in the first place, for an order that all documents in the respondents' possession belonging to him shall be delivered up to him. That part of the summons has not been pressed. The part of the summons that has been pressed is the second part, which asks for an order that the respondents shall, at all reasonable times on reasonable notice, produce at 42, Gracechurch Street, in the City of London, all books, documents, papers or writings in their custody, possession or power relating to the action entitled Groom v. Tear Brothers and Groom, 1934, G. No. 7842, and that the applicant his solicitors and agents may be at liberty to inspect and peruse the documents so produced and to make notes of their contents and may be entitled to be supplied with copies thereof on payment therefor at the rate prescribed by R.S.C. Ord., 65, r. 27 (18). Before considering the contentions put forward on this part of the summons, I should say this. The solicitors, whether or not they have a lien, do not seek to raise any point by reason of it and accordingly the position is the same as if they had no lien. Under these circumstances, on the facts which I have stated up to the present, it would seem quite obvious that the applicant is entitled to the relief for which he is now asking. He has employed a solicitor in an action, and the solicitor has acted for him in that matter. There are papers in the custody of the solicitor relating to the action of which the client is entitled to have copies. So far the matter seems simple beyond words. But now I come to the circumstances which, it is suggested, raise a difficulty in the way of my making the order for which the applicant asks. It is not, I think, disputed now, though a contrary suggestion in view of certain provisions in the Solicitors Act, was made at one time, that there is full jurisdiction in the court under its inherent jurisdiction, to make such an order as is asked for, and I shall assume for the purpose of my judgment that I have such jurisdiction. It is, however, said that the court ought not to make such an order in the circumstances of this case to which I now turn. The applicant, Mr. Groom, was insured under a policy against third party risks which was issued by an insurance company and which is in a very familiar form. Amongst other things the policy contains this condition [His Lordship read condition 2 set out above]. It was in accordance with that condition that the selection of the solicitors to act for the applicant in the action was made. The selection was admittedly made by the insurance company and they employed the solicitors, who, I assume, though I do not think that it is material, are frequently employed for such matters by the insurance company. However that may be, it was in virtue of that provision, and of the authority which the assured gave the insurance company to select the solicitor and conduct the proceedings that the action was carried on. But what I wish to emphasise is this, that throughout the hearing of this summons it was not in dispute, and cannot be in dispute, that the solicitors, though selected by the insurance company, were, in all matters concerning the action, the solicitors of the applicant, who was a party to the action, the insurance company not being, of course, parties to the action. And thus, in respect of the duty which the solicitors owed to the applicant as his solicitors, the applicant under the ordinary rule would be entitled to have access to all the documents which were concerned with the matter in which the solicitors were acting as such for him. It is, however, suggested that this provision that the insurance company is to have absolute conduct and control of all or any proceedings against the insured, on its true construction, entitles the insurance company to direct the solicitors not to give effect to what is, prima facie, the applicant's rights, namely, that he should see his documents. It does not seem to me that there is anything in the words used in this condition in the policy which can have any such result. I agree that the words in the policy are that the insurance company are to have the conduct and control of all proceedings against the insured, but that these words should be interpreted as meaning that the insurance company is authorised by the insured to interfere with the ordinary rights which a client has against his solicitor seems to me, I must confess, unreasonable. The next point which is suggested is that the court ought not in its discretion to make this order because the insurance company objects to the solicitors showing these documents to their client. I must confess that, if the applicant in this case had pressed, as he does not press, for the order asked for in the first part of the summons, namely, that the respondents should deliver up to him, or as he might direct, all deeds, documents, papers and writing in their custody, possession or power belonging to the applicant, there might have been a difficulty about the matter and a court might hesitate to make such an order as that in proceedings in which the company are not parties, and in which they have not had an opportunity themselves of presenting whatever contentions they might conceive to be possible. But an order in the terms of the first part of the summons is not what is requested. All that is asked for is that the client should see the documents that have come into being in regard to the matter in which he employed the solicitors, and I cannot see that the insurance company has any right to interfere with that. I appreciate that, having regard to the obligations which the insurance company has undertaken to the present applicant it may have an interest in the matter, and it may be that, if any question arises with regard to the policy as between the insurance company and the applicant, the company may desire to have access to these documents which the applicant desires to see. That may be a very good reason for maintaining the present custody of these documents in the hands of the solicitors. But why that should prevent the applicant seeing the documents I cannot understand, and I do not see what right I have to interfere in what seems to me to be the plain right of a client against his solicitor. In these circumstances I propose to order that the respondents do at all reasonable times on reasonable notice produce at 42, Gracechurch Street, in the City of London, all books, documents, papers or writings in their custody, possession or power, relating to the action entitled Groom v. Tear Brothers, and that the applicant, his solicitors and agents be at liberty to inspect and peruse the