9911796707
TMI Blog1960 (11) TMI 46X X X X Extracts X X X X X X X X Extracts X X X X ..... 8, a company Jackson and Shaw (Holdings) Ltd. was incorporated. The company was promoted by the majority shareholders who were the only members and the directors. Jackson and Shaw (Holdings) Ltd. apparently carried on no business, but on July 14, 1959, solicitors acting for the company. wrote stating that the company was proposing to make an offer to purchase the whole of the issued share capital of the transferor company. The letter continued : "To this end, there have been given facilities for an independent firm of accountants to value the said shares. This has been done by Messrs. Price Waterhouse Co. and their figures are 100,000 ... It is a known fact that Messrs. Jackson and Shaw, the holders of 90 per cent, of the issued capital . . . will accept this offer. Your client [the minority shareholder] would receive should he accept... 10,000. That offer was declined and Jackson and Shaw (Holdings) Ltd. (hereinafter called "the transferee company") gave the minority shareholder notice under section 209 of the Act of 1948 that it intended to exercise its statutory rights of compulsory acquisition under that section. In fact, the notice was given before the interval required by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ning of the section. In my judgment, the applicant ought not to be compelled to sell his shares at the proposed price in these circumstances." In fairness to Mr. Instone's argument I shall read one earlier passage of the judgment [1960] 2 W.L.R. 658, 663: "Whether, in such a case, if the court were fully satisfied that the price offered to the minority shareholders was a fair price to be offered for their shares, the section ought to be allowed to operate according to its tenor is, I think, a matter which it is unnecessary for me to decide today because, in my view, on the facts of this particular case, at any rate, the onus must rest upon Mr. Instone's clients" that is the transferee company "to satisfy the court that the price offered is a fair price." Mr. Instone, in opening the appeal, put his case broadly as follows. First, he said: this case is within the four corners of the section upon the ordinary construction of its language; secondly, it follows that the onus must be upon the dissident shareholder to show that an order should be made otherwise than as the section envisages ; and that argument, I interpolate, depends upon the language of the section which I have alread ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that I have any right to order otherwise in such a case as I have before me, unless it is affirmatively established that, notwithstanding the views of a very large majority of shareholders, the scheme is unfair,'" and then Somervell L.J. states his own acceptance of that principle. It must be borne in mind that Hoare s case ( supra ) followed in this respect by Press Caps Ltd. s case ( supra ), was a case in which the 90 per cent, of the shareholders who had accepted the offer were persons wholly independent of the offer or transferee company. Maugham J. (and I will not make further detailed reference to the decision of Hoare case ( supra )), after pointing out that the section gave no guide whatever as to the basis upon which the apparently unlimited discretion is to be exercised, stated that where one has in a case of that kind (which would be the ordinary case) 90 per cent. of the shareholders saying; "This is, we think, a good offer or satisfactory offer," the court will not, in the absence of very strong evidence to show there is something wrong with the offer, substitute its own view of what a fair offer would be and by that means enable, as Vaisey J. picturesquely ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... court below and it is not referred to by Buckley J. nor was it taken in his argument before us by Sir Milner Holland. Finally there is no cross-notice of appeal here seeking to uphold the judgment on that ground. In the circumstances I do not think it would be right for this court now to come to a decision basing itself on an acceptance, if it should think it right to accept it, of Mr. Finer's argument. But it is I think relevant (and we are indebted to Mr. Finer for drawing our attention to it) to note that by the terms of the section itself one must have regard to what lies behind the invocation of the section. It presupposes the existence of a scheme or contract involving a transfer of shares, and that supposition is expressed when one looks not only at the minority shareholder's application but at Buckley J.'s order. One adds, I think, to that, by way of background to the necessary approach, the words in the parenthesis following the reference to the nine-tenths fraction "other than shares already held at the date of the offer by, or by a nominee for, the transferee company," etc. .Mr. Instone has pointed out, with justice in my judgment, that although Mr. Shaw and Mr. Jackson ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing, for example that the minority shareholder was in some way acting in a manner destructive or highly damaging to the interests of the company from some motives entirely of his own. I prefer, therefore, to base my decision on the broad ground which I have tried to state and do not propose to involve myself in the conflict which has arisen on the evidence as to the correctness of Messrs. Price Waterhouse Co.'s valuation of the company or its undertaking or its shares; save only to say this, that as Sir Milner Holland pointed out, in the absence of any evidence filed on behalf of the transferee company, and, therefore, of any opportunity of cross-examination, the fact that offers were made to the minority shareholder in April and May, 1959, and in an ascending scale of figures appreciably greater than that contained in the offer in July and the facts as to the profit earning of this company during the first quarter of the year 1959, at least show that there is no case here established why the discretion, given the major premise to which I have referred, should not be exercised in the way in which Buckley J. exercised it. For these reasons I think that we could not properly, a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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