The creditors meeting had approved a full and final settlement. 94% of the debts were arrears of child support. The Commission said . .
Lists of cited by and citing cases may be incomplete.

Insolvency, Family

Updated: 11 May 2022; Ref: scu.402616

Surtees And Another, Assignees Of The Estate And Effects Of A Bankrupt, v Ellison: 6 Jul 1829

Evidence of a trading which ceased before the 6 G. 4, c. 16, took effect, will not support a commission of bankrupt issued after that time.

Citations:

[1829] EngR 594, (1829) 9 B and C 750, (1829) 109 ER 278

Links:

Commonlii

Cited by:

Cited – English Bridge Union Ltd, Regina (on The Application of) v The English Sports Council and Others Admn 15-Oct-2015
The claimant Union claimed that the defendant should recognise the game of bridge as a sport. The defendant had adopted a definition from Europe which required physical activity, and the Union said that this was a misconstruction of its Royal . .
Lists of cited by and citing cases may be incomplete.

Insolvency

Updated: 11 May 2022; Ref: scu.322462