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[1916] HCA 37
High Court of Australia
1916-07-01
Isaacs J
Original judgment source is linked above.
Arts. 68, 69 and 158, read in conjunction, entitled the pro- prictors (possibly transferees for value) of the vendor's shares, Nos. 1 to 30,000, to reasonable notice that the business intended : to be transacted at the meeting of Ist October included the deferring of their participation in the assets until the contributory shares were satisfied. That was the real and substantial part of the business as the respondents construe the resolution. From a business standpoint that was on such construction the cause, rather than the consequence, of the winding up at that particular juncture. In law the distribution was the consequence, but so far as the respective rights of the shareholders were concerned it was the effective cause, because it was the practical step propo: to be taken. And this all-important fact was not disclosed in th notice. Why not? I do not attribute any mala fides to tl directors in not stating it in the notice, but the Company, whi agents they were, must take the responsibility of the omission. The shareholders are not to' be put upon conjecture as to what might be intended. They cannot, of course, require meticulously precise notices. All that is needed in the absence of definite provision is a fair and reasonable intimation of what is actuallj proposed to be done. Selwyn LJ. in Wright's Case (1) said "The shareholders must have proper notice on the subject of that which is proposed to be done." I do not postulate that a notice is necessarily insufficient because the formal document itself does not express all that is intended to be done. If on th whole it gives fair business-like notice in the circumstances, the as Bowen LJ. has said (Alewunder v. Simpson (2) ), is enou See also Irvine v. Union Bank of Australia (3) and 'Beale Proprietary Co. Ltd. v. Fuke (4).
Now, upon the facts, did this notice give such fair intimati to the holders of vendot's shares as business men that it was p posed as part of the business of the meeting to deprive them 0 their primary right of equal distribution? Would the fact calling the meeting for a date prior to the expiration of the six months mentioned in the proviso suffice for the purpose? In my opinion it would not. It might raise a doubt; and so far would. be ambiguous - which is not what fairness demands where notice -
(1) 87 LJ. Ch., 529, at p. 537. (3) 2 App. Cas., 366, at p. 375. (2) 43. Ch. D., 139, at p. 147. (4) (1906) 1 Ch., 148, at p. 164.
s required. The essence of the matter is that the shareholders entitled, not merely to be put on inquiry, but to be notified with reasonable clearness that their property was in fact to be
in danger. It was consistent with ordinary or extraordinary tribution that the winding up should take place when it was posed, particularly as other mining property - Mid Iron Cap - ide the leases sold by the vendor, had also been worked by the Company ; and a business man would, I think, have expected be told if it were really proposed to differentiate between him and his fellow shareholders. It was so easy to do it. s
Then it was suggested that developmental reports had been published in the Adelaide daily newspapers between 20th April d 24th July. Apart from other and obvious reasons why such cations could not suffice, it is clear that, unless the Articles provide, shareholders are not bound for such a purpose to read papers: Alexander v. Simpson (1). The Company did not e any circumstances by reason of which, notwithstanding silence of the notice itself, the shareholders, reading it fairly, understand it as applying to those circumstances, and t yy know that the general nature of the business included
e special treatment of the paid up shares. On the contrary, was put in evidence a a telegram, dated 21st September. from
of the Company : - " If Tiguidated what dividend do y ? Would paids participate?" Carmichael appears by the list admitted in evidence as a contributory shareholder He was informed that paid-ups would not participate. he does not appear to have communicated that information, ind it was to his advantage to remain silent. The chairman of Company in his evidence says as to this telegram : - *« It does it that Carmichael was in doubt whether paids would par- He asks the question." Then the witness adds this statement There may or may not have been other olders in the same position of doubt."
o observations naturally arise on that evidence. First, it tes that the notice published in Western Australia on 21st vber was ambiguous and the directors had it brought fully
ww Ryan v Epna May JUNCTION Gorp Minine Co. No Liasruiry.
home to their minds that the ambiguity was felt by one share- - holder and might be felt by others. The other observation is:
that, notwithstanding the natural requirement of art. 158 itself
from the broad standpoint of justice, and the additional effect of : Carmichael's telegram, the directors did not trouble to give to - the parties interested adversely to themselves any further inti-
mation of the real business of the meeting. In my opinion, there - is no ground for departing from the literal terms and primary limits of the notice, and therefore of the resolution. Decisions which assist the appellant by analogy are Imperial Bank of China, India, and Japan v. Bank of Hindustan, India, and Japan (1) and Gardner v. Iredale (2). This results in the winding up not only being valid and effective, but being also one on ordinary conditions. These are provided for in the first part of art. 158, and consist of a pro rata distribution of assets after - outside obligations are satistied. The plaintiff's claim in par. 8° of the statement of claim is therefore well founded, and his appeal should be allowed. :
Gavan Durry J. I have had the advantage of reading the judgments which have just been delivered. I agree in the opinion that the resolution to wind up voluntarily did not bring the case within the proviso in art. 158, and that the notice accurately described the nature of the business which was trans- acted at the meeting. Pa
Appeal allowed. Declaration and order appealed from discharged. Declaration that plaintiff is entitled to the relief as asked for in claim (a) in par. 8 of the statement of claim, and an injunction im terms of claim (b) in the same paragraph. Counterclaim dismissed. Respondents to pay costs of action and of appeal. i
Solicitors for the appellant, Mayo, Murray & Cudmore.
Solicitors for the respondents, Hayward & Magarey. i 'Bee
(1) LR. 6 Eq., 91. (2) (1912) 1 Ch., 700, at pp. 711, 712.