pany is, save as otherwise ordered by the Court, the commencement of the winding-up of the subsidiary company. 85. The Court may, at any time after the presentation of Court may a petition for winding up a company under this Act, and antijunction. before making an order for winding up the company upon the application of the company, or of any creditor or contributory of the company, restrain further proceedings in any action, suit, or proceeding against the company, upon such terms as the Court thinks fit (a); the Court may also at any time after the presentation of such petition, and before the first appointment of liquidators, appoint provisionally an official liquidator of the estate and effects of the company (B). (a) ss. 87, 163, 197, 201. (B) ss. 92-97; Gen. Order, Nov. 1862, Rules 15, 59, Form 9. by the Court. Sections 85 and 201 give to the Court, in the interval between the Winding up presentation of a petition and an order upon it, a discretionary power to restrain proceedings against the company; while sects. 87 and 202 peremptorily stay proceedings after an order has been made until the leave of the Court has been obtained to proceed with them. By sect. 148 a petition for winding up under supervision, and by Winding up sect. 151 an order for winding up under supervision, are respectively, for under superpurpose of giving jurisdiction to the Court over actions and suits, the to be deemed to be a petition and order for winding up by the Court. vision. By sect. 133, in a voluntary winding-up, the creditors are to be paid Voluntary pari passu; and by sect. 138 the Court may, on the application of the winding-up. liquidators or a contributory, exercise all or any of the powers which it might exercise if the company were being wound up by the Court. In several cases, therefore, actions and executions have been restrained in a voluntary winding-up (a). By sect. 163, where a company is being wound up by, or under the Sect. 163 supervision of, the Court, any attachment, sequestration, distress, or execution, put in force against the estate or effects of the company after the commencement of the winding-up shall be void to all intents. But this section is to be read with, and is controlled by, the 85th and 87th sections, and the joint effect of these sections is to put the creditor, who desires to proceed to execution after the commencement of the winding-up, to the necessity of coming to the Court and asking for leave so to proceed; and whether he shall be allowed to proceed or not is a question for the discretion of the Court (b). (a) See In re Keynsham Co., 33 Beav. 123, and other cases cited under this section, infra, sub tit. "Voluntary Winding-up." (b) In re Great Ship Co., 33 L. J. (Ch.) 245; In re Waterloo Life, &c., In surance Co., 31 Beav. 589; 11 W. R. 69. Execution against a company in liquidation. Sheriff in possession before petition presented; It will be observed that sect 163 takes effect from the commencement of the winding-up; there will, therefore, be this difference between an action, or suit, and an execution—that whereas between the commencement of the winding-up and the winding-up order an action or suit may be continued unless further proceedings are restrained by the Court, an execution put in force at any time after the commencement of the winding-up will be void, unless the Court give leave to proceed with it. It has been held, however, that where an execution is perfected by seizure before the commencement of the winding-up, a sale after the commencement is not a putting in force" within this section (a). The leading case on the subject of execution against a company in liquidation is In re Great Ship Company (a), which was the case of an unregistered company, and fell, therefore, under sect 201. In that case the principles which should guide the Court in the exercise of its discretion are thus stated by Turner, L.J.: "The Court is bound to look at the legal rights of the parties, and to the interests, not of one class only, but of each particular class of creditors who may be affected by its decision. There is nothing in this Act to give to general creditors any right to have their interests consulted in preference to the interests of particular creditors whose case comes before the Court. It is the duty of the Court to hold an even hand over the interests of all parties. I think the section was meant with the view to meet cases in which there might have been unfair proceedings on the part of creditors. Above all, the Court is bound, in considering the question as to the exercise of its discretion, to see what its duty would have been if the order to wind up had been actually made, and an application had been made by a creditor for leave to issue execution." When a creditor of the company obtains judgment, and issues execution bonâ fide, and the sheriff is actually in possession before the presentation of the petition, the creditor will not, except under special circumstances, be restrained from realising his judgment (b); so, also, if the execution of the writ be only stopped by resistance made to the sheriff's officer (c); but if a forced sale by the execution creditor would