Category: Company

Re RAC Motoring Services Ltd: ChD 8 Jul 1998

The court approved a scheme of arrangement allowing the RAC to sell off its roadside car resue service and to amend its constitution to allow distribution of the assets to members of the company. The effect of the scheme was that the members ceased to be members of RACL. A new company named RAC Acquisitions became the sole member of RACL. RAC Acquisitions itself became a subsidiary of RAC Holdings Limited ( RACH). One share of andpound;1 each in RACH was allotted to each person who was a member of RACL at the close of business on 8 July 1998. That share was later divided into 2 shares of 50p each. In addition, each of those former members of RACL became a member of New Club Company Limited, to which the entire share capital of a company called Club Acquisition Company Limited (CACL) was transferred. CACL had, while it was a subsidiary of RACL, acquired all the assets of RACL. The New Club Company, which became and remains the ultimate proprietor of the Club, was later re-named ‘The Royal Automobile Club Limited.’ RACL was re-named ‘RAC Limited’ and was subsequently re-registered as an unlimited company with a share capital, whereupon its name became ‘RAC.’

Judges:

Neuberger J

Citations:

[2000] 1 BCLC 307

Statutes:

Companies Act 1985 485

Jurisdiction:

England and Wales

Cited by:

Cited – Bruce Peskin; Kevin Milner v John Anderson and Others CA 14-Dec-2000
The Royal Automobile Club (RAC) had been demutualised. The claimants were former members who sought damages from former directors because they had received no benefit. They had ceased to be members before the re-organisation and claimed they should . .
Lists of cited by and citing cases may be incomplete.

Company

Updated: 06 May 2022; Ref: scu.185790

Re Jaymar Management Ltd: ChD 1990

The 10 day notice period before commencing proceedings had to be calculated exclusive of the day on which the notice was given and the day on which the proceedings were issued.

Judges:

Harman J

Citations:

[1990] BCC 303

Statutes:

Company Directors Disqualification Act 1986 16(1)

Jurisdiction:

England and Wales

Cited by:

Cited – The Secretary of State for Trade and Industry v Swan and Othes ChD 22-Jul-2003
When commencing proceedings under the Act, the papers were defective. The secretary of state had failed to give appropriate notice, and thus prevented him from making representations as to the allegations. The allegations involved the manipulation . .
Cited – Re Cedac Ltd CA 1991
The Secretary of State’s notice of intention to bring disqualification proceedings was served and the proceedings begun 10 days later just inside the 2 year limitation period specified by s 7(2) of the Act. Both parties believed the 10 day notice . .
Lists of cited by and citing cases may be incomplete.

Company

Updated: 06 May 2022; Ref: scu.185780

Re Cubelock Ltd: ChD 2001

The procedures for disqualifying directors should not become hedged about with particular rules allowing directors to escape disqualification on small and technical points.

Citations:

[2001] BCC 523

Statutes:

Company Directors Disqualification Act 1986

Jurisdiction:

England and Wales

Cited by:

Cited – The Secretary of State for Trade and Industry v Swan and Othes ChD 22-Jul-2003
When commencing proceedings under the Act, the papers were defective. The secretary of state had failed to give appropriate notice, and thus prevented him from making representations as to the allegations. The allegations involved the manipulation . .
Lists of cited by and citing cases may be incomplete.

Company

Updated: 06 May 2022; Ref: scu.185778

Re Cedac Ltd: CA 1991

The Secretary of State’s notice of intention to bring disqualification proceedings was served and the proceedings begun 10 days later just inside the 2 year limitation period specified by s 7(2) of the Act. Both parties believed the 10 day notice period had been complied with, and the director raised no objection at first. Following Jaymar, he objected to the short service.
Held: The court asked four questions: (1) What is the scope and purpose of the Act of 1986? (2) What is the importance of the 10-day notice requirement in section 16(1)? (3) What is the relation of that requirement to the general object intended to be secured by the Act of 1986? (4) What are the relevant circumstances of the present case? The Act was intended to protect the public, and the requirement was important, but a breach did not create an automatic nullity. The court could make an order without such formal notice, provided the principles of natural justice were followed. (Legatt LJ) ‘The notice here fulfils no such function (i.e. to protect the director): its importance in the proceedings is minimal, and no one has been able to point to any real benefit that the director may derive from it.’ The third question is a balancing exercise with the protection afforded to the director by the provision of the notice period being set against the need to protect the public. As to the fourth, in these circunstances there was no prejudice to the director.

Judges:

Balcombe LJ, Leggatt LJ

Citations:

[1991] Ch 402

Statutes:

Company Director Disqualification Act 1986 7(2) 16(1)

Jurisdiction:

England and Wales

Citing:

Cited – Re Jaymar Management Ltd ChD 1990
The 10 day notice period before commencing proceedings had to be calculated exclusive of the day on which the notice was given and the day on which the proceedings were issued. . .

Cited by:

Cited – The Secretary of State for Trade and Industry v Swan and Othes ChD 22-Jul-2003
When commencing proceedings under the Act, the papers were defective. The secretary of state had failed to give appropriate notice, and thus prevented him from making representations as to the allegations. The allegations involved the manipulation . .
Lists of cited by and citing cases may be incomplete.

Company, Administrative, Natural Justice

Updated: 06 May 2022; Ref: scu.185779

Re Tech Textiles Ltd: ChD 1998

A disqualified director sought leave under section 17 to act as a director or be concerned or take part in the management of 3 companies and was successful in respect of 1 company. Arden J looked at the statutory basis and observed that the purpose of the unfitness disqualification is protective rather than penal and addressed the circumstances to which the court should have regard when considering an application for leave by an unfit director. She said: ‘As respects the exercise of the discretion to grant leave there is no express guidance in the statute. It is clearly relevant to the exercise of this discretion to consider the end which disqualification seeks to achieve and the reasons why that end is thought desirable. It is clear, however, from the leading authority of Re Sevenoaks Stationers (Retail) Ltd [1991] Ch 164 that the purpose of s 6 of the 1986 Act is protective rather than penal, and this is the starting point. In practice the section also has a deterrent function since honest directors will not wish their conduct to result in disqualification proceedings . . Leave, however, in my view is not to be too freely given. Legislative policy requires the disqualification of unfit directors to minimise the risk of harm to the public, and the courts must not by granting leave prevent the achievement of this policy objective. Nor would the court wish anyone dealing with the director to be misled as to the gravity with which it views the order that has been made . . To what factors should the court have regard when it is considering the grant of leave? The courts have on many occasions made it clear that they will have regard to two factors in particular : the protection of the public; and the need for the applicant to be a director’.
As to the protection of the public Arden J said: ‘The public for this purpose includes all relevant interest groups, such as shareholders, employees, lenders, customers and other creditors. The process of considering whether the public is adequately protected if leave is given involves considering a number of factors. The court must look at the grounds on which unfitness was found, and in particular whether the applicant had misappropriated any assets or acted knowingly in breach of duty. The court must also have regard to the view that the court took as to the character of the applicant, in particular his honesty, reliability and willingness to accept advice. The previous career of the applicant may also be relevant. Obviously it would also be relevant if he had had a previous disqualification order made against him but that has not been suggested in this case.
As regards the company of which the applicant is to become a director, the court must consider the nature of the company’s business, the size of the company, its financial position, the number of directors, the number of its employees and creditors and so on, and the risks involved in the company’s particular business so far as it can make any assessment of this. It must also look to see whether there is potential for the matters which were held to constitute unfitness to recur’.
Arden J reviewed cases in which safeguarding measures, such as appointment of solicitors or accountants as directors and the imposition of specific controls in order to protect the public and avoid recurrence were considered, and continued: ‘There are also other matters to which the court should in my view have regard. However, this is not in any way a comprehensive list. For instance the court should take into account the director’s conduct since the matters which gave rise to the established grounds occurred, in particular since the proceedings for disqualification were begun. Thus, if he has acted as a director while the proceedings were pending it will be relevant to see whether the companies have carried on business satisfactorily, for instance whether they are trading profitably, have complied with their obligations under the Companies Act or other relevant legislation (such as fiscal legislation) and have paid liabilities as they fall due’.
As to the need for the applicant to be a director, she continued: ‘In this context, ‘need’ has to be interpreted as practical need. There will be companies where the involvement of the applicant in the capacity sought is vital to customer or investor confidence, or for some other sufficient reason’.

Judges:

Arden J

Citations:

[1998] 1 BCLC 256

Statutes:

Company Directors Disqualification Act 1986 17

Jurisdiction:

England and Wales

Citing:

Approved – Re Moonlight Foods Ltd , Secretary of State for Trade and Industry v Hickling 1996
The Secretary of State, when presenting an application for the disqualification of a company director is obliged to present a balanced picture. ‘It is accepted that these are not ordinary adversarial proceedings but have an element of public . .
Cited – In re Sevenoaks Stationers (Retail) Ltd CA 1990
The court gave guidelines for the periods of disqualification to be applied for company directors under the Act. The maximum period of ten years should be reserved for only the most serious of cases. Periods of two to five years should apply to . .

Cited by:

Cited – Harris v Secretary of State for Business, Innovation and Skills ChD 9-Aug-2013
The claimant had offered an undertaking not to act as a company director for a period of time, to avoid applications for his disqualification. He now sought leave to act.
Held: The applicant had: ‘put forward ample evidence to justify a . .
Lists of cited by and citing cases may be incomplete.

Company

Updated: 06 May 2022; Ref: scu.185776

Percival v Wright: 1902

The directors of a company owe their duty to the company as a whole, and are not trustees for individual shareholders or owe them a fiduciary duty merely by virtue of their offices. They may purchase their shares without disclosing pending negotiations for the sale of the company’s undertaking.

Citations:

[1902] 2 Ch 421

Jurisdiction:

England and Wales

Cited by:

Cited – Bruce Peskin; Kevin Milner v John Anderson and Others CA 14-Dec-2000
The Royal Automobile Club (RAC) had been demutualised. The claimants were former members who sought damages from former directors because they had received no benefit. They had ceased to be members before the re-organisation and claimed they should . .
Lists of cited by and citing cases may be incomplete.

Company

Updated: 06 May 2022; Ref: scu.185792

Re Landhurst Leasing plc: ChD 21 Dec 1998

Judges:

Hart J

Citations:

Unreported, 21 December 1998

Jurisdiction:

England and Wales

Citing:

Cited – Re Moonlight Foods Ltd , Secretary of State for Trade and Industry v Hickling 1996
The Secretary of State, when presenting an application for the disqualification of a company director is obliged to present a balanced picture. ‘It is accepted that these are not ordinary adversarial proceedings but have an element of public . .
Lists of cited by and citing cases may be incomplete.

Company

Updated: 06 May 2022; Ref: scu.185777

Re Moonlight Foods Ltd , Secretary of State for Trade and Industry v Hickling: 1996

The Secretary of State, when presenting an application for the disqualification of a company director is obliged to present a balanced picture. ‘It is accepted that these are not ordinary adversarial proceedings but have an element of public interest and may entail penal consequences. It follows that there is a duty on the applicant to present the case against each respondent fairly. Many of these applications go by default or are defended by litigants in person, and the practice is for an official in the Department of Trade and Industry to swear a short affidavit referring to the charges, specified in a detailed affidavit sworn by the receiver or liquidator.
In my judgment, that second affidavit should not omit significant available evidence in favour of any respondent. It should attempt to deal with any explanation already proffered by any of the respondents. It should.’

Judges:

HH Judge Weeks

Citations:

[1996] BCC 678

Statutes:

Company Director Disqualification Act 1986

Jurisdiction:

England and Wales

Cited by:

Approved – Re Tech Textiles Ltd ChD 1998
A disqualified director sought leave under section 17 to act as a director or be concerned or take part in the management of 3 companies and was successful in respect of 1 company. Arden J looked at the statutory basis and observed that the purpose . .
Cited – Re Landhurst Leasing plc ChD 21-Dec-1998
. .
Cited – The Secretary of State for Trade and Industry v Swan and Othes ChD 22-Jul-2003
When commencing proceedings under the Act, the papers were defective. The secretary of state had failed to give appropriate notice, and thus prevented him from making representations as to the allegations. The allegations involved the manipulation . .
Cited – Secretary of State for Business, Innovation and Skills v Doffman and Another ChD 11-Oct-2010
The defendants applied for directors’ disqualification proceedings for the claim to be struck out or dismissed on the ground that the respondent had breached their rights to a fair trial under Article 6 of the European Convention on Human Rights . .
Cited – Cathie and Another v Secretary of State for Business, Innovation and Skills CA 1-Jun-2012
The directors appealed against disqualification orders made against them under the 1986 Act. Their company had become insolvent, owing substantial arrears of PAYE and NI contributions. The revenue had said that they had paid other creditors first. . .
Lists of cited by and citing cases may be incomplete.

Company

Updated: 06 May 2022; Ref: scu.185775

Peskin, Milner v John Anderson and Others: ChD 7 Dec 1999

The claimants sought damages for the failure of the defendants, former directors of the RAC, to warn them of the impending re-organisation and demutualisation of the RAC. By resigning in ignorance they had lost the chance to participate in the de-mutualisation.
Held: The claim was struck out. The rules of the club did not form a contract with its members. A director does not owe a general fiduciary duty to shareholders of the company. A director of a company could owe a fiduciary duty to shareholders if he had, in relation to the sale of shares, special knowledge not possessed by the shareholders. There was no fiduciary duty in the circumstances of this case. Eight factors led to that conclusion: the absence of any special facts in the relationship of the directors and the members of RACL, which would make the existence of a fiduciary duty more likely; the claimants had resigned membership of their own motion, uninfluenced by any information provided by, or views expressed by, the directors; no specific transaction was in contemplation at the time of the resignations; the defendants did not, in their capacity as directors of RACL, benefit from the claimants ceasing to be members, either directly ( e.g. they did not acquire shares from the members or encourage them to part with their shares) or indirectly ( e.g. by minimising the number of members, so as to increase their share of the proceeds of sale) ; the alleged interest of the directors in profits from the sale in the form of ‘golden hellos and employment contracts’ did not impinge on the issue whether they were under a duty to disclose at an early stage the possibility of selling off the RACMS business; the investigation and promotion of proposals for the de-mutualisation of RACL (including the incurring of costs in relation to the amendments of the Memoranda of RACL and RACMS sanctioned by the court) did not involve the directors in the pursuit of an unauthorised and improper object; it was unreasonable for directors to be put in the sort of position which the claimants’ contentions would necessarily involve with regard to the disclosure of contemplated arrangements or transactions best kept confidential; and the claimants’ arguments would place directors in the unfortunate position of being ‘damned if they do and damned if they don’t’, if they were put under a duty to disclose to the members a contemplated sale which might, or might not, happen.

Judges:

Neuberger J

Citations:

[2000] 2 BCLC 1

Jurisdiction:

England and Wales

Cited by:

Appeal from – Bruce Peskin; Kevin Milner v John Anderson and Others CA 14-Dec-2000
The Royal Automobile Club (RAC) had been demutualised. The claimants were former members who sought damages from former directors because they had received no benefit. They had ceased to be members before the re-organisation and claimed they should . .
Lists of cited by and citing cases may be incomplete.

Company, Contract

Updated: 06 May 2022; Ref: scu.185791

Re Sutton Glassworks Ltd: ChD 1996

Referring to the procedure in disqualification proceedings of serving an affidavit, the court held: ‘That procedure, and, in particular, the mandatory requirement in r 6, emphasises the importance to the respondent of being able to ascertain with clarity from the evidence filed on behalf of the applicant what are the criticisms laid against him, and upon what evidence the applicant intends to rely. It is on the basis of the applicant’s initial affidavit evidence that the respondent is required to decide whether to advance any evidence of his own and, if so, what issues he must address by that evidence. It should not be open to the applicant, by making general allegations of misconduct, to require the respondent to put forward his own account of events, and then to rely upon the respondent’s own account to support the case for a disqualification order.’

Judges:

Chadwick J

Citations:

[1996] BCC 174

Statutes:

Company Directors Disqualification Act 1986

Jurisdiction:

England and Wales

Cited by:

Cited – The Secretary of State for Trade and Industry v Swan and Othes ChD 22-Jul-2003
When commencing proceedings under the Act, the papers were defective. The secretary of state had failed to give appropriate notice, and thus prevented him from making representations as to the allegations. The allegations involved the manipulation . .
Lists of cited by and citing cases may be incomplete.

Company

Updated: 06 May 2022; Ref: scu.185772

Re Pinemoor Ltd: ChD 1997

Chadwick J said: ‘It would be preferable, for the future, if those preparing and swearing affidavits in support of applications under this Act were careful to distinguish between facts which they are able to establish by direct evidence, the inferences which they invite the court to draw from those facts, and the matters which are said to amount to unfitness on the part of the respondent. If those distinctions were observed, it might lead to respondents concentrating more closely on those factual matters to which they actually need to respond by affidavit evidence under r. 6’.

Judges:

Chadwick J

Citations:

[1997] BCC 708

Statutes:

Company Directors Disqualification Act 1986

Jurisdiction:

England and Wales

Cited by:

Cited – The Secretary of State for Trade and Industry v Swan and Othes ChD 22-Jul-2003
When commencing proceedings under the Act, the papers were defective. The secretary of state had failed to give appropriate notice, and thus prevented him from making representations as to the allegations. The allegations involved the manipulation . .
Lists of cited by and citing cases may be incomplete.

Company

Updated: 06 May 2022; Ref: scu.185771

In re Lo-Line Electric Motors Ltd: 1988

When considering the filing of additional evidence changing allegations made under the 1986 Act, the paramount requirement is that the director facing disqualification must know the charge he has to meet. As to the standard of misbehaviour required to found an order, Sir Nicolas Browne-Wilkinson VC said: ‘Ordinary commercial misjudgment is in itself not sufficient to justify disqualification. In the normal case, the conduct complained of must display a lack of commercial probity, although I have no doubt in an extreme case of gross negligence or total incompetence disqualification could be appropriate.’ The director ‘has been shown to have behaved in a commercially culpable manner in trading through limited companies when he knew them to be insolvent and in using the unpaid Crown debts to finance such trading.’

