winding-up effected without any double process or double set of proceedings: see per Selwyn, L.J., in Stringer's case, In re Mercantile Trading Co. (3). There are difficult and complicated questions to be settled between the liquidator and the directors, and it will be convenient that the shareholders should be bound by the findings of fact in this case as to the dividends being paid out of capital. That is the policy of the third party procedure. It will be merciful to the parties and will not embarrass the liquidator. Any person who has improperly received capital of the company, as the shareholders here have, is liable to refund it as against creditors. The directors' rights are analogous to those of trustees claiming indemnity. It is sufficient for the issue of a third party notice if there is a bonâ fide claim to contribution. John Henderson, for the proposed representative: This is an entirely novel proceeding: Buckley, 6th ed. 405. I submit that the Court has no jurisdiction, and, if it has, it is not convenient to exercise it. Gore Browne, in reply: If this were an action, the leave would be almost of course. VAUGHAN WILLIAMS, J.: I can make no order on this summons. I have no jurisdiction, in my opinion, to do so, and if I had, I should not in the circumstances exercise it. The directors have no right to bring these shareholders into the winding-up without their consent. They may be brought in for the statutory purpose of being made contributories, but not for the purpose of enabling the directors, who are being proceeded against for misfeasance, to recover from them, the shareholders, what they, the directors, may be ordered to pay. It is said the liquidator, as representing creditors, could bring shareholders in for the purpose of recovering from them capital received. I do not agree. The liquidator may avail himself of any rights which the directors may have against the shareholders, but he can only do so in a Court in which the directors could themselves recover, and the directors cannot recover (3) L. R. 4 Ch. 475, 494; 38 L. J. Ch. 628; 20 L. T. 591; 17 W. R. 694. in winding up. There is, therefore, no jurisdiction to make the order asked for here; but, apart from that, looking at the merits, a person is not entitled ex debito justitia to leave to serve a third party notice. It is a matter for the discretion of the Court, and in this case it is not to my mind convenient that leave should be given. Even were there jurisdiction and it was convenient, it is too soon to make such an order before the issues between the directors and the liquidator are more clearly defined. Solicitors: Guscotte, Wadham & Co., for the Applicants. Dawes & Sons, for the proposed Representative of the E. M. IN RE BANK OF SOUTH AUSTRALIA. 1895, February 26, 27. LORD HALSBURY, AND LINDLEY AND A. L. SMITH, L.JJ. Company-Winding-up-Agreement to Transfer Assets and Liabilities—Ultra Vires-Debt contracted in voluntary Winding-up-Supervision Order-Compulsory Order. An agreement duly entered into on behalf of a company by the liquidator in a voluntary winding-up, by which the assets and liabilities of the company are to be taken over by another company, and in the event of the liabilities exceeding the assets the difference with interest is to be a debt due from the selling company to the buying company, and the liquidator is, if necessary to meet the deficiency, to make a call on the shareholders to the extent of their reserved liability, is not ultra vires. Such a debt may be the basis of a petition for the compulsory windingup of the company. Semble, such a debt would support a petition for a supervision order. APPEAL from Vaughan Williams, J.* The above-named company (hereinafter called "the bank ") was 13 R. February, 238; 64 L. J. Ch. 144; 43 W. R. 299. M.-VOL. II. K an English company, and was formed under a deed of settlement dated 17 June, 1842, for carrying on the business of banking in South Australia. In the year 1847 it was incorporated by royal charter as the South Australian Banking Company. The charter reserved a power for the Crown to revoke the powers and privileges therein contained, and in case of revocation the bank was to be wound up, and-so the charter declared-"In the event of the revocation of such privileges as aforesaid, all and every the proprietors for the time being of any interest or share in the capital thereof shall be liable to be called on to contribute to the payment of the debts and liabilities of the said company," i.e., the bank, “to the extent of twice the amount of their subscribed shares; that is, for the amount subscribed or so much thereof as shall not have been previously paid up, and for an additional amount equal to the amount so subscribed." A supplemental royal charter, granted in 1864, changed the name of the bank to "The Bank of South Australia." 