; CHANCERY DIVISION. » BARRON v. POTTER. POTTER v. BERRY. [is14 B. 638.) [isis P92) Company — Additional Directors — Appointment by Board of Directors — Informal Mecting—Unable or unwilling to act—Power of Company in General Meeting —Companies (Consolidation) Act, 1908 (8 Edw. 7, ¢. 69), Table A, cl. 85. A board meeting of directors can be held under informal cireum- stances, but the casual mesting of two directors even at the office of the company cannot be treated as a board meeting at the option of one against the will and intention of the other, and it makes no difference that a notice convening a board meeting has been sent by the one to the other if such notice has not in fact been received by the other. Smith v. Paringa Mines [1906] 2 Ch. 193 distinguished. Where tho articles of association of a company incorporated under ‘the Companies (Consolidation) Act, 1908, give to the board of directors the power of appointing an additional director, and owing to differences between the directors no board meeting can be held for the purpose, the company retains power to appoint aditionl diestor in general meeting. Observations of Cotton and Fry L.JJ. ia Isle of Wight Ry. Co. v. ‘Tahourdin (1883) 25 Ch. D, 320, 332, 36, followed. Blair Open Hearth Furnace Co. y. Reigart (1913) 108 T.. T, 665 distinguished. Cross-Morions. The British Seagumite Company, Limited, was incorporated under the Companies (Consolidation) Act, 1908, as a private company in January, 1912. Article 21 of the articles of associa tion provided that the number of directors should be not less than twoor more than ten. Article 26 provided that the quoram of directors for transacting brsiness should, unless otherwise fixed by the directors, be two. The articles also incorporated clause 85 of Table A, which provides: “The directors shall have power at any time, and from time to time, to appoint a person as an additional director who shall retire from office at the next following ordinary general meeting, but shall be cligible for election by the company at that meeting as an additional director.” The articles also incorporated clause 87 of Table A, WARRING. TON J. r91t March 13,896. WARRING. TON J. 1 Bankox Cs Porrer. Porrer Brnry. CHANCERY DIVISION. 1914) which gives power to the directors to regulate their business as they think fit and gives the chairman a second or casting vote in case of equality. Inthe commencement of the year 1914 there were two directors only, W. J. Potter, the chairman and managing director, and Canon Barron. The conduct of the company’s business was at a. standstill as Canon Barron refused to attend any board meeting with Mr. Potter. On February 9 Canon Barron (pursuant to the provisions of s. 66 of the Companies (Consolidation) Act, 1908) sent out a notice convening an extraordinary general meeting for February 24, at 28, Fleet Street, the registered office of the company, for the purpose of passing a resolution terminating the appointment of Mr. Potter as managing director of the company, and a resolution that one Charles Berry be appointed an additional director, On February 21 Mr. Potter sent through the post to Canon Barron a notice requesting him to attend a board meeting at the company’s office on February 24 at 240 pa. This notice, however, was not in fact received by Canon Barron, who lived in the country, until a later date after his return from London. Canon Barron arrived by train at Paddington Station on February 28, and on his arrival was met on the platform by Mr. Potter, who there purported under the circumstances { presently stated to hold a board meeting and by his easting vote to appoint three persons as additional directors of the company. Canon Barron came to the company's office on February 24 with the intention of attending not a hoard meeting but the extra- ordinary meeting of the company.” Mr. Potter met him in the office before the meeting and under the circumstances presently stated again proposed the appointment of additional directors. Canon Barron disregarded the proposal, whereupon Mr. Potter purported to vote and declared them elected. The extraordinary meeting of the company was then held, at which the first resolution was put to the meeting and carried on a show of hands. Mr. Potter thon demanded a poll, stating that he would fix a place and time, In default of the chairman, Canon Barron put the second resolution to the meeting, which, together with an amendment adding two other persons as1¢h. CHANCERY DIVISION. 