BUSINESS ENTITIES (LAW09130)
2020-21
Compulsory and Voluntary Liquidation Case Summaries
The following cases are referred to in the lecture power-point slides on compulsory
and voluntary liquidation:
Power of the court to refuse a winding up order
Mann v Goldstein [1968] 2 All ER 769 – Winding up petition disputed due to
disputing the debt in question – injunction granted.
A winding up petition was brought on the grounds that the company was unable to
pay its debts. The company applied for further proceedings to be restrained on the
basis that the debts were in dispute. Held: The injunction should be granted. Despite
evidence that the company was in fact unable to pay its debts as they fell due, the
court would not grant the petition where there were substantial grounds for disputing
the debt in question.
Ungoed-Thomas J: "...the winding up jurisdiction is not for the purpose of deciding a
disputed debt (that is, disputed on substantial and not insubstantial grounds) since,
until a creditor has been established as a creditor he is not entitled to present the
petition and has no locus standi in the Companies Court; and that, therefore, to invoke
the winding up jurisdiction when the debt is disputed or after it has become clear that
it is so disputed is an abuse of the process of the court.."
S.212 IA 1986
Re d’Jan of London Ltd [1994] 1 BCLC 561 Company director signed insurance form
mistakenly that he was not previously a director of a company that became
insolvent. Insurance company refused to pay out on fire which damaged company
property. Whilst director was negligent, the act was honest mistake.
A director of a company, d’Jan, signed an insurance proposal form that had been filled
in by the broker without reading it. The form asked whether the director had ever
been a director of a company that had become insolvent, and the broker had filled in
the answer ‘no’ whereas in fact d’Jan had been a director of a company that had
become insolvent a year earlier, and two other companies 5 years earlier. A fire broke
out at the company’s premises which destroyed stock, and the insurance company
refused to pay out. The company went into liquidation, and the liquidator brought
summary proceedings against d’Jan under s.212 IA 1986 for negligence.
Held: Mr D’Jan was negligent in failing to read the form before signing. In the event,
d’Jan was excused part of his liability under the discretionary remedy under what is
now s.1157 CA 2006 as the court considered that he had acted honestly and
reasonably.
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2020-21
Compulsory and Voluntary Liquidation Case Summaries
The following cases are referred to in the lecture power-point slides on compulsory
and voluntary liquidation:
Power of the court to refuse a winding up order
Mann v Goldstein [1968] 2 All ER 769 – Winding up petition disputed due to
disputing the debt in question – injunction granted.
A winding up petition was brought on the grounds that the company was unable to
pay its debts. The company applied for further proceedings to be restrained on the
basis that the debts were in dispute. Held: The injunction should be granted. Despite
evidence that the company was in fact unable to pay its debts as they fell due, the
court would not grant the petition where there were substantial grounds for disputing
the debt in question.
Ungoed-Thomas J: "...the winding up jurisdiction is not for the purpose of deciding a
disputed debt (that is, disputed on substantial and not insubstantial grounds) since,
until a creditor has been established as a creditor he is not entitled to present the
petition and has no locus standi in the Companies Court; and that, therefore, to invoke
the winding up jurisdiction when the debt is disputed or after it has become clear that
it is so disputed is an abuse of the process of the court.."
S.212 IA 1986
Re d’Jan of London Ltd [1994] 1 BCLC 561 Company director signed insurance form
mistakenly that he was not previously a director of a company that became
insolvent. Insurance company refused to pay out on fire which damaged company
property. Whilst director was negligent, the act was honest mistake.
A director of a company, d’Jan, signed an insurance proposal form that had been filled
in by the broker without reading it. The form asked whether the director had ever
been a director of a company that had become insolvent, and the broker had filled in
the answer ‘no’ whereas in fact d’Jan had been a director of a company that had
become insolvent a year earlier, and two other companies 5 years earlier. A fire broke
out at the company’s premises which destroyed stock, and the insurance company
refused to pay out. The company went into liquidation, and the liquidator brought
summary proceedings against d’Jan under s.212 IA 1986 for negligence.
Held: Mr D’Jan was negligent in failing to read the form before signing. In the event,
d’Jan was excused part of his liability under the discretionary remedy under what is
now s.1157 CA 2006 as the court considered that he had acted honestly and
reasonably.
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