Central Piggery Co Ltd v McNicoll and Hurst - [1949] HCA 19

CENTRAL PIGGERY CO. LTD. McNICOLL

RESPONDENT. APPLICANT.

CENTRAL PIGGERY CO. LTD.

RESPONDENT, HURST

RESPONDENT. APPLICANT.

ON APPEAL FROM THE SUPREME COURT OF

QUEENSLAND. Company-Shares-Issue of shares to employee-Application made before employ-

ment-Resolution of company-Allotment of shares-Letter of acceptance after contract of service-Statutory prohibition- Proceed to the issue of shares- BRISBANE,

Rectification of register-The Companies Acts 1931 to 1942 (22 Geo. v. No. 53 June, 22, 23.

-6 Geo. VI. No. 23), 3. 112-The Industrial Conciliation and Arbitration Acts 1932 to 1947 (23 Geo. v. No. 36-11 Geo. VI. No. 27) 8. 4.

Section 4 of The Industrial Conciliation and Arbitration Acts 1932 to 1947 provides that no company " shall proceed to the issue to any of its employees any share in the company

" until the consent of the Industrial Court shall first be had and obtained.

Where applications for shares in a company were made by persons who subsequently became employees and certificates of the shares allotted were posted after they became employees-

Held that, as the shares were issued on communication to them of the acceptance of their applications, the company had proceeded to the issue of shares to its employees within the meaning of S. 4 of The Industrial Conciliation and Arbitration Acts.

Decision of the Supreme Court of Queensland (Philp J.): McNicoll V. Central Piggery Co. Ltd., (1949) Q.S.R. 240, affirmed.

78 CLR 595

APPEAL from Supreme Court of Queensland.

These were applications by James Balgarnie McNicoll and James Robert Hurst, made under S. 112 of The Companies Acts 1931 to 1942, for orders that the register of members of the Central Piggery Co. Ltd. be rectified by removing therefrom their names as share- holders and that moneys paid by them to the company in respect of certain shares with interest thereon be repaid, on the ground that the provisions of S. 4 of The Industrial Conciliation and Arbitra- tion Acts 1932 to 1947 relating to the issue of shares to employees of a company were not complied with prior to the issue of such shares. On the register McNicoll was shown as the holder of 300 fully paid cumulative preference shares of £1 each and 50 similar shares paid to 10s., and Hurst was shown as holder of 500 fully paid cumulative preference shares of £1 each. Each applicant applied to the directors in writing for the shares mentioned. All moneys were paid with the application and by his application each applicant authorized the directors to register me as a holder of the said shares."

The applications were heard before Philp J. who found the facts as follows:-In McNicoll's case the facts were that prior to 25th September 1946 on which date the company was registered, one Wilcox, the promoter of the company, had made an arrangement with McNicoll that the company, when formed, would employ McNicoll as a labourer upon the terms that McNicoll took certain shares in the company. On 25th September 1946 (or 26th Septem- ber 1946) McNicoll…

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: [1949] HCA 19
Decision Date: 23 June 1949

CaseChat Overview and Summary

The High Court of Australia heard an appeal from the Supreme Court of Queensland concerning the issue of shares by Central Piggery Co. Ltd. to two individuals, James Balgarnie McNicoll and James Robert Hurst. McNicoll and Hurst sought rectification of the company's register to remove their names as shareholders and to recover moneys paid for the shares. Their claim was based on the alleged contravention of Section 4 of The Industrial Conciliation and Arbitration Acts 1932 to 1947, which prohibited a company from proceeding to issue shares to its employees without the consent of the Industrial Court.

The central legal issue before the High Court was the interpretation of Section 4 of The Industrial Conciliation and Arbitration Acts, specifically the meaning of "proceed to the issue" of shares to employees. The court was required to determine at what point in the process of share allocation and registration the shares were considered "issued" for the purposes of this prohibition, particularly in relation to the timing of the applicants becoming employees of the company.

The High Court, affirming the decision of the Supreme Court of Queensland, held that the company had contravened Section 4. The court reasoned that the "issue" of shares is not merely the initial step of passing a resolution or even allotment, but rather the point at which the allottee gains complete control and becomes a shareholder. In this case, although resolutions to allot shares were passed and share certificates were signed before McNicoll and Hurst became employees, they did not become shareholders until notification of the allotment was communicated to them. As this communication occurred after they commenced employment, the company had "proceeded to the issue" of shares to its employees without the requisite consent of the Industrial Court. The appeals were dismissed with costs.

Orders