The Gazette 1967/71

their bills as against her, applied to the Court for an order that their costs should be taxed and paid out of the estate to them, or for such further order as the court might think just for their protection. Held, (1) that there was a fund over which the solicitors' lien might prevail and the court had jurisdiction to intervene but that the court would not, in the exercise of its discretion, inter– vene! o protect the solicitors, having regard to the fact that L.'s indebtedness to the solicitors had not been ascertained, that an order for pay– ment out of the estate direct to the solicitors might prejudice the prosecution of her claims for damages against them and to the general practical difficulties in allowing the solicitors, against the will of their client to conduct an inter partes taxation. Accordingly, the court would not order the solicitors to have their costs taxed and paid out of the estate to them direct. The Court in it* legitimate concern for the solicitor should not disregard the rights of the client. (2) But that the court would, however, inter– vene to the extent necessary to safevuard the solicitors' lien and accordingly would order that no payment should be made out of the estate to L. without her solicitors first being given fourteen days notice and that the solicitors should in that event have liberty to apply to the court for direc– tions in which case no payment to L. should be made without leave of the court. Per curiam. If after a solicitor and client taxa– tion L. should appear to be dragging her heels on the inter partes taxation, it might be that the court could then make the kind of order which the solicitors were, prematurely, seeking at present. [In the Estate of Fuld, Eeceased (No: 4), (1967), 3 W.L.R. p. 314]. (1) A director who, in his private capacity, contracts with the company, acting by another director, is not automatically infected with notice of a defect in that other director's authority to bind the company. (2) Neither at common law nor under Section 194 of the Companies Act, 1963, is a director's contract with the company void or unenforceable, even if the requisite declaration of interest has not been made. Such a contract is merely voidable in equity in certain circumstances. X, the chairman and de facto managing direc– tor of D Co., though not formally appointed bv its board, signed on behalf of D Co. an indemnity in favour of P against a personal guarantee of Directors Contracts with Company

his of Y Co.'s banking facilities and a guarantee to repay any money lent by P to Y Co. Both D Co.'s indemnity against P's guarantee and its guarantee of his loan were given for usch consi– deration, and P made advances in reliance on them. Though J had not been formally appointed managing director, D Co. had, on the facts, held out X as having authority to enter into such agreements, though he had no actual authority. An article of D Co. permitted a director to con– tract with the company, provided that his interest was declared at a meeting of directors and, of course, this had not been done. In an action by P against D Co. on its indemnity and guarantee, held (1) that notice of X's lack of authority was not, on the facts, to be imputed to P; (2) that the guarantee and indemnity was not void at common law or by statute; and (3) that there– fore the action succeeded. [Hely-Hutchinson v Brayhead (1967), 5 C.L. 48b and (1967), 2 All E.R. 14]. Determination of Contract Where a contract is of indefinite duration without any express provision for termination on notice, whether such a power is to be inferred is a ques– tion of construction. An agreement silent about its determination will not be determinable unless the facts of the case, such as the subject-matter of the agreement, the nature of the contract or the circumstances in which the agreement was made, support a finding that the parties intended that it should be determinable, but there is no pre– sumption one way or the other. A local authority sought, by an originating summons, a declaration that a trade effluent agreement entered into for commercial reasons and on a commercial basis which contained no provision for revocation could be revoked by reasonable notice. Held, that the declaration should be made. [Re Spenborough U.D.C.'s Agreement; Spenborough Corporation v Cooke Sons & Co. (1967), 5 C.L. 66 and (1967) I All E.R. 959]. Failure of Bank Manager to Investigate Security A bank manager arranged a loan from the bank to the defendants on promissory notes and guar– antees as a aprt of a scheme suggested by him by which they then lent the proceeds back to a client of the bank at a much higher rate of interest. The client failed to repay and his security was insufficient. The bank sued on the promissory 21