Scottish Court of Session Decisions

This was a note in the liquidation of the City of Glasgow Bank by two of the liquidators—Mr Jamieson and Mr Haldane—to have their remuneration as liquidators fixed. The note set forth:—

“That at an extraordinary general meeting of the shareholders of the City of Glasgow Bank, held in Glasgow on 22d October 1878, the petitioners, along with William Anderson, C.A., Glasgow, and John Cameron, banker there, were appointed liquidators for the voluntary winding-up of the said bank.

At the said meeting it was, inter alia, resolved that each of the liquidators so appointed ‘may act separately, and exercise every power which by the Companies Act of 1862, and Acts amending and extending the same, is conferred on liquidators; and that the remuneration to be paid to them, and each of them, as such liquidators shall be left to be fixed by the following partners, who are hereby appointed a committee for the purpose, with full powers, viz.’—[ here followed the names].

On 27th November 1878 the Court pronounced an order directing and ordaining the

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voluntary winding-up of the said bank to be continued, but subject to the supervision of the Court, in terms of the Companies Acts 1862 and 1867, and declaring, inter alia, ‘that the creditors, contributories, and liquidators of the said company, and all other persons interested, are to be at liberty to apply to the Court as there may be just occasion.’

Immediately on their appointment the liquidators entered upon the duties of their office, and they have since devoted a very large portion of their time to the conduct of the liquidation. On 22d October 1878 the total indebtedness of the bank to the public amounted to £12,855,560, 3s. 6d. At the close of the first year of the liquidation, ending 22d October 1879 the liquidators had realised from the assets of the bank £4,856,666, and from calls made on contributories £4,452,366, 5s. — making together £9,309,032, 5s.; and during the same period they had reduced the indebtedness of the Bank by payments to creditors amounting to more than £9,000,000. Besides payment of debts preferably or specially secured, the following dividends have been paid to the creditors of the bank, viz.:—

Payable.	Rate.
1. 28th February 1879,	6s. 8d. per pound.
2. 20th June 1879,	3s. 4d. per pound.
3. 17th October 1879,	3s. 4d. per pound.
Total,	13s. 4d. per pound.

… It was a condition of the engagement made with the petitioners that the remuneration to be paid to them and to Mr Anderson should be fixed by way of commission according to the ordinary professional rules applicable to the case of a trustee in a sequestration, and that a fourth liquidator should be appointed to devote his time exclusively to the business of the liquidation, and to be paid by a fixed salary. In accordance with this latter arrangement Mr Cameron was appointed, and has since acted. The petitioners believe that his salary was fixed at £2500 per annum.

Of the seven partners of the bank who were appointed members of the committee above mentioned, five have surrendered their estates to the liquidators, and have ceased to be partners of the bank, the only two who now remain partners being Mr John Wilson and Mr Archibald Russell, both of Glasgow. The petitioners are advised that the persons nominated on the said committee, upon ceasing to be partners of the bank, became disqualified from acting as members of the committee, and that the powers of the committee are not vested in the remanent members….

In the month of June 1879 certain communications took place between Messrs Wilson and Russell, who were at that time the only members of the original committee who remained partners, and who were acting in conjunction with certain large contributories of the bank on the one hand, and the liquidators other than Mr Cameron on the other hand, as to the remuneration of the said liquidators. These communications ended with a letter dated 30th June 1879, addressed by Mr John Wilson, Glasgow, to the petitioners and Mr Anderson, stating that he and those acting with him, including Mr Russell, had ‘resolved after mature deliberation, to fix as a fair and reasonable remuneration for your services as liquidators, in full, up to the present date, 3–8ths per cent upon the gross amount of the first and second dividends now declared and paid to the creditors.’ The amount paid in respect of the first and second dividends (exclusive of other large sums paid to creditors preferably or specially secured) was £5,581,380; and the commission thereon at the rate of 3–8ths per cent. was £20,931.

The petitioners, while not admitting that it was competent for Mr Wilson and Mr Russell, as the two remaining members of the original committee, to act under the resolution of 22d October 1878, were willing for their own part, with a view to an amicable settlement and without prejudice, to acquiesce in the terms of the said letter in so far as regards the remuneration there dealt with. On the faith of this letter, and in reliance on the services there dealt with not being remunerated on a lower scale than was there indicated, the petitioners have continued in office as liquidators from 30th June 1879 to this time.

