SUPREME COURT—IN BANCO.

New Zealand Times, Volume XXXIII, Issue 5325, 22 April 1878, Page 3

SUPREME COURT—IN BANCO.

Thursday, April 18. BEATON (appellant) V. LLOYD, LIQUIDATOR OP THE HALCYON QUARTZ MINING COMPANY ' LIMITED, (RESPONDENT). His Honor Mr. Justice Richmond delivered the following judgment herein This is an appeal from the District Court of westJ»nd by the defendant in an action brought by the liquidator of a mining company to recover the amount of a call. The respondent relies upon sec. 90 of the Mining Companies Act, 1872, as enabling him to sue. The appellant has raised numerous objections to the right of action, of which the first is that the action is too late, not having been commenced -•within fourteen days from the day when the call became payable. The question turns upon the construction of sections 52. 54, and 90 of the Act. The main provisions respecting calls are contained in sections 60 to 57. We think their effect is to render calls irrecoverable by action unless proceedings are commenced within the time limited by section 52. It is clear, and was not denied in argument, that after the fourteen days the call cannot be recovered at the suit of the manager. But it is contended that the disability is only formal; that the unpaid call is a debt to the company, and as such continues recoverable after the lapse of the fourteen days in a suit i»y the company, or if the company is in liquidation by the liquidators. In the Shotover Terrace Company v. Armstrong. 1 N.Z. Jurist, n.s. (Sup. Court) 05 Mr. Justice 'Williams seems to have thought that calls vrere recoverable at the suit of the company after the lapse of the fourteen days; hut the case before the learned Judge did not require a decision of this point It appears that for some reason, upon which it is not for us to speculate, the Legislature has thougut fit to provide that unless proceedings are taken within the limited time the sole consequence of default in payment of a call shall be the forfeiture of the share. Section 51 plainly enacts that such default (no proceedings having been commenced within the fourteen days) shall, alter the expiration of twenty ; one days from the day upon which the call is due, ipso facto create a forfeiture. Notwithstanding this provision It might be supposed that the liability to pay the call remained. To this section 00 affords an answer. If the liability remained as a debt to the company it would be the duty of a liquidator to recover the debt. But section 00, which defines the duty of the liquidator in respect of outstanding calls, expressly restricts him to suits for unpaid calls "in respect of shares which shall not have been forfeited." The conclusion is that after forfeiture, iafter the expiration of one or other of the peiiods of 21 da vs mentioned in section 54. the debt, or if not the debt, the remedy, is extinct. Every proceeding, whether by manager, company, or liquidator, is barred after the expiry of one or the other of these periods of 31 days. But further, it is impossible, and in the present case useless, to suppose that forprocoedings in the name of the company or liquidator, just seven days, and no more, are allowed i:i_ addition to the fourteen days to which proceedings in the name of the manager are limited, so that the ultimate inference is that section 52 not merely restricts one particular form of proceeding but renders calls absolutely irrecoverable by action after the lapse of the fourteen days period. . In confirmation of this conclusion it is to be observed that, according to the construction of the language of section 90, the liquidator is merely substituted as plaintiff in lieu of the manager, and is therefore prima facie subject to the same limitation as to the time of commencing proceedings. The District Judge has remarked that upon tills construction the possible operation of section 00 will be so limited as virtually to render the enactment nugatory, an observation in which we concur. But this consideration cannot justify us iu disregarding the plain language of the statute, as we must do were) we to hold that the liquidator can sue for calls on forfeited shares. We are not, however, deciding that the appellant s shares have been forfeited. It is enough to say that they would be forfeited shares if, as the respondent contends, and must contend, the call now sued for was properly made, and if, as he is al-o obliged to contend, the appellant’s attempt to transfer his shares to the company was ineffectual. It may perhaps, be said that in the present case proceedings were commenced within the fourteen days, an action having, it seems, been brought in due time in the Bcsident Magistrate's Court at Westport, in which the company was nonsuited. To this it must be answered that the proceedings contemplated by sections 63 and 54 are evidently effectual proceedings. It can never have been intended that an abortive proceeding should have the effect of indefinitely enlarging the time for suing. Although valid reasons might very likely be given for strictly limiting the right of suing for calls, it appears to us that some of the consequences of the remarkable enactments of sections 52 and 54 can hardly have been foreseen. Cases may easily occur, of which the present may be an example, in which it would be a great boon to be relieved of shares in one of these companies by forfeiture. Section 31, which enables shareholders to surrender their shares, is subject to the proviso of section 32, that the retiring shareholders shall remain subject to be made contributories In respect of the then existing liabilities of the company. It appears that some such restriction is needed to qualify the effect of section 54, in cases where shares may be worth less than nothing. It is a strange result that a defaulter may be better off than a shareholder who has fairly paid his calls. The point on wklch we have given onr opinion disposes of the case, and renders it unnecessary to decide any of the other questions which have been raised. The appeal most be allowed, with costs, and judgment below entered for the defendants.