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Company - 1960- 1969

Company Law, including Partnership, Company Director Disqualification. See also Insolvency.

These cases are extracted from a very large database. The entries on that database are now being published individually to the main swarb.co.uk website in a much improved form. As cases are published here, the entry here will be replaced by a link to the same case in that improved form on swarb.co.uk. In addition the swarb.co.uk site includes very substantial numbers of cases after 2000. Please take the time to look.  

This page lists 38 cases, and was prepared on 21 October 2013. These case are being transferred one by one to the main swarb.co.uk site which presents them better, with links to full text where we have it, and much improved cross referencing.
Lee -v- Lee’s Air Farming Limited [1960] 3 All ER 420
1960
PC
Commonwealth, Company, Employment Casemap
1 Citers
Mr Lee had formed a company, Lee's Air Farming Limited and held nearly all its shares. He was the managing director, but by profession a pilot. The company was formed to conduct an aerial top-dressing business. He appointed himself the chief pilot for the company. In the Court of Appeal of New Zealand, North J said: "These powers were moreover delegated to him for life and there remained with the company no power of management whatsoever. One of his first acts was to appoint himself the only pilot of the company, for, although article 33 foreshadowed this appointment, yet a contract could only spring into existence after the company had been incorporated. Therefore, he became in effect both employer and worker. True, the contract of employment was between himself and the company: see Booth v Helliwell, but on him lay the duty both of giving orders and obeying them. In our view, the two offices are clearly incompatible. There could exist no power of control and therefore the relationship of master-servant was not created." Held: Appeal allowed. "one person may function in dual capacities. " and "Ex facie there was a contract of service. . . . the real issue is whether the position of the deceased as sole governing director made it impossible for him to be the servant of the company in the capacity of chief pilot of the company. . . there was no such impossibility. There appears to be no greater difficulty in holding that a man acting in one capacity can give orders to himself in another capacity than there is in holding that a man acting in one capacity can make a contract with himself in another capacity. The company and the deceased were separate legal entities. The company had the right to decide what contracts for aerial top-dressing it would enter into. The deceased was the agent of the company in making the necessary decisions."
Barclays Bank Limited -v- Inland Revenue Commissioners; HL 1960
Unit Construction Co Ltd -v- Bullock; HL 1960
Re Bugle Press Ltd [1961] Ch 270
1961
ChD
Buckley J
Company Casemap
1 Cites
1 Citers
Two shareholders held more than 90% of the issued shares of the company. To get rid of the holder of the remaining shares, they incorporated another company for the purpose of acquiring all the shares of the company. The acquiring company offered to purchase the company's shares at a proper value. The majority shareholders accepted the offer but it was refused by the minority shareholder. The acquiring company gave notice of intention to exercise the statutory power of compulsory acquisition under the section. The minority shareholder applied that the transferee company was neither entitled nor bound to acquire his shares on the terms offered notwithstanding the approval of 9/10ths of the shareholders. The minority said the offer undervalued his shares. The majority shareholders did not file any evidence verifying their valuation. Held: The court made the declarations sought. In circumstances where the assenting 90% majority were unconnected with the offeror the normal burden of proof rested on the dissenting minority to show grounds why the court should "order otherwise", but that did not apply where there was a connection between the assenting majority and the offeror, in particular, where the acquiring company was simply the alter ego of the assenting majority. As to a submission that the respondent's use of section 209 was contrary to the purpose of the section: "I am bound to say that I see very great force in that argument. Whether, in such a case, if the court were fully satisfied that the price offered to the minority shareholders was a fair price to be offered for their shares, the section ought to be allowed to operate according to its tenor is, I think, a matter which it is unnecessary for me to decide today because, in my view, on the facts of this particular case, at any rate, the onus must rest on Mr Instone's clients [the majority shareholders] to satisfy the court that the price offered is a fair price. In the ordinary case of an offer under this section, where the 90 % majority who accept the offer are unconnected with the persons who are concerned with making the offer, the court pays the greatest attention to the views of that majority.
This case, however, seems to me to be quite the reverse of that, because here, although as a matter of law the body making the offer must be regarded as distinct from the persons who hold shares in that body, nevertheless as a matter of substance the persons who are putting forward this offer are the majority shareholdersIn a case of this kind it seems to me that the onus must clearly be on the other side, and that it must be incumbent on the majority shareholders to satisfy the court that the scheme is one with which the minority shareholder ought reasonably to be compelled to fall in with." The acquiring company had not discharged that burden.
Companies Act 1948 209
Commercial Banking Co of Sydney Ltd -v- Mann [1961] AC 1; [1960] 3 All ER 482
1961
PC
Viscount Simonds, Lord Reid, Lord Radcliffe, Lord Tucker and Lord Morris of Borth-y-Gest
Commonwealth, Company, Banking, Torts - Other Casemap
1 Cites
1 Citers
The respondent Mann practiced as a solicitor in partnership with Richardson. They kept a "trust account" in the partnership name with the Australian and New Zealand Bank in Sydney ("ANZ"). Under the partnership agreement, all assets belonged to Mann, but cheques might be drawn on the partnership bank account by either. Mann gave the necessary authority to ANZ. Richardson used that authority to draw cheques, inserting on each after the printed word "Pay", the words "Bank cheque favour H. Ward" or "Bank cheque H. Ward;". He also filed application forms for bank cheques in favour of H. Ward to a like amount, purporting to sign them on behalf of the firm. He took the documents to ANZ, which in each case debited the firm's account and issued a bank draft of an equal amount in the form "Pay H. Ward or bearer." He took the cheques to the appellant bank, and cashed them over the counter. The bank paid the cheques. He was fraudulent throughout; Ward was not a client of the partnership, nor had any client authorised the payment to him of any money held in the trust account. Mann sued the appellant bank for conversion of the bank cheques, or alternatively to recover the sums received by it from ANZ bank as money had and received to his use. He succeeded before the trial judge, whose decision was affirmed by the Court of Appeal of New South Wales. Held: The bank's appeal succeeded. Mann never obtained any title to the cheques, and he could not obtain title by ratifying the conduct of Richardson in obtaining the cheques from ANZ bank, without at the same time ratifying the dealings in the cheques by Ward and the appellant bank. Mann's claim for damages for conversion failed, and that his alternative claim for money had and received also failed. Where a partner in a firm wrongfully draws a cheque on the partnership account, the proceeds of the cheque are legally his.
Viscount Simonds said: "It is important to distinguish between what was Richardson's authority in relation on the one hand to the A.N.Z. bank and on the other to Mann. No question arises in these proceedings between Mann and the A.N.Z. bank. It is clear that Mann could not as between himself and the bank question Richardson's authority to draw cheques on the trust account. The position as between Mann and Richardson was different. Richardson had no authority, express or implied, from Mann either to draw cheques on the trust account or to obtain bank cheques in exchange for them except for the proper purposes of the partnership. If he exceeded those purposes, his act was unauthorised and open to challenge by Mann. It is in these circumstances that the question must be asked whether, as the judge held, the bank cheques were throughout the property of Mann. It is irrelevant to this question what was the relation between Richardson and Ward and whether the latter gave any consideration for the bank cheques that he received and at what stage Mann learned of the fraud that had been practised upon him. The proposition upon which the respondent founds his claim is simple enough: Richardson was his partner and in that capacity was able to draw upon the trust account and so to obtain from the bank its promissory notes: therefore the notes were the property of the partnership and belonged to Mann, and Richardson could not give a better title to a third party than he himself had."
Re Bugle Press Ltd [1961] Ch 270
2 Jan 1961
CA
Lord Evershed MR, Lord Justice Harman
Company Casemap

