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TMI Blog1969 (11) TMI 44X X X X Extracts X X X X X X X X Extracts X X X X ..... e they are not the product of anything done in Parliament. I have never heard of an attempt to move that any of them should be altered or amended, and between the introduction of a Bill and the Royal Assent they can be and often are altered by officials of Parliament acting in conjunction with the draftsman. But it may be more realistic to accept the Act as printed as being the product of the whole legislative process, and to give due weight to everything found in the printed Act. I say more realistic because in very many cases the provision before the court was never even mentioned in debate in either House, and it may be that its wording was never closely scrutinised by any member of either House. In such a case it is not very meaningful to say that the words of the Act represent the intention of Parliament but that punctuation, cross-headings and side-notes do not. So, if the authorities are equivocal and one is free to deal with the whole matter, I would not object to taking all these matters into account provided that we realise that they cannot have equal weight with the words of the Act. Punctuation can be of some assistance in construction. A cross-heading ought to indica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t any business of the company has been carried on with intent to defraud creditors of the company………..or for any fraudulent purpose, the court on the application of the official receiver……….may, if it thinks proper so to do, declare that any persons who were knowingly parties to the carrying on of the business in manner aforesaid shall be personally responsible, without any limitation of liability, for all or any of the debts or other liabilities of the company as the court may direct." Winding up is not expressly mentioned in subsection (3), whereas it is referred to specifically in subsection (1) to which subsection (3) is linked by reference. The whole fasciculus of sections in which section 332 appears is dealing with liquidation. The Act of 1943 is a consolidation Act and did not alter the preexisting law which is to be found in the Companies Act, 1928, sections 72 to 77 inclusive, in which the same fasciculus of sections appears, all of which deal with liquidation. Section 75 of the Act of 1928 is in the same terms as section 332 of the Act of 1948 and section 75 (1), just as its successor, is concerned only with liquidation. Fraudu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eaning have been held to be restricted by their context to a narrower meaning. Such a case is Inglis v. Robertson and Baxter [1898] A.C. 616, where section 3 of the Factors Act, 1889, extended to Scotland by the Factors (Scotland) Act, 1890, fell to be construed. The section enacts : "A pledge of the documents of title to goods shall be deemed to be a pledge of the goods." The words are plain enough if applicable to the facts of the case. The legislature was enacting law in respect of mercantile agents and not members of the public generally and it was held that, the pledge in question not having been made by a mercantile agent, the section did not apply. True that in that case there was a cross-heading " Dispositions by mercantile agents" which was relied on particularly by Lord Herschell at p. 630 as to be read, not as mere marginal notes, so that the sections following should be read in connection with them and interpreted by the light of them. The judges in the Court of Session whence that appeal was brought reached the same conclusion by a majority without placing any significant reliance on the cross-heading (see 1897 24 R. 758). The same may be said of the other members of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision in Reg.'s case (supra) held that the indictment was bad and quashed the conviction. The Director of Public Prosecutions appeals against this decision. The case is of obvious considerable importance, as we were told indictments had been framed in this form for many years and that many persons were in prison following on convictions under this subsection. Section 332 (1) of the Companies Act, 1948, is in the following terms : " If in the course of the winding up of a company it appears that any business of the company has been carried on with intent to defraud creditors of the company or creditors of any other person or for any fraudulent purpose, the court, on the application of the official receive^ or the liquidator or any creditor or contributory of the company, may, if it thinks proper so to do, declare that any persons who were knowingly parties to the carrying on of the business in manner aforesaid shall be personally responsible, without any limitation of liability, for all or any of the debts or other liabilities of the company as the court may direct. On the hearing of an application under this subsection the official receiver or the liquidator, as the case may ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (3) could easily have said so, but it has not done so. I can see no reason why a provision dealing with fraudulent trading by directors of the company cannot conveniently be found in a fasciculus of sections otherwise dealing with winding up, having regard