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1st Div. a new lease. But the late heir having died without appellants had a right to demand a new lease,

discharging his obligation I am of opinion that the but that right was personal and fell in 1914 Campbel

present heir of entail (the objector) is only bound on the death of the late heir of entail. town Coal Co. Ltd. v. as to the duration of the lease by the terms of the

On 14th November 1925 the Court recalled Duke of principal lease alone. I reach this conclusion ex

the order. Argyll

. facie of the documents before us. Accordingly, I

come to the conclusion that the termination of this November 14, lease is at Whitsunday 1927, and not in the year 1938

The Lord President (Clyde) [after narrating as the applicants contend. ... Accordingly, the the circumstances under which the appeal was proposition we have to deal with is this—whether it taken, and summarising the grounds of appeal]. is in the national interest that the powers the appli

. -Turning, in the first place, to the point of cants ask for should be granted in view of the fact law, the substance of the decision turns on the that they have less than two years of the lease to familiar principle that a mere personal obligation run, and that it appears pretty certain that at the termination of that period they will be turned out, to grant a lease is not binding on a singular and that they may be ejected sooner if it is decided successor of the granter ; and an heir of entail, that they have incurred an irritancy of the lease. .

as such, is a singular successor. The obligation Well, I am quite unable, on the evidence that has to accept a renunciation of an old lease and to been led, to reach the conclusion that there is any grant a new one, given by the heir of entail such risk within such a short time; and, accordingly, in possession in 1905, came into force at the my opinion on the whole matter is that this is not a date when the light railway was completed or case in which the application that is before us should working. At that date it is agreed that the be granted.

granter of the obligation was still in possession The other Commissioners (Mr Tindal Atkinson, of the estate, and remained so until 1914, when K.C., and Sir Lewis Coward, K.C.) concurred, the present heir succeeded him. It is clear on the assumption that the tenancy of the from the judgment of the ex-officio Commissioner applicants expired in 1927.

that if, in or after 1907 and before 1914, a formal The applicants appealed to the First Division renunciation had been made by the company, of the Court of Session, and the case was heard and a formal lease had been granted by the on 3rd and 4th November 1925.

heir of entail on which the company had entered Argued for the Appellants : The decision of into possession, such new lease would have been the ex-officio Commissioner that the appellants' regarded by him as binding on the next heir ; lease terminated in 1927 was wrong. The and no doubt rightly so—the company having agreement of 1905 had been acted on by both made their right a real one by entering into parties although there had been no renunciation possession before the granter's decease. I and no new lease. An agreement for a lease, purposely omit any reference to the specialty followed by possession, is equivalent to a lease introduced by section 9 of the Entail Act, 1882. and is binding on an heir of entail. The But a renunciation may be implied as well as appellants' lease, therefore, endured till 1938. express, and the substitution of a new tenancy The order of the Commission was pronounced for an old one is one of the ways in which a on the assumption that the ex-officio Commis- renunciation may be implied. An implied sioner's decision in law was correct, and there- renunciation is just as effective as an express fore it should be recalled.

one; and an heir of entail has, so far as I know, Argued for the Respondent: An heir of no privilege to avoid the effect of a renunciation entail had no power to grant a lease beyond where the actings of lessor and lessee set it up his own lifetime except under statute. As to by implication. Moreover, a new tenancy may minerals, he was limited to a period of thirty-one be constituted by a written obligation to grant years. If the agreement of 1905 were regarded a lease followed by actings (such, for example, as the lease, it was beyond the power of the as the payment of an increased rent), provided heir of entail to grant it, for it was a lease for these are sufficient to establish rei interventus ; thirty-three years (Kerr v. Redhead, 1794, and, if the tenant has taken possession, the new 3 Pat. App. 309; Earl of Galloway v. Duke of tenancy is none the worse because it is not Bedford, 4 F. 851, per the Lord President at supported by a formal document. I know of p. 859, and Lord Kinnear at pp. 863 and 868). nothing to limit an heir of entail to procedure A lease granted by an heir of entail can only in strict formal shape in granting a lease, or to bind his successor in so far as it does not con- entitle his successor to repudiate an informal travene the entail (Gillespie v. Riddell, 1908 contract, supported by rei interventus, and

