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Company - From: 1930 To: 1959

This page lists 72 cases, and was prepared on 02 April 2018.

 
Hill v Permanent Trustee Company of New South Wales Ltd [1930] AC 720
1930
PC
Lord Russell
Company
A bonus issue does not reduce those assets since the assets and liabilities side of the balance sheet remains unchanged but the capital and reserves side of the balance sheet is rearranged with a reduction in the amount of the profits or other relevant reserves and an equal increase in the amount of the paid up share capital reflecting the increase in the issued share capital.
1 Citers



 
 Salvesen's Trustees v Inland Revenue Commissioners; SCS 1930 - 1930 SLT 387
 
Bell v Lever Brothers Ltd [1931] 1 KB 557
1931
CA
Greer LJ, Lawrence LJ
Company, Contract
The court was asked as to the duties of a company director: "It does not seem to me open to question that the directors of a company occupy a fiduciary position towards the company, with the result that they cannot retain a benefit they have obtained by an agreement with the company unless they have made full disclosure of all material facts known to them."
1 Citers



 
 Bell v Lever Brothers Ltd; HL 15-Dec-1931 - [1932] AC 161; [1931] UKHL 2

 
 Bombay Official Assignee v Shroff; PC 1932 - (1932) 48 TLR 443 PC

 
 Gilford Motor Co Ltd v Horne; CA 1933 - [1933] All ER 109; [1933] Ch 935
 
In re MIG Trust Ltd [1933] Ch 542
1933
CA
Lord Hanworth MR
Company
An application under section 85 of the 1929 Act was opposed by the company at an early stage and before the matter came on for hearing. The mortgagor company was hopelessly insolvent and a winding up petition was impending. A few days later, on the instructions of a director of the company who had an interest in the mortgagee company, the opposition of the company was withdrawn and the order was made. Shortly thereafter, the company was wound up. At first instance Eve J had set aside the registration of the charge as a fraudulent preference. Held: The appeal was allowed. Lord Hanworth MR said that the Act in permitting the late registration of charges over company assets gave: "the widest possible discretion to the Court in circumstances which need not show that the omission was accidental or due to inadvertence but which would be sufficient on other grounds to make it just and equitable to grant relief."
Companies Act 1929 85
1 Citers



 
 In re Sir Thomas Spencer Wells; Swinburne-Hanham v Howard; CA 1933 - [1933] Ch 29

 
 In re Beni-Felkai Mining Co Ltd; 1933 - [1934] 1 Ch 406; [1933] All ER 693

 
 Brickenden v London Loan and Savings Co; PC 1934 - (1934) 3 DLR 465
 
Re Yagerphone Ltd [1935] Ch 392
1935


Company, Insolvency
A sum recovered from a creditor who has been wrongly preferred enures for the benefit of the general body of creditors, not for the benefit of the company or the holder of the floating charge. It does not become part of the company's assets but is received by the liquidator impressed with a trust in favour of those creditors amongst whom he has to distribute the assets of the company.
1 Citers


 
In re Charles and Co Ltd [1935] WN 15
1935

Clauson J
Company
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.
1 Citers


 
Elliot v Mackie and Sons Ltd; Elliot v Whyte 1935 SC 81
1935

Lord President Clyde
Scotland, Company
Executors of the deceased founder of the company had executed transfers of shares in favour of two of their number and a third party to qualify them as directors of the company under the articles, the trustees and executors wanting adequate representation on the board of directors. The certificates were endorsed to show that the transfers were purely nominal and done only in order to enable the transferees to qualify as directors, the beneficial interest remaining in the transferors. This initiative was objected to by some of the beneficiaries under the deceased's testamentary settlement. They said that registration of the transfers was ultra vires of the company because the company's articles provided that shares must be held by a director "in his own name and right", and that the register should be rectified because the transferees' names had without sufficient cause been entered in the register. Held: The argument that registration of the transfers was ultra vires of the company because the shares were not held in the transferees' own right as they had no beneficial interest in them was rejected. It was practice for notice of trusts to be taken in company registers. But Lord President Clyde did not think that this made the relation between the registered trustee and the company in any way different from that which existed in the case of other shareholders. Applying Muir v City of Glasgow Bank (1878) 6 R 392, a trustee has the full right of property in the shares and consequently incurs personally the full liabilities of a shareholder. He added these words: "The matter is one in which it is most undesirable to have different interpretations, north and south of the Border, of an expression in common use in the articles of companies whose affairs are regulated by a legislative system which is intended to apply, generally, to both countries; and, whatever view might have been taken – had the matter arisen rebus integris – I think it is too late to open a question which (in England) authority and practice, and (in Scotland) practice conform to that authority, has closed."
The expression in common use to which this passage refers is the provision in the company's articles that the qualification was the holding of a certain number of shares in the director's "own name and right." The decisive issue was the effect of the entry of the transferees' names on the register as members of the company, as to which the law on both sides of the Border is the same. The fact that the certificates on the back of the transfers disclosed that the transfers were purely nominal was insufficient to prevent shares that were actually held in trust from constituting a director's qualification.
Lord Morison said that it was of no concern to the company whether the shareholder was the owner of the shares which he held, or whether third parties were the owners or had interests in them.
1 Cites