Judges:

Sir Nicolas Browne-Wilkinson VC

Citations:

[1988] Ch 477, [1988] 2 All ER 692, [1988] BCLC 698, [1988] 3 WLR 26

Statutes:

Company Directors Disqualification Act 1986

Jurisdiction:

England and Wales

Cited by:

Cited – The Secretary of State for Trade and Industry v Swan and Othes ChD 22-Jul-2003
When commencing proceedings under the Act, the papers were defective. The secretary of state had failed to give appropriate notice, and thus prevented him from making representations as to the allegations. The allegations involved the manipulation . .
Cited – In re Sevenoaks Stationers (Retail) Ltd CA 1990
The court gave guidelines for the periods of disqualification to be applied for company directors under the Act. The maximum period of ten years should be reserved for only the most serious of cases. Periods of two to five years should apply to . .
Cited – Dr Giuseppe Ruscill, Council for the Regulation of Health Care Professionals v The General Medical Council and Another, The Council for the Regulation of Health Care Profesionals, The Nursing and Midwifery Council, Truscott CA 20-Oct-2004
The Council sought to refer to the High Court decisions to acquit the doctors of professional misconduct. The doctors argued that the power only existed for lenient sentences.
Held: The power to refer for undue leniency included the situation . .
Cited – Secretary of State for Business Innovation and Skills v Aaron and Others ChD 10-Dec-2009
The claimant sought a disqualification after the defendants had been directors of a company mis-selling Structured Capital at Risk products. The FSA had reported that they had been negligent.
Held: ‘I do not have to decide whether or not the . .
Cited – Cathie and Another v Secretary of State for Business, Innovation and Skills CA 1-Jun-2012
The directors appealed against disqualification orders made against them under the 1986 Act. Their company had become insolvent, owing substantial arrears of PAYE and NI contributions. The revenue had said that they had paid other creditors first. . .
Cited – Holland v Revenue and Customs and Another SC 24-Nov-2010
The Revenue sought an order under section 212 of the 1986 Act, for payment of the tax debts of the insolvent company by a de facto director. H had organised a scheme under which IT contractors had worked through companies created by him under a . .
Lists of cited by and citing cases may be incomplete.

Company

Updated: 06 May 2022; Ref: scu.185770

Re Circle Holidays International plc: ChD 1994

The affidavit filed in proceedings under the Act take a role similar to that of the pleadings in other cases.

Judges:

HH Judge Micklem

Citations:

[1994] BCC 226

Statutes:

Company Directors Disqualification Act 1986

Jurisdiction:

England and Wales

Cited by:

Cited – The Secretary of State for Trade and Industry v Swan and Othes ChD 22-Jul-2003
When commencing proceedings under the Act, the papers were defective. The secretary of state had failed to give appropriate notice, and thus prevented him from making representations as to the allegations. The allegations involved the manipulation . .
Lists of cited by and citing cases may be incomplete.

Company

Updated: 06 May 2022; Ref: scu.185769

Betjemann v Betjemann: CA 1895

A father and his two sons had carried on the business as partners from 1856 to 1886; the father died in 1886 but the sons continued the business until 1893 when one of the sons died. The deceased son’s executor brought an action against the surviving partner for an account of the partnership dealings from 1886. The surviving partner claimed that the accounts of the old partnership should be taken from 1856.
Held: The surviving son was entitled to an order for the accounts to be taken against the deceased son’s executor with effect from 1856, on the basis that the accounts of the original firm had been carried on into the new firm without interruption or settlement.
Rigby LJ said: ‘What is the duty of a man to inquire? To whom does he owe that duty? Certainly not to the person who had committed the concealed fraud.’

Judges:

Rigby, Lindley LJJ

Citations:

[1895] 2 Ch 474

Jurisdiction:

England and Wales

Cited by:

Cited – Hayward v Zurich Insurance Company Plc SC 27-Jul-2016
The claimant had won a personal injury case and the matter had been settled with a substantial payout by the appellant insurance company. The company now said that the claimant had grossly exaggerated his injury, and indeed wasfiully recovered at . .
Lists of cited by and citing cases may be incomplete.

Torts – Other, Company

Updated: 06 May 2022; Ref: scu.588902

(In re Hannan’s Empress Gold Mining and Development Co (Carmichael’s Case): 1896

A power of attorney was held to be irrevocable when conferred on the promoter of a public share offering to subscribe for shares

Citations:

[1896] 2 Ch 643

Cited by:

Cited – Bailey and Another v Angove’s Pty Ltd SC 27-Jul-2016
The defendant had agreed to act as the claimant’s agent and distributor of the claimant’s wines in the UK. It acted both as agent and also bought wines on its own account. When the defendant went into litigation the parties disputed the right of the . .
Lists of cited by and citing cases may be incomplete.

Agency, Company

Updated: 06 May 2022; Ref: scu.568647

Jaybird Group Ltd v Greenwood: 1986

An indemnity as to costs in a derivative claim is not limited to impecunious claimants. The justification for the indemnity is that the claimant brings his claim for the benefit of the company. Once the court has reached the conclusion that the claim ought to proceed for the benefit of the company, it ought normally to order the company to indemnify the claimant against his costs.

Judges:

Mr Michael Wheeler QC

Citations:

[1986] BCLC 319

Cited by:

Cited – Iesini and Others v Westrip Holdings Ltd and Others ChD 16-Oct-2009
The claimants were shareholders in Westrip, accusing the Defendant directors of deliberately engaging in a course of conduct which has led to Westrip losing ownership and control of a very valuable mining licence and which, but for their . .
Lists of cited by and citing cases may be incomplete.

Company

Updated: 06 May 2022; Ref: scu.551063

Bagnall v Carlton: CA 1877

Agents for a prospective company who made secret profits out of a contract made by the company were held to be ‘trustees for the company’ of those profits

Judges:

James, Baggallay and Cotton LJJ

Citations:

(1877) 6 Ch D 371

Jurisdiction:

England and Wales

Cited by:

Cited – FHR European Ventures Llp and Others v Cedar Capital Partners Llc SC 16-Jul-2014
Approprietary remedy against Fraudulent Agent
The Court was asked whether a bribe or secret commission received by an agent is held by the agent on trust for his principal, or whether the principal merely has a claim for equitable compensation in a sum equal to the value of the bribe or . .
Lists of cited by and citing cases may be incomplete.

Company, Equity, Agency

Updated: 06 May 2022; Ref: scu.551500

In re Jermyn Street Turkish Baths Ltd: CA 1971

The finding of oppression was overturned.

Citations:

[1971] 1 WLR 1042

Citing:

Appeal from – In re Jermyn Street Turkish Baths Ltd ChD 1970
Where an order provides for the purchase of the shares of a delinquent majority shareholder in a company in an oppression suit, the shares were to be valued on an inquiry as at the date of the petition.
Pennycuick J said: ‘Section 210 gives the . .
Lists of cited by and citing cases may be incomplete.

Company

Updated: 06 May 2022; Ref: scu.471192

In Re Plymouth Breweries Ltd: 1967

In 1893 a scheme of reconstruction which adjusted the rights of the preference and the ordinary shareholders was promoted, and in the following year was approved by the court. But it appeared that the scheme had never been approved by a quorate meeting of either class. The scheme was implemented.
Held: The contention that the class resolutions were a nullity owing to the absence of a quorum, would have been correct, apart from the circumstances of ratification and estoppel.

Judges:

Pennycuick J

Citations:

(1967) 111 SJ 715

Cited by:

Cited – Grender and others v Dresden and others ChD 13-Feb-2009
Residents on an estate where the estate roads had come into the control of a trust administered by the residents disputed the arrangement necessary to manage the road scheme. Directions were sought for the implementation of a scheme.
Held: . .
Lists of cited by and citing cases may be incomplete.

Company

Updated: 06 May 2022; Ref: scu.471157

Ridge Securities Ltd v Inland Revenue Commissions: ChD 1964

The taxpayer companies had purported to pay interest on debentures, but these payments were ultra vires and void.
Held: The court upheld the Special Commissioners’ disallowance of payments of interest ‘grotesquely out of proportion to the principal amounts secured’ as not being interest within the meaning of section 169. The sums could not accordingly be annual payments under the 1952 Act. Moreover, the payments of so-called interest were in fact gratuitous (and so unlawful) dispositions of the company’s money. Pennycuick J said: ‘A company can only lawfully deal with its assets in furtherance of its objects. The corporaters may take assets out of the company by way of dividend or, with leave of the court, by way of reduction of capital, or in a winding up. They may, of course, acquire them for full consideration. They cannot take assets out of the company by way of voluntary disposition, however described, and, if they attempt to do so, the disposition is ultra vires the company.’

Judges:

Pennycuik J

Citations:

[1964] 1 WLR 479

Statutes:

Income Tax Act 1952 169

Jurisdiction:

England and Wales

Cited by:

Cited – Progress Property Company Ltd v Moorgarth Group Ltd SC 8-Dec-2010
The appellants appealed against rejection of their claim that there had been an unlawful distribution of capital when the appellant had sold the share capital of a subsidary at an undervalue to the respondent purchaser. The valuation had . .
Lists of cited by and citing cases may be incomplete.

Company, Income Tax

Updated: 06 May 2022; Ref: scu.427161

Nurcombe v Nurcombe: CA 1985

The court discussed a minority shareholder’s action to enforce the company’s claim as a derivative claim. Browne-Wilkinson LJ said that such an action, where a courts in equity permitted a person interested to bring an action to enforce the company’s claim, was analogous to that in which equity permitted a beneficiary under a trust to sue as plaintiff to enforce a legal right vested in trustees, which right the trustees will not themselves enforce, the trustees being joined as defendants.
He continued: ‘Since the wrong complained of is a wrong to the company, not to the shareholder, in the ordinary way the only competent plaintiff in an action to redress the wrong would be the company itself. But, where such a technicality would lead to manifest injustice, the courts of equity permitted a person interested to bring an action to enforce the company’s claim. The case is analogous to that in which equity permits a beneficiary under a trust to sue as plaintiff to enforce a legal right vested in trustees (which right the trustees themselves will not enforce), the trustees being joined as defendants. Since the bringing of such an action requires the exercise of the equitable jurisdiction of the court on the grounds that the interests of justice require it, the court will not allow such an action to be used in an inequitable manner so as to produce an injustice.’
. . And ‘It is pertinent to remember, however, that a minority shareholder’s action in form is nothing more than a procedural device for enabling the court to do justice to a company controlled by miscreant directors or shareholders. Since the procedural device has evolved so that justice can be done for the benefit of the company, whoever comes forward to start the proceedings must be doing so for the benefit of the company and not for some other purpose. It follows that the court has to satisfy itself that the person coming forward is a proper person to do so.’
Lawton LJ distinguished between actions brought for the benefit of the company on the one hand, and those brought for some other purpose on the other. He went on to say: ‘It is pertinent to remember, however, that a minority shareholder’s action in form is nothing more than a procedural device for enabling the court to do justice to a company controlled by miscreant directors or shareholders. Since the procedural device has evolved so that justice can be done for the benefit of the company, whoever comes forward to start the proceedings must be doing so for the benefit of the company and not for some other purpose. It follows that the court has to satisfy itself that the person coming forward is a proper person to do so. In Gower, Modern Company Law, 4th ed (1979), the law is stated, in my opinion correctly, in these terms. . : ‘The right to bring a derivative action is afforded the individual member as a matter of grace. Hence the conduct of a shareholder may be regarded by a court of equity as disqualifying him from appearing as plaintiff on the company’s behalf. This will be the case, for example, if he participated in the wrong of which he complains.”

Judges:

Browne-Wilkinson LJ, Lawton LJ

Citations:

[1985] 1 WLR 370

Cited by:

Cited – Roberts v Gill and Co Solicitors and Others SC 19-May-2010
The claimant beneficiary in the estate sought damages against solicitors who had acted for the claimant’s brother, the administrator, saying they had allowed him to take control of the assets in the estate. The will provided that property was to be . .
Cited – Iesini and Others v Westrip Holdings Ltd and Others ChD 16-Oct-2009
The claimants were shareholders in Westrip, accusing the Defendant directors of deliberately engaging in a course of conduct which has led to Westrip losing ownership and control of a very valuable mining licence and which, but for their . .
Lists of cited by and citing cases may be incomplete.

Company, Litigation Practice, Equity

Updated: 06 May 2022; Ref: scu.416011

Dobson v Hastings: 1992

The Rules of the Supreme Court indicate that save when permitted under the rules, documents on the court file are not intended to be inspected or copied. There is no common law right to obtain access to a document filed in proceedings and held as part of a court record.
The Rules of the Supreme Court, including Order 62 relating to costs, apply to applications under the Act of 1986. Sir Donald Nicholls VC said that: ‘a court file is not a publicly available register. It is a file maintained by the court for the proper conduct of the proceedings. Access to that file is restricted. Non-parties have a right of access to the extent, but only to the extent, provided in the rules.’
Dealing with the transcripts of evidence without the control of the court is ‘knowingly setting at nought one of the court’s procedures devised to strike a balance between the various factors which pull in different directions in all court processes’ and ‘The essential vice lies in knowingly interfering with the court’s documents. This is as much an interference with the administration of justice as knowingly interfering with the court’s officers. The boundary line is to be drawn at the point where there has been a taking of information from documents in the custody of the court knowing that leave was needed and that it had not been obtained. In such cases there is an act of interference with the judicial process; there is also an intention to interfere, because the act was done with knowledge that it was a contravention of the prescribed judicial process.’

Judges:

Sir Donald Nicholls VC

Citations:

[1992] Ch 394

Statutes:

Companies Act 1986

Cited by:

Cited – In re Highfield Commodities Ltd ChD 1985
The court’s discretion in appointing provisional liquidators is unfettered provided it is exercised in a ‘proper judicial manner’. Sir Robert Megarry V-C said: ‘I would respectfully express my complete agreement with the view taken by [the judge]. I . .
Lists of cited by and citing cases may be incomplete.

Litigation Practice, Company

Updated: 06 May 2022; Ref: scu.401968

Smith v Mules: 17 Feb 1852

A and B and the son of B entered into partnership as solicitors, and by articles agreed that the partners were diligently and faithfully to employ themselves in carrying on and managing all the professional business in which they or either of them might be employed or concerned; that B should use his best endeavours to obtain the appointment of the partnership firm to three offices or clerkships, which were then held by B, and such offices should be partnership appointments; that all other compatible offices should be obtained, if possible, in the name of the firm, and the emoluments treated as part of the profits of the partnership; that, if B or his son should retire, or A or B or his son should die, the share of the deceased partner should accrue to the surviving partners : that if B or his son retired they were to use their best endeavours to secure the practice to the continuing partners, and such retiring partner shouId not practise within 30 miles ; that, if either partner should not diligently and faithfully employ himself in carrying on the said partnership practice, and should, on receiving monies, bills, notes, andc., knowingly or wilfully omit immediately to make entries thereof, or if A. or the son of B should absent himself more than two months in one year, the others or other of the partners, if they or he should think fit, should be at liberty to dissolve the partnership, by giving to the offending partner a notice to that effect, and the partnership should from that time, or the time specified in the notice, be dissolved in the same manner and with the same consequences as if it had determined by the voluntary retirement of the offending partner. B. and his son subsequently prooured their own appointment, or the appointment of one of them, to the offices or clerkships, and did not endeavour to procure the appointment of A. It was afterwards discovered that B. was greatly involved in debt, and he absconded in January 1849, and did not return to the business, In May 1849 A, served a notice, in the manner pointed out by the articles, on B. and his son to dissolve the partnership from that date ; and he then filed his bill against B. and his son to have the dissolution declared by the Court, an injunction to restrain them from practising within 30 miles, and a decree that they should resign the several offices or clerkships. Held, that the Plaintiff was entitled to dissolve the partnership as to B., but not as against the other partner (the son of B.), and that he was not entitled to dissolve it by notice under the 16th clause without the concurrence of his co-partner (the son).
That B., not having procured or endeavoured to procure for the partnership firm the appointments to the several offices or clerkships, so as to give the Plaintiff at the dissolution either a share of the profits of the offices or the chance of competing for them, but such appointments having been procured for B. and his son to the exclusion of the Plaintiff, B. and his son were not to be allowed to retain the offices for their exclusive benefit.
That,inasmuch as, from the nature of the offices, they could not be sold, nor could any manager or receiver be appointed to carry them on, the Defendants ought to be charged with the value of the offices in the partnership accounts.
That, the Plaintiff having given a notice of dissolution (acting under the 16th clause), and his co-partner having adopted it, the partnership should be treated as dissolved from the time of the notice, although not with the consequences attaching to a dissolution under the 15th clause.
That, the consequences of a dissolution uncler the 15th clause not having attached, the Plaintiff, therefore, was not entitled to the injunction to restrain the Defendants from practising within 30 miles.
An agreement that, if any of several partners should not diligently and faithfully employ himself in carrying on the partnership practice, the others might give notice of dissolution, construed to refer to the diligent and faithful discharge by each partner of the portion of business carried on by him.

Citations:

[1852] EngR 271, (1851-1852) 9 Hare 556, (1852) 68 ER 633

Links:

Commonlii

Cited by:

Cited – Faulks v Faulks ChD 1992
One brother, as tenant farmed land under a partnership with his brother. On the death of either partner, an account was to be taken and a valuation. On the death of the tenant, there was a dispute as to whether the value of the farm’s milk quotahad . .
Lists of cited by and citing cases may be incomplete.

Company, Legal Professions

Updated: 05 May 2022; Ref: scu.295394

In The Matter Of The British Sugar Refining Company And In The Matter Of The Joint Stock Companies Act, 1856: 18 Feb 1857

The 25th section of the Joint Stock Companies Act, 1856 (19 and 20 Vict, c. 47), enabling a shareholder whose name is without sufficient cause omitted to be entered in the company’s register to apply by motion for an order that the register may be rectified was not meant to give to every shareholder ex debito justiciae this summary remedy. The object of that section was to enable the Court to avoid the inconvenience and injustice which occasionally arise from capricious or frivolous objections on the part of companies to complete the registration of their shareholders. It was not intended by the Act that, in the event of there being a serious question to be tried, the matter should be disposed of summarily.
A resolution for a call may be good, though resolutions for calls for smaller sums had been previously negatived at the same meeting.
Whether, provided shareholders have had notice by means of circulars of a meeting for the purpose of making calls, a shareholder who has attended such meeting can object to calls made thereat, on the mere ground that the company omitted to advertise the meeting in any newspaper, as required by their deed of settlement – quaere.
But where a shareholder, having so attended at such meeting, had allowed others to pay their calls, and after lying by for six months assigned his shares : Held, that his assignee could not, by motion under the 25th section of the Act, apply to have his name entered on the register, so long as the calls remained unpaid; and his motion was dismissed with costs.

