Food Controller v Cork
| Jurisdiction | England & Wales |
| Judge | The Earl of Birkenhead,Lord Atkinson.,Lord Shaw of Dunfermline.,Lord Wrenbury. |
| Judgment Date | 25 July 1923 |
| Judgment citation (vLex) | [1923] UKHL J0725-2 |
| Court | House of Lords |
[1923] UKHL J0725-2
House of Lords
Earl of Bickenhead.
Lord Atkinson.
Lord Shaw.
Lord Wrenbury.
Lord Carson.
After hearing Counsel as well on Monday the 4th, as Tuesday the 5th, days of June last, upon the Petition and Appeal of His Majesty's Food Controller and the Board of Trade, praying, That the matter of the Order, set forth in the schedule thereto, namely, an Order of His Majesty's Court of Appeal, of the 10th of April 1922, might be reviewed before His Majesty the King in His Court of Parliament, and that the said Order might be reversed, varied, or altered, or that the Petitioners might have such other relief in the premises as to His Majesty the King in His Court of Parliament might seem meet; as also upon the printed Case of William Henry Cork, the liquidator of H. J. Webb and Company (Smithfield, London), Limited, lodged in answer to the said Appeal; and due consideration had this day of what was offered on either side in this Cause:
It is Ordered and Adjudged, by the Lords Spiritual and Temporal in the Court of Parliament of His Majesty the King assembled, That the said Order of His Majesty's Court of Appeal, of the 10th day of April 1922, complained of in the said Appeal, be, and the same is hereby, Affirmed, and that the said Petition and Appeal be, and the same is hereby, dismissed this House: And it is further Ordered, That the Appellants do pay, or cause to be paid, to the said Respondent the Costs incurred by him in respect of the said Appeal, the amount thereof to be certified by the Clerk of the Parliaments.
My Lords,
This is an Appeal against an Order of the Court of Appeal reversing the decision of Mr. Justice P. O. Lawrence.
The question for decision shortly stated is, whether the admitted bankruptcy rule that Crown debts have no claim to priority of payment, other than is given by statute, obtains equally under the statutes now in force in the case of winding up an insolvent company. The Trial Judge decided that the Crown's prerogative right of priority still exists in the case of the winding up of a company, though extinguished in the case of bankruptcy. The Court of Appeal decided that the effect of the statutes now in force is that the rule is the same in both cases and that the Crown's prerogative right of priority in the winding up of an insolvent company has been extinguished.
I am of opinion that the decision of the Court of Appeal was right and that the Appeal therefore fails.
The matter is really concluded by the view which I understand that your Lordships have formed of the joint effect of sections 186 and 209 of the Companies Consolidation Act, 1908, for I think that the earlier Acts are only helpful to the history of the matter. The sections referred to are as follow:—
"Section 186. The following consequences shall ensue on the voluntary winding up of a company—
"(i) The property of the Company shall be applied in satisfaction of its liabilities pari passu, and, subject thereto, shall, unless the articles otherwise provide, be distributed among the members according to their rights and interests in the Company."
"Section 209.—(1) In a winding-up there shall be paid in priority to all other debts—
"(A) All parochial or other local rates due from the Company at the date hereinafter mentioned, and having become due and payable within twelve months next before that date, and all assessed taxes, land tax, property or income tax assessed on the Company up to the fifth day of April next before that date, and not exceeding in the whole one year's assessment;
"(B) All wages or salary of any clerk or servant in respect of services rendered to the Company during the four months before the said date, not exceeding fifty pounds; and
"(C) All wages of any workman or labourer not exceeding twenty-five pounds, whether payable for time or for piece work, in respect of services rendered to the Company during the two months before the said date:
(To which a proviso is added.)
"(D) Unless the Company is being wound up voluntarily for the purposes of reconstruction or of amalgamation with another company, all amounts (not exceeding in any individual case one hundred pounds) due in respect of compensation under the Workmen's Compensation Act, 1906, the liability wherefor accrued before the said date, subject nevertheless to the provisions of section five of that Act."
