[1974] 3 All ER 646

Re Rolls-Royce Ltd

CHANCERY DIVISION

PENNYCUICK V-C


9, 10, 11, 17 JULY 1974



Company - Winding-up - Insolvent company - Bankruptcy rules - Application - Surplus assets after payment of debts - Interest - Application of surplus in payment of interest on debts proved - Company placed in liquidation on basis that it was insolvent - Liquidators subsequently disposing of company's undertaking so as to realise a surplus - Creditors paid in full - Whether bankruptcy rules applicable where company placed in liquidation on basis that it was insolvent - Whether surplus to be applied in payment of debts proved - Bankruptcy Act 1914, s 33(8) - Companies Act 1948, s 317.

Company - Winding-up - Debt - Interest on debt - Debt on sum certain whereon interest not reserved - Right to prove for interest - Debt payable by virtue of a written instrument at a certain time - Instrument - Meaning - Document creating or affecting rights or liabilities - Creditor owed sums by company - Sums representing price of goods delivered and sold - Invoices submitted to company - Invoices containing certain terms as to damages, loss and time of payment - Whether invoices written instruments - Whether sums owing to creditor debts 'payable by virtue of' the invoices - Companies (Winding-up) Rules 1949 (SI 1949 No 330), r 100.

A company had for a number of years bought certain goods from the applicants. The goods sold and delivered to the company were invoiced to the company on invoices of a standard form. Those invoices provided that any damage, short delivery or loss was to be notified and a claim made in writing to the carrier and to the consignor, that in the case of damage or short delivery notification and a claim should be made within three days and five days respectively of receipt, that in the case of loss notification and a claim should be made within 21 days of despatch, and that the terms were that payment thereon was due in cash in the month following the month of invoice. In 1971 the company went into a creditors' voluntary winding-up. No declaration of solvency was filed and the liquidation was conducted in the first place on the basis that the company was insolvent. At the commencement of the winding-up the company was indebted to the applicants in a substantial sum ('the trading debt'), mainly in respect of the price of goods sold and delivered. The company however had a claim against the applicants for certain defective goods and that claim originally exceeded the amount admitted by the liquidators as owing to the applicants in respect of the trading debt. The liquidators paid a series of dividends to creditors of the company, excluding the applicants to the extent to which the trading debt was claimed to be the subject of a set-off. Subsequently the undertaking of the company was acquired by a new company on terms which left a surplus in the hands of the liquidators. By 1973 the liquidators had paid to creditors, excepting the applicants, a dividend of 100 per cent. By 1974 the liquidators had paid to the applicants a dividend of 100 per cent on the trading debt so far as not claimed to be the subject of set-off. The applicants brought proceedings against the liquidators claiming (i) that, by virtue of s 317^a of the Companies Act 1948 and s 33(8)^b of the Bankruptcy Act 1914, they were entitled to interest at four per cent per annum from the date of the winding-up on the total indebtedness of the company to the applicants, being interest payable out of surplus, and (ii) further or alternatively that, by virtue of r 100^c of the Companies

^a     Section 317 is set out at p 650 c and d, post

^b     Section 33(8) is set out at p 650 e, post

^c     Rule 100 is set out at p 653 c and d, post

[1974] 3 All ER 646 at 647

(Winding-up) Rules 1949, they were entitled to interest on the sums becoming due to them on their invoices as from the dates for payment thereof down to the commencement of the winding-up.

Held - The applicants' claims did not succeed for the following reasons--

(i) Although there appeared to be no reason in principle why different rules should apply in a winding-up and in bankruptcy to the payment of interest for the period of administration when there was a surplus, an examination of the statutory history of s 317 of the 1948 Act made it impossible to accept the contention that the phrase 'In the winding up of an insolvent company' in s 317 meant 'In the winding up of a company which had been placed in liquidation on the basis that it was insolvent' thereby making the rule in s 33(8) of the 1914 Act applicable in the winding-up of every company placed in liquidation on the basis that it was insolvent however the liquidation might turn out. Accordingly s 317 had no application once a liquidation produced a surplus (see p 651 g and h and p 652 d and h, post); Re Fine Industrial Commodities Ltd [1955] 3 All ER 707 followed.

