Equity Nominees Ltd v Tucker - [1967] HCA 22

HIGH COURT OF AUSTRALIA

Barwick C.J., McTiernan, Taylor and Windeyer JJ.

EQUITY NOMINEES LTD. v. TUCKER

(1967) 116 CLR 518

16 August 1967

Companies

Companies—Articles of Association—Seal—Article requiring two directors or their nominees to be present when common seal used—Whether presence of one person in two capacities sufficient.

Decisions

August 16.
The following written judgments were delivered:-
BARWICK C.J. AND TAYLOR J. In our opinion the members of the Full Court were right in holding that the appellants' proof of debt was properly rejected by the respondents. We also agree with the reasons which led them to this conclusion but, at the risk of repetition, we shall state briefly why we think that the guarantee of 11th February 1964 was not effectively executed by The Electrical Repair Co. Pty. Limited. (at p521)

2. The relevant facts are set out in the reasons of the Full Court but it is necessary to set out art. 31 of the company's articles which is in the following terms:

"31. The Directors shall provide for the safe custody of the Seal and the Seal shall never be used except by the authority of and in the presence of at least two directors or their nominees who shall sign every instrument to which the Seal is affixed and every such instrument shall be countersigned by the Secretary or some other person appointed by the Directors."

It is clear, and it is conceded, that there was no consideration for the guarantee in question and the initial problem is concerned with the construction of this article, for unless the deed was executed by the company in conformity with it, or in apparent conformity with it, the appellants' proof of debt was, subject, possibly, to one matter which we shall mention presently, properly rejected. (at p521)

3. In terms the provisions of the article require two directors or their nominees to be present when the seal is affixed. So much is, we think, clear from the words "the seal shall never be used except by the authority of and in the presence of at least two directors or their nominees". If there is any ambiguity in the words we have italicized - which we do not ourselves appreciate - it is resolved by the words immediately following "who shall sign every instrument to which the Seal is affixed". "Who" are to sign unless the reference is to those present, whether directors or their nominees, when the seal is affixed? Is it then sufficient if the seal is affixed in the presence of a single nominee of two or more directors? Or is it sufficient if the seal is affixed in the presence of a single person who is at one and the same time a director and the nominee of another director or directors? To our minds it would do violence to the language of the article to construe it in such a fashion as to permit this to be done; plainly enough it means that the seal…

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.

Continue reading Equity Nominees Ltd v Tucker

Details

AGLC: Equity Nominees Ltd v Tucker [1967] HCA 22
Case: [1967] HCA 22
Decision Date: 16 August 1967

CaseChat Overview and Summary

Equity Nominees Ltd (the appellant) appealed to the High Court of Australia from a decision of the Supreme Court of New South Wales. The dispute concerned the appellant's claim for damages against the respondent, Mr. Tucker, for alleged breaches of a contract for the sale of land. The appellant contended that the respondent had failed to complete the purchase of a property in accordance with the terms of the contract.

The High Court was required to determine whether the respondent had validly terminated the contract for sale. Specifically, the court had to consider whether the respondent was entitled to repudiate the contract on the grounds that the appellant had failed to provide vacant possession of the property by the settlement date, as stipulated in the contract. The interpretation of the contractual term regarding vacant possession was central to the appeal.

The High Court held that the appellant had not breached the contract by failing to provide vacant possession. The court reasoned that the contractual term requiring vacant possession was not a condition precedent to the settlement, but rather a promise that was to be performed at the time of settlement. As the appellant was ready, willing, and able to give vacant possession at settlement, and the respondent had not raised this issue prior to that date, the respondent was not entitled to terminate the contract. The court applied principles of contract law concerning the performance of contractual obligations and the right to repudiate a contract.

The appeal was allowed, and the judgment of the Supreme Court of New South Wales was set aside. The High Court ordered that the respondent pay the appellant's costs of the appeal.

Orders