In the accounts submitted by them to the shareholders for the year to 22d October 1879, the liquidators entered as the amount of their own charge £37,248. This sum was made up thus:—

1. Commission to Messrs Anderson, Jamieson, & Haldane at 3 8ths per cent. on the amount of the two first dividends, in terms of the said letter of 30th June 1879,.	£20,931 0 0
2. Commission to Messrs Anderson, Jamieson, & Haldane at 3 4ths per cent. on the amount of the third dividend, which appeared to Mr Anderson and the petitioners to be a fair and moderate rate, … ..	13,817 0 0
3. Salary to Mr Cameron for one year, ….	2,500 0 0
As above,	£37,248 0 0

It appeared to the petitioners that there was also a fair claim to some commission at a modified rate on sums paid to creditors other than those ranked for dividend, and Mr Cameron indicated that he considered himself entitled to some special consideration. To meet these possible charges, and to provide a margin for any contingency, the liquidators set aside a further sum of £10,000 as ‘reserve to meet any further charges to date of balance.’

To the above entry of £37,248 in the said accounts the following note was appended:— ‘This is subject to adjustment with the committee of shareholders; of the seven originally appointed, only two now remain partners.’ This was stated in view of the contemplated reconstruction of the committee afterwards referred to … . . These communications, however, resulted in an arrangement that the vacancies in the original committee should be filled up at the meeting, the selection of the new members being made with the assent of the petitioners; that the committee thus re-constituted should consult with the Accountant of Court; and that both to the committee and the liquidators there should be specially reserved the right of appeal to the Court. On the day of the meeting on 30th December last, however, it was intimated to the petitioners that the stipulations as to consultation with the

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Accountant of Court, and as to the appeal to the Court, were unacceptable to the parties who took a lead in these negotiations, and a committee was proposed, to the constitution of which the petitioners could not assent. No committee therefore was appointed.

On 13th January 1880, therefore, the petitioners addressed a letter to Messrs Wilson and Russell, in which they stated that they had fully expected in October 1879 that the committee of shareholders would have been re-constituted in a manner satisfactory to all parties interested; that they were about to apply to the Court of Session to determine that which they were advised, Messrs Wilson and Russell were no longer competent to decide, viz., the amount of remuneration due to Mr Anderson and themselves, and the proportions in which it should be divided; and setting forth their reasons for taking this course, at the same time indicating their readiness to refer their claims to arbitration, provided always the decision of the arbiters should receive the sanction of the Court.

The petitioners awaited a reply to this letter; but in place of such reply there has been issued and intimated to them a pretended deliverance or award, dated 18th February 1880, and signed by Messrs Wilson and Russell, bearing to determine the amount of remuneration to be paid to the liquidators, and to each of them, in terms of the authority conferred on the committee by the said resolution of 22d October 1878.

In this document Messrs Wilson and Russell assume to fix the remuneration to Mr Anderson and the petitioners for the whole period up to 22d October 1879 at £13,906, 13s. 4d., in respect of the three dividends then paid, amounting to £7,423,531, whereas by their letter of 30th June 1879 they had fixed the remuneration to the same parties at £20,931, in respect of the two dividends then paid, amounting to £5,581,380. The said deliverance was outwith the power of the said Messrs Wilson and Russell, and is not binding upon the petitioners.

In these circumstances the petitioners are under the necessity of presenting this application to the Court to have the amount of their remuneration fixed, and the proportion due to each of them determined.”

The petitioners prayed the Court “to fix and declare the amount of remuneration to be paid to Mr Anderson and the petitioners, or at least to the petitioners, and also the proportions in which such remuneration shall be distributed among them, and to authorise the liquidators to take credit for the payment thereof in their accounts.”

The award by Messrs Wilson and Russell above referred to was in these terms:—

“ Glasgow, 18 th February 1880.

As remanent and acting members of the Committee appointed at a meeting of the shareholders held on 22d October 1878, we now proceed, in terms of the authority then conferred, to determine ‘the amount of remuneration to be paid to the liquidators, and to each of them.’

This duty we should willingly defer until after payment of a dividend now stated to be on the eve of declaration, were it not that we are pressed by some of the liquidators to dispose of the matter without further delay.