"(2) The foregoing debts shall—
"(A) Rank equally amongst themselves and be paid in full, unless the assets are insufficient to meet them, in which case they shall abate in equal proportions and
"(B) In the case of a company registered in England or Ireland, so far as the assets of the Company available for payment of general creditors are insufficient to meet them, have priority over the claims of holders of debentures under any floating charge created by the Company and be paid out of any property comprised in or subject to that charge."
It has been pointed out and, indeed, is obvious, that these two sections are, if considered separately, irreconcilable; for it is impossible at one and the same time to apply the property of the Company in satisfaction of its liabilities pari passu, and to allow the preferences permitted by section 209. Obviously, therefore, the sections must be construed together and the most harmonious construction evolved which the language and the evident intention of both permit. The effect of section 209 is to allow priority to specified Crown debts, to specified wages, and to workmen's compensation. It necessarily follows that the generality of the language of section 186 must be supplemented and corrected by the particularity of the exceptions enumerated in section 209.
And still another conclusion would seem to be not less inevitable. At the time the Act of 1908 became law, it was fairly arguable that under the general law of prerogative, and in virtue of various statutory provisions, Crown debts were entitled to a general priority upon the winding up of the company. No such claim can survive the particular enumeration contained in section 209. For the Legislature has indicated the general principle in section 186, namely, that the property is to be distributable pari passu, but in section 209 it enumerates certain exceptions which are to be admitted from the general rule already laid down. Among these exceptions are certain particular Crown debts. It would have been plainly impossible to adopt this form of legislation if it had been intended that other Crown debts should retain a priority inconsistent alike with the general language of section 186 and with the motive which led to the specification of admitted exceptions contained in section 209.
My decision therefore is based simply upon inferences which seem to me to be necessary as to the effect of the clauses under consideration. The construction which I adopt makes it superfluous to embark upon any general consideration of the prerogative, or of the difference between Crown debts as the term was used generations ago, and that term in a changed age, when it governs sums of money owing to the immense trading establishments which various Government departments have been authorised to create.
I mention, lest I appear to have ignored it, the Irish case of In re Galicon. Chief Baron Palles pointed out in his judgment that there is a vital difference between the Irish and the English bankruptcy legislation in a very material respect, for the English Act provides that "save as provided by this section, all debts provable under the bankruptcy shall be paid pari passu." And he added the observation that if any such provision had been part of the Irish Bankruptcy law he would have taken the view that the Crown had lost all priority for any debts other than that provided by section 49 of the Irish Bankruptcy Act of 1872. I was somewhat surprised that the Attorney General founded himself upon a decision which, rightly considered, re-enforces the conclusion I have reached in the present case.
I move that the Appeal be dismissed with costs.
My Lords,
The question for decision in this case is whether the Crown has any prerogative right to require payment of Crown debts due from a company which is insolvent and in voluntary liquidation—in priority to all other creditors of the company—or in priority to all such creditors of the company as are not given priority by the Companies Acts.
The facts and circumstances out of which this question has emerged may be shortly stated: H. J. Webb & Co., Ltd. (Smithfield, London), now insolvent and in liquidation (for convenience styled the Company), was employed by the Food Controller, acting under the powers conferred upon him by the New Ministries and Secretaries Act, 1916, and by certain Regulations made under the Defence of the Realm Act, 1914, to sell on commission and distribute large quantities of frozen rabbits which, to meet the threatened shortage of food, the Board of Trade had purchased from certain State Governments in Australia, paid for, and imported into this country.
The course of business followed was this: This Company, acting on behalf of the Food Controller, sold and delivered these rabbits to purchasers throughout England, collected from those purchasers the purchase money, which it was bound to pay over, less commission, to the Food Controller. On the 9th July 1920, when the Company went into liquidation, it owed to the Food Controller the large sum of 9,689 l. 5 s. 10 d. in respect of money received for the rabbits sold but not accounted for. This is the debt for which the Crown claim priority.
I concur with the Master of the Rolls in thinking that the expressions "Crown debts" and "debts due to the Crown" are unfortunate expressions, inasmuch as they suggest, at least to the...
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