Insolvency - 1900- 1929

These cases are extracted from a very large database. The entries on that database are now being published individually to the main swarb.co.uk website in a much improved form. As cases are published here, the entry here will be replaced by a link to the same case in that improved form on swarb.co.uk. In addition the swarb.co.uk site includes very substantial numbers of cases after 2000. Please take the time to look.  

This page lists 45 cases, and was prepared on 06 June 2013. These case are being transferred one by one to the main swarb.co.uk site which presents them better, with links to full text where we have it, and much improved cross referencing.

Re Lane-Fox [1900] QB 508
1900	Insolvency	Casemap

In re Ford, Ex parte the Trustee [1900] 2 QB 211
1900	Insolvency, Company	1 Citers

Borland's Trustee -v- Steel Brothers & Co Ltd [1901] 1 Ch 279
1901 Farwell J	Company, Insolvency	Casemap 1 Citers
	Mr Borland was a shareholder. The company's articles contained pre-emption rights, such that on a shareholder's bankruptcy, he had, on receiving a transfer notice from the directors, to transfer his shares to a manager or assistant at a fair value calculated in accordance with the articles. His trustee said that the transfer articles were void because, among other reasons, they amounted to a fraud upon the bankruptcy laws, and could not prevail when bankruptcy had supervened, since the trustee was forced to part with the shares at less than their true value, and the asset was not fully available for creditors. Held: Farwell J said: "a simple stipulation that upon a man's becoming bankrupt that which was his property up to the date of the bankruptcy should go over to some one else and be taken away from his creditors, is void as being a violation of the policy of the bankrupt law". It was a commercial arrangement, and the provisions were were a fair agreement for the business of the company. They were binding equally on all shareholders. There was no suggestion of fraudulent preference, and nothing obnoxious to the bankruptcy law in a clause which provided that if a man became bankrupt he should sell his shares. The price was a fixed sum for all persons alike, and no difference in price arose in the case of bankruptcy. The purpose was that there should be in the company, if it were so desired, none but managers and workers in Burma. There was nothing repugnant in the way in which the value of the shares was to be ascertained. It would have been different if there were any provision in the articles compelling persons to sell their shares in the event of bankruptcy at something less than the price that they would have otherwise obtained, since such a provision would be repugnant to the bankruptcy law He described the nature of a company share: "It is the interest of a person in the company, that interest being composed of rights and obligations which are defined by the Companies Act and by the memorandum and articles of association of the company." and one with limited liability in a company: "A share is the interest of the shareholder in the company measured by a sum of money, for the purpose of liability in the first place, and of interest in the second, but also consisting of a series of mutual covenants entered into by all the shareholders inter se in accordance with section 16 of the Companies Act 1862. The contract contained in the articles of association is one of the original incidents of the share. A share is . . an interest measured by a sum of money and made up of various rights contained in the contract, including the right to a sum of money of a more or less amount."

Re Miller; CA 1901

In re EWA, A Debtor (1901) 2 KB 642
1901 CA Collins LJ	Insolvency	Casemap 1 Citers
	The general rule is that where an obligation is joint and several, the release of one of two joint debtors has the effect of releasing the other, but: "It is clear that, although a document in terms purports to release one of two joint debtors, yet it may contain in terms a reservation of rights against the other joint debtor. Where you find those two provisions you construe the document, not as a release, but merely as an undertaking not to sue a particular individual, and the result is that the right to proceed against the co-debtor is reserved and can be put in force against him. Whenever you can find from the terms of the document an agreement for the reservation of rights against the co-debtor, then, I agree, the document cannot be construed as an accord and satisfaction of the joint debt, and, therefore, as a release of the co-debtor."

Marchant -v- Morton Down & Co [1901] 2 Ch 829
1901	Insolvency	Casemap
	An assignment of a debt by a liquidator need not be by deed, any signed writing will be enough.

