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Form 532. Summons to

sanction agree

ment for compromise.

The summons to obtain the sanction of the court to an agreement may be as follows:

Formal parts: see supra, Form 313.

On the part of the off. liq. of the above-named company that an agreement of compromise dated, &c., and made between the said off. liq. of the one part and N. one of the contributories of the company of the other part may be sanctioned.

The following form is an example of an affidavit of a liquidator in support. See supra, p. 446.

Form 533.

Affidavit of

Off Liq. as to proposed com

promise.

Formal parts: see supra, Form 315.

1. H. of has been settled on the list of contributories of the above-named company in respect of shares therein, and by an order in these matters dated, &c., a call of 201. per share has been made on him in respect thereof amounting to 2007.

2. The said H. has applied to me to accept a compromise of 50l., to be paid as follows, &c., and five guineas towards the costs of the agreement for the said compromise in full discharge of his liability in respect of the said call of 207. per share, and all liability as a contributory of the said company.

3. I have investigated the affairs of the said H. who has made an affidavit as to his means, filed the — day of and have caused

him to be cross-examined on such affidavit before the examiner of this court, and as the result of such investigation and cross-examination it appears that the said H. cannot pay the said call, and I believe that if I cause him to be made a bankrupt I shall not obtain from his estate as much as I shall by the said compromise. I believe that it will be beneficial to the said company that the said compromise shall be accepted.

Form of Agreement.

A form of agreement between the official liquidator and a contributory is given in the schedule to the Gen. Order of Nov. 1862, No. 50, and that form is generally followed as closely as may be, but sometimes the contributory agrees to pay a sum by instalments, and the following clause is usually required to be inserted.

Form 534.

6. Provided always that nothing herein contained shall prejudice or affect the rights of the said company, or of the said official liquidator or of the creditors of the company against any contributories of the said company, whether as present or past members thereof or otherwise, and that the liability of such members to contribute to the assets of the company

shall remain the same as if this agreement of compromise had not been Form 535. made, except only to the extent of the said sum ofl. so to be paid as aforesaid.

Orders.

Upon the application of the official liquidator, &c., Let the agreement Order sanctioning agreement for compromise dated, &c., and made, &c., be sanctioned. for compromise.

mise.

Upon the application, &c., Let the official liquidator of the said Bank Form 535. be at liberty to accept from the applicant the sum of 1007. together with Order sanction107. 10s. Od. for costs, in the whole 1107. 10s. Od. in discharge of the ing comproapplicant's liability as a contributory of the said Bank and otherwise, and in discharge of all claims of the said Bank against him. London and Suburban Bank Limd., Hall, V.-C., 9 May, 1878. 894 B.

In some cases in order to avoid the expense of an agreement, the liquidator applies for liberty to compromise, as in the above case.

Upon the application of W., the liq. of co., and upon hearing the Form 536. solicitor for the said liq., and upon reading an affidavit of M. filed, &C., Another. Let the said liq. be at liberty to compromise with the said M. in respect of his liability for calls due to the said co. by accepting the sum of 207., together with the costs of this application, such costs not to exceed the sum of 51. 5s. Od. in full satisfaction and discharge thereof. Welsh Steam Coal, 19 Sep. 1876. B. 1609.

Compromises with creditors and others.

tor to compro

Upon the application of the off. liq., &c., Let the said off. liq. be at Form 537. liberty to compromise the action commenced by the above-named co. Liberty to (with the sanction of the court) against M. upon the terms embodied in official liquidathe exhibit B. to the affidavit of the said off. liq. being the proposed mise action. minutes of judgment in the said action signed by the solicitors for the respective defendants. Mendip Hematite Co., Malins, V.-C., 14 Jan. 1878.

B. 570.

For order in winding up giving off. liq. liberty to compromise action of co. against Grant and others, as regards two of the defts. upon payment of 1,000l. a-piece, see Lisbon Steam Tramways, Malins, V.-C., 13 June, 1878. B. 1221. And see Form 205, supra, 309.

For order on motion giving off. liq. liberty to compromise landlord's claim, 2,000l. to be paid by co., and certain leaseholds and chattels to be given up to co. see Victoria & Fenton Co., Bacon, V.-C., 24 Jan. 1878. B. 429.

For order giving off. liq. liberty to release equity of redemption in patents, see Metal Tube Co., Hall, V.-C., 17 Mar. 1878. B. 478.

