In re Fenton: CA 1931

A surety under a pre-insolvency guarantee, had not actually paid, and could not pay, being bankrupt with his assets vested in the trustee. The creditor was still owed the money and entitled to prove in the liquidation.
Held: One could not have more than one proof in respect of the same debt (‘the rule against double proof’); otherwise, if there had been, say, four guarantors, there could have been five people receiving dividends on the same debt. Also. until the creditor had been paid, he had the superior right of proof and a proof by a surety was excluded. Lastly, a debt which could not be proved could not be relied upon for set-off. If the guarantor had paid off the debt after the insolvency date, he would have been entitled to set it off against a debt which he owed to the company.

Judges:

Lord Hanworth MR, Lawrence and Romer LJJ

Citations:

[1931] 1 Ch 85

Jurisdiction:

England and Wales

Cited by:

CitedSecretary 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.
Not followedIn 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 . .
CitedIn 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: 19 August 2022; Ref: scu.196879