Scottish Court of Session Decisions

On 17th July 1886 R. A. Macfie, a shareholder and creditor of the Portobello Pier Company (Limited), presented a petition for winding up of the Portobello Pier Company under the Companies Acts 1862 to 1886, and for appointment of a liquidator.

An order for service and advertisement was pronounced by the First Division. After the service the petitioner applied to the Lord Ordinary on the Bills in vacation (Lord Shand) for a winding-up order and the appointment of a liquidator, founding on the Companies Act 1886.

On the 13th August 1886 the Lord Ordinary on the Bills ( Lord Shand) granted the petition and appointed a liquidator.

“ Note.—This application has been presented to the Lord Ordinary on the Bills after the intimation and service ordered by the First Division of the Court has been made, that an order for judicial winding-up of the Portobello Pier Company should be pronounced. The petitioner submits that under the recent statute 49 Vict. c. 23 (The Companies Act 1886) the Lord Ordinary on the Bills has during vacation all the powers competent to either Division of the Court in time of session in reference to the liquidation of joint-stock companies under the Companies Acts 1862 to 1886, including the power to pronounce a winding-up order, or a supervision order in the case of a company which has passed a resolution to wind-up voluntarily.

“The competency of the application to the Lord Ordinary on the Bills depends on the construction of section 5th of the recent Act, which provides that ‘wherever the expression “the Court of Session” occurs in the said recited Acts’( i.e., in the Companies Act of 1862 and subsequent Acts), ‘or the expression “the Court” occurring therein or in this Act refers to the Court of Session in Scotland, it shall mean and include either Division thereof, or in the event of a remit to a permanent Lord Ordinary, as hereinafter provided, such Lord Ordinary during session, and in time of vacation the Lord Ordinary on the Bills.’

“The words of this enactment admit of two different interpretations. They may either mean

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(1) that the expressions ‘the Court of Session’ or ‘the Court’ occurring in the Companies Acts shall mean and include in time of vacation the Lord Ordinary on the Bills, in which case all the powers which either Division of the Court may exercise during session may competently be exercised by the Lord Ordinary on the Bills during vacation; or (2) that these expressions shall mean and include the Lord Ordinary on the Bills in time of vacation only in the case of a liquidation which has been remitted by one of the Divisions of the Court to a permanent Lord Ordinary, or in other words, that the Lord Ordinary on the Bills shall in vacation represent the permanent Lord Ordinary before whom the liquidation depends in the case only in which a liquidation has been remitted to the Outer House.

“By section 6 of the Act it is provided that ‘when the Court makes a winding-up or a supervision order, or at any time thereafter, it shall be lawful for the Court, in either Division thereof, to remit the winding-up to one of the permanent Lords Ordinary,’ before whom the subsequent proceedings shall go on. Until such a remit be made, a Lord Ordinary has no jurisdiction in the process of winding-up, and under the statute a remit of the liquidation process cannot be made until a winding-up order or a supervision order has been pronounced. It follows that a Lord Ordinary in the Outer House cannot competently grant such orders. He can only, after the liquidation has been remitted to him, carry out the winding-up process which has originated in a Division of the Court, and in which a winding-up or supervision order has been pronounced by the Court.

“If, then, the true meaning of section 5 of the recent Act be that the Lord Ordinary on the Bills shall only in vacation follow up the liquidation proceedings in cases where the liquidation has been remitted to one of the permanent Lords Ordinary, it would be incompetent in the Bill Chamber to entertain the present application, for this liquidation had not been remitted to a Lord Ordinary, as indeed it could not be, till after a winding-up or supervision order has been pronounced by one of the Divisions of the Court.

“It is notorious that it was the intention of the framers of the Act to give the Lord Ordinary on the Bills in vacation power to grant winding-up orders, and to carry on the proceedings in existing liquidations, and it is clearly desirable that, in order to prevent preferences being acquired and for other objects, it should be competent to obtain winding-up orders in vacation in the same way as warrants sequestrating the estates of bankrupt traders and firms may be obtained when the Courts are not sitting. Moreover, in England the Judges sitting in vacation exercise this jurisdiction to the public advantage.

