CASES DETERMINED BY THE CHANCERY DIVISION AND IN LUNACY AND ON APPEAL THEREFROM IN THE COURT OF APPEAL. ERNEST v. LOMA GOLD MINES, LIMITED. [1896 E. 675.] Company Meeting of Shareholders-Special Resolution Show of HandsProxies-Companies Act, 1862 (25 & 26 Vict. c. 89), s. 51 (1)—Blanks in Proxies Stamp Act, 1891 (54 & 55 Vict. c. 39), s. 80. At a meeting of the shareholders of a company the articles of which allow voting by proxy, the chairman, in ascertaining the number of votes given on a show of hands, must count the vote of each person who holds proxies as a single vote, and not count a vote for each of the members whose proxies he holds. Decision of Chitty J., [1896] 2 Ch. 572, affirmed. In re Bidwell Brothers, [1893] 1 Ch. 603, overruled. A notice convening an extraordinary general meeting to confirm a special resolution was accompanied by a circular from the secretary and directors with a proxy attached, asking for the return of the proxy in support of the resolution; by a printer's error the date of the meeting was left blank in the proxy. Several of the members executed and returned their proxies (which were duly stamped) without filling up the blanks, which were filled up by the secretary before the proxies were lodged with the company :— Held, by the Court of Appeal, affirming the decision of Chitty J., that these proxies were valid within the provisions of the Stamp Act, 1891, s. 80. THIS was an appeal by the plaintiff from a decision of Chitty J. (2), who held that at a special general meeting of (1) The Companies Act, 1862 lution passed by a company under this (25 & 26 Vict. c. 89), s. 51: “A reso- Act shall be deemed to be special VOL. I. 1897. (2) [1896] 2 Ch. 572. B 1 C. A. 1896 Nov. 4, 10. C. A. 1896 ERNEST 2. MINES, LIMITED. shareholders in June, 1896, the chairman was right in refusing on a show of hands to count the votes of all the members for whom a member present held proxies, and that at the confirmatory meeting in July he had rightly allowed proxies in which the date and hour of the meeting had been filled in by the secretary after the proxies had been signed and returned to the company. By The company had a nominal capital of 300,000l. in 300,000 shares of 17. each. Art. 56 provided that five shareholders, each of whom must be present in person or by proxy, should be required to constitute a quorum at a general meeting. art. 60, at any general meeting a motion was to be decided in the first instance by a majority of members ascertained by show of hands, and, unless a poll was demanded by at least three members holding at least one-tenth of the shares of the company, a declaration by the chairman that a resolution had been carried, and an entry to that effect in the books was to be sufficient evidence of the fact. By art. 62, every member was to have one vote for each of his shares. Art. 66 allowed voting by proxy; and 67 provided that proxies must be members, and that all instruments appointing proxies must be deposited in the whenever a resolution has been passed the meeting at which such resolution was first passed: At any meeting mentioned in this section, unless a poll is demanded by at least five members, a declaration of the chairman that the resolution has been carried shall be deemed conclusive evidence of the fact, without proof of the number or proportion of the votes recorded in favour of or against the same: Notice of any meeting shall, for the purposes of this section, be deemed to be duly given and the meeting to be duly held, whenever such notice is given and meeting held in manner prescribed by the regulations of the company: In computing the majority under this section, when a poll is demanded, reference shall be had to the number of votes to which each member is entitled by the regulations of the company." company's office at least forty-eight hours before the time of meeting. On June 3, 1896, an extraordinary general meeting was held at which fourteen shareholders were present. On a show of hands, twelve voted for the resolution, the plaintiff and one other against it. The plaintiff held proxies for 431 shareholders holding in all 102,000 shares. The chairman declared the resolution carried, and refused a poll on the ground that the plaintiff was not supported in his demand for it by two other members present. The meeting to confirm the resolution was held on July 1. A poll was demanded, and on its being taken there was a majority of 16,704 votes in favour of the resolution. The plaintiff objected to a number of proxies used in favour of the resolution to an extent more than sufficient to wipe out this majority. Notice of the confirmatory meeting was duly sent to all the members. Accompanying this notice was a circular signed by the secretary and emanating from the chairman and directors with a form of proxy to be returned, and giving reasons why the proxies should be sent as requested by the directors. The proxy was in the usual form except that