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Scottish Court of Session Decisions |
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You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> City of Glasgow Bank Liquidation - (Liquidatois' Remuneration Case) - Jamieson and Haldane v. Anderson and Others [1880] ScotLR 17_800 (20 July 1880) URL: http://www.bailii.org/scot/cases/ScotCS/1880/17SLR0800.html Cite as: [1880] SLR 17_800, [1880] ScotLR 17_800 |
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Page: 800↓
Public Company
The total debts, secured and ordinary, of a banking’ company of unlimited liability which was being wound up under the supervision of the Court were £12,855,560, 3s. 6d. Of the ordinary debts £8,928,214, 10s. 5d. were paid during the first year and a-half of the liquidation, £7,396,940 being paid during the first year; and during the whole period secured debts to the amount of £1,724,342, 2s. 6d. were also paid. In these circumstances the Court allowed remuneration to the liquidators at the rate of three-eighths per cent. on the ordinary debts paid during the first year, and of a half per cent. on those paid in the remaining half-year.
In the liquidation of a company, where there are several liquidators, there is a presumption for equality in the apportionment of the remuneration: Circumstances in which the remuneration was divided unequally.
This was the sequel of the case reported March 19, 1880, supra, p. 483. In terms of the interlocator
Page: 801↓
then pronounced each of the liquidators lodged a statement of the work he had done in connection with the liquidation, and as far as possible of the time occupied therein. The substance of these statements appears sufficiently from the judgment of Lord Shand, infra. The case was advised without further argument, the opinion of the Court being delivered by
The matter is one of considerable difficulty and delicacy, and very careful consideration has been given to the conflicting views of the parties as contained in the printed papers given in by them respectively. The Court has also had the benefit of information of great value and use obtained from the Accountant in Bankruptcy and the Auditor of Court. These gentlemen have at our request supplied us with particulars regarding the general expense of the liquidation, apart from the remuneration of the liquidators, and regarding the legal expenses, a great part of which was incurred in settling questions with contributories, and have also furnished details as to the remuneration which has been given both in Scotland and in England to liquidators or trustees who have been engaged in administering and winding-up, judicially or voluntarily, large banking or mercantile companies.
It is unnecessary to attempt any recapitulation of the various duties which have necessarily devolved on the liquidators in the conduct of a liquidation which has certainly involved, as they state, “a very large and exceptional amount of labour, anxiety, and responsibility.” The joint statement by the liquidators, of 14th May last, gives an accurate and by no means exaggerated account of these duties. It will be convenient, and is indeed necessary, however, to state shortly the extent of the pecuniary intromissions which the liquidators have had, and with regard to which their remuneration must now be fixed.
|
At the commencement of the liquidation, as appears from the accounts, the total liabilities of the bank, secured and ordinary, were |
£12,855,560 |
3 |
6 |
The payments which have been made to the creditors are as follows, viz.—
|
During the first year of the liquidation—Secured debts paid |
1,617,982 |
6 |
8 |
|
Dividends on ordinary debts paid |
7,396,940 |
1 |
4 |
|
9,014,922 |
8 |
0 | |
|
From 22d October 1879 to 19th March 1880—Secured debts paid |
£106,359 |
15 |
10 |
|
Dividends on ordinary debts paid |
31,274 |
9 |
1 |
|
1,037,634 |
4 |
11 | |
|
10,052,566 |
12 |
11 | |
|
Leaving liabilities at 19th March 1880 amounting, exclusive of interest due, to On 23d March 1880 (four days after the close of the account) a fifth dividend of 1s. per £ was payable to the ordinary |
£2,803,003 |
10 |
7 |
|
Brought forward |
£2,803,003 |
10 |
7 |
|
creditors, for which the liquidators had an available balance provided of about |
600,000 |
0 |
0 |
|
Thus reducing the liabilities, exclusive of interest, at 23d March 1880, to |
£2,203,003 |
10 |
7 |
It will be seen from the above statement that the liquidators have made the following payments towards extinction of the ordinary debts:—
|
During the first year |
£7,396,940 |
1 |
4 |
|
From 22d October 1879 to 19th March 1880 |
931,274 |
9 |
1 |
|
£8,328,214 |
10 |
5 | |
|
And that at 19th March 1880 they had a balance in hand available to pay off an addition of, say, |
600,000 |
0 |
0 |
|
Making together |
£8,928,214 |
10 |
5 |
The parties differ widely as to the amount of remuneration to be allowed. From the note of 23d February of this year for Mr Jamieson and Mr Haldane, and answers for Mr Anderson of 5th March thereafter, it appears that these gentlemen indicated that in respect of the first three dividends which were paid during the first year of the liquidation a payment in all of £37,248 should be made as the liquidators' remuneration, being at the rate of
Page: 802↓
The respondents acknowledge the industry and professional ability with which the liquidators have discharged their duties, and the Court having in the constant supervision of the liquidation had frequent opportunities of knowing the conduct of the general business, cannot speak too highly of the energy, tact, and skill which the liquidators have shown throughout. The result has been to save large sums to the estate, by means of arrangements made with the assistance of the banks in Scotland, by which a great number of the creditors, in respect of present payment of their debts, were induced to forego their claims for interest, and also by effecting judicious compromises with the representatives of companies and individuals with whom the bank was deeply involved, whereby protracted and expensive litigation has been avoided and important securities for the benefit of the bank have been retained. The remaining business of the liquidation has also been brought into a comparatively small compass in a remarkably short time. The liquidation is one in which the remuneration should certainly be fixed on the footing that the work has been done extremely well and with remarkable expedition, having regard to the many large and complicated transactions in which the bank was engaged not only in this country but abroad.