1 Citers
Shareholders with over 90% of the issued shares sought to acquire the remaining shares, and create another company to do so. That company offered to purchase the shares at a valuation. The majority shareholders accepted but the minority shareholder refused. The new company gave notice to exercise the statutory power of compulsory acquisition under the section. The minority shareholder said that the transferee was not entitled to acquire his shares despite the approval of 9/10ths of the shareholder, and said the offer undervalued his shares. The majority did not file any evidence verifying their valuation. The court at first instance granted the declaration, saying the connection between the acquiring company and the majority shareholders was an exception. Held: Upholding the declaration, the constitution of the acquiring company and its connection with the majority shareholders rendered this a special case where the normal rule as to the burden of proof did not apply. ""But if the minority shareholder shows, as he shows here, that the offeror and the ninety per cent of the transferor company's shareholders are the same, then as it seems to me he has prima facie shown that the court ought to order otherwise, since if it should not so do the result would bethat the section has been used not for the purpose of any scheme or contract properly so called or contemplated by the section, but for the quite different purpose of enabling majority shareholders to expropriate or evict the minority" Lord Justice Harman:- "The minority shareholders advisers waived that objection also, and he having applied to the court under the section had, like any other applicant, to prove his case, that is to say to set up a case which the respondents had to answer. He did that quite simply by showing that the transferee company was nothing but a little hut built round his two co-shareholders, and that the so-called "scheme" was made by themselves as directors of that company with themselves as shareholders and the whole thing, therefore, is seen to be a hollow sham. It is then for the transferee company to show that nevertheless there is some good reason why the scheme should be allowed to go on. The transferee company, whether because the two members did not wish to go into the witness-box and be cross-examined or for some other reason, did not file any evidence at all; they merely purported to rely on a copy of a valuation said to have been made on their behalf by a firm of chartered accountants. That valuation was not sworn to, nobody has been able to cross-examine the authors of it and there was in my judgment no case in answer. The minority shareholder has nothing to knock down; he has only to shout and the walls of Jericho fall flat. I am surprised that it was thought that so elementary a device would receive the court's approval."
Companies Act 1948 209
in Re William Hockley Ltd [1962] 1 WLR 555
1962
ChD
Pennycuick J
Insolvency, Company
Pennycuick J said: "The expression ‘contingent creditor’ is not defined in the Companies Act 1948, but it must, I think, denote a person towards whom under an existing obligation, the company may or will become subject to a present liability upon the happening of a future event or at some future date . ."
Companies Act 1948 224(1)
Musselwhite -v- CH Musselwhite & Son Ltd [1962] Ch 964
1962