1 Citers


 
Tomlinson v Liquidators of Scottish Amalgamated Silks Ltd [1935] UKHL 2; 1935 SLT 297; 1935 SC (HL) 1
7 May 1935
HL

Scotland, Company

[ Bailii ]

 
 Furs Ltd v Tomkies; 1936 - (1936) 54 CLR 583
 
Inland Revenue Commissioners v Crossman [1937] AC 26
1937
HL
Lord Russell of Killowen
Company, Taxes - Other
For a valuation for estate taxes, the value is what a purchaser in the open market would have paid to enjoy whatever rights attached to the property at the relevant date.
Lord Russell of Killowen said that 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, but also consisting of a series of mutual covenants entered into by all the shareholders inter se in accordance with . . the Companies Act . . a share is an interest measured by a sum of money and made up of various rights contained in the contract, including the right to a sum of money of a more or less amount.
1 Cites

1 Citers


 
Re William Porter and Co Ltd [1937] 2 All ER 361
1937

Simonds J
Employment, Company

1 Cites

1 Citers


 
Mills v Mills (1938) 60 CLR 150; [1938] HCA 4
1938

Dixon J, Latham CJ
Company
(High Court of Australia) Where the main purpose of the directors' resolution (in this case to increase the share base) is to benefit the company it matters not that it incidentally also benefits a director.
Dixon J pointed out the difficulties associated with too rigorous an application of the public law test to the decisions of directors: "it may be thought that a question arises whether there must be an entire exclusion of all reasons, motives or aims on the part of the directors, and all of them, which are not relevant to the purpose of a particular power. When the law makes the object, view or purpose of a man, or of a body of men, the test of the validity of their acts, it necessarily opens up the possibility of an almost infinite analysis of the fears and desires, proximate and remote, which, in truth, form the compound motives usually animating human conduct. But logically possible as such an analysis may seem, it would be impracticable to adopt it as a means of determining the validity of the resolutions arrived at by a body of directors, resolutions which otherwise are ostensibly within their powers. The application of the general equitable principle to the acts of directors managing the affairs of a company cannot be as nice as it is in the case of a trustee exercising a special power of appointment. It must, as it seems to me, take the substantial object the accomplishment of which formed the real ground of the board's action. If this is within the scope of the power, then the power has been validly exercised."
1 Cites

1 Citers

[ Austlii ]

 
 Smith, Stone and Knight Limited v Birmingham; 1939 - [1939] 4 All ER 116
 
In re Ocean Steam Navigation Company Limited [1939] 1 Ch 4
1939
ChD
Simonds J
Company
A petition was presented for the re-organisation of the company in circumstances in which, though it was was wholly insolvent, proposed a transfer of its entire undertaking to a new company, the shares in the new company being allotted to the creditors of the old. No shareholder in the old company was to take shares (or indeed any other interest) under the scheme. Part of the dispute was whether or not shareholders should have been offered something or whether their position could be ignored because they had no interest in the company. Held: The scheme was not unfair on the shareholders, but in the circumstances it was ultra vires.
1 Citers



 
 Re Oceanic Steam Navigation Co Ltd; 1939 - [1939] Ch 41
 
Knightsbridge Estates Trust Ltd v Byrne [1940] AC 613; [1940] 2 All ER 401
1940
HL
Viscount Maugham
Land, Company
A mortgage of freehold land contained a covenant to repay the secured loan by half-yearly instalments over a period of 40 years. The mortgagors sought early redemption arguing that the contractual postponement of repayment over a 40 year period was void in equity. The respondents relied upon the mortgage constituting a debenture as defined by s.380 of the Companies Act 1929 so that s.74 applied to prevent the condition for postponement becoming invalid in equity on grounds of the length of the period. Held: It was a debenture.
Viscount Maugham said: "If we begin by asking what the word "debenture" means, apart from any definition, the reply must be that it has no precise meaning. Chitty J. observed in the case of Levy v. Abercorris Slate and Slab Co., that the word "means a document which either creates a debt or acknowledges it, and any document which fulfills either of these conditions is a debenture." An interesting extract from Skeat's Etymological Dictionary (1882) will be found in a footnote to the case (p. 264). Sir Nathaniel Lindley had previously stated simply, "What the correct meaning of 'debenture' is I do not know": British India Steam Navigation Co. v. Inland Revenue Commissioners. In Lemon v. Austin Friars Investment Trust, Ld., the same ignorance was professed in the Court of Appeal. Warrington L.J. in particular, after observing that it had been said "by a wiser man than himself" that it was impossible to give an exhaustive definition of the word "debenture," went on to remark that he did not propose to incur the reproach of venturing where wise men fear to tread. The text books are agreed at least in this that no accurate definition of the word can be found. I think it sufficient to cite Buckley on the point (11th ed., p. 174). It is clear, therefore, that it was desirable to insert in any consolidation of the Companies Acts a definition of the word.
I do not think there is any strong argument for suggesting that s. 74 of the Act of 1929, or any of its predecessors, ought by reason of its nature to be confined to what may be called ordinary debentures. As we have seen, some definition was certainly desirable, and the very wide terms used by the Legislature in the Act of 1928 and reproduced in the consolidating Act of the following year seem to me to show that it was intended to give freedom of contract as regards the particular matter involved in s. 74 in relation to any securities granted on loan by a company registered under the Companies Acts. It is contended that the context otherwise requires. I am unable to find any such context."
Companies Act 1929 380
1 Citers


