25 / 736
their bills as against her, applied to the Court for
an order that their costs should be taxed and paid
out of the estate to them, or for such further
order as the court might think just for their
protection.
Held,
(1)
that there was a fund over which
the solicitors'
lien might prevail and the court
had jurisdiction to intervene but that the court
would not, in the exercise of its discretion, inter–
vene! o protect the solicitors, having regard to
the fact that L.'s indebtedness to the solicitors
had not been ascertained, that an order for pay–
ment out of the estate direct to the solicitors
might prejudice the prosecution of her claims for
damages against them and to the general practical
difficulties in allowing the solicitors, against the
will of their client to conduct an inter partes
taxation. Accordingly, the court would not order
the solicitors to have their costs taxed and paid
out of the estate to them direct. The Court in it*
legitimate concern for the solicitor should not
disregard the rights of the client.
(2) But that the court would, however, inter–
vene to the extent necessary to safevuard the
solicitors' lien and accordingly would order that
no payment should be made out of the estate to
L. without her solicitors first being given fourteen
days notice and that the solicitors should in that
event have liberty to apply to the court for direc–
tions in which case no payment to L. should be
made without leave of the court.
Per curiam. If after a solicitor and client taxa–
tion L. should appear to be dragging her heels
on the inter partes taxation, it might be that the
court could then make the kind of order which
the solicitors were, prematurely, seeking at present.
[In the Estate of Fuld, Eeceased (No: 4), (1967),
3 W.L.R. p. 314].
Directors
Contracts with Company
(1) A director who,
in his private capacity,
contracts with the company, acting by another
director, is not automatically infected with notice
of a defect in that other director's authority to
bind the company.
(2) Neither at common law nor under Section
194 of the Companies Act, 1963, is a director's
contract with the company void or unenforceable,
even if the requisite declaration of interest has
not been made. Such a contract is merely voidable
in equity in certain circumstances.
X, the chairman and de facto managing direc–
tor of D Co., though not formally appointed bv
its board, signed on behalf of D Co. an indemnity
in favour of P against a personal guarantee of
his of Y Co.'s banking facilities and a guarantee
to repay any money lent by P to Y Co. Both D
Co.'s indemnity against P's guarantee and
its
guarantee of his loan were given for usch consi–
deration, and P made advances in reliance on
them. Though J had not been formally appointed
managing director, D Co. had, on the facts, held
out X as having authority to enter into such
agreements, though he had no actual authority.
An article of D Co. permitted a director to con–
tract with the company, provided that his interest
was declared at a meeting of directors and, of
course, this had not been done. In an action by
P against D Co. on its indemnity and guarantee,
held (1) that notice of X's lack of authority was
not, on the facts, to be imputed to P; (2) that
the guarantee and indemnity was not void at
common law or by statute; and (3) that there–
fore the action succeeded.
[Hely-Hutchinson v
Brayhead (1967), 5 C.L. 48b and (1967), 2 All
E.R. 14].
Determination of Contract
Where a contract is of indefinite duration without
any express provision for termination on notice,
whether such a power is to be inferred is a ques–
tion of construction. An agreement silent about
its determination will not be determinable unless
the facts of the case, such as the subject-matter of
the agreement, the nature of the contract or the
circumstances in which the agreement was made,
support a finding that the parties intended that
it should be determinable, but there is no pre–
sumption one way or the other.
A
local authority sought, by an originating
summons, a declaration
that a
trade effluent
agreement entered into for commercial reasons
and on a commercial basis which contained no
provision
for
revocation could be
revoked by
reasonable notice. Held,
that
the declaration
should
be made.
[Re Spenborough U.D.C.'s
Agreement; Spenborough Corporation v Cooke
Sons & Co. (1967), 5 C.L. 66 and (1967)
I
All
E.R. 959].
Failure of Bank Manager to Investigate Security
A bank manager arranged a loan from the bank
to the defendants on promissory notes and guar–
antees as a aprt of a scheme suggested by him by
which they then lent the proceeds back to a client
of the bank at a much higher rate of interest.
The client failed to repay and his security was
insufficient. The bank sued on
the promissory
21