The Gazette 1967/71

Company Law — Loan by Company for Purchase of its Shares In 1965, the plaintiff company contracted to sell its business to the defendant. The original inten– tion was that the defendant should form a com– pany to take over the plaintiff's business, assets and premises. The agreement was made in a hurry. The defendant was to take over on 1st June and was let into possession. The plaintiff company had a wholly owned subsidiary, Solent Products (SP), and it was decided that this com– pany and not a new company would be utilised for the purpose of the take-over. On 5th June the plaintiff granted the defendant an option for £6,000 to purchase the total shareholding in SP for £36,500 which was to include the factory premises, business assets, the benefit of existing contracts, trade marks and names of the plaintiff company. The £36,500 was to be payable by SP issuing a fixed and floating debenture over its premises and assets extending over eight years bearing interest at 8 per cent per annum. That security was to be supported by a personal guar– antee from the defendant and assets of his worth £9,000. Held, (1) that the provision of the option agreement relating to the issue of a debenture by SP was illegal under Section 60 of the Companies Act, 1963; (2) that the effect of this was not to make the whole agreement illegal so as to prevent recovery of property passing thereunder; it merely rendered the agreement unnforceable; and (3) thatt he parties must as far as possible be restored to their former positions, and that to save expense the court would leave them to try to achieve this by agreement and return to court to argue costs later. [South Western Mineral Water Co. v Ashmore (1967), 5 C.L. 399]. SOLICITORS' LIABILITY FOR PAYMENT OF WITNESSES' EXPENSES The question of the right of a witness to recover his expenses from the solicitor who served him with a subpoena arose recently in the Dublin District Court, in a case of Dodds v McCullagh. In that case an essential witness was a typist, who had been one of the attesting witnesses to a dis– puted will. She was present throughout the trial and her expenses, amounting to £10, at £1 per day, appeared in the bill of costs of the successful party to the action. This bill was settled without going to taxation, a considerably smaller sum being accepted from the opposite side than that which appeared in the bill as originally drawn. The typist brought action in the District Court 22

notes. Held, (1) that the manager of a branch of a Canadian chartered bank had no actual, usual, or apparent authority to recommend any invest– ments to clients or effect them as agent for the bank; (2) that acts by senior officials of the bank in trying to settle the matter could not be ratifi– cation by the bank as the rate of interest was so high as to be ultra vires the bank; and (3) that the bank manager having been referred to in a personal, not an official capacity, was not per– sonally liable for his negligence in not checking up on the security offered by the client, since he acted honestly and in good faith. Judgment for the bank. [Hedley Byrne & Co. v Heller & Part– ners (1963), C.L.Y/2416 distinguished Bank of Montreal v Young (1967), 5 C.L. 248]. After the plaintiff, ship's painter, had obtained judgment against his employers in respect of injuries to his wrist which he alleged were sus– tained in the course of his employment, the defen– dants received an anonymous message that these injuries had been received in a fight. Witnesses of the fight were discovered. On the defendants' application for a new trial, held (1) that the new evidence could not have been obtained by reason– able diligence for use at the trial; (2, that if it had been given it would have been likely to have had an important influence on the result; and (3) that it was apparently credible. Accordingly, a new trial was ordered. [Day v Harland and Wolff (1967), 5 C.L. 301]. It is not unlawful maintenance for a master to support his servant's litigation. The unsuccessful defendant in a libel action by two paid oxcials (both subscribing members) of a trade union, who had libelled them in their capacity as such officials, sued for an injunction to restrain the union from paying their costs. There was no express power in the rules to do so and Rule 46, relating to the administration of legal assistance, said that no legal assistance should be given out of the union funds except to subscribing members. HeHld, that the action failed as the assistance was not maintenance and, de– spite R. 46, the union had implied power to give it as incieental to its power to employ the officials. [Hill v Archbold (1967), 5 C.L. 367; (1967), 2 W.L.R. 1180]. New Trial — Fresh Evidence Champerty and Maintenance