be ruinous to the company and the other creditors, an injunction will be granted to restrain the sale, a first charge being given to the execution creditor on the property for his debt and costs (d), or the same rights being reserved to the creditor against the proceeds of the property seized by the sheriff on his behalf as he would have had if it had been sold by the sheriff (e). (a) In re Great Ship Co., 33 L. J. (Ch.) 245; 3 N. R. 181; 12 W. R. 139; 10 Jur. (N.S.) 3. (b) In re Great Ship Co., v. supra; and see Ex parte Hawkins, L. R. 3 Ch. 787, where a creditor had obtained payment, before the winding-up order, under a garnishee order obtained before the presentation of the petition. (c) In re London Cotton Co., L. R. 2 Eq. 53; see, too, Re Dublin Exhibition Palace, &c., Co., I. R. 2 Eq. 158. (d) In re Hill Pottery Co., L. R. 1 Eq. 649; and see Re Dublin Exhibition Palace, &c., Co., I. R. 2 Eq. 158. (e) In re Plas-yn-Mhowys Coal Co., L. R. 4 Eq. 689, where see form of order; Re Pen-Allt Silver Lead Mining Co., 15 S. J. 714. The Act, however, makes no distinction whether the sheriff is or is after petition not in possession at the commencement of the winding-up; the rule in presented. this respect is only one which has been adopted in the discretion of the Court, and may in a proper case be disregarded. Thus in In re Bastow & Co. (a) a creditor had issued a writ before the presentation of the petition; after its presentation, but before a winding-up order was made, execution was issued, and the creditor, acting bonâ fide, had obtained possession; he was allowed to levy execution under certain restrictions imposed by the Court. In this case the following circumstances weighed materially with the Court: (1.) the petition was presented by the company, so that the winding-up was for their own convenience; (2.) they had not, in the opinion of the Court, given the creditor such fair notice of their proceedings as he was entitled to; (3.) it was stated that the assets would be sufficient ultimately to pay all the creditors in full, so that the question was only whether the execution creditor should be paid at once, or should wait until the completion of the winding-up. So, where a company had vexatiously delayed its creditor, so that, in an action brought long before the commencement of the winding-up, he was not able to sign judgment until the day on which a winding-up petition was presented by the manager of the company in the character of a creditor, and execution was, therefore, not levied until after its presentation, an ex parte injunction which had been obtained on a second petition of later date presented by a possibly bona fide creditor was dissolved and execution allowed to be enforced (b). But in the absence of special circumstances in favour of the execution creditor the Court will have regard to the object of the winding-up proceedings, viz., an equal distribution among all creditors (c), and will stay proceedings under the writ, if execution be not actually issued before the presentation of the petition. Thus, where the writ was in the hands of the sheriff three hours before the presentation of the petition, but possession was not actually taken till three hours after, further proceedings were stayed; the winding-up petition being presented by a bonâ fide creditor for the bonâ fide purpose of obtaining an order to distribute the assets equally among the creditors (d). Whether the Court has power to restrain an extent by the Crown, Extent by quære (e). A distress for rent by the company's lessor upon the goods of a company in liquidation is, like any other proceeding, not void under sect. 163, but subject to the discretion of the Court by virtue of this section and the 87th section. Thus, where the lessors, in respect of a lease granted to trustees for the company, put in a distress for rent, on the same day as, but before, (a) L. R. 4 Eq. 681. () Re Imperial Steam, &c., Co., 16 W. R. 689; 37 L. J. (Ch.) 517; 18 L. T. (N.S) 390. (c) v. s. 133, and remarks of Turner, L.J., in Smith, Fleming, & Co.'s Case, L. R. 1 Ch. 538, 545. (d) In re London and Devon Biscuit Co., L. R. 12 Eq. 190. (e) In re English Joint Stock Bank, W. N. 1866, 199. L the Crown. Distress for rent, after winding-up order. Costs incurred by company in liquidation. the winding-up order was made, they were allowed to proceed (a), and, as against the official liquidator, to realise their distress as well in respect of rent accrued due subsequent to the distress as in respect of that for which the distress was levied (b). But such a distress will not be allowed, after the winding-up order has been made, in respect of rent accruing due before the winding-up; nor, where the lessor has not required possession to be given up to him, will a distress be allowed in respect of rent accruing due after the winding-up, except in the case where not merely formal but actual possession of the property has been retained for the purpose of carrying on the business of the liquidation. If possession is retained for this purpose, the rent is looked upon as part of the expenses incurred in the winding-up; and by sect. 110 (see also sect. 144 as to a voluntary