Attorney-General (Cth) v Colonial Sugar Refining Company Limited [1913] UKPCHCA 4

Privy Councit. 1913.

va (Lrp.)

HIGH COURT {1913.

from June 1873 to December 1909 may be stated as follows :— The subsidy has amounted to £183,409, of which £115,684 has been carried to profit and loss account and £67,725 to reserve account. The profit and loss account for the whole period shows a net loss of £321. In the period before the subsidy commenced there was a profit amounting to nearly £1,500. In the period during which the subsidy was discontinued there were losses amounting to £18,200 or thereabouts. In other years there has sometimes been a considerable profit in addition to the subsidy, and sometimes a heavy loss notwithstanding the subsidy. The Company has never paid a dividend even in the most prosperous years, it being feared that if they did so the continuance of the subsidy might be jeopardized. The reserve has been employed in extending the Company's business.

The majority of the Company's shareholders are and have always been graziers who derive an indirect benefit from the Company's operations. There are, however, and apparently always have been, shareholders who are not graziers, and whose interest is that the Company should earn and pay dividends. The appellant in the present proceedings is one of such last- mentioned shareholders, and his case against the Company and its directors is that the business of the Company is not being carried on with a view to earning dividends for distribution among its shareholders, but with a view to keeping up the price of sheep for the benefit of such members of the Company as are graziers. He asks for a declaration that the Company and its directors are not entitled so to carry on the Company's business, and for an injunction on the footing of such declaration.

The first question which their Lordships have to determine is, therefore, a question of fact. Has the business of the Company been carried on, and is it being carried on, not with a view to earning dividends for the shareholders generally but in order to benefit indirectly such of its shareholders as are graziers? Are the interests of the shareholders, as such, being sacrified for the indirect benefit of such of them as desire to keep up the price of stock ?