897 additional directors, he declared to be,carried. Mr. Potter, WARRING. however, ruled it to be illegal, as the power lay with the directors and not with the company. On February 24, 1914, Canon Barron issued his writ (to which ~ the company was afterwards added as co-plaintiff) against Mr. Potter and the persons purporting to have been appointed as additional directors at the alleged board meetings for an injunction to restrain the defendants, other than Mr. Potter, from acting as directors and for a declaration that they had not been validly appointed as directors ; and on March 6, 1914, Mr. Potter issued his writ in the eross-action, claiming a declaration that the appointment of the additional directors at the general meeting \ was ultya-rives and invalid, and an injunction; and the respective ) plaintiffs now moved for interlocutory injunctions. Tho questions raised by each motion wore the same, namely, (1.) whether what had taken place between Mr. Potter and Canon Barron amounted to a valid appointment by the board of the additional directors proposed by Mr. Potter ; and (2.) if not, then whether the resolution of the company in general meeting was a valid appointment of the persons named in the resolution. Mr. Potter's evidence on the first point was that owing to the refusal of Canon Barron to attend any board meeting the position of the affairs of the company was becoming so serious that he was advised in the interests of the company to meet Canon Barton wherever he could be found and to use ‘his casting vote as chairman in ease Canon Barron should refuse to agree to the appointment of additional directors. Accordingly on February 28 he met the train at Paddington by which he expected Canon Barron to arrive, and seeing him alight from it walked by his side along the platform and said to him,“ I want to sce you, please.” Canon Barron replied, “I have nothing to say to you.” Mr. Potter then said, “I formally propose that we add the Reverend Charles Herbert, Mr. William George Walter Barnard, and Mr. John Tolchurst Musgrave as additional directors to the board of the British Seaguinite Company, Limited. Do you agree or object?” Canon Barron replied, “J object and I object to say anything to you at all.” Mr, TON J. 191s BARRON ® Porter. Porrer Berny,898 WARRING. TON 5. 1914 BaRnoN, Porter, Torrer, Be CHANCERY DIVISION. 11914) Potter then said, “In my capacity as chairman I give my casting vote in their favour and declaredthem duly elected.” He continued to walk with Canon Barron a few steps and then said, “ That is all I want to say ; thank you. Good day.” According to Canon Barron's evidence, on his arrival at Paddington Station he engaged a porter to carry his luggage to ataxicab. On the way to it he saw Mr. Potter coming towards him, who said, “I want a word with you.” He replied, “ I shall hold no communication with you. I shall have nothing to do with you.” Mr, Potter then laid his hand upon Canon Barron's arm and said, “I propose Mr... . . as a director.” Canon Barron did not catch the name and turned his back and continued towards his taxicab, He then heard Mr, Potter hurriedly say, “Have you any amendment? hen I give my casting vote.” As to the alleged board meeting on February 24, Mr. Potter stated that Canon Barron arrived at the office¥f the company with the object of attending the extraordinary general meeting called by him. Mr. Potter thereupon proposed to Canon Barron that Mrs. Clara Rose Potter, Miss Florence Millicent Hewitt, and Mr. Frank Burnett should be appointed additional directors of the company, proposing each name separately. Canon Barron disregarded the proposals and refused to vote thereon, whereupon Mr. Potter voted in favour of them and declared the persons named to be duly elected directors. Aceording to Canon Barron's evidence, he attended at the registered office of the company at 8 o'clock pax, to attend the extraordinary goneral meeting, and as he entered the inner room where the mecting was io be held Mr. Potter came’ after him and said, “I propose Mrs, Clara Rose Potter and (mentioning another name) as divectors. Have you any amendments?” Canon Barron answered laughingly, “Yes, I have plenty of amendments which we shall discuss.” Here Mr. Potter interrupted him and said, “ Then I give my casting vote; they are elected.” H. Terrell, K.C., and Sheldon, for the motion in Barron's action. First, there was no valid appointment of the additional10h. CHANCERY DIVISION. directors at any board mesting. The persons attending a board WARRING. meeting must atténd as directors and vote as directors. ‘These requirements were not satisfied by what took place either at Paddington Station or on the second occasion at the office of the company. A directors’ meeting may no doubt be held informally: Smith v. Paringa Mines (1); but that case bears no resemblanee to the present. Sccondly, notwithstanding the delegation by the articles of the power of appointing an additional direetor, the company retained a concurrent power under eireum- stances such as existed in the prosent ease: Isle of Wight Ry. Co. y. Takourdin. (2) Otherwise there would be a complete dead- lock, and there is nothing in Blair Open Hearth Furnace Co. v. Reigart(8), Automatic Self-cleansing Filter Syndicate Co. v. Cuninghame (4), and Salmon v. Quin Actens (5) which conflicts with this view. Automatic Self-cleansing Filter Syndicate Co. v- Cuninghame (4) was explained by Neville J. in Marshall's Valve Gear Co. v. Manning, Wardle & Co. (8) Clauson, K.C., and H. E. Wright, for the respondents. As to the first point we do not rely on the meoting at Paddington Station, but on the subsequent ocaasion on February 24 