 
Kerr v John Mottram Ltd [1940] Ch 657
1940
ChD
Simonds J
Contract, Company
The court considered an application by a shareholder of a company to enforce an alleged contract for the sale of shares that he claimed were offered to him at a meeting of the company. The minutes of the company meeting did not support the plaintiff’s claim that the contract had been entered into by the shareholder. The plaintiff sought to rely on evidence that was inconsistent with the signed minutes of the meeting, but the Articles provided that the minutes of any meeting purporting to be signed by the chairman should be “conclusive evidence without any further proof of the facts therein stated”. The plaintiff argued that the evidence inconsistent with the minutes is admissible as the secretary may be wrong in his record of what occurred. The defendant argued the words “conclusive evidence” in the Articles of Association mean the minutes were evidence which could not be rebutted and were conclusive between the parties bound by the minutes. The defendant argued that any inconsistent evidence was nadmissible. Held: Simonds J stated: "Now, art. 114 which I have read represents the bargain between the shareholders as to what is to be, as between them, the value and effect of the minutes of the company as recorded in its minute book and signed by the chairman, and their bargain is that it is to ‘be conclusive evidence without any further proof of the facts therein stated.’ I have no doubt that the words ‘conclusive evidence’ mean what they say; that they are to be a bar to any evidence being tendered to show that the statements in the minutes are not correct." This was the "natural meaning" of the words, and: "That is to say, the minutes are to be regarded as evidence which is not to be displaced and is conclusive as between the parties who are bound by them."
1 Citers



 
 Societe Belge De Banque S A v Rao Girdhari Lal Chaudhary; PC 18-Mar-1940 - [1940] UKPC 13
 
In re Griffin Hotel Co Ltd [1941] Ch 129
1941
ChD
Bennett J
Company, Insolvency
A company owned hotels, in Leeds and in Buxton. In 1937, it issued a debenture creating a floating charge over all its assets to secure £45,000. In December 1938, an order was made in a debenture holder's action, appointing a receiver over all the company's property except the Buxton Hotel which was subject to a prior mortgage and of no value to the debenture holder. The company continued to operate the Buxton Hotel. In March 1939, an order was made for the winding up of the company. In the meantime, in operating the Buxton Hotel, the company incurred certain preferential debts within the meaning of s. 264 of the 1929 Act. One issues was whether those preferential debts were payable in priority to the plaintiff (the debenture holder) from the proceeds of the assets over which the receiver was appointed in 1938. There were no other assets out of which the preferential debts could be discharged. The first issue related to the relationship between sections 78 and 264(4)(b) which is not of relevance. The second issue is the same construction issue arising in these proceedings, albeit in relation to s. 264(4)(b), providing: "The foregoing [preferential] debts shall: (a) rank equally among themselves and be paid in full, unless the assets are insufficient to meet them, in which case they shall abate in equal proportions; and (b) in the case of a company registered in England, so far as the assets of the company available for payment of general creditors are insufficient to meet them, have priority over the claims of holders of debentures under any floating charge created by the company, and be paid accordingly out of any property comprised in or subject to that charge." Held: The court construed the expression 'floating charge' in the statute to mean a charge which was still floating at the date of the winding up.
Bennett J, having expressed his conclusion that s. 78 of the 1929 Act did not exclude or prevent the operation of sub-section 4(b) of s. 264, continued: "But that conclusion on the construction and effect of the statutory provisions leaves open the question whether in the supposed events there is, when the winding up take place, any floating charge or any property subject to that charge. In my judgment, sub-s. 4(b) of s. 264 only operates if at the moment of the winding up there is still a floating charge created by the company and it only gives the preferential creditors a priority over the claims of the debenture holders in any property which at that moment of time is comprised in or subject to that charge.
In the present case, the debenture held by the plaintiffs contained a floating charge over all the borrowers' property. On December 9, 1938, that charge ceased to float on the property and assets of which Mr. Veale was appointed receiver. The charge on that day crystallised and became fixed on that property and those assets. It remained a floating charge on any other assets of the borrowers. At the moment before the winding up order was made, the charge still floated over any other assets of the borrowers and over those other assets, if any, the preferential creditors as defined by sub-s. I of s. 264 have a priority over the claims of the plaintiffs by force of the provisions of sub-s.4 of the same section. This seems to be a corollary of the proposition established by In re Lewis Merthyr Consolidated Collieries, Ld. (I) [1929] 1 Ch. 498."
Companies Act 1929 78 264
1 Citers



