The claimant appealed the strike-out of his claim for professional negligence against the respondent solicitors. He claimed that the solicitors had acted in breach of their duty, and he then called a company meeting. Only he attended. He mistakenly believed that he had the power to assign to himself from the company the right of action. He later arranged for a deed to be issued which purported to rectify the mistake.
Held: Section 35A allowed somebody dealing with a company in good faith not to be affected by a failure to comply with the company’s constitution. The section was intended to forgive procedural irregularities, not to rectify what was otherwise a nullity. In this case however, the error sought to be forgiven was that of the chairman, and he was the party also seeking to rely on the section. He could not, by forgiving his own error, turn a nullity into a decision of the board. Robert Walker LJ considered the rule on ratification by a company: ‘Ratification is not effective where to permit it would unfairly prejudice a third party, and in particular-(1) where it is essential to the validity of an act that it should be done within a certain time, the act cannot be ratified after the expiration of that time, to the prejudice of any third party; (2) the ratification of a contract can only be relied on by the principal if effected within a time after the act ratified was done which is reasonable in all the circumstances.’ and ‘I am inclined to think that this debate (as to whether the exception is limited to ratification affecting property rights) may not be particularly profitable. Even though the operation of the Limitation Act 1980 is normally to bar the remedy rather than to extinguish the right, an accrued defence under the Act has often been spoken of in terms approximating to a property right of which a party ought not to be deprived. In my view the right approach would be to regard the deprivation of an accrued right as an important example of the general rationale identified in Bowstead and Reynolds’s article 19, that is, unfair prejudice.’
Judges:
Lord Justice Schiemann, Robert Walker LJ
Citations:
Times 29-Aug-2002, Gazette 26-Sep-2002, [2002] EWCA Civ 762, [2003] Ch 182
Links:
Statutes:
Jurisdiction:
England and Wales
Citing:
Cited – Pontin v Wood CA 1962
The writ had been issued just before the expiration of the relevant limitation period in a defective form in that it was endorsed merely with the words ‘the plaintiffs’ claim is for damages for personal injuries’. The judge in chambers held that the . .
Appeal from – Smith v Henniker-Major and Co ChD 17-Oct-2001
. .
Cited by:
Cited – Kilcarne Holdings Ltd v Targetfollow (Birmingham) Ltd, Targetfollow Group Ltd ChD 9-Nov-2004
The defendant entered into an agreement for lease, incurring substantial obligations. When it could not meet them it sought assistance from the claimant, who now claimed to have an interest in a joint venture. The draft documentation originally . .
Cited – Parker and Another v SJ Berwin and Co and Another QBD 17-Dec-2008
The claimants sought damages from their former solicitors. They set out to purchase a football club, expending substantial sums for the purpose, relying on the defendants’ promised provision of service in finding and arranging the funding. They said . .
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.
Company, Agency
Updated: 06 June 2022; Ref: scu.174345