In re J Leslie Engineers Co Ltd: 1976

The director of a company between presentation of a petition to wind up and the making of the order paid over pounds 1050 to a creditor for work done. Of this sum, pounds 800 was paid by way of a cheque drawn on the personal account of the director and his wife, which was in fact overdrawn at the time. The director caused the Company to pay pounds 800 into the joint account to reimburse them for the sum paid to the creditor.
Held: The payment of pounds 800 from the Company to the joint account was a disposition of the Company’s property and accordingly void, but the payment out of the joint account to the creditor was not a disposition of the Company’s property and therefore was not void. The creditor therefore was not liable in respect of that sum to the Company. The invalidating provisions in section 227 do not spell out the appropriate remedy of the company when the disposition is avoided: ‘Now, it must be remembered that the invalidation of a disposition of the company’s property and the recovery of the property disposed of, are two logically distinct matters. Section 227 says nothing about recovery; it merely avoids dispositions . . What is the appropriate remedy in respect of the invalidated disposition is a matter not regulated by the statute and that has to be determined by the general law.’
Section 227 did not mean that the company had some special remedy which enabled it to proceed with a claim in circumstances where, had the disposition been invalid on some other ground than the section, no such remedy would have lain.
Oliver J
[1976] 1 WLR 292
Companies Act 1948 227
England and Wales
Cited by:
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Saad Investments was a Cayman Islands company in liquidation. The liquidator brought an action here, but the defendant sought a stay saying that another forum was clearly more appropriate. Shares in Saudi banks were said to be held in trust for the . .

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Updated: 09 February 2021; Ref: scu.640393