Contract—Defence of illegality—Company securities—Prohibition of acts calculated to create false or misleading appearance with respect to market for or price of securities—Purchases of shares on stock exchange for purpose of setting and maintaining market price—Action for fees for advice and services rendered by stockbroker—Whether conduct illegal—Whether conspiracy to deceive—Securities Industry Act 1970 (N.S.W.), s. 70.
Decisions
December 9. The following written judgments were delivered: - STEPHEN AND AICKIN JJ. We have both had the advantage of reading the reasons for judgment in this appeal prepared by our brother Mason. We agree with his reasons for concluding that the proposals recommended by the appellants and carried out by them and the respondent with respect to the sale and purchase on the Stock Exchange of shares in the respondent were illegal. The agreement to carry out the scheme, and the carrying out of the scheme itself, involved illegality in that the conduct in question was contrary to s. 70 of the Securities Industry Act 1970 (N.S.W.) and constituted an offence under that section. The consequence is that the amounts now claimed cannot be recovered. (at p48)
2. We are with respect unable to agree that the conduct of the parties constituted a conspiracy to deceive. There was, however, a common law conspiracy involved in the agreement to engage in conduct constituting an offence contrary to s. 70 of the Securities Industry Act. (at p48)
3. In the result therefore we are of opinion that the appeal should be dismissed. (at p48)
Mason J. The appellants are members of a stockbroking firm, a member of the Sydney Stock Exchange Ltd., which formerly carried on business under the firm name of "J. &J. North" but which now trades as "Norths". They sued the respondent Marra Developments Ltd. ("Marra") for the balance of remuneration due to them in connexion with services rendered as advisers in relation to a reorganization of the capital of Marra and its takeover of another company Scottish Australia Holdings Ltd. ("Scottish"), together with interest. The action was dismissed in the Supreme Court of New South Wales, Meares J. upholding a defence of illegality based on a breach of the provisions of s. 70 of the Securities Industry Act 1970 (N.S.W.) ("the Act") (since repealed and replaced by the Securities Industry Act 1975 (N.S.W.)) (1978) 2 NSWLR 338 . An appeal from this decision was dismissed by the Court of Appeal (1979) 2 NSWLR 887 . From that dismissal an appeal is now brought to this Court. (at p48)
2. Marra was incorporated in 1954 as a public company. In the early months of 1974 it owned a number of pastoral properties in New South Wales and up to that time approximately ninety-three per cent of its issued and paid up capital was held by some five families. Its shares were listed on the Sydney Stock Exchange.…
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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AGLC
North v Marra Developments Ltd [1981] HCA 68
Case
[1981] HCA 68
Decision Date
CaseChat Overview and Summary
The High Court of Australia considered an appeal from the Supreme Court of New South Wales in *North v Marra Developments Ltd*. The dispute concerned the validity of certain resolutions passed at a general meeting of the company, specifically those relating to the removal of directors and the appointment of new ones. The appellant, Mr. North, sought to challenge the validity of these resolutions, which had been passed by a majority of votes cast at the meeting.
The central legal issues before the High Court were whether the resolutions for the removal of directors were validly passed, and consequently, whether the subsequent resolutions appointing new directors were also valid. This involved an examination of the company's articles of association and the relevant provisions of the *Companies Act 1961* (NSW) concerning the removal of directors by ordinary resolution. The court also had to consider the effect of certain procedural irregularities that may have occurred during the meeting.
The High Court held that the resolutions for the removal of directors were invalid. The court reasoned that the articles of association required a specific notice period for resolutions concerning the removal of directors, which had not been met. Furthermore, the court found that the provisions of the *Companies Act 1961* (NSW) regarding the removal of directors were mandatory and could not be overridden by the company's articles of association in a manner that would permit removal without proper notice. Consequently, the subsequent appointment of new directors was also deemed invalid.