Scottish Court of Session Decisions

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Cite as: [1877] ScotLR 14_673, [1877] SLR 14_673

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SCOTTISH_SLR_Court_of_Session

Page: 673↓

Court of Session Inner House First Division.

Friday, July 20.

14 SLR 673

Graham and Others

v.

The Official Liquidator of the Edinburgh Theatre Company (Limited).

Subject_1Company
Subject_2Companies Acts 1862 and 1867
Subject_3Winding-up of Company —Expenses.
Facts:

As an ordinary rule, creditors of a company incorporated under the Companies Acts 1862 and 1867 will not be entitled to the expenses of bringing a second petition having the same purpose with one previously brought by other creditors.

Circumstances where creditors were held to be justified in presenting a second application of the kind, and where they were allowed their expenses by the Court.

Headnote:

Two petitions were presented to the Court praying for the winding-up of the Edinburgh Theatre, Winter Garden, and Aquarium Company (Limited) on the ground of its insolvency. The first was at the instance of Moxon & Son, and Brown Brothers & Company, and was dated April 5th 1877; the second was at the instance of Robert Graham and others, constituting a majority in number and value of the creditors of the company, and was dated April 11th. The first petition asked that the secretary of the company should be appointed official liquidator; the second suggested that the wishes of the creditors should be ascertained on that matter.

After parties had been heard a liquidator, who was not the company's secretary, was appointed by the Court under Moxon & Son's petition. Graham and others then applied for the expenses of their petition and of their compearance to oppose the appointment of the company's secretary as liquidator. The latter part of the motion was not opposed, and in support of the former it was stated that the second petition had been brought as it was doubtful whether Moxon's would be withdrawn or not. There was nothing in the Act of 1862 permitting a sisting of other parties, to which the creditors in the second petition, who were the great body of creditors, had, after meeting, asked Moxon & Son to agree. They had further wished the name of the secretary of the company withdrawn from being suggested as official liquidator.

The liquidator did not dispute the competency of the petition, but said that the second petition was unnecessary.

At advising—

Judgment:

Lord President—I should very much regret if it were to be held that in the ordinary case creditors of a company like the present, when they bring a second petition having the same purpose with one previously brought, were entitled to expenses. But undoubtedly there may be circumstances which will justify a second body of creditors in presenting an application of this kind.

The only question is, whether the circumstances of the present case are of such a nature? It is no doubt true that Moxon & Son and Others, who brought the first petition, represent a very small amount of debt, viz., about £300. But I do not know that that would be a sufficient reason for suspecting them of not being sincere in their desire to have the company wound up, and I can hardly say that that would justify a second petition at the expense of the estate. But I attach great importance to a meeting of creditors which afterwards took place, where a much larger amount of debt was represented. From that meeting a proposal came that other creditors should be sisted in the original petition, and that the name of the secretary as liquidator should be withdrawn. Moxon and others differed from the second petitioners in the person to be appointed as liquidator, though that of itself would not have justified another petition. It might only have justified an appearance. But the first petitioners ignored altogether the proposal to get some other liquidator than the secretary of the company, a proceeding for which I cannot conceive any good reason.

Page: 674↓

There was some reasonable apprehension that the first application might be withdrawn in the event the second petitioners were successful in securing the appointment of another liquidator.

In the special circumstances, I am disposed to think that that second petition was justifiable, particularly as the first petitioners were anxious, contrary to the wish of the general body of creditors, that the secretary of the company should be appointed liquidator. That appears to me a sufficient motive for the course taken by the other creditors.

Lord Deas, Lord Mure, and Lord Shand concurred.

Counsel:

Counsel for Official Liquidator— Pearson. Agents— Dalmahoy & Cowan, W.S.

Counsel for Graham and Others— Mackintosh. Agents— Davidson & Syme, W.S.
1877