(ii) The word 'instrument' normally denoted a document which created or affected rights or liabilities though it might in context have a wider meaning. The debts comprised in the invoices were payable by virtue of the contract between the company and the applicants. The invoices were the applicants' statements of account and although the invoices contained certain terms as to damage, loss and time of payment and those terms should be treated as having been accepted by the company by its acceptance of the goods, the debts could not be said to be payable by virtue of the statements of account even though the statements introduced one or two new terms. Accordingly those debts were not debts 'payable by virtue of a written instrument at a certain time' so as to admit of proof for interest under r 100 of the 1949 rules (see p 654 d to h, post).

Notes

For application of bankruptcy rules, see 7 Halsbury's Laws (4th Edn) 729, 730, para 1276, and for cases on the subject, see 10 Digest (Repl) 982-984, 6761-6779.

For proof for interest on debts, see 7 Halsbury's Laws (4th Edn) 728, para 1274.

For the Bankruptcy Act 1914, s 33, see 3 Halsbury's Statutes (3rd Edn) 81.

For the Companies Act 1948, s 317, see 5 Halsbury's Statutes (3rd Edn) 344.

For the Companies (Winding-up) Rules 1949, r 100, see 4 Halsbury's Statutory Instruments (2nd Reissue) 162.

Cases referred to in judgment

Beswick v Beswick [1967] 2 All ER 1197, [1968] AC 58, [1967] 3 WLR 932, HL, Digest (Cont Vol C) 161, 245a.

East of England Banking Co, Re (1868) 4 Ch App 14, 38 LJCh 121, 19 LT 299, 3 Digest (Repl) 214, 482.

Fine Industrial Commodities Ltd, Re [1955] 3 All ER 707, [1956] Ch 256, [1955] 3 WLR 940, Digest (Cont Vol A) 192, 6757a.

Grey v Inland Revenue Comrs [1959] 3 All ER 603, [1960] AC 1, [1959] 3 WLR 759, [1959] TR 311, 38 ATC 313, HL, 39 Digest (Repl) 333, 723.

Humber Ironworks and Shipbuilding Co, Re, Warrant Finance Co's Case (1869) 4 Ch App 643, 38 LJCh 712, 20 LT 859, CA, 10 Digest (Repl) 981, 6750.

Milan Tramways, Re, Ex parte Theys (1884) 25 Ch D 587, 53 LJCh 1008, 50 LT 545, CA, 10 Digest (Repl) 989, 6807.

Theo Garvin Ltd, Re [1967] 3 All ER 497, [1969] Ch 624, [1968] 2 WLR 683, Digest (Cont Vol C) 118, 6750a.

Cases also cited

Duncan (W W) & Co, Re [1905] 1 Ch 307.

Hadfields Patent Cask & Package Co Ltd, ex parte Greenwood (1863) 3 De GJ & S 602.

[1974] 3 All ER 646 at 648

London, Chatham & Dover Railway Co v South Eastern Railway Co [1892] 1 Ch 120, CA; affd [1893] AC 429, HL.

Merchant Shipping Co Ltd v Armitage (1973) LR 9 QB 99, Ex Ch.

Page v Newman (1829) 9 B & C 377.

Riches v Westminster Bank Ltd [1947] 1 All ER 469, [1947] AC 390, HL.

State Fire Insurance Co, Re, Times Assurance Co's Case [1964] 2 H & M 722.

Taylor v Holt (1864) 3 H & C 451.

Whitaker, Re, Whitaker v Palmer [1901] 1 Ch 9, CA.