Contract, Company

Sale of shares - duty of vendor between exchange and completion - interim receipts.
Independent Automatic Sales Ltd -v- Knowles and Foster [1962] 1 WLR 974; [1962] 3 All ER 27
1962
ChD
Buckley J
Company, Insolvency
1 Citers
The company in liquidation had sold machines on hire-purchase. It sued the finance company to recover hire-purchase agreements and other securities which it had charged to secure the repayment of advances. When the finance company relied upon the charge, the plaintiff replied that it was void because it should have been registered as a charge over book debts. Held: If the property subject to a charge is not registered and the property remains after all the costs of the winding up and debts payable in the liquidation have been paid the property will continue to be encumbered even though the charge was not registered at Companies House. A book debt is one which could be properly entered in the books of the company whether in fact entered or not.
Jones -v- Lipman and Another; ChD 1962
Parke -v- Daily News Ltd [1962] Ch 927
1962

Company
1 Citers
The company which had sold its business, through its Board of Directors, had resolved to pay £1 million to its former workers and the widows of such former workers. A shareholder sought to prevent this happening on the ground that such a payment went beyond the articles of association of the company, and such payment to ex-employees was not reasonably incidental to the carrying on of the business of the company. Held: The application succeeded. The making of an ex gratia payment as the company intended to do, and in the circumstances where that company no longer operated, was not reasonably incidental to the conduct of its business and was therefore ultra vires the company’s memorandum and articles. In such circumstances a shareholder has the right to bring the action which the plaintiff in Parke’s case did.
Boulting -v- Association of Cinematograph, Television and Allied Technicians; CA 1963
Savoy Corp Ltd -v- Development Underwriting Ltd; 1963
In re Overseas Aviation Engineering(GB) Ltd [1963] I Ch 24
1963
CA
Lord Denning MR, Harman LJ
Company

A charging order on land under section 35(1) of the 1956 Act obtained to enforce a judgment debt was a form of "execution" for the purposes of section 325 CA 1948. Lord Denning MR: "The word "execution" is not defined in the Act. It is, of course, a word familiar to lawyers. "Execution" means, quite simply, the process for enforcing or giving effect to the judgment of the court: and it is "completed" when the judgment creditor gets the money or other thing awarded to him by the judgment. That this is the meaning is seen by reference to that valuable old book Rastill Termes de la Ley, where it is stated: "Execution is, where Judgment is given in any Action, that the plaintiff shall recover the land, debt, or damages, as the case is; and when any Writ is awarded to put him in Possession, or to do any other thing whereby the plaintiff should the better be satisfied his debt or damages, that is called a writ of execution; and when he heath the possession of the land, or is paid the debt or damages, or heath the body of the defendant awarded to prison, then he heath execution." And the same meaning is to be found in Blackman v. Fysh,[1892] 3 Ch 209,217 (C.A.) when Kekewich J. said that execution means the "process of law for the enforcement of a judgment creditor's right and in order to give effect to that right." In cases when execution was had by means of a common law writ, such as fieri facias or elegit, it was legal execution: when it was had by means of an equitable remedy, such as the appointment of a receiver, then it was equitable execution. But in either case it was "execution" because it was the process for enforcing or giving effect to the judgment of the court."
Harman LJ: "Now what is execution but the enforcement of a judgment or order? In my judgment, the new remedy given by section 35 is merely an alternative method of execution against the debtor's land, replacing the old writ".
Administration of Justice Act 1956 35(1) - Companies Act 1948 325
NW Robbie & Co Ltd -v- Witney Warehouse [1963] 1 WLR 1324
1963
CA
Russell LJ
Company Casemap
1 Citers
A floating charge effects an equitable assignment of the charged asset to the security holder.
Ridge Securities Ltd -v- Inland Revenue Commissions; ChD 1964
Heyting -v- Dupont [1964] 1 WLR 843
1964
CA
Russell LJ
Company

