Palmos v Wilson

The case of *Palmos v Wilson* concerned a dispute between shareholders of Heindorffs Building Company Limited and the company's directors regarding the sale of the company's principal asset, Heindorff House. The shareholders sought an injunction to prevent the sale, arguing that the directors lacked the necessary authority. The matter was heard in the Supreme Court of Queensland, and the appeal proceeded to the High Court of Australia.

The central legal issue before the High Court was the interpretation of Article 107(13) of the company's articles of association. This article empowered the directors to sell company property but stipulated that the freehold property, Heindorff House, "shall not be sold without first obtaining the consent of the members expressed by extraordinary resolution." The shareholders contended that this provision required a specific consent to any particular sale, whereas the directors argued that a general authorisation to sell, passed by an extraordinary resolution in 1950, was sufficient for a sale effected in 1955.

A majority of the High Court, comprising Dixon C.J., Webb, Kitto, and Taylor JJ., held that the articles did not mandate consent to a specific sale. They reasoned that the purpose of the proviso was to allow members to retain control over the disposition of the company's core asset, but this control could be exercised through a general authorisation. The extraordinary resolution passed in 1950, which authorised the directors "to sell the company's freehold property," was deemed sufficient to satisfy the requirement for consent. The Court noted that while a specific consent to a particular transaction was permissible, it was not mandatory. The appeal was dismissed.