Adjourned summons

By an originating summons dated 8 November 1973, amended on 15 February 1974 and reamended on 9 July 1974, the applicants, Imperial Metal Industries (Kynoch) Ltd, who claimed to be creditors of Rolls-Royce Ltd ('the company'), applied for an order against Edward Rupert Nicholson, Sir William Slimmings, and Keith David Wickenden, the liquidators of the company: (1) that the liquidators should reserve and retain in their hands (a) pending the hearing of the summons or further order a sum sufficient to pay the interest claimed under para 2(a)(b) and (d) of the summons, (b) pending the determination of the claim made by the company against the applicants in respect of defective zirconium a sum sufficient to pay the whole of the sum of £158,436 together with interest thereon down to the date of payment; (2) that the liquidators should pay to the applicants interest as follows: (a) interest at four per cent per annum from the date of the commencement of the winding-up on the total indebtedness of the company to the applicant being interest payable out of the surplus assets in the hands of the liquidators; (b) further or alternatively interest at such rate as the court should prescribe on the dividends which had been paid to the applicants, interest being claimed on such dividends from the dates when and the extent to which they should have been paid if payment had been made pro rata with the other unsecured creditors down to the dates of payment; (c) further of alternatively interest on the sums from time to time becoming due to the applicants on their invoices as from the dates for payment thereof down to the commencement of the winding-up at such rate as the court should prescribe; (d) interest on any dividend in respect of the amount by which the sum of £158,436 exceeded the damages and cost (if any) actually awarded to the liquidators by the arbitration in respect of the zirconium claim, interest being claimed on such dividend from the date when it should have been paid if no set-off had been claimed down to the date of payment at such rate as the court should prescribe; (3) (i) that further or alternatively that the liquidators should pay to the applicants the sum of £40,142 by way of immediate further dividend at the rate of 100p in the pound in respect of that sum forming part of the money owed by the company to the applicants in respect of the trading debt to the applicants; (ii) further or alternatively that the liquidators should pay to the applicants interest on the last mentioned sum from the date or dates when it should have been paid to the applicants at such rate as the court might prescribe down to date of payment. The facts are set out in the judgment.

Muir Hunter QC, P J Crawford and Paul Miller for the applicants.

G B H Dillon QC and W F Stubbs for the liquidators.

Cur adv vult

17 July 1974. The following judgment was delivered.



PENNYCUICK V-C

delivered the following judgment. I have before me a summons in the matter of Rolls-Royce Ltd, to which I shall refer as 'the company'. The application is made by Imperial Metal Industries (Kynoch) Ltd, to which I shall refer as 'Kynoch'. Summarily, for the purpose of the present judgment, two questions are raised, those questions relating to interest on certain debts owing by the company to Kynoch at the commencement of the liquidation. I put it that way because an additional question has now been raised by amendment. I am not at present dealing with that question. The respondents to the summons are, of course, the liquidators.

[1974] 3 All ER 646 at 649

The relevant facts of the purpose of these questions may be quite shortly stated. The company went into a creditors' voluntary winding-up on 4 October 1971. No declaration of solvency was filed and the liquidation was in the first place conducted on the basis that the company was insolvent, as indeed it undoubtedly was at the commencement of the winding-up. During the years preceding the liquidation Kynoch had from time to time sold to the company consignments of a metal known as zirconium. I shall refer later in more detail to the terms on which these sales took place. At the commencement of the winding-up the company was indebted to Kynoch in respect of these sales in a sum exceeding £300,000. The company had, however, a claim against Kynoch in respect of defective material, this claim originally exceeding the amount admitted by the liquidators as owing to Kynoch in respect of the trading debt.

However, as the months passed the amount of the admitted trading debt owing by the company to Kynoch increased and was on 18 August 1973 agreed at £358,293; while on the other hand the amount of the company's set-off claim against Kynoch decreased, so as to become much less than the trading debt. The set-off claim by the liquidators against Kynoch forms the subject of an arbitration which is still pending. It will be sufficient for the present purpose to say that the maximum amount claimed by the liquidators is now £185,000; the maximum amount admitted by Kynoch to be even in dispute is £118,321. I put it that way because the liquidators are seeking an amendment of their claim in the arbitration, and a new issue has been raised by amendment to this summons as to the amount which the liquidators are now entitled to retain against Kynoch.

The liquidators paid a series of dividends to creditors of the company but excluded Kynoch from these dividends to the extent to which the trading debt was claimed to be the subject of a set-off. As the set-off claim was reduced the liquidators paid dividends on the amount to which Kynoch was entitled on the footing of such reduction. These dividends were in the natural course paid after the corresponding dividends to the other creditors. Particulars of the dividends will be found in a schedule of payments, namely exhibit 'PGC2' to an affidavit sworn by Mr Corbett on this summons. As appears from that schedule, the liquidators were ultimately able to pay a final dividend to creditors on 20 September 1973, making a dividend of 100 per cent in all, the dividend to Kynoch on its debt so far as not claimed to be the subject of set-off being made up to 100 per cent on 5 February 1974. The liquidators are retaining assets sufficient to pay 100 per cent on whatever further sum Kynoch is entitled to receive after the set-off claim has been determined. The amount retained is sufficient to meet a claim of £158,321. The reason why the liquidators were able to pay the creditors in full is that the undertaking of the company was acquired by a new company, Rolls-Royce (1971) Ltd, on terms which left the liquidators with a surplus in their hands.