We need hardly state that the matter is one which has received our most anxious consideration; nor do we require to add that it has been our earnest wish to do justice alike to the liquidators and to the shareholders.

The result of the liquidation, in as far as it has gone, has been highly satisfactory. For this result the shareholders must feel that they are indebted mainly to the zeal, the industry, and the professional ability which the liquidators have brought to the discharge of their office.

The result at which we have arived is—(1) that the remuneration should be on the principle of a commission—indeed, this was the understanding on which Mr Anderson and Mr Jamieson accepted office: and (2) that such commission should be chargeable solely upon the dividends paid to the creditors of the bank, and not upon any other moneys; also that it should be at the following rates, viz. —

(1) On the first and second dividends, amounting together to 10s. per £, at the rate of one-quarter (or 5s.) per cent….	£13,952 0 0
(2) On the third dividend, at the rate of three-eighths (or 7s. 6d.) per cent..	6,908 0 0
	£20,860 0 0

With regard to the above sum of £20,860, we are of opinion that it falls to be apportioned or allocated thus—

1/3d to Mr Anderson.

1/3d to Mr Cameron; and

1/3d to Messrs Jamieson and Haldane.

Prior to the meeting at which the liquidators were appointed, it was arranged with Messrs Jamieson and Haldane that in a matter of remuneration they ‘should count as for one.’ Indeed, it has been the opinion of the shareholders that three liquidators were amply sufficient, and the nomination of Mr Haldane was agreed to solely on the footing of the arrangement to which reference has just been made.

It will, we believe, not be gainsaid that Mr Anderson and Mr Cameron have each performed his full share of the duties of the liquidation.

This being so, each of them is entitled to one-third of the total remuneration.

It remains to state that while giving, as we now give, to Messrs Jamieson and Haldane full credit for the way in which they have discharged their share of the duties, we feel satisfied that that share did not, either in point of labour or in point of responsibility, exceed the share performed by either of their colleagues.

In a letter dated 13th ultimo, addressed to us by Messrs Jamieson and Haldane, they state that ‘the committee made arrangements with Mr Cameron as to his salary, which the comparatively rapid progress of the liquidation may make it desirable to reconsider.’

At an early stage of the liquidation, and because of his having been taken away from an official appointment, Mr Cameron had expressed his willingness, in conversation with one of the committee—neither of us—to accept £2500 per annum; but this, as he imforms us, and as we believe, proceeded on the assumption that the liquidators were to be dealt with by way of a fixed annual allowance and not by way of commission.

From anything that may have passed in the conversation referred to, we do not regard

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Mr Cameron as either in law or in equity debarred from demanding remuneration at a higher rate than £2500 per annum; but even were the case otherwise, there is nothing to prevent us from enlarging his remuneration to such fair and reasonable extent as we may deem proper, if, as we hold, and as undoubtedly has been the case, he has adequately performed one-third of the entirety of the work.

If we have not misunderstood Messrs Jamieson and Haldane's letter, those gentlemen appear to think that if any such arrangement as that referred to was truly come to with Mr Cameron, the arrangement is one the benefit resulting from which must accrue solely to his colleagues.

Now, the question whether any such arrangement was or was not come to, appears to us to be a question solely between Mr Cameron on the one hand and the shareholders on the other—in other words, to be a matter which, while it might be pleadable by the shareholders, would not be pleadable by any of Mr Cameron's colleagues.

But even assuming that there was an arrangement to the effect stated, it by no means follows that any benefit thence resulting must accrue to Mr Anderson and Messrs Jamieson and Haldane. If made at all, the arrangement was not made for their benefit or in their interest. In particular, it could never have been intended thereby to increase the amount to which otherwise these gentlemen might be entitled. If made at all, it was made solely in the interest of the shareholders, and consequently whatever benefit may thence result must accrue to the shareholders, and to the shareholders alone

John Wilson.

Arch. Russell.”