Citations:

[1857] EngR 280, (1857) 3 K and J 408, (1857) 69 ER 1168

Links:

Commonlii

Statutes:

Joint Stock Companies Act 1856 25

Company

Updated: 05 May 2022; Ref: scu.290026

Regina v Tidd Pratt: 5 Jun 1865

The court was asked as to the purported alteration of the rules of a friendly society which the registrar had refused to register. The two alleged defects were: i) The meeting of the society was held in Manchester (where the majority of members lived), rather than in Liverpool as the rules required; ii) The meeting was held at 2 pm although the rules contemplated night meetings. There were also objections to the new rules themselves, but those objections did not relate to the conduct of the meeting.
Held: Cockburn CJ said in argument that those objections were small and could be cured. However, the meeting was nevertheless invalid. Although the society itself could change the place of meeting, the officers could not, and in consequence: ‘The meeting was at a place where it could not legally be held, which renders the rules agreed to at it altogether null and void . . ‘

Judges:

Cockburn CJ

Citations:

[1865] EngR 543, (1865) 6 B and S 672, (1865) 122 ER 1343

Links:

Commonlii

Cited by:

Cited – Speechley and Others v Allott and Others CA 10-Mar-2014
The parties disputed the management of a social club. The club owned a bowling green, and bowling members sought to restrain its closure. The appellants now said that the court should not have found at first instance that a meeting had validly . .
Lists of cited by and citing cases may be incomplete.

Company

Updated: 05 May 2022; Ref: scu.281455

Waterer v Waterer: 1873

Citations:

[1873] LR 15 Eq 402

Jurisdiction:

England and Wales

Cited by:

Cited – Robinson v Reeve ChD 14-Jun-2002
The parties were brother and sister, owning and renting properties. The issue was whether they were in partnership, and to what extent properties in one name were held in trust for the two.
Held: A partnership was not to be inferred solely . .
Lists of cited by and citing cases may be incomplete.

Company, Wills and Probate

Updated: 05 May 2022; Ref: scu.181806

Regina v Dixon: CACD 24 Nov 1999

It was wrong to imprison a company director for non-payment of pension contributions required to be made by the company where such amounts had been deducted from wages for this purpose, save in the presence of a fraudulent evasion. There was already a civil penalty imposed, and new legislation was to replace the offence of late payment with and offence of fraudulent evasion.

Citations:

Times 24-Nov-1999

Statutes:

Pensions Act 1995 49 (8)

Jurisdiction:

England and Wales

Criminal Sentencing, Financial Services, Company

Updated: 05 May 2022; Ref: scu.85233

BML Group Ltd v Harman and Another: CA 8 Apr 1994

Shareholders of one class sought an order under section 371 which would have had the effect of overriding the class rights of another shareholder. The meeting was proposed to remove two directors who did not have the protection of a shareholder’s agreement.
Held: The Court does not have a power under section 371 to order a company meeting to be held for one class of shareholders over another class. It was entirely novel to seek to use the machinery of convening a meeting under the section to override class rights. It was not right to invoke the section to override class rights attached to a class of shares which had been deliberately imposed for the protection of the holders of those shares although they were a minority.
Shareholder’s not allowed to apply s371 to meet in absence of group.

Judges:

Dillon LJ, Leggatt, Henry LJJ

Citations:

Times 08-Apr-1994, Gazette 01-Jun-1994, [1994] 2 BCLC 674, [1994] 1 WLR 893

Statutes:

Companies Act 1985 371

Jurisdiction:

England and Wales

Cited by:

Cited – Grays Timber Products Ltd v Revenue and Customs SC 3-Feb-2010
An assessment to income tax had been raised after the employee resold shares in the company issued through the employees’ share scheme at a price which the Revenue said was above the share value. The company appealed against a finding that tax was . .
Lists of cited by and citing cases may be incomplete.

Company

Updated: 05 May 2022; Ref: scu.78456

Bishopsgate Investment Management Ltd (in Liquidation) v Maxwell: CA 16 Feb 1993

The fundamental wrong in the directors’ acts lay in the signing of transfers of the company’s assets and not entirely in their failure properly to enquire as to the nature of other transaction. The breach of fiduciary duty lay in positive acts. Complaint was also made as to the judge’s five month delay in handing down his judgement.

Judges:

Stuart Smith LJ

Citations:

Times 16-Feb-1993, [1993] BCC 120

Jurisdiction:

England and Wales

Cited by:

Cited – Official Receiver v Wadge Rapps and Hunt (a firm) and another and two other actions HL 31-Jul-2003
(Orse In re Pantmaenog Timber Co Ltd)
The Receiver sought to use information obtained under section 236 (documents recovered from the directors’ solicitors) in disqualification proceedings.
Held: The appeal succeeded. The Act had . .
Lists of cited by and citing cases may be incomplete.

Company, Insolvency

Updated: 05 May 2022; Ref: scu.78424

Phillips and Another v Robin James Symes and Robin Symes Ltd: ChD 9 Jul 2001

English proceedings were issued to claim against a partnership. Simultaneously proceedings were issued in Greece, but the Greek proceedings were served on the London parties first. The plaintiffs in Greece asked the English court to issue a stay of the English proceedings, they having issued first in Greece. The stay was granted. There had been effective service on the claimants’ London offices. Part of the claim related to questions regarding a partnership. An ‘association of legal persons’ under the convention included an informal partnership under English law, and under 16(2) exclusive jurisdiction was granted to the UK courts for that single issue out of the others.

Judges:

The Hon Mr Justice Hart

Citations:

Gazette 06-Sep-2001, Times 02-Oct-2001, [2001] EWHC Ch 395

Links:

Bailii

Statutes:

Partnership Act 1890, Brussels Convention on Jurisdiction and Enforcement of Judgments in Civil and Commercial Matters Art 16(2), 21, Civil Jurisdiction and Judgments Act 1982

Jurisdiction:

England and Wales

Cited by:

See Also – Phillips, Harland (Administrators of the Estate of Michailidis), Papadimitriou; Symes (A Bankrupt), Robin Symes Limited (In Administrative Receivership), Domercq etc ChD 30-Jul-2004
Under the Ciivil Procedure Rules, experts have acquired greater responsibilities to the court. Those responsibilities transcend their perceived obligations to the parties whom they give evidence. . .
See Also – Phillips, Harland (Suing As Administrators of the Estate of Christo Michailidis), Papadimitriou v Symes (A Bankrupt) Robin Symes Limited (In Administrative Receivership) Jean-Louis Domercq ChD 20-Oct-2004
Dr Z had given expert evidence in the principal proceedings. It was now said that that evidence had not been given in the proper way, and a remedy was now sought in costs.
Peter Smith J had held that: ‘It seems to me that in the administration . .
See Also – Phillips v Symes CA 2003
Courts should be reluctant to exclude altogether evidence merely because it is written. If the purpose of the order sought was to trace assets it would be wrong to permit cross-examination which was designed to show that there had been a contempt of . .
See Also – Phillips, Harland (Suing As Administrators of the Estate of Christo Michailidis), Papadimitriou v Symes (A Bankrupt) Robin Symes Limited (In Administrative Receivership) Jean-Louis Domercq etc ChD 20-Oct-2004
. .
See Also – Symes v Phillips and others CA 6-May-2005
. .
See Also – Symes v Phillips and others CA 19-May-2005
The applicant was in contempt of court. He successfully appealed a sentence of two years imprisonment, with the sentence being reduced to one year. Legally aided, he sought his costs from the claimant. The claimant replied that their part was only . .
See Also – Phillips, Harland (Suing As Administrators of the Estate of Christo Michailidis) v Symes (A Bankrupt), Nussberger, Galerie Nefer Ag, Geoff Rowley ChD 19-Aug-2005
The court allowed the appellant’s application to dispense with service of a claim form under the rule. The High Court became seised of the matter as at 19 January 2005. Further directions were given. . .
See Also – Phillips and others v Symes and others ChD 12-Jul-2006
. .
See Also – Phillips and Another v Symes and Others (No 6) CA 19-May-2006
Proceedings were issued in England for service on the defendant in Switzerland, but because of an error by the Swiss Court were not properly served. Proceedings were then issued in Sitzerland, and seisin was claimed for the Swiss Court. The claimant . .
See Also – Phillips and others v Symes and others ChD 16-Oct-2006
. .
See Also – Phillips and Another v Symes and others HL 23-Jan-2008
Various parties had sought relief in the English courts and in Switzerland after an alleged fraud. There had been a mistake in service of the proceedings in England. The high court had dispensed with service an backdated the effect of the order to . .
Lists of cited by and citing cases may be incomplete.

Jurisdiction, Company

Updated: 05 May 2022; Ref: scu.159964

Brady v Brady: HL 1988

An employment agreement contravening section 151 of the 1985 Act is unenforceable. The obvious mischief to which section 151 is directed is the case of a bidder financing his bid from the funds of the company acquired. The larger purpose had to be something other than the acquisition of shares, however beneficial the acquisition was felt to be in the interests of the company. Lord Oliver said: ‘the purpose and the only purpose of the financial assistance is and remains that of enabling the shares to be acquired.’
Lord Oliver of Aylmerton said that the word ‘reason’ is not the same as ‘purpose’. The former word provides an explanation why an act is done. The word ‘purpose’ describes what transaction is designed to achieve.
Lord Oliver said: ‘The matter can perhaps, most easily be tested by reference to section 153(1)(a) where the same formula is used. Here the words are ‘or the giving of the assistance for that purpose’ (i.e. the acquisition of shares) ‘is but an incidental part of some larger purpose of the company’. The words ‘larger purpose’ must here have the same meaning as the same words in subsection (2)(a). In applying subsection (1)(a) one has, therefore, to look for some larger purpose in the giving of financial assistance than the mere purpose of the acquisition of the shares and to ask whether the giving of assistance is a mere incident of that purpose. My Lords, ‘purpose’ is, in some contexts, a word of wide content but in construing it in the context of the fasciculus of sections regulating the provision of finance by a company in connection with the purchase of its own shares there has always to be borne in mind the mischief against which section 151 is aimed. In particular, if the section is not, effectively, to be deprived of any useful application, it is important to distinguish between a purpose and the reason why a purpose is formed. The ultimate reason for forming the purpose of financing an acquisition may, and in most cases probably will, be more important to those making the decision than the immediate transaction itself. But ‘larger’ is not the same thing as ‘more important’ nor is ‘reason’ the same as ‘purpose’. If one postulates the case of a bidder for control of a public company financing his bid from the company’s own funds – the obvious mischief at which the section is aimed – the immediate purpose which it is sought to achieve is that of completing the purchase and vesting control of the company in the bidder. The reasons why that course is considered desirable may be many and varied. The company may have fallen on hard times so that a change of management is considered necessary to avert disaster. It may merely be thought, and no doubt would be thought by the purchaser and the directors whom he nominates once he has control, that the business of the company will be more profitable under his management than it was heretofore. These may be excellent reasons but they cannot, in my judgment, constitute a ‘larger purpose’ of which the provision of assistance is merely an incident. The purpose and the only purpose of the financial assistance is and remains that of enabling the shares to be acquired and the financial or commercial advantages flowing from the acquisition, whilst they may form the reason for forming the purpose of providing assistance, are a by-product of it rather than an independent purpose of which the assistance can properly be considered to be an incident.’

Judges:

Lord Oliver of Aylmerton

Citations:

[1989] AC 755, [1988] 2 WLR 1308, [1988] BCLC 20, (1988) 3 BCC 535, [1988] 2 All ER 617

Statutes:

Companies Act 1985 151

Jurisdiction:

England and Wales

Cited by:

Cited – Cox v Cox and Skan Dansk Design Limited ChD 27-Apr-2006
Mrs Cox sought to declarations as to the effect of arrangements made on her divorce in an attempt to avoid contentious proceedings. The couple held equal shares in the family business, but the company registers were missing or had never existed. The . .
Cited – Grays Timber Products Ltd v Revenue and Customs SC 3-Feb-2010
An assessment to income tax had been raised after the employee resold shares in the company issued through the employees’ share scheme at a price which the Revenue said was above the share value. The company appealed against a finding that tax was . .
Lists of cited by and citing cases may be incomplete.

Company

Updated: 04 May 2022; Ref: scu.242134

I J L, G M R, and A K P v United Kingdom (Application Nos 29522/95, 30056/96, and 30574/96): ECFI 13 Oct 2000

The obtaining by compulsion of statements in Companies investigations which were later used in evidence in criminal trials was a breach of the defendant’s human right to a fair trial by enforced self-incrimination. However there was no evidence in this case that there had been any collusion to seek to take advantage of the procedure in planning the timing of the criminal proceedings, and given the complex nature of the matters in issue, the delay was not so unreasonable as to amount to an infringement.

Citations:

Times 13-Oct-2000

Jurisdiction:

European

Criminal Evidence, Company, Human Rights

Updated: 04 May 2022; Ref: scu.81586

In Re A Debtor (No 303 of 1997): ChD 3 Oct 2000

A former partner in a firm was not to be heard to claim a set off of sums due to him in the accounting following the break up of the firm, against sums claimed for an indemnity claimed against him by the other partners in respect of payments made by them as trustees to satisfy partnership obligations in a lease of premises occupied by the partnership.

Citations:

Times 03-Oct-2000

Jurisdiction:

England and Wales

Company, Insolvency

Updated: 04 May 2022; Ref: scu.81655

Ruben and Ladenberg v Great Fingall Consolidated Co: HL 19 Jul 1906

The appellants in good faith advanced a sum of money to the secretary of a company for his private purposes on the security of a share certificate of the company. The certificate was in point of form correct, bearing the seal of the company, and appearing to be signed by two of the directors and countersigned by the secretary. The seal of the company was however affixed to it fraudulently by the secretary and without authority, and the signatures of the two directors were forged by him.
Held that the company were not estopped from pleading the invalidity of the certificate, and were not responsible to the appellants for the loss they had sustained through the fraud of the secretary.

Judges:

Lord Chancellor (Loreburn), Lords Macnaghten, Davey, James of Hereford, Robertson, and Atkinson

Citations:

[1906] UKHL 616

Links:

Bailii

Jurisdiction:

England and Wales

Company, Torts – Other

Updated: 04 May 2022; Ref: scu.625468

Conway v Petronius Clothing Limited: 1978

The court considered, inter alia, the right of a director to inspect his company’s records. The applicable statutory provision as to a company’s financial records simply laid down a criminal sanction and conferred no civil right enforceable by injunction. All serving directors have the right to inspect the company’s records, minutes and accounts, and if desired they may have appropriate expert assistance.

Judges:

Slade J

Citations:

[1978] 1 WLR 72, [1978] 1 All ER 185, (1978) 122 SJ 15

Jurisdiction:

England and Wales

Citing:

Cited – Burn v London South West Coal Co 1890
. .

Cited by:

Cited – Seery v Leathes Prior (A Firm) QBD 24-Jan-2017
The claimant alleged professional negligence against his former solicitors in the settlement of his claim against his former partners.
Held: The claim failed. There had been no clear duty to give the advice the claimant said should have been . .
Lists of cited by and citing cases may be incomplete.

Company

Updated: 04 May 2022; Ref: scu.573399

Corbett v Corbett: ChD 1998

Judge Howarth observed: ‘I am well aware of the fact in s.459 cases they are in every bit like an acrimonious divorce case between people whose marriages fail. They are one of the instances in life where frankly bloody-mindedness takes over and people are capable at least of acting in a way of doing the other side down and getting pleasure from doing the other side rather than by acting in accordance with strict, rational forms of behaviour for their own long-term interests and certainly the long-term interests of the company.’

Judges:

Judge Howarth

Citations:

[1998] BCC 93

Statutes:

Companies Act 1985 459

Jurisdiction:

England and Wales

Cited by:

Cited – Seery v Leathes Prior (A Firm) QBD 24-Jan-2017
The claimant alleged professional negligence against his former solicitors in the settlement of his claim against his former partners.
Held: The claim failed. There had been no clear duty to give the advice the claimant said should have been . .
Lists of cited by and citing cases may be incomplete.

Company

Updated: 04 May 2022; Ref: scu.573401

Olson v Gullo: 1994

(Court of Appeal for Ontario) A Mr Olson and a Mr Gullo had formed a partnership to develop a tract of land. Mr Gullo nevertheless bought and sold part of the land for his own account at a substantial profit which he planned to pocket. The trial judge held that Mr Olson was entitled to recover the whole of the profit.
Held: The appeal was allowed.
Morden ACJO said that he had ‘concluded . . that it was contrary to principle and authority . . to deprive the defendants of their one-half share in the transaction in question’. He explained: ‘We must, however, begin our consideration with the basic premise that the profit in question is the property of the partnership, not of all the partners except the defaulting partner. To exclude the wrongdoer would be to effect a forfeiture of his or her interest in this partnership property. The point may be understood by considering a starker form of wrongdoing – a case where a partner misappropriates partnership funds for his own benefit. In such a case I am not aware of any principle or decision to the effect that not only must the partner account to the partnership for the money but must also suffer a forfeiture of his or her interest in it. In fact, the case law of which I am aware is to the contrary.’

Judges:

Morden ACJO

Citations:

(1994) 17 OR (3d) 790

Jurisdiction:

Canada

Cited by:

Cited – Hosking v Marathon Asset Management Llp ChD 5-Oct-2016
Loss of agent’s share for breach within LLP
The court was asked whether the principle that a fiduciary (in particular, an agent) who acts in breach of his fiduciary duties can lose his right to remuneration, is capable of applying to profit share of a partner in a partnership or a member of a . .
Lists of cited by and citing cases may be incomplete.

Commonwealth, Company, Agency

Updated: 04 May 2022; Ref: scu.569930

Burn v London South West Coal Co: 1890

Citations:

[1890] 7 TLR 118

Jurisdiction:

England and Wales

Cited by:

Cited – Conway v Petronius Clothing Limited 1978
The court considered, inter alia, the right of a director to inspect his company’s records. The applicable statutory provision as to a company’s financial records simply laid down a criminal sanction and conferred no civil right enforceable by . .
Cited – Seery v Leathes Prior (A Firm) QBD 24-Jan-2017
The claimant alleged professional negligence against his former solicitors in the settlement of his claim against his former partners.
Held: The claim failed. There had been no clear duty to give the advice the claimant said should have been . .
Lists of cited by and citing cases may be incomplete.

Company

Updated: 04 May 2022; Ref: scu.573400

Baker v Jones: 1954

There was a dispute within an unincorporated weightlifting association about an alleged misuse of its funds.
Held: Words in an agreement are void to the extent that they seek to oust the jurisdiction of the court.
Lynsey J said: ‘The association, being an unincorporated body, could not be liable for the tortious acts either of its officials or council members. The members of the association, individually, would not be liable for such tortious acts, except in so far as they had individually authorized such acts.’
and ‘The common law does not approve of the intervention of any man in the litigation of another with which he had no lawful concern, whether that litigation is well founded or not’ However, as to the law prohibiting maintenance of an action the common law rules were ‘much modified and, as some say, almost atrophied’
It is contrary to the common law and contrary to public policy to attempt to oust the jurisdiction of the courts

Judges:

Lynskey J

Citations:

[1954] 1 WLR 1005

Jurisdiction:

England and Wales

Cited by:

Cited – Foster v McNicol and Another QBD 28-Jul-2016
Incumbent Labour leader did not need nominations
The claimant challenged a decision of the National Executive Committee of the Labour Party to allow its present Leader to stand in the leadership election challenging his position without the need for him to submit first the otherwise standard . .
Lists of cited by and citing cases may be incomplete.

