Set off of dividends against contributory liability is barred; dividend claims do not reduce contributory calls in winding up.

A petitioner who is an executor, administrator and present member sought to set off claimed dividends and interest against contributory liability in a company winding up. The articles of association were held to forfeit earlier dividends and to preclude interest on unpaid dividends, and the statutory scheme limits members' claims to any surplus after payment of creditors. Consequently, sums payable as dividends do not rank for set off against contributory calls and cannot reduce contributory liability; the petition to set off dividends and interest was dismissed and the petitioner remains a contributory.

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Issues: Whether the petitioner, as executor and administrator and a present member, is entitled to set off dividends (and interest) alleged to be due on shares against his liability as a contributory in the company's winding up.

Analysis: The Court considered the effect of the company's articles (including forfeiture of dividends and the provision that unpaid dividends shall not bear interest) and the statutory scheme governing contributories under section 156(1)(vii) of the Companies Act. The Court held that article 167 operated to forfeit earlier dividends and article 168 precluded a claim for interest on unpaid dividends. With respect to section 156(1)(vii), the Court found that the subsection was intended to prevent sums due to members by way of dividends or profits from ranking as debts against other creditors and to limit contributories' claims to any surplus after payment of creditors; it did not provide a basis for allowing a contributory to set off such sums against his liability in the winding up. No authority was found to support the petitioner's broader contention that dividends could be set off against contributory calls.

Conclusion: The petitioner is not entitled to set off the dividends or interest against his liability as a contributory; the petition is dismissed and the petitioner's name remains on the list of contributories in category B (representing the estate of a deceased person). In favour of Respondent.

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