Re Karsberg (B) Ltd
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE BIRKETT,LORD JUSTICE ROMER |
| Judgment Date | 29 November 1955 |
| Judgment citation (vLex) | [1955] EWCA Civ J1129-2 |
| Date | 29 November 1955 |
| Court | Court of Appeal |
[1955] EWCA Civ J1129-2
In The Supreme Court of Judicature
Court of Appeal
Lord Justice Birkett and
Lord Justice Romer
MR G. GLYNN BLACKLEDGE, Q.C., MR LINDSAY JOPLING, and Mr J. WOODHOUSE (instructed by & Bieber) appeared on behalf of the Appellants.
MR. JOHN VINELOTT (instructed by Messrs Harewood & Co.) appeared on behalf of the Respondents (petitioners).
I Will ask Lord Justice Romer to deliver the first Judgment.
This is an appeal from an order which Mr Justice Vaisey made on the 4th November last for the compulsory Winding up of a company called B. Karsberg Limited. The company the patition, as did also the great Majority of the creditors of the company. This is an appeal brought by the company and by the creditors, and by the creditors, and the Respondents to the appeal are the Patitioning Creditors. I will say althoughit is hardly necessary, perhaps, for me to say so, that it is always with hasitation and diffidonce that I differ from the view which Mr Justice Vaicey takes, and especially perhaps on company matters, of which he has such great experience; but I have come to the conclusion in this case that the appeal should be allowed, for reasone that I will state.
Certain facts and dates are undisputed, and it would be convenient, perhaps, if I were to refer to those at once. The Company was incorporated in September, 1949, as a private Company, with its registered office in London and with a nominal and issued capital of £ 10,000. Its objects, as stated in the patition, were to carry on business as manufactures, importers and exporters, factors, and agents for the sale of and wholesale and retail dealers in carpets, rugs, linoleum, mats, and other floor coverings and other objects set forth in its Memorandum of Association. The company is one of a group of six associated and closely linked companies, all carrying on business in London, At the times when the petitioners (who are a Mr and Mr Norman ) had transactions with karsberg Limited, and which transactions are the foundation of the present petition, all the companies to which I have referred, including Karsberg Limited, ware controlled, directly or indirectly, by a Mr and MsFradman. Theyware the Directors of this Company. The group carries onbusiness in several shops in North London ae sellers of furniture, carpets, and so on. The Petitioners claim to be creditors of the Company for a total sum of £5,350 under three allegad loans, all of which fell due for payment in June or July On the 12th July a Mr Lubbock and a Mr Fine were appointed Directors of this Company, at instence of certain creditore. in place of the Frwedmans. On the 15th July a debenture was issued to a certain creditor of the Company inorder to secure a caeh advance which that creditor made for the purposes of the Company. On the 19th July, Mr Fine was appointed Receiver under that dabenture; and on the same day heSent out to the creditors of all the companies in this group a letter which is in evidence on this petition. That letter after referring to the appointment of Mr Fine (both of whom, I may say, are chartered accountants and are partners in a of chartered accountants) as the Directors and referring to the debenture which I have mentioned, proceeded as follows: "The object of this letter is to invite you to submit to us immediately full and detailed particulars of your trading and other transactions with the above named Companies and any other undertaking with Mr Fredman has been connected. He would emphasiss that the action recently taken by and then they the Company to which the debenture had been given "has been directed to conserve the various undertakings concerned and to ensur that the position which is now under Investigation by us shall not in any way be allowod to . The action has been taken for the purpose of protecting all the creditors concerned and it is to be hoped that we may rely on your full co-operation in the investigation which we have to undertake and which from present indication will be most complicated. It is proposed to take the necessary steps for the purpose of putting the Companies into liquidation at the moment and formal notices will reach you during the courses of the next few days".
