Palmos v Wilson [1955] HCA 65

High Court of Australia Dixon C.J. Webb, Fullagar, Kitto and Taylor JJ. Palmos v Wilson [1955] HCA 65

ORDER Appeal dismissed with costs.

Cur. adv. vult.

The following written judgments were delivered:—

Nov. 29 Dixon C.J.

The question upon which this appeal depends is confined entirely to the interpretation of the proviso to art. 107 (13) of the articles of association of Heindorffs Building Company Limited. What exactly must be done to fulfil the condition which the proviso imposes upon the power of disposition with which the article invests the directors? The proviso refers to the freehold property from which the company takes its name. The purchase of the property was the first object set out in the company's memorandum. What the proviso says is that the property shall not be sold without first obtaining the consent of the members expressed by extraordinary resolution. Is this condition satisfied by an extraordinary resolution which states no more than that "the directors be and are hereby authorised to sell" that property? Must the precise sale be identified or the terms of a sale approved or consented to? Must the price be named or delimited? Or is it enough to give a general consent expressed as an authority to sell? In my opinion it is enough to do so. I think that the purpose of the proviso was to preserve, subject to the members' decision, the company's property in the building, because the acquisition and management formed so to speak the substratum of the company. No doubt the proviso enabled the members to retain a complete control of the disposition of the property. The consent might have been given only to a sale on particular terms or to a proposed transaction identified in all its details. But if the members were prepared to give a general consent expressed in an extraordinary resolution and otherwise to leave the sale to the directors, I do not see why they should not do so. Neither the language nor the general purpose of the proviso appears to me to require an interpretation which entrusts exclusively to the members of the company any greater responsibility in the sale of Heindorff House and I do not think that such a proviso should receive a narrow construction.