March 19, 1906.]
valid or invalid. We are not to do anything under them. They are in force, but we must not do anything under them. Later, if the Court is entefied they are invalid, then the "Court sets them aside.
His Lordship—Yes.
Mr. Sharp-Then the people affected by them are thrown back into their original position. Meanwhile the resolutions are in force but must not be acted upon.
Mr. Pollock-I don't think there is any real difference whether you say they are in force or not.
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· CHINA OVERLAND TRADE REPORT.
201
His Lordship-Well, as I have mid two or | consent of the Governor in Council was now three times before, I should think an injunction | given, that could not cure the fact that the might be necessary to restrain defendants from resolutions were ultra virés nor conld 1 it care carrying the resolutions into effect until the the fact that the agreements framed upon these consent of the Governor was obtained.
resolutions were ultra virès, Mr. Pollock-Yes, my Lord. His Lordship-But then supposing the injunction were granted.
Mr. Pollock-What would be the effect? What would be the effect say as regards your His Lordship That is what I am coming to. alternative claim ?
Mr. Pollock-How can the question of His Lordship-But the form of the injund-arbitration possibly be gone into until it is tion has been challenged.
known whether the consent of the Governor in Council be given ?
Mr. Pollook-We submit that the injunction was properly granted as regards all four resolu- tions.
His Lordship Yes.
Mr, Pollock-The order of the Court is the ordinary form of injunction.
His Lordship-Yes.
Mr. Sharp-I, would ask your Lordship to refer to page seven of Buckley, which does not conflict with the principle I have laid down.
Mr. Pollock, continuing his argument, affirmed that when a new company was formed to take over an old company and carry on its undertaking that was a re-construction, and as his Lordship had pointed out yesterday a compulsory sale of shares for cash was not a -re-construction scheme. It seemed to him that if the arguments of his learned friends were followed to their logical conclusion it would mean that by passing a resolution of winding up which could be done whether the articles provided for it or not-the shareholders in the minority could be deprived of their rights under section 201 of the ordinance by the majority. The machinery which had 2been adopted in the present 0880
altogether inconsistent with any plea, put -forward at the eleventh hour, that they were empowered to do this under the memoran. dum. It was clear from Mr. Ewens' evidence that the memorandum did not give them that power. Referring to the letter "intended as an offer of arbitration," he said that no one would take that as an offer of arbitration, and pointed out that defendants had always denied the right to arbitration. On the subject of the notice, he contended that it was inadequate. The shareholders inasmuch as they were invited to the meeting ought to have had sufficient informa- tion to determine whether it was wise to sell their shares at 8200, to decide whether it was advisable
Was
His Lordship-You would require judg. ment on the alternative as
a substantive claim and not as an alternative claim.
Mr. Pollock-There is a difficulty, my Lord. The only way in which it can be got over is to grant us an injunction.
His Lordship-Yes.
Mr. Pollock The matter is in an impossible position until we know where we are-until we know whether the Governor in Council will give his consent
otion be granted say until the consent of the His Lordship-Supposing a proper injun.
Governor in Council were obtained?
Mr. Pollock-Yes
Mr. Pollock-Oh yes. His Lordship-That is hardly an alternative
claim.
Mr. Pollock-We are asking for an injun. tion to stop the whole thing,
His Lordship-Yes.
Mr. Pollock - We say we are entitled to an absolute injunction restraining them from oarrying the resolutions into effect.
His Lordship Yes.
Mr. Pollock-We say these resolutions were contrary to law because they purported to con. tain a power of sale that lacked a material precedent.
His Lordship-Everything falls to ground.
Mr. Pullook-Yes, of necessity. The proper procedure, we submit to your Lordship, is that the other side, if they get the consent, an absolute injunction should be granted, and
ner. bring up another resolution in a regular ma
Governor in Council was refused what would be His Lordship-Supposing the consent of the the position?
Mr. Pollock-It would be an impossible position.
1
now given would not that oure it ?
His Lordship-Supposing the consent were
Mr. Pollock-No. It would not cure sitra ires. They have entered into all manner of can that possibly cure it ? agreements with the new company. How
be done over again.
