The Londonderry Equitable Co-Operative Society, Ltd, (in Liquidation)

• Jurisdiction: Ireland
• Judge: Ross, J.
• Judgment Date: 14 December 1909
• Court: Chancery Division (Ireland)
• Date: 14 December 1909

In the Matter of the Londonderry Equitable Co-Operative Society, Limited, in Liquidation.

Ross, J.

CASES

DETERMINED BY

THE CHANCERY DIVISION

OF

THE HIGH COURT OF JUSTICE IN IRELAND,

AND BY

THE IRISH LAND COMMISSION,

AND ON APPEAL THEREFROM IN

THE COURT OF APPEAL.

1910.

Industrial and Provident Society — Extension of objects — Unregistered rules — Ultra vires — Winding up.

A society, formed for the purpose of carrying on trade as general dealers, manufacturers, and agents, was registered under the Industrial and Provident Societies Act, 1876, and its rules were duly registered. Subsequently a building department of the Society was formed, and separate rules for the building department were approved of at a special general meeting of the Society, but neither the building department nor its rules were registered under any Act. Subsequently it was decided to wind up the Society, and liquidators were appointed for the purpose of winding up its affairs:—

Held, that the building department and the Society were not separate societies; but that the building department, not being registered, had no legal existence, and could not be wound up in the present liquidation, or under the Companies Acts, and that the liquidators of the Society had no power to deal with the assets of the building department, which must be administered in a separate Chancery action.

The Londonderry Equitable Co-operative Society, Limited, was formed in the year 1891, with the object of carrying on the trade of general dealers, manufacturers, and agents at Londonderry, including the trade of buying and selling land, and was on the 20th August, 1891, registered under the Industrial and Provident Societies Act, 1876, with limited liability.

In the year 1898 the Society, believing that they were empowered to do so by section 40 of the Industrial and Provident Societies Act, 1893, determined to form a building department of the Society, whereupon separate rules for the building department were framed and finally approved of at a special general meeting of the Society, held on the 13th April, 1899. The building department was never registered as a building society, nor were its rules ever registered with the registrar of Friendly Societies or otherwise. The rules of the building department provided that the secretary and the treasurer of the Society for the time being should perform the duties of secretary and treasurer respectively of the building department, and that the building department should be governed by the committee of the Society for the time being.

Rule 2 of the building department rules empowered the Society to receive deposits or loans from co-operative bodies or other sources to be applied to the purposes of the building department. It appeared from the ledgers of the building department that loans, amounting at the time of the subsequent liquidation to £2396, had been obtained under this rule, the agreements for the loans being made in the name of the Society. Large sums were advanced to members on foot of mortgages under the rules of the building department, the mortgages being taken in the name of the Society.

In the year 1907, it became necessary to wind up the Society, and on the 18th July, 1907, a resolution was passed at a special and extraordinary meeting of the Society, that it had been proved to the satisfaction of the Society that the Society could not by reason of its liabilities continue its business, and that it was advisable to wind up the same, and by the same resolution two liquidators were appointed for the purpose of winding up the affairs of the Society and distributing its property.

The liquidators now applied to the Court under section 138 of the Companies Act, 1862, for the determination of...