Scottish Court of Session Decisions

The Miraflores Gold Syndicate, Limited, Glasgow, registered under the Companies Acts, went into voluntary liquidation upon 14th December 1893, when J. L. Stewart, secretary of the company, was appointed liquidator. A committee of advice composed of shareholders was also appointed. At the date of the liquidation the liabilities of the company amounted to £20, and there was a sum in bank belonging to the company amounting to £130 or thereby. Thereafter the liquidator, at the request of a number of the shareholders of the company, took proceedings against two of the members of the said committee, who had been promoters and directors of the Syndicate, for recovery from them of the value of 35,000 £1 shares of the Totumo Alluvial Gold Company, Limited, which had been formed for the purpose of acquiring from or through the said Syndicate certain lands, mines, and mining rights in the district of Miraflores, in the United States of Colombia, and which 35,000 £1 shares it was alleged they had received under and in terms of a secret agreement with the vendors which had not been disclosed to the shareholders of the Syndicate.

In May 1894 a petition was presented by Colonel Lysons and other shareholders of said Syndicate, including James Dunnachie and William Stewart, under section 141 of the Companies Act 1862, praying for the removal of the liquidator and for the appointment of a fit person as voluntary liquidator. The petitioners alleged, inter alia, that it had been intended that the liquidator should immediately after his appointment pay off the liabilities of £20 and forthwith divide the balance among the shareholders, that he had raised the action above referred to without consultation with the committee of advice, and that it was believed that he contemplated calling up the remaining uncalled capital of the company to enable him to carry it on.

Answers were lodged by Stewart. He stated that he had been requested to take the proceedings complained of by a number of shareholders in the Syndicate; that portions of the shares illegally received by James Dunnachie and William Stewart had been gifted to several of the persons who were conjoined with them as petitioners, and that of the other petitioners a large proportion were relatives of, or conjunct

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and confident, with James Dunnachie and William Stewart and the other holders of said shares; and that the petition was an improper attempt, instigated by James Dnnnachie and William Stewart, to put an end to the proceedings against them.

The petition was continued to allow a general meeting of the shareholders of the company to be held.

At the general meeting, which was held on 1st May 1895, twelve members expressed approval of the petition and thirteen expressed disapproval. Upon a poll being demanded it appeared that, with proxies, twenty-two shareholders representing 492 votes had voted for approval of the petition, and twenty-two shareholders representing 349 votes for disapproval.

Upon the petition being again called the petitioners laid before the Court certain correspondence which had passed between the liquidator on the one hand and James Dunnachie and William Stewart on the other, with the view of showing that the liquidator had received 700 shares in the Totumo Alluvial Gold Company from James Dunnachie and William Stewart as recompense for services given by him in promoting the two companies, and that he had not been satisfied with this remuneration, but had claimed that his services were entitled to more substantial recognition.

Argued for the petitioners—(1) The liquidator had no right to raise this action on his own responsibility, and it now appeared that the majority of shareholders—and this was purely a shareholders' liquidation— were against him. The minority might litigate at their own expense, but the liquidator was not entitled to use the company's funds for that purpose. (2) From letters produced it rather appeared that the proceedings for which the liquidator took credit had really been brought in a spirit of revenge. He himself had had 700 shares of the Totumo Company allotted to him, but he thought he should have had more. If he had got what he wanted there would have been no action. He was therefore not an impartial party, and should be removed. (3) Removal did not necessarily cast a slur upon the character of the liquidator removed. It was ordered wherever the Court thought in the interests of the company that another person would be more suitable having respect to the special circumstances that had emerged—Buckley's Notes on sec. 141, in re Marseilles Extension Railway and Land Company, 1867, L.R., 4 Eq. 692; re Tavistock Iron Works Company, 1871, 19 Weekly Reporter, 672; Sir John Moore Gold Mining Company, 1879, L.R. 12 C.D. 325; in re Adam Eyton, Limited, 1887, L.R. 36 C.D. 299.

Argued for the respondent—He was bound to raise this action in the interests of the shareholders, and could not take the advice of the committee in this matter because they were interested parties. He was acting as liquidator, and that he happened, in his private capacity, to hold shares in the Totumo Company was beside the question. He held these shares when he was unanimously appointed liquidator; there was no reference to them in the petition, and it was too late now to introduce this new and really irrelevant ground of complaint. He showed his impartiality in bringing this action, because it was against his interest to do so. He now saw what he did not see when he took the shares, that he would have to give them up, and this he was quite willing to do. If the votes given at the general meeting were scrutinised, and the votes of those personally interested set aside, there would he a majority in favour of the liquidator's action.

At advising—