His Lordship-Everything would have to
Mr. Pollock-Yes, and very rightly
because the position of the dissentients and other shareholders in the company would be very much altered by the question whether the His Lordship-In that case you would still consent of the Governor in Connell was want your declaration ?
granted or not. If the consent be withheld, if your Lordship grant an injunction in the form suggested, it seems to me an impossible position will be created. If on the other hand the consent of the Governor in Council is obtained, then we say that that will have a very important bearing upon this question of arbitration, be- cause it will have a most important bearing upon the question of the price which ought to be paid to the dissentients. The whole object of the scheme was to do away with opposition. Your Lordship will bear in mind that it was declared that handsome profits could be obtained merely by building the new concession up to Queen's Gardens level and working that part alone. If the Governor in Jouncil does give his conmut to the transfer of the tramway, it is hardly likely the general managers will take the line up, to the Peak in the face of their letters and correspondence. In conclusion, he argued that it would be absurd to wind up the old company for the purpose of transferring the undertaking to the new company when they had not obtained the necessary legal consent. It might be that the Government would come interest to have the two tramways controlled by one body. The Government might decide that it was better to have competition. It certainly could not be said that there was a certainty of the Government assenting to the transfér, and the general managers had altogether been too premature in bringing 'the matter before the shareholders. There was
His Lordship-Yes. The absence of notice
does not make them ultra vires.
Mr. Pollok-It makes an irregularity. His Lordship'-It may give your plaintiff a right to the declaration ?
Mr. Pollock-Yes. He would certainly have a right to the declaration that they were invalid, His Lordship-An injunction to set aside would not meet the case.
Mr. Pollock-We think we are absolutely
to become investors in the new company, or to entitled to the declaration that they are bɔth to the conclusion that it was not in the public
decide whether they would do neither the one nor the other but oppose the scheme. He *further argued that rights conferred by statute on sharehoɛders could not be contracted out of As to the statement that plaintiff acquiesced in the proceedings, there was no evidence to support that. The correspondence proved an intention to contest the validity of the resolu tion, but in face of those letters the general managers decided to call the new company into existence and hurry through all manner of agreements. He submitted that what was done I was ultra vires of the company, because these resolutions perpetrated to give the liquidators authority to sell to a new company when such sale
• would: have been contrary to the statute without the consent of the Governor in Council being first obtained. All the resolutions ought to have been passed subject to the approval of the Governor in Council. They could not possibly take effect without that consent. Supposing that consent were refused and the injunction dissolved, the -new company could not admit the old company because they were still carrying 0 their busi- ness.” An impossible situation would be created. The old company would go in liquidation for all time or until the tramway line wore out. The new company could not carry on without obtain ing the concession from the old company,
Mr. Sharp thought the new company could carry out one of its objects, one of the lines.
Mr. Pollock denied this. He submitted that nothing of those resolutions could go through without first obtaining the consent of the Governor in Council.
His Lordship You claim first for a declara- tion that the resolutions are ultra vires and void injunction to restrain defend- ing them into affect P
es, my Lord.
invalid and illegal, in the sense that they were contrary to statute.
His Lordship-Do you say that absence of notice makes that ultra vires?
Mr. Pollook-Being unable to carry out the resolutions without the consent of the Governor in Council makes them ultru vires.
His Lordship
Supposing the injunction were granted, the alternative question as to arbitration under section 201 would not be decided but would have to be discussed again?
Mr. Pollock-It has been pretty fully dis- cussed now, but it would certainly have to be gone into again.
His Lordship-Yes.
Mr. Pollock-That is why my Lord we have framed it in the alternative because seemed to as if the injunction were granted that meant everybodys shares would revert to them. Supposing your Lordship says the resolutions passed are ultra vires then there is nothing to arbitrate.
His Lordship-Yes. Supposing the injunction were until a decision was arrived, until the
overnor in Council gave or refused his consent, then the question of arbitration would crop up again?
Mr. Pollock-Not now, we think it would depend upon whether the consent was given
or.not.
whole of this question would have to be opened His Lordship-Assuming it were given, the agaiu.
Mr. Pollock-I don't know. Not necessarily,
Lord. my
inte fere.
His Lordship-They have the same right to
Mr. Pollook-Your Lordship has to decide whether the resolutions valid or not and whether they were ultra virés. Amuming, the
по
doubt that these hares had been unduly depressed, and having regard to the dividend earning power of the old company the shares were worth $325 each. If the new line were taken to some other part of the Peak the present company would be as flourishing as ever. Therefore, they submitted that the only proper order the Court could make was that the resolu tions were invalid and that an injunction onght to be granted.
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Mr. Sharp said his Lordship had asked a question the previous day which he could not answer. He could now supply the answer. The total number of shareholders was 51, holding 1250 shares. The number of shareholders not present at the first meeting or represented was seven, holding 95 shares. Of the soren absentees six had singe approved of the sobere and the other had given no intimation, either way. In further reply to his Lordship, he maintained that the word reconstruction could rightly be used. They sai a price of $250,000. Their second scheme was for a sale of the old und king at
was that the scheme was also properly reconstruction, using the word in business sense.” The third propo the scheme, either amalgamation, could be carried invoking the aid of section 201,
Mr. Pollock briady The case
adjourned.
thout