 
 Re VGM Holdings Limited; CA 1942 - [1942] Ch 235
 
Income Tax Commissioners for City of London v Gibbs [1942] AC 402
1942
HL
Lord Macmillan
Company
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. "
1 Citers



 
 In Re Smith and Fawcett Ltd; CA 1942 - [1942] Ch 304

 
 In re Straw Products Pty Ltd; 1942 - [1942] VLR 222

 
 Regal (Hastings) Ltd v Gulliver; HL 20-Feb-1942 - [1967] 2 AC 134; [1942] UKHL 1; [1942] 1 All ER 378
 
Equity and Law Life Assurance Society v Tritonia Ltd 1943 SC (HL) 88
1943
HL
Viscount Simon LC
Scotland, Company, Litigation Practice
Viscount Simon LC said: "When an appeal is argued before the House of Lords, no one has any right of audience except counsel instructed on behalf of a party or (when the litigant is a natural person) the party himself. In the case of a corporation, inasmuch as the artificial entity cannot attend and argue personally, the right of audience is necessarily limited to counsel instructed on the corporation's behalf . . Such a rule limiting a right of audience on behalf of others to members of the English or Scottish or Northern Irish bars, secures that the House will be served by barristers or advocates who observe the rules of their profession, who are subject to a disciplinary code, and who are familiar with the methods and scope of advocacy which are followed in presenting arguments to this House".
1 Citers



 
 Greenhalgh v Mallard; CA 1943 - [1943] 2 All ER 234
 
Regina v ICR Haulage Ltd [1944] KB 551; [1944] 1 All ER 691
1944
KBD

Company, Crime
A company can be guilty of conspiracy, in this case to defraud. Both the managing director and, through him, the haulage company were convicted of conspiracy to defraud. His acts 'were the acts of the company and the fraud of that person was the fraud of the company'.
"Where the only punishment which the court can impose is death, for this purpose the basis of this exception is being that the court will not stultify itself by embarking on a trial in which, if the verdict of guilt is returned, no effective order by way of sentence can be made."
1 Citers


 
Moore v I Bresler Ltd [1944] 2 All ER 515
1944
KBD
Humphreys J, Viscount Caldecott LCJ
Company
The company had been required to make a return for revenue purposes (purchase tax) and the statute made it an offence to make a false return with intent to deceive. The company was charged with such, but responded that the action was of employees . Held: The mens rea of the servant authorised to discharge the duty to make the return should be attributed to the company. The Court focussed on the question whether the officers were acting within the scope of their authority and concluded that they were, notwithstanding that the purpose of the dishonest purchase tax returns was to conceal the defendant's own theft from the company.
Viscount Caldecott LCJ described the officers as important officials of the company
Humphreys J said that it was difficult to imagine two persons whose acts would "more effectively bind the company" and who could be said to be more obviously agents of the company
1 Citers


 
Director of Public Prosecutions v Kent and Sussex Contractors Ltd [1944] KB 146; [1944] 1 All ER 119
1945

Lord Caldecote
Company, Crime
The court considered the liability of a company under provisions being, "with intent to deceive, made use . . of a document which was false in a material particular" Held: The General Manager was capable of acting or speaking as the company;
1 Citers


 
Re Warden and Hotchkiss Ltd [1945] 1 Ch 270
1945
CA

Company
Judicial decisions upon which title to property depends or which, by establishing principles of construction or otherwise, form the basis of contracts or which affect the general conduct of affairs so that their alteration would mean, for example, that payments have been needlessly made, ought not to be altered even by the House of Lords, unless the decisions were clearly wrong and productive of inconvenience.
1 Citers


