Scottish Court of Session Decisions

The Companies (Consolidation) Act 1908 (8 Edw. VII, cap. 69) enacts—Section 188—“(1) Every liquidator appointed by a company in a voluntary winding-up shall, within seven days from his appointment, send notice by post to all persons who appear to him to be creditors of the company that a meeting of the creditors of the company will be held.… (2) At the meeting to be held in pursuance of the foregoing provisions of this section the creditors shall determine whether an application shall be made to the Court for the appointment of any person as liquidator in the place of or jointly with the liquidator appointed by the company, or for the appointment of a committee of inspection, and if the creditors so resolve at!application may be made accordingly to

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the Court at any time not later than fourteen days after the date of the meeting, by any creditor appointed for the purpose at the meeting. (3) On any such application the Court may make an order either for the removal of the liquidator appointed by the company and for the appointment of some other person as liquidator, or for the appointment of some other person to act as liquidator jointly with the liquidator appointed by the company or for the appointment of a committee of inspection either together with or without any such appointment of a liquidator, or such other order as, having regard to the interests of the creditors and contributories of the company, may seem just.”

Robert W. Webb, yarn agent, 77 Queen Street, Glasgow, a creditor of Archibald Hall & Company, Limited, in liquidation, with the consent and concurrence of H. E. Borland, O.A., Glasgow, the voluntary liquidator, presented a petition to the Court under the Companies (Consolidation) Act 1908, sec. 188, for the appointment of a joint liquidator and of a committee of inspection in the voluntary winding-up of the company.

The petition set forth, inter alia—“1. That Archibald Hall & Company, Limited (hereinafter styled the company), was registered in Scotland on 2nd April 1919. The nominal capital of the company was £7500 divided into 7500 ordinary shares of £1 each. 2. That by the memorandum of association the objects for which the company was formed were, inter alia, to take over and acquire the hosiery business carried on by Mrs Isabella Wylie, widow, residing in Dean Street, Stewarton, under the firm name of Archibald Hall & Company, with the whole business assets belonging to the said Archibald Hall & Company, and to carry on the said business. 3. That the issued capital of the company is now 5500 shares of £1 each fully paid. 4. That the company began business immediately on its incorporation. The business has been unsuccessful, and the assets of the company are of uncertain value but will not suffice to pay the debts in full. 5. That at a general meeting of the shareholders of the company held on 23rd December 1921 an extraordinary resolution was passed that the company be wound up voluntarily, and that H. E. Borland, chartered accountant, 216 West George Street, Glasgow, be appointed liquidator for the purposes of such winding-up. The said H. E. Borland accepted the office and has since acted as liquidator of the company. 6. That in terms of section 188 of the Companies (Consolidation) Act 1908 the liquidator duly convened a meeting of the creditors of the company to be held within 216 West George Street, Glasgow, on 11th January 1922. The meeting was largely attended, and the following resolution was passed:—‘Mr Robert W. Webb was unanimously appointed chairman of the meeting.… The creditors unanimously resolved that an application be made to the Court (1) for the appointment of Mr Hugh M. Mackie, C.A., Glasgow, as liquidator jointly with Mr H. E. Borland, the liquidator appointed by the company, and (2) for the appointment of Mr Robert W. Webb, Mr T. Mackie, and Mr D. Buchanan as a committee of inspection. The chairman was appointed by the meeting to make the necessary application to the Court.’ … 6. That this petition is presented under and in terms of the Companies (Consolidation) Act 1908, and in particular section 188 thereof.”

No answers were lodged.

Argued for the petitioner—There was statutory authority for the appointment of a committee of inspection. It also served a good purpose, for it provided a body with which the liquidators could consult on questions of policyandother matters of difficulty. A committee of advice had frequently been appointed by the Court without the sanction of statute— Liquidators of Pattisons, Limited, 1902, 4 F. 1010, per Lord Adam at p. 1013, 39 S.L.R. 792. The committee of inspection would discharge the same functions as a committee of advice, and would exercise a general power of inspection. Although the powers of the proposed committee of inspection were undefined, so were the powers of a committee of inspection in a voluntary winding-up in England. Any definite powers given to a committee of inspection in England were limited to cases of winding up by the Court.. Counsel also referred to Belhaven Engineering and Motors, Limited, October 16, 1912, 50 S.L.R. 19, per Lord President Dunedin, and an article entitled Committees of Inspection and Scottish Liquidations which appeared in the Scots Law Times (21st January 1922, p. 9).