I have summarised the facts in broad outline, the details being irrelevant to the issues on interest on which I now have to determine. These are issues entirely of law.

The present summons was issued on 8 November 1973. The claim originally made by the summons was for payment of a certain immediate dividend and reservation of assets sufficient to meet a further dividend, but that claim was overtaken by the events. As I have said the liquidators did pay dividends to Kynoch on the amounts admittedly due to Kynoch.

The summons was amended on 15 February 1974, and as far as now material reads as follows:

'1. That the Liquidators do reserve and retain in their hands [and I need not read the further particulars under question 1 because it is not in dispute that the liquidators are bound to reserve assets sufficient to meet Kynoch's claim when the set-off has been determined].

'2. That the Liquidators do pay to [Kynoch] interest as follows (a) Interest at 4 per cent per annum from the date of the commencement of the winding up

[1974] 3 All ER 646 at 650

on the total indebtedness of the Company to [Kynoch] being interest payable out of the surplus assets in the hands of the Liquidators ... (c) Further or alternatively, interest on the sums from time to time becoming due to [Kynoch] on their invoices as from the dates for payment thereof down to the commencement of the winding up, at such rate as the Court shall prescribe ...

I have not read paras (b) and (d) because counsel for Kynoch very properly abandoned those contentions in the course of the hearing.

It will be observed that para (a) relates to the period of the winding-up and para (c) to a period preceding the winding-up. Paragraph (a) has been argued first and I shall deal with the two issues in the same order.

(a) On this issue the governing provision is contained in s 317 of the Companies Act 1948, which reads as follows:

'In the winding up of an insolvent company registered in England the same rules shall prevail and be observed with regard to the respective rights of secured and unsecured creditors and to debts provable and to the valuation of annuities and future and contingent liabilities as are in force for the time being under the law of bankruptcy in England with respect to the estates of persons adjudged bankrupt, and all persons who in any such case would be entitled to prove for and receive dividends out of the assets of the company may come in under the winding up and make such claims against the company as they respectively are entitled to by virtue of this section.'

That section sends one to the Bankruptcy Act 1914 and there one finds these two provisions: s 33(8) reads:

'If there is any surplus after payment of the foregoing debts [those are various preferential debts], it shall be applied in payment of interest from the date of the receiving order at the rate of four pounds per centum per annum on all debts proved in the bankruptcy.'

Then s 69 reads:

'The bankrupt shall be entitled to any surplus remaining after payment in full of his creditors, with interest, as by this Act provided, and of the costs, charges, and expenses of the proceedings under the bankruptcy petition.'

The provision contained in s 33(8) reproduces in substance a provision which has been in force since the Bankruptcy Act 1849 at least.

Counsel for Kynoch contended that the opening words of s 317 of the 1948 Act, that is to say, 'In the winding up of an insolvent company', mean in the winding-up of a company which has been placed in liquidation on the basis that it is insolvent. So he contends that the rule contained in s 33(8) of the 1914 Act is made applicable in the winding-up of every company placed in liquidation on that basis however the liquidation may turn out. If one could look at s 317 in isolation from its statutory history, I should see the greatest force in this contention. The general policy of the company legislation, as implemented in this respect by s 317, is to equate the rules applicable in liquidation with the rules applicable in bankruptcy. There appears to be no reason in principle why in this particular respect, namely the payment of interest for the period of administration where there is a surplus, different rules should apply in the one case and in the other. Again, the bankruptcy rule appears to be eminently fair. The creditor is compensated for being kept out of his money during the period of administration.

