Bushell v Faith

There was £300 capital, 100 shares held by Mr Faith and the other 200 by his two sisters, Mrs Bushell and Dr Bayne.

The House of Lords held that the provision was valid, because there was no express indication by Parliament that it intended otherwise.

Lord Reid, giving the first judgment said that with a some reluctance I agree with the majority of your Lordships that this appeal must be dismissed.

(1956), but, with all respect to the learned Lord Justice, I do not think these precedents which, so far as relevant, are comparatively new can be said to have the settled assent and approbation of the profession, so as to render them any real guide for the purposes of a judgment; especially when I note the much more cautious approach by the learned editors of the Encyclopaedia of Forms and Precedents, 4th ed.

5, p. 428, where in reference to a form somewhat similar to special article 9 they say in a footnote: "The validity of such a provision as this in relation to a resolution to remove a director from office remains to be tested in the courts.

In many cases this would be impossible, so the Act provided that notwithstanding anything in the articles an ordinary resolution would suffice to remove a director.

I only raise this purely hypothetical case to show the great difficulty of trying to do justice by legislation in a matter which has always been left to the corporators themselves to decide.Lord Donovan said: My Lords, the issue here is the true construction of section 184 of the Companies Act, 1948: and I approach it with no conception of what the legislature wanted to achieve by the section other than such as can reasonably be deduced from its language.

The field over which section 184 operates is thus extensive for it includes, admittedly, all companies with a quotation on the Stock Exchange.

It is now contended, however, that it does something more; namely, that it provides in effect that when the ordinary resolution proposing the removal of the director is put to the meeting each shareholder present shall have one vote per share and no more: and that any provision in the articles providing that any shareholder shall, in relation to this resolution, have "weighted" votes attached to his shares, is also nullified by section 184.

A provision for such "weighting" of votes which applies generally, that is as part of the normal pattern of voting, is accepted by the appellant as unobjectionable: but an article such as the one here under consideration which is special to a resolution seeking the removal of a director falls foul of section 184 and is overridden by it.

and those who drafted it and enacted it certainly would have included among their numbers many who were familiar with the phenomenon of articles of association carrying "weighted votes."

Yet no such provision was made, and in this Parliament followed its practice of leaving to companies and their shareholders liberty to allocate voting rights as they pleased.

I am not, of course, saying that this is such a case: I merely seek to repel the argument that unless the section is construed in the way the appellant wants, it has become "inept" and "frustrated."