Central Piggery Co Ltd v McNicoll [1949] HCA 19

High Court of Australia Latham C.J. Rich and Dixon JJ. Central Piggery Co Ltd v McNicoll [1949] HCA 19

ORDER Appeals dismissed with costs.

The following judgments were delivered:—

Latham C.J.

The question which arises in this case depends upon the construction of s. 4 of The Industrial Conciliation and Arbitration Acts 1932 to 1947, which makes provision in the following terms: "No company shall proceed to the issue to any of its employees any shares in the company until the consent of the court shall first be had and obtained." The court is the industrial court which is the court established under that Act. The matter arose on applications for rectification of the share register in two cases, those of James Balgarnie McNicoll and James Robert Hurst. The company concerned was the Central Piggery Co. Ltd. The facts in each case were that the persons who sought rectification of the register were promised employment in the company if they took shares. The company was subsequently formed and became their employer under a contract of service. They made application for shares before they were employees and a resolution was passed by the directors of the company which provided for the allotment of shares to them. Notification of the allotment did not reach the applicants until they had become employees of the company.

The question is whether on the day they became employees of the company, the company had proceeded to the issue of shares to them. It has been established for many years that an application for shares is an offer which may be accepted by allotment notified to the applicant. In the absence of a communication in the general sense of the law of contract (even though it may fail to reach the applicant) there is no acceptance of the offer and therefore no contract. In the present case the applicants did not become shareholders until notification of the allotment was received by them or perhaps placed in the post. The notification was posted after they had become employees. The question is whether the company had proceeded to the issue of any shares. Mr. Bennett argued that the phrase applied only to the first step of the process, which culminated in the issue of shares, and that if the first step was taken, as in the present case, before the relationship of employer and employee was established then there was no breach of the statute. There is a distinction between proceeding to issue shares and proceeding towards the issue of shares. The section deals with the whole process from the initial step to the actual issue. The words used are "issue to any of its employees". The issue of the shares is the act which ends the transaction and ends in the issue of the shares to a specific person, an employee. The act of issuing involves a set of proceedings which result in the employee becoming a shareholder. That is what the statute is designed to meet. I agree in substance with the reasons of Philp J.