. S.C. 628). The agreement, therefore, might followed by possession during his predecessor's be regarded as the lease except as regards lifetime. An heir of entail is just a fee-simple duration, where it contravened the entail. In proprietor, except in so far as the entail puts any case the appellants' possession was attri- him in fetters. Now, it was all along part of butable, not to the agreement, but to the lease the company's case that they were tenants in of 1900 as modified by the agreement. The possession of the mineral field upon a contract

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consisting of, inter alia, the original lease of

2ND Div.

SECOND DIVISION. 1900 and the agreement of 1905, and that the

· La conditions regarding the completion of the light

(The Lord Justice-Clerk, Lords Ormidale,

Lainiere railway referred to in the latter had been

de fulfilled in 1907. It is clear from the judgment

Hunter, and Anderson.)


Societe of the ex-officio Commissioner, and counsel so

7th November 1925.

Anonyme informed us, that the company in their reply

V. Glen at the very end of the hearing alleged actings 2. La Lainière de

Roubaix Société Glove and as constituting rei interventus; but, as they

Hosiery Anonyme Glen Glove and

Co. Ltd. justly complain, they were never properly

Hosiery Company Limited. challenged on the point, and had had no op

November 7, portunity either of submitting evidence with company-Winding-up-Petition by creditor to wind-up regard to what occurred between 1905 and 1914, company being sisted to allow it to present petition or of cross-examining the other side's witnesses for sanction of a scheme of arrangement-Com

panies (Consolidation) Act, 1908 (8 Edw. VII. cap. with regard to them. They say they could

69), section 120 — Petition for such sanction being have produced such evidence. But the ex-officio presented and meeting of company being held to Commissioner thought that such actings as the approve of scheme, the chairman of meeting to company's counsel was able to suggest in his

report the result to the Court-Objections being

lodged to such report maintaining (first) that the final reply on the case might not imply rei

creditors should have voted in separate classes interventus, and that whether they did or not

according to their interests; (second) that certain was immaterial, in respect that there had been creditors' proxies ought not to have been refused; no renunciation of the old lease. But, for the and (third) that the scheme was not a reasonable

one-Reporter appointed by the Court reporting in reasons I have given, the question whether there

favour of sanction being given-Held (diss. Lord had, or had not, been any renunciation of the Anderson) that the petition for sanction fell to be old lease is precisely part of the de quo. To refused in respect of all the objections taken, and decide the question ex facie of the documents

the petition to wind-up granted—Order for winding-up is to leave out of account the facts that nine

company accordingly pronounced. years, in which much may have happened,

Petitions. elapsed between the date of the agreement and the granter's death, and seven between the date of the completion of the light railway and Société Anonyme, Roubaix, Nord, France, pre

On 23rd May 1925 La Lainière de Roubaix that event; and that, as far as appears,

the real issue which the lessor's belated contentions sented a petition for the compulsory winding-up raised had never been present to the mind of either party as relevant to the decision of the Glen, Aberdeen, incorporated, 24th July 1916, application until too late for the facts (on which under the Companies Acts, 1908 and 1913, as a a determination of that issue depends) to be private limited company, on the averment that ascertained. At the debate before us the lessor extent of £675, 98. 10d. for goods supplied, and

the former company were creditors to the founded on certain of the documents as tending had failed to receive payment after repeated

9s to shew that no rei interventus had taken place.

demands therefor. It may well be so for aught that I know, but

On 6th June the respondent company lodged the documents by themselves are wholly inconclusive on that matter.

