Grant v John Grant & Sons Pty Ltd [1950] HCA 54

High Court of Australia Latham C.J. McTiernan, Williams, Fullagar and Kitto JJ. Grant v John Grant & Sons Pty Ltd [1950] HCA 54

ORDER Appeal allowed with costs. Decree in terms of pars. 1 (omitting reference to par. 19 of statement of claim), 2, 3, 4, 5, and 6 of prayers in statement of claim. Share register to be rectified by defendant company within twenty-eight days. Cross-appeal dismissed with costs.

Cur. adv. vult.

The following written judgments were delivered:—

Dec. 4 Latham C.J.

This litigation has arisen out of disputes between two brothers, the plaintiff Henry Cook Grant and the defendant William Allison Grant, each supported by three members of their families, with respect to the management of the defendant company, John Grant & Sons Pty. Ltd. The company, which was formed in 1922, had a large business as builders and contractors. The defendant W. A. Grant was the active manager. He and H. C. Grant were "governing directors" and there were no other directors until 1948. Originally the plaintiff H. C. Grant and the defendant W. A. Grant held equal numbers of shares. Each of the brothers on 10th October 1922 executed separate deeds of trust of 9,000 shares in the company in favour of their respective children when they should attain twenty-five years of age. In the case of H. C. Grant the beneficiaries under the deed executed by him were his son H. J. Grant, his son K. W. Grant and his daughter Alison Jean Grant. In the case of W. A. Grant the beneficiaries (in 1948) were his son Donald Frederick Grant, his daughter Margaret Winifred Grant (now Mrs. Dampney) and his daughter Alison Eleanor Grant (now Mrs. Arnott).

In 1940 without any dissent from W. A. Grant and his family the shares which were subject to H. C. Grant's deed of trust were transferred to the beneficiaries, who thereupon became shareholders in the company. Article 16 of the articles of association provided that no share in the company should be transferred to a person who was not a member of the company so long as any member was willing to purchase the same at the "fair value" as stated in a notice to the company and that if the company within twenty-eight days found a member willing to purchase, the proposing transferor was bound to sell to the member upon payment of the fair value. In 1940 when H. C. Grant's shares were transferred no attention was paid to art. 16 and the shares were transferred without objection from W. A. Grant. In 1947 W. A. Grant wished to transfer to his children the shares held in trust by him in the same way as H. C. Grant had done in 1940 but H. C. Grant, wishing to enlarge the total shareholding of himself and his family, objected, and sought to insist that the procedure prescribed by art. 16 should be followed so that he or his family could buy the shares which W. A. Grant wished to transfer. Disputes had arisen in relation to payment to be made to an employee of the company, J. T. Wilson, the conduct of a quarry and other matters, and feeling was strained. Though W. A. Grant had or controlled a majority of shares so that he could procure the passing of an ordinary resolution at a meeting of the company he did not have or control the necessary number of shares (three-fourths) to pass an extraordinary resolution. Further, there were only two directors and deadlocks were obviously probable. H. C. Grant, in objecting to the transfer of shares to W. A. Grant's children, was using art. 16 as a lever to obtain the equality which he desired. W. A. Grant quite frankly said in evidence that he was determined to change the position and to take steps to obtain the registration of his children as shareholders and to increase the number of directors by procuring the appointment of his children to the board.