to the fact that fraudulent trading by directors is not uncommonly connected with winding up. If one asks the question, what is the common object governing subsections (1) and (3) of section 332, the answer is responsibility for fraudulent trading by persons connected with companies. This has certain civil consequences which are dealt with by subsection (1) and certain criminal consequences which are dealt with by subsection (3). In sub-section (1) a winding-up order is necessary for the operation of the subsection because it is the court in the winding up which makes the declaration referred to in the subsection. In subsection (3) there is no need to provide for a winding up as the subsection establishes a criminal offence. There is a presumption that unless the context otherwise requires a consolidation statute does not alter the previous law. It is not without significance that in the Companies Act, 1929, which was a consolid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng, I do not have to decide the question whether it was legitimate to refer to a cross-heading in the construction of an Act of Parliament. This case, as I have already said, must be decided upon the law as it stood when the Act of 1928 was passed and as this Act had no cross-headings the question of cross-headings does not arise. I would allow the appeal. Viscount Dilhorne.---My Lords, the respondent on October 31, 1968, pleaded guilty at the Central Criminal Court to a count in an indictment in the following terms : "Statement of Offence'--Carrying on the business of a company with intent to defraud creditors contrary to section 332 (3) of the Companies Act, 1948." " Particulars of Offence--Jan Schildkamp between October!, 1963, and July 10, 1964, within the jurisdiction of the Central Criminal Court was knowingly a party to the carrying on of the business of a company known as Fiesta Tours Ltd. with intent to defraud the creditors of the said company." On April 1, 1969, in the case of Reg.'s case (supra) the Court of Appeal quashed a conviction for fraudulent trading contrary to section 332 (3) of the Companies Act, 1948, on the ground that "subsection (3) was intended by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pany concerned is being or has been wound up. In Attorney-General v. Prince Ernest Augustus of Hanover [1957] A.C. 436, where it was sought to restrict the generality of the words of an enactment by reference to the preamble, Viscount Simonds said, at p. 463 : "On the one hand, the proposition can be accepted that' it is a settled rule that the preamble cannot be made use of to control the enactments themselves where they are expressed in clear and unambiguous terms.' I quote the words of Chitty L.J. which were cordially approved by Lord Davey in Powell v. Kempton Park Racecourse Co. Ltd. [1899] A.C. 143, 185. On the other hand, it must often be difficult to say that any terms are clear and unambiguous until they have been studied in their context. That is not to say that the warning is to be disregarded against creating or imagining an ambiguity in order to bring in the aid of the preamble. It means only that the elementary rule must be observed that no one should profess to understand any part of a statute or of any other document before he had read the whole of it. Until he has done so he is not entitled to say that it or any part of it is clear and unambiguous. To say, then, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of a company for a period not exceeding five years. While this subsection throws no light on the scope of subsection (3), as it operated both in relation to subsection (1) and subsection (3), it was obviously convenient that it should be preceded by these two subsections and that they should be included in the same section. When section 33 of the Act of 1947 was enacted and replaced by section 188 of the Act of 1948, the retention of this subsection in section 332 became, as I have said, unnecessary. Subsection (4) commences with the words : " The provisions of this section shall have effect notwithstanding that the person concerned may be criminally liable in respect of the matters on the ground of which the declaration is to be made." One can understand why this subsection was included if the section only related to the making of a declaration by a court in the course of a winding up, but it is not easy to see what useful purpose it can serve in relation to subsection (3). Perhaps the explanation may be that this sub-section was not in the Bill as originally drafted but was inserted during its passage through Parliament in consequence of the view being held that a declara ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... now replaced by section 330 of the Act of 1948) created a. number of offences and made it clear that they were only offences in relation to a company " which is subsequently ordered to be wound up by the court or subsequently passes a resolution " for voluntary winding up and section 73 (now replaced by section 328 of the Act of 1948) which also defines a number of criminal offences which may be committed in relation to companies, commences with the words : "If any person, being a past or present officer of a company which at the time of the commission of the alleged offence is being wound up, whether