Westmoreland Green and Blue Slate Company v Feilden
| Jurisdiction | England & Wales |
| Date | 1891 |
| Year | 1891 |
| Court | Court of Appeal |
Company - Contributory - Calls - Winding-up - Balance Order - “Final Judgment” - Right of Action - Original Debt - Specialty Debt - Merger of Old Remedy in New - Jurisdiction -
Held by Kekewich, J., following Chalk, Webb & Co. v. TennentF1, that an action to enforce a balance order made under sect. 101 or sect. 102 of the Companies Act, 1862, for calls made before or in the winding-up of a limited company, cannot be maintained.
But held, by Kekewich, J., and by the Court of Appeal, that where calls have been made before the winding-up, and, after the winding-up the company brings an action, on a writ specially indorsed, for payment of those calls, that action may be maintained notwithstanding that a balance order has been made in the winding-up for the amount of the calls; the right of action in respect of the calls as an original debt not being merged in or destroyed by the balance order.
A balance order under the Companies Act, 1862, is not a “judgment.”
The nature of a balance order discussed.
THE Westmoreland Green and Blue Slate Company, Limited, was incorporated on the 19th of April, 1886, with a nominal capital of £30,000 in 6000 shares of £5 each. On the 28th of April, 1886, the Defendant, Colonel Montague Joseph Feilden, sent in an application for 200 shares, which were allotted to him by the directors at a board meeting held on the 26th of June, 1886, and a resolution was thereupon passed on the same day appointing him a director. Subsequently, on one occasion at least he attended a board meeting and voted, and on various occasions he wrote letters to the secretary on the footing of his being a director, and excusing his non-attendance at board meetings. On the 3rd of December, 1886, he paid his application money, £200, being £1 per share.
On the 14th of July, 1888, an order was made to wind up the company compulsorily on its own petition, and an official liquidator was appointed. On the 15th of March, 1889, the Chief Clerk made his certificate in the winding-up, settling the Defendant on the list of contributories in respect of 200 shares. On the 7th of May, 1889, the Chief Clerk, upon the application of the official liquidator, made a balance order against the Defendant for payment to the official liquidator of £884 8s. 1d., being the amount due on allotment of his 200 shares, and for three calls made by the directors before the winding-up and for interest on the calls up to the 20th of March, 1889. In the order the Defendant was described as of “Catford House, Catford, Kent.” His solicitors attended on his behalf before the Chief Clerk upon the hearing of the application. At that time he was residing in Guernsey, and some difficulty was therefore experienced in serving the balance order; but it was eventually served upon him in Guernsey on the 10th of August, 1889. That service was, however, set aside on the 16th of August as being out of the jurisdiction, and accordingly it appeared that during his absence in Guernsey the Defendant could not be served with the balance order at all. In these circumstances the company, on the 20th of September, 1889, issued the writ in this action, leave being obtained to serve the writ on the Defendant in Guernsey. The writ was specially indorsed with a claim “for money due on allotment of, and for calls upon, 200 shares held by the Defendant in the Plaintiff company, and interest thereon. The following are the particulars.” Then followed the details of the amount of the claim, the total being £884 8s. 1d. — that is to say, the same sum as that stated in the balance order. And the Plaintiff company further claimed interest at 10 per cent. on £800, part of that sum.
On the 26th of November, 1889, the company obtained summary judgment in the action for the £934 14s. 1d. with £31 0s. 2d. for costs; but on the 16th of January, 1890, the judgment was, upon the Defendant's application, set aside, and leave was given him to defend, he having paid the £965 14s. 3d. into Court. He then delivered a defence alleging that the allotment of the shares and also the calls were invalid, on the ground, among other reasons, that the directors were not duly qualified to act; and as a further ground of defence he alleged that the action was, in fact, an action to enforce the balance order, and that the Plaintiff company was not entitled to maintain such action. He also counter-claimed to have the register of shareholders rectified by expunging his name therefrom. In reply the Plaintiffs denied that there was any ground for rectification, and pleaded delay and acquiescence.
The action came on for trial before Mr. Justice Kekewich on the 4th of March, 1891.
Renshaw, Q.C., and Bramwell Davis, for the Plaintiffs:—
As the defence raises a plea of jurisdiction, challenging our right to sue at all, on the ground that the action is one to enforce a balance order, that question must be disposed of first. Our contention is that we are not suing on the balance order at all, but on the original debt, which distinguishes this case from that of Chalk, Webb & Co. v. TennentF2, which will, no doubt, be relied on by the other side, and where Mr. Justice North held that a company could not maintain an action to enforce a balance order.
[KEKEWICH J.:— If you are not suing on the balance order, you are suing simply as creditor?]
Yes; we are suing for a legal debt on a specially indorsed writ. In the case before Mr. Justice North there was an important fact which is omitted from the report in the Weekly Reporter, but which appears in the Law Times report and also in In re TennentF3, namely, that the balance order there in question was in respect of calls made in, and not before, the liquidation of the company. That, we submit, is the key to Mr. Justice North's decision. Here the balance order was in respect of calls made before the liquidation, and therefore that decision does not apply. Again, in the case before Mr. Justice North the balance order was made under the special remedy given by sect. 102 of the Companies Act, 1862, whereas here it was made under sect. 101, which, no doubt, gave us a new right and special remedy, but did not destroy our existing legal right. Looking at the two cases cited by the learned Judge, Carpenter v. ThorntonF4 was the case of an action at law for the recovery of an equitable debt created by a decree of a Court of Equity, and it was held such an action could not be maintained. However, Abbott, C.J., did express an opinion that a Court of law would lend its aid to enforce a decree of the Court of Chancery under which a precise sum had been found due. So in the other case, Bailey v. BaileyF5, it was held that as an action of law would lie only upon a legal claim it could not lie upon an order for alimony, which was not a legal debt, but an equitable debt only, enforceable under a special statute. Again, in Berkeley v. ElderkinF6 it was held that no action would lie upon the judgment of a County Court. It seems evident, therefore, that Mr. Justice North's decision must have been based upon the principle that, the calls in question-before him having been made under the special remedy given by sect. 102 of the Companies Act, 1862, they could only be recovered under that statute. The principle is that where new rights are given with specific remedies, the remedy is confined to those specifically given: Hutchinson v. GillespieF7. In the present case the calls, being all made before the winding-up, are “of the nature of a specialty” under sect. 75 of the Companies Act, and are recoverable as a common law debt; and we are simply suing for a common law debt in a common law action, and not for a debt under a balance order at all, although the debt is for the same amount as the balance order. The Companies Act, 1862, was never intended to take away existing rights, and Mr. Justice North's decision amounts merely to this, that you cannot sue on a balance order alone.
Warmington, Q.C., and Butcher, for the Defendant:—
We ask your Lordship to follow Mr. Justice North's decision, which has never been...
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