The Court is satisfied there is no good reason for holding that the remuneration should be fixed according to the time occupied by each liquidator in the performance of his duties, and on the application of any scale of charges, such as that referred to by the respondents as applicable to liquidations of an ordinary nature in the Courts of Chancery in England. From the information furnished to us by the officials already named, with whom we have communicated, we have reason to think that this mode of remuneration applies only or mainly to official liquidators acting directly under the control of the Court; but however this may be, the reason or expediency of applying such a system in all cases is certainly open to question, and especially where the remuneration is to be given to liquidators selected by a large body of shareholders in an undertaking so important as the City of Glasgow Bank, where necessarily the peculiar qualifications for the delicate and important duties to be performed were in the view of the shareholders who made the appointment. And it must also be borne in mind that charges by time only, or where time occupied is the main element in determining the remuneration, are apt to lead to the result that the man of business who is slow in his work is better paid than one who is active, and there is an inducement to prolong the proceedings.
The Joint-Stock Companies Act of 1862 contemplates that a rate of commission shall be fixed as the ordinary mode of remuneration of liquidators who do not hold their appointments on salary, for it provides by section 93d “that there shall be paid to the official liquidator such salary or remuneration by way of percentage or other-wise as the Court may direct;” and the important, anxious, and responsible nature of this liquidation is a sufficient reason for saying that the remuneration should be by commission, and not according only to the time occupied by the liquidators respectively.
As to the amount on which the commission should be fixed, there seems to be no doubt that, in accordance with ordinary practice, the amount intromitted with, exclusive of the payments to creditors on secured debts, should alone be regarded. There is no reason in this case for adopting a different rule. It is no doubt reasonable and proper, in fixing the rate of commission to be allowed on the amount realised and paid to ordinary creditors, to bear in mind that besides that amount there was a further sum paid to creditors holding securities over that part of the funds on which they had a first charge; but this further sum ought not to be itself included in the amount on which the commission at the fixed rate shall be charged. Thus, in the present case, while giving a certain rate of commission on the sum of £8,928,214 of sums realised and paid to the ordinary creditors, it must certainly be kept in view that the liquidators had the trouble also of realising and distributing about £1,725,000 amongst creditors who were secured.
The difficult matter in this case is to fix the rate of commission which ought in the whole circumstances to be given. It is obvious that the remuneration to be divided amongst the four gentlemen who from October 1878 to March 1879—a period of a year and five months—devoted themselves to the arduous duties of the liquidation, and had intromissions of so great amount, must be correspondingly and exceptionally large; while, on the other hand, as a very slight increase in the rate of commission on a sum of nearly nine millions would produce a very large difference, the rate to be allowed ought not to be high, or at all on the same scale as in the case of an estate of ordinary though large amount. The rate of commission to be allowed is always a matter depending on circumstances. No fixed rule or principle can be laid down, but keeping in view the rates in practice allowed in ordinary cases where the trouble and responsibility and the extent of the sums intromitted with are not in any way remarkable, such a case as this liquidation must be dealt with on its own merits, bearing in mind on the one hand the exceptionally anxious and arduous nature of the liquidators' duties, and on the other the very large amount on which any given percentage will fall to be charged.
