Central Piggery Co Ltd v McNicoll and Hurst

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.