Balance-sheet entries and directors' report did not conclusively amount to acknowledgment of liability against a limitation defence.

Entries in a balance-sheet and directors' report were examined to see whether they constituted an acknowledgment of liability sufficient to defeat a limitation defence in a winding-up petition. The Court held that the balance-sheet entry showing the amount under secured loans, together with Schedule 'A' describing the liability as partly secured and unconfirmed, did not by itself conclusively establish acknowledgment. The directors' report also stated that the relevant liabilities, except specified debts, were barred by limitation and were not confirmed by the directors. On these materials, limitation remained a bona fide dispute, and the alleged acknowledgment was not enough to override it.

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Issues: Whether the entries in the balance-sheet and the directors' report amounted to an acknowledgment of liability sufficient to defeat the plea of limitation in a winding-up petition.

Analysis: The claimed debt arose from a loan advanced in 1958. The balance-sheet for the relevant year contained an entry showing the appellant's amount under secured loans, and Schedule 'A' referred to the liability as partly secured and unconfirmed. The directors' report, however, stated that the liabilities shown in the relevant schedules, except certain specified debts, were barred by limitation and were not confirmed by the directors. On these materials, the Court agreed with the trial judge that the issue of limitation gave rise to a bona fide dispute and that the balance-sheet entries and report did not conclusively establish an acknowledgment overriding that dispute.

Conclusion: The alleged acknowledgment was not treated as sufficient to negate the bona fide dispute on limitation, and the appeal failed.

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