On the following day, the 20th July, this petition was presented, and on the same day an application was made for the appointment of a provisional Liquidator of the company. On the 21st July Lubbock and Mr Fine resigned from the Board of the Company and two new Directors were appointed to act in their place. On the 25th July, the application for the appointment of a Provisional Liguidator came before the learned Registas, and be made no Order on the application upon the Receiver giving certain undertaking as to dealing with the Company's scents, and so forth, on the 2nd September there was a meeting of the creditors of this company, duly convened, at which theCreditors passed a re solution that the Company should go into a creditors voluntary liquidation (that resolution being passed to section 283 of the Companies Act) and Mr Fine was appointed appointed Liquidator. We are told that since then all the creditors of the other Companies in this group have adopted the same course, and the result is that all six associated Companies are now in voluntary liquidation and Mr Fine is the Liquidator in all those liguidations.
On the 17th october this petition came before Mr Justice vaisay, and he made, as I have said, an order for the compulsory winding up of the Appllant company. We are told (and I do not think there is any dispute about this) that 51 creditors, representing a total value of over £41,000, out of 56 creditors the petition. There were one or two creditors who had given notice to support the petition including, I think, the Inland Revenue and some insurance companies, but (possibly with one exception apparently) when the patition came on for hearing they expressed their willingness to have a Supervision Order made under section 311. That that was apparently the position before the learned Judge and is the position now so far as all these 51 creditors are asking this Court to reverse Mr Justice Vaisay's Order and dismiss the petition. None of the creditors is opposing this appeal other than the petitioning Creditors.
The Petition by paragraph 5 Days: "The Company is indebted to your petitions in the aggregate in the sum of £5,350, being as to a cheque drown by the Company in favour of your Patitioner on the National Bank Limited" - giving the number "for £1.350. which cheque on presentation was dishonoured by being referred to the drawer the roof, and a cheque drawn by the company in favour of A.B , otherwise known as M. H. , on the National Bank Limited for £1,350 which cheque on presentation was dishonoured by being referred to the the roof, and the burden and benefit of such cheque having been assigned by of Assignment dated the 19th day of July, 1955, to yourPatitioner Norman and further by an Agreement dated the 87th day of January, 1955, made between the Company of the one part and your petitioner Norman pf the other part, the company received from your petitioner Norman the sum of £ 3,100 of which Philip Fine, a Director of the Company, has intimated the company's inability to pay these on their respective dates for maturity. 6. The Company is insolvent and unable to pay its debts. 7. In the circumstances it is just and equitable that the Company should be wound up". It is to be observed there that the statement that it is just and equitable that the company should be wound up is founded upon the circumstances of the petition, and the only circumstances to which reference is made in the petition relate to the alleged insolvency of the company.
The petition was supported by the usual statutory addidavit; but a further affidavit was sworn by the petitioners in support of their application for the appointment of a provisional Liquidator, and I need only refer to certain portions of that. Paragraph 2 stated that which I have already mentioned with regard to the business of the company and said: "The business of the company is an extansive business and one which would carry a considerable amount of stock and involve the turnover of large sums of money. The goodwill of the company is of considerable value and would be seriously damaged if not destroyed in the event of the company's business being , mismanaged or closed down, or if the large amount of stock required to carry on the business were depleted".
Then, by Paragraph 5, the Petitioners said: "The Company appears to be the main Company of a number of Companies which are all associated but which carry on different businesses and we verily believe that that business of the Company is the most substantial of all the companies and it is therefore essentialThat the company's businesses and undertaking shall be protected. 6. we have caused certain enquiries to be made as a result of which we find that two alleged substantial creditors of the company appear to have forced the issue with the previous Directors of the company" that is to say, the Fredmans "and apparently in fact arranged for the appointment of two of their nominees" namely, Mr Lubbock and Mr Fine, as Directors of the Company.
Then they said by paragraph 9: From further enquiries we have made we are informed by…. Mr Fine that there appear to be no records, stock sheets or other usual company's books and accounts of the company, and we are informed that it is suspected that these books and papers were taken away by a former Director of the company, who since the appointment of the two present Directors has disappeared completely together with his wife".
Then Mr philips Fine put in an affidavit, sworn on the 7th...
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