Contract, Company, Torts – Other

Updated: 04 May 2022; Ref: scu.567810

Regina v Jesse Smith: 1871

Chief Justice Bovill said, referring to the 1861 Act: ‘At the time that Act (24 and 25 Vict. c. 96) was passed theft by a partner of the goods of the firm did not fall within the criminal law, either common or statute. This defect was supplied by 31 and 32 Vict. c. 116, which, after reciting that ‘ it is expedient to provide for the better security of the property of co-partnerships and other joint beneficial owners against offences by part owners thereof, and further to amend the law as to embezzlement,’ proceeds to enact, by the first section, that if a partner, or one of two or more beneficial owners, shall steal, etc., any property of such co-partnership or such joint beneficial owners, ‘every such person shall be liable to be dealt with, tried, convicted, and punished for the same as if such person had not been or was not a member of such co-partnership, or one of such beneficial owners’.’

Judges:

Bovill CJ

Citations:

(1871 Crown Cases Reserved 266)

Statutes:

Larceny Act 1861

Jurisdiction:

England and Wales

Cited by:

Cited – Regina v Bonner and Others CACD 24-Feb-1970
The appellants challenged their convictions for theft, saying that as partners in a firm they could not be convicted of theft of partnership property.
Held: The appeals were allowed for the unsatisfactory and unsafe nature of the convictions . .
Lists of cited by and citing cases may be incomplete.

Company, Crime

Updated: 04 May 2022; Ref: scu.566425

Labouchere v Earl of Wharncliffe: CA 1879

The purported expulsion of Mr Labouchere from the Beefsteak Club was invalid because the rules had not been followed.

Judges:

Sir George Jessel MR

Citations:

(1879) 13 Ch D 346

Jurisdiction:

England and Wales

Cited by:

Cited – Speechley and Others v Allott and Others CA 10-Mar-2014
The parties disputed the management of a social club. The club owned a bowling green, and bowling members sought to restrain its closure. The appellants now said that the court should not have found at first instance that a meeting had validly . .
Lists of cited by and citing cases may be incomplete.

Company

Updated: 04 May 2022; Ref: scu.551300

Dunne v English: CA 1874

A partner had made a secret profit from the sale of partnership property.
Held: The other partner sought and obtained relief ‘substantially in accordance with the first and second paragraphs of the prayer of the bill’, which had sought ‘a declaration . . that the Plaintiff was entitled to share equally with the Defendant in the profits . . and that the Defendant was bound to make over to the Plaintiff one half of the profits . .’ Because of the importance which equity attaches to fiduciary duties, ‘informed consent’ to a fiduciary acting for two parties is only effective if it is given after ‘full disclosure’.
Sir George Jessel MR said of a partner: ‘The Defendant was not only in law the agent of the partnership to sell (being himself a partner, and every partner being an agent of the partnership), but he was in fact the agent who had been engaged in negotiating the sale.’

Judges:

Sir George Jessel MR

Citations:

(1874) LR 18 Eq 524

Jurisdiction:

England and Wales

Cited by:

Cited – FHR European Ventures Llp and Others v Cedar Capital Partners Llc SC 16-Jul-2014
Approprietary remedy against Fraudulent Agent
The Court was asked whether a bribe or secret commission received by an agent is held by the agent on trust for his principal, or whether the principal merely has a claim for equitable compensation in a sum equal to the value of the bribe or . .
Cited – Hosking v Marathon Asset Management Llp ChD 5-Oct-2016
Loss of agent’s share for breach within LLP
The court was asked whether the principle that a fiduciary (in particular, an agent) who acts in breach of his fiduciary duties can lose his right to remuneration, is capable of applying to profit share of a partner in a partnership or a member of a . .
Lists of cited by and citing cases may be incomplete.

Equity, Agency, Company

Updated: 04 May 2022; Ref: scu.551499

In re Beni-Felkai Mining Co Ltd: 1933

A liquidator’s remuneration is not encompassed by the word ‘expenses’. The term ‘expenses’ is not a term of art. It may include any expenses which the liquidator may be compelled to pay in respect of his acts in the course of a proper liquidation of the company’s assets.
The liquidator is the ‘person who can see what the position is’ and has the means to ascertain the company’s financial position at any time.

Citations:

[1934] 1 Ch 406, [1933] All ER 693

Cited by:

Cited – In re Nortel Companies and Others SC 24-Jul-2013
The court was asked as to the interrelationship of the statutory schemes relating to the protection of employees’ pensions and to corporate insolvency.
Held: Liabilities which arose from financial support directions or contribution notices . .
Lists of cited by and citing cases may be incomplete.

Insolvency, Company

Updated: 04 May 2022; Ref: scu.537945

Byblos Bank SAL v Al-Khudhairy: CA 1987

The parties disputed the validity of the appointment of a receiver. The ostensible ground for appointment of the receiver was not made out, but the bank relied on a new ground, section 223(d) of the 1948 Act. Nicholls LJ observed: ‘Construing this section first without reference to authority, it seems to me plain that, in a case where none of the deeming paras (a), (b) or (c) is applicable, what is contemplated is evidence of (and, if necessary, an investigation into) the present capacity of a company to pay all its debts. If a debt presently payable is not paid because of lack of means, that will normally suffice to prove that the company is unable to pay its debts. That will be so even if, on an assessment of all the assets and liabilities of the company, there is a surplus of assets over liabilities. That is trite law.
It is equally trite to observe that the fact that a company can meet all its presently payable debts is not necessarily the end of the matter, because para (d) requires account to be taken of contingent and prospective liabilities. Take the simple, if extreme, case of a company whose liabilities consist of an obligation to repay a loan of andpound;100,000 one year hence, and whose only assets are worth andpound;10,000. It is obvious that, taking into account its future liabilities, such a company does not have the present capacity to pay its debts and as such it ‘is’ unable to pay its debts.’

Judges:

Nicholls, Slade and Neill LJJ

Citations:

[1987] BCLC 232

Statutes:

Companies Act 1948

Citing:

Cited – In Re European Life Assurance Society 1869
Sir William James V-C dismissed a petition for the winding up of a company which had issued large numbers of life policies and annuity contracts, and appeared to be in financial difficulties. He rejected the basis of the ‘just and equitable’ ground . .
Cited – In re a Company (Bond Jewellers) ChD 21-Dec-1983
A tenant company had a propensity for postponing payment of its debts until threatened with litigation. Nourse J felt unable to make an order under section 223(d), and considered, but ultimately did not make an order, on the ‘just and equitable’ . .
Cited – In Re Capital Annuities Ltd ChD 1979
Slade J said: ‘From 1907 onwards, therefore, one species of ‘inability to pay its debts’ specifically recognised by the legislature as a ground for the making of a winding up order in respect of any company incorporated under the Companies Acts was . .

Cited by:

Cited – BNY Corporate Trustee Services Ltd and Others v Neuberger SC 9-May-2013
Potential Insolvency effect under guarantee
The various parties had entered into complex and substantial financial arrangements incorporating guarantees. The guarantees were conditional upon the guaranteed party being solvent. The parties disputed whether a party which would otherwise be . .
Cited – In re Cheyne Finance Plc (No 2) ChD 17-Oct-2007
The court was asked as to the treatment of the assets of the company in case of a future insolvency.
Held: Briggs J decided section 123(1)(e) required: ‘In my judgment, the effect of the alterations to the insolvency test made in 1985 and now . .
Lists of cited by and citing cases may be incomplete.

Company, Insolvency

Updated: 04 May 2022; Ref: scu.535118

In Re Capital Annuities Ltd: ChD 1979

Slade J said: ‘From 1907 onwards, therefore, one species of ‘inability to pay its debts’ specifically recognised by the legislature as a ground for the making of a winding up order in respect of any company incorporated under the Companies Acts was the possession of assets insufficient to meet its existing, contingent and prospective liabilities.’

Judges:

Slade J

Citations:

[1979] 1 WLR 170

Cited by:

Cited – Byblos Bank SAL v Al-Khudhairy CA 1987
The parties disputed the validity of the appointment of a receiver. The ostensible ground for appointment of the receiver was not made out, but the bank relied on a new ground, section 223(d) of the 1948 Act. Nicholls LJ observed: ‘Construing this . .
Cited – BNY Corporate Trustee Services Ltd and Others v Neuberger SC 9-May-2013
Potential Insolvency effect under guarantee
The various parties had entered into complex and substantial financial arrangements incorporating guarantees. The guarantees were conditional upon the guaranteed party being solvent. The parties disputed whether a party which would otherwise be . .
Lists of cited by and citing cases may be incomplete.

Company, insolvency

Updated: 04 May 2022; Ref: scu.535116

Atlas Maritime Co SA v Avalon Maritime Ltd (‘the Coral Rose’) (No 1): CA 1991

Whilst it would be wrong to find a principal/agency relationship between a creditor and a debtor which was a shell company whose sole activity was sponsored, funded and controlled by the creditor (a proposition described by Staughton LJ as ‘revolutionary doctrine’), the reality of the relationship meant that payment to the creditor would not be in the ordinary course of business so that release of the debtor’s assets from a Mareva injunction for that purpose would be inappropriate.
Staughton LJ observed: ‘The creation or purchase of a subsidiary company with minimal liability, which will operate with the parent’s funds and on the parent’s directions but not expose the parent to liability, may not seem to some the most honest way of trading. But it is extremely common in the international shipping industry, and perhaps elsewhere. To hold that it creates an agency relationship between the subsidiary and the parent would be revolutionary doctrine’.
He expressly separated the two concepts of ifting and piercing the corporate veil, on the basis that ‘pierc[ing] . . is reserve[d] for treating the rights or liabilities or activities of a company as the rights or liabilities or activities of its shareholders’, whereas ‘lift[ing] . . [is] to have regard to the shareholding in a company for some legal purpose’.

Judges:

Staughton LJ

Citations:

[1991] 4 All ER 769, [1991] 1 WLR 917

Cited by:

Cited – Prest v Petrodel Resources Ltd and Others SC 12-Jun-2013
In the course of ancillary relief proceedings in a divorce, questions arose regarding company assets owned by the husband. The court was asked as to the power of the court to order the transfer of assets owned entirely in the company’s names. The . .
Lists of cited by and citing cases may be incomplete.

Company

Updated: 04 May 2022; Ref: scu.519430

In re Polly Peck International plc: ChD 1996

It was argued, unsuccessfully, that a special purpose company incorporated in the Cayman Islands should be regarded as a single economic unit with the holding company, so as to eliminate ‘double dip’ as well as double dividend.
Held: There would be obvious unfairness to other creditors if both a principal creditor and a surety were entitled to prove for and receive a dividend in respect of what is in substance a single debt. Robert Walker J said: ‘The rule against double proof is a long-standing principle of the law of bankruptcy, and has applied in the winding up of companies since the Companies Act 1862 (see Re Oriental Commercial Bank, ex p European Bank (1871) LR 7 Ch App 99). It has often been described in terms of straightforward and obvious fairness, depending on substance, not form
. . Much the commonest situation in which the rule against double proof applies is that of suretyship. Indeed it has been said that it applies only in a situation which actually is, or is analogous to, that of suretyship (the latter category includes the old cases on negotiable instruments considered in Re Oriental Commercial Bank ex p European Bank). It is therefore convenient to set out some very elementary rules as to suretyship, shorn of complications arising from the provision of security or from the Ellis v Emmanuel distinction. In what follows, C is the principal creditor, D the principal debtor, and S the surety (and all are companies).
(1) So long as any money remains due under the guaranteed loan, C can proceed against either D or (after any requisite notice) S.
(2) If D and S are both wound up, C can prove in both liquidations and hope to receive a dividend in both, subject to not recovering in all more than 100p in the pound.
(3) S’s liquidator can prove in D’s liquidation (under an express or implied right of indemnity) only if S has paid C in full (so that C drops out of the matter and S stands in its place).
(4) As a corollary of (3) above, S’s liquidator cannot prove in D’s liquidation in any way that is in competition with C; though S has a contingent claim against D (in the event of C being paid off by S), S may not make that claim if it has not in fact paid off C.
‘The situation in (2) above is what insolvency practitioners call a ‘double-dip’, which is permissible; the situation in (4) above is the simplest case of what would be double proof, which is not permissible.
‘So far as the basis of the rule needs (or indeed allows of) further explanation it is that the surety’s contingent claim is not regarded as an independent, free-standing debt, but only as a reflection of the ‘real’ debt – that in respect of the money which the principal creditor had loaned to the principal debtor.’

Judges:

Robert Walker J

Citations:

[1996] 2 All ER 433

Jurisdiction:

England and Wales

Cited by:

Cited – In re SSSL Realisations (2002) Ltd and Another; Squires and others v AIG Europe (UK) Ltd and Another CA 18-Jan-2006
A creditor claiming an equity in a debt but who himself owed money to the debtor, could not pursue his claim without first contributing the sum due. A person could not take an aliquot share out of a fund without first contributing what he owed to . .
Cited – In re Kaupthing Singer and Friedlander Ltd SC 19-Oct-2011
The bank had been put into administrative receivership, and the court was now asked as to how distributions were to be made, and in particular as to the application of the equitable rule in Cherry v Boultbee in the rule against double proof as it . .
Lists of cited by and citing cases may be incomplete.

Company, Insolvency

Updated: 04 May 2022; Ref: scu.449872

New Zealand Forest Products Finance NV v Commissioner of Inland Revenue: 1995

(New Zealand) The taxpayer company was established in the Netherlands Antilles as the subsidiary of a New Zealand parent company. It was a vehicle company whose purpose was to raise borrowings on the Eurobond market and to lend the money on to the New Zealand parent for use in its business or in the businesses of the group. The Netherlands Antilles subsidiary of the ABN group was engaged to act as manager and bookkeeper of the company and subsequently was appointed a director of it. The ABN subsidiary provided a registered office, and ensured compliance with Netherlands Antilles laws and with the articles of association of the company. It also attended to the day to day management of the company. Proposals for bond issues originated with the parent company in New Zealand, but were actually carried into effect by the Netherlands Antilles subsidiary, which had a local board of directors. For some of the time one of the directors was a New Zealander who was also a director of the parent company.
Held: [‘the objector’ means the Netherlands Antilles subsidiary] ‘All the objector’s decisions in respect of issues were taken at meetings outside New Zealand. The issues could not proceed without those decisions. Plainly those decisions of policy in respect of the borrowing were first undertaken by those responsible for NZFP [the parent company], with the reasonable expectation that they would find favour with the directors of the objector, particularly when in the time of Mr Wylie he was a director of both boards and other Australasian directors were closely associated with NZFP.
It is also clear upon the evidence, however, that the decisions of the directors of the objector were those of the objectors [sic] independently. . .
Applying the De Beers test, it is clear the central management and control of the objector was at all times outside New Zealand. All decisions taken by its directors were taken outside New Zealand, as were its shareholders’ meetings and its essential management functions, which took place in Curacao. The Commissioner has argued that the true centre of management and control was Auckland and that the board of the objector merely rubber stamped NZFP decisions. As already indicated, that ignores both the legal and the factual position. . . The Commissioner’s position confuses NZFC’s policy and influence with its powers. . . [I]t was not in the interests of NZFP that the directors of the objector should act as pawns or rubber stamps in the way submitted by the Commissioner and they did not do so. . . The control and management of the objector was in the hands of its directors and, as already indicated, that was at no time exercised in New Zealand.’

Judges:

Doogue J

Citations:

(1995) 17 NZTC 12,073

Jurisdiction:

England and Wales

Cited by:

Cited – Unit Construction Co Ltd v Bullock HL 30-Nov-1959
The UK parent company owned subsidiaries incorporated in East Africa and carried on trading activities there. The managing director of the parent company concluded that ‘the situation of the African subsidiaries was becoming so serious that it was . .
Lists of cited by and citing cases may be incomplete.

