Statutory limit on contributory liability governs refund of excess calls while liquidation calls may be enforced for equal distribution.
A contributory's liability in liquidation cannot be enlarged beyond the statutory limit recoverable after crediting assets, A contributories' contributions, and pre-membership debts. Excess proceeds realised from calls on B contributories, after proper deduction of costs, were therefore refundable, as retention of the surplus would exceed the statutory liability. At the same time, where needed to achieve equal distribution among all B contributories, the liquidator could enforce payment of the calls or unpaid balances, since liquidation procedure remains adaptable until distribution is complete. The controlling principle was that calls are only machinery for collecting and distributing the fund pari passu among those liable.
Issues: (i) whether the excess realised from calls made on the B contributories was refundable to them, and (ii) whether the liquidator could enforce payment of the calls or unpaid balances thereof against all the B contributories to secure an equal distribution of the excess proceeds.
Issue (i): Whether the excess realised from calls made on the B contributories was refundable to them.
Analysis: The liability of the B contributories was confined to the amount statutorily recoverable after giving credit for the assets, the contributions of the A contributories, and the debts and liabilities of the company contracted before they ceased to be members. Once the proceeds of the calls exceeded that limit, retaining or applying the excess in any other manner would enlarge their liability beyond the statute. The calls were only machinery for collecting a fund for payment of creditors, and the Court retained power to correct mistakes or injustice while assets remained undistributed in liquidation.
Conclusion: The excess moneys, subject to proper deduction of costs, were required to be refunded to the B contributories.
Issue (ii): Whether the liquidator could enforce payment of the calls or unpaid balances thereof against all the B contributories to secure an equal distribution of the excess proceeds.
Analysis: The Court accepted that, so far as necessary to achieve an equal distribution among all B contributories, the liquidator could pursue the unpaid balances of the calls. The expression used in the order describing the call as "final" did not prevent further steps if needed, since the Court had not exhausted the possible liability and the procedure remained adaptable to the requirements of the liquidation.
Conclusion: The applicant was granted liberty to enforce payment of the two calls or the unpaid balances thereof against the B contributories to the extent necessary for equal distribution.
Final Conclusion: The decision protected the statutory limit of contributory liability while permitting enforcement steps needed to equalise distribution among the B contributories.
Ratio Decidendi: A contributory cannot be made liable beyond the statutory limit of liability, and calls in liquidation may be enforced only to the extent necessary to collect and distribute the fund pari passu among those liable.
TaxTMI 
AI Drafter ✕
TaxTMI 
