TMI Blog1936 (7) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... pany's name to take action against the respondents other than himself, for the recovery of property and assets alleged to be the property of the company and for other reliefs. Alternatively the appellant asked for leave to bring an action in the company's name for the same relief. The proposed defendants collectively hold a controlling interest in the company, fifty-one per cent of the issued shares. Two of them were directors; two others are representatives of a deceased director. As against all of these the claim or some part of it would be made in that character. The petition was dismissed by the Supreme Court Murphy, J. and his order, as just stated, was affirmed on appeal. This bare statement suffices to disclose the unusual character of this appeal, one justified only by the importance of the issues involved, the exceptional circumstances in which the application was made, and the even more unusual course taken by the learned Judge in dealing with it. The purpose of the petition was to obtain leave to have action taken in the company's name in respect of matters which, so far as it was a representative suit by a minority shareholder, had been the subject of a former action ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of such a claim as was successfully made by the plaintiff in Cook v. Decks and there is at least a family likeness between that case and this justice will be denied to him if the mere possession of the Company's seal in the hands of his opponents were to prevent the assertion at his instance of the corporate rights of the Company as against them. But even in the case of a going company a minority shareholder is not entitled to proceed in a representative action if he is unable to show when challenged that he has exhausted every effort to secure the joinder of the company as plaintiff and has failed. But cessante ratione legis, cessat lex ipsa. So soon as the company goes into liquidation the necessity for any such expedient in the procedure disappears. Passing over the superficial difficulty that a Company in compulsory liquidation cannot be proceeded against without the leave of the Court, the real complainants, the minority share-holders, are now no longer at the mercy of the majority, wrongly retaining the property of the Company by the strength of their votes. If the liquidator, acting at the behest of the majority, refuses when requested to take action in the name o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dator had been invited to institute proceedings in the Company's name and he had refused. It seems, however, to have been suggested in the Provincial Courts that the petition should be granted on the ground that it was at least encouraged by their Lordships. That is not so. The possibility of further proceedings was certainly not absent from their minds. They deplored the fact that the objection taken was "an obstacle to finality." They did not forget section 243 of the Act. But they said and meant no more. The petition when presented was one to be dealt with by the Judge in liquidation upon the considerations relevant in such cases. And the proper judicial attitude towards such an application is well understood. A Judge in winding up is the custodian of the interests of every class affected by the liquidation. It is his duty even, if it be in a voluntary liquidation that opportunity offers, to see to it that all assets of the Company are brought into the winding-up. In authorising proceedings, especially if they may or will involve some drain upon the assets, he must satisfy himself as to their probable success: where, as in the present case, they involve no possible charge on ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... umption that "fraud in all its phases will be eliminated" from the proposed action. It may be, but it will not necessarily be so. Doubtless no more will be heard of the fraudulent conspiracy so adversely commented upon in their Lordships' judgment in the Ferguson appeal and of this their Lordships were assured by Mr. Radcliffe but if the facts as proved in the proposed action justify personal reflection on any defendant, the Company cannot in advance be precluded from making it, and no assurance to that extent has been given nor can it be asked for. It must be remembered that as relied on by the respondents themselves in obtaining the dismissal of the Ferguson appeal, the Company was a stranger to the proceedings then. So far as the Company was concerned these proceedings were all coram non judice ; it cannot be affected by anything that took place in its absence. The unfortunate experience of the plaintiff in the Ferguson action however will be the best protection the respondents can have against any further reckless charges of fraud being made against them. The next ground of Mr. Justice Macdonald's judgment is that in his opinion, with fraud in all its phases eliminated, the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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