Re Swain (J. D.) Ltd
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE SELLERS,LORD JUSTICE HARMAN,LORD JUSTICE DIPLOCK |
| Judgment Date | 13 April 1965 |
| Judgment citation (vLex) | [1965] EWCA Civ J0413-3 |
| Date | 13 April 1965 |
| Court | Court of Appeal |
[1965] EWCA Civ J0413-3
Lord Justice Sellers
Lord Justice Harman and
Lord Justice Diplock
In The Supreme Court of Judicature
Court of Appeal
Form: Mr. Justice Pennycuick
Mr. J.R. BICKFORD SMITH (instructed by Messrs. Cochrane & Cripwell) appeared on behalf of the Appellants (Petitioning Creditor Hall Electric Limited, and others).
Mr. MICHAEL MILLER (instructed by Messrs. Campbell Hooper & Co.) appeared on behalf of the Respondent the Company.
Mr. RALPH INSTONE (instructed by Messrs. Walton's, Bright & Co.) appeared on behalf of the Respondent Gray Dawes & Co. Ltd.
I will ask Lord Justice Harman to give the first judgment.
This is an appeal from a decision of Mr. Justice Pennycuick refusing to order the winding up of the respondent company, which is in course of voluntary liquidation The decision of the learned judge was given having regard to the wishes of a majority of the creditors and therefore followed section 346 of the Companies Act of 1948, which prescribes that the Court may "as to all matters relating to the winding up of a company have regard to the wishes of the creditors". This therefore is on the face of it an exercise by the judge of a discretionary power and will not be interfered with in jthis Court unless he has made some error in law.
The facts which need to be stated are very short. The company was incorporated in the year 1961 with an insignificant capital and has carried on a considerable mail order business, chiefly I gather in small electrical components, making a loss in its first year, a profit which just wiped out that loss in the second, and a very large loss in the third. The company is manifestly hopelessly insolvent and has a very large number of comparatively small creditors, among them the petitioner who put this petition on the file on the 2nd November last in reliance on a judgment debt of under £200. The petition came on for hearing on the 30th November, when it was adjourned owing to the failure of the company to put its opposition into order in time. On that same day there was sent out a notice prepared a few days earlier for a meeting of creditors with a view to a voluntary liquidation. This meeting was held on the 18th December, when a resolution for voluntary liquidation was passed. The petition came on for hearing on the 18th January of this year, when the petitioner was supported by three creditors, their aggregate debts amounting to about £2,200. It was opposed by 211 creditors whose debts amounted in the aggregate to £82,000 or so. If, therefore, the wishes of the majority of the creditors areto be regarded it would seem that they would point to a dismissal of the petition. It is, however, of course, true that this is not a mere matter of counting heads, and it is said that on the cases the judge ought to have given effect to the prima facie right of an unpaid judgment creditor and have the company wound up rather than to the wishes of the other creditors who take a contrary view. For myself I wish to express my concurrence in the observations of Lord Justice Upjohn (as he then was) in ( P. & J. Macrae Ltd. 1961 1 Weekly Law Reports, at page 237), where he said this: "Reported cases can only be quoted as examples of the way in which in the past judges have thought fit to exercise the discretion, and judicial decision cannot fetter or limit the discretion conferred by statute or even create a binding rule of practice".
The law as discussed before us begins with the provisions of the Companies Acts up to and including the Act of 1908 which by section 137 provided that where a voluntary winding up was in progress a creditor in order to obtain a compulsory order must show that he would be prejudiced by the continuance of the voluntary liquidation. The Act of 1929 by section 255 altered the law in this respect, providing that the winding up should not bar the right of a creditor to a compulsory order. This has remained the law ever since. It was discussed in ( James Millward & Co. 1940 Chancery 333) which decided that as between a creditor and a company in voluntary liquidation the creditor's right to have a winding up order was not displaced. No opposing creditors appeared on that petition. In re ( Home Remedies 1943 Chancery 1) Mr. Justice Simonds (as he then was) decided that section 255 of the Companies Act, 1929, did not overrule the section (now re-enacted by section 346 of the 1948 Act) that the court where a voluntary liquidation is in progress might have regard to the wishes of the majority who there opposed the petition; and James Millward was distinguished on that ground. The learned judge refused a winding up order. The question has been before this Court again three times inrecent years and first in re ( Karsberg 1956 1 Weekly Law Reports 57) where the headnote reads (in part) as follows: "Held, that irrespective of the question whether the petitioners' debt was valid or not, they had not shown any valid reason or special circumstances why effect should not be given to the wishes of the majority of the creditors that the voluntary liquidation should continue". The judgment reversed the decision of Mr. Justice Vaisey, who had made a winding up order. Lord Justice Romer referred to James Millward and to Home Remedies and said, at page 66, "In my judgment, it follows from the principle as stated in those cases (and, indeed, the principles are long and well established) that in the present case an order should not have been made unless a 'valid reason' or 'special circumstances' were shown by the petitioners why effect should not be given to the wishes of the majority of the creditors that the voluntary liquidation should continue". At page 69 the judgment ended in this way: "I, accordingly, would allow this appeal, on the ground which I have tried to make clear, that the overwhelming majority of the creditors of this company are against the making of a compulsory order, that they are content that the voluntary liquidation should continue, and that the petitioners have shown no ground of hardship or injustice upon which the court could base a departure from the ordinary principles to which I have referred". This was followed by re ( Vuma Ltd. 1960 1 Weekly Law Reports 1283) where this Court made an order for winding up against the majority view, there being special circumstances and no suggestion of a voluntary winding up though the company had no assets whatsoever. No reason was given by the majority of two who opposed the petition and it has been suggested that this was the reason for the decision. I do not think it was. There were circumstances of suspicion in that case which made an order desirable.
The matter was again discussed in Macrae Ltd. (already mentioned) where the whole Court held that there was an unfettered...
To continue reading
Request your trial
-
Re Wools (LHF) Ltd
...than a sign-post, as Lord Justice Upjohn (as he then was) said in Re P. & J. Macrae Ltd. in a passage to which I referred in the case of Re. J.P. Swain, in 1965 1 Weekly Law Reports page 909, where this question was discussed. He said that other cases about discretion could be no more than ......
-
Southard & Company Ltd Re
...his discretion in accordance with proper principles, or whether he exercised it wrongly. In this connection our attention was drawn to Re Swain Ltd. (1965) 1 Weekly Law Reports, 909; and to Evans v. Bartlett. (1937) Appeal Cases, 4-73,and particularly to the remarks of Lord Wright at page 4......
-
Recycling and Economic Development Initiative of South Africa NPC v Minister of Environmental Affairs
...Corporation Ltd (1908) 24 TLR 837 (Ch): referred to Re First Express Ltd [1991] BCC 782: dictum at 785D – G applied Re J D Swain Ltd [1965] 2 All ER 761 (CA): dictum at 762 applied H Secretary of State for Business Innovation and Skills v PAG Management Services Ltd [2015] EWHC 2404 (Ch) ([......
-
Re Commodore International Ltd
...523 and pages 798 to 801. The cases referred to are A.B.C. Coupler and Engineering Co. Ltd [1961] 1 All. E.R. 354, J.. Swain Limited [1965] 2 ALL E.R. 761. 26 Section 208 of the Companies Act, 1992 , provisions as follows:– “208 (1) Subject to subsection (2), the Court may, as to all matte......