Short v Treasury Comrs
| Jurisdiction | UK Non-devolved |
| Judge | Lord Porter,Lord Uthwatt,Lord Du Parcq,Lord Morton of Henryton |
| Judgment Date | 29 July 1948 |
| Judgment citation (vLex) | [1948] UKHL J0729-2 |
| Date | 29 July 1948 |
| Court | House of Lords |
[1948] UKHL J0729-2
Lord Porter
Lord Uthwatt
Lord du Parcq
Lord Normand
Lord Morton of Henryton
House of Lords
Upon Report from the Appellate Committee, to whom was referred the Cause Short and others against Lords Commissioners of His Majesty's Treasury, that the Committee had heard Counsel as well on Monday the 28th, as on Tuesday the 29th days of June last, upon the Petition and Appeal of Francisco Samuel Short, of "Leylands," Meopham, in the County of Kent, and Lonsdale Investment Trust Limited, of 27 Old Broad Street, E.C.2, in the City of London, praying, That the matter of the Order set forth in the Schedule thereto, namely, an Order of His Majesty's Court of Appeal of the 22d of July 1947, might be reviewed before His Majesty the King, in His Court of Parliament, and that the said Order might be reversed, varied or altered, and that the Petitioners might have the relief prayed for in the Appeal, or such other relief in the premises as to His Majesty the King, in His Court of Parliament might seem meet; as also upon the printed Case of the Lords Commissioners of His Majesty's Treasury, 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 His Majesty the King assembled, That the said Order of His Majesty's Court of Appeal, of the 22d day of July 1947, complained of in the said Appeal, be, and the same is hereby, Affirmed, and that the said Petition and Appeal be, and the same is hereby, dismissed this House: And it is further Ordered, That the Appellants do pay, or cause to be paid, to the said Respondents the Costs incurred by them in respect of the said Appeal, the amount thereof to be certified by the Clerk of the Parliaments.
My Lords,
This is an appeal from a judgment of the Court of Appeal affirming a decision of Morris J. in the High Court.
The question at issue involves a consideration of the sum to be paid to certain shareholders in Short Brothers (Rochester and Bedford) Ltd., whom I shall call Short Brothers, by the Treasury when taking over the shares in that company.
The issued capital of the company consisted of three classes of shares, viz., 230,475 Redeemable Preference shares of £1 each, as to which no question arises, 250,000 A ordinary shares of 5s. each and 581,302 ordinary shares also of 5s. each. The voting power was concentrated in the ordinary shares and each A ordinary share entitled its holder to four votes as against one vote in the case of each ordinary share.
No distinction however has been made or is claimed to exist between these two types of share for the purpose of this case, though it is clear that any one possessing 200,000 A shares would have control of the company.
The Appellants have, I understand, been chosen so as to represent the interests concerned, Mr. Short holding 22,958 A ordinary and the Trust 3,000 ordinary shares.
The claim arises in this way:—
"3.—(1) By paragraph (4) of Regulation 55 of the Defence (General) Regulations, 1939, a competent authority was empowered for ( inter alia) the efficient prosecution of the war to appoint by order an authorised controller of any undertaking to exercise with respect to the undertaking such functions of control on behalf of His Majesty as might be provided by the order.
(2) By paragraph (1) of Regulation 78 of the said Regulations where an order appointing an authorised controller had been made in the case of an undertaking carried on by a company, the competent authority, if satisfied that it was necessary for the purpose of securing effective control, was empowered with the consent of the Treasury by order to transfer the shares of the company to such transferees as might be specified in the order.
(3) By paragraph (4) of Regulation 78 it was provided that where an order had been made under paragraph (1) thereof the shares should on such date as might be specified in the order vest in the transferees on behalf of the competent authority free from any mortgage, pledge or charge.