Company

Updated: 04 May 2022; Ref: scu.224813

Lehtimaki and Others v Cooper: SC 29 Jul 2020

Charitable Company- Directors’ Status and Duties

A married couple set up a charitable foundation to assist children in developing countries. When the marriage failed an attempt was made to establish a second foundation with funds from the first, as part of W leaving the Trust. Court approval was obtained, but the court ordered the remaining non-interested director to vote in favour of the transaction. He appealed successfully against that order, and W now herself appealed.
Held: The appeal raised several issues.
Lady Arden discussed whether L was a fiduciary when acting as a member of CIFF. The defining characteristic of a fiduciary is that he has a single duty to his trustor. A member of a charitable company has that duty, the company itself being in a position of trustee. The position of the member was as under a trust given shape by statute and the company’s own constitution.
The application having been made to the court to approve such an arrangement, the Court’s answer governed the decision on what was in the charity’s best interests, and therefore the member no longer retained discretion to vote against it, and had to work to implement it. If the member disagreed, his remedy was to appeal.
Lady Arden, dissenting, saying that the fiduciary duty was in its nature subjective, and could not be ousted in favour of an objective direction.
Lady Arden confirmed the capacity of the Court to direct a member’s vote under section 217 of the 2006 Act.
Otherwise: Children’s Investment Fund (UK) v Attorney General

Judges:

Lord Reed, President, Lord Wilson, Lord Briggs, Lady Arden, Lord Kitchin

Citations:

[2020] UKSC 33, [2020] 2 BCLC 463, [2020] 3 WLR 461, [2020] WTLR 967, 23 ITELR 273, [2021] 1 All ER (Comm) 757, [2021] 1 All ER 809, [2022] AC 155

Links:

Bailii, Press Summary, Issues and Facts

Statutes:

Companies Act 2006 217, Charities Act 2011 201

Jurisdiction:

England and Wales

Citing:

Cited – In re The French Protestant Hospital ChD 1951
The charity was an incorporated body created by a Royal Charter granted in 1718. The governor and directors sought to exercise a power conferred on them by the charter to amend the byelaws to enable the directors’ professional firms to be . .
Cited – Von Ernst and Cie SA v Inland Revenue Commissioners CA 1979
The assets of a corporate charity were held on charitable trusts: ‘We were referred to certain authorities which give support to the view that a company incorporated for exclusively charitable purposes is in the position of a trustee of its funds or . .
Cited – Liverpool and District Hospital for Diseases of the Heart v Attorney-General ChD 1981
Charitable Company is Trustee of Assets
The court was asked as to the distribution of surplus assets of a charitable company which was in winding up, and the question whether or not s 257 et seq. Companies Act 1948 applied, including s 265 which made provision for the distribution of . .
Cited – The Attorney-General, at The Relation of W Izard v Brown, And Forty-Seven Others 3-Apr-1818
The Crown has a role as parens patriae or protector of charities.
Lord Eldon LC said: ‘It is the duty of the King, as parens patriae, to protect property devoted to charitable uses; and that duty is executed by the officer who represents the . .
Cited – John Shaw and Sons (Salford) Ltd v Shaw 1935
The members of a company cannot interfere with the decisions of the trustees and directors unless they amend the articles to enable them to do so. . .
Cited – Re Egerton Trust Retirement Benefit Scheme ChD 2000
(No Date) Robert Walker J identified four categories of case in which the court has to consider actions taken or to be taken by trustees, as follows:-
‘ . . it seems to me that, when the court has to adjudicate on a course of action proposed . .
Cited – Public Trustee v Cooper 2001
The court looked at the circumstances required when a court was asked to approve a proposed exercise by trustees of a discretion vested in them. The second category of circumstances was (quoting Robert Walker J): ‘Where the issue was whether the . .
At First Instance – The Children’s Investment Fund Foundation (UK) v Attorney General and Others ChD 9-Jun-2017
The court considered the propriety of a payment made by a charitable company to a director for her loss of office. The charity was to transfer a substantial sum to a new charity headed by the departing director.
Held: The court approved the . .
Appeal from (CA) – Lehtimaki v The Children’s Investment Fund Foundation (UK) and Others CA 6-Jul-2018
A charity established by H and W wanted to transfer part of its fund to a new charity headed by W in return for her resignation from the first charity on the breakdown of the marriage. Court approval was sought for a transfer, but the remaining . .
Cited – Hope Community Church (Wymondham) v Phelan and Others ChD 22-May-2020
The Church, a private company limited by guarantee, sought a declaration that it had the right to enfranchise its church premises under the 1920 Act. . .
Cited – Pender v Lushington CA 1877
After stating that the Court would not restrain the exercise of certain votes by members of a company merely because the holder of the votes had a motive for voting them which the Court might not approve, his Lordship said: ‘I am confirmed in that . .
Cited – The North-West Transportation Company and James Hughes Beatty v Henry Beatty and Others PC 21-Jul-1887
(Canada) . .
Cited – Allan v Gold Reefs of West Africa Ltd CA 19-Feb-1900
The company had altered its articles so as to give itself a lien on paid up shares in respect of the failure of the shareholder to pay calls on other shares which had not been fully paid up. The effect of the amendment was to alter the contractual . .
Cited – Arbuthnott v Bonnyman and Others CA 20-May-2015
Appeal from refusal of unfair prejudice petition.
After listing cases: ‘I would extract from them the following principles:
(1) The limitations on the exercise of the power to amend a company’s articles arise because, as in the case of . .
Cited – Northern Counties Securities Ltd v Jackson and Steeple Ltd ChD 1974
Walton J reiterated that, when a shareholder is voting for or against a particular resolution, he is voting as a person owing no fiduciary duty to the company and who is exercising his own right of property to vote as he thinks fit. . .
Cited – Letterstedt v Broers PC 22-Mar-1884
(Supreme Court of the Cape of Good Hope) Lack of harmony may be of itself a good reason for a trustee to resign or be dismissed. Lord Blackburn approved a passage in Story’s Equity Jurisprudence, s 1289: ‘But in cases of positive misconduct, courts . .
Cited – Bolton v Madden QBD 25-Nov-1873
The Court of Queen’s Bench on appeal from the Lord Mayor’s Court held that they could ‘find no legal principle to justify us in holding that the subscriber to a charity may not give his votes as he pleases’. Blackburn J said that ‘The general rule . .
Cited – SEC v Chenery Corporation 1-Feb-1943
(United States Supreme Court) Frankfurter J held: ‘to say that a man is a fiduciary only begins analysis; it gives direction to further inquiry. To whom is he a fiduciary? What obligations does he owe as a fiduciary?’ . .
Cited – Goldcorp Exchange Ltd and others v Liggett and others PC 25-May-1994
(New Zealand) The non allocated claimants purchased gold bullion from a company for future delivery on a non allocated basis. The company stored and insured the metal, but the claimants had a right to call for delivery of their part within 7-days. . .
Cited – Bolton v Madden QBD 25-Nov-1873
The Court of Queen’s Bench on appeal from the Lord Mayor’s Court held that they could ‘find no legal principle to justify us in holding that the subscriber to a charity may not give his votes as he pleases’. Blackburn J said that ‘The general rule . .
Cited – Mothew (T/a Stapley and Co) v Bristol and West Building Society CA 24-Jul-1996
The solicitor, acting in a land purchase transaction for his lay client and the plaintiff, had unwittingly misled the claimant by telling the claimant that the purchasers were providing the balance of the purchase price themselves without recourse . .
Cited – F and C Alternative Investments (Holdings) Ltd v Barthelemy and Another (No 2) ChD 14-Jul-2011
The court was asked as to the fiduciary obligations owed by members of the board of a limited liability company.
Held: Sales J said that: ‘there is nothing in the Act to qualify the usual fiduciary obligations which an agent owes his principal . .
Cited – Grimaldi v Chameleon Mining NL (No 2) 21-Feb-2012
Federal Court of Australia
CORPORATIONS – Corporations Act 2001 (Cth), s 9 – ‘director’ – ‘officer’ – de facto director – no single test for determining whether a person is such – assuming or performing the functions of a director of the . .
Cited – Chinachem Charitable Foundation Ltd v The Secretary for Justice 18-May-2015
(Court of Final Appeal of Hong Kong) Lord Walker of Gestingthorpe NPJ referred to a proposed scheme as ‘a written instrument approved by the court to regulate, in whole or in part, the future management and administration of the trust’ . .
Cited – Income Tax Special Commissioners v Pemsel HL 20-Jul-1891
Charitable Purposes used with technical meaning
The House was asked whether, in a taxing statute applying to the whole of the United Kingdom and allowing for deductions from and allowances against the income of land vested in trustees for charitable purposes, the words ‘charitable purposes’ . .
Cited – National Anti-Vivisection League v Inland Revenue Commissioners HL 2-Jul-1947
The main object of the Society was political viz, the repeal of the Cruelty to Animals Act 1876, and for that reason the Society was not established for charitable purposes only and was not entitled to exemption from tax. An organisation whose aims . .
Cited – Construction Industry Training Board v Attorney-General CA 1973
The principal issue was whether a body set up by statute and subject to the control of a minister of the Crown was a ‘charity’ within the meaning of section 45(1) of the Charities Act 1960, for which purpose it had to be subject to ‘the control of . .
Cited – Armitage v Nurse; etc CA 19-Mar-1997
A clause in a trust deed may validly excuse trustees from personal liability for even gross negligence. The trustee was exempted from liability for loss or damage ‘unless such loss or damage shall be caused by his own actual fraud’.
Held: The . .
Cited – Gaudiya Mission and others v Brahmachary CA 30-Jul-1997
The High Court had found the plaintiff to be a charity, and ordered the Attorney-General to be joined in. The A-G appealed that order saying that the plaintiff was not a charity within the 1993 Act. The charity sought to spread the Vaishnava . .
Cited – Ex Parte Lacey 5-Feb-1802
Trustee Not To purchase Property of Trust
Lord Eldon held that equity imposed stringent duties on persons who were appointed trustees of trusts and that these duties were imposed with ‘relentless jealousy’ in order to ensure that trustees fulfilled their duties, and that trustees had to be . .
Cited – Citibank Na and Another v QVT Financial Lp CA 22-Jan-2007
Securitisation of Channel Tunnel debts.
The controlling noteholder of a series of notes issued by the company and secured by a trust deed argued that its extensive powers, while its notes remained outstanding, to direct the trustee of the . .
Cited – Stanway v Attorney-General CA 5-Apr-2000
Sir Richard Scott V-C said: ‘Charities operate within a framework of public law, not private law. The Crown is parens patriae of the charity and the judges of the courts represent the Crown in supervising what the charity is doing and in giving . .
Cited – Arklow Investments Ltd and Another v Maclean and Others PC 1-Dec-1999
PC (New Zealand) Land was offered for sale. A potential buyer, the appellant was approached by a merchant bank with a proposal for finance. When he sought finance elsewhere, a company associated with the bank . .
Cited – Assenagon Asset Management Sa v Irish Bank Resolution Corporation Ltd ChD 27-Jul-2012
The court considered the right of a company member to vote as he wishes. Briggs J said: ‘The basis for the application of that principle in relation to powers conferred on majorities to bind minorities is traditionally described as arising from . .
Cited – The Attorney-General v The Dean and Canons of Christ Church CA 28-Mar-1822
Devise to the Dean and Canons of Christ Church in trust to constitute and support a grammar school at P, to appoint a master and usher, and pay them certain salaries; and the Dean and Canons to direct the management of the school.
Held: 1 That . .
Cited – Attorney-General v The Bishop Of Worcester 8-Nov-1851
If a scheme for the regulation of a charity, settled by a decree, does not operate beneficially for the charity, and the attorney-general considers that the interests of the charity would, consistently with the foundation, usage and law, be promoted . .
Cited – Girls Public Day School Trust v Minister of Community and Country Planning ChD 1951
A company was formed for the purpose of establishing in England, public day schools for the education of girls. The position on the day appointed by the minister of Town and Country planning under the 1947 Act, section 119, namely July 18th 1948, . .
Cited – Chapman v Chapman HL 25-Mar-1954
It was suggested to the House that: ‘A judge of the Chancery Division of the High Court of Justice has an inherent jurisdiction, in the execution of the trusts of a settlement, to sanction, on behalf of infant beneficiaries and unborn persons, a . .
Cited – Re Royal Society’s Charitable Trusts 1956
The Society, a charitable company regulated by statute, requested that it be permitted inter alia, to consolidate various different trust funds of which it was trustee for investment and accounting purposes.
Held: The application did not come . .
Cited – In re J W Laing Trust ChD 1984
The trust was first created in 1922 with a gift of 15,000 shares worth pounds 15,000 ‘the proceeds of which and the dividends thereon from time to time declared and paid … to be devoted to charitable purposes, it being understood that the capital . .
Cited – In re Steed CA 26-Jan-1960
The court considered an application under the 1968 Act to vary a trust. The testator had shown in the terms of his will a particular purpose in creating a protective trust; that was to protect the life tenant from improvident dealings with property . .
Cited – Re Ashton Charity CA 3-May-1856
The Court of Chancery has jurisdiction to alien the real estate of a charity, and it can do so upon an application under Sir Samuel Romilly’s Act: ‘upon an information, the Court of Chancery has a general jurisdiction, as incident to the . .
Cited – The Attorney-General v The Governors Of The Free Grammar School Of Queen Elizabeth In Dedham The Attorney-General v Ellis The Attorney-General v Grignon In The Matters Of The 52 Geo 3, C 101, The Charitable Trusts Act, 1853, And Of The Several Speci 30-Jan-1857
The jurisdiction of the court was not ousted where the charity obtained a charter subsequent to its founding . .
Cited – Ex Parte The Governors Of Christ’s Hospital 10-Dec-1864
. .
Cited – Attorney General v British Museum ChD 27-May-2005
The trustees brought a claim against the Attorney-General seeking clarification of their duties and powers to return objects which were part of the collection in law, but where a moral duty might exist to return it to a former owner. Here drawings . .
Cited – Clephane and Others v Magistrates of Edinburgh SCS 30-Oct-1869
This case came before the Court on a petition by the defenders, dated 21st May 1869, to apply the judgment of the House of Lords. The Kirk-session lodged a minute, asserting their interest in the matter, and craving to be sisted as parties to the . .
Cited – Andrews v McGuffog 1886
Applications to court – partial decree not granted – directions where scheme of founder cannot be carried out – commingling of different funds
Pursuers in an actio popularis in re a public trust have no right to demand a partial decree which . .
Cited – Hampden v Buckinghamshire (Earl of) ChD 24-Apr-1893
(ChD and CA) By sect. 11 of the Settled Land Act, 1890 (which Act and the Settled Land Act, 1882, are to be read and construed together as one Act): ‘Where money is required for the purpose of discharging an incumbrance on the settled land or part . .
Cited – Attorney-General v Governors of Christ’s Hospital 3-Mar-1896
The Attorney-General proposed a scheme to except certain endowments from the 1869 Act. They would be made over to another governing body in augmentation of the endowments held by them subject to the provisions of that Act.
Held: The court . .
Cited – Royal Society for the Prevention of Cruelty to Animals v Attorney-General and others ChD 26-Jan-2001
The right to freedom of association could be exercised by a society choosing to remove from its membership individuals who held views which it saw as inimical to its purposes. Such a removal did not infringe the members’ rights of freedom of speech. . .
Cited – In re Steed CA 26-Jan-1960
The court considered an application under the 1968 Act to vary a trust. The testator had shown in the terms of his will a particular purpose in creating a protective trust; that was to protect the life tenant from improvident dealings with property . .
Cited – In re S (an infant) CA 1965
A boy was received into the care of the local authority in 1954, when he was 5 weeks old. The local authority entrusted him to foster parents, who signed an agreement that the boy could be removed from them when required by an authorised person. In . .
Cited – Attorney General v Haberdashers’ Company 7-May-1791
Where a surplus to be distributed is an uncertain sum, the Master ought to report the shares in aliquot parts, not in money. The only way of administering a charity is under general direction to trustees; in case of misbehaviour there must be a new . .
Cited – Attorney-General, At The Relaion Of Barrett And Hayman v The Mayor, Bailiffs, And Commonalty Of The City Of Exeter, Defendants 10-Mar-1826
Semble. It is not a general rule of a court of equity, that a charitable gift for the benefits of the poor is to be confined to such poor as do not receive parish relief. Where trustees of a charity, under an instrument of doubtful construction, . .
Cited – Randell, In re; Randell v Dixon ChD 10-Feb-1888
A testatrix bequeathed pounds 14,000 on trust to pay the income to the incumbent of the church at H. for the time being so long as he permitted the sittings to be occupied free : in case payment for sittings was ever demanded, she directed the . .
Cited – Garnham v PC and Others 13-Mar-2012
(Royal Court – Samedi) . .
Cited – Cowan v Scargill and Others ChD 13-Apr-1984
Trustee’s duties in relation to investments
Within the National Coal Board Pension scheme, the trustees appointed by the NCB were concerned at the activities of the trustees of the miners, and sought directions from the court. The defendants refused to allow any funds to be invested abroad. . .
Cited – McPhail v Doulton (on appeal from In re Baden’s Deed Trusts) HL 6-May-1970
The settlor asked whether the test for validity, in point of certainty of objects, is the same for trusts and powers, or whether the test for trusts is more demanding.
Held: The test is the same. The context was a provision, held to be a . .

Cited by:

Cited – Butler-Sloss and Others v The Charity Commission for England and Wales and Another ChD 29-Apr-2022
Principles allowing Ethical Investment by Trustees
Should charities, whose principal purposes are environmental protection and improvement and the relief of poverty, be able to adopt an investment policy that excludes many potential investments because the trustees consider that they conflict with . .
Lists of cited by and citing cases may be incomplete.

Charity, Company

Updated: 04 May 2022; Ref: scu.652834

Sinclair Investments (UK) Ltd v Versailles Trade Finance Ltd and Others: CA 29 Mar 2011

The appellant challenged a decision that it was not entitled to a proprietary interest in the proceeds of sale of some shares which had been acquired with the proceeds of a breach of trust. Specifically, the claims gave rise to (i) an issue as to the circumstances in which a proprietary interest arises, (ii) an issue as to what constitutes sufficient notice to defeat a person’s claim that he is a purchaser for value without notice in good faith, and (iii) a number of other issues relating to tracing claims.
Held: The Court analysed the conflicting decisions on these issues and decided that it should follow Heiron and Lister, and Tyrrell, for a number of reasons.
The court decided not to follow a decision of the Privy Council. Lord Neuberger MR said: ‘We should not follow the Privy Council decision in Reid [1994] 1 AC 324 in preference to decisions of this court, unless there are domestic authorities which show that the decisions of this court were per incuriam, or at least of doubtful reliability. Save where there are powerful reasons to the contrary, the Court of Appeal should follow its own previous decisions, and in this instance there are five such previous decisions. It is true that there is a powerful subsequent decision of the Privy Council which goes the other way, but that of itself is not enough to justify departing from the earlier decisions of this court . . I do not suggest that it would always be wrong for this court to refuse to follow a decision of the Privy Council in preference to one of its own previous decisions, but it the general rule is that we follow our previous decisions, leaving it to the Supreme Court to overrule those decisions if it is appropriate to do so.’

Judges:

Lord Neuberger MR, Richards, Hughes LJJ

Citations:

[2011] EWCA Civ 347, [2011] Bus LR 1126, [2011] 3 WLR 1153, [2011] WTLR 1043, [2012] Ch 453

Links:

Bailii

Jurisdiction:

England and Wales

Citing:

See Also – Sinclair Investment Holdings Sa v Versailles Trade Finance Ltd and Another CA 12-May-2005
. .
See Also – Sinclair Investment Holdings Sa v Versailles Trade Finance Ltd and others CA 25-Jan-2005
leave . .
Appeal from – Sinclair Investments (UK) Ltd v Versailles Trade Finance Ltd and Others ChD 30-Jun-2010
Lord Neuberger MR said that Carl Zeiss ‘supports the proposition that notice of a claim is not the same as notice of a right’. . .

Cited by:

Cited – FHR European Ventures Llp and Others v Cedar Capital Partners Llc SC 16-Jul-2014
Approprietary remedy against Fraudulent Agent
The Court was asked whether a bribe or secret commission received by an agent is held by the agent on trust for his principal, or whether the principal merely has a claim for equitable compensation in a sum equal to the value of the bribe or . .
Cited – Michael Wilson and Partners Ltd v Sinclair and Others ComC 21-Sep-2012
The claimant company alleged that the defendants had variously received assests (shares and cash) acquired by a former partner in the claimant company and held on his behalf, in breach of his obligations to the caimant partnership. The defendants . .
Cited – Willers v Gubay ChD 15-May-2015
The court was asked whether the tort of malicious prosecution of civil proceedings is known to English law.
Held: The Crawfod Adjusters case should not be followed: ‘If I am not bound by Gregory, then I see no reason for departing from the . .
Mentiuoned – Scott v Bridge and Others ChD 25-Nov-2020
Claim to recover money and property said to have been transferred by the claimant to the defendants or one or more of them. The money concerned came from a bank account belonging to the claimant. The property concerned consisted of two . .
Lists of cited by and citing cases may be incomplete.

