The directors of a benefit building society which had both borrowing and non-borrowing members, and had sustained losses which absorbed the profits allocated to members of both classes, issued a circular to the members which brought its operations to a close, and subsequently it was ordered to be wound up by the Court. The rules provided that borrowing members (who had to give heritable security for their advances) could redeem their bonds either (1) by giving three months’ notice that they renounced their shares and paying the amount of their advances, under deduction of instalments paid and interest thereon, or (2) by payment of the whole sum borrowed, retaining their shares; and that when their payments into the society, together with the share of profits, were equal to the amount advanced, then their payments and membership of the society should cease. There were no outside creditors to be settled with in the winding-up. Held, in a Special Case stated to have the allocation of losses inter se decided on ( rev. judgment of First Division), that the question was not one to be decided on the maxim that one who shares the profit should share the loss, but on the effect of the contract contained in the rules; that the case was ruled by the decision of the House of Lords in Brownlie v. Russell, March 9, 1883, L.R., 8 App. Cas. 235, and 20 SLR 481, and therefore that the borrowing members were entitled to have their securities discharged in terms of the rules, and not bound to share the losses of the society.
Lord Chancellor (Herschell), Lord Blackburn, and Lord Fitzgerald
 UKHL 128, 24 SLR 128
Updated: 04 July 2022; Ref: scu.637737