O'Donnell v Thor Industries Pty Ltd [1977] HCA 28

High Court of Australia Barwick C.J. Stephen, Mason, Jacobs and Aickin JJ. O'Donnell v Thor Industries Pty Ltd [1977] HCA 28

ORDER Appeals dismissed with costs.

Cur. adv. vult.

The following written judgments were delivered:—

June 7 Barwick C.J.

These appeals involve the construction of a clause in the memorandum of association of Thor Industries Pty. Ltd. The question is whether upon its true construction that clause entitles the appellant O'Donnell to refuse to execute a transfer of a share in the capital of the company of which he is at present the holder.

The terms of the clause of the memorandum are fully set out in the reasons for judgment of other members of the Court, which I have had the advantage of reading. I am in agreement with the conclusion reached by my brother Stephen and with the reasons which support that conclusion.

I would merely add that it is of the nature of a share in the capital of a limited liability company that the rights it confers are determined by the memorandum and articles of association to the extent that they specify those rights and are not inconsistent with any relevant statutory provision. No doubt such a share is an item of property: but its extent and significance as such may depend upon the terms of the constating instruments of the company.

In this instance, the memorandum determined that upon loss of employment by the holder of an "E" class share, that holder could no longer hold the share and was bound to transfer it to the employee nominated by the governing director of the company or, in default of such a nomination, to the governing director. To require a transfer in pursuance of that provision of the memorandum is not, in my opinion, to expropriate the erstwhile employee holder, for his share at that stage did not entitle him in the circumstances to continue to hold it. Further, the obligation laid upon him at the time he ceased to be an employee was to transfer the share: not to sell it. Consideration is not an essential of a transfer as it would be in the case of a sale.