Unfortunately, however, as it seems to me, an examination of the statutory history of s 317 of the 1948 Act makes it impossible to accept this contention. Prior to the Supreme Court of Judicature Act 1875 there was no general provision for the application of the bankruptcy rules in the winding-up of an insolvent company. Specifically,

[1974] 3 All ER 646 at 651

the court had no power to direct payment of interest on debts not in themselves carrying interest, even though there turned out to be a surplus: see Re East of England Banking Co, in which the Court of Appeal held ultra vires an attempt to achieve this result by rule. Contrast the position of debts in themselves carrying interest: see Re Humber Ironworks and Shipbuilding Co, and in particular per Giffard LJ (4 Ch App at 647) where the distinction is neatly put.

Then came s 10 of the Supreme Court of Judicature Act 1875, which is in the following terms:

'Whereas, by section twenty-five of the principal Act [ie the Supreme Court of Judicature Act 1873], after reciting that it is expedient to amend and declare the law to be thereafter administered in England as to the matters next therein-after mentioned, certain enactments are made with respect to the law, and it is expedient to amend the said section: Be it therefore enacted as follows:--Sub-section one of clause twenty-five of the principal Act is thereby repealed, and instead thereof the following enactment shall take effect; (that is to say,) in the administration by the Court of the assets of any person who may die after the commencement of this Act, and whose estate may prove to be insufficient for the payment in full of his debts and liabilities, and in the winding up of any company under the Companies Acts, 1862 and 1867, whose assets may prove to be insufficient for the payment of its debts and liabilities and the costs of winding up, the same rules shall prevail and be observed as to the respective rights of secured and unsecured creditors, and as to debts and liabilities provable, and as to the valuation of annuities and future and contingent liabilities respectively, as may be in force for the time being under the Law of Bankruptcy with respect to the estates of persons adjudged bankrupt; and all persons who in any such case would be entitled to prove for and receive dividends out of the estate of any such deceased person, or out of the assets of any such company, may come in under the decree or order for the administration of such estate, or under the winding up of such company, and make such claims against the same as they may respectively be entitled to by virtue of this Act ... '

I mention in passing that the 1873 Act had covered in this respect the position of insolvent estates, but not the position of companies in liquidation. That, no doubt, is the reason for this amending Act.

Section 10 of the 1875 Act imports the bankruptcy rules only in the case of the winding-up of any company 'whose assets may prove to be insufficient for the payment of its debts and liabilities and the costs of winding up'. The words 'prove to be' and the reference to 'the costs of winding up' leave no doubt that one must look at the situation as it turns out in the course of the administration and that the bankruptcy rules are only made applicable where in the event, after paying the debts and liabilities and costs, there is no surplus. It is, I think, quite impossible to construe this section as importing the provision now contained in s 33(8) of the Bankruptcy Act 1914, since s 33(8) only applies where there is a surplus. In the event of a surplus the pre-1875 position remains unaltered, that position having been determined by the pre-1875 judicial decisions. This point is neatly put by Lord Selbourne LC sitting in the Court of Appeal in Re Milan Tramways Co ((1884) 25 Ch D 587 at 591) where he says:

'The 10th clause of the Judicature Act, 1875, refers only to a company unable to pay its debts, but I am of opinion that it must be treated as applicable to any company in liquidation until it is shewn that the assets are sufficient for payment of the debts in full.'

[1974] 3 All ER 646 at 652

The Companies (Consolidation) Act 1908 repealed s 10 of the 1875 Act and by s 207 substituted the following provision:

'In the winding up of an insolvent company registered in England or Ireland the same rules shall prevail and be observed with regard to the respective rights of secured and unsecured creditors and to debts provable and to the valuation of annuities and future and contingent liabilities as are in force for the time being under the law of bankruptcy in England or Ireland, as the case may be, with respect to the estates of persons adjudged bankrupt; and all persons who in any such case would be entitled to prove for and receive dividends out of the assets of the company may come in under the winding up, and make such claims as against the company as they respectively are entitled to by virtue of this section.'

This section, instead of the elaborate formula contained in s 10 of the 1875 Act, introduces the shorter formula 'In the winding up of an insolvent company'; otherwise it reproduces s 10 in almost identical terms.

