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Insolvency - From: 1970 To: 1979

This page lists 34 cases, and was prepared on 08 August 2015.


 
 In re ABC Coupler & Engineering Co Ltd (No 3); ChD 1970 - [1970] 1 WLR 702
 
Inland Revenue Commissioners -v- Goldblatt [1972] Ch 498
1972


Taxes Management, Insolvency, Torts - Other
In a winding up case, the Commissioners can if necessary proceed against a receiver for misfeasance.
1 Citers


 
Highland Engineering Ltd -v- Thomson 1972 SC 87
1972


Scotland, Company, Insolvency
The liquidation of a company is treated as the equivalent as bankruptcy to prevent the hardship of a debtor who is also a creditor being forced to pay in full, when he will come in only as a creditor for a dividend for his debt as a result of ranking pari passu with the ordinary creditors.
1 Citers



 
 National Westminster Bank Ltd -v- Halesowen Presswork & Assemblies Ltd; HL 1972 - [1972] AC 785

 
 In re Sharp's Settlement Trusts; 1972 - [1973] Ch 331; (1972) 36 Conv 436
 
Re Union Accident Insurance Co Ltd [1972] 1 All ER 1105; [1972] 1 WLR 640
1972
ChD
Plowman J
Insolvency, Company
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 £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.'
1 Citers


 
British Eagle International Airlines Ltd -v- Compagnie National Air France [1974] 1 Lloyd's Rep 429
1974
CA
Russell LJ
Insolvency, Contract

1 Citers


 
In re Wyvern Developments Ltd [1974] 1 WLR 1097
1974
ChD
Templeman J
Insolvency
An official receiver "must do his best by his creditors and contributories. He is in a fiduciary capacity and cannot make moral gestures, nor can the court authorise him to do so."
1 Citers


 
In re Downer Enterprises Ltd [1974] 1 WLR 1460
1974


Insolvency, Landlord and Tenant

1 Citers



 
 In re Clark (a bankrupt); ex parte the Trustee -v- Texaco Ltd; ChD 1975 - [1975] 1 WLR 559

 
 In re Calgary and Edmonton Land Co Ltd (In liquidation); 1975 - [1975] 1 WLR 355

 
 British Eagle International Airlines Ltd -v- Compagnie National Air France; HL 1975 - [1975] 1 WLR 758; [1975] 2 All ER 390

 
 Re HH Realisations Ltd; ChD 1975 - (1975) 31 P & CR 249
 
Aluminium Industrie Vaassen B V -v- Romalpa Aluminium Ltd [1976] 1 WLR 676
11 Feb 1975
ChD
Mocatta J
Insolvency, Company, Contract, Contract, Equity
The plaintiffs sold aluminium to the defendant and by a clause in the contract retained their title in the materials sold until payment was received. The purchaser went into insolvent receivership, and the seller sought recovery of the equipment and proceeds of sale of articles made from the materials. The defendants allowed that they had been bailees of the material supplied by the plaintiffs until all debts were paid, but claimed that this was overridden by sales to bona fide purchasers. Held: The clause showed an intention to create a fiduciary arrangement between seller and buyer, and the plaintiffs were entitled to recover the proceeds of sales to third parties.
1 Cites

[ lip ]
 
