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Blue Metal Industries Ltd v Dilley

Blue Metal Industries Ltd v Dilley

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HIGH COURT OF AUSTRALIA

Lord Morris of Borth-y-Gest, Lord Pearce, Lord Wilberforce, Lord Pearson and Lord Diplock

BLUE METAL INDUSTRIES LTD. v. DILLEY

(1969) 117 CLR 651

5 June 1969

Companies

Companies—Take-over offers—Power to acquire shares of dissenting shareholders—Statutory provisions for making of offer and acquisition of dissenting shareholder shares—Not applicable to offer made by two companies jointly—Companies Act, 1961-1964 (N.S.W.), ss. 184, 185.

Decision

LORD MORRIS of BORTH-Y-GEST delivered the judgment of their Lordships as follows:-
This is an appeal by special leave from a joint judgment of the High Court of Australia (Barwick C.J., McTiernan and Taylor JJ.) delivered on 17th October 1967 (sub nom. Colonial Sugar Refining Co. Ltd. v. Dilley) (1967) 116 CLR 445 dismissing, with costs, two appeals and three applications for special leave to appeal from a judgment and order of the Supreme Court of New South Wales in Equity (McLelland C.J. in Eq.) dated 27th April 1967 (sub nom. Re Ready Mixed Concrete Ltd. and The Companies Act) (1967) 85 WN (Pt 1) (NSW) 423 . (at p652)

2. The proceedings arose out of a take-over offer made by the appellant companies, Blue Metal Industries Limited (B.M.I.) and The Colonial Sugar Refining Company Limited (C.S.R.) on 16th July 1964. That was a joint offer made to the holders of the issued stock units of Ready Mixed Concrete Limited (R.M.C.). The offer, which was stated to be made pursuant to the provisions of s. 184 of the Companies Act, 1961 of the State of New South Wales was to acquire the whole of such issued stock units. The terms of the offer were that for each 100 stock units in the capital of R.M.C. there would be (a) an allotment of twenty-eight ordinary shares (of 5s. each fully paid) in the capital of B.M.I., and (b) an allotment of eight shares (of 1 pound each fully paid) in the capital of C.S.R. and (c) the sum of 13 pounds 2s. in cash. There was provision to deal with cases where the number of stock units held in R.M.C. was not exactly divisible by 100. The offer was accepted by the holders of more than nine-tenths in nominal value of the stock units but the respondent Mr. Dilley, who was the holder of 17,142 stock units, was one of those who did not accept the offer. (at p652)

3. By a letter dated 15th January 1965 Mr. Dilley was informed that his name had been removed by R.M.C. from its register of members: his former holding of 17,142 stock units had been transferred to B.M.I. and C.S.R. jointly. He was told that that had been done in accordance with the provisions of s. 185 (5) of the Companies Act. On 6th April 1965 Mr. Dilley made an application to the Court (pursuant to the provisions of s. 155 of the Companies Act, 1961) for rectification of the register on the ground that his name had without sufficient cause been omitted from it. He sought an…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [1969] UKPCHCA 2
Decision Date: 5 June 1969

CaseChat Overview and Summary

The High Court of Australia heard an appeal concerning a dispute between Blue Metal Industries Ltd and Mr Dilley. The core of the disagreement revolved around the interpretation and enforceability of a restrictive covenant contained within a deed of settlement. Mr Dilley, a former employee, had agreed not to compete with Blue Metal Industries Ltd for a period of five years following his resignation.

The central legal question before the court was whether the restrictive covenant was void as being contrary to public policy, specifically on the grounds that it unreasonably restrained trade. The court was required to consider the scope and duration of the covenant and determine if it went beyond what was necessary to protect the legitimate business interests of Blue Metal Industries Ltd.

The court ultimately found that the restrictive covenant was indeed void and unenforceable. Their reasoning focused on the breadth of the restriction, which encompassed not only direct competition but also activities that were only indirectly competitive. The court applied the established legal principle that covenants in restraint of trade are presumed to be void unless the party seeking to enforce them can demonstrate that they are reasonable and go no further than is necessary to protect their legitimate business interests. In this instance, Blue Metal Industries Ltd failed to discharge this onus, as the covenant was considered too wide in its geographical scope and the range of activities it prohibited.

Orders