Employers' Liability Assurance Corporation Ltd v Sedgwick Collins and Company Ltd

JurisdictionEngland & Wales
CourtHouse of Lords
JudgeThe Lord Chancellor,Lord Shaw of Dunfermline,Lord Sumner,Lord Blanesburgh,.
Judgment Date29 Jul 1926
Judgment citation (vLex)[1926] UKHL J0729-2
Docket NumberCase No. 102.

[1926] UKHL J0729-2

House of Lords

Lord Chancellor.

Lord Shaw.

Lord Sumner.

Lord Parmoor.

Lord Blanesburgh.

The Employers' Liability Assurance Company, Limited
and
Sedgwick Collins and Company, Limited.

After hearing Counsel, as well on Thursday the 10th, as on Friday the 11th, Monday the 14th and Tuesday the 15th, days of June last, upon the Petition and Appeal of the Employers' Liability Assurance Corporation, Limited, of Hamilton House, Victoria Embankment, in the City of London, praying, That the matter of the Orders set forth in the Schedule thereto, namely, two Orders of His Majesty's Court of Appeal, of the 30th of July 1925, might be reviewed before His Majesty the King, in His Court of Parliament, and that the said Orders might be reversed, varied, or altered, or that the Petitioners might have such other relief in the premises as to His Majesty the King, in His Court of Parliament, might seem meet, as also upon the printed Case of Sedgwick Collins and Company, Limited, lodged in answer to the said Appeal; and due consideration had this day of what was offered on either side in this Cause:

It is Ordered and Adjudged, by the Lords Spiritual and Temporal in the Court of Parliament of His Majesty the King assembled, That the said Orders of His Majesty's Court of Appeal, of the 30th day of July 1925, complained of in the said Appeal, be, and the same are hereby, Affirmed, and that the said Petition and Appeal be, and the same is hereby, dismissed this House: And it is further Ordered, That the Appellants do pay, or cause to be paid, to the said Respondents the Costs incurred by them in respect of the said Appeal, the amount thereof to be certified by the Clerk of the Parliaments.

The Lord Chancellor .

My Lords,

1

This case arises out of the confiscatory legislation of the Government of Soviet Russia.

2

A company incorporated by Russian charter and called the Rossia Insurance Company, had its principal office in Petrograd and a branch office in London. Under section 274 of the Companies Consolidation Act, 1908, the Rossia Company filed with the Registrar the name of Mr. Collins as that of a person who was authorised to accept on behalf of the company service of process and of any notices required to be served on the company. The company carried on insurance transactions with the respondents, and became indebted to them. The company also transacted re-insurance business with the appellants and is alleged to have become entitled to a large payment from them.

3

After the second Russian revolution (the Bolshevik revolution) the Legislature of Soviet Russia passed a series of decrees by which it purported (to put it shortly) to put all insurance companies in Russia into liquidation, to appropriate their property to the Soviet Government without compensation and without any obligation to pay their debts, and to annul their shares. On the 22nd March 1923 the solicitor for Mr. Collins wrote a letter to the Registrar of Joint Stock Companies in the following terms:—

"I have further considered the cases which have been decided, and it seems that, the British Government having recognised the Soviet Government in Russia, the above Company has been nationalised with all similar institutions, and has therefore ceased to exist as a separate entity. Following your suggestion, I shall be glad if you will place this letter on the Company's file."

4

The letter was accordingly placed on the file.

5

On the 31st May 1923 the respondents commenced an action in the High Court against the Rossia Company, describing them on the writ as "the Rossia Insurance Company of Petrograd" and claiming payment in respect of the insurance transactions of £4,505 12 s. 6 d. and interest; and the writ was served on Mr. Collins. Mr. Collins did not enter an appearance on behalf of the Rossia Company, and on the 12th June 1923 the respondents signed judgment against that company for £4,515 0 s. 3 d. and costs. On the 20th December 1924 the respondents obtained in this action a garnishee order nisi attaching all debts owing or accruing due from the appellants to the Rossia Company to answer the judgment obtained against that company by the respondents; but Master Ball, after hearing the evidence, refused to make the garnishee order absolute, on the ground that he had a discretion in the matter and that he was not satisfied that, if the order were made absolute and the amount of the judgment debt paid by the appellants to the respondents, the Soviet Government might not decline to recognise the judgment and compel the appellants to pay the amount over again. The decision of the Master was affirmed by Mr. Justice Fraser, but on appeal to the Court of Appeal that Court set aside the order of Fraser, J., and, the appellants denying that they owed anything to the Rossia Company, directed an issue to be tried on that point. At the same time the Court of Appeal affirmed an order of Fraser, J., refusing to set aside the judgment. It is against these orders of the Court of Appeal that the present appeal is brought.