answers, averring :
It follows that the order appealed against
cannot stand. [His Lordship then dealt with 6. On 21st May 1925 the respondents sent to their
other questions with which this report is not creditors (including the petitioners) the letter of which

a form is produced and founded upon. At the date
of that letter negotiations had been successfully

concluded, as a result of which the said creditors Lords Skerrington, Cullen, and Sands con

were offered a dividend of 5s. per £ in cash, payable curred.

within fourteen days after the obtaining of their

consents. That dividend (the offer of which has not Counsel for Applicants and Appellants, J. A. been refused by the petitioners) is considerably more Christie, Clyde; Agents, W. & J. Burness, W.S. than that which would be yielded in the event of -Counsel for Objector and Respondent, Mac- compulsory liquidation of the respondents. phail , K.C., J. Ř. Dickson ; Agents, Lindsay, respondents and others, dated 22nd, 25th, 26th, and , ,

7. Conform to minute of agreement between the
Howe & Co., W.S.
N. M. L. W.

27th May 1925, a compromise with, inter alios, the
said creditors has been proposed, subject to consent
of a majority in number and three-fourths in value
of the shareholders and creditors of the respondents,
and to judicial sanction under section 120 of the
said Act. Already the requisite consents have been

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2nd Div. given, as shewn by the documents produced and Class II. Creditors who are to receive 5s. per £.

referred to with the said minute of agreement. Total amount present at meeting · £6207 16 41 La Reference is also made to the circular letter, dated Voted in favour of scheme

2297 13 31 Lainiere

26th May 1925, issued by the respondents to their de

Voted against the scheme

3910 31 Roubaix creditors, and herewith produced. Societe 8. In the whole circumstances, and especially

Class III. Creditors who are to receive deposits of Anonyme having regard to the fact that the composition

68. 8d.


£. v. Glen offered to the said creditors exceeds the possible

Total amount present at meeting . £8632 19 91 Glove and dividend payable to them in the event of liquidation,

Voted in favour of scheme

7332 30 Hosiery the respondents humbly submit that an order for Voted against scheme .

1300 16 9} Co. Ltd.

winding-up would be neither just and equitable November 7, nor in the interests of the petitioners, nor in accord- 3. Objection is also taken to the chairman's ruling

ance with the wishes of the majority of the creditors against certain proxies of creditors on the ground that and shareholders. Accordingly, the respondents these had not been timeously lodged at the registered respectfully crave that they be afforded an oppor- office of the company. Although repeatedly pressed tunity (of which they undertake to avail themselves to state his authority for so ruling, the chairman without delay) of submitting for approval of the refused to state it, and it is averred that no such Court a scheme of arrangement upon the basis of the authority exists in the Companies Acts, or elsewhere. terms set forth in the said minute of agreement. 4. Objection is also taken to the scheme on its The respondents' directors are most anxious (as merits in respect that a liquidation would furnish stated in the said letter dated 26th May 1925) that the creditors with a far larger dividend than that the respondents' factory be carried on so

as to offered under the scheme of arrangement. prevent unemployment. Not only would many 5. The proposed scheme of arrangement, which wage-earners suffer, but the respondents' prospects contemplates a transference of the petitioners' would be seriously hurt by the pronouncing of the undertaking as a going concern to Mr W. Watt order sought by the petitioners.

Hepburn, is not supported by any full and correct

statement of the company's affairs, nor has any The respondents pleaded, inter alia :

independent valuation of its assets been submitted “1. The petitioners' averments being irrele- to its members or creditors. The petitioners at vant and insufficient in law to support the various times have purported to assign and convey prayer of the petition, the petition should be to the Royal Bank of Scotland, Aberdeen, or to dismissed.

petitioners' own directors as guarantors to said bank, “2. The petition being premature and un- the greater part of their property, heritable and

moveable. For many months prior to the presentanecessary should be dismissed.

tion of the petition for winding-up by the Court, “3. The compulsory order for winding-up the petitioners have been trading in commercial craved by the petitioners, being unjust and co-operation with, and under the direction of, the inequitable, should be refused.

