Scottish Court of Session Decisions

On 4th November 1884 the British Finance Company (Limited) obtained a judgment in default against English's Coasting and Shipping Company (Limited) for a sum of £69, 2s. for alleged debt, with £5, 14s. for costs—making together £74, 16s.—in an action raised in the High Court of Justice, Queen's Bench Division, Liverpool District Registry. Both these companies were registered under the Companies Acts, and had their registered offices in Liverpool, or elsewhere furth of Scotland.

On 15th November 1884 the British Finance Company registered this judgment in the Books of Council and Session under the Judgments Extension Act 1868. They then obtained the concurrence and authority of the Lord Ordinary on the Bills for putting the warrant of arrestment contained in the extract registered certificate of judgment into execution, and caused the vessel “Magdala,” of Bristol, in which English's Coasting and Shipping Company had a beneficial interest, and which was at Grangemouth, to be arrested and dismantled, with the result, as was averred in this action, that she lost the benefit of a charter she was then under to proceed to Demerara.

English's Coasting and Shipping Company (Limited) then raised this action against the British Finance Company (Limited), concluding for reduction of the “extract registered certificate of judgment and warrant of the Lords of Council and Session thereon, dated the 10th day of November 1884, at the instance of the said defenders against the said pursuers, having concurrence and authority by Lord Kinnear, Ordinary officiating on the Bills, thereon, for putting the warrant of arrestment contained in said extract into all due and legal execution in so far as regards maritime subjects, dated the 15th day of November 1884,” with all that had followed thereon, and also concluding for £250 of damages.

The pursuers pleaded—“(1) The said registration in the Books of Council and Session at Edinburgh of said judgment, and the arrestment and whole proceedings thereon, being incompetent, wrongous, and illegal, the pursuers are entitled to decree of reduction as craved.”

The defenders averred that there were only four shareholders in the pursuers' company, and pleaded, inter alia—“(1) The pursuers have no title to sue, in respect that they are not a company in the sense of the Companies Acts. (2) The defenders are not subject to the jurisdiction of the Courts of Scotland. (3) The pursuers having no assets sufficient to pay the costs of the present action, are bound to find caution for the expenses of process; or the liquidator, if appointed, is bound to sist himself pursuer.”

The Lord Ordinary ( Fraser) on 16th October 1885 appointed the pursuers to find caution for expenses within fourteen days, and on 7th November following, in respect the pursuers had failed to find caution for expenses, dismissed the action.

The pursuers reclaimed.

After hearing counsel, the Court on 19th December 1885 appointed the pursuers to put in a minute specifying the amount and description of the assets of the company. In obedience to this order the pursuers lodged a minute, stating that the assets of the company amounted to £639, 0s. 1d., which chiefly consisted of reversionary rights in two ships, of which the “Magdala” was one, and upon both of which there were mortgages.

The pursuers argued—The assets of the company, as stated in the minute, were sufficient to enable them to pay the expenses. But further, section 69 of the Companies Act 1862 [which provides that where any limited company is plaintiff or pursuer in any action, any judge having jurisdiction may, if it appears by credible testimony that there is reason to believe that if the defendant be successful in his defence the assets of the company will be insufficient to pay his costs, require sufficient security to be given for such costs, and may stay all proceedings until such security is given] was not applicable, because the pursuers here were not truly in petitorio. The grounds of reduction were that the decree was not registrable under the Judgments Extension Act 1868, as the Court which pronounced judgment was not one of the Courts mentioned in that Act; and further, because the pursuers were not subject to the jurisdiction of the Scottish Courts. They ought to be in as favourable a position as the suspenders of a decree in absence, and should not be found liable to find caution for expenses on the general rule that defenders were not so liable— Stephen v. Skinner, May 31, 1860, 22 D. 1122; Accidental and Marine Insurance Company v. Mercati, L.R., 3 Eq. 200; Buckley, p. 170. Moreover, this company was not a limited company within the meaning of section 69, as there were only four shareholders. The Lord Ordinary should have “stayed proceedings,” and not dismissed the action.

Page: 290↓

The defenders replied—The only question was, whether the Lord Ordinary had exercised properly the discretion given him by section 69 of the statute. There was here an affidavit that the pursuers were unable to pay the expenses. Even supposing that the pursuers had the reversionary rights stated in their minute, those were not the kind of assets that would form a good answer to this demand— Lydney and Wigpool Iron Ore Company v. Bird, 23 Ch. D. 358; Lashoe Mining Company v. Ferguson, L.R., 2 Eq. 371. The summons here contained not only reductive conclusions, but also a conclusion for damages. According to the English practice, the order pronounced upon the defendant was to find security for costs, and failing his doing so the action was to stand dismissed— Moscow Gas Company v. International Financial Society, L.R., 7 Chan. 225, per Jessel; Daniel's Chan. Practice, 1954; La Grange v. M'Andrew, 4 Q.B.D. 210. The pursuers here were a limited company, and the Court would not go into the question of the number of shareholders.