 
Inland Revenue Commissioners v J Bibby and Sons Limited [1945] 1 All ER 667; [1945] UKHL TC_29_167; 29 TC 167
17 May 1945
HL
Macmillan, Russell of Killowen, Porter, Simonds LL
Income Tax, Company
The House was asked whether shares in a company held by directors as trustees could be aggregated with shares held by them beneficially for the purpose of determining whether the directors had "a controlling interest" in the company. Held:
Russell of Killowen said: "When the section speaks of directors having a controlling interest in a company, what it is immediately concerned with in using the words "controlling interest" is not the extent to which the individuals are beneficially interested in the profits of the company as a going concern or in the surplus assets in a winding up, but the extent to which they have vested in them the power of controlling by votes the decisions which will bind the company in the shape of resolutions passed by the shareholders in general meeting. In other words, the test which is to exclude a company's business from subsection (9)(a) and include it in (9)(b), is the voting power of its directors, not their beneficial interest in the company.
For the purpose of such a test the fact that a vote-carrying share is vested in a director as trustee seems immaterial. The power is there, and though it be exercised in breach of trust or even in breach of an injunction, the vote would be validly cast vis-a-vis the company, and the resolution until rescinded would be binding on it."
Lord Macmillan said: "The question whether the directors of the respondent company have the control of it by their voting power as shareholders must in my view be determined by the memorandum and articles of the company and by the register of shareholders. By the constitution of the company, as I have already mentioned, the voting power is vested in the ordinary shareholders and the register shows that the directors hold a majority of these shares . .
So far as the company is concerned the relation between such of its shareholders as happen to be trustees and their beneficiaries is res inter alios. It may be that a trustee shareholder may, as between himself and his cestuis que trust, be under a duty to exercise his vote in a particular manner, or a shareholder may be bound under contract to vote in a particular way (cf Puddephatt v Leith). But with such restrictions the company has nothing to do. It must accept and act upon the shareholder's vote notwithstanding that it may be given contrary to some duty which he owes to outsiders. The remedy for such breach lies elsewhere."
Lord Porter said: "The phrase is a composite one and the combination means no more than that the directors must have an interest such as enables them to control the activities of the company: it does not require some personal financial interest on their part which control enables them to exploit. It may be that trustees can ultimately be brought to book for activities which would not lay a beneficial owner open to attack or complaint. Nevertheless for good or ill the trustee like the beneficial owner controls, though if his powers be wrongly exercised they may in some way or other be capable of being challenged."
Lord Simonds said: "What, my Lords, constitutes a controlling interest in a company? It is the power by the exercise of voting rights to carry a resolution at a general meeting of the company. Can the directors of the respondent company by the exercise of their voting rights carry such a resolution? Yes: for they are the registered holders of more than half the ordinary shares of the company. Therefore they have a controlling interest in the company . .
Those who by their votes can control the company do not the less control it because they may themselves be amenable to some external control. Theirs is the control, though in the exercise of it they may be guilty of some breach of obligation whether of conscience or of law. It is impossible (an impossibility long recognised in company law) to enter into an investigation whether the registered holder of a share is to any and what extent the beneficial owner. A clean cut there must be."
1 Citers

[ Bailii ]
 
In re Fry [1946] Ch 312; [1946] 2 All ER 105
1946
ChD
Romer J
Equity, Company
A settlor executed a transfer of shares but failed to obtain the consent of the Treasury under the Regulations. The transferees argued that the testator had executed documents which were appropriate to the subject matter of the gift, namely the share transfers, that those documents being under seal were irrevocable and that the settlor had done everything he could that was necessary for him to do to divest himself of the legal and equitable interest in the shares in favour of the transferees. Further they argued that even if the donor had failed to succeed in his purpose, so far as the legal title was concerned, he must be regarded as having passed his equitable interest in the shares. Held: The gift was incomplete, and there is no equity to perfect an imperfect gift. "The testator had not done everything that was required to be done by him at the time of his death. He had not obtained permission from the Treasury. The Treasury might have required further information or answers supplemental to those which he had given in reply to it; and he might have refused to concern himself with the matter further, in which case I do not know how anyone could have compelled him to do so. At the time of the testator’s death a complete equitable assignment had been effected. The interest in the shares so acquired by the assignees would indubitably be an “interest in securities” within the meaning of reg. 3A and inasmuch as they are prohibited from acquiring such an interest except with permission granted by the Treasury, this court cannot recognise a claim to such an interest where the consent of the Treasury was never given to its acquisition. The assignment and acceptance of the interest would both be equally incapable of recognition in the absence of Treasury sanction, and that sanction was never in fact obtained; it might indeed (although the probabilities are certainly otherwise) never have been forthcoming at all."
The Defence (Finance) Regulations 1939
1 Citers


 
Morris v Kanssen [1946] AC 459; [1946] 1 All ER 586
1946
HL
Lord Simonds
Torts - Other, Company
The House considered the effect of provisions relating to the acts of directors in the 1929 Act. Lord Simonds said: "There is, as it appears to me, a vital distinction between (a) an appointment in which there is a defect or, in other words, a defective appointment, and (b) no appointment at all. In the first case it is implied that some act is done which purports to be an appointment but is by reason of some defect inadequate for the purpose; in the second case there is not a defect, there is no act at all. The section does not say that the acts of a person acting as director shall be valid notwithstanding that it is afterwards discovered that he was not appointed a director. Even if it did, it might well be contended that at least a purported appointment was postulated. But it does not do so, and it would, I think, be doing violence to plain language to construe the section as covering a case in which there has been no genuine attempt to appoint at all. These observations apply equally where the term of office of a director has expired, but he nevertheless continues to act as a director, and where the office has been from the outset usurped without the colour of authority."
Companies Act 1929 143
1 Cites

1 Citers


 
Tintin Exploration Syndicate Ltd v Sandys (1947) 111 LT 412
1947

Roxburgh J
Company, Limitation
The court considered the ability of a de facto director to rely on the 1939 Act as a defence to an action by the company to recover "trust property". Held: The defence failed. The court considered the circumstances in which fiduciary duties might arise, and said that the de facto directors exercised command and control over the company's property and were consequently trustees for the purposes of the Limitation Act.
Limitation Act 1939
1 Citers


