AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
1959 (12) TMI 14
X X X X Extracts X X X X
X X X X Extracts X X X X
....efore, was the only A contributory, the B con tributaries being the transferors of the shares transferred on July 23, 1953, as above mentioned. On December 14, 1955, the committee of inspection resolved that a call of 10s. per share on the redeemable preference shares and a call of 2S. 6d. per share on the preferred ordinary shares should be made by the liquidator on all the contributories of the company. On December 20, 1955, the liquidator duly made the call in accordance with rule 88 of the Winding Up Rules (1) Companies (Winding Up) Rules, 1949, rule 88 : " When the liquidator is authorised by resolution ... to make a call on the contributories he shall file with the registrar a document making the call in the form 53 in the Appendix with such variations as circum. stances may require.", and within the ambit of the requisite form 53 which was filed as required by the rule. By a letter dated the same day he gave notice to Williams to pay in respect of the call GBP26,250 on or before January 3, 1956, with interest at 4 per cent. as from that date until payment. The next day he wrote as follows to each of the B contributories, enclosing a copy of the resolution of the committee o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the sum of GBP26,250 on or before March 12, 1956, or subsequently within four days after service of the order on him. The order was served on March 23 but Williams failed to pay the sum or any part of it and stated that he was unable to do so. He submitted to an examination as to his means and made a statutory declaration as to them, subsequently amplified by a further statutory declaration. These declarations showed that he had no free assets of any value. His principal source of income, that is his salary as managing director of National Screen Service Ltd. amounted, after deduction of P.A.Y.E. income tax, to GBP71 10s. per week. The liquidator said that on August 31, 1956, he obtained a garnishee order nisi against Williams' bank account with a New York bank, but that had proved abortive as the account had only 15s. in it. He made a further unsuccessful attempt to garnishee Williams' salary from the National Screen Service Ltd. He continued : "My committee of inspection and I respectfully submit that we have taken all reasonable steps open to us to obtain payment from Mr. Williams of the amount due from him. From the inquiries and investigations which we have made, we have come ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nances Ltd. That company, by a deed dated March 2, 1959, released the Apex company, the liquidator and the contributories from all liability for those debts. On March 18, 1959, an application by eight of the B contributories was made to the registrar, asking him to recall his order on February 25, 1959, and to reduce the amounts to be paid by the B contributories by taking into account the deed of release. The registrar refused that application, and on March 18, 1959, he made an order, which was duly completed, on the B contributories for the payment of calls calculated to produce a total of GBP22,504. On a motion for a declaration that the liability of the B contributories had been reduced by GBP13,853 18s. 11d. by the release of the two debts mentioned above, Wynn-Parry J. declared that the debt of the B contributories became payable on call and could only be extinguished by payment, and that their liability had not been reduced by the purchase after the call of the debts in question. The eight B contributories appealed. During the hearing of the appeal it was conceded by counsel for the liquidator that the notification of May 3, 1957, was not an effective call on the B contribu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e and the reasoning of Lord Selborne L.C. in Brett's case (No. 2) (supra) above mentioned-language quoted by the judge, but which I need not repeat. On the other hand, it is said that there is no logic nor justice in drawing the line at the date of the call (or, indeed, at any other point short, at any rate, of final distribution); and this View is said to be supported by the decision of Bacon V.C. in In re Greening, Marsh's case (supra), and by Eve J. in the case I have already mentioned, In re City of London Insurance Co. Ltd. [1932] 1 Ch. 226 ; [1932] 2 Comp. Cas. 301 ; and also by the uniform views expressed in every edition of Buckley on the Companies Acts, and in the relevant volumes of Halsbury's Laws of England. Without multiplying citation, I refer to a passage in Buckley, 13th ed., at p. 434: "The rules, then, which have been established with respect to the contributories of a company in liquidation and the application of their contributions may be briefly stated in some such form as the following..." There follow five heads in Roman numerals, and the fifth is : "If, before a call is made upon the B list, or before payment of such call, the debts in respect of which a B ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....liquidator did on December 20, 1955, amounted to a call on the B contributories for the purposes of section 214 : that is to say, he contended that the debt which section 214 states to be created became payable, at the time when that call was made on December 20, 1955, by the contributories. But, in my judgment, this cannot be sustained. Whatever be the exact construction of section 214, and particularly of the phrase at the beginning of the section, "The liability of a contributory" in its context, the B contributories were, at December 20, 1955, by virtue of the clear terms of section 212, and particularly sub-section (1)(c), under no liability at all : so that there was then nothing capable of being called or of crystallising-and this view is plainly in accordance (as I earlier stated) with what the liquidator thought and intended according to the letter that he wrote on December 21, 1955, and according to the evidence of his affidavit. The matter may, I suggest, be tested by asking : Could the liquidator, on January 4, 1956 (which was the day after the date fixed for payment by the A contributory in his notice of December 20 to Mr. Williams) have sued the B contributories as f....
X X X X Extracts X X X X
X X X X Extracts X X X X
....upon them and thinking that a decision on them should await a case when such a decision is necessary-which I think all the more important since (as I stated at the beginning of my judgment) cases concerning the liability of B contributories are only likely to arise very rarely, and may arise in very special circumstances which it is impossible to forecast. For the reasons I have stated, I think that the appeal should be allowed. Romer L.J.-I agree. It is expressly provided by section 212(1)( c) of the Companies Act, 1948, that a past member shall not be liable to contribute unless it appears to the court that the existing members are unable to satisfy the contributions required to be made by them in pursuance of the Act. In other words, the liability of the B contributories to contribute on a winding up does not arise at all unless it appears to the court (or, by delegation, the liquidator) that the A contributories are unable to satisfy the calls made upon them ; and the B contributories' liability is in any case limited to the extent of the A contributories' default. It was thought when this case was before Wynn-Parry J. that the call on the B contributories which was relevant ....