Herbert Berry Associates Ltd -v- Inland Revenue Commissioners [1976] 3 All ER 207
1976
ChD
Templeman J
Insolvency, Company
The collector of taxes distrained on the goods of the company under section 61 TMA 1970 for unpaid taxes and the company entered into a walking possession agreement. Before the collector had sold the goods, and completed the distress, the company entered into voluntary winding-up and a liquidator was appointed. There was a deficiency of £91,000, with preferential creditors of £31,000 and assets of £25,000 including the distrained goods. The goods were later sold with the consent of the collector for £10,500. The collector claimed payment in full of the unpaid tax from the proceeds of sale of the goods. The liquidator contended that the Crown could not assert its right to distrain in order to be paid in full, but by section 319(5) CA 1948 (which concerned preferential payments; the Crown's claim for unpaid tax was a preferential debt) was only entitled to rank pari passu with other preferential creditors. It was argued that since the Crown was distraining for a preferential debt, it was bound by section 319(5) which provided for pari passu distribution among preferential creditors. Held: The collector was entitled to distrain by taking possession prior to the date of the winding-up and then to complete it unless there were special reasons rendering it inequitable for him to do so. No distinction was to be drawn in this context between distraint by a landlord and distraint by the collector. The effect of section 319(5) ranking preferential debts pari passu was not a special circumstance which rendered it inequitable for the distress to be completed. The completion of the distress would not be incompatible with the apparently provisions of CA 1948. CA 1948 distinguishes between distress, whether by a landlord or the Crown, and execution. S228 refers to the four remedies of attachment, sequestration, distress and execution. S371(7) deals with distress by landlords or other person and s325 deals with execution or attachment. Templeman said: "In my judgment, it is not possible to extract distress by the Crown from distress in general in section 319 and include it somehow or other in section 325, which is not dealing with distress."
The court rejected the argument that the collector had abandoned or prejudiced his right of distress by accepting a walking possession agreement: "In my judgment, the property of a company, which is directed by section 302 [now section 107 IA 1986] to be applied for the benefit of the creditors subject to preferential payments, is the property subject to such rights as were exercised prior to the date of the winding-up. At the date of the winding-up in the present case, the goods were in the possession of the collector, and he had power to sell them in order to discharge unpaid taxes. The property of the company at the date of the winding-up consisted only of its right to any surplus realised on that sale."
Taxes Management Act 1970 61 - Companies Act 1948 319(5)
1 Cites

1 Citers



 
 Ayerst (Inspector of Taxes) -v- C & K (Construction) Ltd; HL 1976 - [1976] AC 167
 
In re Dynamics Corpn of America [1976] 1 WLR 757
1976
ChD
Oliver J
Insolvency
No allowance is made in an insolvency for exchange rate fluctuations which affect the sterling value of a debt in foreign currency after the date of the winding up order. The purpose of the rule that debts are valued at the date of winding up is to give effect to the principle of pari passu distribution. It is a principle of fairness between creditors: "It is only in this way that a rateable, or pari passu, distribution of the available property can be achieved, and it is, as I see it, axiomatic that the claims of creditors amongst whom the division is to be effected must all be crystallised at the same date . . for otherwise one is not comparing like with like . ."
1 Citers


 
Herbert Berry Associates Ltd -v- Inland Revenue Commissioners
2 Jan 1976
CA

Insolvency, Company

1 Cites

1 Citers



 
 Aluminium Industrie Vaassen B V -v- Romalpa Aluminium Ltd; CA 16-Jan-1976 - [1976] 1 WLR 676
 
Herbert Berry Associates Ltd -v- Inland Revenue Commissioners; re Herbert Berry [1977] 1 WLR 1437; [1977] 1 All ER 161
1977
HL
Lord Simon of Glaisdale, Lord Russell
Litigation Practice, Insolvency, Landlord and Tenant
The principle to the effect that the court should exercise its discretion to restrain a distress levied by a landlord before the commencement of a winding-up only where there were special circumstances rendering it inequitable that he should be permitted to do so, applies also to a distress levied by the Crown under a statutory duty. Lord Russell: "Finally section 325 cannot avail the liquidator: . . It was suggested that distraint was a form of execution; but Parliament has quite clearly distinguished distress and execution: see section 228 of the 1948 Act" and "So far as concerns section 325 I cannot conceive a more deliberate restriction to two only of methods of proceeding - I use the word in a non-technical sense - against the property of a company." S61 TMA 1970 and s319 CA 1948 could quite easily sit together. Section 61 imposes on the collector a statutory duty to distrain. Under section 319(7), a distraint (even if completed by sale) within 3 months of the winding-up order charges the distrained goods or their proceeds of sale with the preferential debts. Subject to that, and the discretion of the court to restrain completion of an uncompleted distress, the distrainor keeps the good distrained. Accordingly, in a voluntary winding-up, the distraint, even if incomplete, was permitted to disturb the pari passu distribution of preferential debts. The distrained assets are not assets of the company available for distribution within sections 302 or 319(5). There was a need for a lis to support an application for an asset freezing injunction. "The primary sense of action as a term of legal act is the invocation of the jurisdiction of the court by writ."
Companies Act 1948 325 - Taxes Management Act 1970 61
1 Cites