Taking all the circumstances into account, keeping in view that the amount is to be divided amongst four professionalmen of high standing, and proceeding also on their own personal knowledge of much even of the detail of the leading business of the liquidation, the Court has come to the conclusion that for the first year of the liquidation the rate of commission to be allowed as a reasonable and proper remuneration to the liquidators should be
Page: 803↓
The opinion arrived at by the Court, entirely on their own view of the special circumstances of the liquidation, that 3/9ths per cent. is a suitable remuneration to the four gentlemen who acted as liquidators for the first year of the liquidation, is strongly confirmed by the fact that the committee of shareholders originally intimated that after mature deliberation they had resolved to fix that rate as fair and reasonable on the amount of the first two dividends; and it is worthy of notice that a rate of
It is only further to be observed that in fixing the total amount of remuneration of the liquidators for division amongst them, we have had fully in view the information obtained, as already referred to, in regard to cases of bankruptcy and liquidations, judicial and voluntary, in this country and in England, including the cases of The Western Bank of Scotland; Overend, Gurney, & Co., Limited; Agra & Masterman's Bank; and The Northumberland and Durham, Bank. We do not find, however, that these cases give any assistance except in the most general way; for, as already explained, the amount of remuneration is necessarily dependent on the special and peculiar circumstances of each case. In some of the cases—as, for example, that of The Western Bank, in which there was a long-pending litigation against certain of the directors—the liquidations necessarily lasted over a long period of time, and the remuneration had relation to that circumstance. It has been pointed out to us that in the case of Overend, Gurney, & Co. a sum of nearly £60,000 was paid to two liquidators, with the approval of the Vice-Chancellor (Malins). Of this sum £40,000 was allowed in respect of funds realised and paid to creditors amounting to £4,913,136, 7s. 6d., being at a rate of over four-fifths per cent; and £19,639, 18s. 2d. was allowed on funds realised and repaid to the shareholders amounting to £414,192, 10s. 3d. The total remuneration—£59,639, 18s. 2d—was over one and one-ninth per cent. on the total payments to creditors and repayments to shareholders of £5,327,328, 17s. 9d. Again, in the case of The Northumberland and Durham Bank, in which the amount received was £2,205,708, commission at the rate of 2 per cent. was allowed or sanctioned by the same learned Judge. In both of these cases the liquidation lasted, and we presume necessarily lasted, over ten years, and there must have been very special circumstances to justify the very large remuneration allowed. Thus, in the case of Overend, Gurney, & Co. we have been informed that the labours of the liquidators included a careful supervision of the realisation of securities amounting to above £14,000,000, and that very considerable sums were realised through their instrumentality and paid direct to creditors without passing through the liquidators' accounts, and that these services were taken into consideration in dealing with the question of remuneration; and in the later stages of the liquidation the Vice-Chancellor gave effect to a recommendation by a committee approved of by a meeting of certain shareholders. We certainly cannot follow these cases as precedents for fixing the rate of commission in this case. The rate we are to allow is much more nearly the same in result as in the case of Agra & Masterman's Bank, decided by Vice-Chancellor Giffard (L.R., 7 Chan. 102), in which the period embraced in the account was from June 1866 to June 1868, and where a sum of £9000 was allowed on gross receipts to the extent of £3, 700, 000. That was the very peculiar case of a bank carried on by one liquidator only with a view to its reconstruction, and the remuneration was fixed in a great measure by a calculation of the time occupied by the liquidator and his assistants, and a sum added to the amount thus brought out—a course which, for the reasons already stated, we cannot adopt in this instance.
The very special circumstances of this liquidation, and the fact that four professional men have been engaged as liquidators in the work, are quite a sufficient reason for fixing a rate or percentage which yields a somewhat higher sum in proportion to the assets realised than was there given; but, on the other hand, the amount to be given is certainly moderate if compared with the remuneration given in certain of the English cases that have been referred to.
The statute empowers the Court further to direct in what proportions the amount fixed as remuneration shall be distributed amongst the liquidators. On this matter it is unnecessary to enter into details. In ordinary circumstances, as stated in the opinions of the Court in the advising of 19th March last, there is a presumption for equality in the apportionment of the remuneration amongst several liquidators; but having considered the detailed statements, with information as to the duties performed by each of the gentlemen in this liquidation, we think it would not be right or equitable to make an equal division. Mr Anderson, who has been for a considerable time at the head of a firm of high standing in Glasgow largely engaged in general business, particularly in business arising out of important mercantile bankruptcies, has, with the constant assistance of his son and partner, and
Page: 804↓
We think it right to add that the present decision leaves entirely open all questions in regard to the rate of remuneration to be allowed in respect of actings and intromissions later than those included in the account on which we have proceeded, and that this judgment is intended to apply to the personal services only of the liquidators, including the services of any partners who have aided them in their work. A. sum of £668 has been paid to clerks of Messrs Jamieson & Haldane, and the salaries of a number of clerks and officials of the bank who were continued in the service of the liquidators at the head office in Glasgow have been regularly paid. If there be any sums due to the clerks of Mr Anderson's firm for similar work done by them, it is not meant to affect the claim for remuneration to this extent, nor to affect the claims of Mr Anderson's partner Mr Muir for the special business mentioned at the close of Mr Anderson's statement of 22d May last, excepting the claim for assistance in preparing the first balance-sheet of the liquidators as at 31st December 1878, all charges for which are included in the remuneration now allowed to Mr Anderson.
The interlocutor of Court will fix the remuneration of the liquidators for the period in question at the sum of £35,400, to be distributed amongst them in the proportions above stated, and will authorise the liquidators to take credit for that sum in their accounts; and the expenses of the parties on this question of remuneration, including the fees and outlays due to the Accountant in Bankruptcy and. the Auditor of Court in respect of their inquiries and information given to the Court will be allowed as charges in the liquidation.
Counsel for Messrs Jamieson and Haldane— Pearson. Agents— Gibson-Craig, Dalziel, & Brodies, W.S.
Counsel for Mr Cameron— Guthrie. Agents— J. & J. Ross, W.S.
Counsel for Mr Anderson— Mackintosh. Agents— Webster, Will, & Ritchie, S.S.C.
Counsel for Shareholders—Dean of Faculty (Fraser, Q.C.)— Moncreiff. Agent— James W. Moncrieff, W.S.
