corporate constitution cases

Question 1

rayfield v hands

Answer 1

courts permitted members to enforce an article requiring other members to take shares when other member transferred them

Question 2

bratton seymour service v oxbourgh

Answer 2

CA held: terms cannot be implied from extrinsic circumstances

Question 3

allen v gold reefs of west africa

Answer 3

alteration that only affected one member would still be valid if it could apply to all members

Question 4

birch v cooper

Answer 4

there is a default presumption of equality between the shareholder

Question 5

eley v positive life insurance

Answer 5

the AoA provided that C would be the company’s permanent solicitor CA held: unable to enforce his rights as a third party

Question 6

russell v northern bank development

Answer 6

HL held: shareholder agreement not to create further share capital was binding on the shareholders but not the company

Question 7

ag of belize v belize telecom

Answer 7

HL held: Lord Hoffman when the instrument is not clear- interpret in line with what a reasonable person would interpret - no additions to articles

Question 8

shuttleworth v cox and bros

Answer 8

objective test to whether the alteration of the articles is bone fide in the interests of the company

Question 9

quin & acton v salmon

Answer 9

court are reluctant to enforce rights between members

Question 10

hickman v kent and romney

Answer 10

articles state that if there was a dispute arbitration is required. member issued writ against the appointment of secretary, co tried to enforce article HL held: lord ashbury ‘the company is entitled against its members to enforce

Question 11

heals-hutchinson v brayhead

Answer 11

r was the chairman of brayhead and regularly acted as MD. he guaranteed the payment of a loan on hold. CA held: while richards lacked express actual authority as defacto MD he had implied actual authority

Question 12

bushell v faith

Answer 12

HL held: the weighed voting rights were valid and not prohibited (Davis - this decision seems to be confined to limited situations

Question 13

Re Duomatic

Answer 13

Buckley J: where it can be shown that all the shareholders who have a right to attend and vote in a GM of a company assent to some matter the assent is binding as a resolution must be [a)must be from all shareholders b) must consent with full knowledge]

Question 14

royal british bank v turquand

Answer 14

the internal management rule - company was bound by loan as the resolution was a matter of internal management that C could presume had been correctly carried out

Question 15

macdougal v gardiner

Answer 15

James LJ cannot seek enforcement of the articles on matters related to internal management

Question 16

freeman and lockyer v brockhurst park properties

Answer 16

Diplock LJ summarised three conditions that must be met for apparent authority to be applicable 1) the representation was made to the contractor 2) that such a representation was made by a person or persons who had actual authority to manage the business generally or in respect of those matters which the contract related 3) the contractor was induced by such representation to enter into the contract

Question 17

ashbury railway carriage and iron v riche

Answer 17

sets out ultra vires principle: Lord Hatherly - void and ultra vires

Question 18

walker v london tramways

Answer 18

a company cannot contract itself out of the right to alter its articles

Question 19

pender v lushington

Answer 19

chairman of shareholder’s meeting improperly refused to register the vote’s cast infringing on a member’s right Held: as his personal rights as a member were infringed he could enforce them