said bank. The objectors maintain that the alleged On 11th July the Court granted a sist in hoc transfers of assets to the said bank are invalid and statu.

inoperative as against the objectors and other trade On 16th July the respondent company pre- creditors. If such assets be included in the assets sented a petition for authority to caŭ and of the petitioners, there would be sufficient to pay hold meetings and for sanction of a scheme of the petitioners' creditors a dividend substantially

a arrangement. The Court ordered meetings of larger than any composition proposed by the the company and of its creditors, and appointed

6. For many months prior to the said petition for the chairman thereof to report, which he did. winding-up order, the present petitioners have also La Lainière de Roubaix Société Anonyme from time to time purported to divest themselves and William Archibald Son & Co. Ltd., Strude of a large part of their assets to individual directors Mills, Alva, lodged objections (which were in connection with guarantees undertaken by them afterwards amended) to the report.

on behalf of the petitioners. The objectors maintain The amended objections set forth :

that these alleged transfers are also invalid, and are inoperative as against the objectors and other trade

creditors, and that the assets available for distribu2. Objection is taken to said report on the ground tion among creditors accordingly fall to be largely that the creditors should have voted in different increased in amount. classes, i.e. Class I., creditors partly secured and

7. On 24th April 1925 the petitioners issued a partly guaranteed; Class II., trade creditors who circular to their creditors, including the objectors, under the scheme are to receive 58. per £; Class indicating that they were now unable to pay their III., creditors who are to receive deposits of 6s. 8d. debts. They urged that no proceedings should per £. Had this been done it is averred that there meantime be taken, as no one will be allowed to would not have been the requisite majorities in the acquire a preference.” On the following day twenty. various classes. The voting would have been as four cases of manufactured goods, the property of follows:

the petitioners, were delivered by them to the Class I. Creditors partly secured and partly London and North-Eastern Railway Co. at Aberguaranteed.

deen. The petitioners at the same time presented Total amount present at meeting £7700 for signature a delivery warrant or receipt in favour Of which there voted for the scheme 7700 of said bank. This delivery warrant, which was

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November 7


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accordingly signed by the custodiers, was incor- On 28th August the Lord Ordinary on the 2nd Div. rectly antedated to 23rd April 1925. 1925 the petitioners delivered to the said railway Winchester, Esq., W.S., to enquire as to the Lainiere

On 9th. May Bills (Lord Murray) remitted to W. G. L. company twenty-seven further

of manufactured goods belonging to them, delivery warrants regularity of the proceedings and the facts and de

Mr Roubaix in respect of these goods made out in favour of two circumstances set forth in the petition.

Societe individual directors of the petitioners being at the Winchester reported, inter alia :

Anonyme same time tendered by the petitioners and signed

V. Glen by the said railway company. The objectors believe

2. Objection is taken that the creditors should

Glove and and aver that the fifty-one cases referred to contained have voted at the meeting in different classes, i.e.

Hosiery approximately 5 tons of manufactured goods of the Class I., creditors partly secured and partly guar. Co. Ltd. value of £2500.

anteed; Class II., trade creditors who under the 8. The said circular letter was accompanied by an

scheme are to receive 5s. per £; Class III., creditors approximate statement of affairs," which shewed, that if this course had been followed there would not

who are to receive deposits of 6s. 8d. in the £; and by estimates but not by valuations, available assets to the extent of about 38. per £ only, and referred to have been the requisite majorities in the various

classes. an independent valuation of certain assets which was in the course of being made. Even on the figures different classes of creditors, and stated that Class

It is denied for the petitioners that there were in said valuation, which was signed by Mr Hepburn, I. is invented by the objectors, and comprises only who is now the prospective purchaser, the available that part of the claim against the company by the assets are far greater in amount, and when placed against the said approximate statement of affairs Royal Bank of Scotland which is not secured by shew assets available for the payment of at least division into Classes IŤ. and III. has been made in

assets of the company, and that the attempted 12s. per £ to creditors. All explanation of the discrepancy has been consistently denied to the objectors disregard of the terms of the scheme, Articles 2 and 3. and other creditors. Special reference is directed is no warrant for this division of creditors, and that

