Miles v Sydney Meat-Preserving Company (Limited) - [1912] HCA 87

16 CLR 50

THE SYDNEY MEAT-PRESERVING COM-

RESPONDENTS.

PANY (LIMITED) AND OTHERS

DEFENDANTS,

ON APPEAL FROM THE SUPREME COURT OF

NEW SOUTH WALES. SYDNEY, Nov. 29; Dec. 2,3, 19.

Company- - Powers of majority-Ultra - vires-Misuse of powers - Business carried

on not with view to make profits for distribution-Rights of minority-Injune- tion - Sydney Meat-preserving Company (Limited) Incorporation Act 1871 (N.S. W.), secs. 1, 2, 12, 13.

16 CLR 51

A company, which had been established in Sydney under the rules, regula- tions and conditions of a deed of settlement, for the purpose of carrying on the business of meat preserving and disposing of and exporting the products, was in 1871 incorporated under a private Act of New South Wales for the purposes mentioned in the deed of settlement. The Act provided that the regu- latious might be altered, but not in opposition to the general scope or true intent and meaning of the deed of settlement, and that no dividends should be paid except out of profits. By the deed of settlement it was provided that the clear bond fide net profits arising from the operations of the company should be applied in payment to the shareholders of a dividend in proportion to the number of shares held by them, and that the directors should every half year determine upon such dividend or dividends or bonus out of such clear profits (if any) as they in their judgment, conformably to the provisions of the deed, should see fit and that the directors might in their discretion out of the profits of each half year set apart and appropriate such sum as they might think advisable for increasing the works or plant or to a reserve fund, and that after such appropriation the balance (if any) should be available for pay. ment of dividends. A majority of the shareholders were graziers. No dividends were ever paid by the company, but it was the settled policy of the company, which was approved by a majority of the shareholders and was publicly announced, to carry on their operations, not with a view to paying dividends to the members, but with a view to benefiting the pastoral industry generally, although such a policy involved the benefiting of such of the members as were interested in that industry, and the affairs of the company were conducted in accordance with that policy. In an action by a share- holder against the company and the directors,

Held, by Griffith C.J. and Barton J. (Isaacs J. dissenting), that the share- holder was not entitled to an injunction to restrain the company and the directors from carrying on the business of the company otherwise than with a view to earning profits for distribution among all the members.

Decision of the Supreme Court of New South Wales (Simpson C.J. in Eq.) affirmed, but his decision on demurrer: 12 S.R. (N.S.W.), 98, reversed.

APPEAL from the Supreme Court of New South Wales.

An action was brought in the Supreme…

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 Miles v Sydney Meat-Preserving Company (Limited)

Details

AGLC: Miles v Sydney Meat-Preserving Company (Limited) [1912] HCA 87
Case: [1912] HCA 87
Decision Date: 19 December 1912

CaseChat Overview and Summary

This case concerned an appeal from the Supreme Court of New South Wales to the High Court of Australia. The appellant, William John Miles, a shareholder, brought an action against the Sydney Meat-Preserving Company (Limited) and its directors. Miles sought an injunction to restrain the company and its directors from operating the business otherwise than with the primary aim of earning profits for distribution among all shareholders.

The central legal issues before the High Court were whether the company's directors and the majority of shareholders were acting within their powers, or committing a fraud on the minority, by operating the business not with a view to distributing profits, but to benefit the pastoral industry and, consequently, those shareholders who were graziers. Specifically, the court had to determine if the company's operations, which involved purchasing stock at prices that might not yield a profit for the company but benefited stock owners, were ultra vires or constituted a misuse of majority power.

The majority of the High Court, comprising Griffith C.J. and Barton J., affirmed the decision of the Supreme Court, though reversing its decision on demurrer. Their reasoning focused on the established practice and policy of the company, which had been publicly announced and approved by a majority of shareholders since its inception. This policy was to operate the business not primarily for profit distribution, but to benefit the pastoral industry by providing a stable outlet for stock, even if this meant purchasing stock at prices that were not immediately profitable for the company. The court held that the company's operations, as conducted, were not ultra vires, as the core business of meat preserving was still being carried out. They found that the directors and majority shareholders were entitled to conduct the business in a manner that benefited the industry, which in turn benefited a significant portion of the shareholders, provided the fundamental business purpose was maintained and no specific assets were misappropriated.

The appeal was dismissed. The court found that the plaintiff had not established that the company's actions were ultra vires or constituted a fraud on the minority that warranted judicial intervention. The established policy of the company, supported by the majority of shareholders, was to operate in a manner that benefited the pastoral industry, and the company's operations, while not yielding dividends, were conducted in accordance with this policy.

Orders