documents so produced and to make notes of their contents, and be entitled to be supplied with copies thereof on payment therefor at the rate prescribed by R.S.C., Ord. 65, r. 27 (18), such production to be, if so required by the applicant, upon oath. The effect of that is this, that the solicitors will, of course, in the first instance take the responsibility of the books, documents, papers and writings which they have in their custody relating to the action. It may be that there are some documents in their custody which they think do not relate to the action but which in the applicant's opinion do. If there is any doubt whether any particular documents do or do not relate to the action the applicant must ask for an affidavit by the respondents as to those documents. Solicitors: Metcalfe, Copeman & Pettefar (for the applicant); Linklaters & Paines (for the respondents). [Reported by C. M. YOUNG, Barrister-at-Law.] GERARD v. WORTH OF PARIS, LTD. [COURT OF APPEAL (Slesser and Romer, L.JJ.), June 29, 1936.] Companies-Members' voluntary winding up Judgment against liquidator for wrongful dismissal of employee-Garnishee order on liquidator's bank account Companies Act, 1929 (c. 23), ss. 172, 174, 246-255. A company went into liquidation under a resolution for a member's voluntary winding up. The liquidator summarily discharged its manageress, who sued the company for wrongful dismissal and obtained judgment in default of defence. She applied for a garnishee order on a bank account in the name of the liquidator. There was no evidence of any other claims on the company. The master refused to make the order absolute, but the judge in chambers reversed his decision. The liquidator appealed : HELD: (i) this being a members' voluntary winding up, it must be taken that the company was solvent, as there was no evidence to the contrary. There was therefore no question of all creditors being paid in full and the court might properly refuse to exercise its discretion to stay an execution, and make the garnishee order absolute. (ii) the fact that the account was in the name of the liquidator was immaterial. (iii) the liquidation did not in the circumstances dissolve the employee's existing contract with the company. [EDITORIAL NOTE. The position under a members' voluntary winding up is quite different from that under a creditors' winding up. In the former, which is the position in the present case, there is a declaration of solvency and, until the contrary is shown, the presumption is that all debts will be paid in full. There is therefore no case for any restriction to be placed upon a creditor issuing execution upon a judgment. This argument applies equally to a garnishee order, and, where the creditor has proceeded in this way, an order absolute can be made. The making of such an order is in the discretion of the court. AS TO EXECUTION AGAINST A COMPANY IN VOLUNTARY LIQUIDATION, see HALSBURY, Hailsham Edn., Vol. 5, p. 778, para. 1337; and FOR CASES, see DIGEST, vol. 10, pp. 1013, 1014, Nos. 7031-7039.] Cases referred to: (1) Re Bank of Hindustan, China & Japan, Ex p. Levick (1867), L.R. 5 Eq. 69; 10 Digest 1052, 7361. (2) Anglo-Baltic & Mediterranean Bank v. Barber & Co., [1924] 2 K.B. 410; Digest Supp. (3) Westbury v. Twigg & Co., [1892] 1 Q.B. 77; 10 Digest 1013, 7035. (4) Re International Marine Hydropathic Co. (1884), 28 Ch. D. 470; 10 Digest 970, 6669. (5) Re Oak Pits Colliery Co. (1882), 21 Ch. D. 322; 10 Digest 969, 6663. (6) Reigate v. Union Manufacturing Co., (Ramsbottom), [1918] 1 K.B. 592; 9 Digest 536, 3532. APPEAL by the liquidator of the defendant company from an order of HILBERY, J., made in chambers on June 12. On Feb. 11, the shareholders of the defendant company passed a resolution for a members' voluntary winding up, and a liquidator was appointed. On Feb. 21 the liquidator dismissed the plaintiff, a manageress, from the employment of the company. On Mar. 4 she sued the company for breach of contract and wrongful dismissal, and on May 1 obtained a judgment in default of defence, against the company for £671 and costs. On May 17 the master made a garnishee order nisi on the Midland Bank, Ltd., debtors of the company. On May 22 the master refused to make the order absolute, because the account was in the name of the liquidator. The plaintiff appealed to HILBERY, J., in chambers, who discharged the master's order and made the garnishee order absolute. Counsel were not agreed on his Lordship's reasons. On the one side it was said that the learned judge had taken the view that there was a new employment by the liquidator and that the damages were a liability incurred by him in carrying on the business for the purposes of liquidation; on the other, that his Lordship held that, as the liability arose after the liquidation and the liquidator had taken the benefit of the existing contract, he was in the same position with regard to the damages as he was to any other liability arising after the liquidation. The liquidator appealed. C. N. Tindale Davis for the liquidator. G. Avgherinos for the judgment creditor. Tindale Davis: The effect of the Companies Act, 1929, ss. 246-255, is to stay all proceedings, including garnishee proceedings, brought against the company after the voluntary winding up. Sect. 174 applies to a voluntary liquidation. There is no distinction, for the purpose of staying proceedings in respect of the garnishee order, between a voluntary and compulsory winding up. Here there are no such exceptional circumstances as would justify the court in departing from the usual rule that a stay is always granted when a creditor obtains judgment against a company in voluntary liquidation. Anglo-Baltic & Mediterranean Bank v. Barber & Co. (2). case. Avgherinos: The Anglo-Baltic case (2) has no application to the present The resolution to wind up did not put an end to the judgment creditor's employment; she was dismissed afterwards by the liquidator, and the dismissal had nothing to do with the liquidation. There must be a substantive application for a stay in a case of voluntary winding up : Westbury v. Twigg & Co. (3). If there had been a statutory stay under sect. 174, the judgment creditor would not have applied for a garnishee order. With deference to the learned editors of BUCKLEY ON THE LAW OF COMPANIES (note, p. 398), sect. 174 does not apply in a voluntary winding The court has discretion to stay proceedings, but also to take exceptional circumstances into account, and these are exceptional up. circumstances. A liability which arises after liquidation must be paid in full and is not provable: Re International Marine Co. (4). The judgment creditor |