Balance-sheet acknowledgment and limitation: unconfirmed liabilities in financial statements did not revive a barred debt claim.

Balance-sheet entries, read with the directors' report, did not constitute a clear acknowledgment of a present subsisting debt in favour of the petitioning creditor. Although the claim appeared under liabilities, it was marked unconfirmed, and the directors' report stated that the relevant liabilities were treated as barred by limitation and not confirmed. Read together as part of the same financial disclosure, the statements failed to establish the necessary jural relationship of debtor and creditor to save limitation. The limitation defence was therefore held bona fide, and the winding up petition was not maintainable at this stage.

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Issues: Whether the entries in the company's balance-sheet, read with the directors' report, constituted an acknowledgment of liability sufficient to save limitation and justify admission of the winding up petition.

Analysis: The balance-sheet showed the petitioning creditor's claim under liabilities, but it was marked "unconfirmed". The directors' report stated that the liabilities shown in the balance-sheet, except certain specified debts, were treated as barred by limitation and were not confirmed. The balance-sheet and the directors' report were read together as part of the same explanatory financial disclosure to shareholders. On that combined reading, the court held that the language did not unequivocally admit a present subsisting liability or a clear jural relationship of debtor and creditor in favour of the petitioning creditor. In winding up proceedings, where limitation was specifically raised, the court held that such a defence could not be treated as sham or mala fide at the threshold.

Conclusion: The balance-sheet did not amount to a sufficient acknowledgment to save limitation, and the defence based on limitation was bona fide. The winding up petition was not maintainable at this stage.

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