Re “L” Hotel Co Ltd and Langham Hotel Co Ltd

 

Re “L” Hotel Co Ltd and Langham Hotel Co Ltd

COMPANY; Other Company: CIVIL PROCEDURE

CHANCERY DIVISION

UTHWATT J

11 DECEMBER 1945

Companies – Practice – Reconstruction – Transfer of property and liabilities to another company – Form of order – Companies Act, 1929 (c 23), s 154 – RSC,

Ord 53B, r 13 – Appendices to RSC, 1883, App L, No 37.

Where an application is made to the court under the Companies Act, 1929, s 154, for an order transferring the property and liabilities of the transferor

company to the transferee company, the order should not contain any limitation showing that it cannot have the effect of transferring a purely personal

contract, because such an order can only transfer such property as could be transferred by an act inter partes. Where the order is one transferring all the

property of the transferor company, it is not legally necessary to specify all the various properties of the company in schedules to the order. RSC, Ord 53B, r

13, which authorises the use of the scheduled form of order, is permissive and not mandatory.

Notes

This is a point of practice in regard to an order transferring property of a company. It is unnecessary to burden such an order with a full specification of all the

properties of the company, and equally unnecessary to negative the transfer of property such as personal contracts which cannot be transferred inter partes.

For RSC, Ord 53B, r 13, and Appendix L, No 37, see Yearly Practice of the Supreme Court, 1940, pp 1044 and 2836.

Case referred to in judgment

Nokes v Doncaster Amalgamated Collieries Ltd [1940] 3 All ER 549, [1940] AC 1014, Digest Supp, 109 LJKB 865, 163 LT 343.

Application

Application by adjourned summons, under the Companies Act, 1929, s 154, for an order transferring the property of the Langham Hotel Co Ltd to the “L”

Hotel Co Ltd, pursuant to a scheme sanctioned by the Court for the reconstruction of the Langham Hotel Co Ltd. The summons asked for an order (i) that the

undertaking and all the properties, rights and powers of the transferor company be transferred, pursuant to the Companies Act, 1929, s 154(2) to the transferee

company, and (ii) that all the debts, liabilities and duties of the transferor company, other than its indebtedness in respect of certain debenture stock, be

(pursuant to that section) transferred to the transferee company. The following questions were raised as to the form of the order: (i) whether or not there

should appear in the order some limitation showing that the order could not have the effect of transferring a purely personal contract; (ii) whether the use of

the form of order authorised by RSC, Ord 53B, r 13, was mandatory or permissive.

􀂭 319􀀉

W Gordon Brown for the applicants, “L” Hotel Co Ltd.

11 December 1945. The following judgment was delivered.

UTHWATT J. This is an application under the Companies Act, 1929, s 154, for an order vesting the property of the old company (in the Act referred to as

the “transferor company”) in the transferee company, and two questions are raised as to the form of the order.

As to the first question, it is clear that since the decision of the House of Lords in Nokes v Doncaster Amalgamated Collieries Ltd, an order made under

this section in perfectly general terms transfers all the property and all the liabilities of the transferor company to the transferee company, but does not operate

to transfer purely personal contracts. At the root of that decision lies the undoubted principle that there is transferred, by virtue of a vesting order made under

the section, only such property as could be transferred by an act inter partes. The point raised by the registrar (and properly raised, I think, as it is a matter of

general practice and it is right that the practice should be correct) is whether or not there should appear in the order some limitation which shows that the order

cannot have the effect of transferring a purely personal contract. I am clearly of opinion that it is neither necessary nor desirable that there should appear in

the order any such exception. The order works according to law when expressed in general terms. Why enter upon a statement as to what the effect of the

All England Law Reports 1936 - books on screen™

All ER 1946 Volume 1

Preamble

order in a particular case, or particular classes of cases, is understood to be? I see no reason whatever.

The second question is in regard to RSC, Ord 53B, r 13, which authorises the use of the scheduled form of order transferring property and liabilities under

the section: [see RSC, App L No 37]. RSC Ord 53B, r 13, is merely permissive and its value lies, I think, in the fact that it gives practitioners a guide as to the

class of order which may properly be made; but it certainly is not mandatory upon the court that that form of order should be used, nor, indeed, is it directory.

The language of the rule is permissive. The general line which the scheduled form of order follows is that it provides for the specification in schedules of the

freehold property, the leasehold property, and stocks and debentures and other choses in action of the transferor company.

Two observations may be made upon that form of order. First, compliance with it entails a considerable amount of work; and secondly, even when it has

been complied with, no useful purpose has been effected, because the form of the order transfers all the property of the company. What, therefore, is the point

of specifying some of it? It can only have an indirect business effect in the sense that it may be convenient to the company to have recorded in the order the

more important pieces of property which it claims to own. The statement that those properties are transferred by the order does not transfer them if, in fact, the

company has no title in them, and can only transfer them for such right and interest as the company may possess. So, legally, there is no need to put any class

of property at all in the order in a case such as the present. Apart from that, I cannot see any use whatsoever in detailing the various properties of the company

in the schedule.

Solicitors: Slaughter & May (for the applicants).

B Ashkenazi Esq Barrister.

[1946] 1 All ER 320