The court discussed the joinder of the company in a derivative action. A L Smith LJ said: ‘That in the circumstances of this case the company are necessary parties to the suit I do not doubt, for without the company being made a party to the action it could not proceed’ because ‘the company must be party to the suit in order to be bound by the result of the action and to receive the money received in the action.’ Also, ”what is recovered cannot be paid to the plaintiff representing the minority, but must go into the coffers of the company.’
Chitty LJ said: ‘To such an action as this the company are necessary defendants. The reason is obvious: the wrong alleged is done to the company, and the company must be party to the suit in order to be bound by the result of the action and to receive the money recovered in the action. If the company were not bound they could bring a fresh action for the same cause if the action failed, and there were subsequently a change in the board of directors and in the voting power. Obviously in such action as this is, no specific relief is asked against the company; and obviously, too, what is recovered cannot be paid to the plaintiff representing the minority, but must go into the coffers of the company. It was argued for the appellants that the company were made a party for the purpose of discovery only, and authorities were cited to shew that when no relief is asked against a party he cannot or ought not to be compelled to make discovery. But this argument and these authorities have no bearing on the present case, where, as already shewn, the action cannot proceed in the absence of the defendant company, and the defendant company are interested in and will be bound by the results’.
Judges:
A L Smith LJ, Chitty LJ
Citations:
[1897] 2 QB 124
Statutes:
Jurisdiction:
England and Wales
Cited by:
Cited – Roberts v Gill and Co Solicitors and Others SC 19-May-2010
The claimant beneficiary in the estate sought damages against solicitors who had acted for the claimant’s brother, the administrator, saying they had allowed him to take control of the assets in the estate. The will provided that property was to be . .
Lists of cited by and citing cases may be incomplete.
Litigation Practice, Company
Updated: 18 June 2022; Ref: scu.415959