WINDING UP 
265 
A few matters in which it behoves the liquidator to be 
specially careful may be noticed. In carrying on the 
business of the company for the purposes of its beneficial 
winding up, he will do well to consider carefully the precise 
effect of any proposed step, for a new contract might, in 
many instances, be made in excess of his duties; in case of 
doubt, application to the Court may often be desirable. 
Again, he should hesitate before embarking on costly litiga- 
tion; for although in general an unsuccessful liquidator will 
be allowed his costs out of the assets of the company, yet it 
has been held that the Court has jurisdiction to order him 
to pay them personally, and, in case of an action being 
improperly or recklessly brought, he may find himself 
ordered to pay the costs out of his own pocket. Too much 
care cannot be exercised by the liquidator in avoiding all 
payments or dealings with the company’s assets which are 
not expressly or obviously authorised. 
In certain circumstances a liquidator may be removed 
from his position. It is not open to the shareholders them- 
selves to remove a liquidator; the power of removal lies in the 
Court alone. S. 249 of the Act provides that ‘the Court may, 
on cause shown, remove a liquidator, and appoint another 
liquidator.” Contributories or creditors may apply for the 
removal of a liquidator, and the matter is one for the dis- 
cretion of the Court, which, however, can only act ‘on 
cause shown.” It is impossible to predicate with certainty 
what circumstances will, or what will not, amount to ‘cause.’ 
It may, however, be safely assumed that gross misconduct, 
such as wrongful dealing with the company’s assets, will 
constitute sufficient cause; and although pecuniary interest 
in the winding up, apart from the liquidator’s remuneration, 
might not be sufficient unless it is calculated to interfere with 
the proper performance of his duties, flagrant breaches of 
Rules 159 and 160 of the Companies (Winding up) Rules 1929 
might afford a ground for removal. Gross immorality is a 
factor to be considered, but in many cases it would not 
alone be sufficient to warrant a liquidator’s removal. The 
dominant principle on which the Court acts in this, as in 
all matters connected with the winding up, is that the benefit 
of the company and the wishes of the shareholders are to 
be first considered; and, unless the facts proved upon the 
application are sufficient to show that the continuance of 
the liquidator in office will be prejudicial to the company’s 
welfare, that is, to the creditors and the contributories, 
or is for adequate reasons distasteful to the shareholders 
or creditors, the liquidator will not be removed. By Rule 166 
Removal of 
Liquidator.