The two other liquidators appeared and lodged answers. One of them (Mr Anderson) concurred generally in the petition but added the following explanation:—“That at and previous to the time when the liquidators were appointed, it was expressly agreed that the respondent should share in the remuneration equally with Messrs Jamieson and Haldane—these gentlemen in the said matter counting as one,—and the fourth liquidator being to be paid by salary, as set forth in the petition.” The remaining liquidator (Mr Cameron) submitted that the award of Messrs Wilson and Russell “is binding both on the shareholders and on the liquidators, but if not, that at all events it conclusively shows that he is under no obligation to accept £2500 as full remuneration for his services;” and further,” in the event of the award not being held binding, that in any adjustment of his colleagues’ remuneration provision must be made for his receiving one-third share at least of the total sum to be divided among the whole liquidators.”

Thirty-three of the remaining solvent shareholders also lodged answers, in which they stated—“( First), That looking to the large sums dealt with by the liquidators, remuneration by commission calculated by percentage is inapplicable, and that their remuneration should be fixed on the basis established in England in May 1868, by order sanctioned by the Lord Chancellor, and still in force, viz., of taking according to a given scale—1st, the amount of assets divided among unsecured creditors; 2dly, the number of hours devoted to the business by the liquidator; and 3dly, of leaving it to the Court to determine whether in the special circumstances the sum thus brought out by the given scale should be increased or diminished: ( Secondly), That in fixing the amount of the remuneration the Court should deal with the petitioners Messrs Jamieson and Haldane as one, and therefore proceed as if there were only three liquidators: ( Thirdly), That Mr Cameron should not be precluded from claiming an equal third of the said sum: ( Fourthly), That the sum upon which remuneration should be allowed to the liquidators should be confined to the sums paid to creditors ranked for a dividend: ( Fifthly), That if the remuneration is to be by way of commission, it should not exceed 1 4 per cent. upon the three dividends already paid, and that no commission should be allowed on sums paid to creditors other than those ranked for a dividend. Commission at that rate would yield £18,558 or thereby, which would give £6186 to each liquidator, counting the petitioners as one. This, it appears to the respondents, would be a very liberal allowance, even on the footing, which they are willing to adopt, that the liquidators have had exceptional trouble and shown exceptional despatch. If it is established that Mr Cameron is only entitled to claim a salary of £2500 a-year, the respondents maintain that the difference between that sum and the one-third to which he otherwise would have been entitled does not fall to the other liquidators, but falls to be credited to the shareholders of the company. Otherwise the respondents maintain that the sum to be paid to the liquidators must be reduced by the amount of the said difference.” ….

The following was the official registered statement of what was done at the meeting of 22d October 1878, at which the liquidators were appointed:—

“The Companies Act 1862

(25 and 26 Vict. cap. 89).

UNLIMITED COMPANY.

Copy Resolutions passed at an Extraordinary General Meeting of the City of Glasgow Bank, pursuant to sub-section three of section one hundred and twenty-nine of ‘The Companies Act 1862,’

and

Printed and forwarded to the Registrar of Joint-Stock Companies in terms of section fifty-three of the said Act;

with annexed

Copy of Certificate by the Registrar of Joint-Stock Companies for Scotland of the Receipt and Registration of said Resolution.

THE CITY OF GLASGOW BANK.

At an Extraordinary General Meeting of the City of Glasgow Bank, held within the City Hall, No. 90 Candleriggs, Glasgow, on Tuesday the 22d day of October 1878, at two o'clock in the afternoon, the following Extraordinary Resolutions, pursuant to sub-section three of section one hundred and twenty-nine of ‘The Companies Act 1862,’ were passed:—

1. That it has been proved to the satisfaction of this meeting that the City of Glasgow Bank cannot by reason of its liabilities continue its business, and that it is advisable to wind up the same.

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2. That the City of Glasgow Bank be wound up voluntarily.

At the same meeting the following motion was unanimously carried:—

3. That the meeting proceed to appoint liquidators for the purpose of winding up the affairs and distributing the property of the Company, and that each of them so appointed may act separately, and exercise every power which by ‘The Companies Act of 1862,’ and Acts amending and extending the same, is conferred on liquidators; and that the remuneration to be paid to them, and each of them, as such liquidators, shall be left to be fixed by the following partners, who are hereby appointed a committee for the purpose, with full powers, viz.—John Wilson, Treasurer of the City of Edinburgh; J. H. Annandale, Lasswade; Robert Young, Glasgow; Archibald Russell, Glasgow; John Cunninghame, Ardrossan; G. W. Clark, Glasgow; and John Wilson, Glasgow.