Montefiore -v- Guedalla; 1901

Stein -v- Pope [1902] 1 KB 595 CA
1902 CA Romer LJ, Sir Richard Henn Collins MR	Insolvency, Landlord and Tenant	1 Cites 1 Citers
	A lessee assigned the lease by an assignment which constituted an act of bankruptcy. He was subsequently adjudicated bankrupt and his trustee disclaimed the lease. During the interval between the assignment of the lease and the date of the adjudication two quarters' rent had fallen due, the lessors had sued the assignee and had recovered judgment for the first quarter's rent, and had commenced proceedings for the second quarter's rent. The action did not come on for trial until after the adjudication. Was the assignee of the lease liable for the rents notwithstanding the relation back of the trustee's title? Held: He was. The bankruptcy provisions, including the relation back of the trustee's title, were not provisions for the benefit of the bankrupt. As a general rule bankruptcy did not affect the rights and liabilities of persons not parties to the bankruptcy, except so far as might be necessary in the interests of the trustee and creditors and the administration of the bankrupt's estate in bankruptcy. It was not necessary in those interests to hold that the bankruptcy had freed the assignee from his liability to the lessor. The court reserved its opinion on what would have been the outcome if bankruptcy had supervened before any action had been take by the lessor against the assignee.

Re Joplin Brewery Co Ltd; ChD 1902

In re X Y, Ex parte Haes [1902] 1 KB 98
1902 Vaughan-Williams LJ	Insolvency
	Bankruptcy proceedings are not "in any sense criminal".

In re I C Johnson; CA 01-May-1902

In re Anglo-Oriental Carpet Manufacturing Company; ChD 1903

In re London and Globe Finance Corporation Ltd [1903] 1 Ch 728
1903 ChD Buckley J	Insolvency, Crime, Company
	A company which had gone from voluntary winding up, first to winding up under supervision and then to compulsory winding up, with the official receiver as liquidator. The company's former managing director was suspected of fraud, but the law officers declined to prosecute. Some of the shareholders wished to prosecute him, mainly at the expense of the company's assets (although they offered to pay into court at least £1,250 of their own money) while others opposed the prosecution as a waste of money. Held: The court authorised the liquidator, the official receiver, to do so at the expense of the company. Buckley J said: "the general scheme of the Acts with reference to the liquidation of a company no doubt is that the assets are to be realised to the best advantage for the benefit of those who are entitled to share in their distribution. But indications are not wanting that the assets may under the Acts be applied for some purposes other than these. Section 167 of the [1862 Act] is, having regard to the reasons which I have just given, one example of this, and in the [1890 Act] the same intent may be traced in sections 7 and 8 of that Act. These are sections which require the preparation of a statement of the company's affairs at the expense of the assets leading to a preliminary report, which is to show whether further inquiry is desirable as to matters relating to the promotion and the like, and, if necessary, to a public examination of parties incriminated, with the purpose, of course, of enforcing commercial morality. It is, therefore, in my judgement plain that the principle upon which I am to apply, or refuse to apply, section 167 is not measured or limited or even concerned with pecuniary benefit to be obtained for the shareholders or creditors." and ' To deceive is, I apprehend, to induce a man to believe that a thing is true which is false, and which the person practising the deceit knows or believes to be false. To defraud is to deprive by deceit: it is by deceit to induce a man to act to his injury. More tersely it may be put, that to deceive is by falsehood to induce a state of mind ; to defraud is by deceit to induce a course of action."
	Companies Act 1862 167

Pulsford -v- Devenish; ChD 1903

Re Button; 1905

In re West Coast Gold Fields Ltd; 1905

In re Ehrmann Brothers Ltd; CA 1906

Ponsford, Baker & Co -v- Union of London and Smith's Bank [1906] 2 Ch 444
1906 CA Fletcher-Moulton LJ	Insolvency	1 Citers
	Was a debtor who had committed an act of bankruptcy but who had not yet been adjudicated bankrupt free to require his secured creditor, who had notice of it, to hand over his securities on payment of the amount due thereon. Held: He could not. This was the consequence of the debtor having incapacitated himself from tendering the money. "If such receiving order be made the whole of the assets vest in his trustee as from the date of the act of bankruptcy." The consequences were that during the period of relation back the bankrupt had no right to deal with his assets and could give no title in them to any transferee with notice; nor could he collect his debts or give a valid discharge for them, and anyone making a payment to him with notice of the act of bankruptcy acted at his peril. "But these statutory provisions have been enacted for the benefit only of the creditors of the bankrupt, and not for the benefit of his creditors."

