Whether action commenced by a solicitor had been ratified by claimant

http://www.bailii.org/ew/cases/EWHC/Ch/2015/3071.html

A firm of solicitors approached a Chinese trade body, advising it that its members might potentially have a claim against the defendants. The trade body provided details of some 65,000 companies which might have suffered a loss. Because the claim might have become time-barred imminently in China, the solicitors commenced proceedings in England, with a partner signing the statement of truth. PD 22 provides that where a legal representative signs a statement of truth, his signature will be taken as a statement that his client has authorised him to do so.

Prior caselaw has established that, where a solicitor has started proceedings in the name of a claimant without authority, the claimant may ratify the act of the solicitor and adopt the proceedings. After proceedings were commenced, the solicitors claimed that 362 claimants had ratified the commencement of those proceedings. Rose J confirmed that the ratification here had to be valid under English (rather than Chinese) law.

She then went on to find that the commencement of the proceedings had not been ratified. In order to ratify an act, the principal must have full knowledge of all the material circumstances. Here, the claimants had been misled by being told by the solicitors that they would not need to participate directly in the proceedings. However, "by becoming a claimant, the company is participating directly in the proceedings". It might also be misleading to state that the claimants would bear no financial risk, since an application for security for costs might be made here. Accordingly, the claim was struck out.

Furthermore, the claim should also be struck out pursuant to the court's general discretion. This was because there were no grounds for believing that any particular claimant had in fact suffered a loss, the trade body had no authority to tell the solicitors to commence proceedings and the solicitors failed to tell the defendants' solicitors that there were serious difficulties with identifying claimants.