Lyle & Scott Ltd v Scott's Trustees
| Jurisdiction | UK Non-devolved |
| Judge | Viscount Simonds,Lord Reid,Lord Tucker,Lord Keith of Avonholm,Lord Somervell of Harrow |
| Judgment Date | 18 June 1959 |
| Judgment citation (vLex) | [1959] UKHL J0618-3 |
| Court | House of Lords |
| Docket Number | No. 3. |
| Date | 18 June 1959 |
[1959] UKHL J0618-3
Viscount Simonds
Lord Reid
Lord Tucker
Lord Keith of Avonholm
Lord Somervell of Harrow
House of Lords
Upon Report from the Appellate Committee, to whom was referred the Cause Lyle & Scott Limited against Scott and others (Trustees and Executors of the late John P. Scott), that the Committee had heard Counsel, as well on Monday the 4th, as on Tuesday the 5th and Wednesday the 6th, days of May last, upon the Petition and Appeal of Lyle & Scott Limited, a company incorporated under the Companies Acts and having its registered office at 2 Lothian Street, Hawick, praying, That the matter of the Interlocutors set forth in the Schedule thereto, namely, an Interlocutor of the Lord Ordinary in Scotland (Lord Strachan) of the 30th of October 1957 and also an Interlocutor of the Lords of Session there of the First Division of the 14th of February 1958, so far as therein stated to be appealed against, might be reviewed before Her Majesty the Queen, in Her Court of Parliament, and that the said Interlocutors, so far as aforesaid, might be reversed, varied or altered, or that the Petitioners might have such other relief in the premises as to Her Majesty the Queen, in Her Court of Parliament, might seem meet; as also upon the printed Case of Mrs. Norah A. Scott, residing at "Clevely", Parkdaill, Hawick, James Wright, residing formerly at "Braidlea", 53 Greenbank Crescent. Edinburgh, and presently a patient in the Royal Edinburgh Hospital for Mental and Nervous Disorders, Edinburgh, Guy Hepburn Armstrong, Solicitor, Hawick, and George Sime Scott-Noble, Greenbank, Hawick, Trustees and Executors of the late John P. Scott, who resided at "Clevely", Parkdaill, Hawick, as such Trustees and Executors aforesaid, lodged in answer to the said Appeal; and due consideration had this day of what was offered on either side in this Cause:
It is Ordered and Adjudged, by the Lords Spiritual and Temporal in the Court of Parliament of Her Majesty the Queen assembled, That the said Interlocutors of the 30th day of October 1957 and of the 14th day of February 1958, in part complained of in the said Appeal, be, and the same are hereby Recalled: And it is further Ordered, That the Case be, and the same is hereby, remitted back to the Court of Session in Scotland with a Direction: (1) to repel the first plea-in-law for the Defenders and to sustain the sixth plea-in-law for the Pursuers; (2) to grant decree of declarator that the Defenders, being the holders of ordinary shares of Lyle & Scott Limited amounting to more than one per centum of the issued Ordinary Share Capital of the said Company and having agreed to sell their said shares, have shown themselves to be desirous of transferring their said shares within the meaning of Article 9 of the Articles of Association of the said Company and are therefore bound to implement the said Article 9 by informing the Secretary of the said Company in writing of the number of ordinary shares comprised in the said agreement of sale; and (3) to ordain the Defenders, standing the said agreement to sell, forthwith to implement the terms of the said Article 9 by informing the said Secretary in writing of the number of ordinary shares which they have agreed to sell; and to proceed as accords: And it is further Ordered, That the Respondents do pay, or cause to be paid, to the said Appellants the Costs of the Action in the Court of Session and also the Costs incurred by them in respect of the said Appeal to this House, the amount of such last-mentioned Costs to be certified by the Clerk of the Parliaments: And it is also further Ordered, That unless the costs, certified as aforesaid, shall be paid to the parties entitled to the same within one calendar month from the date of the certificate thereof, the Court of Session in Scotland, or the Judge acting as Vacation Judge, shall issue such summary process or diligence for the recovery of such Costs as shall be lawful and necessary.
My Lords,
The Respondents, whom I will call "Scott's Trustees", are, and were in November, 1956, the registered holders of a number of ordinary shares of the Appellant Company. The precise number has not been disclosed: it is sufficient to say that it is more than one per cent. of the issued ordinary share capital. That being so, their power to dispose of their shares is limited by certain of the Articles of Association of the Company. I must refer to them in some detail.
