Proceedings
Case Law
Duggan v. Bank of Ireland
[1998] IEHC 124 McCracken J. wrote
1. The Plaintiff is a stockholder in the Defendant (hereinafter called “the Bank”) and as such was entitled to attend and vote at the Annual General Court of the Bank, which is equivalent to the Annual General Meeting of an ordinary company. It should be noted at the outset that the Bank was established by charter, and is not a company regulated by the provisions of the Companies Acts. It is governed by its Bye-laws which have been amended from time to time.
2. At the relevant time Bye-law (56) provided that on the taking of a poll every member present in person or by proxy should have one vote for each £1 of ordinary stock of the Bank in respect of which he has been registered for the previous six months provided that if a member holds more than 1%, he is not entitled to vote in respect of any part of his holding which exceeds 1%. In other words, there was a cap put on the voting rights of the large stockholders. At the Annual General Court held on 5th July, 1995 it was proposed to amend this Bye-law by deleting the voting limit of 1% of the stock. It is the voting on this proposal that is at issue in these proceedings.
3. There is a full transcript of the meeting of the Annual General Court, which it is accepted is accurate, and accordingly it is possible to recite exactly what occurred. When the resolution was proposed a number of people spoke from the floor against the resolution. In the course of the discussion the Plaintiff put forward an amendment to the resolution, which was in effect a compromise proposal that the limit be raised to 3%, but that it should not be abolished altogether. The Chairman refused to accept the amendment on the basis that it was an issue of substance of which advance notice had not been given, and the discussion continued on the original resolution. I should say that the Plaintiff is not taking any issue in these proceedings as to the correctness of the Chairman’s decision on that point.
4. After further discussion the Chairman put the resolution in the following terms:-
“This is resolution No. 7, about which we have had considerable debate. Would those in favour of this resolution please raise their hands with the yellow cards in them. Thank you. Those against please raise their hands. That is sufficiently too tight for me to call on that basis. I would not see a discernible majority either way. We are going now to go to a poll. I am going to exercise my right to demand a poll and the process will be as follows. There are 122,803,863 votes in favour of the resolution for supporting the directors. Only those who oppose the resolution need vote, to speed up the process. If you have the recommendation from the directors, if you wish to vote. If you wish to vote No, you may get a ballot from the stewards along each row and if you have any query, ask the stewards. Completed ballot papers will be collected by the stewards and put in the ballot box. Are you clear about that? 122,881,363 votes in favour and 186,652 against”.
5. Mr. Duggen then raised the question about people who had given proxies and might wish to change their votes, and was assured that if any such people were present they could change their vote.Mr. Duggan then said:-
“Shouldn’t that be your instructions rather than those who vote against it?”.
6. The Governor replied:-
“If anybody wants to vote for, please feel free. What we are saying is it is not necessary. We are trying to cut down to minimise the administrative time involved. If you vote against you will get a ballot paper from the steward”.
7. Mr. Duggan then asked in respect of the 120,000,000 qualified votes, could the Governor exercise all the one per cents, and was told that he could and they had been approved by the auditor who vetted them. Anybody present who wished to vote was then given a ballot paper, and the votes were duly collected. The meeting adjourned to allow a count to take place. When the meeting resumed the Chairman declared the resolution carried and said that the final position was there were 122,837,345 for and 681,562 against.
8. The Plaintiff’s case can be stated very simply. He argues that, on the taking of the poll, the Chairman did not in fact exercise the votes which he was authorised to exercise by the proxies he held. There is no dispute as to the fact that these proxies existed, but the Plaintiff’s case is that a proxy is merely an authority to vote, and has no effect unless the person in whose favour the proxy is made actually casts a vote. Furthermore, the Plaintiff makes the case that on a poll the votes ought to be in writing or in some permanent form, and that this is confirmed by the fact that those who wish to vote against were required to vote in writing.
9. The Defendant replies by pointing out the very wide terms of Bye-law (53), which would appear to give a complete discretion to the Chairman as to how a poll is to be taken. It further argues that there is no requirement either in law generally or contained in the Bye-laws, that a poll must be taken in writing, and the Chairman in his remarks to the meeting quite clearly indicated verbally that he was exercising the votes contained in the proxies.
10. It is important to recognise the purpose of the taking of a poll at meetings of shareholders or stockholders. Largely for reasons of convenience, if a motion is put to a general meeting, it is initially decided on a show of hands, on the basis that each person present has one vote, irrespective of the number of shares they hold. When that result is known, normally any member, or in the case of the Defendant, at least nine members present or the Chairman may demand a poll. This is frequently done where the persons who are defeated on a show of hands feel that in fact they have a greater shareholding than those who succeeded. In the present case, the Chairman decided to hold a poll because he was not prepared to determine whether the resolution had been passed or not on a show of hands. However, the essence of a poll is that, instead of there being a principle of one vote for each shareholder, there is one vote for each share or, in this case, each £1 of stock held. Thus the purpose of a poll is to allow those with the greatest financial interest in the company ultimately to determine the outcome of any vote.
