Scottish Court of Session Decisions

The Kilmarnock Heritable Property Investment Co. (Limited) was registered under the Companies Act 1862 and 1867 in June 1874. Its objects were the acquiring for building purposes of land in or near Kilmarnock or elsewhere, borrowing money on the security of the capital or property of the company, lending money on heritable security, and in general the transaction of every kind of business transacted by building and property investment companies. The capital was £25,000 divided into £10 shares.

This was a petition by the trustees of the late Boyd Gilmour, creditors of the company to the amount of £4000, for the judicial winding-up of the company.

The petitioners set forth that the shareholders of the company had never exceeded seven in number, that two of these were now deceased, and of the other five three were bankrupt, and that nominal dividends only would be paid by their estates; that the business of the company had for some time been unprofitable, the profit and loss account showing a considerable loss.

The petitioners suggested an accountant in Glasgow as liquidator.

Answers were lodged for the company and David Broadfoot, accountant, who had for some time been secretary of the company, in which it was stated that in consequence of the state of the business it had been resolved prior to the presentment of the petition, by special resolution duly passed, to wind-up the company by voluntary liquidation, and that the respondent Broadfoot be appointed liquidator; that the resolutions had on 26th June (the day subsequent to the petition being served) been duly confirmed as required by the statutes. It was also set forth that the other creditors (of whom there were 15), whose debts amounted in all to £9935, did not concur in the petition.

Answers were also lodged for all the creditors, other than the petitioners, adopting the answers for the company.

Both sets of respondents submitted that the voluntary liquidation with the respondent Broadfoot as liquidator ought to proceed.

At the bar both parties consented to an order

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directing the winding-up to proceed under the supervision of the Court.

The petitioners objected to the liquidation proceeding with the respondent Broadfoot as liquidator, on the ground—(1) That being engaged as inspector of poor in a populous district he was unsuitable for the office; and (2) that he had failed when secretary of the company to have registered in the register of mortgages a heritable bond for £2000 which had been granted by the company.

Section 43 of the Companies Act 1862 provides—“Every limited company under this Act shall keep a register of all mortgages and charges specially affecting property of the company, and shall enter in such register in respect of each mortgage or charge a short description of the property mortgaged or charged, the amount of charge created, and the name of the mortgagees or persons entitled to such charge; if any property of the company is mortgaged or charged without such entry, as aforesaid, being made, every director, manager, or other officer of the company who knowingly and wilfully authorises or permits the omission of such entry shall incur a penalty not exceeding £50.” It is thereafter provided by the same section that the register of mortgages shall be open to the inspection of the creditors or members at all reasonable times, and provision is made for penalties for refusal of such inspection and for an order on the company to afford it.

It was stated for the respondent Mr Broadfoot —(1) That he was engaged in business as a property agent and accountant in Kilmarnock, and was quite able'to undertake the liquidation, being well aquainted with the property; (2) That he was not secretary at the time the bond referred to was granted, and that all that could be alleged against him was that he had not had the bond registered in the mortgage register after he came into office.

At advising—