In Re Pope ex parte Dicksee [1908] 2 KB 169
1908 Sir Herbert Cozens-Hardy MR	Insolvency, Family, Land	Casemap
	In a post-nuptial settlement, the wife had given up all her rights in return for a transfer to her of property from her husband who was later made bankrupt. Held: Sir Herbert Cozens-Hardy MR said: "I am unable to adopt the view that there must be either money or physical property given by the purchaser in order to bring the case within the exception. In my opinion, the release of a right or the compromise of a claim, not being a merely colourable right or claim, may suffice to constitute a person a "purchaser" within the meaning of section 47". Buckley LJ disagreed: "The purchaser for valuable consideration within this section must be, I think, a person who gives such a valuable consideration as justifies his being described as a purchaser or buyer. That is only satisfied when the valuable consideration is money or property or something capable of being measured by money. It does not, I think, extend to the surrender of such a right as the right to relief for matrimonial offences."
	Bankruptcy Act 1883 47

In Re Rhodesia Goldfields Ltd; ChD 1910

Galbraith -v- Grimshaw and Baxter; CA 1910

In re John Tweddle & Company Ltd [1910] 2 KB 697
1910 CA Farwell LJ	Insolvency, Company	Casemap 1 Citers
	The court discussed the official receiver's enquiries and report leading up to the public examination of former directors, saying: "Now those are functions of a judicial character which are cast upon him, not in the liquidation of the company for the benefit of the assets, but primarily at any rate for the protection of the public. One has to bear in mind that in 1890 there had been various company failures, and it was thought that more drastic legislation was required against directors and promoters and people standing in that position, and I have no doubt that this section was passed for that purpose. It is said, and with some truth, perhaps, that it is a little hard on the company if the view that we take is correct that the costs of all this should come out of the company's assets; but a company only exists by favour of and on the conditions imposed by the legislature, and it is not immaterial to observe that as long ago as 1862, under the 167th section of the Act of 1862, if directors were prosecuted (as mentioned in that section) the expense of the prosecution came out of the assets of the company".

Galbraith -v- Grimshaw and Baxter; HL 02-Jan-1910

Camden Brewery, Re [1911] 106 LT 598
1911	Insolvency	Casemap

Boehm -v- Goodall; ChD 1911

Moss Steamship Co -v- Whinney [1912] AC 254
1912 Lord Atkinson	Insolvency
	The appointment of a receiver: "entirely supersedes the company in the conduct of its business, deprives it of all power to enter into contracts in relation to that business, or to sell, pledge or otherwise dispose of the property put into the possession or under the control of the receiver and manager. Its powers in these respects are entirely in abeyance."

Re Hart, ex parte Green [1912] 3 KB 6
1912 Warrington LJ	Insolvency
	The original disposal by a debtor was prior to the act of bankruptcy, though the later transfer by the disponee to the defendant was after it. Held: In such a case, the trustee could not succeed against a transferee for value without notice.

Re Ashwell ex parte Salaman; Chd 1912

MacGregor -v- Clamp & Son [1914] 1 KB 288
1914	Insolvency, Taxes management	Casemap 1 Citers
	A distress for taxes was "really by way of execution".

In re Benzon [1914] 2 Ch 68
1914 CA	Insolvency, Limitation	1 Citers
	Limitation applies where a claim is not against a bankrupt's estate or is not a claim "in the bankruptcy".

