Pure Spirit Company v Fowler
| Jurisdiction | England & Wales |
| Year | 1890 |
| Date | 1890 |
| Court | Queen's Bench Division |
Practice - Security for Costs - Action by Company in Liquidation -
A shareholder in a company sued the company in the Chancery Division to set aside a contract on the ground of fraud in the prospectus. While this action was pending the company sued the shareholder in the Queen's Bench Division for calls. The company was in liquidation. The shareholder applied for an order that the company should give security for costs in the action for calls:—
Held, that the fact that the company was in liquidation shewed, in the absence of evidence to the contrary, that there was reason to believe that if the defendant should be successful in his defence the assets of the company would be insufficient to pay his costs, and therefore the defendant was entitled to security for costs under the Companies Act, 1862 (25 & 26 Vict. c. 89), s. 69.
APPEAL by the defendant from the order of Lawrance, J., at chambers, affirming the decision of the master, who had refused to make an order that the plaintiff company should give security for the costs of the action.
The defendant in the present action, who was a shareholder in the plaintiff company, had commenced an action in the Chancery Division against the company to set aside a contract on the ground of fraud in the company's prospectus. While that action was pending the company commenced the present action for calls. A meeting of the company had been held, at which resolution had been passed, “That in the opinion of the meeting the company, by reason of its liabilities, cannot continue its business, and that the company be wound up voluntarily.” The company had accordingly gone into liquidation.
J. Henderson, for the defendant, in support of the appeal. The fact that the plaintiff company is in process of winding-up is enough of itself to bring the case within s. 69 of the Companies Act, 1862 (25 & 26 Vict. c. 89), for it gives reason to believe that the assets will be insufficient to pay the defendant's costs if he succeeds: Washoe Mining Co. v. FergusonF1; Accidental and Marine Insurance Co. v. MercatiF2; City of Moscow Gas Co. v. International Financial SocietyF3; Northampton Coal, Iron, and Waggon Co. v. Midland Waggon Co.F4
Alfred Lyttelton, for the plaintiff company. Sect. 69 of the Companies Act, 1862, provides that a judge “may” order security for costs to be given. The making or refusal of the order is therefore a matter of discretion, and, the master and the judge having both exercised their discretion in the same way, the Court should not interfere: Western of Canada Oil, Lands and Works Co. v. Walker.F5
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Parkinson (Sir Lindsay) & Company Ltd v Triplan Ltd
...it is a very important matter whether a suitor is likely, if successful, to be able to obtain payment of his costs." In 1890, in Pure Spirit Co. v. Fowler (1890) 25 Q. B. D. 235, at page 237, Mr. Justice Denman said "the Court is bound to order security for costs where the company is in liq......
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Parkinson (Sir Lindsay) & Company Ltd v Triplan Ltd
...it is a very important matter whether a suitor is likely, if successful, to be able to obtain payment of his costs." In 1890, in Pure Spirit Co. v. Fowler (1890) 25 Q. B. D. 235, at page 237, Mr. Justice Denman said "the Court is bound to order security for costs where the company is in liq......
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Banco Economico v Allied Leasing
...(Sir Lindsay) & Co. Ltd. v. Triplan, [1973] Q.B. 609; [1973] 2 All E.R. 273, applied. (7) -Pure Spirit Co. Ltd. v. FowlerELR(1890), 25 Q.B.D. 235, applied. (8) -Union Accident Ins. Co. Ltd., In re, [1972] 1 W.L.R. 640; [1972] 1 All E.R. 1105, not followed. Legislation construed: Insolvency ......
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