HL Deb 21 February 1867 vol 185 cc698-700

Order of the Day for the Second Reading read.

LORD ST. LEONARDS moved the second reading of this Bill, the object of which is to amend the Companies Act of 1862, and also an Act passed to simplify and amend the practice as to the entry of satisfaction on Crown debts and on judgments. The noble and learned Lord said, that the Companies Act contained a clause that petitions for winding up a limited company should be deemed a lis pendens within the Act, requiring every lis pendens intended to bind a purchaser to be registered. Now this was a simple mistake. To constitute a lis pendens, the litigation must be for the particular estate, and the proceeding under the Companies Act bound no portion of a shareholder's estates. The Registry Act did not create a lis pendens, but only required it to be registered in order to bind a purchaser. After the passing of the Companies Act, a lis pendens was registered against the company. This, of course, was inoperative. It bound no man's estate; and consequently such a registry was treated by the profession as of no validity. It then became usual to enter a lis pendens against every individual shareholder, whose estates it was desired to bind. This led to serious inconvenience and complaint, as it prevented the shareholders from dealing with their estates, although the registry was considered to be inoperative. His attention having been drawn to this difficulty, he had a draft of his Bill repealing the obnoxious clause on his table, when an application was made to one of our Courts of Equity by a shareholder who had had a lis pendens entered up against him under the Companies Act to vacate the registry, but this was refused; from this order an appeal was made to the Lords Justices, and they decided, and in his opinion rightly decided, that the registry was inoperative, and reversed the decision of the Court below. Still, the clause which has created so much difficulty and led to such adverse judgments remains in force, and therefore it is proposed by this Bill to repeal it.

Moved, "That the Bill be now read 2a."—(Lord St. Leonards.)


thought that the first clause in the Bill, repealing the 114th section of 25 & 26 Vict. c. 89, would be unnecessary. In the Companies' Act of 1848 there was a clause which enacted that the registration of the winding-up petition of a company should constitute a lis pendens, and the creditors of companies had most absurdly, as it appeared to him, been in the habit of registering the winding-up petition against the shareholders, as if the petition constituted a lis pendens, as to the separate property of each of them. That question had been set at rest by the judgment of the Lords Justices in a recent case, in which an application was made by the official liquidator to register a winding-up petition against an individual shareholder. The Master of the Rolls, to whom the application was made, declined to interfere, but did not express any opinion at all on the effect of the registration. There was an appeal to the Lords Justices, who stated in the clearest and most distinct manner possible that it was absurd to imagine that the Legislature intended to allow registration of lis pendens against the estate of a shareholder so as to make persons dealing with him liable to all the penalties attending the dealing with property in litigation. With regard to the clause which made a registration of the petition for winding-up a lis pendens against the company, such a clause appeared to him to be of little value, because it did not seem likely that a person would deal with a bankrupt company whose books and other effects were all in the hands of an official liquidator; but, knowing the decision of the Lords Justices, it appeared to him to be unnecessary to repeal a clause which had been in existence since 1848.


desired to remind the noble and learned Lord on the Woolsack that a lis pendens was never registered against a shareholder until an order of the Court had been made, which had the effect of a judgment for the payment of money; but the Lords Justices, though they would not allow a lis pendens to operate against the property of an individual shareholder, expressed an opinion that there might be some cases in which it might be necessary to do so. He thought that the second clause of the Bill would, in some respects, be beneficial in its operation.


had already stated the original order by his noble and learned Friend opposite (Lord Romilly) and the reversal of it by the Lords Justices, but still the difference of opinion re- mains, and an appeal will lie to this House. The repeal of the clause will set everything right. His noble Friend opposite thinks it should be repealed, and the Lords Justices agree that the Act should be altered. He had been in communication with all these learned Judges. The remedy is the repeal of the clause.

Motion agreed to: Bill read 2a accordingly, and committed to a Committee of the Whole House on Monday next.