by the court or voluntarily, or is subsequently ordered to be wound up by he court or passes a resolution ......... authorising the company to be wound up voluntarily" It would indeed have been easy to provide, if that was Parliament's intention that subsection (3) should only operate in relation to a company which was being or had been wound up. While it is true that sections 72 to 77 of the Act of 1928 all relate to the winding up of a company, it is not, in my opinion, to be inferred from that that a subsection, clear in its terms, of a section included in this group of sections ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on Act section 75 became section 275 and that section was included in Part V of the Act which was entitled "Winding Up." sections 271 to 277 appeared under the cross-heading "Offences antecedent to or in course of Winding Up." section 332 of the 1948 Act was also in Part V of that Act. under the same title and in a group of sections also under the same cross-heading. The respondent sought to rely on this, and in R. v. Rollafson's case (supra ) the Court of Appeal appears to have based its decision on this. I do not consider that it is proper to infer from the title to a Part and from this cross-heading that the scope of the subsection is limited as the respondent contends. In the first place, a consolidation statute is presumed not to intend to change the law. If section 75(3) was not so limited, it is not, in my opinion, to.be inferred from the title of the Part of the 1948 Act and from the cross-heading that the words in section 332(3) are to be given a different meaning from that which they bore in section 75(3). Secondly, while I would not suggest that, when one is considering an Act of Parliament, one is not entitled to look at the title given to a Part of the Act and to c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he scope of the Factors Act, 1889, section 3 of which is in the following terms : "A pledge of the documents of title to goods shall be deemed to be a pledge of the goods." It came in a Part of the Act headed "Dispositions by Mercantile Agents" and in the opinion of Lords Halsbury, Watson and Herschell that heading sufficed to show that section 3 only applied when the disposition was by a mercantile agent. In that section the words were general and clear but the context was held to limit their operation. If the words of section 3 of the Factors Act had not been so interpreted, the Act, a consolidation Act, would have effected a major change in the law of Scotland which it was unlikely Parliament intended. There was thus in that case a compelling reason for allowing the context to influence "the meaning otherwise ascribable to the enacting part." In this case I can find no such compelling reason. Nor, if such a compelling reason existed, can it be said, with any degree of certainty, to what extent the operation of section 332(3) should be limited. In the course of the argument it was suggested that one should read into the subsection the opening words of subsection (1) so that it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case may be, may himself give evidence or call witnesses. ... (3) Where any business of a company is carried on with such intent or for such purpose as is mentioned in subsection (1) of this section, every person who was knowingly a party to the carrying on of the business in manner aforesaid, shall be liable on conviction on indictment to imprisonment for a term not exceeding two years or to a fine not exceeding £ 500 or to both." Of course, the fraudulent trading must take place while the company is a going corcern and the whole question is whether before any person can be prosecuted for the commission of an offence under subsection (3) the company referred to must subsequently have been put into liquidation, which admittedly is not the case here. The argument of counsel for the appellant was straightforward. Reading subsection (3) he submits truly that its terms are perfectly clear and simple. There is no ambiguity; the subsection clearly applies so as to create an offence on the part of a person knowingly carrying on a business-- with intent to defraud creditors of the company or creditors of any other person or for any fraudulent purpose, and the circumstance that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with sufficient accuracy that section 332(1) and (3) of the 1948 Act exactly reproduces the wording of section 75 (1) and (3) of the 1928 Act, so I need not set out the provisions of that section. The problem, therefore, is different from that which confronted this House in Beswick's case ( supra) where the issue was whether a change of wording was sufficient to rebut the presumption I have mentioned above. Nevertheless, in my opinion, the problem is essentially a question of construction of the 1928 Act and not the 1948 Act, for it was the former that created the new concept of making directors liable for the fraudulent trading of a company and the true scope and ambit of that liability, whether civil or criminal, must be determined by considering the terms of that Act and not of the subsequent consolidation Acts. My Lords, the arguments of counsel for the appellant upon section 75(3) are, of course, precisely the same as upon section 332(3) but, for