 
Davey v Shawcroft [1948] 1 All ER 827
1948

Lord Goddard CJ
Crime, Company
The court was asked whether an agent of the committee of an unincorporated association, who was personally responsible for a breach of the licence terms, was properly convicted. Held. Lord Goddard CJ said that section 19 meant that an unincorporated committee could be a licensed person for regulatory purposes under the Coal Distribution Order.
Interpretation Act 1889 19
1 Citers


 
Short v Treasury Commissioners [1948] 1 KB 116
1948
CA

Company
"shareholders are not, in the eye of the law, part owners of the undertaking" A share is classified as a chose in action, a species of intangible personal property.
1 Citers



 
 Nokes v Doncaster Amalgamated Collieries Ltd; HL 1948 - [1940] AC 1014
 
Re Chatterley-Whitfield Collieries [1948] 2 All ER 593
1948

Asquith LJ
Company
The colliery had been nationalised at a time of very low interest rates. The court discussed the "reasonable expectations" of preferential shareholders.
1 Citers


 
In re Re Rose, Midland Bank Executor and Trustee Company Limited v Rose [1949] Ch 78
1949
ChD
Jenkins J
Company, Wills and Probate, Equity
The testator handed a transfer of the relevant shares to the donee, Mr Hook, together with the relevant certificates. The transfer had not been registered by the date of his death. Held: Equity will not compel an imperfect gift to be completed. Nevertheless, the testator had done everything in his power to divest himself of the shares in question to Mr Hook. He had executed a transfer. It was not suggested that the transfer was not in accordance with the company’s regulations. He had handed that transfer together with the certificates to Mr Hook. There was nothing else the testator could do. Mr Hook’s legal title would not be perfected until the directors passed the transfer for registration, but that was not an act which the testator had to do, it was an act which depended on the discretion of the directors. The gift was effective
1 Citers


 
Wilsons and Clyde Coal Co v Scottish Insurance Corporation [1949] UKHL 3; [1949] 1 All ER 1068; 1949 SLT 230; [1949] AC 462; 65 TLR 354; [1949] LJR 1190; 1949 SC (HL) 90
6 May 1949
HL

Scotland, Company

[ Bailii ]

 
 Tamlin v Hannaford; CA 1950 - [1950] 1 KB 18
 
Hawks v McArthur [1951] 1 All ER 22
1951


Equity, Company
A transfer of the equitable interest in shares in breach of article 8(B) would nonetheless be effective.


 
 Greenhalgh v Alderne Cinemas Ltd; 1951 - [1951] Ch 286
 
In re Wondoflex Textiles Pty Ltd [1951] VLR 458
1951

Smith J
Commonwealth, Company
The court contrasted the literal meaning of the company's articles with the true intentions of the parties: "It is also true, I think, that, generally speaking, a petition for winding up, based upon the partnership analogy, cannot succeed if what is complained of is merely a valid exercise of powers conferred in terms by the articles . . . To hold otherwise would enable a member to be relieved from the consequences of a bargain knowingly entered into by him . . . But this, I think, is subject to an important qualification. Acts which, in law, are a valid exercise of powers conferred by the articles may nevertheless by entirely outside what can fairly be regarded as having been in the contemplation of the parties when they became members of the company; and in such cases the fact that what has been done is not in excess of power will not necessarily be an answer to a claim for winding up. Indeed, it may be said that one purpose of [the just and equitable provision] is to enable the court to relieve a party from this bargain in such cases."
1 Citers


 
Rama Corporation Limited v Proved Tin and General Investment Limited [1952] 2 QB 147
1952


Company, Agency
The court considered the doctrine of ostensible authority as regards the actions of a single director of a company, identifying three essential elements.
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 In re Rose, Rose v Inland Revenue Commissioners; CA 1952 - [1952] 1 Ch 499; [1952] EWCA Civ 4; [1952] 1 All ER 1217; [1952] 1 TLR 1577; (1952) 31 ATC 138; [1952] TR 175
 
Attorney General of Ceylon v Mackie [1952] 2 All ER 775
1952
PC
Lord Reid
Company, Damages
The House considered how to value a company. The possibility that a business might be sold as a going concern for a price equal to the net realisable value of the assets employed was envisaged: "If it is proved in a particular case that at the relevant date the business could not have been sold for more than the value of its tangible assets, then that must be taken to be its value as a going concern."
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 Lee v Showmens Guild of Great Britain; CA 1952 - [1952] 2 QB 329; [1952] 1 All ER 1175

 
 Dean v Prince; 1953 - [1953] 2 All ER 636; [1953] Ch 590

 
 Re B Johnson and Co (Builders) Ltd; CA 1953 - [1953] Ch 634

 
 In Re Holt; Holt v Inland Revenue Commissioners; ChD 1953 - [1953] 2 All ER 1499
 
Baker v Jones [1954] 1 WLR 1005
1954

Lynskey J
Contract, Company, Torts - Other
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
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 Dean v Prince; CA 1954 - [1954] 1 All ER 749; [1954] Ch 409
 
John Adebayo v The Official Receiver of Nigeria [1954] UKPC 16; [1954] 1 WLR 681; [1954] 2 All ER 197
6 Apr 1954
PC

