Winding-up interest and trade claims may survive where surplus assets exist and business transactions are in the ordinary course.

A winding-up dispute turned on whether the creditor's debt had been discharged by alleged payment or adjustment, whether a later settlement bound the liquidator, whether interest continued after the winding-up order, and whether trade goods supplied during the petition remained recoverable. The alleged discharge was rejected because the account entries were inconsistent and did not prove actual payment or novation. The 10 December 1926 settlement was upheld as a binding adjustment. Post-winding-up interest was allowed because the estate had surplus assets after principal and pre-liquidation interest. The claim for goods supplied in the ordinary course of trade was enforceable, subject to the Court's adjustments.

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Issues: (i) whether the creditor's debt was discharged by payment or adjustment on 31 December 1921 or 31 December 1922; (ii) whether the settlement of accounts dated 10 December 1926 was binding on the liquidator; (iii) whether interest on the admitted debt continued to run after the winding-up order; (iv) whether the claim for goods supplied during the pendency of the winding-up petition was enforceable.

Issue (i): whether the creditor's debt was discharged by payment or adjustment on 31 December 1921 or 31 December 1922

Analysis: The account entries relied on for the alleged discharge were found to be suspicious and inconsistent with the company's own subsequent admission that the debt remained outstanding. The later entries in the treasurers' books did not establish any actual payment to the creditor, nor any arrangement amounting to novation binding on him.

Conclusion: The debt was not discharged on either date, and this finding is in favour of the applicant.

Issue (ii): whether the settlement of accounts dated 10 December 1926 was binding on the liquidator

Analysis: The settlement was entered into by the chairman while the company was still being managed before the winding-up order, and it reduced the debt to a figure accepted as beneficial by the shareholders, creditors, and the liquidator. On that footing, the settlement was treated as a valid and binding adjustment of the claim.

Conclusion: The settlement dated 10 December 1926 was binding on the liquidator, and this issue is in favour of the applicant.

Issue (iii): whether interest on the admitted debt continued to run after the winding-up order

Analysis: Under section 168 of the Companies Act, winding-up relates back to the presentation of the petition, but the rule that interest stops after the winding-up order applies only where the assets are insufficient to pay all debts in full. Where there is a surplus after payment of principal and pre-liquidation interest, post-liquidation interest remains payable.

Conclusion: Interest continued to run after the winding-up order because the estate was shown to have surplus assets, and this issue is in favour of the applicant.

Issue (iv): whether the claim for goods supplied during the pendency of the winding-up petition was enforceable

Analysis: Section 227(2) of the Companies Act avoided dispositions of company property after the commencement of winding-up, but the transaction in question was a purchase of goods in the ordinary course of trade. As the goods were supplied and taken delivery of honestly and in the ordinary course of business, the claim was confirmed, subject to the deduction and adjustment directed by the Court.

Conclusion: The claim was enforceable, and the matter is in favour of the applicant to the extent allowed by the Court.

Final Conclusion: The creditor's challenge to the alleged discharge failed, the later settlement was upheld, post-winding-up interest was allowed because surplus assets existed, and the trade claim for goods supplied was recognised, while one ancillary item was left for future consideration.

Ratio Decidendi: In a winding-up, interest on debts continues after the winding-up order where the company has surplus assets sufficient to satisfy principal and accrued interest, and a transaction entered into in the ordinary course of business may be upheld notwithstanding the retrospective effect of the winding-up order.

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