“Nevertheless, if the question of competency had turned entirely on the leading words of enactment contained in the 5th clause of the statute above quoted, I should have felt the utmost difficulty in entertaining the application. The statute contains no preamble expressive of any purpose to give to the Lord Ordinary on the Bills the extensive powers contended for—powers in themselves greater than are given to any permanent Lord Ordinary—and the language used, though admitting of either of two interpretations, seems to me to read rather more naturally as meaning that the Lord Ordinary on the Bills in vacation may in liquidations take the place of the Lord Ordinary to whom the liquidation has been remitted than as meaning that he may competently exercise all the powers of either Division of the Court, even to the extent of granting a winding-up order or an order for a winding-up under supervision.

“In the subsequent part of section 5 of the statute, however, it is I think made clear—not by words of direct enactment it is true, but by very clear implication—that of the two meanings of which the clause above quoted admits, that which gives the full powers of the Court to the Lord Ordinary on the Bills is the sound one. Section 5 in two sub-sections (1 and 2) goes on to enumerate, first, the different orders or judgments pronounced by the Lord Ordinary in vacation which shall not be subject to review, and second, the orders or judgments which, notwithstanding a reclaiming-note, are to be carried out and receive effect until the reclaiming-note be disposed of by the Court. A perusal of the different clauses of the Act of 1862 so enumerated, with reference to which the statute assumes that the Lord Ordinary on the Bills may grant orders or judgments, shows that such orders or judgments may relate to steps in a liquidation which must precede any possible remit by the Court to a permanent Lord Ordinary, and indeed may include orders for a judicial winding-up or for continuing a winding-up under supervision. Thus, under sub-section (1) it is provided that no order or judgment pronounced in vacation under section 149 of the Act of 1862 shall be subject to review ‘so far as it authorises the Court to direct meetings of creditors or contributories to be held,' leaving it as matter of plain implication that to all other effects orders under section 149 may be the subject of a reclaiming-note. Now, that section enacts that ‘the Court may in determining whether a company is to be wound up altogether by the Court, or subject to the supervision of the Court, in the appointment of liquidator or liquidators, and in all other matters relating to the winding-up subject to supervision, have regard to the wishes of the creditors or contributories as proved to it by any sufficient evidence;’ after which the section goes on to provide for meetings of creditors or contributories being summoned, and to give rules for voting at such meetings. As regards these latter provisions the order of the Lord Ordinary is declared to be final. But a judgment determining whether a company is to be wound up altogether by the Court or subject to the supervision of the Court is left subject to review. This clause appears to me to recognise the power of the Lord Ordinary on the Bills to grant a winding-up order or an order to continue a voluntary winding-up under the supervision of the Court.

“Again, the same inference must, I think, be drawn from certain clauses of the Act of 1862 which, under sub-section (2) of section 5 of the Act of 1886, are declared to be subject to review under the limitations therein provided. It is there enacted as follows—‘Provided always, that such orders or judgments pronounced by the said Lord Ordinary in vacation, under or by virtue, in whole or in part, of the following sections of the Companies Act of 1862, shall, from the dates of such orders and judgments, and notwithstanding any reclaiming-note against the same, be carried out

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and receive effect till such reclaiming-note be disposed of by the Court,’ viz., sections 85, 147, 150, &c.

“Now, section 85 provides for the restraint of proceedings against a company at any time after the presentation of a petition for winding-up, and before an order for winding-up has been giver.

“Section 147 is the clause in the statute which authorises the Court to make an order directing that the voluntary winding-up shall continue subject to the supervision of the Court; and section 150 provides for the appointment of an additional liquidator or liquidators when an order for winding-up subject to the supervision of the Court is made.

“These several sub-sections deal with liquidation proceedings at their outset, and before any remit can be made by a Division of the Court to a Lord Ordinary in the Outer House, and the statute plainly recognises that the Lord Ordinary on the Bills may deal with the matters therein enumerated, including an order for the voluntary winding-up of the company under supervision.

“Having regard to the circumstance that in the sub-sections of section 5 there is a clear recognition of the power of the Lord Ordinary on the Bills to make initial or first orders in liquidation proceedings, I have come to be clearly of opinion that the enacting words of section 5 must be read as amounting to a declaration that when the expression ‘the Court of Session’ or ‘the Court’ occurs in the Joint-Stock Companies Acts referring to the Courts in Scotland it means and includes in time of vacation the Lord Ordinary on the Bills, and I therefore sustain the competency of this application, and on the merits I have no doubt the prayer of the petition ought to be granted.”

Thereafter the Lord Ordinary on the Bills ( Lord Shand), on a note craving, inter alia, power to sell being presented by the liquidator, granted power as craved.