66 By a private Act, passed in 1884, called "The Bank of South Australia Act, 1884" (47 & 48 Vict. c. clxxviii.), the bank was empowered "to register itself as a limited company by the name of The Bank of South Australia, Limited,' under the Companies Acts, 1862 to 1880, with the constitution and powers defined by the said charters as modified and extended by this Act," and the said charters were to cease and determine " as from the date of the bank obtaining a certificate of registration as a company with limited liability under the Acts aforesaid. Section 7 of the Act went on to provide as follows: "Notwithstanding anything in the Companies Acts, 1862 to 1880, contained, the liability of the shareholders or members of the bank, in the event of the powers of the bank being determined and the affairs wound up, shall, after the bank is registered as aforesaid, as well in respect of notes issued by the bank subject as hereinafter mentioned as of other debts and liabilities of the bank, continue to be in accordance with the limited liability defined by the said original charter as amended by the said supplemental charter, that is to say, the extent thereof shall be twice the amount of the subscribed shares as in the said charter mentioned." In pursuance of the powers contained in this Act, the bank, on 30 December, 1884, caused itself to be registered under the Companies Acts as a limited company by the name of "The Bank of South Australia (Limited)," and on that day obtained a certificate of registration. The capital of the bank (which had been increased and then reduced) was, in 1891, 608,000l., divided into 32,000 shares of 191., all of which capital was fully paid up. In April, 1892, the shareholders of the bank passed resolutions for a voluntary winding-up, and authorised the liquidators to enter into an agreement, dated 11 April, 1892, and made between the bank and its liquidators of the one part, and the Union Bank of Australia (Limited) of the other part. The material clauses of the agreement were as follows: (i.) The Union Bank was to take over the undertaking and all the assets of the bank. (ii.) The Union Bank was, as the consideration for the transfer, to undertake all the liabilities of the bank and to keep it, its liquidators, and contributories, indemnified in respect of such liabilities. (viii.) If the aggregate amount of the value of the transferred assets should be less than the aggregate amount of the liabilities and of such moneys as might have been paid by the Union Bank in respect of the liquidation of the bank, the amount of such deficiency with interest from the date of the agreement was to be "deemed and treated as being a debt due by the Bank of South Australia to the Union Bank." (xiv.) "If at any time the assets of the Bank of South Australia in the hands of the liquidators shall not be sufficient to pay and discharge any debt due and payable to the Union Bank under these presents, the liquidators of the Bank of South Australia shall, so far as they legally can or may, make such a call or such calls upon the contributories of the Bank of South Australia as may be necessary to raise the amount required to pay and discharge such debt or liability." In pursuance of this agreement the Union Bank took over, from the date of the agreement, the entire assets of the bank and satisfied its liabilities to the extent of over 3,000,000l. The assets of the bank, when realised, fell short of this sum by 323,900l., and for this deficiency the Union Bank claimed the right to have a call of 251. per share made by the liquidators of the bank, the original amount of each share (which had already been all paid up) being 251. The liquidators refused to make the call on two grounds: first, that no liability on the part of the shareholders of the bank remained beyond the original 251. per share after registration under the Companies Acts; and, secondly, that the agreement could not be relied on as justifying the making of a call for any debt newly created by the agreement. The Union Bank, having no means of applying to the Court under section 138 of the Companies Acts to determine its rights-the right of application in a purely voluntary winding-up being limited to the liquidators and contributories-presented a petition for a supervision order which would enable it to obtain an adjudication as to its rights. On 9 August, 1894, VAUGHAN WILLIAMS, J., held (1), on the authority of Sir GEORGE JESSEL's ruling in In re Pen-y-van Colliery Co. (2), that the petitioners required for a supervision order the same qualifications as a petitioner for an ordinary winding-up order, and that the claim of the Union Bank, arising as it did under an agreement subsequent to the voluntary winding-up, was not a sufficient debt, not being provable in the voluntary winding-up, to support the petition—which he dismissed accordingly. The Union Bank then presented a petition for a compulsory order, to which they claimed to be entitled under section 145 of the Companies Act, 1862, being prejudiced by the continuance of the voluntary winding-up as the liquidators refused to make a call. Against this it was contended that the liquidators had no power under section 161 to contract a debt like the one in question, that the agreement to make a call was ultra vires, and that the extension of liability of the shareholders was intended to arise only on a revocation of the bank charter by the Crown, and not in an ordinary winding-up. On 6 December, 1894, VAUGHAN WILLIAMS, J., was of opinion that the extension of the shareholders' liability was intended (section 7 of the special Act) to apply to the case of an ordinary winding-up, and that on the true construction of the section the liquidators had power to call up the reserve liability; he was further of opinion that the agreement was not ultra vires, and that the liquidators had (1) 13 R. Feb. 238; [1894] 3 Ch. 722; 64 L. J. Ch. 44. |