Hawcroft v Jamieson

Hawcroft was the legal personal representative of a deceased director of the respondent company, and was entitled to one-third of the shares in the company. The other two directors, who were each one-third shareholders, were the respondents. The dispute concerned the management and operation of the company, and the validity of a resolution of the directors appointing one of the respondents as chairperson with additional remuneration. The plaintiffs claimed that the directors had entered into a binding agreement that governed the company’s management, and that the resolution appointing the respondent as chairperson was beyond the power of the directors under the company’s constitution. The plaintiffs sought to enforce the agreement and the invalidity of the resolution.

The court considered the validity of the resolution appointing the respondent as chairperson, and whether the agreement was binding. The court considered whether the agreement was binding in the face of the company’s constitution which provided for the appointment of directors by a simple majority, while the agreement required a special majority for any variation to the management of the company. The court also considered whether the plaintiffs were estopped from asserting the agreement was binding, as they had not raised the issue in earlier proceedings against the company.

The court found that the resolution appointing the respondent as chairperson was invalid, as it was beyond the power of the directors under the constitution. The court found that the agreement was binding, as the directors’ subsequent conduct indicated that they intended to be immediately bound by the agreement. The court found that the plaintiffs were not estopped from asserting the agreement was binding, as it was not unreasonable for the plaintiffs not to have joined the additional defendants in the earlier proceedings, or to have raised the issue of the validity of the agreement.

The court ordered that the resolution appointing the respondent as chairperson was invalid, and that the agreement was binding. The court ordered that the company pay the plaintiffs damages for breach of the agreement.