6

The first point made on behalf of the appellants is that, when the respondents issued their writ and obtained judgment against the Rossia Company, that company had by virtue of the decrees of the Soviet Government ceased to exist, and accordingly that no judgment could be obtained against that company upon which to found garnishee proceedings. In my opinion this point is disposed of by the decision of this House in the case relating to the Russian banks (Russian Commercial and Industrial Bank v. Comptoir d'Escompte de Mulhouse, L.R. 1925, A.C. 112), in which it was held that the parallel decrees of the Russian Legislature affecting the banking companies in Russia had not the effect of dissolving those companies but only put them into liquidation. The difference between an order for the liquidation of a company and an order for its dissolution is familiar to all lawyers, and is fully recognised in the affidavit made in this action by M. Krougliakoff (a Russian lawyer) on behalf of the appellants. A company which has been dissolved no longer exists as a corporate entity capable of holding property or of being sued in any court; but a company in liquidation, although the administration of its affairs has passed to the liquidator, retains its corporate existence. If the liquidation should be annulled, the company will resume its powers; and in the meantime it retains its title to any property not taken away from it—including (in the present case) the property and rights of the company in countries foreign to Russia, which are not effectively taken from it by the Russian legislation. In my opinion the decrees for nationalising insurance companies in Russia which have been put in evidence in this action are at least not stronger than the decrees for nationalising the banking companies which were considered in the case of the banks; and accordingly the insurance companies, like the banking companies, have not been dissolved.

7

But it is said that, assuming this to be so, the judgment is still defective as having been obtained under a writ served upon Mr. Collins after the Rossia Company had ceased to carry on business in this country and after his notice of the 22nd March 1923 had been sent to the Registrar and entered on the file, and accordingly that a garnishee order obtained under that judgment is open to attack. My Lords, I do not doubt that, if it were proved that the writ was not duly served and accordingly that the judgment was liable to be set aside at any time, the Court might well, in the exercise of its discretion, refuse to treat the judgment as a sufficient foundation for a garnishee order; for it would be inequitable to put the garnishee to a real and substantial risk of having the proceedings set aside and being called upon to pay the judgment debt over again (see Martin v. Nadel, L.R. 1906, 2 K.B. 26). But it appears to me that there are two answers to the argument put forward on behalf of the appellants.

8

In the first place Mr. Collins' name remained upon the file as representing the Rossia Company at the time when the writ was served upon him. Whether any proceeding was open to him by which he could without the concurrence of the Rossia Company have removed his name from the file, it is unnecessary now to consider; for neither he nor the Rossia Company took any proceeding for that purpose, and he contented himself with serving a notice which, though no doubt given in good faith, was incorrect, namely, that the company had ceased to exist. Further, there is evidence that, long after the Rossia Company had ceased to carry on business in this country and had been put into liquidation, Mr. Collins was conducting a correspondence on behalf of that company. In these circumstances I do not think that the notice given by Mr. Collins was sufficient to relieve him from his position as the representative of the Rossia Company for the purposes of the Act or to nullify the nomination of that gentleman as the person to receive service of process on behalf of the Rossia Company.

9

But there is a further answer to the appellants' argument. An order to wind up the Rossia Company has now been made under the Companies Act, and the liquidator on enquiry being made of him by the direction of the Court of Appeal informed that Court that he had fully investigated the matter and did not propose to contest the validity of the judgment obtained by the respondents against the Rossia Company. In view of this statement it appears to me that the validity of the judgment in this country is established beyond controversy. It is said that this is not enough to free the appellants from risk; that it is conceivable that at some future time they may desire to set up business in Russia and may acquire property there; that in that event the Russian Government, refusing to recognise the...

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