Equity, Company

Updated: 02 May 2022; Ref: scu.431559

Re Halt Garage (1964) Ltd: ChD 1982

The company was a husband-and-wife business running a garage. They worked hard to build up the business, which included recovering broken-down vehicles from the nearby M1. They paid themselves modest remuneration as directors. In 1967 the wife became seriously ill and the couple decided to move to the Isle of Wight. They failed to sell the business and the husband was commuting between the Isle of Wight and Bedfordshire looking after his wife and the ailing business. Other misfortunes followed and the company went into insolvent liquidation in 1971. The liquidator challenged the propriety of director’s remuneration paid to the husband and wife during the company’s decline.
Held: The court upheld the husband’s remuneration but disallowed most of the wife’s last two years’ remuneration.
The amount of remuneration awarded to a director is a matter of company management, and that provided there has been a genuine exercise of the company’s power to award remuneration, it is not for the court to determine if, or to what extent, the remuneration awarded was reasonable. However,, if the director’s remuneration was excessive or unreasonable, it would not avail him to argue that the matter had been decided by the company as a matter of company management.
Oliver J said: ‘The real question is, were these payments genuinely director’s remuneration? If your intention is to make a gift out of the capital of the company, you do not alter the nature of that by giving it another label and calling it ‘remuneration’.’ If the label of remuneration does not square with the facts, the facts will prevail and the result may be an unlawful distribution, even if the directors in question intended no impropriety. Oliver J said: ‘In the absence of any evidence of actual motive, the court must, I think, look at the matter objectively and apply the standard of reasonableness.’
and ‘But it is said that Parke’s case and the cases which preceded it were all cases where what the court had to consider was the test to be applied where reliance was being placed, either by directors or by a general meeting, on an implied power, whereas the power in the instant case, which is written into the company’s constitution and is not subject to any expressed limitation, is an express power.’

Judges:

Oliver J

Citations:

[1982] 3 All ER 1016

Jurisdiction:

England and Wales

Citing:

Cited – Parke v Daily News Ltd 1962
The company which had sold its business, through its Board of Directors, had resolved to pay 1 million pounds to its former workers and the widows of such former workers. A shareholder sought to prevent this happening on the ground that such a . .

Cited by:

Cited – Progress Property Company Ltd v Moorgarth Group Ltd SC 8-Dec-2010
The appellants appealed against rejection of their claim that there had been an unlawful distribution of capital when the appellant had sold the share capital of a subsidary at an undervalue to the respondent purchaser. The valuation had . .
Lists of cited by and citing cases may be incomplete.

Company

Updated: 02 May 2022; Ref: scu.427162

Steckel v Ellice: 1973

A salaried partner can be a true partner. Megarry J said that of a salaried partner that ‘I do not see why he should not be a true partner, at all events if he is entitled to share in the profits on winding up’ . . and ‘Certain aspects of a salaried partnership are not disputed. The term ‘salaried partner’ is not a term of art, and to some extent it may be said to be a contradiction in terms. However, it is a convenient expression which is widely used to denote a person who is held out to the world as being a partner, with his name appearing as a partner on the notepaper of the firm and so on. At the same time, he receives a salary as remuneration, rather than a share of the profits, though he may, in addition to his salary, receive some bonus or other sum of money dependent upon the profits. Quoad the outside world it often will matter little whether a man is a full partner or a salaried partner; for a salaried partner is held out as being a partner, and the partners will be liable for his acts accordingly. But within the partnership it may be important to know whether a salaried partner is truly to be classified as a mere employee, or as a partner . . It seems to me impossible to say that as a matter of law a salaried partner is or is not necessarily a partner in the true sense. He may or may not be a partner, depending on the facts. What must be done, I think, is to look at the substance of the relationship between the parties; and there is ample authority for saying that the question whether or not there is a partnership depends on what the true relationship is, and not on any mere label attached to that relationship.’

Judges:

Megarry J

Citations:

[1973] 1 WLR 191

Cited by:

Cited – Tiffin v Lester Aldridge Llp EAT 16-Nov-2010
EAT CONTRACT OF EMPLOYMENT – Whether established
The Claimant, who is a solicitor, became a salaried partner in a partnership, which became a Limited Liability Partnership, which was the Respondent. The . .
Lists of cited by and citing cases may be incomplete.

Employment, Company

Updated: 02 May 2022; Ref: scu.426461

Clark v Balm, Hill and Co: 1908

A company registered in Guernsey issued debentures creating floating charges over real and personal property in England. The court was asked whether the debentures ought to be deemed to be within the Bills of Sales Acts and so ought to have been registered as bills of sale in circumstances where the company was not obliged by the law of Guernsey to keep a register of charges.
Held: The court applied Read v Joannon and Standard Manufacturing in the effect that all debentures of incorporated bodies were exempt from the Act of 1878; ‘there was a little error in the judgment of Vaughan Williams J.’ in Great Northern Ry. Co. and, ‘I must say that the reasoning of Wills J. in [Read v Joannon] commends itself to my mind.’

Judges:

Phillimore J

Citations:

[1908] 1 KB 667

Jurisdiction:

England and Wales

Citing:

Cited – In re Standard Manufacturing Co CA 1891
Company debentures were expressly excepted from the operation of the Bills of Sales Act (1878) Amendment Act 1882 by section 17 of that Act because they were debentures ‘issued by any mortgage, loan, or other incorporated company’. Nor were . .

Cited by:

Cited – Online Catering Ltd v Acton and Another CA 10-Feb-2010
The claimant agreed for the defendant to repair its fleet of vehicles. The defendant, having fees outstanding, entered the claimants’ premises and removed vehicles saying falsely that they were to be repaired, and then refused to return them. The . .
Cited – N V Slavenburg’s Bank v Intercontinental Natural Resources Ltd ChD 1980
The Bermudan company defendant had assigned stocks as a security. The security was not registered, and nor did the company have any registration within the UK. It was not the practice of the Registrar of Companies to accept particulars of charges . .
Lists of cited by and citing cases may be incomplete.

Company

Updated: 02 May 2022; Ref: scu.414893

Read v Joannon: 1890

The court considered the application of the 1878 Act.
Held: Where there are a series of Acts dealing with a topic and with similar names, the words ‘this Act’ in expressions such as ‘in this Act’ or ‘under this Act’ must be construed to mean the combined Acts.
Wills J said: ‘I am of the same opinion; and I agree with my Lord, on consideration, that debentures of an incorporated company are not, and were never intended to be within the operation of the Act of 1878.’
Lord Coleridge CJ said: ‘The question is, whether a debenture of an incorporated company requires registration as a bill of sale. I am of the opinion – and I think it right to say that my opinion does not stand alone, but is supported by that of a judge of much greater authority than myself, whom I have had the opportunity of consulting – that such debentures are not bills of sale, and are not struck at by either of these Acts of Parliament – that they were never within the Act of 1878 and are expressly exempted from the operation of the Act of 1882.’

Judges:

Wills J, Lord Coleridge CJ

Citations:

(1890) 25 QBD 300

Statutes:

Bills of Sale Act 1878 4, Bills of Sale Act 1882

Cited by:

Cited – Online Catering Ltd v Acton and Another CA 10-Feb-2010
The claimant agreed for the defendant to repair its fleet of vehicles. The defendant, having fees outstanding, entered the claimants’ premises and removed vehicles saying falsely that they were to be repaired, and then refused to return them. The . .
Applied – In re Standard Manufacturing Co CA 1891
Company debentures were expressly excepted from the operation of the Bills of Sales Act (1878) Amendment Act 1882 by section 17 of that Act because they were debentures ‘issued by any mortgage, loan, or other incorporated company’. Nor were . .
Cited – N V Slavenburg’s Bank v Intercontinental Natural Resources Ltd ChD 1980
The Bermudan company defendant had assigned stocks as a security. The security was not registered, and nor did the company have any registration within the UK. It was not the practice of the Registrar of Companies to accept particulars of charges . .
Lists of cited by and citing cases may be incomplete.

Contract, Company

Updated: 02 May 2022; Ref: scu.408564

Welton v Saffery: 1897

Lord Davey said: ‘Of course, individual shareholders may deal with their own interests by contract in such way as they may think fit. But such contracts, whether made by all or some only of the shareholders, would create personal obligations, or an exceptio personalis against themselves only, and would not become a regulation of the company, or be binding on the transferees of the parties to it, or upon new or non-assenting shareholders.’

Judges:

Lord Davey

Citations:

[1897] AC 29

Cited by:

Approved – Russell v Northern Bank Development Corporation Limited and Others HL 15-Jul-1992
Four directors of the company agreed with each other not to create further share capital. A director seeking to enforce the agreement, appealed against a judgment that the agreement was invalid in seeking to fetter the company’s stautory powers.
Cited – Grays Timber Products Ltd v Revenue and Customs SC 3-Feb-2010
An assessment to income tax had been raised after the employee resold shares in the company issued through the employees’ share scheme at a price which the Revenue said was above the share value. The company appealed against a finding that tax was . .
Lists of cited by and citing cases may be incomplete.

Company

Updated: 02 May 2022; Ref: scu.396608

Bedford v Deakin And Two Others: 1816

The plaintiff holding a bill of exchange as a security from three partners, after the dissolution of the copartnership, and after the bankruptcy of one of them, takes the notes of one of them as a collateral security, without the knowledge of the other partners and retains, the original security in his hands. This does not discharge the other partners.

Citations:

[1816] EngR 14, (1816-1819) 2 Stark 178, (1816) 171 ER 612 (B)

Links:

Commonlii

Company, Insolvency

Updated: 02 May 2022; Ref: scu.333707

Baring v Noble: 9 Mar 1831

The creditor of a partnership, in which one of the partners dies, and the surviving partners afterwards become bankrupt, has a right to resort to the assets of the deceased partner for payment, without regard to the state of the account as between such deceased partner and the surviving partners.

Citations:

[1831] EngR 491, (1831) 2 Russ and My 495, (1831) 39 ER 482

Links:

Commonlii

Citing:

See Also – Devaynes v Noble; Baring v Noble, Clayton’s Case CA 1816
A partner in a banking firm died. The surviving partners continued to trade without making any changes. They later fell into bankruptcy. Creditors of the bank at the date of the death still traded with the bank with varying changes in their banking . .
Lists of cited by and citing cases may be incomplete.

Company

Updated: 02 May 2022; Ref: scu.320369

The West Cornwall Railway Company v Mowatt: 4 Jun 1850

Debt for calls on railway shares : plea, that defendant was not shareholder : issue thereon. A special verdict found that, by agreement of 21st July 1847, between the directors of the railway company and defendant, he agreed to take all the unappropriated shares in the compariy, being 4935, and to pay 4l. per share on 15th August then next, and, meanwhile, to deposit securities to the amount of 20,000l. ; and the company agreed that, ‘so soon as 15l. per share shall have been paid on the 4935 shares, and that the company is in a position legally to do so, they shall deliver’ to defendant mortgage debentures of the company payable three years after date, and bearing 5 per cent. interest, for 24,675l, being at the rate of 5l. per share. At a meeting of the shareholders, on 10th August 1847, convened for the purpose, the agreement was confirmed by the shareholders, and the shares were registered to defendant with his consent. The call, on which the action was brought, was made in December 1847. Held, that the production of the register made a prima facie case that defendant was a shareholder, which case was not rebutted by any thing in the other evidence; that, even if the stipulation to deliver mortgage debentures in consideration of the shares taken were illegal, this would be no defence, as the action was not on the agreement, and the agreement had been, in part, executed by the transfer of the shares, which transfer took effect in praesenti. But that the stipulation to deliver such debentures, as soon as the company should be in a position legally to do so, was not illegal.

Citations:

[1850] EngR 623, (1850) 15 QB 521, (1850) 117 ER 556

Links:

Commonlii

Company

Updated: 02 May 2022; Ref: scu.297970

Prole v Masterman: 24 Jul 1855

A suit was instituted against the directors of an abortive company, to make them liable for acts of mismanagement and for the misapplication of its funds. This was compromised by an order on the Defendants to pay a fixed sum, One of them having paid more than his share : Held, that he could sustain a suit simply for contribution in respect of the compromise, and that the co-directors were not entitled without a cross-bill, to make the Plaintiff, at the same time, account for his general Iiabilities to the company.

Citations:

[1855] EngR 704, (1855) 21 Beav 61, (1855) 52 ER 781

Links:

Commonlii

Company

Updated: 02 May 2022; Ref: scu.292626

Robert Hull Terrell v James Button: 16 Mar 1854

The intention of the 11th and 12th Vict. c. 45 (the Winding Up Act of 1848), was to provide for debts recoverable only in equity, as well as for those recoverable at law ; and the Master has an uncontrolled discretion (subject to appeal) to allow or disallow, or to allow as a claim only, according to the proofs adduced before him, any demand against a Company.
Certain persons proposed to form a company; they employed A. as their solicitor; he was so named, on provisional registration, under the joint Stock Company’s Act; the Directors were not to be personally liable to the officers of the Company ; the solicitor was continuously employed, until after the company had been completely formed and registered, and until it was wound up. The 44th article of the deed of settlement declared, that ‘a sufficient part of the funds of the Company should, upon complete registration, be appropriated in payment of the expenses of and incidental to the formation of the Company, including those of or having reference to the preparation and execution of that deed.’ When the Company was before the Master on the Winding-up Act, the solicitor presented a demand for services from the earliest period up to that time. The Master allowed the demand as a claim only, and not as a debt, leaving the solicitor to proceed at law : Held, reversing an order of Vice Chancellor Kindersley which had permitted the order of the Master to stand, that the Master ought to have allowed this demand as a debt, but subject to proof that the items came under the description contained in the 44th article, and subject also to taxation. As the solicitor had omitted to bring the 44th article to the notice of the Vice Chancellor, his order, though reversed, was reversed without costs.

Citations:

[1854] EngR 361, (1854) 4 HLC 1091, (1854) 10 ER 790

Links:

Commonlii

Statutes:

Winding Up Act of 1848

Company, Legal Professions, Insolvency

Updated: 02 May 2022; Ref: scu.293218

The Electric Telegraph Company Of Ireland Cookney’s Case: 19 Jul 1858

A. gave to B. a cheque for andpound;50 to obtain fifty shares in a company. B applied for fifty shares, and they were allotted to A, and his name was entered in the books, andc., as a shareholder. It did not appear that anything had been done further than that A. had refused to sign the deed. Held, that not having repudiated the shares, he was a contributory Held, also, that a change iri the company’s books in the the number of the shares first allotted to B. did not relieve him from his liability.

Citations:

[1858] EngR 1000, (1858) 26 Beav 6, (1858) 53 ER 798

Links:

Commonlii

Company

Updated: 02 May 2022; Ref: scu.289471

In The Matter Of The Electric Telegraph Company Of Ireland, And In The Matter Of The Joint Stock Companies Winding-Up Acts, 1848 And 1849 Cookney’s Case: 3 Nov 1858

Shares in a company which was in the course of formation were allotted to an applicant whose application was merely a verbal request to a director to obtain the shares, but who subsequently paid the deposit. On being requested to execute the deed af settlement the allottee refused to do so. The company afterwards obtained an Act of Parliament, and in the register of shareholders made under the Act the name of the allottee, omitting however his first Christian name, was inserted in the register as a shareholder in respect of the same number of shares as had been allotted to him, but which were differently numbered, numbers corresponding to those on the allotment being ascribed in the new register to another shareholder. Held, that no written agreement to take shares was necessary, but that the Appellant had become liable as a contributory, and was not relieved from his liability either by his refusal to execute the deed, by the change in the numbers of the shares ascribed to him, or by the mistake in his name.

Citations:

[1858] EngR 1072, (1858) 3 De G and J 170, (1858) 44 ER 1233

Links:

Commonlii

Company

Updated: 02 May 2022; Ref: scu.289543

The Metropolitan Saloon Omnibus Company v Hawkins: CEC 2 Dec 1858

The plaintiff, a company incorporated under the Joint Stock Companies Act 1856 sued in respect of a libel imputing to it insolvency, mismanagement and dishonest carrying on of its affairs.
Held: The action was maintainable. Pollock CB said: ‘That a corporation at common law can sue in respect of a libel there is no doubt. It would be monstrous if a corporation could maintain no action for slander of title through which they lost a great deal of money. It could not sue in respect of an imputation of murder, or incest, or adultery, because it could not commit those crimes. Nor could it sue in respect of a charge of corruption, for a corporation cannot be guilty of corruption, although the individuals composing it may. But it would be very odd if a corporation had no means of protecting itself against wrong; and if its property is injured by slander it has no means of redress except by action. Therefore it appears to me clear that a corporation at common law may maintain an action for a libel by which its property is injured.’

Judges:

Pollock CB

Citations:

[1859] EngR 234, (1859) 4 H and N 146, (1859) 157 ER 792, [1859] EngR 252, (1859) 4 H and N 87, (1859) 157 ER 769, [1858] EngR 1210 (B), (1858) 1 F and F 413

Links:

Commonlii, Commonlii, Commonlii

Cited by:

Cited – Derbyshire County Council v Times Newspapers Ltd and Others HL 18-Feb-1993
Local Council may not Sue in Defamation
Local Authorities must be open to criticism as political and administrative bodies, and so cannot be allowed to sue in defamation. Such a right would operate as ‘a chill factor’ on free speech. Freedom of speech was the underlying value which . .
Lists of cited by and citing cases may be incomplete.

Company, Defamation

Updated: 02 May 2022; Ref: scu.289681

Bouche v Sproule: 1887

Lord Bramwell discussed the capitalisation of undistributed profis within a partnership: ‘Where there is a partnership, whether an ordinary partnership or an incorporated partnership . . There the undivided profits of any period, a year or shorter or longer time, continue to be undivided profits unless something in the articles of partnership or some agreement by all the partners make them capital. They do not become capital by effluxion of time or by their being used in the trading’.

Citations:

(1887) 12 App Cas 385

Jurisdiction:

England and Wales

Cited by:

Cited – Hopper and Another v Hopper CA 12-Dec-2008
Appeals were made after an order declaring an account a between former partners in a wholesale fruit and vegetable business. The dispute related to the applicability of limitation to undrawn profit shares, and the doctrine of Laches.
Held: The . .
Lists of cited by and citing cases may be incomplete.