the reasons I have already given, in my opinion, are based upon the wrong approach; one must consider the whole of the 1928 Act before trying to ascertain and determine the true scope of section 75 (3) thereof. There are no relev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng in the aid of the preamble. Here I warn myself against creating or imagining a difficulty or doubt as to the scope and ambit of apparently plain and unambiguous words by reason of the general structure of the Act, but I hope (again to echo Lord Simonds' words) I am doing no more than read the whole statute before professing to understand any part of it. But, my Lords, I do have the most genuine doubt upon this matter. In the first place, upon the construction of section 75 itself I feel the gravest doubts as to the true scope and ambit of subsection (3). I see much to be said for the view that subsection (3) is limited to prosecutions after the commencement of a winding up. Subsection (1) which creates a new civil liability for fraudulent trading before winding up is clearly so limited. I find it almost impossible to suppose that if Parliament intended to create a criminal liability while the company was a going concern it would not have imposed a civil liability at the same time. Of course, a fraudulent trader might be made civilly and criminally liable if his fraudulent trading fell within some well-known category, for example, obtaining money or goods by fraud. But that is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubject the benefit of the doubt in a criminal matter. Then, my Lords, if Parliament had intended to create a new offence subject to prosecution while the company was a going concern, surely it would have enacted an independent section and placed it in a position contiguous to sections 92 or 93. But I must say a few more words about the argument based on the absence of words of limitation in subsection (3) in contrast to subsection (1) and other sections and to the virtual impossibility of rewriting subsection (3) so as to limit its application to post winding up prosecutions. Closely allied to these arguments was the argument that it would be virtually impossible to frame an indictment in accordance with the Indictment Rules. At first sight these arguments appear formidable. But, in my opinion, no alteration to the phraseology of sub-section (3) is required; it stands as it is, plain and unambiguous, but the context in which it is found requires a limitation in its application to cases where the company has subsequently gone into liquidation. On that footing I can see no difficulty in framing an indictment. Some support for this view is to be found in the observations of some of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The marginal note to the section is " Responsibility for fraudulent trading of persons concerned." Upon the footing that the relevant statute is the only relevant statute your Lordships have heard an interesting argument on its construction and the proper regard that is to be paid to cross-headings and marginal notes when construing an Act of Parliament and I propose to say a few words upon this matter. It must always be remembered that cross-headings, punctuations and marginal notes are not part of the Bill passing through Parliament in this sense that they cannot be debated and amended as the Bill passes its various stages, in marked contrast to the preamble and long title. These cross-headings and marginal notes are put there in the first place by the Parliamentary draftsman but as the Bill proceeds may be altered (probably in consulation with the draftsman) by the officials of Parliament to accord with amendments made to the body of the Bill as it progresses. Counsel for the appellant submitted that the old strict rule distinguished between cross-headings, on the one hand, and, on the other, preambles which in old statutes used to occur before each new group of sections and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... construction of the word " property." I did not feel able to go as far as that but, at p. 105, held that probably Parliament had inadvertently altered the law when consolidating it. My Lords, in this somewhat fluctuating state of the authorities what role do cross-headings play in the construction of the statute ? In my opinion, it is wrong to confine their role to the resolution of ambiguities in the body of the statute. When the court construing the statute is reading it through to under-stand it, it must read the cross-headings as well as the body of the statute and that will always be a useful pointer as to the intention of Parliament in enacting the immediately following sections. Whether the cross-heading j is no more than a pointer or label or is helpful in assisting to construe, or even in some cases to control, the meaning or ambit of those sections must necessarily depend on the circumstances of each case, and I do not think it is possible to lay down any rules. In this case and treating section 332(3) as containing plain and unambiguous language, as in a sense it does, nevertheless it seems to me quite clear from the three cross-headings I have mentioned that Parliam ..... X X X X Extracts X X X X X X X X Extracts X X X X
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