Counsel for Kynoch contended that this change of language rendered s 207 of the 1908 Act applicable to any company which had been placed in liquidation on the basis that it was insolvent, thereby fully equating the provisions of the section to the provisions applicable under the bankruptcy legislation. That is an attractive argument, but I feel unable to accept it. The 1908 Act is a consolidating Act. It consolidated the principal Companies Acts then in force and also one or two other Acts passed shortly before it for the purpose of such consolidation. Compare the position in the case of the 1925 property legislation, which has been the subject of judicial decision: see in particular the general principle stated by the House of Lords in Grey v Inland Revenue Comrs ([1959] 3 All ER 603 at 606, [1960] AC 1 at 13), per Lord Simonds where he said:

'... the principles applicable to the construction of a consolidating Act are not in doubt. The presumption is that such an Act is not intended to alter the law, but this prima facie view must yield to plain words to the contrary ... '

See also an informative statement by Lord Reid in Beswick v Beswick ([1967] 2 All ER 1197 at 1202, [1968] AC 58 at 73) in which he sets out the Parliamentary practice in connection with consolidating Acts.

If the intention of Parliament in the 1908 Act had really been to alter the law as it stood under the 1875 Act, I find it inconceivable that it would have done so simply by the use of the expression 'In the winding up of an insolvent company', which in itself is decidedly imprecise, in place of the longer formula in the 1875 Act. This is certainly to may mind not a case in which there are plain words to the contrary to which the presumption that the 1908 Act is not intended to alter the law must yield.

Section 207 of the 1908 Act was re-enacted in the Companies Act 1929, and is now represented by s 317 of the 1948 Act, which I have already read. The terms of the present Act are identical with those of s 207 of the 1908 Act, apart from the references to Ireland.

I conclude that on the proper construction of the statutory provision, and quite apart from authority, s 317 of the 1948 Act has no application once the liquidation throws up a surplus, whatever may have been the position at the commencement of the winding-up.

Perhaps I should add that it is not altogether clear that the words 'with regard to the respective rights of secured and unsecured creditors and to debts provable' in s 317 of the 1948 Act cover the allowance of interest on a surplus. I would certainly strive to hold that they did if one reached that point.

In fact this question is not free from authority because Vaisey J, in Re Fine Industrial Commodities Ltd, decided it in the same sense as I have decided it. I have gone over the ground again, partly in deference to the arguments of counsel for Kynoch and

[1974] 3 All ER 646 at 653

partly because the attention of Vaisey J was apparently not directed to the statutory predecessors of s 317 of the 1948 Act. As I have indicated, a consideration of the earlier provisions to my mind conclusively fortifies the conclusion at which Vaisey J arrived on other grounds.

I reach this conclusion with some regret, as did Vaisey J, because, as I have already said, it seems fair that a creditor should be compensated for being kept of his money during the period of administration if there turns out to be a surplus, and again because the difference in this respect between the winding-up provisions and the bankruptcy provisions appears to be without logical foundation.

(c) The relevant statutory provision here is r 100 of the Companies (Winding-up) Rules 1949^d, which is in the following terms:

^d     SI 1949 No 330

'On any debt or sum certain, payable at a certain time or otherwise, whereon interest is not reserved or agreed for, and which is overdue at the date of the commencement of the winding-up, the creditor may prove for interest at a rate not exceeding four per centum per annum to that date from the time when the debt or sum was payable if the debt or sum is payable by virtue of a written instrument at a certain time, and if payable otherwise, then from the time when a demand in writing has been made, giving notice that interest will be claimed from the date of the demand until the time of payment.'

This provision has a long statutory history going back to s 28 of the Civil Procedure Act 1833. The first critical question here is whether Kynoch's debt is 'payable by virtue of a written instrument'.

I shall now state such facts relating to this debt as appear on the evidence. Mr Roger Buckley Almond, Assistant Secretary to Kynoch, gives the following account of the matter:

'3. At all material times prior to the liquidation of the Company, the Company carried on business as (inter alia) manufacturing engineers. [Kynoch] have at all material times carried on business as manufacturers and suppliers of (inter alia) metal and engineering components, and as such supplied metal and components to the Company.

'4. Pursuant to such trading relationship there was at the date of the liquidation a substantial sum owing by the Company to Kynoch, mainly in respect of the price of goods sold and delivered (hereinafter referred to as "the trading debt"). The goods so sold and delivered had been invoiced to the Company upon invoices in a standard form, an example of which is hereinafter exhibited. By the terms of such invoices payment thereon was due in cash in the month following the month of the invoice.'