11. The discretion which the Chairman had under Bye-law (53) was a discretion to direct how the will of those with a majority financial interest was to be determined. He was, of course, aware that he held such a large number of proxies that the resolution was in fact going to be passed, however he had an obligation to allow those who disagreed with the resolution to exercise their vote. I think it is unfortunate that he tried to cut corners by only seeking votes against the resolution, but that does not necessarily invalidate the poll or affect the question of whether he did in fact exercise the votescontained in the proxies. In my view the discretion given to him was so wide as to allow him to give the direction which he gave, and that he did comply with Bye-law (53).
12. That being so, the question is whether he did in fact exercise the votes contained in the proxies. I have no doubt but that he intended to exercise them, and that this was quite clear to everybody present at the meeting. The phrase he used was “there are 122,803,863 votes in favour of the resolution for supporting the directors” . I do not think that could be interpreted as anything other than his exercising the vote contained in those proxies. It should be noted that he did not merely state that he held proxies for this number of votes, but he specifically said that there were those number of votes in favour, and he said it having already declared that there was going to be a poll. In that context, I think there was a clear exercise of the votes by him.
13. The final question, therefore, is whether such a vote is valid when it was not in writing. I know of no general proposition, nor is there anything contained in the Bye-laws, which require votesin a poll to be cast in writing. The only reason why there might be such an implied requirement would be to ensure that there is a record of the votes cast. In the present case there was such a record, as the proxies existed and were in writing, and furthermore were actually signed by the stockholders themselves. If there is any need for there to be a record in writing of votes cast at a poll, and I do not have to determine that matter, any such requirement is satisfied by the existence of the proxy documents which are of course available to the scrutineers who are counting the votes.
14. Accordingly I refuse the relief sought in this case.
Colthurst v. Colthurst
[2000] IEHC 14 McCracken J. wrote
” Finally, I would deal briefly with the position of the second Plaintiff. This is a company which operates the shops at Blarney Castle. Its shares are owned as to 49% by the first Plaintiff, 1% by his wife and the remaining 50% are held by the second Defendant, that is his mother. They are also the three directors. The second Defendant claims that the company never authorised the issue of these proceedings, nor did the company ever resolve that it wished to set aside the settlement. The first Plaintiff went through somewhat of a charade in an attempt to put a gloss of legality on issuing these proceedings in the name of the company. The Plaintiffs’ Solicitors were authorised to issue the proceedings by a letter dated 1st September, 1999 signed by the first Plaintiff and his wife which reads as follows:-
“We, Charles Colthurst and Nora Colthurst, directors and shareholders of Tenips Limited hereby authorise McCarthy & Co, Solicitors, to issue proceedings seeking to set aside agreement for compromise dated 2nd July 1999, in which Tenips Limited was a party.
We confirm we have convened a meeting and passed the necessary resolution.”
15. What was in fact done was that a meeting of directors was convened for 10th August, 1999 for the purpose of convening an extraordinary general meeting of the company pursuant to Section 132 of the Companies Act, 1963, the purpose of such extraordinary general meeting being to pass a resolution authorising the Plaintiffs’ Solicitors to issue proceedings to set aside the agreement. No notice of this directors meeting was given to the second Defendant. In due course an extraordinary general meeting was called for 1st September, and again no notice of this meeting was given to the second Defendant. Minutes of that meeting have been produced, in which it is stated:-
“The chairman proposed the resolution contained in the said notice of extraordinary general meeting as an ordinary resolution of the company. The resolution was seconded by Nora Colthurst. The chairman put the resolution to the meeting, took the vote on a show of hands, and declared the resolution unanimously passed as an ordinary resolution of the company.”
16. The only explanation I have been given for the failure to notify the second Defendant is that the first Plaintiff and his wife were aware that she would vote against any such resolution, but were also aware that they would out-vote her. He also claims that he was advised by his accountants not to give her notice, which I find quite astonishing, both that in general his accountant would not have been aware of the necessary formalities in calling an extraordinary general meeting, and in particular that he would advise a director and 50% shareholder would not be notified of either a directors meeting or a general meeting of the company in which it was intended to pass a resolution authorising the company to issue proceedings against her. I am satisfied this was a deliberate attempt to prevent the Defendants from finding out the Plaintiffs’ intention to issue proceedings against them, and it is very significant that during the period between the supposed directors meeting on 10th August and the issue of proceedings, the Defendants were allowed to continue to make arrangements to put in place elements of the settlement.
17. Lest there be any doubt as to the validity of the meeting of 1st September, I would point out that it purported to be an extraordinary general meeting of the company, and that under Section 134 of the Companies Act, 1963 notice of a meeting of the company must be served on every member of the company, and further under Section 193 of the Companies Act, 1990 the auditor of the company is entitled to attend any general meeting of the company and to receive all notices in relation thereto. In view of the statutory provisions, quite clearly the resolution which was purported to be passed is invalid, and the second Plaintiff has no standing in these proceedings. In fact, this in itself, in my view, would have determined the case in favour of the Defendants, but I felt that I should deal with the merits of the Plaintiffs’ claim in any event, in an attempt to forestall any further proceedings which the first Plaintiff might bring.
18. Accordingly, this claim must be dismissed.