Russian and English Bank and Florance Montefiore Guedalla v Baring Brothers & Company Ltd

The Russian and English Bank, in whose name as principal party this appeal is brought�I will refer to it as the Bank�was incorporated in Russia under Russian Law in April, 1910, and with its head office at Petrograd carried on for some years the business of banking on a large scale. In December, 1915, it opened a Branch in London, observing then all the requirements of Section 274 of the Companies (Consolidation) Act, 1908. The Branch did an extensive business in this country until June, 1920�a date some years after the Russian Revolution and as now appears more than two years after the Bank as a result of decrees of the Soviet Government had been dissolved or had ceased to exist by Russian Law. The date of that event may now, I gather, be taken to have been the 26th January, 1918.

Following upon transactions of some complication in which the Czarist Government were concerned but the details of which are not at present material, there were in November, 1917, left in the hands of the Respondents, Baring Brothers, for the account as is alleged of the London Branch of the Bank, two sums of ?80,000 and £100,000. As the claim of the Bank to have these moneys paid over to it was not recognised by the Respondents, the Bank on the 23rd March, 1921, brought an action in the Chancery Division of the High Court of Justice to recover these sums with interest. Pleadings in this, the first action, were duly delivered but, owing mainly, it would seem, to uncertainty in this country as to the actual position of Russian Banks under the decrees of the Soviet Government proceedings were left in abeyance until the 18th June, 1931. By that date it had been ascertained that for some considerable time and possibly prior to the commencement of the action the Bank had in fact been dissolved in Russia. The Respondents accordingly took out a summons in the first action asking for an order that all further proceedings therein be stayed on the ground that the action had been commenced or at all events was being continued in the name of a Plaintiff who was non-existent. An order for costs personally against the Solicitors on the record for the Bank was also asked for. At the hearing of the summons on the admission made that the Bank had certainly ceased to exist in Russia prior to the date of the summons, Mr. Justice Eve on the 12th January, 1932, held that the action was no longer maintainable and that all further proceedings in it must be stayed. He suggested, however, that creditors' claims against the assets of the Bank might still be established, in a winding-up made on a petition presented to the Court under Section 338 of the Companies (Consolidation) Act, 1929. On the 9th February, 1932, a creditors' petition, inspired doubtless by that suggestion of the learned Judge, was presented to the Court, praying, under the Section of the Act referred to, for a winding-up order, on that petition and in the presence of and without objection taken by the Attorney-General, a winding-up order was on the 8th of March, 1932, made by Mr. Justice Bennett and on the 20th July following, Mr. Edward Maloney, a chartered accountant, with a Committee of Inspection, was appointed liquidator for the purpose of the winding-up. The learned Judge made the winding-up order under the power conferred upon the Court by Section 338 (1) ( d) (i) of the Act on evidence adduced that the Bank, an unregistered company, had in Russia been dissolved with its affairs in this country unliquidated.

On the 13th December, 1933, the Liquidator applied to Mr. Justice Bennett to remove the stay in the first action directed by Mr. Justice Eve prior to the winding-up order. The application was made on the suggestion that the status of the Bank in an English Court had in relation to any proceedings made necessary by the winding-up been restored. But Mr. Justice Bennett refused to interfere. Mr. Justice Eve, he said, had made his order because there were no Plaintiffs before the Court. From the moment of his order the action was dead for all purposes. Nor had the Bank been re-animated as a result of the winding-up order. Accepting that decision, the Liquidator, having duly obtained the leave of the Court, and with the authority of the Committee of Inspection, instructed his Solicitors, Messrs. F. M. Guedalla & Co., to issue in the name of the Bank, as Plaintiff, the writ in the action out of which this appeal proceeds (to be referred to as the present action). Pleadings have been delivered�the defence of the Respondents submitted without prejudice�and it clearly appears that the issues are substantially the same as were those in the first action, the relief claimed being, I think, identical.

In that state of things on the 18th July, 1934, the Respondents took out in the present action a summons against the Bank and Messrs. Guedalla & Co. asking for an order staying all proceedings therein on the ground that the Plaintiff Bank was a dissolved corporation: as before, too, an order upon the Solicitors personally to pay the costs of the Respondents taxed as between Solicitor and Client was asked for: on the 9th October, 1934, Mr. Justice Clauson made the order in these terms: an appeal to the Court of Appeal was on the 20th November, 1934, dismissed. This Appeal in the name of the Bank, with Messrs. Guedalla & Co. joining as co-Appellants in respect of the order made against them for costs, is an appeal from that order of the Court of Appeal.

Mr. Justice Clauson treated Mr. Justice Bennett's refusal to remove the stay in the first action as a decision that the winding-up order did not avoid the dissolution brought about by the foreign law. By that decision he was bound. But he followed it with no reluctance because it commended itself entirely to his own Judgment. The non-existent Plaintiff could no more sue now than it could before the winding-up order. It had not been re-animated and the dissolution was not avoided. Section 191 of the Act did not appear to him to create in the Liquidator a new cause of action in the name of the company which the company itself could not enforce by action. He did not understand how a liquidator could sue on behalf of a non-existing company. The learned Judge suggested that a recourse to the machinery provided by Section 190 of the Act, to which, as to section 191, reference will presently be made, might provide an escape from the difficulty and he offered Counsel an adjournment to consider that suggestion. But he was not concerned then to decide whether there was any such machinery available. The Lords Justices Slesser and Roche, on appeal, took the same view. The company in such a case as this Slesser L.J. said, "has no name and there is no company on behalf of which the action can be brought." Both of the Lords Justices, while not finally so deciding, were strongly of opinion that Section 190 provided the remedy for the Liquidator if he chose to avail himself of its machinery.

My Lords, I find myself at variance with the learned Judges on these matters but I will not give my reasons until I have drawn your Lordships' attention to some sections of the Companies (Consolidation) Act, 1929, the statute upon which, of course, everything must depend. Many of its provisions were referred to during the argument. In detail these are too lengthy for citation here. But it may be convenient, if only for purposes of immediate reference that I should now set forth textually the sections of the statute immediately relevant, enclosing in square...