1 Citers


 
Ramsey -v- Hartley [1977] 1 WLR 686
1977
CA
Lawton LJ
Insolvency
The court considered the sale of a cause of action by the trustee in bankruptcy: "Now, the sale of a cause of action by a trustee can only be effected by an assignment. It vests in the trustee in the first place because it is deemed to have been duly assigned to him . . The legal process by which it gets to him must operate to vest it in the person to whom he sells it. If this were not so, such a cause of action would be of no value to the creditors unless the trustee himself tried to enforce it. To do so, unless success was assured, would require the expenditure of money which would otherwise be available for distribution among the creditors. To assign the cause of action for good consideration to another person who was willing to try to enforce it could be a sensible way of disposing of the bankrupt's assets."
1 Citers



 
 Ezekiel -v- Orakpo; CA 1977 - [1977] QB 260
 
Re Humberstone Jersey Ltd (1977) 74 LS Gaz 711
24 Jan 1977
CA
Scarman LJ
Insolvency
A manufacturing company was supplied with machines on terms that they were to be installed within 30 days. The installation was not completed for another 6 months and the company claimed damages for breach of contract. The supplier served a statutory demand on the company for the cost of the machines and petitioned on the basis of that debt. Held: Because of the unquantified claim by the company for damages, the supplier could not rely on the statutory demand. It was not possible to say that there was any quantified sum due, indeed it was possible that nothing was owed.
1 Citers


 
Halliard Property Co Ltd -v- Jack Segal Ltd [1978] 1 WLR 377; [1978] 1 All ER 1219
1978

Goulding J
Landlord and Tenant, Insolvency
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.
1 Citers


 
In re D H Curtis (Builders) Ltd [1978] Ch 162
1978
ChD
Brightman J
Insolvency
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.
1 Citers


 
Re Associated Travel Leisure Ltd [1978] 2 All ER 273
1978


Insolvency

1 Citers


 
Re JN 2 Ltd [1978] 1 WLR 183; [1977] 3 All ER 1104
1978
ChD
Brightman J
Company, Insolvency
The court will require any dispute as to the status or locus standi of a party to be resolved in separate proceedings before a winding-up petition is heard. The Court highlighted the extent and applicability of Section 224(1) of the 1948 Act, observing: "There seems to be no doubt that entry on the register is an essential qualification for a contributory who desires to present a petition, if he is not the original allottee and if the shares have not devolved on him through the death of a former holder;
for if neither condition is satisfied, section 224(1)(a)(ii) requires that the shares must have been held by him and registered in his name for at least six months during the preceding 18 months. Plainly, if a transferee is not and never has been on the register, he cannot satisfy that condition. And it would not seem to be an answer that he ought to have been on the register, unless, perhaps, the company has been ordered to place him on the register and has disobeyed that order."
Companies Act 1948 224(1)
1 Citers


 
In re Gerald Cooper Chemicals Ltd [1978] Ch 262
1978
ChD

Insolvency, Company
A business might be found to have been conducted in such a way as to defraud creditors even though only one act of defrauding had been found and one creditor defrauded.
1 Citers


 
Sowman -v- David Samuel Trust Sowman v David Samuel Trust [[1978] 1 WLR 22
1978
ChD
Goulding J
Company, Insolvency
When considering a mortgage created by a corporate debtor, the rights under the debenture are not the property of the mortgagor but that of the mortgagee. It was a case where a company which had created the debenture equivalent to the mortgage had gone into liquidation: "Winding up deprives the receiver, under such a debenture as that now in suit, of power to bind the company personally by acting as its agent. It does not in the least affect his powers to hold and dispose of the company's property comprised in the debenture, including his power to use the company's name for that purpose, for such powers are given by the disposition of the company's property which it made (in equity) by the debenture itself. That disposition is binding on the company and those claiming through it, as well in liquidation as before liquidation, except of course where the debenture is vulnerable under [various sections of the Companies Act] or is otherwise invalidated by some provision more applicable to the winding up.
. . The view of the authorities which I have just stated is also fatal, I think, to Mr Monckton's alternative submission that the sale by the receiver is a disposition of the company's property avoided by section 227 of the Companies Act 1948 . . In truth, the rights and powers given by the debenture are themselves property, but not property of the company, and if they are not extinguished by the fact of winding up, their enforcement or exercise is not within the scope of section 227 at all."
Companies Act 1948 227
1 Citers