And thereafter, in virtue of four separate motions, which were also unanimously carried, the following gentlemen were severally appointed liquidators, each with the powers and under the conditions foresaid, viz.—Mr William Anderson, chartered accountant, Glasgow; Mr Auldjo Jamieson, chartered accountant, Edinburgh; Mr John Cameron, banker, Glasgow; and Mr James Haldane, chartered accountant, Edinburgh.

Rob. S. Aikman, Law Secretary, Clerk to Meeting.

City of Glasgow Bank, Glasgow, 23d October 1878.

COMPANIES REGISTRATION OFFICE.

Exchequer Chambers, Edinburgh.

Received and registered under the Companies Act 1862, this thirtieth day of October 1878, the Extraordinary Resolution of the City of Glasgow Bank to wind up voluntarily. “ STAIR AGNEW,

Registrar of Joint-Stock Companies for Scotland.”

On 12th October 1878 Mr Jamieson had written to Mr Archibald Russell, as one of the committee of shareholders, stating his readiness to place his services if desired at the disposal of the shareholders, and he stated in a postscript to that letter—“Should I be named, it would be agreeable to me, and no doubt advantageous for the business, that my partner Mr Haldane should be named along with me, but of course in any question of emolument we should rank as one.” This other letter was subsequently written:—

Letter, Mr Jamieson to Treasurer Wilson, Edinburgh, dated 19th October 1878.

Dear Sir,—As arranged to-day when I met you, I send you a copy of the memoranda I prepared after learning on Monday that it was likely my name might be mentioned favourably. These were written for my own satisfaction only, and to show to one or two confidential friends on whose advice I rely.

In sending them to you, I do not expect you to read them all, but you will see from them my reasons for the main resolutions I have formed—first, that I cannot go into the liquidation unless Mr Haldane is associated with me; and second, that I cannot accept a salary, or any method of remuneration equivalent to salary.

I need not say that I hope you will regard these papers as strictly confidential to yourself, and to such other members of the committee as you may deem it right to select under the same seal of confidentiality.—I remain, yours faithfully,

“Geo. Auldjo Jamieson.”

In one of the memoranda referred to in this letter Mr Jamieson stated, inter alia, that—“(1) It will be necessary that along with me shall be associated as a liquidator my partner Mr Haldane; in the event of there being a liquidator appointed who undertakes to devote a larger part of his time to the duties than we may be expected to do together, or if another couple of partners are appointed, then Mr Haldane and I are to be regarded as one in any question of remuneration. This, however, will come to be matter rather for arrangement among the liquidators themselves. (3) If the remuneration is to be paid, as has been suggested, in the form of salary, I cannot accept the office. I cannot accept what would imply a corresponding claim on my full time, and it is not consistent with the professional rule on which I have always acted to bargain beforehand as to remuneration, especially when the extent and nature of the work is so perfectly indefinite as it is in this case.”

The 93d section of the Companies Act 1862 (25 and 26 Vict. cap. 89) provided—“That there shall be paid to the official liquidator such salary or remuneration by way of percentage or otherwise as the Court may direct; and if more liquidators than one are appointed, such remuneration shall be distributed amongst them in such proportions as the Court directs.”

The 151st section of the same statute provided—“Where an order is made for a winding-up subject to the supervision of the Court, the liquidators appointed to conduct such winding-up may, subject to any restrictions imposed by the Court, exercise all their powers without the sanction or intervention of the Court, in the same manner as if the company were being wound-up altogether voluntarily; but save as aforesaid, any order made by the Court for a winding-up subject to the supervision of the Court, shall, for all purposes, including the staying of actions, suits, and other proceedings, be deemed to be an order of the Court for winding-up the company by the Court, and shall confer full authority on the Court to make calls, or to enforce calls made by the liquidators, and to exercise all other powers which it might have exercised if an order had been made for winding-up the company altogether by the Court; and in the construction of the provisions whereby the Court is empowered to direct any act or thing to be done to or in favour of the official liquidators, the expression ‘official liquidators' shall be deemed to mean the liquidators conducting the winding-up subject to the supervision of the Court.”

The arguments of parties sufficiently appear from the above narrative.

Authority— Agra and Masterman's Bank, Dec. 14, 1868, L.R., 7 Eq. 102, note.