Company
(West Africa)
[ Bailii ]
 
Regina v Minister of Agriculture and Fisheries, Ex parte Graham [1955] 2 QB 140
1955
CA

Agriculture, Company
On a true construction of section 104(5) of the Agriculture Act 1947 a sub-committee or a district committee of a county agricultural executive committee is not excluded from being "a person" who may be appointed by the Minister to hear representations, notwithstanding that it was a fluctuating body of natural persons.
Agriculture Act 1947 104(5)
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Lee v Sheard [1956] 1 QB 192
1956
CA
Denning LJ
Personal Injury, Damages, Company
The negligence of a car driver resulted in an injury to the plaintiff who was one of two directors and shareholders of a limited company and did outside work of buying and selling linen goods for it. As a consequence of the accident the plaintiff was unable for a time to do his work for the company, its profits were lower than they would otherwise have been and he received £1,500 less from it than he would otherwise have done. Held: The awrd of £1,500 for the reduction in his earnings through the shareholding. The company could not have claimed for the same loss.
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In re Donald Kenyon Ltd [1956] 1 WLR 1397
1956

Roxburgh J
Company, Insolvency
The company contributories petitioned for the restoration of the company so that they could get in a sum of money standing to the credit of the company's account at a building society. Held: Fairness required that the restoration should be on terms that time should not run during the period of dissolution against creditors whose claims were not statute-barred at the date of dissolution whose claims were not statute-barred at that date: ".... what I have to do is put all other persons – not only the company, but all other persons – in the same position as nearly as may be as if the name of the company had not been struck off. At the date of the dissolution, the creditors .... who were not statute-barred at the date of dissolution .... could have stopped the statute running by issuing, possibly serving, a writ. [Counsel for the petitioner] contends that the creditor could also have applied to restore the name of the company to the register and then have issued his writ. Of course he could, but that is not the same position, nor is it, in my judgment, the nearest that can be done to get to the 'as-you-were position'; and it seems to me that, when a company has been dissolved and therefore nobody can sue it without getting it restored to the register, it is only common fairness that, if the contributories for purposes of their own, want to get it restored to the register years afterwards, the period [of dissolution] should be disregarded for the purposes of the Statute of Limitations. .... Common justice requires that some such provision should be inserted."
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 Lazarus Estates Ltd v Beasley; CA 1956 - [1956] 1 QB 702; [1956] 1 All ER 341

 
 HL Bolton (Engineering) Co Ltd v TJ Graham and Sons Ltd; CA 1957 - [1957] 1 QB 159; [1956] 3 All ER 624
 
Fomento (Sterling Area) Ltd v Selsdon Fountain Pen Co Ltd [1958] 1 All ER 11
1958


Company
Lord Denning said: "What is the proper function of an auditor? It is said that he is bound only to verify the sum, the arithmetical conclusion, by reference to the books and all necessary vouching material and oral explanations, and that it is no part of his function to inquire whether an article is covered by patents or not. I think this is too narrow a view. An auditor is not to be confined to the mechanics of checking vouchers and making arithmetic computations. He is not to be written off as a professional “adder-upper and subtractor”. His vital task is to take care to see that errors are not made, be they errors of computation, or errors of omission or commission, or downright untruths. To perform his task properly, he must come to it with an inquiring mind – not suspicious of dishonestly, I agree – but suspecting that someone may have made a mistake somewhere and that a check must be made to ensure that there has been none. "

 
In re H R Harmer Ltd [1959] 1 WLR 62; [1958] 3 All ER 689
1958
CA
Jenkins LJ
Company
Shareholders who receive their shares as a gift but afterwards work in the business may become entitled to enforce equitable restraints upon the conduct of the majority shareholder. To succeed the applicant must show some detriment in their capacity as a member of the company, and not as a director, though a wrongful exclusion of a member from participation in the management of the company may amount to such.
A majority shareholder has no obligation to choose as a representative director the most suitable person for the position. A majority shareholder may appoint his friend or a person whom he might reasonably expect usually to vote in a certain way.
The mere subordination of the wishes of the minority by the exercise of the voting power of the majority is not of itself oppressive.
Jenkins LJ accepted a submission that: "If a person, relying on majority control in a point of voting power dispenses with the proper procedure for producing the result he desires to achieve, and simply insists on this or that being done or omitted, his conduct is oppressive because it deprived the minority of shareholders of their right as members of the company to have its affairs conducted in accordance with its articles of association”.
Companies Act 1948
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Scottish Co-operative Wholesale Society Ltd v Meyer [1958] 3 All ER 66; [1959] 3 WLR 404; [1959] AC 324
1959
HL
Viscount Simonds, Lord Keith and Lord Denning
Scotland, Company
The Co-operative Society had formed a 51 per cent-owned subsidiary to manufacture rayon at a time of strict post-war controls. The other shares were owned by two outside directors with skill and experience in the trade. When these directors declined to sell their shares to the society it began switching its business to a new department within its own organisation. The subsidiary's business declined and its shares fell heavily in value. On the directors' petition the Court of Session had ordered the society to buy the directors' shares at "what would have been the value of the shares at the commencement of the proceedings had it not been for the oppressive conduct of which complaint was made". Held: The House dismissed the Society's appeal. The grant of relief was in the judge's discretion. Viscount Simonds, Lord Keith and Lord Denning all specifically approved a valuation which was both back-dated to the presentation of the petition and adjusted to compensate for the past oppression.
An oppressing shareholder was directed to purchase the shares of the oppressed shareholder: (Lord Denning) "One of the most useful orders mentioned in the section -- which will enable the Court to do justice to the injured shareholders -- is to order the oppressor to buy their shares at a fair price: and a fair price would be, I think, the value which the shares would have had at the date of the petition, if there had been no oppression. Once the oppressor has bought the shares, the company can survive. It can continue to operate. That is a matter for him. It is, no doubt, true that an order of this kind gives to the oppressed shareholders what is in effect money compensation for the injury done to them: but I see no objection to this. The section gives a large discretion to the Court and it is well exercised in making the oppressor make compensation to those who have suffered at his hands."
Companies Act 1948 210
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 Gradwell (PTY) v Rostra Printers Ltd; 1959 - [1959] (4) SA 419
 