The reporter has come to the conclusion that there to the last sentence of the valuation, No note is taken of the manufactured goods stored by the Articles 2 and 3 of the proposed scheme dispose of railway company." ." It is believed and averred that

the objectors' contention. the manufactured goods stored with the railway

3. Objection is taken to the chairman's ruling company at the date of the said valuation exceeded against certain proxies of creditors being refused as the value of £10,000. It is further pointed out these had not been timeously lodged. that the valuation states that no allowance has

The petitioners' answer is that these were not been allowed for woollen yarns or cotton yarns still lodged at any time, but even if they had been lodged to be uplifted.” It is believed and averred that they would not have affected the result of the voting, the value of said yarns was at said date at least and the reporter is prepared to accept the statement £4000. The objectors believe and aver that there is of the officers of the company that they had no a substantial fund of assets available for and liable opportunity of examining the proxies in question, to satisfaction of their debts, and that the effect of and that their absence did not alter the result of

the voting. the proposed scheme of arrangement would be un. justly to deprive them of these. By approval of

4. Objection is taken to the scheme on its merits the said proposed scheme the objectors would in respect that a liquidation would furnish the further be precluded from obtaining the necessary under the scheme of arrangement. [Here the

creditors with a far larger dividend than that offered independent enquiry into, and decision of, the fore. going matters.

reporter dealt with the different contentions.] 9. The said report, on pp. 17 to 19 thereof, contains the procedure has been regular and proper, that it

In the whole circumstances the reporter finds that a list of “mandates from creditors," which were utilised to support the scheme, amounting in all to is in the best interests of all concerned that the £9959, 16s. 7d. The principal item of these is a

company should be continued under the agreement claim for £7700 by the said bank. ' It is disclosed by and amended objections for La Lainière de Roubaix

with William Watt Hepburn ; that the objections Article Fifth of the minute of agreement between (a) and William Archibald Son & Co. should be repelled, the petitioners, (6) Mr MʻRobert and others, and (c) and the scheme of arrangement sanctioned. Mr Hepburn, that the debit, if any, of said bank is fully provided for, and that they are to obtain

The parties were heard on the petitions, payment of 20s. per £. This vote was, notwithstanding, classed with trade creditors, and was em

answers, objections, and reports on 27th October ployed to compel the objectors to acceptance of the

1925. suggested dividend of 58. per £.

Argued for William Archibald Son & Co. 10. The objectors respectfully submit that the Ltd. The scheme propounded by the comproposed scheme of arrangement is not fair or pany had not received the necessary statutory reasonable or genuinely to the advantage of the approval, without which the Court could not petitioners' creditors, and that it is not such as have regard to the scheme. This was a case in should receive judicial approval. 11. Further, and without prejudice to the fore- different classes, as each class had a different

which the creditors ought to have voted in going, objection is taken generally to the procedure both prior to and at the said meeting of creditors, and interest from the other (Sovereign Life Assurparticularly to the refusal of the chairman to furnish ance Co. v. Dodd, [1892] 2 Q.B. 573 at p. 579). my information as to the company's financial position. Had there been different classes a majority vote


Co. Ltd.