G G

Form 538. Liberty to compromise with debtor.

Upon the application of the off. liqs., Let the applicants upon W. of paying to them the costs of and incident to this application, such costs to be taxed in case the parties differ, be at liberty to accept from W. by the instalments mentioned in the said affidavit the sum of 571. 168. 5d. in full discharge of a debt of 1527. 128. 11d. due from the said W. to Bank prior to its suspension, such debt being in respect, &c., Liberty to off. liqs. to apply as to costs of application if W. does not pay. West of England, &c., Bank, Fry, J., 7 July, 1879. B. 1421.

Form 539.

Order as to compromise with claimant.

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Upon the application of J. B. and E. B. (trading as W. B. & Co.), of merchants, who claim to be creditors of the above-named co. for 21677. 10s. 1d., and upon the application of G. the liq. of co. by summons dated 7 July, 1876, that the said J. B. & E. B. or one of them might be ordered to pay to the said liq. 4000l. with interest thereon at the rate of 5 p. c. p. a. and the costs of the application, and upon the application of the liq. to set off a competent part of the said 40007. against any debt due to the said J. B. & E. B. from the said co., and upon the application of the said J. B. & E. B. by summons dated 24 Ap. 1877, for liberty to amend and increase their claim as creditors of the company in respect of the items the particulars whereof are set out in paragraphs & of the affidavit of the said J. B. filed 5 Mar. 1877, and upon hearing the solicitors for the liquidator and for the said J. B. & E. B., and upon reading an order dated 4 Dec. 1875 [supervision order] and the affidavit of, &c., and the exhibit A. therein referred to being an agreement dated 3 July, 1877, made between the said liquidator of the one part and the said J. B. and E. B. of the other part whereby the several parties thereto agreed to compromise the matters in dispute between the said company and the liquidator thereof on the one hand and the said J. B. and E. B. and each of them on the other hand: And the said J. B. & E. B. pursuant to the terms of the said agreement abandoning the said debt or claim of 2167l. 10s. 1d., and also the said further or increased claim, and the said parties by their said solicitors consenting hereto : The judge doth by consent order that the said debt and claim of the said J. B. & E. B. be disallowed, and that the said applications by summons dated respectively 7 July, 1876, & 21 Ap. 1877, be dismissed without costs. Carmarthenshire Anthracite Coal Co., M. R., 25 July, 1877. A. 1463.

Form 540.

Compromise with mortgagee.

Upon the application of S. by summons, &c., and the said C. as such off. liq. as aforesaid by his solicitors admitting that the sum of 76,3007. is now due from the said co. to the said S. for principal on the indentures of mortgage and bill of sale in the summons and affidavit mentioned, and the sum of 37907. for interest thereon up to this day, making together 80,0907., and the said C. as such off. liq. admitting that the

amount due to the said S. largely exceeds the value of the mortgaged Form 540. property, And the said C. as such off. liq. claiming that sundry chattels now on or about the works and land comprised in the said mortgage are not subject to the said mortgage and bill of sale or either of them: And the said S. without admitting such claim agreeing to purchase all the interest (if any) of the said co. or the said off. liq. thereof in the said chattels for the sum of 2007.: It is by consent ordered that the said co. as from the date hereof stand absolutely debarred and foreclosed of and from all right, title, interest and equity of redemption of and in the said mortgaged property: And let the said co. and the said off. liq., upon payment by the said S. to the said off. liq. of the sum of 2007. and upon being required so to do, release and convey the said equity of redemption and all right, title and interest to and in the said chattels to the said S. or as he shall direct at his expense, and either party is to be at liberty to apply as he or they may be advised. Britannia Iron Works, 8 Aug. 1877. A. 1551.

Upon the application of W. P. & L. the liquidators of the above- Form 541. named co., and upon hearing the solicitors for the applicants, and upon Order giving reading the London Gazette of the 15th June, 1875, containing a notice liberty to compromise. of resolution to wind up the said co. voluntarily and of the appointment of liquidators, and upon reading an affidavit of W. P. & L. filed 1 Aug. 1877: Order that the said liqs. be at liberty to compromise the cross claims made in the proceedings for winding up by the said co. on the one hand against Messrs. T. W. & Sons, of, and the said Messrs. T. W. & Sons against the said co. on the other hand, upon the terms of the said co. and the said Messrs. T. W. & Sons mutually foregoing and releasing the said claims against one another. Humphreys & Pearson, Malins, V.-C., 6 Aug. 1877. A. 1532.

