Brownett v Newton [1941] HCA 14

OF AUSTRALIA.

(HIGH COURT OF AUSTRALIA.]

BROWNETT AND OTHERS DrFenpants,

NEWTON e PLAINTIFF,

APPELLANTS ;

AND

ResponpDeEnt.

ON APPEAL FROM THE SUPREME COURT OF NEW SOUTH WALES.

An action for breach of warranty of authority may be maintained against directors of a company who enter on the company's behalf into contracts which are not binding on the company because of its failure to comply with

see. 7 (1) (c) of the Companies Act 1936 (N.S.W.), where the conduct of the

therefrom.

Decision of the Supreme Court of New South Wales (Full Court): Newton

* Sec. 77 of the Companies Act 1936 (N.S.W.) provides : "(1) Where a com- pany having a share capital has issued

a ela' inviting the public to subscribe for its eae the iene shall not commence any business or exercise any borrowing powers unless —(a) shares held subject to the pay- ment of the whole amount thereof in 'cash have been allotted to an amount not less in the whole than the minimum pemeovtion 5 (b) every director of the 'company has paid to the company, on 'each of the shares taken or contracted to be taken by him and for which he is liable to pay in cash, a proportion equal

Ld

v. Brownelt, (1940) 41 S.R. (N.S.W.) 1; 58 W.N. (N.S.W.) 15, affirmed.

to the proportion payable on applica- tion and allotment on the shares offered for public subscription ; and (c) there has been filed with the Registrar General a statutory declaration by the secretary or one of the directors, in the prescribed form, that the conditions mentioned in paragraphs (a) and (6) of this sub-section have been complied with. . . . (3) The Registrar-General shall, on the filing of the statutory declaration, certify that the require- ments of sub-sectionone . . . have been complied with, andsthat certificate shall be conclusive evidence of that fact in favour of any person dealing