Hennessy and Others v National Agricultural and Industrial Development Association and Others
| Jurisdiction | Ireland |
| Judgment Date | 07 December 1947 |
| Date | 07 December 1947 |
| Court | High Court |
Company - Agreement - Resolution - Ultra vires - Amalgamation with another Company - Quorum - Licence under s. 20 of Companies (Consolidation) Act, 1908, to dispense with use of word "Limited" - Condition of licence that no alterations be made in articles of association without prior approval of Minister for Industry and Commerce - Condition incorporated in memorandum of association - Letter stating that Minister "as at present advised" was prepared to sanction alterations - Whether compliance with provision in memorandum requiring such approval - Alterations in articles made with view to amalgamation with another company having different objects - Whether ultra vires - Quorum present at commencement of meeting but not at time when resolution passed - Whether resolution validly passed.
Plaintiffs, who were members of Cumann Naisiunta Cuireadoireacta agus Tionnsgal, commonly known as N.A.I.D.A. (hereinafter referred to as "the Association"), contested the validity of two resolutions which purported to have been passed by the Association as special resolutions. The first resolution authorised the Association to enter into an agreement with The Federation of Irish Manufacturers (hereinafter referred to as "the Federation"), to effect the merger or amalgamation of the Association with the Federation and to place the Association under the control of the latter body. The second resolution altered the articles of association of the Association with a view to giving effect to the agreement.
Both the Association and the Federation were incorporated as companies limited by guarantee without share capital. Power to dispense with the word "Limited" as part of the name of the Association was, by licence, granted by the Minister for Industry and Commerce under s. 20 of the Companies (Consolidation) Act, 1908. In accordance with the terms upon which the licence was granted, the memorandum included the following provisions, viz.:—the prohibition of the distribution of any of its property among its members, the prohibition of any amendment or alteration in the articles of association without the previous approval of the Minister for Industry and Commerce and the statement that those provisions wore conditions under which the licence was granted. The objects of the Association authorised amalgamation, but only with bodies having similar objects and conditions.
The memorandum of association of the Federation contained no such prohibitions as above mentioned; its principal objects differed materially from those of the Association. The two bodies differed also in the provisions relating to their internal management.
Before entering into the agreement with the Federation, the Association wrote to the Minister for his approval of the proposed alterations in the articles, and received a reply from the Minister's secretary in the following terms:—"I am advised by the Minister for Industry and Commerce to state that, as at present advised, the Minister will be prepared to sanction the proposed alteration in the articles of association of the company."
Art. 19 of the articles of association of the Association provided as follows:—"If within half an hour from the time appointed for a mooting, a quorum, which shall consist of at least twenty members, is not present, the meeting if convened upon the requisition of members shall be dissolved. In any other case it shall stand adjourned to the same day in the following week at the same time and place and if at such an adjourned meeting a quorum is not present, it shall be adjourned sine die."
Twenty persons were present when the president took the chair at a meeting of the Association which had been convened to consider the resolutions, but three of those present, after expressing themselves in favour of the resolutions, left before either resolution was put to the meeting.
Held that notwithstanding the receipt of the letter from the Minister relating to the proposed alterations, there was no compliance with the condition in clause 5 of the memorandum of association requiring the previous approval by the Minister of such alterations. Accordingly, in the absence of such approval, there was no power to alter the articles and the purported alterations wore null and void.
Held, further, that the alleged resolutions were null and void for want of a quorum.
Per Overend J.:—"In the present case the articles modify the common law to the extent that a quorum of twenty is a sufficient number to constitute the 'Corporate Assembly,' but in my opinion the common law requires the quorum to be present at the one time and place when the corporate act is done."
Semble: The proposed agreement and alterations of the articles, even if validly authorised by special resolution would have remained ultra vires by reason of the fact, inter alia, that the objects intended to be effected by the agreement, were repugnant to the objects of the Association as set out in its memorandum of association.
Witness Action.
The plaintiffs, Michael John Hennessy, John Francis Reynolds, Robert Whelan and William Christopher Toomey sued on behalf of themselves and all others the members of the Association. The defendants were the Association, the Federation and the following persons who claimed to be members of the council of the Association on the nomination of the Federation:—James J. Holloway, Samuel McAuley, Peter L. McEvoy, Marcus Noone, Frank H. O'Donnell, Frederick M. Summerfield, Patrick J. Kavanagh, Michael Dalton, William J. Costelloe and John Hilton.
The objects of the Association, as set out in par. 3 of the memorandum, included the following:—
"(a) To promote the development of Irish Agriculture, Irish industry and Irish commerce.
(b) To impress on the public the importance of their using goods of Irish origin.
(c) To promote the extension of Irish trade at home and abroad, and the sale of Irish-manufactured goods, and to take such steps as may be necessary for the formation of public opinion on the question of National Economics, and to advocate the adoption of a State policy of agricultural and industrial development.
(d) To take all necessary or advisable steps to advertise display and make known those goods which are made in Ireland, and are worthy of the support of the public, and for that purpose to hold or promote any temporary or permanent Aonach or Exhibition of goods of Irish manufacture, and to do all things ancillary thereto.
(e) To examine any goods in respect of origin, material, mode of manufacture, quality, accuracy of description or other characteristic, and to expose cases of fraud or misrepresentation, such as selling foreign goods as Irish, or any other unfair methods calculated to injure Irish trade.
(f) To encourage Irish manufacturers to advertise more generally, and to promote or organise any scheme of advertisement, co-operative or otherwise.
(g) To urge the wholesale houses to stock and push the sale of Irish goods, and to encourage their travellers to keep samples of home-made articles prominently to the fore.
(r) To amalgamate with any companies, institutions, societies or associations having objects, altogether or in part, similar to those of this Association, and which prohibit the payment of dividend, bonus or profits to their members either absolutely or at least to as great an extent as such payment to members of the Association is prohibited by this memorandum."
Pars. 4, 5 and 6 of the memorandum of association of the Association provided as follows:—
"4. The income and property of the Association, whence-soever derived, shall be applied solely towards the promotion of the objects of the Association, as set forth in this memorandum of association; and no portion thereof shall be paid or transferred directly or indirectly by way of dividend, bonus or otherwise howsoever by way of profit, to the members of the Association.
5. No addition, alteration or amendment shall be made to or in the regulations contained in the articles of association for the time being in force, unless the same shall have been previously submitted to, and approved of by, the Minister for Industry and Commerce.
6. The fourth and fifth paragraphs of this memorandum contain conditions on which a licence is granted by the Minister for Industry and Commerce to the Association in pursuance of section 20 of the Companies (Consolidation) Act, 1908."
The objects of the Federation, as set out in par. 3 of the memorandum, included the following:—
"1. To unite the different manufacturing interests into one Federation where their views can be gathered together for presentation in whatever direction is considered advisable for the advancement of Irish industry.
2. To bring before each industry full particulars of the scope and extent of all other industries operating in the country with the object of developing inter-trading between them.
3. To examine ways and means whereby the financing of Irish industries may be brought into closer accord with the requirements of manufacturers.
4. To examine any Government proposal which is calculated to affect the welfare of Irish industry and take the necessary action to have the views of the Federation placed before the Department concerned.
5. To secure that as far as possible, consistent with the National requirements, industrial development shall be retained in the hands of Saorstat nationals.
6. To demand differentiation, in the assessment of income tax, in favour of capital invested by Saorstat nationals in...
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