1 Citers
The plaintiff owned shares in a company registered in Jersey and created to make the most of an invention. The articles contained a deadlock provision. Held: This was “essentially a dispute between two discordant partners” There was a general exception to the rule in Foss v Harbottle where the interests of justice so required, and service out of the jurisdiction was allowed: “I dare say that the rule in Foss v. Harbottle is a conception as unfamiliar in the Channel Islands as 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 the forum.”
Freeman & Lockyer -v- Buckhurst Park Properties; CA 1964
Charles Forte Investments Ltd -v- Amanda; CA 1964
Meekins -v- Henson; 1964
Thorby -v- Goldberg (1964) 112 CLR 597
1964

Company, Commonwealth Casemap
1 Citers
(High Court of Australia) If, when a contract is negotiated on behalf of a company, the directors bona fide think it in the interests of the company as a whole that the transaction should be entered into and carried into effect they may bind themselves by the contract to do whatever is necessary to effectuate it.
Broadway Approvals Ltd -v- Odhams Press Ltd (No 2) [1965] 1 WLR 805
1965
CA
Sellers, Davies and Russell L.JJ
Defamation, Damages, Company


A company's mind is not to be assessed on the totality of knowledge of its employees. Malice was not to be established by forensic imagination however eloquently and subtly expressed.
Russell LJ said: "the law of libel seems to have characteristics of such complication and subtlety that I wonder whether a jury on retiring can readily distinguish their heads from their heels."
Wenlock -v- Moloney [1965] 1 WLR 1238
1965
CA
Danckwerts LJ
Litigation Practice, Company Casemap
1 Cites

The plaintiff alleged a conspiracy to deprive him of his shares and interest in a company. Each side filed affidavit evidence raising issues of fact. With no oral evidence or cross examination on the affidavits, the Master made a striking out order which was upheld on appeal to the Judge in Chambers. Held: The strike out was an impermissible trial of the facts on affidavit. That usurped the function of the trial judge. The strike out procedure was not intended to be used in cases which involved a minute and protracted examination of documents and facts to see if the plaintiff had a case. The jurisdiction was confined to "plain and obvious" cases, such as where a plaintiff was attempting to resurrect a matter which had already been litigated or where the grievance was "mythical". It was not sufficient to justify striking out a case that the plaintiff's claim was "highly improbable" or that it was difficult to believe that it could be proved. It was a jurisdiction that was to be used "sparingly" and only in "very exceptional cases": "The position under two former rules has been incorporated in the present RSC Ord. 18, r. 19. There is no doubt that the inherent power of the court remains. But this summary jurisdiction of the court was never intended to be exercised by a minute and protracted examination of the documents and facts of the case, in order to see whether the plaintiff really has a cause of action. To do that is to usurp the position of the trial judge, and to produce a trial of the case in chambers, on affidavits only, without discovery and without oral evidence tested by cross-examination in the ordinary way. This seems to me to be an abuse of the inherent power of the court and not a proper exercise of that power."
Noble -v- Noble [1965] SLT 415
1965
OHCS
Lord Migdale, Lord Strachan, Lord Clyde
Scotland, Company