Re Gershon and Levy [1915] 2 KB 527
1915 Horridge J	Insolvency	Casemap
	An order was made by consent in a partnership action to tax the costs of the parties and the receiver was ordered to pay the costs when taxed out to the solicitors for the parties out of the partnership assets. When the order was made all parties knew that a bankruptcy petition was pending against each of the partners. They were later adjudicated bankrupt on that petition. The solicitors claimed to be secured creditors. Held: The order created an equitable charge on the partnership assets in favour of the claimants. But for the doctrine of relation back, the solicitors were secured creditors and entitled to priority over other creditors because all necessary parties were before the court when the order was made, but as a result of the relation back of the trustee's title to the partnership assets, the partners were not the proper parties and could not consent to the order.

In Re Peruvian Railway Construction Co Ltd; 1915

In re Melton, Milk -v- Towers; CA 1918

Wilson -v- United Counties Bank Ltd; HL 1920

Re Gunsbourg [1920] 2 KB CA
1920 CA Lord Sterndale MR, Warrington LJ	Insolvency	1 Citers
	The debtor transferred his assets to a company formed by him. He later committed an act of bankruptcy on which he was adjudicated bankrupt. The company had sold some of the assets to a bona fide purchaser without notice of the act of bankruptcy. The trustee impugned the transfer to the company which was held to be fraudulent and void and to constitute an act of bankruptcy, and then sought to recover from the purchaser the assets which he had acquired from the company. Held: The trustee's title related back to the earlier act of bankruptcy which consisted of the transfer to the company and neither the company nor any subsequent purchaser could establish any title as against the trustee. "If this [Lord Esher's statement in re Pollitt] is correct the position is exactly the same as if the bankrupt had been in possession of goods belonging to another person, to which he had no title, and had sold them to the original transferee who had then resold them. In such a case neither the original nor any of the subsequent transferees would take any title at all, and the true owner could recover the goods from anyone in whose possession he found them. I know of no doctrine of law or equity which would relieve any of the transferees in these circumstances. It was however argued that this statement of Lord Esher cannot be taken to its full extent and that it must be confined to avoiding dealings with his property by the bankrupt himself after the date of relation back. This was founded on the argument that the original transfer was not void but only voidable, and that therefore any bona-fide purchase from the original transferee was protected. I am not sure that void and voidable are quite apt expressions, but clearly the transfer was not void at the moment it was made, for it might be that no circumstances would ever arise in which a trustee's title would accrue or the bankruptcy law apply. I will assume that voidable is a correct expression to describe the nature of the transaction, and then it becomes necessary to ascertain the effect of the avoidance caused by the making of the receiving order. This seems to me to be quite different from the effect of avoidance in the ordinary case of a voidable transfer where no principles of bankruptcy law apply. In this latter case the title of the person avoiding the transaction arises only from the time when he elects to avoid, and therefore intervening bona-fide transactions are protected because the transferor up to the date of avoidance had and could confer a good title. In the case under consideration so soon as the receiving order is made the trustee at once gets a title which relates back to the earliest act of bankruptcy within three months of the receiving order, whether it be the one upon which the receiving order is made or not, and therefore his position and rights are entirely different from those of an ordinary person who elects to avoid a voidable transaction."

Keene, In re [1922] 2 Ch 475
1922 CA	Insolvency	Casemap 1 Citers

In Re Carton Ltd; 1923

Palmer -v- Carey [1926] AC 703
1926 PC Lord Wrenbury	Equity, Insolvency	Casemap 1 Citers
	A lender financed a trader in goods, on the basis the proceeds of sale of the goods be paid into an account in the name of the lender, and that the lender recoup himself on a monthly basis in respect of sums advanced, with the balance being released to the trader subject to a right for the lender to retain a sum representing an agreed share of the trader's profit. The trader subsequently became bankrupt. At the date of the bankruptcy, a substantial sum was owing to the lender in respect of sums advanced. The lender claimed security over goods and proceeds of sale in the hands of the trader. Held: The lender had no such security: "The law as to equitable assignment, as stated by Lord Truro in Rodick v. Gandell, is this: 'The extent of the principle to be deduced is that an agreement between a debtor and a creditor that the debt owing shall be paid out of a specific fund coming to the debtor, or an order given by a debtor to his creditor upon a person owing money or holding funds belonging to the giver of the order, directing such person to pay such funds to the creditor, will create a valid equitable charge upon such fund, in other words, will operate as an equitable assignment of the debts or fund to which the order refers. An agreement for valuable consideration that a fund shall be applied in a particular way may found an injunction to restrain its application in another way. But if there be nothing more, such a stipulation will not amount to an equitable assignment. It is necessary to find, further, that an obligation has been imposed in favour of the creditor to pay the debt out of the fund. This is but an instance of the familiar doctrine of equity that a contract for valuable consideration to transfer or charge a subject matter passes a beneficial interest by way of property in that subject matter if the contract is one of which a Court of equity will decree specific performance."

