Re W C Leitch Bros Ltd [1932]

Re W C Leitch Bros Ltd [1932]

Re W C Leitch Bros Ltd [1932] 2 Ch 71 provides crucial insights into the definition of fraud under Section 213 of the Insolvency Act 1986 and acknowledges the potentially punitive nature of contributions under this Section.

W C Leitch Bros Ltd, while insolvent, continued its business operations and made further purchases on credit. The company already owed approximately £6,500 for goods and lacked the means to settle these debts. Despite its financial state, the director ordered additional goods worth £6,000, and the company's account with the Midland Bank was overdrawn by around £800. The liquidator sought to hold the company director personally liable under Section 275 of the Companies Act 1929 (now Section 213 of the Insolvency Act 1986) for carrying on the business with the intent to defraud creditors. One of the directors was held personally liable for the price of the goods, with a judgment against the director for a specific sum of £6,000.

Maugham J, in providing a definition for fraud under Section 213 of the Insolvency Act 1986, stated that if a company continues to operate and incur debts when the directors know there is no reasonable prospect of creditors receiving payment, it is a proper inference that the company is carrying on business with the intent to defraud.

Maugham J expressed an inclination toward the view that Section 275 (now Section 213) is of a punitive nature. He suggested that when the court makes a declaration regarding all or any of the debts or other liabilities of the company, it is within the court's discretion to issue an order without necessarily limiting it to the amount of the proven debts of creditors defrauded by the director's actions. However, he noted that such orders would generally be limited to the proven amounts.

It is important to note that Maugham J later offered a stricter definition for fraud in the case of Re Patrick and Lyon [1933]. The decision in Re W C Leitch Bros Ltd provides insight into the court's interpretation of fraudulent intent and the potentially punitive nature of contributions under Section 213 of the Insolvency Act 1986.
Back to blog
UOL Case Bank

UOL Case Bank

Upon joining, you become a valuable UOL student and gain instant access to over 2,100 case summaries. UOL Case Bank is constantly expanding. Speed up your revision with us now.

Subscribe Now

Where are our students from?

Yale University
Council of Europe
Baker Mckenzie 
University of Chicago
Columbia University
New York University
University of Michigan 
INSEAD
University College London (UCL)
London School of Economics (LSE)
King’s College London (KCL)
University of London
University of Manchester
University of Zurich
University of York
Brandeis University
University of Exeter
University of Sheffield
Boston University
University of Washington
University of Leeds
University of Law
Royal Holloway, University of London 
Birkbeck, University of London
SOAS, University of London
University of Kent
University of Hull
Queen’s University Belfast
Toronto Metropolitan University
Hong Kong University of Science and Technology
University of Buckingham

  • Criminal Practice

    Diagrams and Charts

    Our carefully designed diagrams and charts will guide you through complex legal issues.

  • Criminal Law

    Clear and Succinct Definitions

    Key concepts are concisely defined to help you understand legal topics quickly.

  • Property Law

    Statutory Provisions

    Statutory provisions are provided side by side with legal concepts to help you swiftly locate the relevant legislation.

  • Public Law

    Case Summaries

    We have summarised important cases for you so that you don't need to read long and boring cases.

  • Evidence

    Rules and Exceptions

    Rules and exceptions are clearly listed so that you know when a rule applies and when it doesn't.

  • Company Law

    Terminology

    Legal terms and key concepts are explained at the beginning of each chapter to help you learn efficiently.

  • Case Law

    Case law is provided side by side with legal concepts so that you know how legal principles and precedents were established.

  • Law Exam Guide

    Law Essay Guide

    You will learn essential law exam skills and essay writing techniques that are not taught in class.

  • Law Exam Guide

    Problem Question Guide

    We will show you how to answer problem questions step by step to achieve first-class results.

  • Conflict of Laws

    Structured Explanations

    Complex legal concepts are broken down into concise and digestible bullet point explanations.

  • Legal System and Method

    Legal Research

    You will learn legal research techniques with our study guide and become a proficient legal researcher.

  • Jurisprudence and Legal Theory

    Exam-focused

    All essential concepts, principles, and case law are included so that you can answer exam questions quickly.