there was every ingredient of a valid board mecting. Notice summoning the meeting had been duly sent through the post by Mr. Potter even if it had not then been received by Canon Barron, and the place of actual meeting was at the registered office of the company. ‘The meeting was no more informal than in Smith v. Paringa Mines (1), and it was not open to Canon Barron to nullify it by his conduct. Secondly, the resolution carried at the general meeting was in any case invalid. The express power of appointing an additional director conferred by the articles on the directors excludes the existence of a con- current power in the company : Blair Open Hearth Furnace Co. v. Reigart (8); Automatic Self-cleansing Filter Syndicate Co.v. Cuning- hame (4); Gramophone and Typewriter v. Stanley.(7) The case (1) [1908] 2 Ch. 193. H. L. sub nom. Quin & Antens ¥. (2) 26 Ch. D. 320, 832, 933, por Salmon [1909] A. 0. 442. Cotton and Fry L.JJ. (8) [1909) 1 Ch. 267. (8) 108 L. . 66s, (7) [1908} 2 K. B. 89, 98, per (4) [1906] 2 Ch. 34. Wletcher Moulton L.J. (5) [1909] 1 Oh. 311 ; affirmed in 899 TON J. POTTER Benny.“ae 900 CHANCERY DIVISION. 1914] Warrine. of Isle of Wight Ry. Co. v. Lahourdin (1), which is relied on TON 5. 19s BARRON Porter, Porrse, Berpy. against us, is inapplicable, since that was a case under the Companies Clauses Consolidation Act, 1845, which contains au express provision making the exercise of the directors’ powers subject to the control of a general meeting, and it was dis- tinguished on that ground in Automatic Self-cleansing Filter Syndicate Co. v. Cuninghame (2) and in Salnon v. Quin & Axtens. (8) HH. Terrell, K.C., was called on to reply only as to the alleged board meeting on February 24. What took place between Mr. Potter and Canon Barron on that occasion was not business transacted at a board meeting. Canon Barron attended at the office of the company for the purposes of the extraordinary general meeting only and without any intention of attending a board meeting with Mr. Potter. One director cannot force another to hold a board meeting against his will. ‘The facts in ‘Smith y. Paringa Mines (4) were totally different. Wanrieron J. In the present case there are two eross- motions, the objects of which are the same, though the position of the parties is reversed. ‘Nhe question is whether certain additional directors appointed at a general meeting of the company were validly appointed or whether certain additional directors were validly appointed at a directors’ meeting, in which case the resolution of the company in general meeting would be invalid. [His Lordship stated the facts and continued:] Mr. Potter originally insisted that what took place on the platform of Paddington Station was a directors’ meeting at which a sufficient proposal was made for the appointment of the three persons named as additioual directors, and that if Canon Barron did not vote it was competent to Mr. Potter to vote and carry the resolution, or if Canon Barron did vote, then it was eompetent for Mr. Potter to carry it by his own casting vote. It is not, however, now contended that what took place on that occasion was a valid appointment of the additional directors, but it is contended that what took place the next day immediately before (1) 25 Ch, De (3) [1909] 1 Oh. 311. (2) [1906] 2 Ch. 34 (4) [1906] 2 Ch. 193.1¢Ch, CHANORY DIVISION. tho general meeting did amount to a valid appointment. I will warainc- first refer to the articles of association under which the company is substantially governed by Table A, clause 85 of which provides that “ the directors shall have power at any time, and from time to time, to appoint a person as additional director . . . . ,” and clause 87 gives power to the directors to regulate their business as they think fit and gives the chairman a second or casting vote in case of equality. Another article provides that the quorum of directors, uniess otherwise fixed by the directors, shall betwo. [His Lordship then referred to what took place betwoen Canon Barron and Mr. Potter immediately before the general meeting on February 24 and said that there was no substantial difference between the accounts which they gave respectively, and continued :] What then took place is said to have been a directors’ meeting at which a valid appointment was made of the three additional directors proposed by Mr. Potter. The answer, in my opinion, is that there was no directors’ meeting at all for the reason that Canon Barron to the knowledge of Mr. Potter insisted all along that he would not attend any directors’ meeting with Mr. Pottor or disonss the affairs. of the company with him, and it is not enough that one of two directors should say “This is @ directors’ meeting” while the other says it is not. Of course if directors are willing to hold a meeting they may do s0 under any cireumstances, but one of them cannot be made to attend the board or to convert a casual meeting into a board meeting, and in the present case I do\ not see how the meeting in question ean be treated as a voard meeting. In my opinion therefore the true conclusion is that there was no board meeting, but that Canon Barron came with the deliberate intention of not attending a board meeting. If he had received the notice sent to him by Mz. Potter summoning him to a board meeting different considerations might have arisen, but he had not received it and came with the fixed intention of not attending any such meeting. There was therefore no board mesting at which Canon Barron was present.i/Mr. Potter was alone present, so that there was no quorum, and I must hold that the three additional directors named by him were not validly appointed. p 901 TON J, ioe Banos Porter, Porter ‘Bern,902 WARRING. TON J. it Bazzow e. Porter, Porrer BERR CHANCERY, DIVISION. 