Tesco v Constain - Thomson Reuters

[1912] 2 Ch. 125 Page 51912 WL 17392 (Ch D)(Cite as: [1912] 2 Ch. 125)trust deed.FN11 54 Sol. J. 31; see note at end of this report, p. 134.Buckmaster, K.C., in reply. We do not suggest that there has been any personalmisconduct on the part of the defendant trustees.Cur. adv. vult.March 8. JOYCE J.This is an action by one only of a large number of persons and companies, theholders of debentures of the defendant brewery company, impeaching the validityof certain resolutions passed by a majority of more than eight to one of thesedebenture-holders at a meeting duly held pursuant to the provisions of the fifthschedule of the debenture trust deed.In my opinion the action is not properly constituted, and particularly in thatthe plaintiffs do not sue on behalf of themselves and other debenture- holders,nor is any one made a party to defend on behalf of or as representing themajority who passed the resolutions. In the circumstances it appears to me thatany order I may make will not be binding upon the other debenture-holders.Upon a former occasion by a similar resolution the period originally fixed forthe payment of the debentures was extended *132 for ten years, namely, fromSeptember 30, 1909, to the same date in 1919. Neither the plaintiffs nor any oneelse, so far as I understand, objected to this. The principal complaint now isthat the resolutions impeached, to put it broadly, as in the case of In re JosephStocks & Co. [FN12] before Eve J., convert what I believe is commonly, but,perhaps, not quite accurately, termed a redeemable debenture into what issimilarly termed an irredeemable or perpetual debenture. These are theexpressions, I think, used in s. 103 of the recent Act.FN12 54 Sol. J. 31; see note at end of this report, p. 134.There is a suggestion in the pleadings, and for some time there wereinsinuations, at least in the speeches of counsel, that the resolutions impeachedwere not passed bona fide and in the interests of all the debenture- holders, butto benefit the defendant company and the shareholders therein. No evidence,however, in support of these allegations was adduced, so that the case has to bedecided upon the documents alone, if we include among these prints of the reportsand balance-sheets for the years 1907, 1908, 1909, 1910 and 1911, and atranscript of the shorthand notes of the proceedings at the meeting when theresolutions in question were passed. Ultimately Mr. Buckmaster, counsel for theplaintiffs, disclaimed any imputation of personal misconduct on the part of thedefendant trustees. It is quite plain that they simply acted in a regular mannerunder the advice of their solicitors and counsel, although, of course, they mayhave been wrong.Now what I mentioned as being the principal ground of complaint was not in anyview of the case an act of the debenture trustees or any other persons or personpossessing a fiduciary character. The offence is the vote of the majority of thedebenture-holders themselves in general meeting, after discussion, and in face ofthe opposition of a minority less than one-eighth; the fact being that theprovisions of the debenture trust deed--some of the conditions are at the back ofthe debenture, but I treat them as if they were all contained in the deed--enabled a certain majority assembled in a certain manner to do what they allindividually and collectively might have done if of one mind sui juris andcompetent. They enabled such a majority to *133 override what I think MellishL.J. would have called a few "cantankerous" debenture-holders. The powers--suchas they were--under which the meeting of debenture-holders acted are contained inclauses 13, 14, and 15 of the fifth schedule to the trust deed. The power of theCopr. © West 2004 No Claim to Orig. Govt. Works