5. Company Directors
| Pages | 78-96 |
| Author | Michael Ottley |
5 Company Directors
5.1 Appo intm ent
5.1.1 Ap po int ment of ma nag ing d irect or
Harold Holdsworth & Co (Wakefield) Ltd v Caddies (1955) HL
The respondent, Mr Caddies, had been appointed, for five years,
managing director of the appellant company pursuant to an agreement
which required him to perform the duties and exercise the powers in
relation to the appellant company and the businesses of its subsidiary
companies which were assigned to or vested in him by the appellant
company's board of directors. Following differences arising between Mr
Caddies and the rest of the board of the appellant company the board
resolved that he confine his attention solely to the running of the business of
one of the appellant's subsidiary companies. Mr Caddies claimed that this
was a repudiation of the agreement by which he was appointed managing
director by the appellant company.
Held The House of Lords said that it was not a repudiation by the
appellant company, indeed the agreement appointing Mr Caddies entitled
them to vary the nature of his duties. The office of managing director was
not a fixed term of art in company law but depended upon the terms of the
individual appointment.
Freeman & Lockyer v Buckhurst Park Properties Ltd (1964) CA
The defendant company was a property development company and had
been formed by Mr K and Mr H. These two gentlemen along with two of
their nominees constituted the board of directors and all four needed to be
present in order for a board meeting to be quorate. Despite the fact that he
had contributed half of its capital, Mr H played no active role in the running
of the company and was mostly abroad. The running of the company's
business was left to Mr K who, although he had never been formally
appointed managing director, acted as such. Mr K commissioned the
plaintiff firm of architects to lodge a planning application in respect of a site
owned by the company. The company refused payment of the plaintiff's fee
on the grounds that Mr K had no authority to engage them on behalf of the
company.
Held The Court of Appeal found for the plaintiffs and held that the acts
of Mr K did bind the company since the board of directors, in which was
vested full powers of management under the articles, knew Mr K had been
acting as managing director, and in that they permitted him to do so they
represented by conduct that he had the authority of a managing director and
the plaintiffs were thus induced to believe that he could so act. Mr K had
implied actual authority to act as he did.
Hely-Hutchinson v Brayhead Ltd (1968) CA
Mr Richards was chairman and chief executive of the defendant company
but had not been formally appointed managing director or been given
express authority to bind the company. However, he acted as managing
director and it was quite usual for him to make deals on behalf of the
company and tell his fellow directors later. They acquiesced in this practice.
The plaintiff was chairman and managing director of another company
which it was planned to merge with the defendant company. Mr Richards
gave the plaintiff certain letters which committed the defendant company to
guarantee payments owing to the plaintiff and to indemnify him against
certain losses. The defendant company now claimed that Mr Richards had
no authority to commit the company thus.
Held The plaintiff's claim succeeded as Mr Richards was held to have
implied actual authority to enter into these commitments on behalf of the
defendant company. The board's conduct in its acquiescence to the way in
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