At first instance Vinelott J held British Steel’s knowledge of the irregularity rendered the guarantee ultra vires, void and incapable of validation with the members’ consent.

However, it was unenforceable because British Steel, with knowledge of the irregularity, could not rely on a presumption of regularity in the company’s internal management.

Since British Steel ‘constructively knew’ about the lack of authority, they could acquire no rights under the guarantee.

The distinction between the capacity of the company and abuse of powers was also drawn by Oliver J in In re Halt Garage (1964) Ltd [1982] 3 All ER 1016 , 1034.

46 to be wrong for the reasons given by Pennycuick J. in the Charterbridge case [1970] Ch 62: the decision itself can only be justified (if at all) on the footing that the widow who was granted a pension had notice of the impropriety of the grant...On the question of authority Slade LJ held that the Rule in Turquand's case, which would ordinarily entitle a person dealing with a company who to assume the company's own internal rules were complied with, did not apply when it came to someone breaching a rule to further their own personal interests.

[2] The signed minutes of the board meeting of that day, a copy which was subsequently supplied to Colvilles' solicitors (and indeed had been drafted by them), made no mention whatever of any declaration of a personal interest by Mr. Shenkman.

If, therefore, the defendants are to be allowed both to take and succeed on the Turquand's case point, this must mean that, in the circumstances subsisting in late January 1969, they were as a matter of law entitled to assume (contrary to the fact and without further inquiry) that Mr. Shenkman had duly declared his personal interest either at the board meeting of 22 January 1969 or at some previous board meeting of the plaintiff.