Coubrough v James Panton & Company Ltd

• Jurisdiction: Ireland
• Judgment Date: 01 January 1965
• Date: 01 January 1965
• Court: High Court

Coubrough v. James Panton & Co. Ltd.

ARCHIBALD MURDOCK COUBROUGH

Plaintiff

and

JAMES PANTON & COMPANY LIMITED, JOHN BROOKS, WILLIAM SMILLIE COUBROUGH, JOHN McKEEVER BROOKS and OLIVE BROOKS

Defendants.

Company - Director - Exclusion from meetings of board of directors - Injunction.

The plaintiff was a director of, and a large shareholder in, the defendant company. An extraordinary resolution was required by the Articles of Association of the company for the removal of the plaintiff from the office of director before the expiration of his period of office, but such resolution could not be carried without the concurrence of the plaintiff. On the 9th June, 1961, despite the objection of the plaintiff, an ordinary resolution that the existing directors should retire and offer themselves for re-election was proposed and passed. Thereafter the four individual defendants were elected as directors of the company and the plaintiff was excluded from meetings of the board of directors. The plaintiff sought in his summons a declaration that the resolution purporting to remove the directors from office was invalid; a declaration that he was still a director of the defendant company and an order restraining the defendants from excluding him from meetings of the board of directors of the defendant company. At the trial of the action the defendants conceded that the plaintiff was still a director of the company but, nevertheless, they contended that, in view of the opposition to the plaintiff acting as director of the company, the Court should not restrain them by injunction from excluding him from meetings of the board of directors.

Held by Budd J. 1, that the resolution passed on the 9th June, 1961, was invalid in so far as it purported to remove the plaintiff from the office of director of the defendant company.

2, That the plaintiff had a right to attend meetings of the board of directors of the defendant company and that, in the circumstances, the defendants should be restrained by injunction from excluding the plaintiff from such meetings and from otherwise preventing or interfering with the exercise of his powers and duties as such director.

Pulbrook v. Richmond Consolidated Mining Company9 Ch. D. 610 applied.

Hayes v. Bristol Plant Hire Ltd.[1957] 1 All E. R. 685 considered.

Harben v. Phillips23 Ch. D. 14 and Bainbridge v. Smith41 Ch. D. 462distinguished.

Plenary Summons

The plaintiff, being a director of, and a shareholder in, the defendant Company, was excluded from the meetings of the board of directors of that Company. The facts have been summarised in the head-note and are fully stated in the judgment of Budd J., post. The order of the Court, dated 14th November, 1963, contained (inter alia) an order that the defendant Company by its directors, servants and agents and the remaining defendants and each of them be restrained from excluding the plaintiff from meetings of the directors of the Company or otherwise preventing or interfering with the exercise of the plaintiff's powers and duties as such director.

Budd J. :—

The plaintiff in this action, Archibald Murdock Coubrough, is a director and shareholder in the defendant Company, James Panton & Co. Ltd. The other defendants are the remaining directors of the Company. The plaintiff claims in the first part of this action that he was wrongfully and invalidly dismissed from his directorship and excluded from board meetings, and he claims certain declarations with regard to the purported dismissal which is alleged to have taken place as a result of a resolution passed at the Annual General Meeting held on the 9th June, 1961. The relevant resolution, proposed by J. M. Brooks and seconded by W. S. Coubrough, was that all the directors be retired and those willing should offer themselves for re-election. The resolution was carried by four votes to one, the plaintiff recording his opinion that it was invalid. There followed a series of resolutions whereby the four individual defendants were elected directors. The plaintiff seeks a declaration that the resolution purporting to remove the directors was ultra vires the Company's Articles; a declaration that he is still a director, and an injunction restraining the defendants from excluding him from board meetings.

I may say straight away that a notice for particulars was served by the plaintiff and it was conceded in reply thereto that the plaintiff was still a director of the Company, so that the matters now in issue are somewhat different from those dealt with in the statement of claim. It is not now contended

that the plaintiff is not a director, but it is asserted that he is not entitled to act by reason of the resolution of the Company passed at the annual general meeting and that therefore the other directors are entitled to exclude him from meetings. The second part of the action has to do with the borrowing powers of the Company and the method of negotiating a debenture. At the same annual general meeting a resolution was passed "That J. M. Brooks' proposal to obtain additional finance and act as nominee be approved and that a 6¹/₂%Second Debenture similar in scope to the one granted to Royal Bank with a ceiling of £5,000 as security for the financial assistance be approved and instructions given to prepare the documents." This resolution was carried by four votes to one. It is the contention of the plaintiff that the borrowing powers of the Company should be exercised by the Company, and that negotiation of terms of borrowing cannot be delegated. Though the matter is in issue, it has been agreed that I need not deal with it now, for the procedure, if invalid, may be readily rectified by a resolution proposing a valid procedure. I am therefore only dealing with the first part of the action which concerns the plaintiff's position.

The Company carries on the business of wholesale jewellers in Dublin. It was associated with another company of dental suppliers in that it had the same shareholders and directors. The plaintiff and the individual defendants own between them all the shares in the defendant Company. It is convenient here to refer to Article 104 of the Company's Articles as it is important in relation to what follows. The relevant part reads:—"104. The Company may by extraordinary resolution remove any Director before the expiration of his period of office, and appoint another qualified person in his stead."The position is that the Company could not carry such a resolution against the plaintiff as the...