Loch v Blackwood (John) Ltd
| Jurisdiction | UK Non-devolved |
| Judgment Date | 1924 |
| Date | 1924 |
| Court | Privy Council |
Company - Winding Up - “Just and equitable” - Ejusdem generis Rule - Discretion of the Court -
The Companies Act, 1910, of Barbados, provides by s. 127, which is identical with s. 129 of the Companies (Consolidation) Act, 1908, that “a company may be wound up by the Court …. (vi.) if the Court is of opinion that it is just and equitable that the company should be wound up.”
A company was registered in Barbados under the Companies Act, 1910, as a public company, in order to carry on the testator's business and to divide the profits of it between members of his family entitled under his will to share them; the managing director had a preponderating voting power. Upon a petition for winding up by shareholders who were not directors, it appeared that the directors had omitted to hold general meetings, or to submit accounts, or recommend a dividend, and that they had laid themselves open to the suspicion that their object in so omitting was to keep the petitioners in ignorance of the company's position and affairs and to acquire the petitioners' shares at an under value:—
Held, that the power to wind up the company under s. 127 (vi.) was not confined to cases in which there were grounds analogous to those mentioned earlier in the section; and that in the circumstances of the case, regard being had to the domestic character of the company, the petitioners were entitled under that provision to a winding up order.
Authorities as to the effect of the Companies (Consolidation) Act, 1908, s. 129 (n.), reviewed.
APPEAL (No. 100 of 1923) from an order of the West Indian Court of Appeal (Barbados) dated March 15, 1923, reversing an order of the Court of Common Pleas of Barbados.
In 1922 the appellants petitioned the Court of Common Pleas of Barbados praying for (inter alia) an order that the respondent company be wound up by the Court under the Companies Act, 1910, of Barbados.
The facts appear fully from the judgment of the Judicial Committee.
The Chief Justice of Barbados (Sir W. H. Greaves) was of opinion that it was just and equitable that the company should be wound up, and under s. 127 (vi.) of the Act he made a winding-up order.
Upon appeal to the West Indian Court of Appeal the order was set aside. The learned judges were of opinion that to justify the Court in ordering a company to be wound up under s. 127 (vi.) of the Act it must be shown either that the company's business cannot be carried on at all, or that on account of fraud or for other weighty reasons it ought not to be allowed to be carried on, neither of which grounds for a winding-up order existed in the present case.
1924. Wilton K.C. and Blanco White for the appellants referred to the Companies Act, 1910, of Barbados, s. 127; the Companies (Consolidation) Act, 1908, s. 129; Symington v. Symington's QuarriesF1; In re Newbridge Sanitary Steam LaundryF2; In re Yenidje Tobacco Co.F3; Baird v. LeesF4; Demerara Bauxite Co. v. HubbardF5; and Lindley on Partnership, 8th ed., p. 656.
Clauson K.C. and Gordon-Brown for the respondents contended that on the facts the appellants were not entitled to a winding-up order; they referred to Percival v. WrightF6 and to s. 63 of the (Barbados) Companies Act, 1910.
June 2. The judgment of their Lordships was delivered by
LORD SHAW OF DUNFERMLINE. This is an appeal from an order dated March 15, 1923, of the West Indian Court of Appeal presided over by Sir A. Lucie Smith, Chief Justice of Trinidad, the other members of the Court being Sir Charles Major, Chief Justice of British Guiana, and Mr. W. P. Michelin, Acting Chief Justice of the Leeward Islands. This Court reversed an order dated October 30, 1922, of His Honour Sir W. H. Greaves, Chief Justice of Barbados, sitting in the Court of Common Pleas for Barbados, for the winding up of the respondent company, John Blackwood, Ld.
The appellants are petitioners for an order by the Court for the winding up. The petition is presented under s. 127 of the Barbados Companies Act, 1910. That section is in terms identical with those of s. 129 of the English Companies (Consolidation) Act, 1908. The sub-section particularly founded upon is sub-s. 6, which declares that a company may be wound up by the Court “if the Court is of opinion that it is just and equitable that the company should be wound up.”
A good many years ago Mr. John Blackwood established an engineering business in Barbados and carried it on until his death in January, 1904. Under the provisions of his will his estate fell to be divided one-half to Mrs. Rebecca Thomson McLaren, the wife of Mr. William McLaren, and one-quarter each to his niece Mrs. Loch and to his nephew (Mrs. Loch's brother) James Blackwood Rodger lately deceased; the shares to be paid to Mrs. Loch and Mr. Rodger when they reached the age of 30.
Authority was given to his trustees to convert his business into a company, with powers to his trustees to act as directors and to Mr. McLaren to have the supreme control and management of matters connected with the business. The trustees were James Murphy (who died in 1911 and never acted in the trusts); Mr. William McLaren (the testator's sister's husband); and Mr. McLaren's clerk Henry Allan Yearwood.
A company was accordingly formed on January 2, 1905. In the year 1916 Mrs. Loch and James Blackwood Rodger had both attained the age of 30. The latter died in December, 1919. The board of directors now consists of Mr. McLaren, his wife Mrs. McLaren, who was appointed in 1913, and Mr. Yearwood. Under this directorate the business of the company appears to have been energetically managed and to have amassed considerable profits.
The arrangement of the capital was this: the total amount was 40,000 in 1l. shares; 20,000 of these were allotted to Mrs. McLaren; of the remaining 20,000, 10,000 should have gone to Mrs. Loch and 10,000 to Mr. Rodger. Mrs. Loch, however, was allotted 9999; Mr. Rodger, 9998; and the three shares left over were allotted one to Mr. McLaren and one each to Mr. Yearwood and Mr. King (Mrs. McLaren's nominees; the first being Mr. McLaren's clerk and the second his solicitor). This was quite a natural and proper arrangement; but, of course, in the event of a division of opinion in the family between what may be called the McLaren interest on the one hand, and the interest of the nephew and niece on the other, the preponderance of voting power lay with the former. It is thus seen that although taking the form of a public company the concern was practically a domestic and family concern. This consideration is important, as also is the preponderance of voting power just alluded to.
In the petition for winding up eight different reasons are assigned therefor. The first is: that the statutory conditions as to general meetings have not been observed; the second that balance sheets, profit and loss accounts and reports have not been submitted in terms of the articles of the company; and the third is that the conditions under the statute and...
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