Farmers' Mercantile Union and Chaff Mills Limited v Coade [1921] HCA 48

Farmers' Mercantile Union and Chaff Mills Limited v Coade [1921] HCA 48

By majority (Knox C.J. and Higgins J.), the inaction and acquiescence of the respondents after receiving multiple calls and company notices established that they agreed to become, and were accepted as, members of the company and are liable as shareholders; silence after belated communication of acceptance (by notice of call) and failure to repudiate amounts to acceptance of membership and liability. Starke J. dissented, holding no agreement to take shares was concluded as acceptance was not sufficiently communicated nor proved, and the respondents were entitled to treat their application as lapsed given the delay.

Parties
Appellant; Plaintiff: The Farmers' Mercantile Union and Chaff Mills Limited; Respondents; Defendants: Coade and Another (Edward James Coade and Robert Tindale)
Jurisdiction
Australia
Judgment Date
18 November 1921
Procedural Posture
Appeal / On Appeal From the Supreme Court of Western Australia to the High Court of Australia
Outcome
Appeal allowed (by majority); judgments of Local Court and Supreme Court set aside.
Legal Topics
Shareholders' Liability, Contract Formation, Notice of Allotment, Company Winding Up, Agreement to Take Shares
Company Law Shareholders' Liability Contract Formation Notice of Allotment Company Winding Up Agreement to Take Shares

Case Brief

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Parties

The Farmers' Mercantile Union and Chaff Mills Limited

Appellant; Plaintiff

Coade and Another (Edward James Coade and Robert Tindale)

Respondents; Defendants

Procedural Posture

Appeal / On Appeal From the Supreme Court of Western Australia to the High Court of Australia

Legal Issues

  1. 1 Whether silence/inaction after notice of calls and company winding up amounts to agreement to be shareholder despite late notice of allotment;
  2. 2 Whether the company accepted the share application on the terms offered, and whether such acceptance was communicated;
  3. 3 Effect of delay between application and notice of calls on existence of shareholder relationship;

Ratio Decidendi

By majority (Knox C.J. and Higgins J.), the inaction and acquiescence of the respondents after receiving multiple calls and company notices established that they agreed to become, and were accepted as, members of the company and are liable as shareholders; silence after belated communication of acceptance (by notice of call) and failure to repudiate amounts to acceptance of membership and liability. Starke J. dissented, holding no agreement to take shares was concluded as acceptance was not sufficiently communicated nor proved, and the respondents were entitled to treat their application as lapsed given the delay.

Court Disposition

Appeal allowed (by majority); judgments of Local Court and Supreme Court set aside.

Orders

  • Judgment for appellant (The Farmers' Mercantile Union and Chaff Mills Limited) for £31 16s. 7d.
  • Respondents to pay taxed costs in Local Court and Supreme Court to appellant.