Article 7 provides that the directors may in their absolute discretion and without assigning any reason therefor decline to register any transfer of any share whether or not it is a fully paid share. This Article must be borne in mind in construing the succeeding Articles. Article 8 provides that subject to the provisions of Articles 7 and 12 ordinary shares may be dealt with by an ordinary shareholder by way of transfer or bequest to, or conveyance to trustees for behoof of certain relations with or without any consideration being paid. Article 9 is that upon which this appeal turns and I must set it out in extenso:
"Subject to the provisions of Clauses 7, 8 and 12 no registered holder of more than one per centum of the issued Ordinary Share Capital of the Company shall, without the consent of the Directors, be entitled to transfer any Ordinary Share for a nominal consideration or by way of security, and no transfer of Ordinary Shares by such a Share-holder shall take place for an onerous consideration so long as any other Ordinary Shareholder is willing to purchase the same at a price, which shall be ascertained by agreement between the intending transferor and the Directors and, failing agreement, at a price to be fixed by the Auditors of the Company for the time being. Any such Ordinary Shareholder who is desirous of transferring his Ordinary Shares shall inform the Secretary in writing of the number of Ordinary Shares which he desires to transfer, and the price shall immediately be fixed as aforesaid. Thereafter the Secretary shall intimate the same to all the other holders of Ordinary Shares simultaneously by written notice containing particulars of the intending transfer. Thereafter each Ordinary Shareholder receiving such notice shall be entitled, within fourteen days from the date of the notice, to intimate in writing to the Secretary that he offers to purchase some or all of the shares mentioned in the intimation made to him; otherwise he shall not be a party to the offer. On the expiry of the foresaid fourteen days' notice, the Secretary shall report the result to the Directors who shall divide and appropriate the shares specified in the notice among the offerers in proportion to the number of Ordinary Shares held by them respectively or as near thereto as possible, provided that no offerer shall have apportioned to him a greater number of shares than he has offered to purchase. If any difficulty shall arise in apportioning the said shares or any of them, the Directors may appropriate the shares in respect of which such difficulty arises among the offerers in such manner as they think fit or otherwise in their sole discretion. If after intimation by the Secretary to the Ordinary Shareholders in manner aforesaid the number of shares offered to be purchased by them shall be less than the number of shares, which the intending transferor gave notice of his desire to transfer, or if the offering Ordinary Shareholders shall fail to complete their purchase of such shares as shall be appropriated to them within one month after the date of such appropriation, the intending transferor may transfer the shares undisposed of to any person, whether a member of the Company or not, as he thinks proper, provided that he shall not take for them less than the price to be ascertained as aforesaid, without first offering them in manner foresaid to the other Ordinary Shareholders at such lower price."
Articles 10, 11 and 12 also deal with transfer or transmission of shares but I think that there is nothing in them relevant to this appeal.
In these circumstances in November, 1956, Scott's trustees and all other shareholders of the Company were approached by a firm of solicitors acting on behalf of a principal, who, though his name was then undisclosed, later proved to be a Mr. Hugh Fraser, with a written offer to purchase their shares. The offer was expressed to be subject to certain terms and conditions, of which the first was that the offer was conditional upon acceptance by the holders of 75 per cent. of the ordinary shares then in issue or such lesser proportion as their clients might in their absolute discretion accept as sufficient, and the second that the price for each ordinary share should be £2 10s. and should be inclusive of any ordinary dividend declared subsequent to the date thereof and that the price for each preference share should be 20s. with a similar provision in regard to dividend. Then there was a condition about holdings of both ordinary and preference shares, and then this condition which I deem of sufficient importance to set out in full:
"The price shall be satisfied by payment in cash on or after the 18th December 1956 against delivery of valid and effective Transfers of the said Ordinary and/or Preference Shares together with the relative Share Certificates and a general proxy in favour of our clients' nominee".
Certain other conditions were expressed to which I need not refer, and lastly it was provided that "acceptances of this offer must be received by us not later than first post on 27th November, 1956 on the enclosed Form of Acceptance duly signed by you." By a subsequent letter the price offered for each ordinary share was increased to £3 and the time for acceptance was extended.
By the enclosed form of acceptance, which...
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