1914] The question then arises, Was tho resolution passed at the general meeting of the company a valid appointment? The argument against the validity of the appointment is that the articles of association of the company gave to the board of directors the power of appointing additional directors, that the company has accordingly surrendered the power, and that the directors alone can exercise it. It is true that the general point was 50 decided by Eve J. in Blair Open Hearth Furnace Co. v. Reigart (1), and I am not concerned to say that in ordinary cases wheye there is a board ready and willing to act it would be competent for the company to override the power conferred on the directofs by the articles except by way of special resolution for the purpose of altering the ‘articles. But the case which I have to deal with is a different one. For practical purposes there is_no board of directors at The only directors are two persons, one of whom refuses to act with the other, and the question is, What is to be done under these circum- stances? On this point I think that I can usefully refer to the judgment of the Court of Appeal in Isle of Wight Ry. Co. v. Tahourdin (2), not for the sake of the decision, which depended on the fact that it was a case under the Companies Clauses Consolidation Act, 1845, but for the sake of the observa- tions of Cotton and Fry L.JJ. upon the effect of @ deadlock such as arose in the present case. Cotton LJ. says(8): “Then it is said that there is no power in the meeting of shareholders to elect new directors, for that under the 89th section the power would be in the remaining directors. The remaining directors would no doubt have that power if there was a quorum left. But suppose the meeting were to remove so many directors that a quorum was not left, what then follows? It has been argued that in that case, there being no board which could act, there would be no power of filling up the board so as to enable it to work. In my opinion that is utterly wrong. A power is given by the 89th section to the remaining directors ‘if they think proper s0 to do’ to elect persons to fill up the vacancies. I do not see how it is possible for a non-existent body to think proper (1) 108 L. 1. 665. (2) 25 Ob. D. 820. (3) 25 Ch. D. 382. 41 Ch. CHANCERY DIVISION. to fill up vacancies, In such a case a general meeting duly WARRING. summoned for the purpose must have power to elect a new board so as not to let the business of the company be at a dead-| lock.” Fry LJ. says this (1): “Then with regard to the objee- tion that a general meeting cannot elect directors to fll up vacancies, it appears to me that a general meeting would at any vate haye that power in the event of all the directors being removed, In my judgment it is quite impossible to read the 89th section as the only section relating to the filling up of vacancies in the office of directors. That applies only where there are remaining directors, and those remaining directors think proper to exercise their-power. “That does ffot, in my judgment, deprive the general’ mesting of the power to elect directors, where there are no’ directors, or where the directors do not think fit to exercise their-powers.” Those observations express a principle which, seems to ihe to be as applicable to the case of a limited company incorporated under the @ompanies (Consolidation) Act, 1908, as to a case falling under the Com- panies Clauses Consolidation Act, 1845, and moreover to be a prineiple founded: on plain common sense. If directors having certain powers are unable or unwilling to exercise them—are in fact a non-existent body for the purpose—there must be some power in the company to do itself that which under other cireum- stances would be otherwise done. ‘The directors in the present case being unwilling to appoint additional directors under the power conferred on them by the articles, in my opinion, the company in genétal meeting has power to make the appointment. The company has passed a resolution for that purpose;-and though a poll has been demanded no date or place has yet been fixed for taking it. The result therefore is that I must grant an injunction on the motion-in Canon Barron's action and refuse the motion in Mr. Potter’s action. Solicitors: Bartlett & Gluckstein ; A. J. Greenop & Co. / (1) 26 Ch. D. 335, AC, 903 TONS, 1014 ‘BARRON Porren, Porrer BERRY.