In re Glyncorrwg Colliery Co Ltd [1926] Ch 951
1926	Company, Insolvency	Casemap
	In a receivership the costs of the receivership (including the cost of realising the property comprised in the charge) had priority to the claims of the charge holder. The preferential payments must be paid before the debenture holders "but not before the costs of liquidation".

William Harrington Palmer -v- Randal Westropp Carey [1926] UKPC 30; [1926] AC 703
19 Apr 1926 PC	Commonwealth, Insolvency
	(Australia)
	Link[s] omitted

In re Paget [1927] 2 Ch 85
1927 CA Lord Hanworth MR	Insolvency
	The purpose of the public examination of a debtor is not merely to obtain a full and complete disclosure of his assets and the facts relating to the bankruptcy in the interests of the creditors, but also to protect the public: "To concentrate attention upon the mere debt collecting and distribution of assets is to fail to appreciate one very important side of bankruptcy proceedings and law." The judge had disallowed a question on the ground that the answers would not assist in the collection of the debtor's assets. The court rejected this as a sufficient ground for disallowing the question on the ground that it would exclude: "a side of the bankruptcy law which we are constantly affirming in this court, where it has been necessary over and over again to point out that in matters of bankruptcy it is not merely the creditors who have their rights, but it is also the public themselves whose interests have to be safeguarded."

Re Harrington Motor Co Ltd, Ex parte Chaplin [1928] Ch 105
1928 Eve J	Insurance, Insolvency	1 Citers
	A person injured in a road accident had obtained judgment for damages against the company, but had been unable to enforce the judgment before the company went into liquidation. The company's motor insurers paid the amount of the judgment to the liquidator, who then treated the injured person as an unsecured creditor with no special interest in the insurance monies. Held: The liquidator had been right to deal with the matter in that way.

In re Johns, Worrell -v- Johns [1928] Ch 737
1928 Tomlin J	Insolvency	1 Citers
	A mother and son agreed that the sum repayable by the son in respect of periodic loans made by the mother (which could not exceed £650, and might be as little as £10, in all) was to increase from £650 to £1,650 (plus interest) in the event of the son's bankruptcy. Held: The applicable principle was that a "person cannot make it a part of his contract that, in the event of bankruptcy, he is then to get some additional advantage which prevents the property being distributed under the bankruptcy laws". The agreement was "a deliberate device to secure that more money should come to the mother if the son went bankrupt, than would come to her if he did not; and, that being so . . the device is bad".

In re Windsor Steam Coal Co. (1901) Ltd [1929] 1 Ch 151
1929	Company, Insolvency, Professional Negligence	Casemap 1 Citers
	The courts look more favourably on applications by gratuitous trustees than on those by paid trustees. In a company winding up the liquidator may be liable to the company for negligence on his part in making a compromise.

In re Drew (A Bankrupt) [1929] IR 504
1929 Johnston J	Landlord and Tenant, Insolvency	Casemap 1 Citers
	(Ireland) A tenant subject to a re-entry clause in his tenancy agreement in the case of his being made bankrupt, and who had gone bankrupt had broken an obligation of his tenancy. He was not protected from an order for possession. "The tenant here has broken one of the conditions of his tenancy by allowing himself to be adjudicated a bankrupt, and therefore he is no longer entitled to possession, even as a statutory tenant."