Although the above and the following orders were made in a voluntary windingup, they are of course equally useful as precedents in a compulsory winding-up.

refer to arbitration.

Upon the application of H. the liq. of the above-named co., and upon Form 542. hearing the solicitors for the applicant, and upon reading the affidavit Order giving of the said liq. and an originating summons taken out by the said liberty to liquidator on the 18th July, 1877, in the Chancery Division of this Court, Order that the said liq. be at liberty to refer all matters in difference between the said co. and W. in reference to the erection of certain buildings at according to certain specifications and terms mentioned in the affidavit of the said liq. and in relation thereto, and all matters and questions arising thereout, in such manner and upon such terms and conditions as the said liq. may think fit, and for the purposes aforesaid to enter into and to execute any agreement or agreements as he may

be

Form 542. advised, but so that any proceedings, rules, or orders, to be had, taken or made in regard to such reference shall be had, taken or made in and by this court, And order that the costs of the said liq., of and incident to this application, shall be paid out of the assets of the said co. Drake's Patent Concrete Co., Malins, V.-C., 28 July, 1877. A. 1474.

Orders against Directors and others under S. 165 of the Act.

S. 165 provides that, "Where in the course of the winding-up of any company under this Act, it appears that any past or present director, manager, official or other liquidator, or other officer of such company, has misapplied or retained in his own hands or become liable or accountable for any monies of the company, or been guilty of any misfeasance or breach of trust in relation to the company, the court may, on the application of any liquidator, or of any creditor or contributory of the company, notwithstanding that the offence is one for which the offender is criminally responsible, examine into the conduct of such director, manager, or other officer, and compel him to repay any monies so misapplied or retained, or for which he has become liable or accountable, together with interest after such rate as the court thinks just, or to contribute such sums of money to the assets of the company by way of compensation in respect of such misapplication, retainer, misfeasance, or breach of trust, as the court thinks just."

Orders are frequently made under the above section. The application is usually made by the official liquidator by summons, supported by the requisite evidence. In many cases, before taking proceedings, the official liquidator obtains the appointment of a special examiner under s. 115 [supra p. 443 et seq.] and examines before him the supposed delinquent and other persons capable of throwing light on the transaction in question. The following are some of the cases in which orders have been made under this section. Stringer's case, 4 Ch. 475: Director ordered to repay dividend declared and paid to him under fraudulent and delusive balance sheet. Rance's case, 6 Ch. 104: Director ordered to repay bonus improperly paid to him. National Funds Assurance Co., 10 C. D. 118: Directors ordered to repay dividends improperly paid to shareholders out of capital. British Imperial Assurance Corp.: Similar order against directors. [See Form 547 infra.] McKay's case, 2 C. Div. 1: Secretary ordered to pay full nominal value of paid-up shares given him by vendor. De Ruvigne's case, 5 C. Div. 306; and Pearson's case, 5 C. Div. 336: Similar orders against directors whose qualification shares had been given them. Mitcalfe's case, 13 C. Div. 169: Similar order against director who had accepted shares from promoter. [See Form 201 supra p. 308.] National Funds Assurance Co.: Directors ordered to make good amount which ought to have been invested in Government Securities, viz., half the premiums paid by policy holders. [See Form 546, infra.] Similar order against directors in British Guardian Life Assurance Co., 14 C. D. 335; 28 W. R. 945. Englefield Co., 8 C. Div. 388, and Form 543 infra: Directors ordered to make good a sum paid to a promoter "for preliminary expenses," out of which the directors' qualifications were provided. Railway, &c., Co., Marzetti's case, 28 W. R. 541; 42 L. T. 206: Director ordered to repay sums paid nominally for preliminary expenses, but really for rigging the market. In re Public Supply Association, W. N. 1880, 106: De facto director ordered to pay nominal value of shares taken and paid for by him, with fees improperly paid him by the board.

S. 165 does not create any new liability or right, but only provides a more convenient means of enforcing rights and remedies which would have been enforceable by action if there had been no winding-up. Canadian Land, &c., Co., Coventry

& Dixon's case, 14 C. Div. 666; 28 W. R. 775.

In this case Jessel, M. R., had ordered directors who had acted without the requisite qualification shares to pay to the liquidator the amount which they would have had to pay therefor, but the order was reversed on appeal.

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