liquidation) these expenses may be paid in such order of priority as the Court thinks just. But, if this be not so, the lessors can in such a case only prove for the amount of the rent in the winding-up (c). But if the company, for its own purposes, and with a view to the realisation of the property to better advantage, remain in possession of the estate of their lessor, so that he is not able to obtain possession of it, the Court will see that he receives the full value of his property, and will allow him to distrain upon the goods of the company for rent accrued due since the winding-up (d). With respect to the case last referred to it may be said, as was said by Stuart, V.C., in Ex parte Levick (e), that although the purpose of the Act is that complete justice shall be done between all the creditors in paying them pari passu, yet this must mean creditors of the company at the time of the order for winding up. And if the liquidators of the company, in realising or distributing the assets of the company, incur costs and expenses, these are costs and expenses incurred on behalf of the estate, that is, on behalf of the creditors, and ought, therefore, to be paid in full before the assets are distributed. It is on this principle that, where a company in course of liquidation is ordered to pay costs, such costs are not to be proved as a debt in the winding-up, but are to be paid in full out of the assets of the company (f). And there is no distinction in principle between the costs of an action brought by the company which fails and the costs of an action which is unsuccessfully defended by the company. Accordingly, where costs were given against a plaintiff company in a suit (g), and against a defendant company in an action (h), the costs were to be paid in full. (a) In re Exhall Mining Co., 12 W. R. 727; 10 Jur. (N.S.) 576; 4 N. R. 127. (b) Same case, 13 W. R. 219. (c) In re Progress Co., Ex parte (d) In re Lundy Granite Co., Ex parte Hearan, L. R. 6 Ch. 462. (e) In re Bank of Hindustan, China, and Japan, L. R. 5 Eq. 69. (f) But see further, s. 86. (g) Madrid Bank v. Pelly, L. R. 7 Eq. 442. (h) Bailey and Leatham's Case, L. R. 8 Eq. 94, and see Gen. Order, Nov. 1862, Rule 27, infra. And if, in such a case, the party entitled to costs issue execution for them, the execution will not be restrained (a). But this rule as to payment of costs does not apply to costs ordered Alleged conto be paid to an alleged contributory successfully applying for the tributory. removal of his name from the list (b). The 163rd section renders void, in general terms, any attachment, sequestration, distress, or execution against the estate or effects of the company. But this provision must be read as confined to proceedings by a creditor of the company against the company as debtor, and not as capable of including a distress by a stranger to the company against his debtor, who happens to have goods of the company in his possession. Thus, for example, if the official liquidator chooses to leave goods of the company in the order and disposition of a bankrupt, or upon land where a landlord has a right to distrain, the rights of the assignee in the one case, or of the landlord under a distress for rent in the other, cannot be affected by the fact that the goods are the property of a company in liquidation. So, where, A. being lessor and B. lessce, a company, under an agreement with B. for an assignment of the lease, took possession of the leasehold property, and remained in possession after a winding-up order, and left goods upon the land, the Court gave A. leave to pursue his right by distress for rent accrued due since the winding-up (c). Distress by person not a creditor of the company. The intention of the Act, where there is a resolution passed to wind Voluntary up voluntarily, is (sect. 133) that all the creditors shall be paid pari winding-up. passu, and the Court will therefore interfere by injunction to restrain one creditor from seizing an undue share of the assets for his own benefit. Thus, where a creditor commenced an action after a resolution to wind up voluntarily, the Court restrained the action, the liquidators being required to give the creditor access to the proceedings, and gave costs to the creditor down to the time when he had notice of the winding-up, such costs to be added to his debt (d). In In re Life Association of England (e) the action was commenced before the resolution for a voluntary winding-up, and was stayed on the same terms as to costs. In In re Sablonière Hotel Co. (f), the creditor commenced his action on the same day as the resolution to wind up voluntarily was confirmed. He was a shareholder, and had notice of the resolution. He afterwards signed judgment. On the application of the liquidator execution was restrained, but without costs, as no execution was in fact issued. (a) In re Bank of Hindustan, Ex parte Levick, L. R. 5 Eq. 69; Ex parte Smith, L. R. 3 Ch. 125. (b) Ship's Case, 13 W. R. 1016; and see further, s. 86. (c) Ex parte Heavan, L. R. 6 Ch. 462. (d) In re Keynsham Co., 33 Beav. 123; Re Peninsular Banking Co., 35 Beav. 280. (e) 10 Jur. (N.S.) 762; 12 W. R. 1069. (ƒ) L. R. 3 Eq. 74. |