1 Citers
A father took his son into a farming partnership. The agreement recited that they agreed that "the heritable property should be taken as of the value of eight thousand pounds, but which is burdened with a heritable security for three thousand five hundred pounds". Proper books of account were to be kept. Until 1963 the books of account were prepared on the basis of those values. In 1963 the father sought a declaration that he was entitled to have the capital value of the assets of the partnership entered in the balance sheet at a real and not an arbitrary or notional value. Held: The issue is one of construction: what did the partners intend by the agreement which they made. Lord Strachan, sitting in the Outer House of the Court of Session, granted the declaration. As to Cruikshank v Sutherland: "The fact that Cruikshank was dealing with the share of a deceased partner is not, in my opinion, a material ground for distinguishing it from the present case. Similar issues are involved in this case, because under clause seventh of the contract a retiring partner or the representatives of a deceased partner are to be paid the sum at his credit as shown in the last preceding balance sheet. The same issues are therefore raised, but ab ante. It was argued for the defender, however, that there is vital distinction between Cruikshank and the present case in respect that the agreement that the heritable property is to be taken as of the value of £8,000 laid down a definite figure which was to be adopted in preparing the accounts and that it therefore cannot be said that the contract is silent as to the principle to be adopted in entering the heritable property. That point is the crux of the case, and with some hesitation, I have come to the opinion that the narrative references in the contract and the disposition cannot reasonably be read as meaning that the figure of £8,000 was to be entered in every balance sheet. It was a figure which was agreed for the purpose of fixing the capital of the company but on a construction of the whole deeds I find insufficient warrant for holding that it was intended to be a permanent valuation to be entered in every balance sheet. If that were so, a retiring or deceased partner would have no share whatever in any increase in the market value of the property, and if such an apparently unfair result had been intended, I think it would have been provided for in the eight clauses in which the terms and conditions of the partnership are reduced to writing, and would not have been left to be inferred from the narrative clauses. In my opinion, therefore, the contract is silent as to the principle to be adopted in framing the balance sheet, and Cruikshank is not distinguishable on that ground."
Lord Clyde: "In my opinion the provision requiring the keeping of proper books annually balanced and regularly audited requires the inclusion in the balance sheet of the assets of the partnership at their true value at the end of the year in question. The language of cl.6 of the contract of co-partnery will not therefore be complied with if any of the assets, one of which is the farm itself, is entered at a mere nominal value which was fixed by agreement between the parties when the contract was made. I can find nothing in art. 6 of the contract to support the view that the value of the farm itself - the main asset - was to be frozen year by year at a constant figure throughout the partnership . . . It was contended by the defender that in solicitors' partnership agreements it is quite common to provide that the heritable property in which the business is carried on should be entered at a constant figure in the balance sheets of the partnership throughout its term. It is of course quite legitimate for parties to make such a provision, but clear language to that effect is essential. There is no such provision in the present case."
Lord Migdale: "As I understood their arguments counsel on both sides are agreed that it is always open to partners to provide that an asset acquired by the partnership should continue to appear in the partnership books at its original value. The question raised here is not whether it can be so agreed but whether in this case it was so agreed."
Willis -v- Association of Universities of the British Commonwealth; CA 1965
Hogg -v- Cramphorn Limited; ChD 1966
Noble -v- Noble Unreported, 26 January 1996
26 Jan 1966
IHCS
Company, Scotland Casemap
1 Cites

Pathirana -v- Pathirana; PC 28-Jun-1966
in Re Resinoid and Mica Products Ltd; CA 1967
In Re Plymouth Breweries Ltd; 1967
R W Pathirana -v- A Pathirana [1967] 1 AC 233
1967
PC
Company, Equity Casemap

Section 29 requires a partner to account to the partnership for any private benefit which he derives at the expense of the partnership, and this duty subsists after the dissolution of the partnership until the winding up is completed. An inalienable asset had been acquired by one partner in his own name but in account of the firm.
Partnership Act 18980 29
Re Saltdean Estates [1968] 1 WLR 583
1968

Company Casemap

Harlowe’s Nominees Pty Ltd -v- Woodside (Lakes Entrance) Oil Company No Liability (1968) 121 CLR 483
1968

Company Casemap
1 Citers
Selangor United Rubber Estates Ltd -v- Cradock (No 3); ChD 1968
Hely-Hutchinson -v- Brayhead Ltd [1968] 1 QB 549
1968

Company Casemap
1 Citers
Directors are required to disclose their interests in contracts with the company: "'It is not contended that [the] section in itself affects the contract. The section merely creates a statutory duty of disclosure and imposes a fine for non-compliance. But it has to be read in conjunction with article [85]. The first sentence of that article is obscure. If a director makes or is interested in a contract with the company, but fails duly to declare his interest, what happens to the contract? Is it void, or is it voidable at the option of the company, or is it still binding on both parties, or what? The article supplies no answer to these questions. I think the answer must be supplied by the general law, and the answer is that the contract is voidable at the option of the company, so that the company has a choice whether to affirm or avoid the contract, but the contract must be either totally affirmed or totally avoided and the right of avoidance will be lost if such time elapses or such events occur as to prevent rescission of the contract . . ."
Companies Act 1948 317
Barclays Bank Ltd -v- Quistclose Investments Ltd; etc; HL 31-Oct-1968
Capital Finance -v- Stokes; 1969
In Re Duomatic Ltd; ChD 1969

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