2nd Div. of those with the real interest would have Hosiery Co., after a petition for a compulsory

La existed against the scheme. The bank and winding-up order had been presented by Lainiere guarantors, being entirely secured, had really unpaid creditors, applied to the Court to order

de no interest to vote. Secured creditors getting meetings of the shareholders and creditors for Roubaix

20s. in the £ could not give an uninterested vote the purpose of taking into consideration and, Societe Anonyme to creditors only receiving 5s. in the £. The if so resolved, of approving a compromise under

v. Glen scheme was inimical to the French company, which the unsecured creditors are to receive a Glove and and the vote of the bank ought not to have been cash dividend of 5s. in the £ on the amount of Hosiery considered. If so, the statutory majority was their claims. The Court authorised the holding

not present to permit of the Court approving of these meetings. The chairman at both the November 7, of the scheme. To sanction the scheme meant meetings, who is also the chairman of the com

that certain transactions referred to in the pany, has reported that the statutory majorities objections would not receive investigation. of both shareholders and creditors approved of Common interest of each class of creditors was the compromise. Objections were lodged by the principle involved, and the Court required certain of the creditors to this report. On to be satisfied that the scheme was fair and 28th August 1925 the Court remitted to Mr equitable, and it was not so here (In re Winchester to enquire into the regularity of the Empire Mining Co., (1890) 44 Ch. D. 402; In re proceedings and the facts and circumstances set Alabama, etc., Railway Co., [1891]1 Ch. 213 at p. forth in the petition, the report by the chair238; Gillies v. Dawson, 1893, 20 R. 1119). The man, and the objections and replies, and to

. chairman of the meeting also erred in reject- report. That report is now before us, and ing certain proxies of creditors on the ground suggests that we should repel the objections of that they were not timeously lodged (The Com- the dissenting creditors and sanction the scheme panies (Winding-up) Rules 1909, paragraph 147); of arrangement. The objecting creditors, how

Counsel for La Lainière de Roubaix Société ever, insist in their objections based upon two Anonyme adopted the foregoing argument, reasons, (first) that the statutory formalities and maintained that the scheme was imperfect have not been complied with, and (second) that and ill-considered, and could not be said to be the scheme itself is not, on its face, of so reasona reasonable one.

able a character that it ought to be imposed Argued for the Company: To justify the upon them. It is for the Court to say now Court in refusing approval of the scheme it whether these objections, or either of them, are had to be satisfied that a miscarriage of justice well founded. The conclusion which I have had occurred (In re English, Scottish, and reached is that the report ought not to be Australian Chartered Bank, [1893] 3 Ch. 385 at approved. pp. 414, 415). There was no real difference in

At the meeting of creditors the chairman the treatment of the various classes of creditors rejected certain proxies of creditors on the here. Their rights were identical and their ground that they had not been timeously lodged common interest to receive payment. at the registered office of the company.

In Even if a creditor held security, that did not taking the course which he did, the chairman take him out of a particular class of creditors. was apparently influenced by the provision as

On 7th November 1925 the Court (dissenting to shareholders voting by proxy. Lord Anderson) refused to approve of the com- opinion, however, he was wrong in applying promise and dismissed the petition craving this provision to creditors. Mr Winchester approval, and in the petition of the French takes the view that the absence of these proxies company ordered the company to be wound up. did not alter the result of the voting. This

depends upon whether all the creditors who Lord Hunter.—The Court can only sanction voted were entitled to vote, or at all events a compromise or arrangement whereby a to have their votes reckoned in the majority minority of creditors are forced without their necessary to override the views of the minority. consent to accept less than full payment of their The objecting creditors maintain that they were debts if there is satisfactory evidence that at not. a meeting of creditors, convened in terms of

According to the objections, the creditors section 120 of the Companies (Consolidation) who were present in person or by proxy were Act, 1908, a majority in number representing (first) the Royal Bank of Scotland, who were three-fourths in value of the creditors, or class partly secured and partly guaranteed creditors of creditors, present, either in person or by for the amount of £7700; (second) ordinary proxy, at the meeting agree to the compromise trade creditors, £6207, 16s. 44d.; and (third) or arrangement. Apart from this consideration, depositors. The contention of the objecting I think the compromise must be, on its face, creditors is that neither the Royal Bank nor equitable and not open to reasonable objections. the depositors should have been considered as

In the present case the Glen Glove and creditors in the same class as ordinary trade

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