R. D. Simpson, Ltd, and Liquidator v. Hudson Beare and Others [1908] ScotLR 424 (08 February 1908)

R. D. Simpson, Ltd, and Liquidator v. Hudson Beare and Others [1908] ScotLR 424 (08 February 1908)

The directors, having settled a personal liability claim for £1000 and obtained an assignation of Van Berkel & Co.'s rights against the company, can only rank in the liquidation for the unpaid balance (£1000) of the estimated liability (£2000). The liquidator erred in not seeking court sanction for the compromise, but there was no evidence of collusion or bad faith. The reduction of the liquidator's fee was unwarranted; disallowing his expenses in the reclaiming note suffices.

Citation
[1908] ScotLR 424
Parties
Company in Liquidation: R. D. Simpson, Limited; Liquidator: Charles J. Munro (Liquidator); Claimants/directors/assignees: Hudson Beare, R.B. Mathie, Andrew Scott
Jurisdiction
Scotland
Judgment Date
08 February 1908
Procedural Posture
Company Liquidation (under Court Supervision) / Reclaiming Note (appeal) Against Lord Ordinary's Interlocutor
Outcome
Interlocutor of the Lord Ordinary adhered to, except as regards reduction of liquidator's fee; claimants' ranking restricted to £1000; liquidator not entitled to charge expenses of reclaiming note to the estate; claimants not entitled to expenses since 4 December 1907.
Legal Topics
Liquidation Under Supervision, Directors' Personal Liability, Compromise of Claims, Duties of Liquidator, Ranking of Claims in Insolvency, Assignment of Claims, Patent Infringement
Company Law Insolvency Law Patent Law Liquidation Under Supervision Directors' Personal Liability Compromise of Claims Duties of Liquidator Ranking of Claims in Insolvency +2 more

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Parties

R. D. Simpson, Limited

Company in Liquidation

Charles J. Munro (Liquidator)

Liquidator

Hudson Beare, R.B. Mathie, Andrew Scott

Claimants/directors/assignees

Procedural Posture

Company Liquidation (under Court Supervision) / Reclaiming Note (appeal) Against Lord Ordinary's Interlocutor

Legal Issues

  1. 1 Whether directors who settled a personal liability claim and obtained an assignation of the creditor's rights can rank in the liquidation for more than the amount paid
  2. 2 Whether the liquidator acted improperly in admitting the claim without court sanction
  3. 3 Whether the directors were personally liable for the company's patent infringement

Ratio Decidendi

The directors, having settled a personal liability claim for £1000 and obtained an assignation of Van Berkel & Co.'s rights against the company, can only rank in the liquidation for the unpaid balance (£1000) of the estimated liability (£2000). The liquidator erred in not seeking court sanction for the compromise, but there was no evidence of collusion or bad faith. The reduction of the liquidator's fee was unwarranted; disallowing his expenses in the reclaiming note suffices.

Court Disposition

Interlocutor of the Lord Ordinary adhered to, except as regards reduction of liquidator's fee; claimants' ranking restricted to £1000; liquidator not entitled to charge expenses of reclaiming note to the estate; claimants not entitled to expenses since 4 December 1907.

Orders

  • Claimants' ranking in liquidation restricted to £1000.
  • Direction to deduct £15, 15s. from liquidator's fee recalled.