Company

Updated: 02 May 2022; Ref: scu.278695

Singularis Holdings Ltd v Daiwa Capital Markets Europe Ltd: SC 30 Oct 2019

The Court was asked whether a claim against a bank for breach of the Quincecare duty is defeated if the customer is a company, and the fraudulent payment instructions are given by the company’s Chairman and sole shareholder who is the dominating influence over the company’s affairs. That shareholder had given the bank instructions for various payments intended to defeat the company’s creditors. The bank now appealed against a finding that it was liable for the payments.
Held: The appeal failed. An implied term (‘Quincecare Duty’) of the contract between a bank and its customer is that the bank owes a duty not to execute the customer’s order if it knows the order to be dishonestly given, or shuts its eyes to obvious dishonesty, or acts recklessly in failing to make inquiries.
The Quincecare duty strikes a careful balance between the interests of the customer and those of the bank and denying the claim would not enhance the integrity of the law, the purpose of the Quincecare duty is to protect the bank’s customers from harm caused by people for whom the customer is responsible.
There was no universal rule to attribute the fraudulent acts of a sole shareholder and director to the company.

Judges:

Lady Hale, President, Lord Reed, Deputy President, Lord Lloyd-Jones, Lord Sales, Lord Thomas

Citations:

[2019] UKSC 50, [2019] 2 CLC 743, [2020] 2 BCLC 392, [2019] Bus LR 3086, [2020] Lloyd’s Rep FC 54, [2019] WLR(D) 608, [2019] 3 WLR 997, [2020] BCC 89, [2020] 1 Lloyd’s Rep 47, [2020] AC 1189, [2020] PNLR 5, [2020] 1 All ER 383, [2020] 1 All ER (Comm) 1, UKSC 2018/0039

Links:

Bailii, Bailii Summary, WLRD, SC, SC Summary, SC Summary Video, SC 2019 Jul 23 am Video, SC 2019 Jul 24 am Video, SC 2019 Jul 24 pm Video

Jurisdiction:

England and Wales

Citing:

Appeal from – Singularis Holdings Ltd v Daiwa Capital Markets Europe Ltd CA 1-Feb-2018
The court was asked whether the defence of illegality is available to allow a bank to defeat a claim in negligence and breach of contract brought by its corporate customer.
Held: The Court of Appeal unanimously dismissed the appeal. Mr Al . .
Cited – Barclays Bank plc v Quincecare Ltd QBD 1992
The relationship of banker and customer is that of agent and principal: ‘Primarily, the relationship between a banker and customer is that of debtor and creditor. But quoad the drawing and payment of the customer’s cheques as against the money of . .
At First Instance – Singularis Holdings Ltd v Daiwa Capital Markets Europe Ltd ChD 16-Feb-2017
Claim for return of money said to be held for the claimant’s benefit by a stockbroker.
Held: Rose J dismissed the dishonest assistance claim because Daiwa’s employees had acted honestly. However, she upheld the negligence claim, while making a . .
Cited – Patel v Mirza SC 20-Jul-2016
The claimant advanced funds to the respondent for him to invest in a bank of which the claimant had insider knowledge. In fact the defendant did not invest the funds, the knowledge was incorrect. The defendant however did not return the sums . .
Cited – Barings Plc and Another v Coopers and Lybrand (A Firm) and others ChD 20-Mar-2002
. .
Cited – Barings Plc and Another v Coopers and Lybrand (A Firm) and Others ChD 11-Jun-2003
Evans-Lombe J expressed an unwillingness to accept any all-embracing test for what may constitute the breaking of the chain of causation, saying: ‘It seems to me that what will constitute such conduct is so fact-sensitive to the facts of any case . .
Cited – Salomon v A Salomon and Company Ltd HL 16-Nov-1896
A Company and its Directors are not same paersons
Mr Salomon had incorporated his long standing personal business of shoe manufacture into a limited company. He held nearly all the shares, and had received debentures on the transfer into the company of his former business. The business failed, and . .
Cited – Luscombe v Roberts 1962
A solicitor’s claim against his negligent accountants failed because he knew that what he was doing – transferring money from his clients’ account into his firm’s account and using it for his own purposes – was wrong. . .
Cited – In re King CA 4-Feb-1963
. .
Cited – Jetivia Sa and Another v Bilta (UK) Ltd and Others SC 22-Apr-2015
The liquidators of Bilta had brought proceedings against former directors and the appellant alleging that they were party to an unlawful means conspiracy which had damaged the company by engaging in a carousel fraud with carbon credits. On the . .
Cited – Moore Stephens (A Firm) v Stone Rolls Ltd (in liquidation) HL 30-Jul-2009
The appellants had audited the books of the respondent company, but had failed to identify substantial frauds by an employee of the respondent. The auditors appealed a finding of professional negligence, relying on the maxim ex turpi causa non . .
Cited – Commissioner of Police for the Metropolis v Reeves (Joint Administratix of The Estate of Martin Lynch, Deceased) HL 15-Jul-1999
The deceased was a prisoner known to be at risk of committing suicide. Whilst in police custody he hanged himself in his prison cell. The Commissioner accepted that he was in breach of his duty of care to the deceased, but not that that breach was . .
Cited – Meridian Global Funds Management Asia Ltd v Securities Commission PC 26-Jun-1995
(New Zealand) The New Zealand statute required a holder of specified investments to give notice of its holding to a regulator as soon as it became aware of its holding. Unbeknown to any others in the company apart from one colleague, its chief . .
Lists of cited by and citing cases may be incomplete.

Banking, Company

Updated: 02 May 2022; Ref: scu.642832

Tribe v Tribe: CA 26 Jul 1995

Illegal intent alone rebutted presumption

The plaintiff held 499 of the 500 issued shares of a company. In 1986 he wished to retire and transferred 30 shares to his son, one of four children, who was to take over the business. In 1988 he was worried about a bill for dilapidations, and, to safeguard his position and with the intention of defrauding his creditors, he transferred the remaining shares. The judge found that the father and the son had agreed that the shares would be held on trust for the father pending the settlement of the dilapidation claims.
Held: The illegal (but unused) purpose of a gift was admitted as evidence to rebut the presumption of advancement.
Millett LJ ‘But it does not follow that subsequent conduct is necessarily irrelevant. Where the existence of an equitable interest depends upon a rebuttable presumption or inference of the transferor’s intention, evidence may be given of the subsequent conduct in order to rebut the presumption or inference which would otherwise be drawn.’ and
‘In my opinion the following propositions represent the present state of the law. (1) Title of property passes both at law and in equity even if the transfer is made for an illegal purpose. The fact that title has passed to the transferee does not preclude the transferor from bringing an action for restitution. (2) The transferor’s action will fail if it would be illegal for him to retain any interest in the property. (3) Subject to (2) the transferor can recover the property if he can do so without relying on the illegal purpose. This will normally be the case where the property was transferred without consideration in circumstances where the transferor can rely on an express declaration of trust or a resulting trust in his favour. (4) It will almost invariably be so where the illegal purpose has not been carried out. It may be otherwise where the illegal purpose has been carried out and the transferee can rely on the transferor’s conduct as inconsistent with his retention of a beneficial interest. (5) The transferor can lead evidence of the illegal purpose whenever it is necessary for him to do so provided that he has withdrawn from the transaction before the illegal purpose has been wholly or partly carried into effect. It will be necessary for him to do so (i) if he brings an action at law or (ii) if he brings proceedings in equity and needs to rebut the presumption of advancement. (6) The only way in which a man can protect his property from his creditors is by divesting himself of all beneficial interest in it. Evidence that he transferred the property in order to protect it from his creditors, therefore, does nothing by itself to rebut the presumption of advancement; it reinforces it. To rebut the presumption it is necessary to show that he intended to retain a beneficial interest and conceal it from his creditors. (7) The court should not conclude that this was his intention without compelling circumstantial evidence to this effect. The identity of the transferee and the circumstances in which the transfer was made would be highly relevant. It is unlikely that the court would reach such a conclusion where the transfer was made in the absence of an imminent and perceived threat from known creditors.’
Nourse LJ observed that: ‘the presumption of advancement has . . fallen into disfavour’.

Judges:

Millett LJ, Nourse LJ

Citations:

Gazette 15-Sep-1995, Times 14-Aug-1995, [1996] Ch 107, [1995] 3 WLR 913, [1995] EWCA Civ 20, [1995] 4 All ER 236, [1995] 2 FLR 966

Links:

Bailii

Jurisdiction:

England and Wales

Cited by:

Cited – Lavelle v Lavelle and others CA 11-Feb-2004
Property had been purchased in the name of of the appellant by her father. She appealed a finding that the presumption of advancement had been rebutted.
Held: The appeal failed. The presumption against advancement had been rebutted on the . .
Cited – Collier v Collier CA 30-Jul-2002
Fraudulent Intent Negated Trust
The daughter claimant sought possession of business premises from her father who held them under leases. He claimed an order that the property was held in trust for him. The judge that at the time the properties were conveyed, the father had been . .
Cited – Ben Hashem v Ali Shayif and Another FD 22-Sep-2008
The court was asked to pierce the veil of incorporation of a company in the course of ancillary relief proceedings in a divorce. H had failed to co-operate with the court.
After a comprehensive review of all the authorities, Munby J said: ‘The . .
Cited – Patel v Mirza SC 20-Jul-2016
The claimant advanced funds to the respondent for him to invest in a bank of which the claimant had insider knowledge. In fact the defendant did not invest the funds, the knowledge was incorrect. The defendant however did not return the sums . .
Lists of cited by and citing cases may be incomplete.

Equity, Company

Leading Case

Updated: 02 May 2022; Ref: scu.89990

Rex v Dodd: KBD 30 May 1808

Lord Ellenborough discussed the first attempts to set up companies with limited liability.

Judges:

Lord Ellenborough LCJ

Citations:

[1808] EngR 224, (1808) 9 East 516, (1808) 103 ER 670

Links:

Commonlii

Jurisdiction:

England and Wales

Company

Updated: 01 May 2022; Ref: scu.270284

Re Oceanic Steam Navigation Co Ltd: 1939

In the case of an insolvent company, in which the shareholders have no interest of any value, the court may sanction a scheme which leaves them with nothing.

Citations:

[1939] Ch 41

Cited by:

Cited – Cambridge Gas Transport Corp v Official Committee of Unsecured Creditors (of Navigator Holdings Plc and Others) PC 16-May-2006
(Isle of Man) A scheme of arrangement was proposed for a company with involvement in several jurisdictions. An order in New York sought assistance in the vesting of shares and assets in the Isle of Man in the creditors committee. Cambridge was a . .
Lists of cited by and citing cases may be incomplete.

Insolvency, Company

Updated: 01 May 2022; Ref: scu.266728

Borland’s Trustee v Steel Brothers: 1901

Farwell J defined a share: ‘a share is the interest of a shareholder in the company measured by a sum of money, for the purpose of liability in the first place, and of interest in the second’.

Judges:

Farwell J

Citations:

[1901] 1 Ch 279

Cited by:

Cited – Cambridge Gas Transport Corp v Official Committee of Unsecured Creditors (of Navigator Holdings Plc and Others) PC 16-May-2006
(Isle of Man) A scheme of arrangement was proposed for a company with involvement in several jurisdictions. An order in New York sought assistance in the vesting of shares and assets in the Isle of Man in the creditors committee. Cambridge was a . .
Lists of cited by and citing cases may be incomplete.

Company

Updated: 01 May 2022; Ref: scu.266727

Union Bank of Australia Ltd v McClintock: PC 1922

Where a partner obtains money by drawing on a partnership bank account without authority, he alone and not the partnership obtains legal title to the money so obtained.

Citations:

[1922] 1 AC 240

Cited by:

Applied – Commercial Banking Co of Sydney Ltd v Mann PC 1961
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 . .
Cited – Lipkin Gorman (a Firm) v Karpnale Ltd HL 6-Jun-1991
The plaintiff firm of solicitors sought to recover money which had been stolen from them by a partner, and then gambled away with the defendant. He had purchased their gaming chips, and the plaintiff argued that these, being gambling debts, were . .
Lists of cited by and citing cases may be incomplete.

Commonwealth, Company

Updated: 01 May 2022; Ref: scu.259436

Dean v Prince: 1953

An auditor had valued the shares in a private company under its articles. The court was asked to look behind the valuation: ‘In my judgment the valuation cannot stand. I propose, therefore, to declare that the valuation is not binding upon the plaintiff, and, if necessary – though I doubt if it can be necessary to restrain the defendant company from acting upon the valuation. The plaintiff asks the court to take upon itself the burden of ascertaining the valuation which should be made and then direct an inquiry on that footing. I decline to do either of those things. I do not see what jurisdiction the court has to put itself in the place of the expert that the parties have chosen. It may be that he would be unwilling to assume the burden of trying to do the same thing again, it may be that some agreement will be reached, and it may be that if and when he does come to a new decision one party or the other will refuse to carry it out. I do not propose to do any more than to relieve the plaintiff of any obligation that may be upon her to submit to the present valuation which could be implemented through the company, by the machinery which the articles provide, by the secretary signing the transfer of the shares.’

Judges:

Harman J

Citations:

[1953] 2 All ER 636, [1953] Ch 590

Cited by:

Appeal from – Dean v Prince CA 1954
The court had criticised an auditors’ valuation of a company’s shares.
Held: The criticism was not correct. However. if the court was satisfied that the valuation was made under a mistake, it would not be binding on the parties.
Denning . .
Cited – Smith v Gale ChD 1974
Three solicitors were in partnership. It was agreed that one would retire. He would take 10,000 pounds on retirement and his share of undrawn profits after an account had been taken. When the accountant certified the profits in line with previous . .
Lists of cited by and citing cases may be incomplete.

Company, Arbitration

Updated: 01 May 2022; Ref: scu.245124

Income Tax Commissioners for City of London v Gibbs: HL 1942

Lord Macmillan considered the construction of the word ‘person’ in the context of a partnership under Scots law: ‘The word ‘person’ is in the singular, but it includes the plural and also any body of persons corporate or unincorporate: Interpretation Act, 1889, s.1, sub-s.1(b), and s,19. In considering whether a partnership or a group of persons associated in partnership constitutes ‘a person charged’ within the meaning of the rule, I think it right to lay aside any preconceptions derived either from the law of England or from the law of Scotland as to the technical legal nature of a partnership. In Scotland a firm is ‘a legal person distinct from the partners of whom it is ‘composed’: Partnership Act 1890, s.4, sub-s.2, but this is not so under English law. For the present purpose this distinction should, in my opinion, be disregarded . . The important thing to ascertain is the meaning of the word ‘person’ in the vocabulary of the Income Tax Acts. The word constantly occurs throughout the Acts, and I think that it is most generally used to denote what may be termed an entity of assessment, i.e., the possessor or recipient of an income which the Acts require to be separately assessed for tax purposes . . Having regard to the special vocabulary of the income tax legislation, I find no difficulty in interpreting the words ‘ person charged’ in r.9 to include the case of several persons associated together in partnership for the purpose of carrying on a trade in common whose profits are by the Acts made the subject of separate assessment and separate charge. ‘

Judges:

Lord Macmillan

Citations:

[1942] AC 402

Jurisdiction:

Scotland

Cited by:

Cited – National Grid Gas Plc, Regina (on the Application of) v The Environment Agency Admn 17-May-2006
The claimant sought a judicial review of the decision to hold them responsible for necessary works of remediation. They were statutory successors to British Gas Corporation.
Held: The legislation clearly attempted to hold the contaminator . .
Cited – Anson v Revenue and Customs SC 1-Jul-2015
Interpretation of Double Taxation Agreements
This appeal is concerned with the interpretation and application of a double taxation agreement between the United Kingdom and the United States of America. A had been a member of an LLP in Delaware, and he was resident within the UK, but not . .
Cited – Anson v Revenue and Customs SC 1-Jul-2015
Interpretation of Double Taxation Agreements
This appeal is concerned with the interpretation and application of a double taxation agreement between the United Kingdom and the United States of America. A had been a member of an LLP in Delaware, and he was resident within the UK, but not . .
Lists of cited by and citing cases may be incomplete.

Company

Updated: 01 May 2022; Ref: scu.242435

Re Curtain Dream plc: 1990

The company sought to finance its stock. It first sold it to a finance company, then repurchased it on terms including a retention of title clause.
Held: The whole transaction was, in its nature, a charge on the company’s assets, and as such was registerable as a company charge.

Judges:

Knox J

Citations:

[1990] BCLC 925

Cited by:

Cited – Dutton and Another v Davis and Another CA 4-May-2006
The appellant had transferred his property with the intention that it should be subject to a right on his part to repurchase it. He now said the sale was in practice merely a charge.
Held: The appeal failed. The legal nature of the transaction . .
Lists of cited by and citing cases may be incomplete.

Equity, Land, Company

Updated: 01 May 2022; Ref: scu.242530

In Re Holt; Holt v Inland Revenue Commissioners: ChD 1953

A basic rule in valuing shares in a company is to reject evidence of events which occurred after the valuation date. Danckwerts J said of his task: ‘The result is that I must enter into a dim world peopled by the indeterminate spirits of fictitious or unborn sales. It is necessary to assume the prophetic vision of a prospective purchaser at the moment of the death of the deceased, and firmly to reject the wisdom which might be provided by the knowledge of subsequent events . . By the terms of the section I have to imagine the price which the property would fetch if sold in the open market. This does not mean that a sale by auction (which would be improbable in the case of shares in a company) is to be assumed, but simply that a market is to be assumed from which no buyer is excluded . . At the same time, the court must assume a prudent buyer who would make full enquiries and have access to accounts and other information which would be likely to be available to him . .’

Judges:

Danckwerts J

Citations:

[1953] 2 All ER 1499

Jurisdiction:

England and Wales

Company

Updated: 01 May 2022; Ref: scu.241673

In re Wellington Publishing Company Ltd: 1973

(New Zealand) The company a target of a takeover raised money (including by raising a loan on security of the company’s assets). Those were then used to declare lawful dividends which were then declared to the takeover shareholder.
Held: The arrangement did not to infringe Section 62 Companies Act 1955. The giving of lawful dividends was just an incident of the company activities as the raising of lawful loans and the repayment of lawful debts.

Citations:

[1973] 1 NZLR 133

Cited by:

Cited – Anglo Petroleum Ltd v TFB (Mortgages) Ltd ChD 24-Feb-2006
The company sought to say that loans of 15 million pounds were void under s151 of the 1985 Act. It was said that the loans infringed the provisions of s151 being unlawful financial assistance.
Held: The loans were valid: ‘if it is lawful for a . .
Lists of cited by and citing cases may be incomplete.

