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TMI Blog1964 (3) TMI 34X X X X Extracts X X X X X X X X Extracts X X X X ..... is the Clameur de Haro in the jurisdiction of England and Wales. But clearly this is a matter of procedure to be decided according to the law of this forum. In the court below this question involved the judge contra mundum. This was because the defendants had elected to assert a counterclaim which itself required exception from the rule in Foss v . Harbottle [1843] 2 Hare 461, notwithstanding that he was in fact the majority shareholder. The point was taken by the judge. In this court the counterclaim, whose close resemblance to the claim was an indication that this is essentially a dispute between two discordant partners, was not pursued, and Mr. Harvey, for the defendant, was free to support the judge's decision to dismiss the action. [His Lordship stated the facts relating to the history of the company and continued.] Before this court the problem ultimately was displayed in this fashion. The plaintiff contended that under two heads the defendant had by misfeasance damaged the company. The first was this : that he, as managing director, received from the company's patent agent in February, 1956, a patent application by the company signed by him as inventor authorising th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tur. But I do not think that the first complaint can be dismissed on that ground. The allegation of damage to the company of the character alleged is at least in theory sufficiently plausible for the pleading of misfeasance to hold water. In those circumstances it is necessary to consider whether on the case as pleaded by the plaintiff the judge was right in refusing to recognise it as one which called for exemption from the rule in Foss v. Harbottle [1843] 2 Hare 461 that in genera, in an action to remedy a wrong done to a company, the only acceptable plaintiff is the company. [His Lordship stated the facts relating to the history of the action and continued,] On the Foss v. Harbottle [1843] 2 Hare 461 point it was urged for the plaintiff that Roxburgh J. in standing over the action on the question of damages, plainly assumed that the present case was a proper exception from the rule. This is true, and it is also true that that judge was not accustomed to overlook such a point even if neither party drew attention to it. But I cannot think that this argument is of any weight: the matter was obviously not debated, and it is worthy of notice that the judgment makes no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to certain exceptions. It has been noted in the course of argument that in cases where the act complained of is wholly ultra vires the company or association the rule has no application because there is no question of the transaction being confirmed by any majority. It has been further pointed out that where what has been done amounts to what is generally called in these cases a fraud on the minority and the wrongdoers are themselves in control of the company, the rule is relaxed in favour of the aggrieved minority who are allowed to bring what is known as a minority shareholders' action on behalf of themselves and all others. The reason for this is that, if they were denied that right, their grievance could never reach the court because the wrongdoers themselves, being in control, would not allow the company to sue. Those exceptions are not directly in point in this case, but they show, especially the last one, that the rule is not an inflexible rule and it will be relaxed where necessary in the interests of justice." To these may be added the comment of Romer J. in Cotter v. National Union of Seamen [1929] 2 Ch. 58, 69 ; 45 TLR. 352 : "An action at the suit of individua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation. In my judgment, for those reasons it cannot by any stretch of imagination be said that the interests of justice require that the ordinary rule should be departed from so as to permit such barren litigation. For these reasons I would dismiss the appeal. I add that we were invited by the defendant to take into consideration certain passages in the inspectors' report on the ground that its contents were to be treated as averments in the statement of claim, which contained the phrase " The plaintiff will refer to the said report. " For my part, I do not think that this is a correct approach, but, in any event, I have not found it necessary to accept the invitation. Harman L.J. I have the authority of Davies L.J., who cannot be here today, to say that he concurs in the judgment which has just been delivered. Harman L.J. This appeal arises out of an attempt by the judge in the teeth of the opposition of both parties to put a summary end to the action and counterclaim. This attempt I am inclined to regard with approval because its success puts a stop to perhaps the most barren and futile litigation it has ever been my lot to encounter. The defendant has accepted the judge's r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In addition, each party has abandoned personal claims against the other based on the original 1952 agreement. The judge stopped the action because he was of opinion that it did not come within the exceptions to the rule in Foss v. Harbottle [1843] 2 Here 461 . He held that the exceptions only cover the necessity of the case and were confined to cases either of actions ultra vires the company (which are not suggested here), or of fraud by the majority or oppression of the minority by them in the form usually called a fraud on the minority, that is to say, where some property or advantage is monopolised by the majority to the exclusion of the minority. The judge found that there was no case in the reports in which such an action had been held to be competent in the absence of some feature of this sort and no such case has been cited to us. In the comparatively recent case of Pavlides v. Jensen [1956] Ch. 565 ; [1957] 27 Comp. Cas.191 it was held by Danckwerts J. that the exception did not cover a case of negligence without fraud on the part of the majority. In that case it was said that the majority of the board had neglectfully parted with certain of the company's pr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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