(4) By paragraph (5) of Regulation 78 the price to be paid in respect of any shares transferred by virtue of such an order was to be such price as might be specified in an order made by the Treasury, being a price which, in the opinion of the Treasury, was not less than the value of those shares as between a willing buyer and a willing seller on the date of the order made appointing the authorised controller.
(5) By paragraph (7) of Regulation 78 if any person, who immediately before the date of transfer had an interest in any of the shares claimed that the price specified by the Treasury was less than the value aforesaid the value of the shares in which that person had an interest should be determined by the arbitration of a qualified accountant nominated by the Lord Chief Justice of England.
4. By an order entitled Short Brothers (Rochester and Bedford) Limited Control Order, 1943, dated the 17th March, 1943, the Minister of Aircraft Production in exercise of his powers under paragraph (4) of Regulation 55 appointed an authorised controller of the undertaking of the Company.
5. By an order entitled Short Brothers (Rochester and Bedford) Limited (Transfer of Shares) Order, 1943, dated the 22nd March, 1943 (hereinafter referred to as the 'Transfer Order'), the said Minister with the consent of the Treasury transferred as at the 23rd March, 1943, all the shares in the company to his nominees.….
6. By an order entitled Short Brothers (Rochester and Bedford) Limited (Price of Shares) Order, 1943, dated the 31st May, 1943 (hereinafter referred to as the 'Prices Order'), the Respondents specified the following prices:—
( a) 22s. 3d. per share in the case of the five per cent. Redeemable Cumulative Preference Shares;
( b) 29s. 3d. per share in the case of the 'A' ordinary shares;
( c) 29s. 3d. per share in the case of the ordinary shares.
7. …. Both Appellants gave notice that they were dissatisfied with the prices fixed for their shares by the Prices Order and Mr. Sydney John Pears, a qualified accountant, was nominated by the Lord Chief Justice of England to act as arbitrator and to assess the value of the said 'A' ordinary and ordinary shares. For convenience it was agreed that the claims of the Appellants should be treated as test cases and that if the arbitrator held that the prices to be paid by the Treasury to the Appellants should be in excess of those specified in the Order the Treasury would pay those revised prices in respect of all shares of these classes, irrespective of whether other former holders had themselves claimed arbitration.
8. The arbitration was held on the 15th, 16th, 17th and 18th October, 1946, and on the 30th October, 1946, the arbitrator stated his Award in the form of a Special Case for the opinion of the Court."
As appears from the Award itself the Respondents contended that the proper basis of valuation under Regulation 78 (5) was to assume that the shares had been purchased in individual blocks from individual shareholders on the date of transfer and to fix the value accordingly and that in fact that value was best ascertained from the prices ruling on the Stock Exchange on the relevant date., viz., the date on which the Controller was appointed.
The Claimants on the other hand contended that, the transfer being a transfer of all the shares, the Stock Exchange value was not a true criterion: inasmuch as no order transferring the shares under paragraph (1) of Regulation 78 was authorised unless it provided for the expropriation of all the shares. As they maintained, the proper method for fixing the price was first to ascertain the value of the whole undertaking and then to determine the proportionate value of each class of shares. They stressed the argument that the Crown was taking and could only take the whole of the shares and therefore must acquire the whole undertaking. No one, they contended, could acquire all the shares in a company except by paying for the business as a whole and, if the business as a whole is acquired, its value should be paid for.
That, they say, was the view of the arbitrator and he has stated what that value amounts to when the appropriate division amongst the ordinary shares has been made.
Even if, however, the shares be treated as purchased in individual blocks the same result, so the Appellants contend, is arrived at, because the potential value which is attributable to the opportunity of acquiring complete control must be taken into account.
My Lords, as I understood the attitude of the Appellants, no point was made that an inaccurate principle had been adopted or untrue figures accepted if the true method of ascertaining the shares was to value them share by share. Admittedly the Stock Exchange price was not necessarily the value of shares calculated on this principle but it was cogent evidence of their value and the Appellants acknowledged...
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