Company, Commonwealth

Updated: 01 May 2022; Ref: scu.238729

Ali v Top Marques Car Rental Ltd and Others: ChD 3 Feb 2006

The claimant had sought an extension of time for registration of his charge over the company’s assets. The judge granted the request but delayed its implementation for 14 days to allow the company or other creditors to object. Companies House practice was to register the charge upon receipt of such an order, but not to issue a certificate until the delay period had expired. By mistake it issued the certificate immediately.
Held: The issue of the certificate had been contrary to the practice and expectations of all involved. Nevertheless, the issue of the certicate was conclusive and binding, and the terms of the original order were no longer operative, and the court had no jurisdiction to intervene.

Citations:

Times 10-Feb-2006

Statutes:

Companies Act 1985 404(1)

Jurisdiction:

England and Wales

Citing:

Cited – In re Charles and Co Ltd 1935
A court granting an order extending the period for registration of a company charge may allow a further delay before registration to allow for objections from other creditors. . .
Lists of cited by and citing cases may be incomplete.

Company

Updated: 01 May 2022; Ref: scu.238394

Steele v EVC International NV: 1996

Control of a company within the section means shareholder control.

Citations:

[1996] STC 785

Statutes:

Income and Corporation Taxes Act 1988 416

Jurisdiction:

England and Wales

Cited by:

Cited – Foulser and Another v HM Inspector of Taxes ChD 20-Dec-2005
The taxpayer company entered into an arrangement in which shares were purchased by a company based in Ireland and resold. A claim was made for holdover relief.
Held: The scheme failed. The restriction imposed did not infringe the right of . .
Lists of cited by and citing cases may be incomplete.

Taxes – Other, Company

Updated: 01 May 2022; Ref: scu.237703

Precision Dippings Ltd v Precision Dippings Marketing Ltd: 1986

The claimant had paid a dividend to its parent company. The claimant’s case was that the payment was in contravention of sections 39 and 43 of the Companies Act 1980, as there were no available profits at the time, and so were ultra vires the claimant. It sued the parent company and the two directors (Mr Wynne-Jones and Mr King), and sought summary judgment. The directors said, and for the purposes of the appeal it was accepted, that at the time of payment of the dividend they were not aware of the relevant requirements of the Companies Act 1980. They also said, and again it was accepted for the purposes of the appeal, that they were advised by the company’s auditors that the sum paid by way of dividend could be paid by way of dividend so long as the dividend was paid by way of available profits. At the time of the appeal the position was that the claimant accepted that the directors should have unconditional leave to defend the claim; the appeal was only against that part of the Judge’s order by which Precision Dippings Marketing Ltd had been given unconditional leave to defend. Repayment was sought under section 44(1) of the 1980 Act.
Held: As to the position of the directors under section 44(1), Dillon LJ: ‘There can be no doubt that because Mr Wynne-Jones and Mr King were the only shareholders in and directors of Marketing and were also the only directors of the company, Marketing must be taken to have known all the facts. But it did not in fact know the terms of sections 39 and 43.’

Judges:

Dillon L.J, Sir Edward Eveleigh

Citations:

[1986] 1 Ch 447

Statutes:

Companies Act 1980 39 43 44(1)

Cited by:

Cited – It’s A Wrap (UK) Ltd v Gula and Another ChD 16-Sep-2005
The defendant company directors were accused of having paid dividends to themselves when the company was in fact making a loss.
Held: A claim might lie, but the pleadings did not phrase it adequately, and an amendment would be improper. Though . .
Lists of cited by and citing cases may be incomplete.

Company

Updated: 30 April 2022; Ref: scu.230900

Yates v Finn: 1880

After the dissolution of a partnership, it was held right and equitable to divide the profits between the parties in accordance with their contributions to the capital of the partnership.

Citations:

(1880) 13 Ch D 839

Cited by:

Cited – Hardip Singh Gill v Kulbir Singh Sandhu ChD 26-Jan-2005
The partnership had been dissolved. It had involved conversion of a property to be run as a nursing home. The claimant was to manage the home, and the profits would be used first to pay him a salary, and then to be divided equally. When wound up . .
Lists of cited by and citing cases may be incomplete.

Company

Updated: 30 April 2022; Ref: scu.222920

Harrison-Broadley v Smith: CA 1964

The court has an inherent power to make declarations even though they have not been claimed in the proceedings. In order to give effect to a partnership, the partner who owns the premises on which the partnership business is carried on is taken to have granted a licence to the other partner or partners to enter upon the premises for the purposes of the partnership business
Pearson LJ considered it unnecessary to decide what ‘the strictly correct practice should be, because it is perfectly plain that this court ought to make some declaratory order’, even though none had been pleaded.

Judges:

Harman, Pearson and Davies LJJ

Citations:

[1964] 1 WLR 456

Jurisdiction:

England and Wales

Citing:

Cited – Goldsack v Shore CA 1950
Lord Evershed said: ‘If the subsection applies to it, it must be capable of being so modified (and that must mean modified consistently with its own terms) as to become enlarged into a tenancy from year to year.’ . .

Cited by:

Cited – Cowan v Scargill and Others ChD 13-Apr-1984
Trustee’s duties in relation to investments
Within the National Coal Board Pension scheme, the trustees appointed by the NCB were concerned at the activities of the trustees of the miners, and sought directions from the court. The defendants refused to allow any funds to be invested abroad. . .
Cited – Lie v Mohile ChD 11-Nov-2014
The parties had been in partnership as doctors in general practice. The respondent challenged an order made without notice restraining actions which might inhibit the claimant operating his practice. On oder dissolving the partnership had already . .
Lists of cited by and citing cases may be incomplete.

Litigation Practice, Company

Updated: 30 April 2022; Ref: scu.222829

Attorney-General v Great Northern Railway Co: 1860

A company incorporated by statute may only exercise those powers given to it by the statute. An Act creating a company is a contract between the company and the public, and there remains a public interest in its enforcement. A stranger to the company could therefore request the Attorney General to seek to enforce that contract against the company.

Citations:

(1860) 1 Drew and Som 154, (1860) 29 LJ Ch 794, (1860) 2 LT 653

Company

Updated: 30 April 2022; Ref: scu.222837

Konamameni v Rolls Royce Industrial Power (India) Ltd: 2002

The entitlement to bring a derivative action in the English courts is governed by the law of the place of incorporation of the company in question.

Citations:

[2002] 1 All ER 979

Cited by:

Cited – Harding v Wealands CA 17-Dec-2004
The claimant sought damages here for a road traffic accident which had occurred in Australia. The defendant was working in England. The defendant argued that the law of New South Wales applied.
Held: The general rule in section 11 was not to . .
Lists of cited by and citing cases may be incomplete.

Company, Jurisdiction

Updated: 30 April 2022; Ref: scu.222529

In re Barcelona Traction, Light and Power Co Ltd (Belgium v Spain) (second phase): ICJ 5 Feb 1970

ICJ The claim arose out of the adjudication in bankruptcy in Spain of Barcelona Traction, a company incorporated in Canada. Its object was to seek reparation for damage alleged by Belgium to have been sustained by Belgian nationals, shareholders in the company, as a result of acts said to be contrary to international law committed towards the company by organs of the Spanish State. The Court found that Belgium lacked jus standi to exercise diplomatic protection of shareholders in a Canadian company with respect to measures taken against that company in Spain. However, it derived from municipal law a limited principle permitting the piercing of the corporate veil in cases of misuse, fraud, malfeasance or evasion of legal obligations.
It is up to the protecting State of the injured national whether and how far to make it available: ‘The Court would here observe that, within the limits prescribed by international law, a State may exercise diplomatic protection by whatever means and to whatever extent it thinks fit, for it is its own right that the State is asserting Should the natural or legal person on whose behalf it is acting consider that their rights are not adequately protected, they have no remedy in international law. All they can do is resort to national law, if means are available, with a view to furthering their cause or obtaining redress. The municipal legislator may lay upon the State an obligation to protect its citizens abroad, and may also confer upon the national a right to demand the performance of that obligation, and clothe the right with corresponding sanctions. However, all these questions remain within the province of municipal law and do not affect the position internationally. . .
The State must be viewed as the sole judge to decide whether its protection will be granted, to what extent it is granted, and when it will cease. It retains in this respect a discretionary power the exercise of which may be determined by considerations of a political or other nature, unrelated to the particular claim.’

Citations:

[1970] ICJ Rep 3

Links:

ICJ

Cited by:

Cited – Regina v Immigration Officer at Prague Airport and another, ex parte European Roma Rights Centre and others HL 9-Dec-2004
Extension oh Human Rights Beyond Borders
The appellants complained that the system set up by the respondent where Home Office officers were placed in Prague airport to pre-vet applicants for asylum from Romania were dsicriminatory in that substantially more gypsies were refused entry than . .
Cited – Enron Corporation v The Argentine Republic ICSID 14-Jan-2004
The Barcelona Traction case ‘has been held not to be controlling in investment claims such as the present, as it deals with the separate question of diplomatic protection in a particular setting’ and that: ‘what the State of nationality of the . .
Cited – Occidental Exploration and Production Company vRepublic of Ecuador CA 9-Sep-2005
The parties had arbitrated their dispute in London under a bilateral investment treaty between the US and Ecuador. The republic sought to appeal the arbitration. The applicant now appealed an order that the English High Court had jurisdiction to . .
Cited – Camuzzi International SA v The Argentine Republic (No 2) ICSID 11-May-2005
(Spanish Text) Diplomatic protection ‘cannot be considered the general rule in the system of international law presently governing the matter, but as a residual mechanism available when the affected individual has no direct channel in its own . .
Cited – Regina (on the application of Abassi and Another) v Secretary of State for Foreign and Commonwealth Affairs and Another CA 6-Nov-2002
A British national had been captured in Afghanistan, and was being held without remedy by US forces. His family sought an order requiring the respondent to take greater steps to secure his release or provide other assistance.
Held: Such an . .
Cited – Prest v Petrodel Resources Ltd and Others SC 12-Jun-2013
In the course of ancillary relief proceedings in a divorce, questions arose regarding company assets owned by the husband. The court was asked as to the power of the court to order the transfer of assets owned entirely in the company’s names. The . .
Lists of cited by and citing cases may be incomplete.

International, Company

Updated: 30 April 2022; Ref: scu.220676

Re Tea Corporation: CA 1904

A scheme was proposed in a liquidation and a meeting of, inter alia, ordinary shareholders was proposed, who were to be given shares in the new company in place of their shares in the old, so to that extent they were affected by the scheme. The shareholders voted against the scheme; the other relevant participants voted in favour of it. On the hearing for sanction the scheme was held to stand. At first instance the amount of the company’s assets was the subject of an agreement and that amount negatived as a fact the notion that there could be any return to shareholders, so they had no financial interest.
Held: In those circumstances the vote of the shareholders could be disregarded.
Vaughan Williams LJ ‘In the present case the contributories were divided into two classes, preference shareholders and ordinary shareholders, and they voted in those classes, and the majority of the preference shareholders voted in favour of the scheme. It is said, however, that the scheme is rendered defective because the ordinary shareholders did not vote in favour of it. I think the right answer to this was given by Buckley J [the Judge at first instance]. You are to divide the shareholders into classes, and when you have done that you find that the preference shareholders have an interest in the assets. But when you come to the ordinary shareholders you find that they have no interest whatever in the assets, and Buckley J. was of opinion that, having regard to this fact, their dissent from the scheme was immaterial. I think that the learned judge was right in so holding. It seems to me that by the very terms of s. 24 you are to divide the contributories into classes and to call meetings of each class, and if you have the assent to the scheme of all those classes who have an interest in the matter, you ought not to consider the votes of those classes who have really no interest at all. It would be very unfortunate if a different view had to be taken, for if there were ordinary shareholders who had really no interest in the company’s assets, and a scheme had been approved by the creditors, and all those were really interested in the assets, the ordinary shareholders would be able to say that it should not be carried into effect unless some terms were made with them.’ Romer LJ ‘Having regard to the evidence and the admissions made in the court below, I think [the judge] was right in drawing the inference that the ordinary shareholders had no interest and I base my judgment solely on that ground. That being so, I can see no difficulty in holding that this scheme is only an arrangement as between the company and their creditors and as between the company and the preference shareholders and as such it is authorised by s 2 of the Act of 1870 combined with s 24 of the Companies Act 1900. It is true that by the scheme some shares in the new company are offered to the ordinary shareholders in the old company; but I think that must be regarded as a gift by the creditors and the preference shareholders to the ordinary shareholders, and not as showing that they had an interest in the assets which they were surrendering.’

Judges:

Vaughan Williams LJ, Romer LJ

Citations:

[1904] 1 Ch 12

Jurisdiction:

England and Wales

Cited by:

Cited – In re British and Commonwealth plc (No 3) ChD 1992
Bonds were subordinated in a winding up, and the company was in administration in which the administrators were proposing a scheme of arrangement. The judge was invited to apply the Tea Corporation principles in order to arrive at a conclusion that . .
Cited – Mytravel Group Plc, Re Companies Act 1985 ChD 24-Nov-2004
The company sought approval of a proposed reconstruction under the section.
Held: Approval could not be given. To count as a reconstruction two principal qualities were required. The business carried on should be the same or similar, and those . .
Lists of cited by and citing cases may be incomplete.

Company

Updated: 30 April 2022; Ref: scu.220255

Re South African Supply and Cold Storage Co: 1904

The court had to construe the words ‘reconstruction or amalgamation’ in the memorandum of association of a company: ‘The only question I have to decide is whether, in the case of each of these two companies, there has or has not been a winding-up ‘for the purpose of reconstruction or amalgamation.’ Neither of words, ‘reconstruction’ and ‘amalgamation’, has any definite legal meaning. Each is a commercial and not a legal term, and even as a commercial term, there is no exact definite meaning. In each case one has to decide whether the transaction is such that, in the meaning of commercial men, it is one which is comprehended in the term ‘reconstruction’ or ‘amalgamation”. And ‘Then it remains to consider whether what was done was for the purpose of ‘reconstruction or amalgamation.’ What does ‘reconstruction’ mean? To my mind it means this. An undertaking of some definite kind is being carried on, and the conclusion is arrived at that it is not desirable to kill that undertaking, but that it is desirable to preserve it in some form, and to do so, not by selling it to an outsider who shall carry it on – that would be a mere sale – but in some altered form to continue the undertaking in such a manner as that the persons now carrying it on will substantially continue to carry it on. It involves, I think, that substantially the same business shall be carried on and substantially the same persons shall carry it on. But it does not involve that all the assets shall pass to the new company or resuscitated company, or that all the shareholders of the old company shall be shareholders in the new company or resuscitated company. Substantially the business and the persons interested must be the same. Does it make any difference that the new company or resuscitated company does or does not take over the liabilities? I think not. I think it is none the less a reconstruction because from the assets taken over some part is excepted provided that substantially the business is taken, and it is immaterial whether the liabilities are taken over by the new or resuscitated company or are provided for by excepting from the scheme of reconstruction a sufficient amount to answer them. It is not, therefore, vital that either the whole assets should be taken over or that the liabilities would be taken over. You have to see whether substantially the same persons carry on the same business; and if they do, that, I conceive, is a reconstruction.’

Judges:

Buckley J

Citations:

[1904] 2 Ch 268

Jurisdiction:

England and Wales

Cited by:

Cited – Brooklands Selangor Holdings Limited v Inland Revenue Commissioners ChD 1970
The court had to consider whether the arrangments before it amounted to a reconstruction for stamp duty purposes: ‘I will deal first with the question whether those transactions amounted to a reconstruction. In ordinary speech the word . .
Applied – Baytrust Holdings Ltd v Inland Revenue Commissioners 1971
Whether a scheme of arrangement constituted a reconstruction for stamp duty purposes. . .
Cited – Mytravel Group Plc, Re Companies Act 1985 ChD 24-Nov-2004
The company sought approval of a proposed reconstruction under the section.
Held: Approval could not be given. To count as a reconstruction two principal qualities were required. The business carried on should be the same or similar, and those . .
Cited – In re Courage Group’s Pension Schemes Ryan v Imperial Brewing and Leisure Ltd ChD 1987
It was possible to amend the provisions of a pension scheme provided the amendments did not conflict with the purposes of the scheme. How was a court to identify such purposes: ‘It is trite law that a power can be exercised only for the purpose for . .
Cited – Fallon v Fellows (Inspector of Taxes) ChD 2001
The court considered whether a scheme was for the purposes of reconstruction or amalgamation in a capital gains tax context. Citing South African Supply: ‘In the context I think it is clear that when the learned judge referred to the persons . .
Lists of cited by and citing cases may be incomplete.

Company

Updated: 30 April 2022; Ref: scu.220247

Baytrust Holdings Ltd v Inland Revenue Commissioners: 1971

Whether a scheme of arrangement constituted a reconstruction for stamp duty purposes.

Citations:

[1971] 3 All ER 76

Citing:

Applied – Re South African Supply and Cold Storage Co 1904
The court had to construe the words ‘reconstruction or amalgamation’ in the memorandum of association of a company: ‘The only question I have to decide is whether, in the case of each of these two companies, there has or has not been a winding-up . .

Cited by:

Cited – Mytravel Group Plc, Re Companies Act 1985 ChD 24-Nov-2004
The company sought approval of a proposed reconstruction under the section.
Held: Approval could not be given. To count as a reconstruction two principal qualities were required. The business carried on should be the same or similar, and those . .
Lists of cited by and citing cases may be incomplete.

Company, Stamp Duty

Updated: 30 April 2022; Ref: scu.220250

In re Ballast plc (in Administration) and Others: ChD 21 Oct 2004

The administrator sought to move direct from an administration to insolvency proceedings without first closing the administration by a court order.
Held: The 2002 was intended to allow such a procedure.

Judges:

Blackburne J

Citations:

Times 28-Oct-2004, [2005] 1 WLR 1928

Statutes:

Enterprise Act 2002

Jurisdiction:

England and Wales

Cited by:

Comments disapproved – In re GHE Realisations Ltd (In Administration) ChD 4-Nov-2005
The administrators having made a distribution, concluded that no further assets would be recovered and sought directions from the court to allow them to withdraw and close the administration.
Held: The court had power to make the order . .
Lists of cited by and citing cases may be incomplete.

Company, Insolvency

Updated: 30 April 2022; Ref: scu.219440

Dale v Hamilton: 1846

An oral partnership agreement mat be valid despite the partnership owning land.

Citations:

(1846) 5 Hare 369

Jurisdiction:

England and Wales

Cited by:

Cited – Kilcarne Holdings Ltd v Targetfollow (Birmingham) Ltd, Targetfollow Group Ltd ChD 9-Nov-2004
The defendant entered into an agreement for lease, incurring substantial obligations. When it could not meet them it sought assistance from the claimant, who now claimed to have an interest in a joint venture. The draft documentation originally . .
Lists of cited by and citing cases may be incomplete.

Company, Land

Updated: 30 April 2022; Ref: scu.219437