it omitted to state the day and hour of meeting. Various proxies were returned signed by the shareholders, but without inserting the day and hour of meeting. The secretary filled up these particulars before lodging the proxies according to art. 67. The plaintiff brought his action, insisting that the first resolution was not carried, for that the chairman ought to have treated the plaintiff as having 432 votes, and that the confirmatory resolution was not validly passed, for that the proxies filled up by the secretary did not satisfy the requisitions of the Stamp Act, 1891, s. 80. Chitty J. decided against the plaintiff on both points: see the report below (1), where a fuller statement of the facts is given. The plaintiff appealed. Ashton Cross, for the appeal. The question is whether proxies are to be taken into account on a show of hands. (1) See [1896] 2 Ch. 572. C. A. 1896 ERNEST v. LOMA GOLD LIMITED. In this company proxies are allowed and greater weight than usual is given to them, for by art. 56 proxies are taken into account in ascertaining whether there is a quorum. The Companies Act, 1862, s. 51, provides for a special resolution being carried by a specified majority of the members present "in person or by proxy" at the meeting. If a member gives a proxy and the proxy attends, the member who gives it is present by proxy. He therefore must be taken into account in considering whether the resolution is carried by the requisite majority of the members present. Here, if account is taken of the persons for whom the plaintiff held proxies, the resolution of June 3 was not carried. Chitty J. refers to the remark of Mr. Palmer (Company Precedents, 6th ed. vol. i. p. 338), that the mode of reckoning votes for which I contend is foreign to common practice, and may in some cases involve great inconvenience; but that learned writer goes on to observe that it agrees best with the words of the Act. I must admit that the chairman was right in refusing a poll, for a poll cannot be demanded by a proxy: Reg. v. Government Stock Investment Co. (1); In re Haven Gold Mining Co. (2) The decision of Vaughan Williams J. in In re Bidwell Brothers (3) is express in my favour; and in that case his Lordship deals with In re Caloric Engine and Siren Fog Signals Co. (4), which makes the other way. Unless the effect I contend for is given to proxies a small minority might govern the company, for in many mining companies nearly all the shareholders are abroad and cannot attend in person. What the statute lays stress on is the being present, and it expressly says present in person or by proxy. Vaughan Williams J. thought that In re Horbury Bridge Coal, Iron and Waggon Co. (5) did not apply, and there is nothing in it that makes against my contention. Byrne, Q.C., and E. W. Stock, for the company. [LINDLEY L.J. Can we say that the requisitions of the Companies Act, 1862, s. 51, have been satisfied?] there were two modes of voting-by show of hands or at a poll. The Act says nothing in words about show of hands; but s. 51 talks of a poll being demanded, and of a resolution being carried. without a poll being demanded, evidently assuming that in the first instance the votes would be taken in the only other known way by show of hands, i.e., a show of hands taken in the usual well-known way. It is against the nature of a show of hands that one hand should count for more than another. The mode proposed on the other side would not secure the expression of the will of the company more than the common mode ; for, if votes were taken according to the appellant's contention, a person holding fifty proxies from fifty holders of one share each would on a show of hands outvote a holder of one proxy for 30,000 shares. A man who holds up his hand holds it up in respect of all his voting power. If a vote is to be given for each proxy, why not give the man his proper voting power as in a poll? It is hard to understand the principle of In re Bidwell Brothers (1), and it is directly opposed to the earlier decision of Kay J. in In re Caloric Engine and Siren Fog Signals Co. (2) The principles laid down in In re Horbury Bridge Coal, Iron and Waggon Co. (3) really cover the case, though the precise point was not decided. That case shews that the old common law mode of show of hands is a proper mode of taking the first vote. Ashton Cross, in reply. Cur. adv. vult. Stock then called attention to the fact that the other point decided by Chitty J. had not been mentioned. Ashton Cross, for the appellant. The provisions of the Stamp Act, 1891, s. 80, are not complied with. That section requires that every proxy shall specify the day of meeting, and the proxies in question were incomplete when they left the hands of the members. They were not, therefore, such instruments as the Act requires, and the votes given under them are void. Stock, for the company, was not called upon. (1) [1893] 1 Ch. 603. (3) 11 Ch. D. 109. (2) 52 L. T. (N.S.) 846. |