Then he exhibits a form of invoice which is headed 'Imperial Metal Industries (Kynoch) Limited'. Then comes the word 'Invoice'; then:

'Damage, Short Delivery Or Loss must be notified and claimed, in writing, to the Carrier and to Consignor. Damage Or Short Short Delivery. Notify within 3 days of receipt. Claim within 5 days of receipt. Loss. Notify And claim within 21 days of despatch. Terms. Net Cash Due in The Month Following Month Of Invoice.'

There follows a number of squares in which the relevant particulars can be entered, including particulars of price.

Counsel for Kynoch contended that these invoices are instruments by virtue of which the price of the various consignments is payable. I feel the greatest doubt whether these invoices are indeed instruments at all for the purpose of r 100 of the 1949 rules. The word 'instrument' normally denotes a document which creates

[1974] 3 All ER 646 at 654

or affects rights or liabilities, though it may in context have a wider meaning: see Halsbury's Laws of England^e:

^e     3rd Edn, vol II, p 371, paras 605, 606

'An instrument under hand only is a document in writing which either creates or affects legal or equitable rights or liabilities, and which is authenticated by the signature of the author, but is not sealed by him. Such documents are used in a great variety of transactions, including contracts, assignments, acknowledgements of title, and notices. The expression is not limited to documents of a formal character, and it extends to any duly signed document which is intended by the author to be the means of producing a result recognised in law ... The word "instrument" as applied to a writing may have a still wider scope, and may include documents which affect the pecuniary position of parties although they do not create rights or liabilities recognised in law; but usually it applies to a document under which some right or liability, whether legal or equitable, exists.'

I should not myself have thought, in the absence of any authority to the contrary, that a tradesman's invoice could properly be described as an 'instrument'. However that may be, the debts comprised in these invoices are to my mind clearly not payable by virtue of the invoices. The debts are payable by virtue of the contract between the company and Kynoch created by an order given orally or in writing by the company and accepted by Kynoch either orally or in writing or by conduct in delivering the goods. The invoices are simply the seller's statement of account. It is true that the invoices contain certain terms as to damage and loss and time of payment. I will assume that these terms should be treated as having been accepted by the company by its conduct in accepting the goods. This point might, I think, depend on the precise sequence of events. However that may be, I find it impossible to say that the debt can be said to be payable by virtue of the seller's statement of account, even though that statement introduces one or two new terms. Contrast the simple case which is the case normally covered by r 100 where the whole terms of a contract are contained in a written document. In such case the contract is clearly an instrument and the debt payable under the contract is payable by virtue of that instrument. No authority was cited on this point. I suspect that the contention of counsel for Kynoch is a novel one and would cut across the ordinary practice as regards proof in respect of tradesmen's bills.

Counsel for the liquidators contended that, quite apart from the point which I have discussed, the debts cannot be said to be payable at a certain time, and I was referred to a number of authorities in this connection. On the clear view which I have taken as to the meaning of the words 'by virtue of a written instrument', this point does not arise, and I do not think it would be necessary or useful to express an opinion on it.

I conclude, therefore, that these are not debts payable by virtue of a written instrument at a certain time so as to admit of proof for interest under r 100.

I was taken at some length through a decision of my own in Re Theo Garvin Ltd. This decision may, perhaps, be of some use by way of general explanation, but it does not, I think, throw any direct light on the questions which I have to decide on the present summons.

I propose accordingly to make no order under question 2 of the summons.

By consent no orders on questions 1, 2(b)(d), 3(ii). Under question 2(a) declaration that applicants not entitled to be paid by liquidators either out of assets of company in hands of liquidators or otherwise any interest pursuant to s 317 of the 1948 Act in respect of any period after commencement of winding-up. Under question 2(c) declaration that applicants not

[1974] 3 All ER 646 at 655

entitled to be paid out of assets of company or otherwise any interest on any sum which became due from company to applicants at any time prior to commencement of winding-up. Under question 3(1) by consent on conditions order that liquidators pay to applicants out of assets in the hands of liquidators £40,142 by way of immediate further dividend at rate of 100p in £ in respect of sum of £40,142 forming part of trading debt. Liberty to apply.

Solicitors: J S Copp (for the applicants); Linklaters & Paines (for the liquidators).

Evelyn Budd Barrister