Taylor v Reid [1929] HCA 32

Taylor v Reid [1929] HCA 32

The guarantee covered dividends only for years in which the respondent continued to own the shares at the time when the dividend was or was to be declared; having sold his shares before the November declaration, he was not entitled to a dividend under the guarantee for the year ending 31 July 1928.

Parties
Appellants; Defendants: Taylor and others; Respondent; Plaintiff: Donald Reid
Jurisdiction
Australia
Judgment Date
04 November 1929
Procedural Posture
Appeal / Appeal From the Supreme Court of South Australia
Outcome
Appeal allowed; order of Richards J. discharged.
Legal Topics
Share Transfer, Director Guarantee, Dividend Entitlement, Breach of Warranty
Company Law Contract Law Share Transfer Director Guarantee Dividend Entitlement Breach of Warranty

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Parties

Taylor and others

Appellants; Defendants

Donald Reid

Respondent; Plaintiff

Procedural Posture

Appeal / Appeal From the Supreme Court of South Australia

Legal Issues

  1. 1 Does the directors' guarantee to pay at least a 6½ per cent dividend per annum on transferred shares apply when the respondent sells his shares before a dividend is declared?
  2. 2 Is continued ownership of shares by the guaranteed party necessary for entitlement under the guarantee?

Ratio Decidendi

The guarantee covered dividends only for years in which the respondent continued to own the shares at the time when the dividend was or was to be declared; having sold his shares before the November declaration, he was not entitled to a dividend under the guarantee for the year ending 31 July 1928.

Court Disposition

Appeal allowed; order of Richards J. discharged.

Orders

  • Declare that the respondent is not entitled to payment by the appellants under the guarantee for a dividend at the rate of 6½ per cent per annum for the year ending 31st July 1928 on the 26,000 shares.
  • Order that the costs of the application to the Supreme Court and the appeal be paid by the respondent Donald Reid.