 
 In Re Capital Annuities Ltd; ChD 1979 - [1979] 1 WLR 170
 
Re Allobrogia Steamship Corporation [1979] 1 Lloyd's Rep 190
1979

Slade J
Insurance, Insolvency
The court considered the effect, on the insolvency of the insured, of "pay to be paid" conditions in contracts of insurance. It was asked to order the winding–up of a foreign registered company. The company had to own assets within the jurisdiction of the English court which could be realised in a winding-up for the benefit of creditors; and that, in turn, depended on whether the company had any realistic prospect of success in a claim against its insurers (a P&I Club). The rules of that Club included a "pay to be paid" condition. The petitioners had obtained judgments against the company in respect of loss of cargo. Liability under those judgments was a risk covered by the company's membership of the Club. on the making of a winding-up order, the company's rights against the Club in respect of its indebtedness to the petitioners would be transferred to the petitioners under the provisions of section 1(1) of the 1930 Act. Held: The Club faced a dilemma. Either the insolvency did, ex hypothesi, render impossible compliance with the "pay to be paid" condition; or it did not. If the latter, then it the claim was not valueless; if the former, then the "pay to be paid" condition would have the substantial effect of altering the rights of the parties under the contract upon the insolvency of the company, and so had to be struck down by section 1(3) of the 1930 Act: "The use of the phrase 'directly or indirectly' in s.1(3) shows that provision in a relevant contract can fall foul of s.1(3), even though it does not expressly and in terms purport to avoid the contract or alter the rights of the parties upon the happening to the insured of any of the relevant events. The effect of the word 'indirectly' is in my judgment that any provision in such a contract which has the substantial effect of avoiding a contract or altering the rights of the parties upon the happening to the insured of any such events is invalidated, even though the contract does not in terms so provide." and 'The manifest purpose of s.1(3) is to make certain that, in any of the events specified in s.1(1), the third party shall be able to take the full benefit of the rights against the insurer, unaltered and undiminished by any provision in the contract which is designed directly or indirectly to cancel, prejudice or reduce such rights in the event of one or more of such events taking place.'
Third Parties (Rights Against Insurers) Act 1930 1(3)
1 Citers



 
 In re Mesco Properties Ltd; ChD 1979 - [1979] 1 WLR 558
 
Gourdain -v- Nadler R-133/78; [1979] EUECJ R-133/78
22 Feb 1979
ECJ

European, Insolvency
Brussels Convention. Bankruptcy and proceedings relating to the winding-up of insolvent companies or other legal persons. Action for making good the deficiency. - "it is necessary, if decisions relating to bankruptcy and winding-up are to be excluded from the scope of the Convention, that they must derive directly from the bankruptcy or winding-up"
Europa 1. The concepts used in article 1 of the Convention which serve to indicate its scope must be regarded as independent concepts which must be interpreted by reference, first, to the objectives and scheme of the convention and, secondly, to the general principles which stem from the corpus of the national legal systems. 2. Bankruptcy, proceedings relating to the winding-up of insolvent companies or other legal persons, judicial arrangements, compositions and analogous proceedings are proceedings founded, according to the various laws of the contracting parties relating to debtors who have declared themselves unable to meet their liabilities, insolvency or the collapse of the debtor's creditworthiness, which involve the intervention of the courts culminating in the compulsory "liquidation des biens" in the interest of the general body of creditors of the person, firm or company or at least in supervision by the courts. If decisions relating to bankruptcy and winding-up are to be excluded from the scope of the convention they must derive directly from bankruptcy or winding-up and be closely connected with proceedings for the "liquidation des biens" or the "reglement judiciaire".
1 Citers

[ Bailii ]
 
Sharpe Re, Ex parte Trustee of the Bankrupt -v- Sharpe [1980] 1 WLR 219; (1980) 39 P & CR 459; [1980] 1 All ER 190
30 Jul 1979
ChD
Browne-Wilkinson J
Insolvency, Land, Trusts
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."
1 Citers


 
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