Scottish Court of Session Decisions

The Rawyards Coal Company (Limited) was incorporated under the Companies Acts 1862 to 1880, on or about the 19th day of August 1872, and had its registered office at 8 High Street, Airdrie. The capital of the company was by the memorandum of association declared to be £30,000, divided into 3000 shares of £10 each. Of these only 2644 were alloted and fully paid up.

At an extraordinary general meeting of the company, held within the registered office on 1st November 1888, the following extraordinary resolutions were adopted, viz.—That it had been proved to the satisfaction of the company that the company could not, by reason of its liabilities, continue its business, and that it was advisable to wind up the same; and that accordingly the company should be wound up voluntarily under the provisions in that behalf of the Companies Acts 1862 and 1867, and that Gavin Black Motherwell, solicitor, Airdrie, should be and was appointed liquidator for the purpose of winding-up the affairs of the company. At the said meeting of 1st November the only two shareholders actually present who opposed the resolution to wind-up were William Mitchell, Airdrie, holding 90 shares, and John Laurie, Airdrie, both directors of the company, who held certain proxies, and the total vote was 573 in favour of the resolution and 53 against it. Upon the same date the said liquidator issued a circular to the shareholders, stating that it was proposed to form a new company, and to advertise, inter alia, the colliery for sale at the upset price of £3000, and requesting answers on or before 12th November.

Upon 3rd November the said William Mitchell presented a petition to have the liquidation put under the supervision of the Court, and to have an additional liquidator appointed. The petition proceeded upon the facts that the indebtedness of the company was greater eight years ago than it was then; that coal had lately risen, and was still rising in price; that the present was therefore not a time to sell the works; and that as various complicated questions as to the management might be expected to arise it was desirable to have the liquidation carried on under the supervision of the Court and a second liquidator appointed.

Answers were lodged for the company and for the liquidator thereof, in which it was stated that “from the date of the incorporation of the company in 1872 until 1875 the company was entirely occupied in sinking pits and opening up the collieries which had been acquired on lease. In 1875 the company began to put out coal for the market, and according to the balance-sheet issued as at 31st May 1876 the expenditure of the company upon pit-sinking, buildings, machinery, railways, &c., amounted to £40,513, 4s., which had been met by the paid-up

Capital	£22,494 0 0
And money borrowed chiefly from the Royal Bank	18,028 16
	£40,522 1 6

For the years 1877 and 1878 a dividend at the rate of 5 per cent. was declared. No dividend had been paid since 1878. At the present time the whole assets of the company could not be valued at more than from £10,000 to £12,000, while the indebtedness of the company amounted to £21,693, 9s. 9d., of which sum £10,643, 9s. 9d. was due to the British Linen Bank. In the spring and summer of 1888 repeated attempts were made to sell the colliery plant, &c., but without success. The same were exposed for sale by public roup at upset prices, which if obtained would not nearly pay the debts of the company.”

Upon 12th November no answers had been received to the liquidator's circular, and upon that day the colliery was advertised in the Glasgow Herald at the proposed upset price of £3000, the sale to take place upon 22nd November.

Upon 16th November a minute was lodged by John Laurie, and other twelve shareholders of the company, concurring in William Mitchell's petition, and at the urgent request of the petitioners' the case was put out for hearing in the Summar Roll of 21st November.

Upon the evening of 20th November another minute was lodged by William Mitchell and John Laurie, which was only brought to the knowledge of the company immediately before the hearing on 21st November. In the minute it was stated that the minuters were liable singuli in solidum along with the other directors for the sum of £10,463, 6s. 9d. due to the British Linen Bank, and were alleged to be

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also liable singuli in solidum along with said other directors for the payment of the sum of £4300 contained in a bond granted by the said company in favour of William Motherwell, chairman of the company, and father of the said liquidator. It was further stated that the minuters had been charged upon said bond, and had been sequestrated, but that said sequestration had been recalled by the Lord Ordinary and the case reclaimed to the First Division; also that the said John Laurie was creditor of the company for a further sum of £150. It was alleged that the upset price was too low, the notice of sale too short, and that the liquidator was a tool in the hands of his relations and friends, who were shareholders of the company, and desirous of acquiring the colliery at a low figure with the view of starting another company.

The Companies Act 1862 (25 and 26 Vict. cap. 89) provides, by sec. 147, that “when a resolution has been passed by a company to wind up voluntarily, the Court may make an order directing that the voluntary winding-up should continue, but subject to such supervision of the Court … and equally upon such terms and subject to such conditions as the Court thinks just;” and by sec. 149, that “the Court may, in determining whether a company is to be wound up altogether by the Court, or subject to the supervision of the Court, in the appointment of liquidator or liquidators, and in all other matters relating to the winding-up subject to supervision, have regard to the wishes of the creditors or contributories as proved to it by sufficient evidence … In the case of creditors regard shall be had to the value of the debts due to each creditor, and in the case of contributories to the number of votes conferred on each contributory by the regulations of the company;” and by sec. 150, that “where any order is made by the Court for winding-up, subject to the supervision of the Court, the Court may in such order, or any subsequent order, appoint any additional liquidator or liquidators.”…

Argued for petitioners—The petitioners here were both shareholders and creditors. They were largely interested in this colliery realising a good price. They could not claim to have the prayer of the petition granted as a matter of right, but where reasonable evidence was put forward in support of the allegation of prejudice, the Court regarded Such applications for a supervision order with favour. The statements made in their minute showed good grounds for distrusting the management of the present liquidator if uncontrolled— Brightwen & Company, &c. v. City of Glasgow Bank, November 27, 1878, 6 R. 244.

Argued for respondents—No ground had been stated for interfering with the conduct of this liquidation and proposed sale, which was approved of by the vast majority of the shareholders. It was only last night that the suggestion of conspiracy was made, and it was without foundation. The colliery had been in the market before, and therefore a long notice was unnecessary and undesirable, as it was being worked at a loss of £400 a-month. The upset price was the largest possible in the circumstances. No bid had been made when it was £5000, and the highest private tenders had been £3600 and £2700; both were withdrawn. It was conceded that even a creditor had no right to demand that such a petition should be granted, and here no relevant allegations had been made. The statements now offered were delayed without excuse till the last moment, and were not therefore to be regarded with favour. The matter was in the discretion of the Court, but by the terms of the Act regard must be had to the wishes of the majority.

At advising—