9911796707
TMI Blog1932 (4) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... r the debts and liabilities of the respondent's business which amounted to 769 11s. 4d. Further, by the articles of association of the company it was provided that the respondent should be the first governing director of the company, with power to fix his own remuneration and also to appoint other directors. On January 15, 1927, the company issued the debenture to the respondent. The alleged value on September 30, 1926, of the assets of the respondent's business sold to the company, as shown by a balance sheet made up from the respondent's books, was 3,964 2s. Id., excluding goodwill, in respect of which there was no entry in the books. Some of the premises remainded vested in the respondent after completion of the sale of his business to the company. After the formation of the company, the directors of the company namely, the respondent and his brother appointed the respondent to the managing director at a salary of 1,000 yearly. Subsequently the company was debited with the sum of 1,000 by way of salary from September 30, 1926, to March 31, 1927 the first six months of the company's existence an amount 500 in excess of the amount actually due to the respondent in respect o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as repaid between April 10 and June 5, 1930. The respondent during the period from the beginning of January, 1930 to the end of May, 1930, had ordered goods greatly in excess of what was required for the business of the company and also of what had been generally ordered for the company over a like period. At a statutory meeting of creditors held on June 5, 1930, a resolution was passed for the compulsory winding-up of the company. On June 23, 1930, an order was made for the compulsory winding-up of the company. The liquidator, upon whose application this summons dated March 5, 1930 was issued, asked for: A declaration that the respondent, having been knowingly a party to the carrying on the company's business with intent to defraud creditors, was personally liable for all the company's debts or other liabilities, without any limitation of liability, and that his liability might be made a charge on his debenture, on the ground that the ordering of goods for which the company could not pay constituted fraud on the company's creditors; declarations that the respondent was liable to contribute to the company's assets 500, as compensation for misfeasance in accepting for remuneratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 6: ".. .where the declaration under subsection (1) of this section is made in the case of a winding-up in England, the declaration shall be deemed to be a final judgment within the meaning of paragraph ( g ) of sub-section (I) of section one of the Bankruptcy Act, 1914." (2)Debtors Act, 1869, section 13: "Any person shall in each of the cases following be deemed guilty of a misdemeanor, and on conviction thereof shall be liable to be imprisoned for any time not exceeding one year, with or without hard labour; that is to say, (1) If in incurring any debtor liability he has obtained credit under false pretences, or by means of any other fraud (2) If he has, with intent to defraud his creditors, or any of them, made or caused to be made any gift, delivery, or transfer of or any charge on his property: (3) If he has, with intent to defraud his creditors, concealed or removed any part of his property since or within two months before the date of any unsatisfied judgment or order for payment of money obtained against him." Possibility of the company's paying for the goods in bulk is carrying on business with intent to defraud the company's creditors. Some indication of what ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to defraud creditors that, if a company continues to carry on business and to incur debts at a time when there is to the knowledge of the directors no reasonable prospect of the creditors ever receiving payment of those debts, it is, in general, a proper inference that the company is carrying on business with intent to defraud. As I have intimated, I am satisfied that the respondent knew what the position was from March 1, 1930; and I hold further that the respondent deliberately went on trading in the name of the company in order, as he hoped, to safeguard his own position, and without any regard to the interests of the creditors. Then arises the question, what is the result of that finding under section 275 of the Companies Act, 1929? [His Lordship read sub-section 1 and continued:] That seems to leave the declaration, so far as the amount is concerned, simply a matter of discretion for the Court; but if the declaration is made in reference to a fixed amount is that amount to be apportioned among the creditors who have been defrauded, or does it go to swell the general assets available in the liquidation? A number of other difficulties arise on the construction of the sub-secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ff or cross demand which equals or exceeds the amount of the judgment debt or sum ordered to be paid, and which he could not set up in the action in which the judgment was obtained, or the proceedings in which the order was obtained..." That clearly contemplates a judgment or an order for an ascertained sum, and, to my mind, the Legislature, under section 275, must be contemplating also that there shall be a declaration against the guilty director for a definite amount. I do not think that it is open to me now to decide whether the amount of so many pounds, if recovered from the respondent, must be distributed by the liquidator among the creditors who have been defrauded, or whether it goes into the general assets in the liquidation: but, as I have indicated, I must, I think, fix an amount for which, under the declaration, the respondent is personally liable. Section 275, sub-section 2, of the Companies Act, 1929, is as follows: "Where the court makes any such declaration, it may give such further directions as it thinks proper for the purpose of giving effect to that declaration, and in particular may make provision for making the liability of any such director under the declara ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