Akerhielm v De Mare [1959] AC 789; [1959] 3 All ER 485
1959
PC
Lord Jenkins
Litigation Practice, Torts - Other, Company
A company prospectus contained the following: "About a third of the capital has already been subscribed in Denmark." Though the directors believed this to be true, it was not true at the time the prospectus was issued. Held: The statement was not fraudulent having been made with an honest belief in its truth. When a party has been acquitted of fraud the decision in his favour should not be displaced except on the clearest grounds.
Lord Jenkins said: "their Lordships are satisfied that this is not one of those exceptional cases in which an appellate court is justified in reversing the decision of a judge at first instance when the decision under review is founded upon the judge's opinion of the credibility of a witness formed after seeing and hearing him give his evidence. Their Lordships can hardly imagine a case in which the credibility of a witness could be more vital than a case like the present where the claim is based on deceit, and the witness in question is one of the defendants charged with deceit. Their Lordships would add that they accept, and would apply in the present case, the principle that where a defendant has been acquitted of fraud in a court of first instance the decision in his favour should not be displaced on appeal except on the clearest grounds." and "The question is not whether the defendant in any given case honestly believed the representation to be true in the sense assigned to it by the court on an objective consideration of its truth or falsity, but whether he honestly believed the representation to be true in the sense in which he understood it albeit erroneously when it was made."
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Holmes v Keyes [1959] Ch 199
1959
CA
Jenkins LJ, Romer LJ and Ormerod LJ
Company
Where provisions were ambiguous a construction which produced reasonable business efficacy was preferred over one which produced an unreasonable result. Jenkins LJ said: "I think that the articles of association of the company should be regarded as a business document and should be construed so as to give them reasonable business efficacy, where a construction tending to that result is admissible on the language of the articles, in preference to a result which would or might prove unworkable."
As to the particular clause he said; “What, to my mind, concludes the matter is the circumstance that the article with which we are here concerned, article 65, as adopted by special resolution, provides as follows: ‘At any general meeting of the company a resolution put to the vote of the meeting shall be decided on a show of hands unless before or upon the declaration of the result of the show of hands a poll be demanded’. It is to be observed that a poll can be demanded before the show of hands as well as upon the declaration of the results of the show of hands. The language is capable of reading: ‘Unless before the declaration of the result of the show of hands or upon the declaration of the result of the show of hands,’ and then it could conceivably be argued that the demand could not be made before the declaration of the result of the show of hands if there was no show of hands at all. That would be an inconvenient construction, which would compel going through the formality of a show of hands, not for the purpose of obtaining the result of that vote, but merely so that a demand for a poll could be made before the declaration of the result. I think the article should read, as suggested by my brother Romer in the course of the argument, in this way: ‘At any general meeting of the company a resolution put to the vote of the meeting shall be decided on a show of hands unless before (comma) or upon the declaration of the result of (comma) the show of hands a poll be demanded.’ That makes it clear that a poll can be demanded without going through the formality of a show of hands. That question, therefore, is, in my judgment, out of the way.”
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Unit Construction Co Ltd v Bullock [1960] AC 455; [1959] UKHL TC_38_712
30 Nov 1959
HL

Company, Income Tax
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 unwise to allow them to be managed in Africa any longer, and that their management must be taken over by the directors of [the parent company] in London.' The board of directors of the parent company 'decided that . . they were forced to take over management and control', and the representative of the parent company in East Africa took over the functions of the local boards, which still existed but stood aside, and controlled the subsidiaries in accordance with the requirements of the parent. Much of that may have been irregular, or even unconstitutional, but it was what happened. Held: The African subsidiaries had become resident in the United Kingdom. A company can come to be resident in a territory even if it does not hold directors' meetings there.
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[ Bailii ]
 
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